G.R. No. 96032 ; July 31, 1991
JESUS N. BORROMEO, petitioner, vs. THE HON. CIVIL SERVICE COMMISSION and SECRETARY OF BUDGET AND MANAGEMENT, respondents.

FACTS

Petitioner Jesus N. Borromeo, former Chairman of the Civil Service Commission (CSC) who retired on April 1, 1986, sought payment of his terminal leave differential, claiming it should be computed based on his highest monthly salary plus his Cost of Living Allowance (COLA) and Representation and Transportation Allowance (RATA). The Commission on Audit (COA), in Decision No. 992 dated September 28, 1989, interposed no objection to this computation, following its action in similar cases involving former COA Commissioners. However, the Department of Budget and Management (DBM) denied the request, asserting that terminal leave pay must be based solely on “basic salary” as defined by law, excluding allowances.
Faced with the DBM’s refusal to release funds, the CSC, which had initially recommended approval of the claim, reversed its position. Through Resolution Nos. 90-514 and 90-945, the CSC declined to rule on the issue, citing “ethical considerations,” and advised the petitioner to seek judicial relief. The CSC also opined that the COA decision lacked sufficient legal basis and noted that the judiciary computed terminal leave based only on basic salary. Borromeo thus filed this petition to nullify the CSC resolutions and compel payment.

ISSUE

Whether the terminal leave pay of a retired Chairman of a Constitutional Commission should be computed based on the highest monthly salary plus COLA and RATA, or on basic salary alone.

RULING

The Supreme Court ruled in favor of the petitioner, ordering the computation of terminal leave pay to include COLA and RATA. The Court rejected the argument that the COA decision was final and binding on the DBM, as neither the CSC nor the DBM was an “aggrieved party” entitled to appeal it under the Constitution, and the DBM, as the disbursing authority, simply disagreed and refused compliance.
On the substantive issue, the Court employed a logical and equitable interpretation. It reasoned that if an employee consumes leave credits before retirement, they receive full salary plus allowances for that period. There is no rational basis to penalize an employee who works until the last day and then commutes the same leave credits by excluding allowances from the computation. This would create an unjust disparity. The Court further noted that Republic Act No. 6758 , which integrated COLA into the basic salary, supported the inclusion of such allowances for retirement benefits. To manage fiscal implications, the ruling was made applicable prospectively to members of the Judiciary and Constitutional Commissions who retired on or after February 1986. The CSC resolutions were set aside, and the DBM was ordered to release the corresponding allotment for Borromeo’s terminal leave differential.