G.R. No. L-39298 August 30, 1982
Sulpicio G. Paredes, petitioner vs. Acting Chairman, Commission on Audit, The City Treasurer and City Auditor of Manila, respondents.

FACTS

Petitioner Sulpicio G. Paredes, former Assistant City Auditor of Manila, retired effective November 1, 1972. He received a monthly basic salary of P1,833.33 and, pursuant to Republic Act No. 5353, a separate monthly commutable representation allowance of P500.00. Upon retirement, he was granted the monetary value of his terminal leave, computed solely on the basis of his basic monthly salary.
Paredes contended that his commutable representation allowance should have been added to his basic salary to determine the “highest rate received” for computing his terminal leave benefits. He filed a claim for the allowance’s value covering his terminal leave period. The City Treasurer referred the claim to the City Auditor and then to the Commission on Audit (COA), which disallowed it. His motion for reconsideration was denied, prompting this petition for review.

ISSUE

Whether the petitioner’s monthly commutable representation allowance should be included as part of his “salary” in computing the money value of his terminal leave.

RULING

The Supreme Court ruled in the negative, affirming the COA’s disallowance. The legal logic proceeds from the specific law governing retirement benefits, Commonwealth Act No. 186 , as amended. While the petitioner correctly argued that his representation allowance, being authorized by a specific law (R.A. No. 5353), did not violate the constitutional prohibition on double compensation, this did not automatically qualify it for inclusion in terminal leave computation.
The Court emphasized that the governing provision is Section 12(c) of Commonwealth Act No. 186 , which mandates that the commutation of unused leave be “based on the highest rate received.” Crucially, Section 2(c) of the same Act, as amended by Republic Act No. 1573 , explicitly defines “salary, pay, or compensation” for retirement purposes as excluding “all bonuses, per diems, allowances and overtime pay,” limiting it to the “base pay of the position or rank as fixed by law or regulations.” The petitioner’s representation allowance, even if commutable, is unequivocally an “allowance” excluded by this statutory definition. Therefore, the “highest rate received” refers only to the basic monthly salary, not additional emoluments. The COA correctly excluded the allowance from the computation.