A.M. No. 04-7-10-SC
RE: PAYMENT OF TERMINAL LEAVE AND RETIREMENT GRATUITY BENEFITS OF ASSOCIATE JUSTICE JOSE C. VITUG
Quoted hereunder, for your information, is a resolution of this Court dated JUN 7 2005.
A.M. No. 04-7-10-SC (RE: Payment of Terminal Leave and Retirement Gratuity Benefits of Associate Justice Jose C. Vitug [Ret.].)
A.M. No. 04-9-12-SC (RE: Source of Special Allowance of Retirement Gratuity and Terminal Leave Benefit.)
On July 20, 2004, the Department of Budget and Management (DBM), through Undersecretary Mario L. Relampagos, issued an Advice of Notice of Cash Allocation (NCA) and an Advice of Special Allotment Release Order (SARO) addressed to Chief Justice Davide, concerning the retirement gratuity and terminal leave benefits of retired Associate Justice Jose C. Vitug. The letter on the Advice of NCA states:
July 20, 2004
Hon. HILARIO G. DAVIDE, JR.
Supreme Court of the Philippines and the Lower Courts
Padre Faura, Manila
Attention: Atty. Luzviminda D. Puno
Clerk of Court
ADVICE OF NCA ISSUED
Please be advised that the
amount of FIVE MILLION SIX HUNDRED THIRTY NINE THOUSAND ONE HUNDRED SIXTY FIVE
PESOS ONLY (
P5,639,165) was credited to your account, details as
NCA No. :227997-0
MDS Sub-Account No. :2059-90033-4
GSB Branch :LBP -Taft Avenue
Purpose :To cover funding requirements
for payment of terminal leave
and retirement gratuity benefits
of former Justice Jose C. Vitug
The difference of
between the amount requested and the amount herein released corresponds to the
terminal leave ( P356.482.99) and retirement gratuity ( P745,644.60)
benefits of Justice Jose Vitug due to the inclusion of the special allowance
granted under R.A. 9227, which is chargeable against the fund from which said
allowance was drawn pursuant to Section 34 of the General Provisions of R.A.
9206 as re-enacted, and the excess RATA computation.
Notwithstanding this release, disbursement of funds by departments/agencies shall be subject to existing, budgeting, accounting and auditing rules and regulations.
Very truly yours,
EMILIA T. BONCODIN By:
MARIO L. RELAMPAGOS
The Advice of SARO contained almost identical wording.
In other words, the DBM disallowed the release of the Special Allowance components in the amounts of retirement gratuity and terminal leave benefits that Justice Vitug is entitled to receive by operation of law, using as their basis Section 34 of the General Provisions of RA 9206 (General Appropriations Act of 2003), which provides:
Sec. 34. Funding of Personnel Benefits. The personnel benefits costs of government officials and employees shall be charged against the funds from which their compensations are paid. All authorized supplemental or additional compensation, fringe benefits and other personal services costs of officials and employees whose salaries are drawn from special accounts or special funds, such as salary increases, step increment for length of service, incentive and service fees, commutation of vacation and sick leaves, retirement and life insurance premiums, compensation insurance premiums, health insurance premiums, Home Development Mutual Fund (HDMF) contributions, hospitalization and medical benefits, scholarship and educational benefits, training and seminar expenses, all kinds of allowances, whether commutable or reimbursable, in cash or in kind, and other personnel benefits and privileges authorized by law, including the payment of retirement gratuities, separation pay and terminal leave benefits, shall similarly be charged against the corresponding fund from which their basic salaries are drawn and in no case shall such personnel benefits costs be charged against the General Fund of the National Government. Officials and employees on detail with other offices, including the representatives and support personnel of auditing units assigned to serve other offices of agencies, shall be paid their salaries, emoluments, allowances and the foregoing supplemental compensation, fringe benefits and other personal services costs from the appropriations of their parent agencies, and in no case shall such be charged against the appropriations of the agencies where they are assigned or detailed, except when authorized by law.
The DBM claims that the
P1,102,127.59, representing the
Special Allowance portion of Justice Vitug's retirement gratuity and terminal
leave benefits should be drawn from the Special Allowance for the Judiciary
(SAJ) and not from the General Fund. Considering that such an interpretation of
Section 34 affects the retirement benefits of all Members of the Judiciary who
retired on or after the date of effectivity of RA 9227, this Court resolved to
address this matter, pursuant to the powers of judicial review and of
administrative supervision over all courts and court personnel.
This matter also had a direct bearing on A.M. No. 04-7-05-SC, in which Justice Vitug had requested permission to purchase motor vehicles, office equipment, appliances and pieces of furniture assigned to him during his incumbency. We granted his request, also on July 20, 2004.
Subsequently, in a letter dated July 29, 2004, Justice Vitug
requested the following: 1) that the disallowed portion pertaining to his
Representation and Travel Allowances (RATA) be charged against prior years'
savings of retirement gratuity and terminal leave benefits; 2) that the amount
corresponding to his special allowance under RA 9227 be earmarked; and 3) that
the total amount of
P1, 102,127.59 be credited to the purchase of the
items we approved in our July 20, 2004 Resolution. On July 30, 2004, Ms. Corazon M. Ordoñez, Chief of the Fiscal Management and Budget Office (FMBO) of the
Court, indorsed Justice Vitug's letter to the Chief Justice for appropriate
On August 3, 2004, the Court referred the matter via Resolution to the Office of the Chief Attorney (OCAT) for study and recommendation. In its report, submitted on August 23, 2004, with an addendum on September 4, 2004, the OCAT disagreed with the DBM's view that the special allowance portion of the retirement gratuity and terminal leave benefits should be taken from the SAJ.
The funding source of the SAJ, under Section 3 of RA 9227, is as follows:
SEC. 3. Funding Source. The amount necessary to implement the additional compensation in the form of special allowances granted under this Act shall be sourced from, and charged against, the legal fees originally prescribed, imposed and collected under Rule 141 of the Rules of Court prior to the promulgation of the amendments under Presidential Decree No. 1949, dated July 18, 1984, and from the increases in current fees and new fees which may be imposed by the Supreme Court of the Philippines after the effectivity of this Act.
xxx xxx xxx
In order to determine whether or not it would be proper to credit
P1, 102,127.59 to Justice Vitug's purchase, we had to rule on the
funding source of the retirement gratuity and terminal leave benefits.
Therefore, we issued a Resolution agreeing with the recommendation of the OCAT
that the gratuity and benefits should come from the General Fund:
Section 34 lays down the rule that the personnel benefits costs of government officials and employees have to be charged against the funds from which their compensations are paid. For the application of the rule, the Section classifies such officials and employees into two (2) groups. The first group are those whose compensations or salaries are drawn from the General Fund. They are covered by the first sentence of the Section. On the other hand, the second group are those whose compensations or salaries are drawn from special accounts or special funds. They are referred to in the second sentence of the Section.
The General Fund is the same as the appropriations from the General Appropriations Act.
Under the first sentence of the Section, the personnel benefits costs of the first group are chargeable against the General Fund even if one or all their benefits aside from their salaries are sourced from special funds. In contrast, in accordance with the second sentence of the Section, the second group's personnel benefits costs are chargeable to the special accounts or special funds from which their salaries are drawn even if they receive benefits from the General Fun. Clearly then, the determinant in identifying the source of the funds for the benefits is the fund from which the salaries or compensations are drawn.
A careful reading of Section 34 reveals that it is the first situation that applies to Justices and judges. The salary of a Justice or judge is taken from the General Fund of the government, not from the SAJ. Thus, following Section 34 of the General Provisions of the 2003 GAA, the retirement benefits of a Justice should be taken also from the General Fund.
xxx xxx xxx
The OCAT...notes that the amounts granted to Justices and judges under R.A. No. 9227 is not salary but an allowance, or an emolument granted in addition to their fixed compensation. According to the OCAT, it is only upon the passage of a law mandating an increase in the salary rates of Justices and judges under Republic Act No. 6748 that the special allowance under R.A. No. 9227 shall be converted as part of their basic salary. In the event that such a law is passed, the amounts received by Justices and judges under R.A. No. 9227 would become part of their salary and accordingly be included in the computation of their retirement benefits.
Still, it is worthy to note that even if the salaries of Justices and judges under R.A. No. 6758 have not yet been increased by law, Section 5 of R.A. 9227 expressly states that the special allowance actually received by a Justice or judge during his incumbency shall be included in the computation of his retirement benefits.
However, as a special fund, the SAJ can only be used for the purposes for which it was created, namely, the grant of special allowances to incumbent or serving Justices, judges and all other positions in the Judiciary with the equivalent rank of Justices of the Court of Appeals and of the Regional Trial Court. It cannot therefore be availed of to grant the retirement gratuity, terminal leave or other benefits to a retired Justice, judge or employee of the Judiciary with a rank equivalent to that of a Court of Appeals Justice or a Regional Trial Court judge.
Section 5 of R.A. No. 9227 only mandates that the actual amount of special allowances received by a Justice during his incumbency under that law be included in the computation of his retirement benefits. It does not ordain the source from which [where] the portion of the retirement benefit corresponding to the special allowances will be taken. There being no exception under R.A. No. 9227 to the general rule under Section 34 of the 2003 GAA, the general rule that the personnel benefits of a government employee whose salary is taken from the General Fund must also be taken from the General Fund applies.
Hence, the portion of Justice Vitug's unreleased terminal leave and
retirement gratuity benefits payable from the Special Allowance for Justices
and Judges Account, amounting to One Million Thirteen Thousand Four Hundred
Forty Two Pesos and Thirty Six Centavos (
P1,013,442.36) should be taken
from the General Fund.
The remaining Eighty Eight Thousand Six Hundred Eighty Five Pesos
and Twenty Two Centavos (
P88,685.22) of the amount disallowed by the
DBM, which corresponds to the terminal leave benefits and additional allowance
(RATA) of Justice Vitug as Chair of the Committee on Legal Education and Bar
Matters, may be paid out of the savings of the Court since such additional
allowance was sourced out of the Court's savings, (emphasis ours)
Thus, of the
P1, 102,127.59 disallowed by the DBM, from
Justice Vitug's retirement gratuity and terminal leave benefits, P1,013,442.36
is chargeable to the General Fund, while the remaining P88,685.22,
corresponding to his additional allowances (RATA) as Division Chair of the
Committee on Legal Education and Bar matters may be paid out of the Court's
As early as September of last year, in A.M. No. 04-7-05, we directed the DBM to issue an NCA and a SARO for the amount of Justice Vitug's gratuity and terminal leave benefits chargeable to the General Fund. The Department of Budget and Management has, however, ignored our resolution.
IN VIEW OF THE FOREGOING, the Secretary of the Department
of Budget and Management is hereby directed to (1) release to the Fiscal
Management and Budget Office of this Court, he amount of
or the Special Allowance in the computation of the retirement gratuity and
terminal leave benefits of Justice Jose C. Vitug for immediate transmittal to
him, and (2) to include such Special Allowance in the allocation and release of
retirement benefits of all Justices and Judges who retired on or after November
12, 2003, the date of effectivity of RA 9227.
Very truly yours,
(Sgd.) MA. LUISA D. VILLARAMA
Acting Clerk of Court
 Inasmuch as no appropriation law was enacted for FY 2004, RA No. 9206 was deemed reenacted for the year 2004 (Sec. 25(7), Art. VI, 1987 Constitution).
 Section 1, Article VIII, 1987 Constitution.
 Section 6, Article VIII, 1987 Constitution.
 Re: Properties Proposed to Be Purchased by Associate Justice Jose C. Vitug, A.M. No. 04-7-05-SC, September 30, 2004.