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THIRTEENTH CONGRESS OF THE 
1 
REPUBLIC OF THE PHILIPPINES 
1 
First Regular' Session 
1 
Introduced by Senator 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 probtem, 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 andfor 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: (I) 
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 
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. 


THIRTEENTH CONGRESS OF THE 
1 
REPUBLIC OF THE PHILIPPINES 
1 
First Regular Session 
1 
S.B. No. 
Introduced by Senator Jinggoy Ejercito Estrada 
AN ACT 
PROVIDING BENEFITS FOR 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. 
Declarafion ofPo/icy. 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 or 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. Vifal and Non-Vifal 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 essentialhital or non-essentialhon-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-essentialhon-vital. The same program shall be offered to 
agencies identified as essential/vital; 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 essentialhital 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. €arly Refiremenf and Voluntary Separation Benefifs. - 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) I 
.2 months time the basic salary for every year of government service should 
the total be less than ten (1 0) 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 (1 4) 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; and 


(d) 1.8 months times the basic salary for every year of government service 
should the total be equal to nineteen (79) 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, hetshe 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 (I) 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, off ice or government-owned or controlled corporation 
concerned as the case may be. 
SECTION 9. Restriction on the Employment and Replacement of Refired 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 officedagencies 
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 (P10,OOO.OO) 
or by imprisonment not exceeding six (6) months or both 
such fine and imprisonment at the discretion of the court. 
SECTION 13. lmplemenfing 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 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; 
Money and property clearance from the agency concerned; and 
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 (‘l5) days from the 
date of submission of the foregoing documents. 
SECTION 14. Compliance and Reporling. 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. Transifory 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 


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1
 
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 
according I y . 
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. BYecfivify. 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.