REQUEST OF CTA PRESIDING JUDGE ALEX Z. REYES

In his letter-request dated May 21, 1991, Court of Tax Appeals Presiding
Judge Alex Z. Reyes asks that, for purposes of his compulsory retirement from
judicial service under R.A. No. 910, the last step increment of his salary
grade be used in the computation of his retirement pay and terminal leave
benefits.

Judge Reyes was appointed Associate Judge of the Court of Tax
Appeals on July 31, 1980, and served as such until November 20, 1990. Beginning November 21, 1990 until his
retirement on November 24, 1991, he served as Presiding Judge of said court.

In his request, Judge Reyes cites the Position Allocation List
and a salary schedule (Approved Salary Standardization), both issued by the
Department of Budget and Management.

The Position Allocation List, which took effect on July 1, 1989,
was issued by the Department of Budget and Management pursuant to Section 6 of
R.A. 6758, otherwise known as the Compensation and Position Classification Act
of 1989, which provides:

“SEC. 6. Index of
Occupational Services, Position Titles and Salary
Grades of the Compensation and Position Classification System – All positions in the government covered under
Section 4 hereof shall be allocated to their proper position titles and salary
grades in accordance with the Index of Occupational Services, Position Titles
and Salary Grades of the Compensation and Position Classification System which
shall be prepared by the DBM.”

Under the Position Allocation List, the position of Presiding
Judge of the Court of Tax Appeals is allocated salary grade 30, with the salary
rate of P227,700 per annum, or P18,975 monthly. Judge Reyes was receiving
such amount at the time of his retirement.

The salary schedule cited by Judge Reyes provides the following
for salary grade 30:

Under the salary schedule, the salary received by Judge Reyes
corresponds to the first step increment.

In his Memorandum, the Court Administrator does not favorably
endorse the request of Judge Reyes. He cites
Joint Civil Service Commission and Department of Budget and Management Circular No. 1, Series of 1990 issued on January 1,
1990, and explains the contents of said circular as follows:

“xxx The Circular provides that Step
Increments to be granted to deserving officials and employees shall be based on
two (2) criteria; merit and length of service. MERIT, for those who have rendered very satisfactory or outstanding
performance in assigned functions for two (2) consecutive rating periods; and
LENGTH OF SERVICE, for those who have rendered continuous satisfactory service
in a particular position for at least three years. Each department or agency shall adopt its own system and
procedure in the recommendation, evaluation and approval of step increments.

A 2-step increment shall be given to officials and employees with
outstanding performance for two (2) consecutive rating periods. Moreover, a 1-step increment shall be given
to officials and employees with very satisfactory performance for two (2)
consecutive rating periods and for those officials and employees on the basis
of length of service, for every three (3) years of continuous satisfactory
service in the position.”

To support his
non-endorsement of Judge Reyes’ request, the Court Administrator gives the
following reasons: (1) Section 4(d) of
the above-mentioned circular prohibits the grant of step increments based on
merit for retirement purposes; (2) the longevity pay granted to judges under
Section 42 of B.P. No. 129, being given on the same premise as step increments
based on length of service, can no longer be given to judges; and (3) there is
no showing on record that Judge Reyes was given a step increment on merit.

Joint Circular No. 1, which
took effect on January 1, 1990 was issued pursuant to Section 13(c) of R.A. No.
6758 (Preambular paragraph), which provides:

“SEC. 13. Pay Adjustments
– Paragraphs (b) and (c), Section 15 of Presidential Decree No. 985 are hereby amended
to read as follows:

xxx            xxx     xxx

‘(c) Step Increments –
Effective January 1, 1990 step increments shall be granted based on merit
and/or length of service in accordance with rules and regulations that will be
promulgated jointly by the DBM and the Civil Service Commission.'”

Judge Reyes, in his Reply
to the Comment of the Solicitor General, invokes the doctrine of liberal
construction of retirement laws, citing Borromeo v.
Civil Service Commission (199 SCRA 924 [1991]). Such
doctrine, however, cannot be applied in the instant case, in view of section 4
of Joint Circular No. 1, which provides:

“SEC. 4 Restrictions. The following restrictions shall be observed
in the grant of step increments:

xxx            xxx     xxx

(d) No step increment
based on merit shall be given to an official or employee on the ground that he
is retiring in the near future and for purposes of enabling him to collect a
higher retirement gratuity, except as he may qualify in accordance with the
criteria established under these Rules.”

In Borromeo,
the court had occasion to say: “It is axiomatic that retirement laws
are liberally construed and administered in favor of the persons intended to be
benefited. All doubts as to the intent
of the law should be resolved in favor of the retiree to achieve its humanitarian
purposes.” Such interpretation in favor of the retiree is unfortunately
not called for nor warranted, where the clear intent of the applicable law and
rules are demonstrably against the petitioner’s claim. (Paredes v. City of Manila, G.R. No. 88879,
March 21, 1991). Section 4 is explicit
and categorical in its prohibition and unfortunately for Judge Reyes applies
squarely to the instant case.

The criteria of merit and length of service call for continuous
service in a particular position or assigned function for at least two
consecutive rating periods or three years, respectively. Judge Reyes has served as Presiding Judge
for only one year and three days. Step
increments are also proscribed if the purpose is to enable a higher retirement
gratuity. Coming as it does after
retirement, the request of Judge Reyes appears to fall under the prohibition.

The Court disagrees, however, with the contention that the
longevity pay of Judges under Section 42 of B.P. 129 is incompatible with step
increments.

There appears to be no legal obstacle to Judges receiving step
increments based on MERIT due to outstanding performance for two consecutive
rating periods. Merit is a criterion
entirely distinct from either longevity or length of service. Longevity pay is based on a law which
antedates by many years the legal basis
for step increments. There is no
incompatibility between the two statutes.

In the interest of good government and public welfare, merit
whenever found in the government service, must be recognized and whenever
authorized by law, must be rewarded.

Practical considerations also rule against a sweeping denial of
government employees’ compensation benefits to Judges. It is apparent from the salary schedule that
the escalation from one grade to another of the incomes of top officials from
Grades 30 to 33 is not fairly proportionate to the nature of the duties and
responsibilities exacted from the people occupying those top positions. Political considerations, not logic or
rational analysis, are the reasons for the discrepancy at the top. The general public, whose voices are
organized and, in this respect, magnified by media have expressed aversion and
displeasure against the grant of salary increases to top elective
officials. As a result, the President,
Vice President, Senators, and Congressmen cannot be given salary increases,
after the constitutional waiting period, no matter how well-deserved these
increases may be. Since the salaries of
the Chief Justice and Justices, not to mention Department Secretaries, are
pegged to the same levels as elective officials and since Judges cannot move up
in the salary scale beyond what Justices receive, a stagnation of salary
increases for Judges is the result.

It is true that there are other compensations in the judicial
service such as public respect, honor, and the satisfactions arising from the
faithful discharge of judicial duties. However, for Judges who rise from the lowest judicial ranks until they
reach the higher or highest court hierarchies, it is quite disconcerting at times to see their less talented or
deserving contemporaries receive six or seven digit monthly incomes while
theirs are held down by law. It is for
this reason that any policy which appears to discriminate against Judges in
matters of compensation must be examined carefully and struck down if enacted
into law. It is also for this reason
that this Court rules in favor of merit step increments and longevity pay which
may be paid at the same time. The
salary after the grant of a merit step increase shall constitute the basis for
the computation of longevity pay and total salary.

We are not prepared at this time to rule in favor of longevity
pay and step increments based on length of service being given
simultaneously. The Court Administrator
believes the two are based on the same premise. We do not necessarily sustain his position but pending an actual
case more squarely in point and the presentation of more valid arguments based
on factual and legal considerations, we reserve
a ruling on this issue for the future.

In his Comment, the Solicitor General assails the validity of the
Position Allocation List issued by the Department of Budget and Management,
upon the belief that said List provides for the step increments for salary
grades 30 to 33. He contends that
“the DBM does not possess quasi-legislative power so as to amend what is
clearly provided for by Section 7 of R.A. No. 6758 (Animos v. Philippine
Veterans Office, 174 SCRA 214 [1989]), nor does DBM possess quasi-judicial
power so as to interpret a void in the law and fill it up, i.e., provide for
the absence in Section 7 of any provision for rates beyond step one for salary
grade 30.” (p. 4, Comment) Section 7 of R.A. No. 6758 referred to provides
as follows:

SEC. 7. Salary Schedule
– The Department of Budget and Management is hereby directed to implement the
Salary Schedule prescribed below:

Salary
Schedule

x x x                 x x x                 x x x

The Position Allocation List does not provide for step
increments for salary grade 30. Rather,
it is Section 3 of Circular No. 1 which provides the mechanism for computing
such step increments. Nowhere in the Solicitor General’s Comment is
Joint Circular No. 1, s. 1990 mentioned.

The Solicitor-General gives no basis for the discrimination. There appears to be no valid justification
for salary Grades 1 to 29 to be given eight (8) step increments and for Salary
Grades 30 to 33 to be denied the same benefit. On the contrary, larger step increments and salary escalations for top
officials as compared to rank and file or clerical and manual workers are sound
and established management practices in big business and industry. The government is the biggest enterprise in
the Philippines.

To give a detailed pronouncement on the contentions of the
Solicitor General calls for a specific ruling on the quasi-legislative powers
of the Department of Budget and
Management. Such a ruling is not
necessary under the facts of this particular case. We likewise reserve it for a case more in point.

WHEREFORE, the request of Court of Tax Appeals Presiding Judge Alex Z. Reyes that the last step of
salary Grade 30 be used as the basis for the computation of his retirement pay
and terminal leave benefits is regretfully DENIED. The Court Administrator is, however, ordered to prepare and
present to the Court a plan providing for merit step increments for deserving
members of the Judiciary.

Narvasa, C.J., Cruz, Feliciano, Padilla, Bidin, Grino-Aquino,
Regalado, Davide, Jr., Romero, Nocon, Bellosillo, Melo, and Campos, Jr., JJ., concur.