Semdr 
SIXTEENTH CONGRESS OF THE REPUBLIC) 
t0H,;, 01 til' ,~""t., ~ 
OF THE PHILIPPINES 
) 
First Regular Session 
) 
"13 
SEP 10 I\n :05 
SENATE 
Senate Bill No.15 9 6 
INTRODUCED BY SEN. JINGGOY EJERCITO ESTRADA 
EXPLANATORY NOTE 
In 1979, then President Marcos issued P. D. No. 1638 entitled 
"Establishing A New System Of Retirement And Separation For Military 
Personnel Of The Armed Forces Of The Philippines And For Other Purposes" 
which consolidated and enhanced the various laws regarding the retirement of 
officers and members of the Armed Forces of the Philippines (AFP). 
This law provided, among others, for an automatic adjustment of the 
retirement pay to the prevailing scale of base pay of military personnel in the 
active service. As such, the rate of pension will be computed based not on the 
rate of his base pay when the soldier retired but on the current rate of base pay 
as received by those in the activeservioe. 
This adjustment however has caused tremendous pressure on the 
government's annual budget. Arrears in retirees' pensions have becorne common 
and the government is hard-pressed to look for a viable solution. The proposed 
bill is one of the measures aimed to, so to speak, stop the bleeding by removing 
the automatic adjustment provision: 
In view of the foregoing, passage of this bill is earnestly sought. 
Senator 


SIXTEENTH CONGRESS OF THE REPUBLIC) 
OF THE PHILIPPINES 
) 
£'el'w:tr 
($H,;r of titt ~trn'br~ 
First Regular Session 
) 
'13 
SEP 10 An :05 
SENATE 
Senate Bill No. 1596 
INTRODUCED BY SEN. JINGGOY EJERCITO ESTRADA 
AN ACT 
FURTHER AMENDING PRESIDENTIAL DECREE NO. 1638, AS AMENDED, 
OTHERWISE 
KNOWN 
AS 
"ESTABLISHING 
A 
NEW 
SYSTEM 
OF 
RETIREMENT AND SEPARATION FOR MILITARY PERSONNEL OF THE 
ARMED FORCES OF THE PHILIPPINES AND FOR OTHER PURPOSES" 
Be it enacted by the Senate and House of Representatives of the Philippines in 
Congress assembled: 
SECTION 1. Section 17 under Title V of Presidential Decree No. 1638 as 
amended is hereby further amended to read as follows: 
"SECTION 17 .. , When ·an officer or enlisted man is retired 
from the Armed Forces of the Philippines under the provisions of 
this Decree, he shall, at his option, receive a gratuity equivalent to 
one (1) month of base and longevity pay of the grade next higher 
than the permanent grade last held for every year of service 
payable in one (1) lump sum or a monthly retirement pay equivalent 
to two and one-half percent (2 %%) for each year of active service 
rendered, but not exceeding eighty-five percent (85%) of the 
monthly base and longevity pay of the grade next higher than the 
permanent grade last held: Provided, That an officer retired under 
Section 11 or 12 shall be entitled to benefits computed on the basis 
of the base and longevity pay of the permanent grade last held; 
[Provided, further, That such retirement pay shall be subject to 
adjustment on the prevailing scale of base pay of military personnel 
in the active service;] Provided, furthermore, That when he retires, 
he shall be entitled, at his option, to receive in advance and in lump 
sum his annual retirement pay for the first three (3) years and 
thereafter receive his· annual retirement pay payable in equal 
monthly installment as they accrue: Provided, finally, That If he dies 
within the three-year period following his retirement and is survived 
by beneficiaries as defined in his Decree, the latter shall only 
receive the derivative benefits thereunder starting the first month 
after the aforecited three-year period. 
"Nothing in this Section shall be construed as authorizing 
adjustment of pay, or payment of any differential in retirement pay 
to officers and enlisted men who are already retired prior to the 
approval of this Decree as a result of increases in salary of those in 
the active duty 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 duty." 
SEC. 2. Repealing Clause. - All other laws, rules, regulations, orders, 
circulars and memoranda inconsistent with this Act are hereby repealed or 
modified accordingly. 
SEC. 3. Effectivity. - This Act shall take effect immediately upon 
approval. 
Approved, 
! 
~"I , 
,I. _