NINETEENTH CONGRESS                  )
REPUBLIC OF THE PHILIPPINES    )
First Regular session                            )
HOUSE OF REPRESENTATIVES
TIME;L±ftyh_
BY:-
Introduced b
resentative Rufus 8.
HouseBi||No.5338
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.


NINETEENTH CONGRESS
REPUBLIC OF THE PHILIPPINES
First Regular Session
HOUSE OF REPRESENTATIVES
Introduced by Representative Rufus a. Rodriguez
House Bii| ~No.  5338
AN ACT
PROVIDING    EARLY    RETIREMENT   AND   VOLUNTARY   SEPARATION    FROM    THE
GOVERNMENT  SERVICE,  PROVIDING  A  SYSTEM  OF  FUNDING  THEREFORE,  AND
FOR OTHER PURPOSES
Be it erl?ct.ed  by the Senate and  House of Representatives of the Philippines in Congress
assembled:
SECTION  1. Dec/arafi.on of Po/i-cy.  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 effect a leaner and  more efficient bureaucracy.  To cushion
any  possible  adverse  effect  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 on  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.   V7fa/  and  Won-Vi.fa/  Agenci.es.   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
essential/vital  or  non-essential/non-vital  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  all  employees  of
agency  identified   to   be   non-essential/non-vital.   The  same   program   shall   be  offered  to
agencies  identified  as  essential/vital;  Provided,  that  in  no  case  shall  this  exceed  twenty
percent  (20°/o)  of  the  total  number  of  employees  of  said  agency;  Provided  further,  That
application for early retirement of participating employees from essential/vital 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.


SECTloN  4.  Early  Retirement  and  Voluntary  Separation  Benefits.  -  AIl  appo.intiIve
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 times the  basic salary for every year of government service  should  the
total be less than ten (10) years;
(b)  1.4  months times the  basic salary for every year of government service  should  the
total be equal to ten (10) years 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 to be paid to any appointive official
or  employee  be  less  than  Ten  Thousand  Pesos  (P10,OOO.00);  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 Refi.remenf Beneri-fs. 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,  he/she  shall  receive
the initial payment in cash, which 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-earningTreasury 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 Bills, they 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.  Add/.fi-ona/ Benefi.ts.  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 GSIS  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.  Exc/us/.y/.fy  of Benefl-ts.  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 FVV 660, or under Presidential Decree 1146, as
amended, or vice versa.
S;ECTloN 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 his/her
position,   agency  or  office   shall   have   been   declared   as   non-vital/non-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.
SE!CTloN 9. Restriction on the Employment and Replacement Of Retired or Separated
Persome/. 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 10.  Opfi.on for Reti.roes. 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 GSIS 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  or  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 Fundi-ng.  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  offices  /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 of 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.  Pena/ffes.  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
(P10,000.00)  or  by  imprisonment     not  exceeding  six  (6)  months  or  both  such  fine  and
imprisonment at the discretion of the court.
SECTION   13.   /mp/emenfi'ng   Ru/es   and  Regu/afi-ons.   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.  Camp//-ance and Reportr'ng. 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.   7fansi-tory  Proy7.si-ons.   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.   Rapea//.ng   C/aqse.   All   laws,   rules   and   regulations   or   parts   thereof,
inconsistent with the provisions of this Act are hereby repealed or modified accordingly.
SECTION  17. Separabi'/i-fy C/ause.  If any part, section or provision of this Act shall be held
invalid   or  unconstitutjonal,   no  other  part,   section  or  provision  thereof  shall   be  affected
thereby.
SECTION 18. Effect/.y/.fy. 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,