The CNMI Supreme Court has found as unconstitutional a law that granted lawmakers, judges, and all other elected government officials a 3-percent retirement bonus.
In its ruling issued on Thursday, the high court reversed the decision issued by Superior Court presiding judge Robert C. Naraja that granted former representative Martin B. Ada's motion for summary judgment on the 3-percent retirement bonus issue.
The Supreme Court ruled that the 3-percent bonus contained in Public Law 6-17 violates article II, section 15 of the NMI Constitution.
“We further hold that the bonus is not void ab initio and is void prospectively only,” said the high court's opinion penned by Justice Pro Tem F. Philip Carbullido and concurred by Justices Pro Tem Robert J. Torres and Alberto C. Lamorena III.
Void ab initio means “null from the beginning, as from the first moment when a contract is entered into.”
The high court's decision means that NMI Retirement Fund members who previously received the 3 percent bonus are allowed to retain it.
However, persons who have not yet received the bonus, including Ada, are barred from receiving the bonus in the future.
The justices also determined that Ada's claim for double dipping benefits for the years 2000-2002 is not barred by the applicable statute of limitations.
The justices said because the trial court has not calculated the specific amount of benefits to which Ada is entitled, the case is remanded to the Superior Court with instructions to calculate the amount due and owing to the former lawmaker in accordance with their opinion and to enter judgment accordingly.
According to court documents, Ada began to work as an employee of the Public School System in March 1978. He held various public employment positions up to September 1997, during which he made contributions to the Fund.
In September 1997, Ada retired and began receiving retirement benefits from the Fund.
In January 2000, he left retirement to become an elected member of the Legislature. He then resumed making contributions to the Fund. That same month, his retirement benefits were discontinued.
When Ada ran for office in 1999, a 3-percent retirement bonus was in place for all elected officials pursuant to Public Law 6-41. The 3-percent bonus was repealed in 2003 pursuant to P.L. 13-60.
In January 2008, Ada retired a second time after having lost his re-election bid.
The following month, the Fund administrator wrote Ada a letter outlining his benefits. The benefits did not take into account Ada's time spent as an elected legislator nor any part of the 3-percent bonus.
The Fund asked the Superior Court to review several provisions of the Retirement Act. Ada filed a cross-motion for summary judgment.
On Aug. 26, 2010, Naraja found as constitutional the law on 3-percent retirement bonus. He ruled that Ada is entitled to such bonus for the years 2000 through 2003.
Naraja also concluded that Ada was entitled to double-dipping benefits for the years 2000 through 2007.
The Fund Board of Trustees appealed.
The board, through legal counsel Carolyn M. Kern, argued that the 3 percent bonus is unconstitutional, citing Section 15 of Article II of the NMI Constitution that provides that a member of the Legislature “may not debate on or vote on” a bill in which the member has a financial or personal interest.
In the Supreme Court's decision, the justices said it is reasonable to conclude that when the Legislature enacted the 3 percent bonus, the lawmakers' personal interest in receiving higher retirement benefits for themselves and for a select group of other government officials conflicted with the interest of the general public in maintaining a solvent Fund.
“We therefore hold that the 3 percent bonus is unconstitutional under section 15,” the justices said.
On void issue, the justices said the Fund and its members acted in good faith when they respectively distributed and received funds pursuant to an unconstitutional statute.
“There is no indication from the record that either the Fund or the Fund members believed the 3 percent bonus to be unconstitutional when the bonus were paid, or that bad faith was otherwise involved,” the justices said.
The justices said stripping Fund members of their previously received bonuses at this late date would place those members in the untenable position of paying back funds which they received in good faith and upon which they may have reasonably relied.
“Moreover, recouping the bonuses from Fund members who in all likelihood have spent the money, relied on this income for their livelihood, were not complicit in the pay out of the funds, and relied in good faith on the validity of the enacted statute, would be unreasonable and unfair,” they said.
On the double-dipping issue, the justices said there are no rules or regulations that govern how Fund members may claim double-dipping benefits.
The justices said were no rules or regulations governed the payment, and where Ada was not informed orally or in writing that upon reemployment with the CNMI he had six years to file a claim, the Fund's failure to voluntarily pay Ada double-dipping benefits when he was rehired in 2000 did not clearly repudiate his right to the benefits.
“Such a repudiation did not occur until, at the earliest, Ada received the February 2008 letter stating that he was entitled to retirement benefits but omitting any reference to the double-dipping benefits,” the justices added.