FOURTEENTH CONGRESS OF THE REPUBLIC 
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OF THE PHILIPPINES 
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First Regular Session 
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S E N A T E  
Senate Bill No. 498 
INTRODUCED BY SEN. JINGGOY EJERCITO ESTRADA 
EXPLANATORY NOTE 
For years, the government's manpower has been perceived as bloated 
and overstaffed. This has not only become a source of inefficiency caused by red 
tape, but the link between corruption and government service has become 
inherent. 
In an attempt to address this problem, Congress enacted RA No. 6683 
"An Act Providing Benefits for Early Retirement and Voluntary Separation from 
Government Service" which aimed to downsize the huge government 
bureaucracy by providing ample incentives and benefits to those who wished to 
retire and leave government service. 
However, records would show that less than the estimated number of 
public servants availed of the benefits provided by this law. This can be attributed 
to two reasons: (1) the benefits of said law were not remunerative enough to 
attract government employees to avail of them, compared to the benefits which 
they expect to receive when they reach the mandatory retirement age, and (2) 
the law was enacted at a time when government salaries were scheduled to be 
upgraded. They opted to wait for their salaries to be adjusted based on the 
computation given by the Salary Standardization Law. 
Huge government bureaucracy thus remained and problems related to an 
overstaffed government continued to persist. 
This proposed measure then aims to strengthen RA 6683 by offering not 
only higher benefits but benefits that are computed based on the present salary 
schedule. Also, one of the bigger benefits of this bill is the trimming of the 
bureaucracy without necessarily creating undue insecurity on the part of our civil 
servants. In fact, the bill gives them several options: whether to stay in 
government service, to leave and enjoy the benefits offered herein, or start a 
second career. 
Hence, the immediate passage of this bill is urged. 
c-) Senator 


FOURTEENTH CONGRESS OF THE REPUBLIC 
J 
OF THE PHILIPPINES 
) 
7 
Jl~il- -2 !.: 1 :,' 
First Regular Session 
) 
S E N A T E  
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Senate Bill No. 4 9 8 
INTRODUCED BY SEN. JINGGOY EJERCITO ESTRADA 
AN ACT 
PROVIDING EARLY RETIREMENT AND VOLUNTARY SEPARATION FROM 
THE GOVERNMENT SERVICE, PROVIDING A SYSTEM OF FUNDING 
THEREFORE, AND FOR OTHER PURPOSES. 
Be it enacted by the Senate and House of Representatives of the Philippines in 
Congress assembled: 
SECTION I. Declaration of Policy. It is hereby declared the policy of the 
State to promote economy, efficiency and effectiveness in government 
operations, particularly in the delivery of essential public services. 
For this purpose, the State shall endeavor to streamline government 
functions and to maintain necessary positions to affect a leaner and more 
efficient bureaucracy. To cushion any possible adverse effects on government 
employees in the process of reducing the number of personnel in the 
government, a safety net shall be created through a more attractive and viable 
retirement and separation program. 
SECTION 2. Coverage. This Act shall cover all appointive officials and 
employees of the national government including government-owned ar controlled 
corporations with original charters, as well as the personnel of all local 
government units subject to the results of the study by the Special Committee of 
Voluntary Early Retirement of the Legislative Executive Development Advisory 
Council (LEDAC) as provided in Section 3 of this Act. The benefits authorized 
under this Act shall apply to all regular, temporary, casual, and contractual 
employees, regardless of age, who have rendered a total of at least three (3) 
consecutive years of government service as of the date of separation. The term 
"contractual" as used in this Act does not include experts and consultants hired 
by the agencies for a limited period to perform specific activities or services with 
definite expected output. 
Uniformed personnel of the Armed Forces of the Philippines, including 
those of the Philippine National Police are excluded from the coverage of this 
Act. 
SECTION 3. Vital and Non-Vital Agencies. The Legislative Executive 
Development Advisory Council (LEDAC) shall create a special Committee of 
Voluntary Early Retirement with three (3) members from the Executive Branch, 
and two (2) members from the Congress (one from each Chamber) to study and 
recommend within ninety (90) days after the effectivity of this Act, which 
government agencies and/or units may be considered as essentiallvital or non- 


essentiallnon-essential on the basis of sound management concepts and guiding 
principles to be agreed within the committee. 
The Early Retirement Program shall be automatically offered to al 
employees of agency identified to be non-essentiallnon-vital. The same program 
shall be offered to agencies identified as essentiallvital; Provided, that in no case 
shall this exceed twenty percent (20%) of the total number of employees of said 
agency; Provided further, That application for early retirement of participating 
employees from essentiaVvital agencies to be subject to the approval of the 
agency head with the confirmation of the agency’s Board of Directors, Trustees, 
Administrators or policy making councils, as the case may be. 
SECTION 4. Early Retirement and Voluntary Separation Benefits. - All 
appointive government officials and employees included in the coverage hereof 
who voluntarily elect in writing to be retired or separated from the service and 
whose retirement has been approved under the provisions of this Act shall be 
paid retirement or separation benefits equivalent to the following: 
(a) 1. 2 months time the basic salary for every year of government service 
should the total be less than ten (IO) years; 
(b) 1.4 months times the basic salary for every year of government service 
should the total be equal than ten (1 0) to less than fourteen (14) years; 
(c) 1.6 months times the basic salary for every year of government service 
should the total be equal to fourteen (14) years to less than nineteen (19) 
years; 
(d) 1.8 months times the basic salary for every year of government service 
should the total be equal to nineteen (19) years to less than twenty three 
(23) years; and 
(e) 2 months times the basic salary for every year of government service 
should the total be twenty-three (23) years or more, or the nearest 
equivalent fraction thereof favorably to them on the basic or the highest 
salary which they respectively received in the course of their employment 
in the government: 
Provided, that the phrase “total number of years of government service” shall 
mean the total cumulative years of service despite any interruption thereof due to 
resignation, phase out or lay-off due to operation of law or reorganization, then 
followed by subsequent reappointment irrespective of the length of interruption. 
Provided, further, that in no case shall the benefit be paid to any appointive 
official or employee be less that Ten Thousand Pesos (PlO,OOO.OO); Provided, 
finally, that any appointive official or employee who has previously been found 
guilty in an administrative proceeding and whose rank or salary has been 
reduced shall be paid on the basis of his last salary in accordance with the 
imposed sanctions. 
SECTION 5. Mode of Payment of Retirement Benefits. This early retirees 
will receive their separation benefits under a staggered payment scheme, as 
follows: 
(a) Upon approval of the retiree’s application for early retirement, helshe shall 
receive the initial payment in cash, may be equivalent to, but not 
exceeding, one-year salary including bonuses from the date of approval 
until the end of the same calendar year. 
(b) The balance of computed benefits (net of initial cash benefits) shall be 
paid with interest-earning Treasury Bills, each of which shall have a face 
value of one (1) year salary (including bonuses). Each of the Treasury 


Bills shall mature once. In case of multiple Treasury Bill shall mature after 
every succeeding year from the date of approval of the early retirement, 
until the total amount of benefits are received in full. 
SECTION 6. Additional Benefits. In addition to the benefits herein 
authorized, covered appointive officials and regular employees who retire or 
voluntarily elect to be separated from the service under this bill shall be entitled 
to the return of GSlS personal contributions pertaining to retirement only and the 
payment of corresponding share of the government with the interest earned 
pursuant to existing rules and regulations of the GSIS. They shall likewise be 
entitled to the commutation of unused vacation and sick leaves in accordance 
with existing rules and regulations. 
SECTION 7. Exclusivity of Benefits. An appointive official or employee who 
retires or elects to be separated from the service under this Act shall not be 
eligible for optional retirement with gratuity under Republic Act Nos. 1616 and 
4968 or with pension under Commonwealth Act No. 186, as amended by FW 
660, or under Presidential Decree 1146, as amended, or vice versa. 
SECTION 8. Discretion of Agency Heads to Accept Application for Early 
Retirement. No appointive official or employee shall be separated or retired 
under this Act unless hidher position, agency or office shall have been declared 
as non-vitalhon-essential by the President upon the recommendation of the 
LEDAC Special Committee on Voluntary Early Retirement. In case of agencies 
declared as vital or essential, application for early retirement or voluntary 
separation shall have been accepted by the head of the government agency, 
office or government-owned or controlled corporation concerned as the case may 
be. 
SECTION 9. Restriction on the Employment and Replacement of Retired 
or Separated Personnel. Appointive officials and employees who are retired or 
separated under this Act shall not be eligible for employment in the government 
whether on a permanent, temporary, casual, or contractual status within the 
period of five (5) years after separation unless they refund the benefits they have 
received under this Act. 
SECTION I O .  Option for Retirees. Early retirees shall be given opportunities 
to further earn their income after voluntary separation from the government 
service. They can avail of the following opportunities, strictly for early retirees 
only: 
a) The Civil Service Commission (CSC) shall establish and maintain the 
manpower pool database where the early retirees with special skills may 
register for referral purposes. 
b) The Cooperative Development Authority (CDA) shall establish a special 
program for early retirees who opt to join a cooperative which 
membership and management shall be limited to early retirees under this 
Act. The retirees shall be provided with necessary orientation and training 
on cooperatives upon request. 
c) The early retirees shall be given the option to continue membership with 
the GSlS or to file membership with the Social Security System (SSS) and 
enjoy special benefits like shorter maturation period. 
d) The Asset Privatization Trust (APT) shall establish a program that will 
provide early retirees the option to convert their retirement of separation 
benefits or a portion thereof into stocks or equity in any of the privatized 
government owned or controlled operations. 


e) Government Finance Institutions (GFls) shall establish a concessional 
loan program for early retirees who decide to put up business ventures. 
SECTION 11. System of funding. The positions vacated through the early 
retirement or separation of its incumbent shall be temporarily retained until such 
time that the full amount of early retirement benefits has been paid. The office 
/agencies where these positions come from are authorized to continue to budget 
for the salaries and benefits of participating employees as payment for their initial 
cash benefits from date of approval or early retirement up to the end of the 
calendar year. 
For employees of government-owned or controlled operations, the benefits 
herein granted shall be paid from the internal funds of the respective 
corporations. In no case shall the benefits paid to the employees of government- 
owned or controlled corporations be less than the benefits granted by their 
existing corporate programs, if any. 
For employees of local government units, the benefits shall be paid from the 
available funds of each local government unit, provided that the funds are 
officially appropriated under their regular annual budget. 
A special funding shall be appropriated for the study to be conducted by the 
Special Committee on Voluntary Early Retirement. This fund shall be taken from 
the savings of any of the agencies under the Office of the President. 
SECTION 12. Penalties. Any government official who compels an employee 
under any guise whatsoever to retire or be separated from the government 
service by virtue of this Act or otherwise, shall be punished by a fine of not 
exceeding Ten Thousand Pesos (PlO,OOO.OO) or by imprisonment shall not 
exceeding six (6) months or both such fine and imprisonment at the discretion of 
the court. 
SECTION 13. implementing Rules and Regulations. The implementing 
rules and regulations shall be issued within ninety (90) days from the effectivity of 
this Act by the Civil Service Commission (CSC) in consultation with LEDAC, 
Department of Budget and Management (DBM), GSIS, SSS, GFls, CDA, AND 
APT; Provided, that any provision of the law contrary notwithstanding, the only 
documents or supporting papers to be submitted by appointive officials and 
employees who wish to avail themselves of the benefits under this Act are the 
following: 
a) A duly approved application under oath for early retirement or voluntary 
separation in accordance with this Act, including a statement of the 
number of years of service in the government and the rate of the highest 
salary received; 
b) Money and property clearance from the agency concerned; and 
c) A simplified statement of assets and liabilities, net worth and financial and 
business interest in the case of regular employees: Provided, further, that 
the processing and actual payment of benefits to the appointive officials 
and employees concerned shall be completed within fifteen (15) days 
from the date of submission of the foregoing documents. 
SECTION 14. Compliance and Reporting. Within six (6) months from the 
effectivity of this Act and every six (6) months thereafter, the Department of 
Budget and Management (DBM) 
and the CSC shall, on the basis of the reports of 
the various heads of government offices and agencies, render a report to 


Congress on the number of government employees affected, the type or nature 
of positions involved, the total amount spent and an evaluation thereof. 
SECTION 15. Transitory Provisions. In case of salary adjustments brought 
about by existing and new laws (e.g. Salary Standardization Law), the benefits of 
such salary shall apply to the early retirees from the date of effectivity of such law 
until the year that have full retirement benefits shall have been paid. In which 
case, the cumulation of said additional benefits shall be paid under the separate 
cash or T-bill arrangements. 
SECTION 16. Repealing Clause. All laws, rules and regulations or parts 
thereof, inconsistent with the provisions of this Act are hereby repealed or 
modified accordingly. 
SECTION 17. Separability Clause. If any part, section or provision of this Act 
shall be held invalid or unconstitutional, no other part, section or provision thereof 
shall be affected thereby. 
SECTION 18. Effectivity. This Act shall take effect for a period of two (2) 
years commencing upon its publication in at least two (2) newspapers of general 
circulation. 
Approved.