EN BANC

[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) OF JUSTICES, JUDGES
AND COURT OFFICIALS WITH EQUIVALENT RANK OF COURT
OF APPEALS JUSTICES OR REGIONAL TRIAL COURT JUDGES.

RESOLUTION

REYES, R.T., J : p

IN her Memoranda of June 26, 2007, July 4, 2007 and November 20,
2007, Deputy Clerk of Court and Chief of Office, Fiscal Management and
Budget Office (FMBO), Corazon G. Ferrer-Flores seeks clarification as to the
effect of the ten percent (10%) increase authorized under Executive Order
(E.O.) No. 611 1 on the monthly Special Allowance for the Judiciary (SAJ) of
incumbent justices, judges and court officials with the equivalent rank of
Court of Appeals (CA) justices or Regional Trial Court (RTC) judges in view of
the provision under Section 6, Republic Act (R.A.) No. 9227 2 which provides:
SaCDTA

Sec. 6. Effects of Subsequent Salary Increase. — Upon

implementation of any subsequent increase in the salary rates
provided under Republic Act No. 6758, as amended, all special
allowances granted under this Act to justices and all other positions in
the Judiciary with the equivalent rank of justices of the Court of
Appeals and judges of the Regional Trial Court as authorized under
existing laws and any additional allowance granted to other personnel
of the Judiciary shall be considered as an implementation of the said
salary increases as may be provided by law. The special allowance
equivalent to the increase in the basic salary as may be
provided by law shall be converted as part of the basic salary:
Provided, that, any excess in the amount of special allowance
not converted as part of the basic salary shall continue to be
granted as such. (Emphasis supplied)
In said Memoranda, Flores requests instructions on (1) whether to
deduct 10% from the monthly SAJ of incumbent justices, judges and judiciary
officials with the equivalent rank of CA justices and RTC judges to correspond
to the 10% increase in the basic salary as authorized under E.O. No. 611;
and (2) whether to source this 10% salary increase from the SAJ fund.
The Facts
On March 14, 2007, President Gloria Macapagal-Arroyo issued E.O. No.
611 directing the implementation of a 10% increase in the basic monthly
salaries of civilian government personnel whose positions are covered by the
Compensation and Position Classification System under R.A. 6758, as
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 amended, effective July 1, 2007.
On June 18, 2007, the Department of Budget and Management (DBM)
issued National Budget Circular No. 511 prescribing the rules and regulations
governing the grant of compensation adjustments authorized under E.O. No.
611. It failed, however, to provide guidelines as to the effect of E.O. No. 611
on the SAJ of justices, judges and those of equivalent rank in light of Section
6 of R.A. No. 9227. The Court's Joint Circular with the DBM dated January 13,
2004 providing guidelines for the implementation of R.A. No. 9227 served no
better as a source of enlightenment in this issue. That being the case, Flores,
in her first Memorandum dated June 26, 2007, sought guidance from the
Court. ICTcDA

On July 2, 2007, during the technical hearing on the Calendar Year (CY)
2008 budget of the Court and the lower courts, DBM representatives referred
to the afore-cited provision of R.A. No. 9227 and advised that 10% should be
deducted from the SAJ of justices, judges and court officials of equivalent
rank corresponding to the 10% increase in the salary effective July 2007.
When informed that National Budget Circular No. 511 does not provide for
the mechanics of this adjustment, the DBM representatives said that a
circular on the implementing guidelines was being prepared and would be
issued soon.
The DBM panel further explained that the 10% to be deducted from the
SAJ of justices, judges and court officials of equivalent rank would not be
remitted to the National Treasury but would still be kept in the SAJ fund until
such time when 100% conversion of the SAJ into salary has been effected. It
appears, however, that fund releases by the DBM for basic salaries of
justices, judges and court officials who are entitled to SAJ shall be the net of
the 10% increase. This 10% deficiency shall then be sourced from the SAJ
fund pursuant to Section 6, R.A. No. 9227. The DBM said they would only
provide funding for the 10% increase in the basic salary of court officials and
employees who are not direct beneficiaries under R.A. No. 9227.
Forthwith, the DBM issued its Circular Letter No. 2007-9 of June 29,
2007 providing for additional guidelines on the release of funds to cover
compensation adjustments of national government personnel effective July
1, 2007. The circular letter provides:
4.0 In cases where personnel of national government agencies
have been granted special allowances under special laws and
said allowances are considered as advance payment of any
future increase in basic salary as may be provided by law, the
following policies shall be adopted:

4.1 The special allowance equivalent to the amount of authorized

increase under EO No. 611 shall be integrated into the basic
salary.

4.2 Any excess in the amount of special allowance not converted as

part of the basic salary shall continue to be granted as such.

Flores promptly brought the court up-to-date on the above

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 developments with a second Memorandum dated July 4, 2007. HIcTDE

Flores' most recent Memorandum of November 20, 2007, has brought

to our attention the DBM's issuance, on November 13, 2007, of the Special
Allotment Release Order (SARO) No. SARO-BMB-C-07-0006137 3 in the
amount of One Hundred Sixty-Five Million Pesos (P165,000,000.00) to cover
the subsidy from the national government for the SAJ pursuant to paragraph
2, Section 3 4 of R.A. No. 9227.
In the Advice of SARO Issued 5 on even date, the DBM qualifies the
purpose for which the P165 Million was issued, providing therein that the
release of allotment is "to cover the Special Allowance for the Judiciary (SAJ)
authorized under 9227/10% compensation adjustment." It further states
that:
In accordance with Republic Act No. 9227, this release likewise
covers the implementation of the 10% salary adjustment under
Executive Order No. 611 dated March 14, 2007 as implemented
under National Budget Circular No. 511 dated June 18, 2007 for
Justices, Judges and all other positions with equivalent rank of justices
of the Court of Appeals and judges of the Regional Trial Court in the
Judiciary.
The 10% increase in the basic salary of the Justices and Judges
shall result in a parallel reduction in the amount of special allowance
they receive; while the total monthly compensation will remain
unchanged.
It would therefore appear that the DBM qualified the purpose of the
subject SARO on the basis of Section 6 of R.A. No. 9227. Thus, applying the
condition set forth in the subject SARO, the basic monthly salary of
incumbent justices, judges and officials with the equivalent rank of CA
justices or RTC judges will get a 10% increase pursuant to E.O. No. 611,
which shall be sourced from the P165 Million subsidy. The monthly SAJ will,
in turn, have a corresponding reduction of 10%.
Issues

1. Whether to deduct 10% from the monthly SAJ of incumbent

justices, judges and judiciary officials with the equivalent
rank of CA justices and RTC judges corresponding to the 10%
increase in their basic salary as authorized under E.O. No.
611; and DEcTCa

2. Whether to source the 10% salary increase from the SAJ

fund.

Our Ruling
The law is clear. The SAJ is to be considered as an implementation of
any subsequent increase in salary rates. This would include the 10%
increase in basic salary under E.O. No. 611. Hence, the 10% increase in basic
salary shall be made to apply to justices, judges and other court personnel of
ranks equivalent to CA justices and RTC judges but will be sourced from the
SAJ funds and result in a corresponding 10% reduction in SAJ.
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 Continued implementation of Sec. 6
would defeat the purpose of RA. No.
9227.
The confusion, however, over the effects of Section 6, R.A. No. 9227 is
understandable, given the foreseeable long-term consequences of said
provision.
Under Section 6, R.A. No. 9227, the following allowances granted to
officials and personnel under this law are supposed to be affected by the
implementation of the increase in salary under E.O. No. 611:

1) The SAJ under R.A. No. 9227 to justices, judges and all other
positions in the Judiciary with the equivalent ranks of justices
of the CA and judges of the RTC; and
2) Any additional allowances granted to other personnel of the
Judiciary.

Pursuant to the aforesaid Section 6 of R.A. No. 9227, a percentage of

the SAJ being received by incumbent justices, judges and officials with
equivalent rank of CA justices or RTC judges shall be converted as part of
the basic salary to correspond to the 10% increase in the basic salary
authorized under E.O. No. 611. Thus, upon implementation of the 10%
increase in the basic salary authorized under E.O. No. 611 in July 2007, the
monthly SAJ of incumbents shall correspondingly be decreased by 10%.
The additional allowances granted to other personnel of the judiciary
referred to in Section 6, R.A. No. 9227 are the allowances sourced from the
surplus of the SAJ fund which are given to court personnel, who are not
direct beneficiaries under R.A. No. 9227, pursuant to paragraph 3 of Section
3 of the law. 6 CADSHI

Since this additional allowance is variable in amount and is not

consistently and regularly granted, the grant thereof being dependent on
availability of funds, the question now arises as to how the 10% increase
may affect the additional allowances granted to other personnel of the
Judiciary in order to be considered as an implementation of the said salary
increase.
The net effect of converting 10% of the monthly SAJ to basic salary is a
corresponding decrease in the monthly income of incumbent justices, judges
and judiciary officials of equivalent rank, since the 10% increase in their
salary, formerly part of their SAJ, will now be subject to income taxation.
Other court personnel who are not direct beneficiaries under R.A. No. 9227
may be expected to benefit with higher additional allowance, in view of the
expected increase in the surplus by reason of the 10% deduction from the
monthly SAJ of incumbents.
Assuming further across-the-board increases in the salary rates as may
be authorized by law, it will reach a point where the incumbent justices and
other officials of equivalent rank, who are presently receiving their monthly
SAJ, will be in the same position as they were before the grant of the SAJ
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 under R.A. No. 9227 in relation to other government personnel. Every
subsequent increase in the basic salary will mean a corresponding decrease
of an equivalent amount in the monthly SAJ of justices, judges and other
officials of equivalent rank. When their present salaries will have reached a
100% increase in subsequent years, they will no longer be receiving their
SAJ, as this would have been completely converted to salary pursuant to
Section 6, R.A. No. 9227.
Moreover, they would be receiving less than before, since their salaries
would then be subject to tax. 7 Other government personnel, on the other
hand, would have likewise received the same 100% increase in their salaries
without any corresponding decrease in allowance. Thus, it would appear that
the very purpose for which R.A. No. 9227 was enacted, to attract lawyers to
the Judiciary through an attractive compensation package, would be
defeated.
In the long run, the real beneficiaries of R.A. No. 9227 would not be
those intended by the framers of the law to benefit, but the so-called
"indirect" beneficiaries under paragraph 3, Section 3 which provides as
follows: SCHIac

If the collections from any increase in current fees and any new
fees imposed after the effectivity of this Act exceed the amount
needed to fund the special allowances granted to justices, judges and
all other positions in the Judiciary with the equivalent rank of justices
of the Court of Appeals and judges of the Regional Trial Court as
authorized under existing laws, the surplus may be used by the
Chief Justice of the Supreme Court to grant additional
allowances exclusively to other court personnel not covered
by the benefits granted under this Act. (Emphasis supplied)
However, these other court personnel not directly covered by R.A. No.
9227, already have their salaries augmented by the Judiciary Development
Fund (JDF), which purposefully grants a higher allowance to those with lower
basic salaries. 8
Section 4 of R.A. No. 9227 provides for the continuation of the grant of
JDF despite the indirect benefit other court personnel gain from the SAJ:
Sec. 4. Continuance and Non-Diminution of Benefits under
the Judiciary Development Fund. — The existing allowance and other
fringe benefits, if any, of the members and personnel of the Judiciary
which are currently paid or augmented chargeable against the
increase in the rates of the legal fees prescribed in the amendments
to Rule 141 of the Rules of Court which accrue to the Judiciary
Development Fund established under Section 1 of Presidential Decree
No. 1949 shall all continue to be funded and paid chargeable against
said Development Fund, and in no case shall these be stopped or
discontinued by reason of the implementation of this additional
compensation.
Clearly, this distribution of surplus SAJ to other court personnel was
intended to be a mere incidental benefit to the main objective of the law,
which was to augment the salaries of members of the Judiciary in an effort to
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 entice more lawyers thereto. The continuing implementation of Section 6 of
said law would defeat this main objective. In actual practice and with the
passage of time, it puts to the fore the interests of other personnel, instead,
whose interests are more properly and directly addressed via the grant to
them of the JDF. IHTaCE

Verba Legis Non Est Recedendum

While continued, long-term implementation of Section 6, R.A. No. 9227
would, indeed, defeat the very purposes for which said law was passed,
there is no escaping the express provisions of the law. Well-established is
the rule that "from the words of the statute there should be no departure."
Hindi dapat lumihis sa mga titik ng batas. Where, by the use of clear
and equivocal language capable of only one meaning, anything is enacted by
the legislature, it must be enforced even though it is absurd or mischievous.
9 Hence, there is nothing to do but to allow the 10% increase in basic salary

of justices, judges and those other officials likewise directly benefiting from
R.A. No. 9227 to be sourced from the SAJ fund, and to allow the
corresponding 10% reduction in SAJ. Dura lex sed lex. The law may be harsh
but it is the law. Ang batas ay maaaring mahigpit ngunit ito ang batas.
The Court has previously ruled on
the nature of SAJ as basic salary.
Besides, We cannot go back on our previous rulings on the nature of
SAJ as being part of the basic salary of justices and judges. In Re: Request of
Retired Justices of the Supreme Court for Upgrading of their Retirement
Gratuities, 10 We reiterated our recognition of the SAJ as forming part of
basic salary, to wit:
. . . As we have ruled in the Resolution dated 01 December
2004 and reiterated in the Resolution dated 25 January 2005, the
special allowance under RA 9227 is intended to be part of the basic
salary of the justices, judges and all other positions in the judiciary of
equivalent rank. Section 6 of RA 9227 categorically states that "the
special allowance equivalent to the increase in the basic salary as
may be provided by law shall be converted as part of the basic
salary." The first sentence on Section 6 is clear. All special
allowances granted under RA 9227 shall be considered as an
implementation of the salary increases or subsequent
increases in the salary rates provided under RA 6758 as
amended. In other words, the special allowance is merely an
advance salary increase for the justices, judges and all other
positions in the Judiciary with equivalent rank. An advance
salary increase is still a salary increase. When a new law is
enacted providing for all government officials and employees,
said special allowance will be converted formally as part of
the basic salary and any excess in the amount of special
allowance not formally converted as part of the basic salary
shall continue to be granted as such.
xxx xxx xxx
. . . And we have stated in the Resolution dated 01 December
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 2004, that since the special allowances that are being received by
incumbent justices under R.A. No. 9227 are actually part of their
increased basic salary, a fortiori, such increased salary of the
incumbent justice becomes the basis of the retirement pension of the
retiree at the time of his cessation in office. (Emphasis supplied) SIaHDA

Seeing that We have previously established the nature of the SAJ as to

be considered basic salary for purposes of computation of retirement
benefits, We can hardly flip-flop on the issue in order to declare the SAJ free
of income tax and to steer clear of deductions therefrom corresponding to
each salary increase, no matter how ludicrous the overall long-term effect of
the implementation of Section 6 may be. Future legislation is encouraged to
rectify this blip in the law.
In sum, this ruling is guided by an obligation to be consistent with the
wording of the law as well as previous rulings of the Court on the nature of
the SAJ fund. It is instilled with a spirit of generosity towards other court
personnel and with self-sacrifice for, indeed, it runs contrary to Our own self-
interests. The distortion in pay that the law may very well cause can be
addressed properly by future legislation.
WHEREFORE, the Deputy Clerk of Court and Chief of the Fiscal
Management and Budget Office Corazon G. Ferrer-Flores is hereby
instructed:
1. To deduct 10% from the monthly SAJ of incumbent justices,
judges and judiciary officials with the equivalent ranks of CA
justices and RTC judges, corresponding to the 10% increase
in their basic salary as authorized under E.O. No. 611; and
2. To source the 10% salary increase from the SAJ fund.
SO ORDERED.
Puno, C.J., Quisumbing, Carpio, Austria-Martinez, Corona, Carpio-
Morales, Azcuna, Tinga, Chico-Nazario, Velasco, Jr., Nachura, Leonardo-de
Castro and Brion, JJ., concur.
Ynares-Santiago, * J., on official leave.

Footnotes

1. Authorizing Compensation Adjustments to Government Personnel.

2. An Act Granting Additional Compensation in the Form of Special Allowances
for Justices, Judges and All Other Positions in the Judiciary with the Equivalent
Rank of Justices of the Court of Appeals and Judges of the Regional Trial
Court, and for Other Purposes.
3. Annex "A" to Memorandum dated November 21, 2007. HEcIDa

4. Sec. 3. Funding source. — . . .

In the event that the said amounts are insufficient to cover the grant of
allowances on the last year of implementation of this Act, the National
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 Government shall subsidize the special allowance granted for justices, judges
and all other positions in the Judiciary with the equivalent rank of justices of
the Court of Appeals and judges of the Regional Trial Court as authorized
under existing laws in an amount not exceeding One hundred Sixty-Five
Million Pesos (P165,000,000.00) per annum.
5. Annex "B" to Memorandum dated November 21, 2007.
6. If the collections from any increase in current fees and any new fees imposed
after the effectivity of this Act exceed the amount needed to fund the special
allowances granted to justices, judges and all other positions in the Judiciary
with the equivalent rank of justices of the Court of Appeals and judges of the
Regional Trial Court as authorized under existing laws, the surplus may be
used by the Chief Justice of the Supreme Court to grant additional allowances
exclusively to other court personnel not covered by the benefits granted
under this Act.
7. Nitafan v. Commission of Internal Revenue, G.R. No. 103524, April 15, 1992,
152 SCRA 284.

8. Presidential Decree No. 1949, Sec. 1. Establishing a Judiciary Development

Fund and for Other Purposes.

9. Lord Esher M.R., R. v. City of London Court, 1 Q.B. 273, 290 (1892).
10. A.M. No. 04-11-06-SC, March 14, 2006. aAEHCI

* On official leave per Special Order No. 497 dated March 14, 2008.

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