Acting Secretary's One-Day Salary Counts for Terminal Leave Pay

The Supreme Court has settled an important question for government employees nearing retirement: when computing terminal leave pay, does a brief stint in an acting capacity with a higher salary count? In Belicena v. Secretary of Finance (G.R. No. 143190, October 17, 2001), the Court ruled that it does — provided the designation was valid under the Administrative Code of 1987.

The case involved Antonio P. Belicena, an Acting Undersecretary of Finance who, on May 22, 1997, was designated by the President as Acting Secretary of Finance while the incumbent Secretary was on official business in Hong Kong. Belicena took his oath and received one day's salary at the Secretary's rate. He retired in 1998 after 44 years of service.

The Dispute Over Terminal Leave Computation

When Belicena applied for terminal leave, a dispute arose over the correct basis for computing its monetary value. The Civil Service Commission initially ruled in his favor, stating that his highest salary — the one-day pay as Acting Secretary — should be the basis. However, upon reconsideration, the Commission reversed itself, holding that Belicena was merely given additional duties and was not entitled to the Secretary's salary rate.

The Court of Appeals affirmed the Commission's reversal. Belicena then appealed to the Supreme Court.

The Governing Law

The case turned on a provision of the Administrative Code of 1987 (Executive Order No. 292) allowing the President to temporarily designate an officer already in government service to perform the functions of another office when the regular officer is unable to perform duties due to illness, absence, or any other cause.

Under this provision, a designated person receives the compensation attached to the position. If the designee is already in government service, he receives only such additional compensation that, together with his existing salary, does not exceed the salary authorized by law for the position filled.

The Supreme Court's decision quotes this provision, but the exact section number is not available in the ASG law library's copy of Executive Order No. 292. The Court's ruling, however, confirms that this was the statutory basis for the President's designation.

The Supreme Court's Ruling

The Supreme Court reversed the Court of Appeals and reinstated the original Civil Service Commission ruling. The Court held that the President's designation of Belicena as Acting Secretary was made under the Administrative Code provision described above. The absence of Secretary de Ocampo was of such extent that he was unable to perform his duties, justifying the temporary designation.

The Court noted that the Commission on Audit — the constitutional office tasked with settling government accounts — has held that an official designated in an acting capacity pursuant to the Administrative Code is entitled to a salary differential, and that his highest monthly salary for terminal leave purposes shall include such differential.

Applying the settled rule from Paredes v. Acting Chairman (201 Phil. 644 [1982]), the Court reiterated that the money value of terminal leave is computed based on the retiree's highest monthly salary. Since Belicena validly received the Secretary's salary during his one-day stint as Acting Secretary, that rate became his highest monthly salary for terminal leave computation.

The Court, however, excluded COLA (cost of living allowance) and RATA (representation and transportation allowance) from the computation, citing Borromeo v. Civil Service Commission (199 SCRA 911 [1991]).

Practical Takeaways

• Acting designations matter for benefits. A valid temporary designation to a higher position under the Administrative Code of 1987 can raise the basis for computing terminal leave pay, even if the stint lasted only one day.

• The "highest monthly salary" rule governs. Terminal leave pay is computed using the retiree's highest monthly salary received during government service, not necessarily the salary of the position held at retirement.

• Not all allowances count. COLA and RATA are excluded from the computation of terminal leave pay, even if they were received during the higher-paying designation.

• Validity of designation is key. The ruling applies only where the designation was properly made under the law. A mere assignment of additional duties without the requisite designation may not entitle an official to the higher salary rate.

• For retiring officials nearing the end of service. Those who have served in an acting capacity at a higher salary should ensure their terminal leave computation reflects that higher rate, consistent with this ruling.

This article is general information and not legal advice. For your specific situation, consult a lawyer or ask ASG Legal AI.