A.M. No. 07-8-3-SC; March 28, 2008
RE: QUERY ON THE EFFECT OF THE 10% SALARY INCREASE UNDER EXECUTIVE ORDER NO. 611 ON THE SPECIAL ALLOWANCE FOR THE JUDICIARY (SAJ)

FACTS

Deputy Clerk of Court Corazon G. Ferrer-Flores sought clarification from the Supreme Court regarding the implementation of a 10% salary increase authorized under Executive Order No. 611 for government personnel. The specific query was its effect on the Special Allowance for the Judiciary (SAJ) received by justices, judges, and court officials with equivalent rank, as governed by Section 6 of Republic Act No. 9227 . This provision states that upon any subsequent salary increase, the special allowance shall be considered as an implementation of that increase, with the equivalent amount converted into basic salary, and any excess continuing as an allowance.
The Department of Budget and Management (DBM), through various issuances, advised that the 10% increase in basic salary for these judicial officials should be sourced from their existing SAJ, resulting in a corresponding deduction. This interpretation was reflected in a Special Allotment Release Order (SARO) for a national government subsidy, which explicitly qualified that the 10% basic salary increase would cause a parallel reduction in the SAJ, leaving the total monthly compensation unchanged. Flores requested instructions on whether to proceed with deducting 10% from the SAJ and sourcing the salary increase from the SAJ fund.

ISSUE

Whether the 10% salary increase under E.O. No. 611 for covered justices and judges should result in a corresponding deduction from their Special Allowance for the Judiciary, with the increase being funded from the SAJ fund, pursuant to Section 6 of R.A. No. 9227 .

RULING

Yes. The Supreme Court resolved the query affirmatively, instructing the Fiscal Management and Budget Office to deduct 10% from the monthly SAJ of the concerned justices and judges and to source the 10% salary increase from the SAJ fund. The Court’s ruling is anchored on a straightforward application of the clear and mandatory language of Section 6 of R.A. No. 9227 . The law explicitly provides that any subsequent increase in statutory salary rates shall be considered as implemented by the special allowances already granted. The equivalent amount of the increase is to be converted from the allowance into part of the basic salary.
The Court found that the DBM’s interpretation and implementing guidelines were consistent with this statutory mandate. The mechanism ensures that the total compensation of the beneficiaries does not diminish; rather, a portion of their non-basic salary allowance is merely reclassified as basic salary. This conversion has potential long-term benefits for the officials, as basic salary forms the basis for computing other benefits and retirement pay. The ruling gives effect to the legislative intent that the SAJ acts as an advance payment for future salary adjustments, thereby complying with the condition set forth in the law and the qualified purpose of the fund release as indicated in the SARO issued by the DBM.