G.R. No. 92284 ; July 12, 1991
TEODORO J. SANTIAGO, petitioner, vs. THE COMMISSION ON AUDIT, and the GOVERNMENT SERVICE INSURANCE SYSTEM, respondents.

FACTS

Petitioner Teodoro J. Santiago, a State Auditor IV at the Commission on Audit (COA) with a monthly salary of P7,219.00, was detailed to the Manila International Airport Authority (MIAA) in 1988. The MIAA Board designated him as Acting Assistant General Manager for Finance and Administration. Under the arrangement, approved by COA Chairman Eufemio C. Domingo, Santiago retained his COA plantilla position and salary but was authorized to receive from MIAA a monthly differential of P5,849.00, bringing his total monthly compensation to P13,068.00. He served in this capacity from August to December 1988.
Upon his retirement in March 1989, the Government Service Insurance System (GSIS) computed his retirement benefits using P13,068.00 as his highest basic salary rate. However, the COA, in paying the benefits, used only his COA salary of P7,219.00. Santiago sought recomputation based on the higher rate, but COA denied his request, prompting this petition.

ISSUE

Whether the differential salary Santiago received from MIAA should be included in his “highest basic salary rate” for computing retirement benefits under Section 9 of Executive Order No. 966.

RULING

Yes. The Supreme Court granted the petition, directing the computation of Santiago’s retirement benefits based on P13,068.00. The legal logic centers on the interpretation of Section 9, E.O. No. 966, which defines “highest basic salary rate” for retirement purposes. The provision includes “salary adjustments duly authorized,” “additional basic compensation or salary indicated in an appointment duly approved as an exception to the prohibition on additional or double compensation,” and “compensation for substitutionary services or in an acting capacity.” It excludes per diems, allowances, bonuses, and similar fringe benefits.
The Court found that Santiago’s MIAA designation was a distinct, separate office, not a mere extension of his COA duties. His compensation for this role—the differential—constituted “additional basic compensation” for services in an acting capacity, expressly allowed under Section 17 of Act No. 4187 and sanctioned by COA. This differential was not a fringe benefit but part of his salary for the second position. Since it was fixed, authorized, and received as compensation for the designated role, it qualified under Section 9. Retirement laws are to be construed liberally in favor of the retiree to provide meaningful sustenance after years of service. COA’s exclusion of the differential was a misapplication of the law.