Department of Budget and Management vs. Manila’s Finest Retirees Association, Inc.

The Integrated National Police (INP) was not abolished by Republic Act No. 6975 but was absorbed and transformed into the Philippine National Police (PNP); consequently, INP retirees are entitled to the same or identical retirement benefits accorded to PNP retirees under R.A. No. 6975, as amended by R.A. No. 8551, and their retirement pay must be adjusted to the prevailing scale of base pay of active police personnel.

After the 1986 EDSA Revolution, the 1987 Constitution mandated the establishment of a single police force national in scope and civilian in character. In response, Congress enacted Republic Act No. 6975 on 13 December 1990, creating the Philippine National Police (PNP) under the Department of the Interior and Local Government. The law provided that the PNP would initially consist of members of the police forces integrated into the INP under Presidential Decree No. 765, as well as officers and enlisted personnel of the Philippine Constabulary. Complementing P.D. No. 765 was P.D. No. 1184 (INP Law) of 1977, which professionalized the INP. On 25 February 1998, R.A. No. 6975 was amended by R.A. No. 8551 (PNP Reform and Reorganization Act of 1998), which revised the retirement scheme and granted more generous benefits to PNP retirees than those previously received by INP retirees of equivalent rank. A marked disparity in monthly pensions emerged, prompting the INP retirees to seek judicial relief.

• The Integrated National Police: In 1975, Presidential Decree (P.D.) No. 765 created the Integrated National Police (INP), composed of the Philippine Constabulary (PC) as the nucleus and the integrated police forces as components. P.D. No. 1184, enacted in 1977, professionalized the INP and provided a retirement scheme for its members.
• Enactment of the PNP Law: On 13 December 1990, Republic Act (R.A.) No. 6975 established the Philippine National Police (PNP) under a reorganized Department of the Interior and Local Government. Section 23 provided that the PNP would initially consist of the members of the police forces who were integrated into the INP under P.D. No. 765, as well as the officers and enlisted personnel of the PC. Section 86 directed the PNP to absorb the police functions of the INP, while Section 88 ordered the transfer, merger, and absorption of offices, property, and personnel. Section 85 prescribed a three-phase implementation for absorption, transfer, and rationalization of the compensation and retirement systems. Section 90 stated that the existing PC-INP would “cease to exist” upon the law’s effectivity.
• The Amendatory Law – R.A. No. 8551: On 25 February 1998, R.A. No. 8551 amended R.A. No. 6975. The new law introduced a reengineered retirement scheme that gave PNP retirees higher monthly pensions than those received by INP retirees of equivalent rank under the old INP Law.
• Disparity in Retirement Benefits: The INP retirees illustrated the resulting disparity. An INP Corporal (rank equivalent to SPO3 in the PNP) received a monthly pension of ₱3,225.00, while a PNP SPO3 received ₱11,310.00—a difference of ₱8,095.00. An INP Brigadier General (equivalent to Police Chief Superintendent) received ₱10,054.24 compared to ₱18,088.00 for the PNP counterpart, a gap of ₱8,033.76.
• Petition for Declaratory Relief: On 3 June 2002, the Manila’s Finest Retirees Association, Inc. (MFRAI) and all other INP retirees filed a petition for declaratory relief before the RTC of Manila against the DBM, PNP, NAPOLCOM, CSC, and GSIS. They alleged that, because the INP was absorbed into the PNP, they were equally situated as PNP retirees yet were arbitrarily denied the higher retirement benefits under R.A. No. 6975, as amended. They prayed for a declaratory judgment that they were absorbed and considered PNP retirees entitled to identical benefits, with a corollary mandate for the respondent agencies to effect immediate adjustment and payment of the differentials retroactive to the law’s effectivity.

• Abolition of the INP: Petitioners maintained that R.A. No. 6975 clearly abolished the INP and created an entirely new police force, the PNP. Since INP retirees never became members of the PNP, they could not avail themselves of the retirement benefits under R.A. No. 6975, as amended.
• Prospective Application of Statutes: Petitioners argued that R.A. No. 6975, as amended, contained no express provision for retroactive application and therefore could not be applied to INP personnel who had retired before its effectivity.
• NAPOLCOM Resolution No. 8: Petitioners contended that Section 11 of NAPOLCOM Resolution No. 8 expressly barred the payment of any differential in retirement pay to officers and non-officers already retired prior to the effectivity of R.A. No. 6975.
• Impropriety of Executory Relief in Declaratory Relief: Petitioners faulted the trial court for ordering the immediate adjustment of retirement benefits in a proceeding for declaratory relief, asserting that the only proper relief was a declaration of rights and duties, not an executory order.

• Absorption, Not Abolition: Respondents argued that R.A. No. 6975 did not abolish the INP; instead, it absorbed, transferred, and merged the INP and its personnel into the newly established PNP. As former INP members subsumed into the PNP, they were entitled to the same retirement benefits granted to PNP retirees.
• Retroactive Application Mandated by Law: Respondents maintained that the retirement scheme under R.A. No. 8551 expressly provided for retroactive effect in favor of PNP members already retired, and that R.A. No. 6975 contextually extended benefits to those who had served in the INP.
• Liberal Construction of Retirement Laws: Respondents invoked the established rule that retirement laws must be liberally construed in favor of the retiree and that the Constitution requires the periodic upgrading of pensions.
• NAPOLCOM Resolution Cannot Override Statute: Respondents countered that the proviso in NAPOLCOM Resolution No. 8 could not override the legislative intent to rationalize benefits and ensure no diminution in retirement pay; moreover, the resolution’s own preambulatory clause confirmed that its purpose was to avoid any reduction in benefits due before the PNP’s creation.

• Abolition vs. Absorption: Whether R.A. No. 6975 abolished the INP, thereby precluding INP retirees from claiming the retirement benefits of the PNP.
• Retroactivity: Whether INP members who retired prior to the effectivity of R.A. No. 6975 are entitled to the enhanced retirement benefits under that law, as amended by R.A. No. 8551, despite the absence of an express retroactivity provision in R.A. No. 6975 itself.
• Effect of NAPOLCOM Resolution No. 8: Whether Section 11 of NAPOLCOM Resolution No. 8, which states that nothing therein authorizes payment of differential retirement pay to those already retired before the effectivity of R.A. No. 6975, operates to bar the INP retirees’ claim.
• Propriety of Relief: Whether the trial court properly ordered the immediate implementation and payment of adjusted retirement benefits in a petition for declaratory relief.

• Abolition vs. Absorption: The INP was not abolished. R.A. No. 6975 nowhere uses the words “abolish” or “terminate” with respect to the INP; instead, it repeatedly employs “absorption,” “transfer,” and “merger.” Section 90’s statement that the PC-INP shall “cease to exist” was interpreted as the logical consequence of its absorption into the PNP, not as an abrogation. “Abolish” means to destroy completely, whereas “absorb” means to assimilate or incorporate. Legislative deliberations confirmed that the law’s purpose was to erase the military character of the police force, not to obliterate the INP. Because the INP was transformed, its members—including those already retired—remained entitled to the retirement benefits under Sections 74 and 75 of R.A. No. 6975, as amended.
• Retroactivity: Retirement prior to the passage of R.A. No. 6975 did not exclude the INP retirees. R.A. No. 6975 did not impose a new obligation; it merely built upon the antecedent fact of INP membership. The three-phase absorption scheme under Section 85 demonstrated that former INP members were considered within the PNP framework. Moreover, Section 38 of R.A. No. 8551 explicitly provided that the rationalized retirement benefits schedule “shall have retroactive effect in favor of PNP members and officers retired or separated,” and Section 75, as amended, mandated that retirement pay be subject to adjustments based on the prevailing scale of base pay of active police personnel. Combined with the constitutional mandate to upgrade pensions, these provisions entitled the retirees to the differential.
• Effect of NAPOLCOM Resolution No. 8: The resolution’s proviso could not bar the payment of differentials. NAPOLCOM Resolution No. 8 was issued to rationalize the retirement system and to ensure that no member of the PNP suffered a diminution in benefits due before the PNP’s creation. Excluding the INP retirees would defeat that purpose and would contravene both the constitutional directive to upgrade pensions and the implementing provision of the Senior Citizen’s Law. The resolution must be read in harmony with the superior statutory and constitutional mandates.
• Propriety of Relief: The trial court’s order for immediate adjustment was proper. Under settled jurisprudence, a declaratory relief petition may be treated as an ordinary action and may include a claim for consequential relief, particularly where the parties were aware of the prayer, did not object, and litigated the matter fully. The petition explicitly prayed for immediate adjustment and payment, and the petitioners (as respondents below) raised no objection. Granting the executory relief forestalled multiplicity of suits—an especially compelling consideration given the advanced years of the INP retirees.

• Absorption vs. Abolition — Where a statute uses the language of “absorption,” “transfer,” or “merger” without explicit words of “abolition” or “termination,” the entity concerned is not abolished but is integrated into a new body. Cessation of existence is merely the consequence of absorption, not abolition. The INP’s transformation into the PNP preserved its identity for purposes of retirement entitlements.
• Liberal Construction of Retirement Laws — Retirement statutes must be liberally construed in favor of the retiree because their object is to provide sustenance and, hopefully, comfort when the employee can no longer earn a livelihood. The humanitarian purpose is to enhance the efficiency, security, and well‑being of government employees. (Citing Request of Clerk of Court Tessie L. Gatmaitan, A.M. No. 9777‑Ret., 313 SCRA 134.)
• Retroactive Adjustment of Retirement Pay — A law providing for retirement benefit adjustments, especially when it expressly declares retroactive effect in favor of retired members, applies to those who retired before its enactment. Additionally, where the law states that retirement pay shall be adjusted to the prevailing scale of base pay of active personnel, retirees are entitled to such adjustments regardless of the date of retirement. This construction is reinforced by Article XVI, Section 8 of the Constitution and Section 6 of the Senior Citizen’s Law (R.A. No. 7432).
• Executory Relief in Declaratory Relief Petitions — In a petition for declaratory relief, a court may properly order the payment of sums or the immediate implementation of rights if the adverse party was fully aware of the prayer and did not object, the factual basis was litigated, and the relief avoids multiplicity of suits. The action may be treated as an ordinary civil action for recovery under such circumstances. (Citing Philippine Deposit Insurance Corporation v. Court of Appeals, G.R. No. 126911, 402 SCRA 194; Matalin Coconut Co., Inc. v. Municipal Council of Malabang, G.R. No. L‑28138, 143 SCRA 404.)

• “To ‘abolish’ is to do away with, to annul, abrogate or destroy completely; to ‘absorb’ is to assimilate, incorporate or to take in. ‘Merge’ means to cause to combine or unite to become legally absorbed or extinguished by merger while ‘transfer’ denotes movement from one position to another. Clearly, ‘abolition’ cannot be equated with ‘absorption.’” — This passage forms the core semantic basis for distinguishing the legislative treatment of the INP.
• “Retirement laws should be liberally construed in favor of the retiree because their intention is to provide for his sustenance and hopefully, even comfort, when he no longer has the stamina to continue earning his livelihood. The liberal approach aims to achieve the humanitarian purposes of the law in order that efficiency, security and well-being of government employees may be enhanced.” — Frequently quoted in retirement jurisprudence, this encapsulates the guiding principle for resolving ambiguities.
• “For sure, R.A. No. 6975 was not a retroactive statute since it did not impose a new obligation to pay the INP retirees the difference between what they received when they retired and what would now be due to them after R.A. No. 6975 was enacted. Even so, that did not render the RTC’s interpretation of R.A. No. 6975 any less valid. The respondents’ retirement prior to the passage of R.A. No. 6975 did not exclude them from the benefits provided by R.A. No. 6975, as amended by R.A. No. 8551, since their membership in the INP was an antecedent fact that nonetheless allowed them to avail themselves of the benefits of the subsequent laws.” — This reasoning resolves the retroactivity objection by framing INP membership as a continuing juridical fact.

• Philippine Deposit Insurance Corporation v. Court of Appeals, G.R. No. 126911, 30 April 2003, 402 SCRA 194 — Relied upon for the principle that a special civil action for declaratory relief is not essentially different from an ordinary civil action; a counterclaim may be filed and executory relief may be granted to prevent multiplicity of suits. The Court applied the same rationale to uphold the trial court’s order for immediate payment.
• Matalin Coconut Co., Inc. v. Municipal Council of Malabang, Lanao del Sur, G.R. No. L‑28138, 13 August 1986, 143 SCRA 404 — Cited as additional authority that a declaratory relief petition may be converted into an ordinary action and that relief for refund or payment is proper where the parties were aware of the claim and evidence was introduced.
• Request of Clerk of Court Tessie L. Gatmaitan for Payment of Retirement Benefits of Hon. Associate Justice Jorge S. Imperial, A.M. No. 9777‑Ret., 26 August 1999, 313 SCRA 134 — Invoked for the rule on the liberal construction of retirement laws in favor of the retiree.

• Article XVI, Section 6, 1987 Constitution — Mandates the establishment of one police force national in scope and civilian in character; cited as the constitutional impetus for R.A. No. 6975’s restructuring of the police organization.
• Article XVI, Section 8, 1987 Constitution — Directs the State to periodically review and upgrade pensions and other benefits due to retirees of both government and private sectors; applied to support the INP retirees’ claim for adjusted benefits.
• Section 6, Republic Act No. 7432 (Senior Citizen’s Law) — Provides that retirement benefits shall be upgraded to be at par with the current scale enjoyed by those in actual service, to the extent practicable; invoked to reinforce the liberal interpretation.
• Republic Act No. 6975, particularly Sections 23, 74, 75, 85, 86, 88, and 90 — The PNP Law’s core provisions that established the PNP, provided for the absorption of INP personnel and functions, set the initial retirement benefits, and described the phased implementation; the interpretation of “cease to exist” in Section 90 was central to the ruling.
• Republic Act No. 8551, particularly Sections 34, 38, and amended Section 75 — Section 34, amending Section 75, added the proviso that retirement pay shall be subject to adjustments based on the prevailing scale of base pay of active police personnel; Section 38 required the formulation of a rationalized retirement schedule and declared its retroactive effect in favor of retired PNP members; these provisions directly supported the grant of differential pay to INP retirees.
• Presidential Decree No. 765 and P.D. No. 1184 — Established and professionalized the INP; provided the original retirement scheme that served as baseline for the claimed adjustment.
• NAPOLCOM Resolution No. 8, Section 11 — The proviso barring payment of differential to pre‑1990 retirees was interpreted as not applicable, as it would frustrate the law’s object of ensuring no diminution of benefits due before the PNP’s creation.

Chief Justice Reynato S. Puno, and Associate Justices Leonardo A. Quisumbing, Consuelo Ynares‑Santiago, Angelina Sandoval‑Gutierrez, Renato C. Corona, Conchita Carpio Morales, Adolfo S. Azcuna, Dante O. Tinga, Minita V. Chico‑Nazario, Presbitero J. Velasco, Jr., and Antonio Eduardo B. Nachura. Associate Justices Antonio T. Carpio and Ma. Alicia Austria‑Martinez were on leave.