Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

EIGHTEENTH CONGRESS
Second Regular Session

HOUSE BILL NO. 7461

Introduced by Representatives
HORACIO P. SUANSING, JR. and ESTRELLITA B, SUANSING

AN ACT
PROVIDING FOR A UNIFIED SYSTEM FOR SEPARATION, RETIREMENT, AND
PENSION OF THE MILITARY AND UNIFORMED PERSONNEL (MUP) SERVICES
OF THE REPUBLIC OF THE PHILIPPINES, PROVIDING FUNDS THEREFOR

EXPLANATORY NOTE

Since early 2019, President Rodrigo Duterte has certified as urgent a bill seeking
reforms in the pension system of the military and other uniformed personnel (MUP) proposed
by the Department of National Defense, through a letter written by Defense Secretary Delfin
Lorenzana sent to Senate President Vicente Sotto III last November 22, 2018. According to
Secretary Lorenzana, said bill would create a new Military Pension System that is sustainable
and permanent to retirees, in order to prevent a scenario where the government pays more
for the pension of retired personnel than the salary of those in the active service.?

Inhis fifth State of the Nation Address, President Duterte said that “there is a need
to adjust the pension system as applicable to newly-hired uniformed personnel so as not
to cause a ‘ballooning effect’ that will greatly affect the budget of the military in the years
to come’,” thereby providing further urgency in the passage of the law.

This measure is filed as an answer to the President’s clamor for the support of the
aspirations of the Department of National Defense through the creation of a meaningful
legislation that would address the problems hounding our military and uniformed
personnel, and would aid them in properly attaining the fair and sustainable pension that
they deserve. In recognition of their selfless service to the nation, the passage of this bill
is earnestly sought.

REP. HOBACIO P. SUANSING, JR.  ESTRELLITA B. SUANSING
2 Mistrict, Sultan Kudarat 1" District, Nueva Ec}ja

* Manila Bulletin, “AFP lauds Duterte’s call for passage of military pension reform measur,” July 28, 2020, available at
-hups://m.com,ph/2020/07/28/afp-lauds-dutertes-call-for-passage-of-military-pension-reform-measure!

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Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

EIGHTEENTH CONGRESS
Second Regular Session

HOUSE BILL No. 7464

Introduced by Representatives
HORACIO P. SUANSING, JR. and ESTRELLITA B, SUANSING

AN ACT
PROVIDING FOR A UNIFIED SYSTEM FOR SEPARATION, RETIREMENT, AND
PENSION OF THE MILITARY AND UNIFORMED PERSONNEL (MUP) SERVICES
OF THE REPUBLIC OF THE PHILIPPINES, PROVIDING FUNDS THEREFOR

Be it enacted by the Senate and the House of Representatives of the Philippines in Congress

assembled:

Section 1. Short Title. This Act shall be known as the "Unified System of Separation,
Retirement and Pension of the Military and Uniformed Personnel Act of 2020."

Title T

Declaration of Policy
Sec. 2. Declaration of Policy. The State duly recognizes the indispensable role of military and
uniformed personnel in providing internal and external security, promoting peace and order,
ensuring public safety, and further strengthening local government capability, all aimed
towards the effective delivery of essential services to the citizenry. The State also recognizes
the extraordinary hazards, risks, perils, and dangers that military and uniformed personnel

encounter in the performance of their duties.

Therefore, it shall be the primary concer of the State to provide for all military and uniformed
personnel their adequate remuneration and benefits, including retirement benefits and pension.
The State shall ensure that the retirement benefits and pension scheme of the military and

uniformed personnel is secure, reliable, and sustainable.


Title It
Definition of Terms

Sec. 3. Definition of Terms. - For the purposes of this Act:
a. "Military and Uniformed Services" shall refer to the Armed Forces of the Philippines (AFP),
Philippine National Police (PNP), Philippine Coast Guard (PCG), Bureau of Fire Protection
(BFP), Bureau of Jail Management and Penology (BJMP), Bureau of Corrections (BuCor), and
employees of National Mapping and Resource Information Agency (NAMRIA) who were
Philippine Navy officers and enlisted personnel and members of the defunct Philippine Navy
Coast and Geodetic Survey that became the nucleus of the NAMRIA
b. "New Entrants" shall refer to military and uniformed personnel from the Military and
Uniformed Services who entered the Military and Uniformed Services after the effectivity of
this Act;
c. "Active Members" shall refer to military and uniformed personnel from the Military and
Uniformed Services in the Active Service, and those who shall enter into the Military and
Uniformed Services before the effectivity of this Act;
d. "Active Service" shall mean Active Service rendered by a Military or Uniformed Services
Personnel as a commissioned officer, non-commissioned officer, enlisted personnel, cadet,
probationary officer, trainee or draftee in the Military or Uniformed Services and service
rendered by hinv/her as a civilian official or employee in the Philippine Government prior to
the date of his/her separation or retirement from the Military or Uniformed Services, for which
armed and/or civilian service he/she shall have received pay from the Philippine Government
and/or such others as may hereafter be prescribed by law as Active Service;
Provided, that for purposes of retirement, he/she shall have rendered at least ten (10) years of
Active Service as an officer or enlisted man in the Military or Uniformed Services;
Provided, further, that no period of such civilian government service longer than his/her active
armed service shall be credited for purposes of retirement;
Provided, finally, that service rendered as a cadet, probationary officer, trainee or draftee in the
Military or Uniformed Services shall be credited for retirement purposes with a maximum of
four (4) years, subject to applicable rules and regulations;
e. "Total permanent physical disability" shall mean the anatomical loss or the permanent loss
of use of both hands, of both feet, of both eyes, of both ears or any combination, or loss of
mental faculties, as determined by the medical board created for the purpose:

f. "Survivors" shall mean:


1. Surviving spouse of a deceased Military or Uniformed Services Personnel not legally
separated by judicial decree from the deceased issued on grounds not attributable to
said spouse, and such marriage was contracted during the Active Service of the
deceased’;

Provided, that entitlement of said spouse to benefits under this Act shall terminate upon
re-marriage or co-habitation with another, or the commission of any of the acts
amounting to "physical violence", "sexual violence", "psychological violence", or
“economic abuse" against the biological or adopted children of the deceased as defined
in Republic Act No. 9262, as determined by a Board created for the purpose;
Provided, further, that the conviction of the surviving spouse of any crime which carries
a penalty of imprisonment of more than six (6) years and one (1) day, the conception
of a child after the death of the deceased, or loss of Philippine Citizenship shall
terminate the entitlement of such surviving spouse to benefits under this Act;

2. Surviving legitimate, adopted and illegitimate children of a deceased Military or
Uniformed Services Personnel conceived, adopted or acknowledged prior to separation
or retirement of the parent from active service:

Provided, that entitlement of said children to benefits under this Act shall terminate
when such children attain twenty-one (21) years of age or upon marriage, whichever is
earlier;

Provided, further, that children who suffer from total permanent disability as defined
in this Act, shall be entitled to benefits under this Act for their lifetime;

Provided, finally, that the conviction of the surviving child of any crime which carries
a penalty of imprisonment of more than six (6) years and one (1) day, or loss of
Philippine Citizenship shall terminate the entitlement of such child to benefits under
this Act:

3. In default of those mentioned in sub-paragraphs f (1) and (2) above, surviving parents
of a deceased Military or Uniformed Services Personnel who are primarily dependent
on the deceased for support, or in default thereof, surviving siblings who are under
twenty-one (21) years of age and unmarried;

Provided, that the conviction of the parent or sibling of the deceased for any crime
which carries a penalty of imprisonment of more than six (6) years and one (1) day, or
loss of Philippine Citizenship shall terminate the entitlement of such parent or sibling

to benefits under this Act;


g. "Death or physical disability in line of duty" shall refer to death, illness or injury incurred
while in the Active Service and not attended by misconduct, willful failure, the use of drugs or

alcoholic liquor, or vicious or immoral habits.
Title 11
Applicability

Sec. 4. Applicability. - This Act shall only apply to all new entrants of the Military and

Uniformed Services unless otherwise specified in the succeeding provisions of this Act.

Title IV
Retirement

Sec. 5. Compulsory Retirement. - The following active Military or Uniformed Services
Personnel shall be compulsorily retired:
a. Those who attain the age of sixty-five (65); provided, that he/she has accumulated at least
thirty (30) years of satisfactory Active Service;
b. Those who suffer death in line of duty: provided, that he/she has accumulated at least thirty
(30) years of satisfactory Active Service;
c. Those who incur total permanent physical disability in line of duty: Provided, That he/she
has accumulated at least thirty (30) years of satisfactory Active Service;
d. Those who are killed in action;
¢. Those who are wounded in action and incur total permanent physical disability as a result
thereof;
£, Those subject to attrition, as provided in Section 8 of this Act; provided, that he/she has
accumulated at least thirty (30) years of satisfactory Active Service;
g. Those separated by the appropriate Disciplinary Board under Section 14 of this Act;
provided, that he/she has accumulated at least thirty (30) years of satisfactory Active Service.

Sec. 6. Voluntary Retirement - Upon accumulation of at least thirty (30) years of satisfactory
Active Service, a Military or Uniformed Services Personnel may, at his/her own request, be
retired from Active Service, subject to the approval of appropriate authority as provided in the

Implementing Rules and Regulations of this Act.


Title V

Separation
Sec. 7. Compulsory Separation. - The following Military or Uniformed Services Personnel
shall be compulsorily separated from the Active Service:
a. Those who attain the age of sixty-five (65) without having accumulated at least thirty (30)
years of satisfactory Active Service;
b. Those who suffer death in line of duty but without having accumulated at least thirty (30)
years of satisfactory Active Service;
c. Those who incur total permanent physical disability in line of duty but without having
accumulated at least thirty (30) years of satisfactory Active Service;
d. Those subject to attrition, as provided in Section 8 of this Act, without having accumulated
at least thirty (30) years of satisfactory Active Service; or
¢. Those separated by the appropriate Disciplinary Board under Section 14 of this Act without
having accumulated at least thirty (30) years of satisfactory Active Service.

Sec. 8, Attrition. - The attrition systems of Military or Uniformed Services shall be provided
for in the Implementing Rules and Regulations of this Act.

Sec. 9. Voluntary Separation. - A Military or Uniformed Services Personnel, who has not
accumulated at least thirty (30) years of satisfactory Active Service, may, at his/her own
request, resign from Active Service, subject to the approval of appropriate authority as provided

in the Implementing Rules and Regulations of this Act.

Title VI
Retirement and Separation Benefits
Sec. 10. Gratuity and Retirement Pay. - When a Military or Uniformed Services Personnel is
retired under Title IV of this Act, he/she shall, at his/her option, receive:
a. Gratuity Pay - equivalent to one (1) month of base and longevity pay of the permanent grade
last held for every year of service payable in one (1) lump sum; or
b. Retirement Pay - a monthly retirement pay equivalent to two and one-half percent (2 1/2%)
for each year of Active Service rendered, but not exceeding ninety percent (90%) of the

monthly base and longevity pay of the permanent grade last held;


Provided, further, that when he/she retires, he/she shall be entitled to receive a lump sum equal
to eighteen (18) months of his monthly retirement pay, and thereafter receive his/her annual
retirement pay payable in equal monthly installments upon reaching sixty (60) years of age;

Provided, finally, that if he/she dies before his/her retirement pay begins to accrue, and
survived by beneficiaries as defined in this Act, the latter shall receive only the derivative

benefits thereunder when they accrue.

Pension payments for those retired under Title IV shall commence immediately after their
retirement from the service, except for those retired due to Attrition under Section 5 (),
Honorably Discharged under Section 5 (g), and those who avail of Voluntary Retirement under
Section 6 shall be eligible to receive monthly retirement pay only upon reaching the age of
sixty (60);

Provided, further, that the retirement pay of those that are Killed in Action under Section 5 (4),
and those that are Wounded in Action resulting in Total Permanent Disability shall be
computed at the rate of ninety (90%) of their monthly base and longevity pay regardless of

their years in Active Service;

Provided, finally, that nothing in this Section shall be construed as authorizing adjustment of
pay, or payment of any differential in retirement pay to Military or Uniformed Services
Personnel who are already retired prior to the approval of this Act as a result of increases in
salary of those in the Active Service may have their retirement pension adjusted based on the
rank they hold and on the prevailing pay of military personnel in the Active Service, at the time

of the termination of their recall to Active Service.

Sec. 11. Separation Pay. - Except for those provided for in Section 13 of this Act, when a
Military or Uniformed Services Personnel is separated from the service under Section 7 and
Section 9 of Title V of this Act, he/she, or his/her survivors as defined in this Act, shall receive
a separation pay equivalent to one-month base plus longevity pay of the permanent grade
he/she holds for every year of Active Service: provided, that nothing in this Section shall be
construed as authorizing adjustment of pay, or payment of any differential in separation pay to
Military or Uniformed Services Personnel who are already retired or separated from the service
prior to the approval of this Act as a result of increases in salary granted to Military or

Uniformed Services Personnel in Active Service.


Sec. 12, Survivorship Benefits. - The qualified survivors, as defined in this Act, of a deceased
Military or Uniformed Services Personnel retired under Title IV, and Section 7 (b) and 7 (c) of
Title V of this Act shall be entitled to a monthly annuity equivalent to seventy-five percent
(75%) of his/her monthly retirement pay which he/she was receiving to be divided among them
in equal shares and with the right of accretion; provided, that the minimum monthly annuity to
be received shall be equivalent to fifty percent (50%) of the base and longevity pay of the

permanent grade last held.

Sec. 13. Benefits for Death and Total Permanent Disability in Line of Duty. - A Military or
Uniformed Services Personnel separated under Section 7(b) and 7(c) of Title V of this Act shall
be entitled to a monthly life annuity the amount of which shall be fifty per centum (50%) of
the base and longevity pay computed on the basis of his/her actual rank held at time of death

or disability.

Sec. 14, Separation by the Disciplinary Board. - A Military or Uniformed Services Personnel
referred to and found by the appropriate Disciplinary Board not fit for retention in the Active
Service because of substandard performance, low potentiality, doubtful integrity and/or acts
inconsistent with the best interest of the service shall be separated from the Active Service,
subject to the approval of appropriate Disciplining Authority as provided in the Implementing
Rules and Regulations of this Act;

Provided, that the Disciplining Authority, based on the facts and circumstances of the case,
shall determine whether the subject Military or Uniformed Services Personnel shall be granted
an Honorable Discharge and is entitled to receive benefits under Sections 10 or 11, as
applicable, of Title VI of this Act, otherwise, all benefits under this act shall be forfeited.

Sec. 15. Disability Pension. - A Military or Uniformed Services Personnel retired for disability
which is the proximate result of wounds or injuries received or sickness or disease incurred in
line of duty or as a battle casualty shall receive, in addition to the other benefits under this Act,
Disability Pension fixed as follows:

a. If and while the disability is rated twenty-five percent (25%), the monthly pension shall be
PHP 2,500.00;


b. If and while the disability is rated fifty percent (50%), the monthly pension shall be PHP
5,000.00;

c. If and while the disability is rated sixty percent (60%), the monthly pension shall be PHP
6,000.00;

d. If and while the disability is rated seventy percent (70%), the monthly pension shall be PHP
7,000.00;

e. If and while the disability is rated eighty percent (80%), the monthly pension shall be PHP
8,000.00;

£. If and while the disability is rated ninety percent (90%), the monthly pension shall be PHP
9,000.00; or

g. If and while the disability is rated one hundred percent (100%), the monthly pension shall
be PHP 10,000.00.

Sec. 16. Manner of Increase of Pension Benefits. - The automatic indexing of Gratuity and
Retirement Pay, and Survivorship Benefits of pensioners with the salary increases of active
Military and Uniformed Services Personnel is hereby terminated. Pension benefits shall be
reviewed annually and increases and/or adjustments in Gratuity and Retirement Pay, and
Survivorship Benefits, will be based on the recommendation of the actuary of the Pension Fund
and approved by the Board of Directors of the Fund Manager of the Military and Uniformed
Personnel Retirement Fund (MUPRF).

Title VII
Military and Uniformed Personnel Retirement Fund
Sec. 17. Creation of the Military and Uniformed Personnel Fund Authority, - For the purpose
of carrying out and effecting the declared policy, as provided for in Section 2 hereof, there is
hereby created a government instrumentality with corporate powers as defined in Section 3 (n)
of Republic Act No. 10149 or the GOCC Governance Act of 20111, to be known as the Military
and Uniformed Personnel Fund Authority which shall be organized within six (6) months from

the approval of this Act.

The Authority shall execute its powers and functions through its Board of Directors, in such a
manner, as will, in its judgment, aid to the fullest possible extent in carrying out the aims and

purposes of this Act.


Sec. 18. Board of Directors, Composition. - The powers and functions of the Authority shall
be exercised by the Board of Directors composed by the Chairman and President of the
Authority, which shall be appointed by the President of the Philippines, and ten (10) other
members: four (4) of whom shall be ex-officio Members from the Department of National
Defense, Department of the Interior and Local Government, Department of Justice, Department
of Transportation, Department of Finance and Department of Budget and Management as
designated by the concerned Department Secretary from the undersecretaries of the concerned
Departments; another three (3) shall be appointed by the President of the Philippines from the
banking, finance, investment, and insurance sector, and one (1) shall be appointed by the
President of the Philippines from the legal profession. The Board of Directors shall elect from
amongst themselves a Vice-Chairman. The Members of the Board the Department
Undersecretaries shall hold office for six (6) years without reappointment, or until their

successors are duly appointed and qualified.

Vacancy, other than through the expiration of the term, shall be filled for the unexpired term
only: provided, that, the Chairman and President shall be initially appointed to a six (6) year
term, and one (1) member to a five (5) year term, one (1) member to a four (4) year term, one
(1) member to a three (3) year term, and the representative from the legal profession to an initial

term of two (2) years

Sec. 19. Funding Sources. - Aside trom the initial proposed capitalization, the MUPRF shall
be funded through the following:
a. Mandatory Contributions. - It shall be mandatory for New Entrants and Active Members to
contribute a percentage of their monthly compensation as their personal share to the MUPRF,
the National Government shall allocate its share in the contribution sourced from the annual
General Appropriations Act, allocated as follows:
1. For the first three (3) years after the effectivity of this Act, New Entrants and Active
Members shall contribute five percent (5%) of their monthly base and longevity pay as
personal share, while the National Government shall provide an equivalent of twenty-
two (22%) as its share;
2. After such period, for the next three years. New Entrants and Active Members shall
contribute seven percent (7%), while the National Government shall provide twenty
percent (20%); and


3. For every year thereafter. New Entrants and Active Members shall contribute nine
percent (9%) and the National Government shall provide eighteen percent (18%).
4, Additional funds to cover past service of Active Members subject to the
recommendation of the actuary of the Pension Fund and approved by the Board of
Directors of the Fund Manager of the Military and Uniformed Personnel Retirement
Fund (MUPRF).
b. Additional Sources of Funding. - Additional funds for the maintenance of the MUPRF shall
be sourced from the proceeds derived from the lease, joint development, or disposition of the
assets of the Military and Uniformed Services, and other government properties identified for

that purpose.

Sec. 20. Termination of Other Contributions of the Same Nature. - Upon the effectivity of
this Act, other mandatory contributions by Military and Uniformed Services Personnel in the
same nature and purpose, for their retirement benefits and pension, shall immediately cease

and be subject to the provisions of this Act instead.

Sec. 21. Retirement Grade. - Military and Uniformed Services members, officers and other
ranks, covered under this Act shall be retired in the grade they hold at the time of their

retirement.

Title VIL
General Provisions
Sec. 22. Retired List. - Military and Uniformed Service Personnel retired under Title IV of
this Act shall be carried in the retired list of the applicable Military and Uniformed Services.
The name of a retiree who loses his/her Filipino citizenship shall be removed from the

Retired List and his/her retirement benefits terminated upon such loss.

Sec. 23, Recall to Active Service. —

(1) AFP Personnel carried in the retired list shall be subject to the Articles of War and may be
recalled at any time by the President to Active Service in the permanent grade last held upon
retirement. His/her refusal to perform such duty shall be a ground for court-martial under
Article 97 of the Articles of War and subsequent termination of payments of benefits as

determined by the court martial.


(2) When recalled to Active Service, a retiree shall receive the pay and allowances of the
permanent grade last held and shall continue to be carried in the retired list and shall be eligible

for promotion in the retired list as long as he/she remains in active status.

Sec. 24, Non-Encumbrance of Benefits. - The benefits authorized under this Act, except as
provided herein, shall not be subject to attachment, garnishment, levy, execution or any tax
whatsoever; neither shall they be assigned, ceded, or conveyed to any third person; provided,
that if retired or separated Military or Uniformed Services Personnel who is entitled to any
benefit under this Act has unsettled money and/or property accountabilities incurred while in
the Active Service, not more than fifty percent (50%) of the pension gratuity or other payment
due such Military or Uniformed Services Personnel or his/her survivors under this Act may be

withheld and be applied to settle such accountabilities

Sec. 25. Accrual of Benefits to Personnel Separated by Court Martial. - The benefits
authorized under this Act shall accrue to AFP Personnel separated by court martial action
except when non-entitlement of such benefits is expressly adjudged by the military court and

approved by the approving authority.

Sec. 26. Non-Diminution of Benefits. - Nothing in this Act shall be construed in any manner
to reduce whatever retirement and separation pay or gratuity or other monetary benefits which

any person is heretofore receiving or is entitled to receive under the provisions of existing law.

Title IX
Miscellaneous Provi

Sec. 27, Penal Clause. - Any person found to have participated directly or indirectly in the
commission of fraud, falsification, misrepresentation of facts, collusion or any similar anomaly
in the issuance of any certificate or document for any purpose connected with this Act shall
upon conviction be punished by a fine of not less than the amount defrauded but not more than
threefold such amount and/or imprisonment of not less than six (6) months and one (1) day to
six (6) years and perpetual disqualification from holding public office and from practicing any

profession or calling licensed by the government.

Sec. 28. Rules and Regulations. - Within sixty days (60) days upon the effectivity of this Act,
the Department of Finance, Department of National Defense, Department of the Interior and


Local Government, Department of Justice, Department of Transportation, Department of
Environment and Natural Resources, Government Service Insurance System, and the
Department of Budget and Management, in coordination with the AFP, PNP, PCG, BJMP,
BFP, BuCor and NAMRIA and other relevant offices shall formulate and issue the
Implementing Rules and Regulations necessary for the effective implementation thereof.

‘Sec. 29. Repealing and Modifying Clause. - Presidential Decree No. 1656, Presidential Decree
No. 1638, Republic Act No. 340, Republic Act No. 5976, Republic Act No. 6975, Republic
Act No. 8551, Republic Act No. 9263, Republic Act No. 9993, Republic Act No. 10575, and
all laws, rules and regulations, and other issuances or parts thereof, which are inconsistent with

the provisions of this Act are hereby repealed or modified accordingly.
Sec. 30. Separability Clause. - If any provision of this Act shall be declared invalid or
unconstitutional, the remaining parts or provisions not otherwise affected shall remain in force

and effect.

Sec. 31. Effectivity Clause. - This Act shall take effect fifteen (15) days following its complete

publication in the Official Gazette or in two (2) national newspapers of general circulation.

Approved,