Lumpsum Retirement

A Review on the Retirement Benefit System of the Philippine National
Police: Basis for Proposed Guidelines on

Retirement Gratuity
A Thesis Presented to the

Faculty of Jose Rizal University
School of Law
In Partial Fulfilment
Of the Requirement for the Degree of
Juris Doctor (JD)
By
JANNET T. CAGUIOA
2019
Retirement Gratuity
CHAPTER 1
PRELIMINARY PAGES
ABSTRACT
PNP personnel who will retire from the service, optional or compulsory,
are entitled to retirement benefits such as Terminal Leave (TL) and
Retirement Gratuity (RG). Terminal Leave pay is a benefit given to a retiring
personnel based on the total number of unused leave credits. Retirement
Gratuity is the standard benefit being given as a result of retirement from the
service that comes in two (2) options – lump sum pension or direct pension.
Under the concept of lump sum pension, a retiring PNP uniformed

personnel shall be entitled to receive in advance his retirement pay equivalent
to the sum of the first three (3) years and thereafter, he shall receive his
annual retirement pay that is payable in equal monthly instalments. On the
other hand, a direct pension entitles the retiree to receive his outright
monthly pension right after the effective date of his retirement.
However, the legal controversy lies in the unreasonable different

consequences underlying these two (2) options based on current practice of
the PNP. By practice, if a retiree chooses direct pension scheme on the date
of his retirement and assuming anytime within three (3) years thereafter, the
government implements salary increases, the said retiree shall still benefit
from this wage increase which will be reflected in his succeeding monthly
pensions. This becomes ergo a continuing celebration for a direct pensioner
because he still benefits from wage increases despite retirement --- but this is
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not the case for a lump sum pensioner. If a retiree chooses lump sum
pension, he will receive in advance his 3-year equivalent salary but his
monthly pension after three (3) years shall no longer include the supposed
“pension differential” to cover what he should have received as wage increase
during said lump sum period. The increase that he will receive only begins on
the period after his lump sum without retroactive increase benefit. The lump
sum scheme hence operates as waiver from getting increase in pension within
3-years unlike in case of direct pensioner.
The disparity in the treatment of these retired pensioners is clear. This

difference, particularly in the treatment of lump sum pensioners is
discriminatory which this study seeks to address, improve and reconcile at its
end. Furthermore, the current practice of PNP in the treatment of lump sum
pensioner has no clear operating guidelines. This is the core focus as legal
issue of this research. It will resolve matters necessary for better and more
orderly retirement program implementation in the PNP and shall propose
guidelines that would shed light on its gray areas.
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TABLE OF CONTENTS
CHAPTER 1
Abstract……………………………………………………………………… 2
List of Related Laws and Jurisprudence……………………………… 5
Definition of Terms………………………………………………………. 6
CHAPTER II
Background of the Study………………………………………………… 7
Thesis Statement………………………………………………………… 10
Relevance of the Study ………………………………………………… 11
Scope and Limitation…………………………………………………… 12
Methodology……………………………………………………………… 12
CHAPTER III
Survey of Related Laws, Jurisprudence and Literature…………………….

……………………………………………. 15
Relevant Jurisprudence………………………………………………… 39
Key Findings and Analysis…………………………………………….. 48
CHAPTER IV
Conclusion………………………………………………………………… 72
Recommendations ………………………………………………………. 73
Bibliography………………………………………………………………. 74
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LIST OF RELATED LAWS AND JURISPRUDENCE
1.) Republic Act (RA) No. 6975 - An Act Establishing the Philippine
National Police under a Reorganized Department of the Interior and
Local Government (DILG),”
2.) Presidential Decree No. 765 - Providing for the Constitution of the
Integrated National Police and for other purposes.
3.) Republic Act 8551 - An act providing for the Reform and
Reorganization of the Philippine National Police and for other purposes,
Amending certain Provisions of Republic Act Numbered Sixty-Nine
Hundred and Seventy-Five entitled "an Act Establishing the Philippine
National Police under a Reorganized Department of Interior and Local
Government, and for other purposes.
4.) Republic Act No. 8291 - An Act Amending Presidential Decree No.
1146, As Amended, Expanding And Increasing The Coverage And
Benefits Of The Government Service Insurance System, Instituting
Reforms Therein And For Other Purposes
5.) REPUBLIC ACT No. 10154 - An Act Requiring All Concerned

Government Agencies to Ensure The Early Release of the Retirement
Pay, Pensions, Gratuities and other benefits Of Retiring Government
Employees
6.) Presidential Decree No. 1146 - As Amended, Expanding And

Increasing The Coverage And Benefits Of The Government Service
Insurance System, Instituting Reforms Therein And For Other Purposes
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Retirement Gratuity
DEFINITION OF TERMS
Retirement – the point in which someone stops working, esp. because of

having reached a particular age or because of ill health.
Retirement Benefits – monetary benefits and assistance given to retirees of

PNP
Gratuity – an amount of money given to a retiree or who has rendered service
Lump sum pension – a retiring PNP uniformed personnel shall be entitled to

receive in advance his retirement pay equivalent to the sum of the first three
(3) years and thereafter, he shall receive his annual retirement pay that is
payable in equal monthly instalments
Direct pension – entitles the retiree to receive his outright monthly pension
right after the effective date of his retirement
Civil Service Commission – one of the three Constitutional Commissions of

the Philippines with responsibility over the civil service. It is tasked with
overseeing the integrity of government actions and processes.
Philippine National Police (PNP) – is the armed, civilian national police force
in the Philippines.
Reform – Reform means the improvement or amendment of what is wrong,

corrupt, unsatisfactory, etc.
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I. INTRODUCTION
1. Background of the Study
The Philippine National Police (PNP) originated from the Philippine

Constabulary (PC) which was inaugurated on August 8, 1901, establishing it
as an insular police force under the American regime. On August 8, 1975,
Presidential Decree No. 765 was issued, establishing the Philippine
Constabulary Integrated National Police (PC-INP) as the country’s national
police force. These fragmented and diverse local police units were integrated
into a national police force with the Philippine Constabulary as its nucleus.
After the People’s Revolution in 1986, a new Constitution was

promulgated providing for a police force, which is “national in scope and
civilian in character.” Consequently, Republic Act (RA) No. 6975 entitled, “An
Act Establishing the Philippine National Police under a Reorganized
Department of the Interior and Local Government (DILG),” was signed into law
on December 13, 1990, which took effect on January 2, 1991. Subsequently,
the PNP was operational on January 29, 1991, whose members were formerly
the PC and the INP and the absorption of the selected members from the
major service units of the Armed Forces of the Philippines such as the
Philippine Air Force Security Command, the Philippine Coast Guard,
Philippine Navy and Philippine Army. During this period, the PC-INP
retirement system was under the control of Government Security Insurance
System (GSIS) created by Commonwealth Act No. 186 purposely to insure its
members against the occurrence of certain contingencies in exchange for their
monthly premium contributions. Further, it is a social insurance institution that
provides a defined benefit scheme under the law.
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Thus, to further strengthen the PNP into a highly efficient and competent
police force, RA 8551 entitled “PNP Reform and the Reorganization Act of
1998” was enacted on February 17, 1998, amending certain provisions of RA
6975. This law provides for pertinent retirement provisions just like the
Retirement Benefits, “One Rank Higher” Benefits, Permanent Physical
Disability Benefits, Separation Benefits, Death Benefits and Commutation of
Accrued Leave.
Under Sections 39 and 74 of RA 6975 in relation to Section 34, Police

Commission Officers (PCO) and Police Non-Commissioned Officers (PNCO),
who upon attaining fifty-six (56) years of age with at least ten (10) years of
active service prior to retirement are compulsorily retired from the PNP
service. However, National Police Commission (NAPOLCOM) may allow the
retention in the service of any officer with the rank of Police Chief
Superintendent (PCSUPT), Police Director (PDIR) and Police Deputy Director
General for inextendible period of one (1) year while Sections 40 and 74 of the
same law provides that upon accumulation of at least twenty (20) years of
active service, an officer or non-officer at his own request and with the
approval of the Commission, shall be retired from the service and entitled to
receive benefits provided by law.
Thereafter, sometime in February 1992, the PNP, PC, NAPOLCOM,

DILG, Civil Service Commission (CSC) and the Department of Budget and
Management (DBM) convened and came up with a Board Resolution No. 8, S.
1992 entitled “Resolution Establishing a Retirement and Separation Benefit
System for the Uniformed Personnel of the Philippine National Police.” The
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policies basically rationalized and formalized guidelines on retirement system

and process of PNP personnel in accordance with the provisions of RA 6975
as amended by RA 8551. At this point, the retirement system of the PNP was
under the control and direct supervision of Directorate for Personnel and
Records Management.
Thereafter, by virtue of PNP-NHQ Order No. 09-12 dated August 5,

2010, entitled “Activation of the PNP Retirement and Benefits Administration
Service (PRBS)” established to administer the retirement and separation
benefits of PNP personnel as well as the implementation of plans and
programs to uplift the morale and welfare of the retirees. This office was
created to address the ballooning number of retirees and pensioners.
Retiring PNP members who are due for compulsory or have applied for
optional retirement has the privilege to be relief from current assignment by
voluntary application of “Non-Duty Status (NDS)” three (3) months prior to the
effectivity date of their retirement.1 The PNP members who requested the
same shall still report to his officer for daily attendance but he is exempted
from work assignment. Such retirees will utilize it, in cases he/she needs to
travel to his/her former work to complete his retirement compliance. The
former shall be entitled to receive Terminal Leave or Commutation of Accrued
Leave and Retirement Gratuity or Lump Sum.
Upon completion of the requirements, the same shall be submitted to

PRBS for consolidation and inventory of the documents. Then, it will be
submitted to the Directorate for Comptrollership (DC) for the preparation of
1
NAPOLCOM Resolution No. 2009-183 dated March 25, 2009.
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fund request to the DBM. Thereafter, the DILG will endorse the same to the
DBM for approval and fund release. Upon approval and release by the DBM,
DILG will endorse the availability of fund to the PNP until such time it reaches
the ATM card of every retiree. Under the said procedure, it takes fifty-two (52)
days to reach the retirees ATM card.
I. INTRODUCTION
2. Thesis Statement
The ambiguity in the PNP Retirement Law customarily emanates from

its policies, guidelines and procedures that greatly affect the enjoyment of
pensioners’ benefits. Moreover, there is doubt in the application of the law in
view of the fact that its practice is consistent and deliberately discriminatory.
Under the constitutional provision anchored on the basic principle of

equal protection clause, RA 6975 as amended by RA 8551 provides for the
indexation of pension to base pay when there is an increase in the salary of
active members of the PNP and that the same effect shall be given to the
pensioners. The sentiment of the pensioner, who availed of lump sum pension
when increase in the base pay arises within the three-year period, is valid as it
curtails the enjoyment of their retirement benefits, and difference thereof will
no longer be available. Unlike those who availed of direct pension, it is far
different and opposite of those who availed of lump sum pension. Since the
law is silent about this, diminution of benefit applies.
This research aims to strengthen and ratify equal rights and protection
to lump sum pensioners which the law intends to protect. Specifically it looks
for the answers to the following questions:
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1) What are the observed deficiencies of the retirement system of the PNP?
2) Is there a need for a review of the policies? Why?
3) What could be suggested to address the flaws of the system?
I. INTRODUCTION
3. Relevance of the Study
The law serves as a norm of conduct for its citizens. Its underlying
principles in exercising its authority are to enforce social justice and carry out
truth. The very purpose of the law is to give equal protection to its people
against oppression, discrimination and inequality.
For almost thirty-seven (37) years, the PNP continuously grants

retirement benefits to the retiring personnel nationwide. Its challenge in the
modernization program of the government constantly develops at the hype of
technological advancement and there is undeniable improvement in all
aspects of the system except on the matter of retirement benefits which is the
core of this research. Aside from variance in the treatment of lump sum and
direct pensioner, it bears to note too that in the appropriation of the PNP fund,
only those compulsorily retired are programmed and funded to the exclusion
of those who were optionally retired.
This study is relevant because it will help address the perennial

sentiment of retiring uniformed personnel of the PNP particularly those who
opted to choose the lump sum scheme. The lack of ample guidelines of the
institution may be considered as the key factor causing the confusion,
misinterpretation and misunderstanding among the stakeholders concerned.
This study will attempt its best to resolve this weakness.
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I. INTRODUCTION
4. Scope and Limitation
This study focused on the review of retirement benefits of Philippine

National Police. It also intends to discuss the assumed insufficiencies and
flaws of the system. Lastly, to be significantly beneficial for the target
recipients of the study, this transcends the need for revisiting and improving of
the guidelines in retirement benefits. Other benefits granted to the
aforementioned personnel are not included in the course of discussion.
The target respondents of the study are the uniformed PNP personnel who
are retirees. Other personnel not concerned on the intent of the study are
excluded.
I. INTRODUCTION
5. Methodology
The study reviews the retirement benefits guidelines of Philippine

National Police. Thus, the descriptive method of research shall be utilized.
This method of research according to Jack K. Fraenkel and Norman E. Wallen
(1993) describes an existing relationship between variables and the degree to
which two or more quantitative variables are related and it does so by the use
of a correlation coefficient, similarly, Consuelo G. Sevilla, et.al. (1990) also
states that this design helps one determine the extent to which the different
variables are related to each other and the population of interest.
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Descriptive research involves gathering data that describe events and

then organizes, tabulates, depicts, and describes the data collection (Glass &
Hopkins, 1984). It often uses visual aids such as graphs and charts to aid the
reader in understanding the data distribution. When in-depth, narrative
descriptions of small numbers of cases are involved, the research uses
description as a tool to organize data into patterns that emerge during
analysis.
Descriptive research is applicable to the study since the primary

purposes in employing this method is to describe the nature of a situation as it
exists at the time of the study and to probe the causes of a particular
phenomenon. Accordingly, descriptive research design is a valid method for
researching specific subjects and as a precursor to more quantitative studies.
Whilst there are some valid concerns about the statistical validity, as long as
the limitations are understood by the researcher, this type of study is an
invaluable scientific tool.
Research Instrument
In the process of gathering data from the respondents, a questionnaire

shall be used as tool in the survey. This questionnaire is self-made by the
researcher. With this, data needed for the study will be gathered and
analyzed.
The survey questionnaire has three parts; the first one is on determining
the retirement benefits mostly preferred by PNP retirees. Next is the level of
satisfaction in terms of the guidelines and policies on retirement benefits
system. Last part is the revisiting of the system regarding the insufficiencies
and flaws; and how would it be improved to address the needs of the retirees.
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Statistical Treatment of Data
In the analysis of the data, the descriptive statistics shall be used such
as simple frequency and percent count.
Frequency count refers to the number of times the answer is given by

the respondents.
Percentage is taken by dividing the frequency of an answer by the given

total number of respondents.
The formula is:
P= x100
Where P= Percentage
X= Total responses
100 = Constant N= Total of respondents
For the level of satisfaction in terms of the guidelines and policies on

retirement benefits system:
A Likert scale is commonly used to measure attitudes, knowledge,

perceptions, values,and behavioral changes. A Likert-type scale involves a
series of statements that respondents may choose from in order to rate their
responses to evaluative questions (Vogt, 1999).
O - Outstanding ;
VS – Very Satisfactory ;
S – Satisfactory ;
F – Fair ;
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P – Poor
III. DISCUSSION
A. Survey of Related Laws, Jurisprudence and Literature
Related Provisions of Laws
Indeed, it is inviolable to dissect and analyze different provisions of

laws for the study to have a deeper analysis and view of what this study
targets to resolve. Without such provisions of laws, the rationale of the
questioned lump sum differential would not be illuminated.
However, to have a holistic view of the said retirement benefits, the

researcher must first look on the background of the PNP Organization and the
gradual events which led to the creation the said organization’s retirement
benefits.
The Philippine National Police (PNP) originated from the Philippine

Constabulary or the PC, which was inaugurated on August 8, 1901,
establishing it as an insular police force under the American regime. On
August 8, 1975, Presidential Decree no. 765 was issued, establishing the
Philippine Constabulary Integrated National Police or the PC/INP as the
country’s national police force. These fragmented and diverse local police
units were integrated into a national police force with the Philippine
Constabulary as its nucleus.
After the People’s Revolution in 1986, a new Constitution was

promulgated providing for a police force, which is “national in scope and
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civilian in character.” Consequently, Republic Act No. 6975 entitled, “An Act
Establishing the Philippine National Police under a Reorganized Department
of the Interior and Local government (DILG),” was signed into law on
December 13, 1990, which took effect on January 1, 1991. Subsequently, the
PNP was operational on January 29, 1991, whose members were formerly the
PC and the INP and the absorption of the selected members from the major
service units of the Armed Forces of the Philippines such as the Philippine Air
Force Security Command, the Philippine Coast Guard, Philippine Navy, and
the Philippine Army. Thus, to further strengthen the PNP into a highly efficient
and competent police force, Republic Act No. 8551 entitled “PNP Reform and
the Reorganization Act of 1998” was enacted on February 17, 1998,
amending certain provisions of Republic Act No. 6975.
Pursuant to Republic Act No. 6975 as amended by Republic Act No.

8551, the Philippine National Police, in under the administrative control and
operational supervision of the National Police Commission. Meanwhile, the
NAPOLCOM is an attached agency of the Department of the Interior and
Local Government for policy and program coordination. The Secretary of the
Interior and Local government is mandated to be the Ex- Officio Chairman of
NAPOLCOM.
Further, under Section 23 of Republic Act of Republic Act No. 6875 the
Philippine National Police, which is referred to as the PNP, is hereby
established, initially consisting of the members of the police forces who were
integrated into the Integrated National Police (INP) pursuant to Presidential
Decree No. 765, and the officers and enlisted personnel of the Philippine
Constabulary (PC). Also, for purposes of this law, the officers and enlisted
personnel of the PC shall include those assigned with the Narcotics Command
(NARCOM) or the Criminal Investigation Service (CIS); and those of the
technical services of the AFP assigned with the PC and the civilian operatives
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of the CIS. The regular operatives of the abolished NAPOLCOM Inspection,

Investigation and Intelligence Branch may also be absorbed by the PNP. In
addition, a PC officer or enlisted personnel may transfer to any of the
branches or services of the Armed Forces of the Philippines in accordance
with the provisions of Section 85 of this law.
In order to be qualified for transfer to the PNP units in Metropolitan Manila

and in highly urbanized cities, an individual must have completed not less than
second year collegiate work or its equivalent in training of seventy-two (72)
collegiate units. Anyone who has any pending administrative or criminal case
or has been adjudged liable or convicted of any crime pending appeal shall be
allowed to join the PNP provisionally without prejudice to final judgment by a
body of competent jurisdiction. The permanent civilian employees of the
present PC, INP, Narcotics Command, CIS, and the technical services of the
AFP assigned with the PC, including NAPOLCOM hearing officers holding
regular items as such, shall be absorbed by the Department as employees
thereof, subject to existing laws and regulations.
Moreover, Section 74 of the same law on Retirement provides that

Uniformed personnel covered under this Act shall, for purposes of retirement
pay, be retired in one (1) grade higher than the permanent grade last held:
Provided that they have served for at least one (1) year of active service in the
permanent grade. And under Section 75 of the same law, the monthly
retirement pay shall be fifty percent (50%) of the base pay and longevity pay
of the retired grade in case of twenty (20) years of active service, increasing
by two and one-half percent (2.5%) for every year of active service rendered
beyond twenty (20) years to a maximum of ninety percent (90%) for thirty-six
(36) years of active service and over.
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On the other note, it is inevitable not to mention the kinds of retirement

benefits claims under the Philippine National Police. First, the Compulsory
retirement, under Section 39 and Section 74 of Republic Act No. 6975, the
PCOs/PNCOs, who upon attaining fifty six (56) years of age with at least ten
(10) years of active service prior to retirement are compulsory retired from the
PNP service. However, NAPOLCOM may allow the retention service of any
officer with the rank of PCSUPT, PDIR, and PDDG for unextendble period of
one (1) year. Optional retirement, on the other hand, under Section 40 and
Section 74 of Republic Act No. 6975, upon accumulation of at least twenty
(20) years of active service, an officer or non-officer at his own request and
with the approval of the commission, shall be retired from the service and
entitled to receive benefits provided by law. On Total Permanent Physical
Disability , under Section 35 of Republic Act 8551, an officer or non officer
who is permanently and totally disabled as a result of injuries suffered or
sickness contracted in the performance of his duty as duly certified by the
NAPOLCOM, upon finding and certification by the appropriate medical officer,
that the extent of disability or sickness renders such member unfit or unable to
further perform the duties of his position, shall be entitled to one (1) year
salary to lifetime pension equivalent to eighty percent (80%) of his alary grade.
On Separation Benefits, any officer/ PNCO with less than twenty (20) years
accumulated active service, separated under Section 8 and 9 of Republic Act
6975 shall be entitled to a separation gratuity pay equivalent to one and one
fourth (1 1l4) month of B/P and L/P of the permanent grade last held for every
year of active service or a fraction thereof. On Death Benefits, monthly
pensions of fifty percent (50%) of Base pay and Long Pay of the next higher
grade if at least (20) years of active service. Monthly pension of Fifty percent
(50%) of bBase Pay and Long pay of the last grade if less than (20) years of
active service.
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The requirements of 36 months lump sum, TPPD and Separation Benefits

are the following: Retirement Order, Service Order, Latest Promotion Order,
Certificate of last payment, DC Clearance, DL Clearance, IAS Clearanc,
OMBUDSMAN Clearance, NAPOLCOM Clearance and Statement of Assets
and Liabilities.
Example Computation for 36 months Lump Sum
Rank: SPO3
Date of Requirement: June 3, 2008
Mode or Retirement: Section 39 and Section 74
En Cbl: July 20, 1975
Length of Service: 32-10-13
Long pay: 5th
Computations:
2008 – 6 – 3
1975 – 7 – 20
32-10-13
32 yrs x 2.5 = 80
10 months/ 12 x 2.5
13 days / 365 x 2.5 = .08904
82.1723% percentage
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Allocated to the Service
B/P – 14, 538.00
L/P – 7, 269.00
21, 807.00
X 82, 1723%
17, 919.32 monthly pension
X 36 months
Php 645, 095.52 Amount Due for 36 Lump Sum
On Commutation of Leave Credits, Philippine National Police members

who retire voluntarily or are separated from the service through no fault of
his own and who are not otherwise covered by special laws are entitled to
the commutation of all their leave credits exclusive of Saturdays, Sundays
and Holidays without limitations and regardless of the period when credit
were earned.
Example of Commutation Service
Rank: SPO3
Date of Retirement : June 3, 2008
Mode of Retirement: Section 39 and 74
Enl Cbl: July 20 1975
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Length of Service: 32-10-13
Constant Factor
32x30 =980
10x2.5=25
13x0.8 = 1.04
986.04
Less: Enjoyed/Mand Lv 75.00
Total Lv Credits 911.04
Formula: BP+LPxLv Creditsx 0.0478087
(Constant Factor)
= 14, 538.00 + 7269 = 21, 807x 911.04x
0478087
CAL = 949, 817.79
The requirements for CAL are the following: Retirement Order; Commutation
Order from DPRM or PRO, Updated Service Order, Breakdown of Leave
Credits, Money, Property Clearance from unit; Certification of non-enjoyment
of Mandatory Leave during the period of 1992 and below; Certificate of Last
Payment’ Latest Statement of Assets and Liabilities;DC Clearance; DL
Clearance; IAS Clearance;Ombudsman Clearance and NAPOLCOM
Clearance.
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REPUBLIC ACT NO. 6975
It is otherwise known as the “An Act Establishing the Philippine

National Police under a Reorganized Department of the Interior and
Local Government, and for Other Purposes”. Its purpose is to promote
peace and order, ensure public safety and further strengthen the effective
delivery of the basic services to the citizenry through the establishment of a
highly efficient and competent police force that is national in scope and civilian
in character.
The relevant provisions of the law are as follows:
SECTION 39. Compulsory Retirement. — Compulsory retirement, for

officer and non-officer, shall be upon the attainment of age fifty-six (56):
Provided, That, in case of any officer with the rank of chief superintendent,
director or deputy director general, the Commission may allow his retention in
the service for an unextendible period of one (1) year.
SECTION 40. Optional Retirement. — Upon accumulation of at least
twenty (20) years of satisfactory active service, an officer or non-officer, at his
own request and with the approval of the Commission, shall be retired from
the service and entitled to receive benefits provided for by law.
xxx
SECTION 74. Retirement in the Next Higher Grade. — Uniformed
personnel covered under this Act shall, for purposes of retirement pay, be
retired in one (1) grade higher than the permanent grade last held: Provided,
That they have served for at least one (1) year of active service in the
permanent grade.
SECTION 75. Retirement Benefits. — Monthly retirement pay shall be
fifty percent (50%) of the base pay and longevity pay of the retired grade in
case of twenty (20) years of active service, increasing by two and one-half
percent (2.5%) for every year of active service rendered beyond twenty (20)
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years to a maximum of ninety percent (90%) for thirty-six (36) years of active
service and over.
On the actual application of the Lump Sum Retirement Benefits , the

Philippine National Police has already given the lump sum and pension worth
of 70M pesos to the bereave families and beneficiaries of the 44 fallen Special
Action Force troopers.
In the report from the Directorate for Personnel and Records Management,
as of January 16, 2016 a total of Php70,583,520.58 has already given to the
beneficiaries of the SAF44. A total amount of Php7,682,433.00 were from
Special Financial Assistance under RA 6963; Php9,623,932.27 were from
Commutation of Accumulated Leave (CAL); Php526,801.90 were from
Monthly Pension; and Php1,146,762.62 were from Back Earned Pension.
While NAPOLCOM released an amount of Php14,467,155.00 from Burial and

Gratuity; Php490,193.80 from Monthly Pension (Married only); and
Php1,108,448.57 from Back Earned Pension.
The office of the President gave Php11,000,000.00, each family receive

Php250,000.00. On the other hand, Public Safety Mutual Benefit Fund, Inc.
(PSMBFI) donated a total amount of Php24,537,793.42 also for the
beneficiaries.
On recognition and awards, PSI Gednat G Tabdi and PO2 Romeo C

Cempron were recommended for Medal of Valor (Medalya ng Kagitingan). A
Medal of Valor awardee is entitled to a lifetime monthly gratuity of Twenty
thousand pesos (P20,000.00). This gratuity is separate and distinct from any
salary or pension which the awardee is currently receiving or will receive from
the government of the Philippines. All the SAF44 were posthumously
promoted, 42 of them were given Medalya ng Kabayanihan (PNP
Distinguished Conduct Medal). For the 30 survivors, 29 of them were granted
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special promotion and were given Medalya ng Kabayanihan, however only 25

availed the promotion and four (4) of them opted for regular promotion.
PSUPT Train was granted Medalya ng Kabayanihan. Also, all the 15 wounded
were conferred with Medalya ng Sugatang Magiting (PNP Wounded
Personnel Medal).
On educational assistance, 46 dependent children of the 28 SAF troopers

were given scholarship grants with the following benefits:
· Kindergarten per school year – Php10,000.00
· Elementary education per school year – Php18,000.00
· Secondary education per school year – Php24,000.00
· Vocational per semester – Php18,000.00
· College per semester – Php30,000.00
At the same time, the Memorandum of Agreement between the PNP and
the Asian Institute of Maritime Studies Scholarship (AIMS), 44 Scholarship
Certificate were given to the SAF44 families providing one college scholarship
grant equivalent to 100% tuition fee discount.
On housing assistance, as of January 8, 2015, in coordination with the

National Housing Authority there were 32 units already completed and 24
were still on-going construction. On other assistance, the families received a
total amount of Php26,875,000.00 coming from the Senate of the Philippines,
House of Representatives, other Local Government Units and PNP Special
Assistance Fund. Moreover, GSIS gave Funeral Benefit to each family
amounting to Php20,000.00; Insurance Plan and Healthcare Card sponsored
by San Miguel Foundation, Inc. were received by SAF44 beneficiaries; and
24
Retirement Gratuity
from the Department of Justice (DOJ) Board of Claims, an amount of

Php10,000.00 for each family. (PNP-PIO)
Further, under the Republic Act No. 8291 which is an act amending
Presidential Decree No. 1146, expanding and increasing the coverage and
benefits of the government service insurance system, instituting reforms. The
relevant provisions of the law are as follows:
"(n) Lump sum - The basic monthly pension multiplied by sixty (60);
"(o) Pensioner - Any person receiving old-age permanent total disability
pension or any person who has received the lump sum excluding one
receiving survivorship pension benefits as defined in Section 20 of this Act;
xxx
"RETIREMENT BENEFITS
SEC. 13. Retirement Benefits. - (a) Retirement benefits shall be:
"(1) the lump sum payment as defined in this Act payable at the time of
retirement plus an old age pension benefit equal to the basic monthly pension
payable monthly for life, starting upon expiration of the five-year (5)
guaranteed period covered by the lump sum; or
"(2) cash payment equivalent to eighteen (18) months of his basic monthly
pension plus monthly pension for life payable immediately with no five-year (5)
guarantee.
25
Retirement Gratuity
"(b) Unless the service is extended by appropriate authorities, retirement shall

be compulsory for an employee of sixty-five (65) years of age with at least
fifteen (15) years of service: Provided, That if he has less than fifteen (15)
years of service, he may be allowed to continue in the service in accordance
with existing civil service rules and regulations.
"SEC. 13-A. Conditions for Entitlement. - A member who retires from the
service shall be entitled to the retirement benefits enumerated in paragraph
(a) of Section 13 hereof: Provided, That:
(1) he has rendered at least fifteen years of service;

(2) he is at least sixty (60) years of age at the time of retirement; and
(3) he is not receiving a monthly pension benefit from permanent total
disability.
Under, Republic Act No. 8551 which is an act providing the reform and
reorganization of the Philippine National Police, Section 75 of which is the
provision on retirement benefits:
"SEC. 75. Retirement Benefits. – Monthly retirement pay shall be fifty

percent (50%) of the base pay and longevity pay of the retired grade in
case of twenty (20) years of active service, increasing by two and one-
half percent (2.5%) for every year of active service rendered beyond
twenty (20) years to a maximum of ninety percent (90%) for thirty-six (36)
years of active service and over: Provided, That, the uniformed
personnel shall have the option to receive in advance and in lump sum
his retirement pay for the first five (5) years: Provided, further, That
payment of the retirement benefits in lump sum shall be made within six
(6) months from effectivity date of retirement and/or completion:
Provided, finally, That retirement pay of the officers/non-officers of the
PNP shall be subject to adjustments based on the prevailing scale of
base pay of police personnel in the active service."
26
Retirement Gratuity
On the other note, on the performance of the Internal Control Processes of

the Armed Forces of the Pension System2, the present Pension System of the
Armed Forces of the Philippines caters to a total of more or less 359,456
pensioners and veterans as of March 2002. This includes the pensioners
serviced by the Philippine Veterans Affairs Office (PVAO) and the AFP
Finance Center. PVAO has a total strength of 267, 147 claimants. The AFP
Finance Center is catering to approximately 92, 300 pensioners. AFP Pension
System was instituted in order to give military personnel incentives and
financial security a form of reward or remuneration for their tireless and
dedicated service to the country and its Constitution.
It is governed by a number of legislative mandates. These laws are

Presidential Decree No. 1638, which is otherwise known as the Armed
Forces of the Philippine Military Personnel Retirement and Separation
Decree of 1979, Presidential Decree No. 1650, which provides for the
amendments of Sections 3 and 5 of PD 1638, Republic Act 6948 “An Act
Standardizing and Upgrading the Benefits for Military Veterans and Their
Dependents”, and Republic Act 7696, “An Act Amending Certain Sections of
RA 6948. But, the true spirit of these legislations lies in the execution and
implementation of the laws. Efficiency of the system’s actual administration
gives an in-depth sense of the objectives of the statues.
The assessment of the system of administration will determine whether

the laws on pension and retirement system of the Armed Forces of the
Philippines and that of the Philippine Veterans really served the interests of
the retirees, the government, and the national community as a whole.
Performance evaluation will show whether goals and objectives of the
decrees have been achieved.
2
http://www.ndcp.edu.ph/index.php/library/thesis-1608/
27
Retirement Gratuity
All these years, the system has been primarily evaluated in terms of
financial performance only. However, at present, it has encountered a
number of recurring problems that pertains to the internal control processes,
is therefore considered necessary. Extensive study should be done in order
to address the recurring problems of the existing AFP Pension System in
order to operate more effectively, efficiently and to the satisfaction of the
pensioners and veterans that aims to serve.
The objective of this study is to evaluate the implementation of the

internal control processes of the present AFP Pension system, and if
necessary come up with the recommendations in order to have a system that
provides for a more efficient, effective and responsive in delivering the
benefits and pensions of the retirees and veterans. In the assessment, the
tentative assumption is whether the types of respondents and the modes of
pension distribution influence the implementation of the internal control
processes of the said pension system.
The research design used is descriptive and evaluative research.

Survey and content analysis of related documents were used as the data
collection method. The sample was chosen in a stratified random sampling
scheme among pensioners of the Armed Forces of the Philippines, veterans
under Philippine Veterans Affairs Office, and internal control personnel of the
different departments involved in the AFP Pension System.
As a framework of analysis, the types of respondents and the different

modes of distribution of pension claims were considered the independent
variables. The implementation of the internal control process comprised the
dependent variable. Satisfaction, Efficiency and Effectiveness were the
performance categories to which the implementation of the internal control
processes of the AFP Pension System was evaluated.
28
Retirement Gratuity
Results of the study showed that the overall performance evaluation of

status of the implementation of the present AFP Pension systems in
inefficient, ineffective, and has not provided for the satisfaction of the
beneficiaries.
Seven (7) alternative courses of action were considered in order to

address the inefficiencies and ineffectiveness of the present system:
1) Additional policies and procedures need to be implemented to

improve the Local Pick-up mode of delivery of pension checks.
2) Additional policies and procedures for the improvement of the mailing

systems of delivery of pension payments.
3) Full implementation of the banking system as the exclusive mode of

distribution of pension claims to the retirees and veterans.
4) Complete cleansing, updating and upgrading of the computerized

pension databases.
5) On time bank reconciliation should be properly implemented. This

involves periodic accountability and verification of actual vs. recorded
balances. Observance of proper transaction authorization and execution
should also be implemented.
6) Further research on the change to a better system, possibly, the

integration of the Pension and Gratuity Branch of the AFP Finance
Center to PVAO.
7) Establishment of a Pensioner Help Desk that will handle all pensioner’s and
veteran’s complaints, follow-ups and inquiries. This help desk should be
interconnected through a computerized network to all departments and
agencies involved in the AFP Pension system.
29
Retirement Gratuity
Moreover, under the Philippine National Police Memorandum Circular

Number 2014-014, the guidelines and procedures for the early release of
retirement pay, pensions, gratuities and other benefits of retiring PNP
personnel are provided. The implementation of this new system aims to
reciprocate the selfless and dedicated services rendered by the retirees while
they were still in the active service.
The thrust of the government is to ensure timely and expeditious release

of retirement pay, pensions, gratuities, and other benefits of all retiring
employees of the government through RA No. 10154. The PRBS was
activated in accordance with Republic Act No. 6975 as a national
administrative support unit which serves as a “one-stop-shop” for the concerns
of retired PNP personnel and their beneficiaries. Unfortunately, PRBS is still in
its way to becoming the ideal “one-stop-shop”. Retirees are still required to
submit their individual folders with complete documentary requirements to
process their retirement claims. An incomplete documentary requirement
hampers the processing of retirement claims. This is the main reason why
most of the PNP retirees were not able to receive on time their retirement
benefits. For Calendar Year 2013, only 204 or 11% of the 1,853 total numbers
of compulsorily retired PNP personnel received their retirement benefits on
time. Records show that there are more unfunded retirement benefits of
compulsory retirees from CY 2011 to 2013 when the processing was done by
PRBS as compared to CY 2001 to 2010 when the processing was done by
RPHRDD’s or Administrative Officers. For CY 2001 to 2010, a total of 116
Terminal Leave (TL) and 990 Retirement Gratuity (RG) were unfunded while
for CY 2011 to 2013, a total of 792 terminal leave and 1,308 retirement
gratuity were unfunded. In order to address the problem, mandatory
processing of retirement claims must be returned back to the RPHRDDs or
30
Retirement Gratuity
Administrative Officers who have direct jurisdiction over retiring PNP

personnel. At least one year prior to the effectivity of retirement of the retiring
PNP personnel, RPHRDD/ADMOs will direct the retiring PNP personnel to
submit the mandatory documentary requirements for them to process and
endorse to PRBS that will attach the mandatory clearances to process their
retirement claims. Integration/linkage of system within concerned offices/units
is another way to ensure that the set period for the standard processing is
being observed.
The Guidelines and Procedures in Processing Retirement Benefits are as

follows: 1) One year prior to the effective date of retirement, RPHRDD/ADMOs
shall update the service record as well as the breakdown of leave credits of
the retiring PNP personnel to be submitted to the Records Management
Division of DPRM (RMD, DPRM). RPHRDD/ADMOs shall designate a Police
Commissioned Officer (PCO) to assist the retiring personnel in the processing
of their claims; RPHRDD/ADMOs shall require the retiring PNP personnel to
submit the following: a) Latest Statement of Assets and Liabilities Net Worth
(SALN); b) Four pieces of 2x2 picture; c) Photocopy of PNP ID; d) Non-Money
Accountability Clearance from last assignment; e) Non-Property Accountability
Clearance from last assignment; f) Affidavit of Authorization to Deduct
authorizing the PNP to deduct the total amount of their accountabilities from
their Retirement Benefits (for those with accountabilities); g) Affidavit of
Undertaking of Legal Beneficiaries certifying the list of his/her beneficiaries
with supporting documents such as Marriage Contract and Birth Certificates of
Children from National Statistics Office; and h) Affidavit of Undertaking that
he/she has no pending criminal investigation or prosecution in relation to R.A.
No. 3019 or the AntiGraft and Corruption Practices Act. Page 4 of 15
RPHRDD/ADMOs shall advise retiring personnel with pending cases to avail
31
Retirement Gratuity
of Outright or Direct Pension instead of Lump Sum Benefits. 2) Nine months

prior to the effective date of retirement of PNP Personnel, the following PNP
Offices/Units shall perform the following tasks: a) DPRM: a.1 Issue Retirement
Order and provide authenticated copies to all concerned Offices/Units; a.2
Issue Service Record and provide authenticated copies to all concerned
Offices/Units; a.3 Issue Breakdown of Leave Credits and provide
authenticated copies to all concerned Offices/Units; a.4 Issue Commutation of
Leave Order and provide authenticated copies to all concerned Offices/Units;
a.5 For Optional Retirement, shall issue Retirement Order whose effectivity
shall be every first date of the month for better accounting of retirement
benefits; and a.6 Provide PRBS and concerned PROs/NSUs with the list of
PNP personnel with pending administrative cases with status on a monthly
basis. b) DL: The functional Offices/Units of DL such as the Logistics Support
Service (LSS), Firearms and Explosives Office (FEO) of Civil Security Group
(CSG), Communications and Electronic Service (CES); and concerned
Logistic Officers of PROs/NSUs shall submit on a monthly basis to DL in
consolidated format the list of PNP personnel with property accountabilities.
b.1 Upon receipt of Retirement Order, shall issue DL Clearance/ Certificate of
Non-Property Accountability to retiring personnel without property
accountabilities and provide authenticated copies to all concerned
Offices/Units; b.2 Issue Certificate of Property Accountabilities to retiring
personnel with property accountabilities and provide authenticated copies to
all concerned Offices/Units; b.3 For retiring personnel with property
accountabilities, 15 days upon receipt of Retirement Order shall direct the
Board of Survey of concerned PROs/NSUs to convene and submit a
Resolution within two months to determine the amount of accountabilities and
inform same that it can be settled through cash payment or through an
Authorization to Deduct; and b.4 Direct the concerned Board of Survey to
recommend to RPHRDD/AdmO of PROs/NSUs to file appropriate
32
Retirement Gratuity
administrative, civil and criminal cases against retiring PNP personnel found to
be liable and/or those who refuse to acknowledge and/or settle their property
accountabilities. Page 5 of 15 c) DC: The functional Offices/Units such as the
Finance Service (FS), PNP Provident Fund (PNPPF) and concerned Budget
and Fiscal Officers of PROs/NSUs shall submit the list of PNP personnel with
money accountabilities to AAS, Management Division of DC. c.1 Upon receipt
of Retirement Order, shall issue DC Clearance / Certificate of Non-Money
Accountability to retiring personnel without money accountabilities and provide
authenticated copies to concerned Offices/Units; and c.2 Issue Certificate of
Money Accountabilities stating therein the amount of accountabilities to
retiring personnel with money accountabilities and provide authenticated
copies to all concerned Offices/Units. d) PROs and NSUs: d.1 Direct the
concerned retiring PNP personnel to submit the complete mandatory
documents for TL and RG claims; d.2 Submit the list of retiring PNP personnel
with pending administrative cases to DLOD, DPRM and PRBS. Require the
retiring PNP personnel with pending cases to submit the documents for
Outright Pension instead of Retirement Gratuity claim; d.3 Submit the list of
retiring PNP personnel with money and property accountabilities to DL and
DC; d.4 Fifteen days upon receipt of Retirement Order, shall direct the Board
of Survey to convene and to submit the Resolution within three months the
amount of money and/or property accountabilities to DL and/or DC; and d.5
Upon recommendation of the Board of Survey, shall file appropriate
administrative, civil and criminal charges to retiring PNP personnel found to be
liable and/or those who refuse to acknowledge and/or settle their property
accountabilities. e) PRBS: e.1 Upon receipt of Retirement Order, provide the
retiring PNP personnel the Letter of Introduction (LOI) to open their PNP ATM
Pension Account with the nearest Land Bank of the Philippines (LBP). Further,
require the retiring PNP uniformed personnel to conform/allow the LBP to
maintain a minimum amount of One Hundred Pesos (Php100.00) to avoid
33
Retirement Gratuity
closure of the said account to be used for crediting of their Retirement

Benefits and pension; e.2 Incorporate in the LOI that the retiring PNP
personnel conforms/allows the LBP to maintain a minimum amount of One
Hundred Pesos (Php100.00) to avoid closure of their ATM Pension Account;
Page 6 of 15 e.3 Require the retiring PNP personnel to report to PRBS or
PRBU on the 34th month from retirement date for accounting purposes and to
show proof of life to start the crediting of their monthly pension in their PNP
ATM Pension Account; and e.4 Submit to PNPFS on a monthly basis the list
of retiring PNP personnel with their corresponding PNP ATM Pension Account
(for uniformed personnel) and personal bank account (for NUPs) to credit the
Retirement Benefits; f) Internal Affairs Service: f.1 Upon receipt of Retirement
Order, direct regional satellites and concerned PROs/NSUs to submit the list
of PNP personnel with pending cases; and f.2 Issue IAS Clearance and
provide authenticated copies to all concerned Offices/Units. g) PNP Finance
Service: Submit on a monthly basis to AAS, Management Division of ODC the
list of PNP personnel with outstanding loan balance to Provident Fund and
other money accountabilities as their reference to issue Certificate of Non-
Money Accountabilities or DC Clearance. g.1 Upon receipt of Retirement
Order, direct regional satellite to submit the list of retiring PNP personnel with
money accountabilities; and g.2 Issue Certificate of Last Payment with amount
of accountabilities (if there is any) and provide authenticated copies to all
concerned Offices/Units. 3) Six months prior to the effective date of retirement
of PNP Personnel, the following PNP Offices/Units shall perform the following
tasks: a) PROs and NSUs: a.1 Ascertain the completeness, authenticity,
accuracy and consistency of data reflected in the submitted documents for TL
and RG claims; a.2 RPHRDD/ADMOs shall attach to the submitted
documents the authenticated copies of the following: a) Appointment /
Absorption Order; and b) Latest Promotion Order a.3 Submit the two (2)
folders with complete documentary requirements to PRBS or its regional office
34
Retirement Gratuity
for processing of TL and RG claims; b) PRBS: Page 7 of 15 b.1 Stamp in the

received copy the date, time, and the name of the person who received the
complete documents for processing of retirement benefits; b.2 Ascertain the
completeness, authenticity, accuracy and consistency of data reflected in the
submitted documents; b.3 Attach the other mandatory clearances to the
individual TL and RG claims folders; b.4 Prepare the computation/s of the
amount of TL/RG claims and reflect the bank account (PNP ATM Pension
Account for uniformed personnel and personal account for NUP) of the retiring
PNP personnel; b.5 Prepare the Disbursement Vouchers (DVs) for TL/RG
claims with necessary deduction (for retiring personnel with accountabilities
who acknowledges and authorized the PNP to deduct it from retirement
benefits) and reflect the bank account (PNP ATM Pension Account for
uniformed personnel and personal account for NUP) of the retiring PNP
personnel; and b.6 Prepare separate DVs for each accountability or obligation
which shall be deducted from the Retirement Benefits with the corresponding
sum total not exceeding the total receivable Retirement Benefits of the retiree.
The following shall be the payees in the DVs: b.6.1 For the Money
Accountabilities: b.6.1.a The PNP Provident Fund for PNP personnel with
obligations to the PNP Provident Fund; and b.6.1.b The Bureau of Treasury
for retiring PNP personnel with Salary Overpayments b.6.2 The Bureau of
Treasury shall be the payee for Property Accountabilities 4) The retiring PNP
Uniformed personnel shall perform the following: a) 1 year prior to the
effectivity date of retirement: a.1 Turn in any PNP property/equipment and
secure a NonProperty Accountability Clearance as well as
RSAO/PSAO/MSAO Clearances. - to be submitted to RPHRDD/Admin Officer
or PRBU who will transmit the same to DL; copy furnished PRBS for issuance
of DL clearance / Certificate of Non-Property Accountability a.2 Settle money
accountabilities and secure a Non-Money Accountability Clearance. - to be
submitted to RPHRDD/Admin Officer or PRBU who will transmit the same to
35
Retirement Gratuity
DC; copy furnished PRBS for issuance of DC clearance / Certificate of Non-

Money Accountability Page 8 of 15 PNP personnel with money and/or
property accountabilities must acknowledge the same. The outstanding
money and property accountabilities of PNP personnel shall be determined by
the Board of Survey, which shall notify the personnel concerned of its findings
regarding his/her liability. It can be settled through cash payment or through
an Authorization to Deduct. The latter option requires the concerned
personnel to execute a written affidavit authorizing the PNP to deduct the total
amount of their accountabilities from their Retirement Benefits. The PNP,
through the recommendation of the Board of Survey to RPHRDDs/AdmOs,
shall file appropriate administrative, civil and criminal, cases against retiring
PNP personnel found to be liable and those who refuse to acknowledge
and/or settle their accountabilities. a.3 Update Service Record in coordination
with RPHRDD/Admin Officer. - to be submitted to RPHRDD/Admin Officer
who will transmit the same to RMD, DPRM a.4 Update Breakdown of Leave
Credits in coordination with RPHRDD/Admin Officer. - to be submitted to
RPHRDD/Admin Officer who will transmit the same to RMD, DPRM a.5 Ask
RPHRDD/Admin Officer to authenticate Promotion Orders. - to be submitted
to RPHRDD/Admin Officer who will transmit the same to RMD, DPRM
Applicable only to PNP retiring personnel whose Promotion Orders are issued
at the PROs. All Promotion Orders issued by DPRM shall be authenticated by
RMD, DPRM. a.6 Submit latest Statement of Assets and Liabilities Net Worth
(SALN) to RPHRDD/Admin Officer. - RPHRDD/Admin Officer will transmit the
same to RMD, DPRM All retiring personnel are required by law to file their
ending SALN as of their last day in government service not later than 30 days
after their retirement to be administered by their respective RPHRDD/Admin
Officer a.7 Submit four pieces of 2x2 pictures and authenticated photocopy of
PNP ID to RPHRDD/Admin Officer - RPHRDD/Admin Officer or PRBU will
transmit the same to PRBS b) Upon receipt of Retirement Order Page 9 of 15
36
Retirement Gratuity
Secure the Letter of Introduction from the PRBS/PRBU and submit it to the
nearest branch of LBP for opening of PNP ATM Pension Account which will
be used for the payment of their Retirement Benefits (TL and RG). Retiring
PNP personnel must conform/allow the LBP to maintain a minimum amount of
One Hundred Pesos (Php100.00) to avoid closure of their PNP ATM Pension
Account. b. Guidelines and Procedures in the Payment of Retirement
Benefits. The pertinent requirements and procedures are as follows: 1) Not
later than 90 days prior to the effective date of retirement of PNP Personnel,
the following PNP Offices/Units shall perform the following tasks: a) DC: a.1
Submit to DBM the SBR for the release of funds to cover retirement benefits
chargeable against the Pension and Gratuity Fund together with the following:
a.1.1 Documents listed in the prescribed Checklist of Documentary
Requirements shown as Annex A in this Circular; and a.1.2 Retirement and
Pension Benefits Section of Fiscal Division, ODC shall prepare the List of
Actual Retirees to be Paid (LARP) in the format prescribed under Annex B.
The LARP shall contain the following information: • Names of the actual
retirees categorized into compulsory or optional; • Name of Government
Servicing Bank (GSB), the Branch, Address and Savings Account Number; •
Position, Title and Item Number of NUP; • Rank of Uniformed Personnel
pursuant to Section 74 of RA 6975: Retirement in the Next Higher Rank; •
Date of birth, original appointment and retirement of concerned PNP
personnel; • Highest Monthly Salary per Notice of Salary Adjustment (NOSA
for NUP and Base Pay in the next higher rank for Uniformed Personnel); •
Gross amount of retirement claim, deductions and net amount due; • TLB
based on number of leave credits earned; and Page 10 of 15 • RGB based on
total creditable services and number of gratuity months. a.2 Upon receipt of
the SARO, the Accounting Division of DC shall obligate the amount of
retirement benefits approved/released by the DBM. Once obligated, the PNP
shall commence the disbursement within thirty (30) days from the actual date
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Retirement Gratuity
of retirement of the PNP retiree. b) FS: b.1 Issue only one ADA, equivalent to
the total amount per List of Actual Retirees to be Paid (LARP) for Direct
Payment of Retirement Benefits. The following procedures shall be observed
in issuing the ADA (the format is shown in Annex C); b.2 For uniformed
personnel, prepare individually the ADA using the PNP ATM Pension account
of the retiring PNP personnel submitted by PRBS. For NUP, prepare their
MDS check; b.3 Authorize the LBP to debit the Special MDS Account using
the ADA. The ADA shall be co-signed by TDC and D, FS; b.4 Deduct the
retiree’s outstanding accountabilities with government institutions from his/her
TL/RG benefits covered by SARO/NCA upon authorization from the
concerned PNP retiree and prepare the corresponding MDS check as
payment; b.5 Issue Official Receipt as the payment to the outstanding
accountabilities and forward the same to PRBS to be given to concerned
retiring PNP personnel; and b.6 Submit to PRBS copy furnished DC and DL
the Report of Payment of Retirement Benefits in a monthly basis which
reflects the list of PNP retiring personnel including the date of crediting of their
Retirement Benefits to their PNP ATM Pension Account as well as the
deductions made for those with accountabilities. c) PRBS: Upon receipt from
FS of Report of Payment of Retirement Benefits as well as Official Receipt
(OR) as payment for the outstanding accountabilities with government
institutions, PRBS will forward the said OR and inform the concerned retiring
personnel that his/her Retirement Benefits are already credited to his/her PNP
ATM Pension account.
Lastly, the Retirement and Separation Benefits of the Uniformed

Personnel of the PNP are the following
a. Compulsory Retirement. It shall be upon attainment of age fifty-six

(56) for officer and non-officer: Provided, That, in case of any officer with the
rank of Chief Superintendent, Director Or Deputy Director General, the
38
Retirement Gratuity
Commission may allow his retention in the service for an inextensible period
of one (1) year.
b. Optional Retirement. Upon accumulation of at least twenty (20)

years of satisfactory active service, an officer or non-officer, at his own
request and with the approval of the Commission, shall be retired from the
service and entitled to receive benefits provided by law (Ref: Sec 40 RA
6975).
c. Total Permanent Physical Disability (TPPD). An officer or non-

officer who is permanently and totally disabled as a result of injuries suffered
or sickness contracted in the performance of his duty as duly certified by
National Police Commission, upon finding and certification by the
appropriate medical officer, that the extent of the disability or sickness
renders such member unfit or unable to further perform the duties of his
position, shall be entitled to one (1) year salary and lifetime pension
equivalent to eighty percent (80%) of his last salary, in addition to other
benefits as provided under existing laws.“Should such member who has
been retired under permanent total disability under this section die within five
(5) years from his retirement, his/her surviving legal spouse of if there be
none, the surviving dependent legitimate children shall be entitled to the
pension for the remainder of the five(5) years guaranteed period.” (Ref: Sec
73, RA 6975as amended by Sec 35, RA 8551).
Related Jurisprudence
In order to dissect the very backbone of the rationale of this study is to

digest and discuss the cases involving the lump sum retirement fees.
39
Retirement Gratuity
In the infamous case of Supreme Court en banc decision re Manilas Finest

Association3 the case postures that R.A. No. 6975 clearly abolished the INP
and created in its stead a new police force, the PNP. Prescinding therefrom,
petitioners contend that since the PNP is an organization entirely different
from the INP, it follows that INP retirees never became PNP members. Ergo,
they cannot avail themselves of the retirement benefits accorded to PNP
members under R.A. No. 6975 and its amendatory law, R.A. No. 8551.
In this case, a flashback at history has been discussed. As may be

recalled, R.A. No. 6975 was enacted into law on December 13, 1990, or just
about four (4) years after the 1986 Edsa Revolution toppled down the
dictatorship regime. Egged on by the current sentiment of the times generated
by the long period of martial rule during which the police force, the PC-INP,
had a military character, being then a major service of the Armed Forces of
the Philippines, and invariably moved by a fresh constitutional mandate for the
establishment of one police force which should be national in scope and, most
importantly, purely civilian in character, Congress enacted R.A. No. 6975
establishing the PNP and placing it under the Department of Interior and Local
Government. To underscore the civilian character of the PNP, R.A. No. 6975
made it emphatically clear in its declaration of policy the following:
Section 2. Declaration of policy - It is hereby declared to be the policy of the

State to promote peace and order, ensure public safety and further strengthen
local government capability aimed towards the effective delivery of the basic
services to the citizenry through the establishment of a highly efficient and
competent police force that is national in scope and civilian in character.
The police force shall be organized, trained and equipped primarily for the
performance of police functions. Its national scope and civilian character shall
be paramount. No element of the police force shall be military nor shall any
3
Supreme Court en banc decision re Manilas Finest Association
40
Retirement Gratuity
position thereof be occupied by active members of the [AFP]. (Emphasis and

word in bracket supplied.)
Pursuant to Section 23, supra, of R.A. No. 6975, the PNP initially
consisted of the members of the police forces who were integrated into the
INP by virtue of P.D. No. 765, while Section 86 of the same law provides for
the assumption by the PNP of the police functions of the INP and its
absorption by the former, including its appropriations, funds, records,
equipment, etc., as well as its personnel. And to govern the statute's
implementation, Section 85 of the Act spelled out the following absorption
phases:
Phase I - Exercise of option by the uniformed members of the [PC], the PC

elements assigned with the Narcotics Command, CIS, and the personnel of
the technical services of the AFP assigned with the PC to include the regular
CIS investigating agents and the operatives and agents of the NAPOLCOM
Inspection. Investigation and Intelligence Branch, and the personnel of the
absorbed National Action Committee on Anti-Hijacking (NACAH) of the
Department of National Defense to be completed within six (6) months from
the date of the effectivity of this Act. At the end of this phase, all personnel
from the INP, PC, AFP Technical Services, NACAH, and NAPOLCOM
Inspection, Investigation and Intelligence Branch shall have been covered by
official orders assigning them to the PNP, Fire and Jail Forces by their
respective units.
Phase II - Approval of the table of organization and equipment of all

bureaus and offices created under this Act, preparation and filling up of their
staffing pattern, transfer of assets to the [DILG] and organization of the
Commission, to be completed within twelve (12) months from the effectivity
date hereof. At the end of this phase, all personnel to be absorbed by the
41
Retirement Gratuity
[DILG] shall have been issued appointment papers, and the organized
Commission and the PNP shall be fully operational.
The PC officers and enlisted personnel who have not opted to join the
PNP shall be reassigned to the Army, Navy or Air Force, or shall be allowed to
retire under existing AFP rules and regulations. Any PC-INP officer or enlisted
personnel may, within the twelve-month period from the effectivity of this Act,
retire and be paid retirement benefits corresponding to a position two (2) ranks
higher than his present grade, subject to the conditions that at the time he
applies for retirement, he has rendered at least twenty (20) years of service
and still has, at most, twenty-four (24) months of service remaining before the
compulsory retirement age as provided by existing law for his office.
Phase III - Adjustment of ranks and establishment of one (1) lineal roster of
officers and another for non-officers, and the rationalization of compensation
and retirement systems; taking into consideration the existing compensation
schemes and retirement and separation benefit systems of the different
components of the PNP, to ensure that no member of the PNP shall suffer any
diminution in basic longevity and incentive pays, allowances and retirement
benefits due them before the creations of the PNP, to be completed within
eighteen (18) months from the effectivity of this Act.
Upon the affectivity of this Act, the [DILG] Secretary shall exercise
administrative supervision as well as operational control over the transferred,
merged and/or absorbed AFP and INP units. The incumbent Director General
of the PC-INP shall continue to act as Director General of the PNP until -
replaced '. (Emphasis and words in brackets supplied.)
From the foregoing, it appears clear to us that the INP was never, as
posited by the petitioners, abolished or terminated out of existence by R.A.
No. 6975. For sure, nowhere in R.A. No. 6975 does the words "abolish" or
42
Retirement Gratuity
"terminate" appear in reference to the INP. Instead, what the law provides is
for the "absorption," "transfer," and/or "merger" of the INP, as well as the other
offices comprising the PC-INP, with the PNP. To "abolish" is to do away with,
to annul, abrogate or destroy completely; to "absorb" is to assimilate,
incorporate or to take in. "Merge" means to cause to combine or unite to
become legally absorbed or extinguished by merger while "transfer" denotes
movement from one position to another. Clearly, "abolition" cannot be equated
with "absorption."
True it is that Section 90 of R.A. No. 6975 speaks of the INP "[ceasing] to
exist" upon the effectivity of the law. It ought to be stressed, however, that
such cessation is but the logical consequence of the INP being absorbed by
the PNP.Ï‚Î·Î±Ã±rÎ¿blÎµrÎ±rÃ¿
Far from being abolished then, the INP, at the most, was merely transformed
to become the PNP, minus of course its military character and complexion.
Even the petitioners' effort at disclosing the legislative intent behind the
enactment of R.A. No. 6975 cannot support their theory of abolition. Rather,
the Senate and House deliberations on the bill that eventually became R.A.
No. 6975 reveal what has correctly been held by the CA in its assailed
decision: that the PNP was precisely created to erase the stigma spawned by
the militarization of the police force under the PC-INP structure. The rationale
behind the passage of R.A. No. 6975 was adequately articulated by no less
than the sponsor of the corresponding House bill in his sponsorship speech,
thus:
By removing the police force from under the control and supervision of
military officers, the bill seeks to restore and underscore the civilian character
of police work - an otherwise universal concept that was muddled up by the
martial law years.
43
Retirement Gratuity
Indeed, were the legislative intent was for the INP's abolition such that
nothing would be left of it, the word "abolish" or what passes for it could have
easily found its way into the very text of the law itself, what with the abundant
use of the word during the legislative deliberations. But as can be gleaned
from said deliberations, the lawmakers' concern centered on the fact that if the
entire PC-INP corps join the PNP, then the PC-INP will necessarily be
abolished, for who then would be its members? Of more consequence, the
lawmakers were one in saying that there should never be two national police
agencies at the same time.
With the conclusion herein reached that the INP was not in fact abolished
but was merely transformed to become the PNP, members of the INP which
include the herein respondents are, therefore, not excluded from availing
themselves of the retirement benefits accorded to PNP retirees under
Sections 74 and 75 of R.A. No. 6975, as amended by R.A. No. 8551. It may
be that respondents were no longer in the government service at the time of
the enactment of R.A. No. 6975. This fact, however, without more, would not
pose as an impediment to the respondents' entitlement to the new retirement
scheme set forth under the aforecited sections. As correctly ratiocinated by
the CA to which we are in full accord:
For sure, R.A. No. 6975 was not a retroactive statute since it did not
impose a new obligation to pay the INP retirees the difference between what
they received when they retired and what would now be due to them after R.A.
No. 6975 was enacted. Even so, that did not render the RTC's interpretation of
R.A. No. 6975 any less valid. The [respondents'] retirement prior to the
passage of R.A. No. 6975 did not exclude them from the benefits provided by
R.A. No. 6975, as amended by R.A. No. 8551, since their membership in the
INP was an antecedent fact that nonetheless allowed them to avail
themselves of the benefits of the subsequent laws. R.A. No. 6975 considered
44
Retirement Gratuity
them as PNP members, always referring to their membership and service in

the INP in providing for their retirement benefits.
In another case of Government Service Insurance System (GSIS) vs.

Apolinario Paguig4, it has been discussed that retirement benefits are given to
government employees to reward them for giving the best years of their lives
to the service of their country. This is especially true with those in government
service occupying positions of leadership or positions requiring management
skills because the years they devote to government service could be spent
more profitably elsewhere, such as in lucrative appointments in the private
sector. Hence, in exchange for their selfless dedication to government service,
they should enjoy security of tenure and be ensured of a reasonable amount
of support after they leave the government.
Pauig insists that retirement laws must be liberally construed in favor of the
retirees because the intention is to provide for their sustenance, and hopefully
even comfort, when they no longer have the stamina to continue earning their
livelihood. After devoting the best years of his life to public service, Pauig
asserts that he deserves the appreciation of a grateful government as best
concretely expressed in a generous retirement gratuity commensurate with
the value and length of his services. That generosity, he argues, is the least
he should expect now that his work is done and his youth is gone. Even as he
feels the weariness in his bones and glimpses the approach of the lengthening
shadows, he should be able to savor the fruits of his toil.
However, the doctrine of liberal construction cannot be applied in this

case, where the law invoked is clear, unequivocal and leaves no room for
interpretation or construction. To uphold Pauig's position will contravene the
very words of the law, and will defeat the ends which it seeks to attain.
4
Government Service Insurance System (GSIS) vs. Apolinario Paguig
45
Retirement Gratuity
Pauig claims that his service in the government from February 12, 1964 to
July 18, 1977 should be credited for the purpose of computing his retirement
benefits. The RTC, in ruling in his favor, relied on Policy 2 of Policy and
Procedural Guidelines No. 171-03 dated February 2, 2003, which states:
2. Services, for purposes of computing all the benefits that a member may
secure from GSIS shall mean only such services rendered by a member in
any government agency, whether national, local or government-owned or
controlled corporation under the following conditions: The member was
receiving a fixed basic monthly compensation for such services.
The corresponding monthly premium contributions were timely and

currently remitted or paid to the GSIS.
The RTC explained that it is clear from the aforequoted provision that the
word "service" is not qualified and does not refer only to service with a
permanent status. What is simply required is that the member was receiving a
fixed basic monthly compensation for his services and the corresponding
monthly premium contributions were timely remitted to the GSIS.
In order to bring life to the true intention of the law, however, Policy and
Procedural Guidelines No. 171-03 must be read together with other laws
pertinent at the time of the contested period of service. Section 4 of
Commonwealth Act (C.A.) No. 186, or the Government Service Insurance Act
of 1936 provides:
SEC. 4. Scope of Application of System. - Regular membership in the

system shall be compulsory upon -
(a) All regularly and permanently appointed employees of the Government of

the Commonwealth;
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Retirement Gratuity
(b) All regular and permanent employees of the National Assembly;
(c) All members of the judiciary;
(d) All officers and enlisted men of the Regular Force, Philippine Army;
(e) All regular and permanent employees of the Metropolitan Water District;
(f) Regular and permanent employees of other Government boards or

agencies, except the University of the Philippines and the Governmentowned
or controlled business corporations; and
(g) Those subject to the provisions of Act Numbered Thirty hundred and fifty,
as amended, excluding the persons employed to take the place of teachers
on maternity or sick leave, or otherwise employed temporarily: Provided, That
any provincial, city or municipal government, or the University of the
Philippines or any other corporation owned or controlled by the Government,
shall have the option of joining the System, and if it so joins, the membership
shall be compulsory upon all its permanent and regular employees, and it
shall pay its share of the contribution of three per centum per annum of its
employees' basic annual salaries or compensation, plus the extra premiums, if
any, due to extra hazards of the member's occupation: Provided, further, That
it shall be compulsory for the municipal, city and provincial governments to
pay the required government contributions corresponding to the employees
now subject to the provisions of Act Numbered Three thousand and fifty, as
amended: And provided, finally, That membership shall not include (a) officers
or personnel detailed from the Army, the Navy, or the Civil Service of the
United States, and (b) employees who are not citizens of the United States or
of the Philippines.
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Retirement Gratuity
II. KEY FINDINGS AND ANALYSIS
In this research, the researcher formulated questionnaire which has

been given to a number of PNP retirees. Further, the researcher conducted an
interview with the chief of to clarify whether there is an existing policy or
procedure on the distribution of lump sum retirement. Lastly, the researcher
drafted a policy which will contain the admired end goal of this study.
The following is the questionnaire sent to eleven respondents:
Questionnaire-Checklist
To the Respondents:
The researcher is humbly asking for your time to accomplish these sets of
questions. Please feel free to enlighten and share the needed data for the
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Retirement Gratuity
study. Your credible and truthful answers will be of great help to complete and
expound the study. Rest assured that your identity along with your responses
will be highly secured and taken confidentiality. Thank you!
----------------------------------------------------------------------
PART I. RETIREMENT BENEFITS
Among the retirement benefits offered, which do you prefer to prioritize?
___ Direct Pension
___ Lump sum Pension
PART II. RETIREMENT BENEFITS: ON ITS EFFECTIVENESS
Indicators Outstanding Very Satisfactory Fair Poor

Satisfactory
Retirement Benefits
give sufficient
support to retirees.
The policies
enclosed to
retirement benefits
are in accordance
to the needs of the
retirees.
Retirement Benefits
System is correct
and just for all.
PART III. REVIEW OF RETIREMENT BENEFITS SYSTEM
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Retirement Gratuity
 What are the observed insufficiencies of the retirement benefits system

of the PNP?
_________________________________________________________
____
_________________________________________________________
____
 Is there a need for review of the policies? Why?
_________________________________________________________
____
_________________________________________________________
____
 What could be suggested to address the flaw/s of the system?
_________________________________________________________
___
_________________________________________________________
___
After thorough research and interviews done by the researcher among

the target respondents, the following data were obtained as a result. To
simplify the outcome for convenient presentation, data gathered were
summarized by tables with their respective explanations.
The following are the collated tabulations of results and the summary
explanation in the questionnaire by the researcher:
Number of respondents 11
Favor Number %
Direct
Pension 1 9.090909091
Lump
SumPension 8 72.72727273
50
Retirement Gratuity
No Answer 2 18.18181818
According to the data 72.73% of the respondents are in favor of the lump sum
retirement benefits and only 9.09% of the respondents preferred the direct
pension program while the other 18.18% did not gave an answer.
Summary:
In conclusion majority of the respondents that we have gathered prefers

the Lump Sum pension over the direct pension or also know as the outright
pension.
Q.1 (total)
Very
Total Outstanding Satisfactory Satisfactory Fair Poor
Q1 2 6 3 0 0
% 18.18181818 54.54545455 27.2727273 0 0
The Data shows that 18.18% of the total number of respondents choose
outstanding as their while rating while 54.55% of the respondents gave a very
satisfactory rating, the other 27.27% only gave a satisfactory rating for the
sufficiency of support that the retirement benefits gives to the retirees.
Summary:
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Retirement Gratuity
According to the data more than half of the respondents is at least pleased
with the sufficiency of the benefits given to them while the rest is just satisfied.
The good thing is that no respondents are dissatisfied with the amount of
support given to them.
Q.1.1 (Direct Pension)
Total Number of respondents: 1
Direct Very
Pension Outstanding Satisfactory Satisfactory Fair Poor
Q1 1 0 0 0 0
% 100 0 0 0 0
100% of the number of people who chose direct pension as their preferred
pension benefits gave a rating outstanding to the sufficiency of the support
given to the retirees.
Summary:
All of the respondents that chose direct pension as their preferred method
of benefits is pleased with the amount of support for the retirees.
Q.1.2 (Lump Sum Pension)
Lump Very
Sum Outstanding Satisfactory Satisfactory Fair Poor
Q1 1 5 2 0 0
% 12.5 62.5 25 0 0
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Retirement Gratuity
12.5% of the respondents who preferred the lump sum pension gave an
outstanding rating for the sufficiency of the retirement benefits given to the
retiree while 62.5% said that the rating of the sufficiency is very satisfactory
while the rest at 25% said that it is only satisfactory.
Summary:
Majority of the respondents that chose Lump Sum Pension as their

preferred method of pension is more than satisfied with the sufficiency of the
retirement benefits given to the retirees.
Q.1.3 (No answer)
No Very
answer Outstanding Satisfactory Satisfactory Fair Poor
Q1 0 1 1 0 0
% 0 50 50 0 0
For the respondents that did not choose their preferred method of pension
50% says that the sufficiency of the retirement benefits is above satisfactory
and the other 50% were just satisfied.
Summary:
All of the respondents that did not have a preference between the 2
methods of pension were either satisfied or more that satisfied with the
sufficiency of the benefits given to the retirees.
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Retirement Gratuity
Q.2 (total)
Very
Q2 2 5 4 0 0
% 18.18181818 45.45454545 36.3636364 0 0
The Data shows that 18.18% of the total number of respondents choose
outstanding as their while rating while 45.45% of the respondents gave a very
satisfactory rating, the other 36.36% only gave a satisfactory rating for the
policies that are enclosed with the retirement benefits are in accordance with
needs of the retiree.
Summary:
Majority of the respondents are more than satisfied with the policies
enclosed with the retirement benefits are in accordance to the needs of the
retirees while some are just satisfied it is still a positive output since no one
from the respondents feels that it is not in accordance with the needs of the
retirees.
Direct Very
Q1 1 0 0 0 0
% 100 0 0 0 0
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Retirement Gratuity
100% of the respondent who chose direct pension as their preferred

method of pension gave an outstanding rating to the policies that are enclosed
with the retirement benefits are in accordance with needs of the retiree.
Summary:
For those respondents that chose direct pension as their preferred method
they were more than satisfied and pleased with the policies regarding the
retirement benefits in accordance to the needs of the retiree.
Lump Very
Q2 1 4 3 0 0
% 12.5 50 37.5 0 0
From the 8 people that chose lump sum pension as their preferred method
of pension 12.5% gave an outstanding rating for the policies enclosed to
retirement benefits to ensure that they are in accordance to the needs of the
retirees, while 50% of them said that it is very satisfactory 37.5% of the
respondents are saying they are just satisfied with the policies.
Summary.
The respondents that chose lump sum pension over the direct pension is
either satisfied or delighted with the policies that are in accordance to the
needs of the retiree.
Q.2.3 (No answer)
55
Retirement Gratuity
No Very
Q2 0 1 1 0 0
% 0 50 50 0 0
50% of the respondents that did not have a preference with regards to the
2 types of pension gave a rating of very satisfactory while the other 50% said
that it was only satisfactory with the policies enclosed to retirement benefits
that is in accordance to the needs of the retirees.
Summary:
Although the respondents have not decided which pension they would
prefer the good thing is that they are still satisfied or even delighted with the
policies of the retirement benefits are in accordance with the needs of the
retirees.
Q.3 (total)
Very
Q3 2 5 3 1 0
% 18.18181818 45.45454545 27.2727273 9.090909 0
Amongst the 11 respondents only 18.18% of them gave an outstanding

rating for the retirement benefits system for its correctness and for being just
to all. While the most voted rating at 45.45% is the very satisfactory rating, the
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Retirement Gratuity
satisfactory got a rating percentage of 27.27% from the respondents and

9.09% said that it is only fair.
Summary:
Majority of the respondents are saying that they are at least satisfied with
the correctness and justification for all of the retirement system. Although it
might need a little improvement because there are some respondents that are
still saying that it is below satisfactory.
Direct Very
Q1 1 0 0 0 0
% 100 0 0 0 0
For the respondents that chose direct pension 100% gave a rating of
outstanding for the retirement benefits system for its correctness and for being
just for all.
Summary:
For people who chooses the direct pension they are very pleased with the
benefits retiring system with regards to its correctness and for being just to all.
57
Retirement Gratuity
Lump Very
Q3 1 4 2 1 0
% 12.5 50 25 12.5 0
Among the 8 respondents 12.5% gave an outstanding rating for the

correctness and for being just to all, but it has the same percentage for the
respondents that gave a fair rating. The respondent that gave a very
satisfactory rating is 50% of the total and the last 25% gave a rating of
satisfactory.
Summary:
More than half of the respondents is more than satisfied with the fairness
of the system to all while there may be some improvements that could help
since some are just satisfied and others rank it below the satisfactory level.
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Retirement Gratuity
Q.3.3 (No answer)
No Very
Q2 0 1 1 0 0
% 0 50 50 0 0
50% of the respondents from those that did not have a preference chose
very satisfactory while the other 50% chose satisfactory for the retirement
benefits system and its correctness and for it being just to all.
Summary:
The respondents although not having a preference for the method of

pension is still satisfied or delighted with the retirement benefits system and its
correctness and for it being just to all.
59
Retirement Gratuity
Review of the retirement benefit system.
(Direct Pension)
For the respondent that chose the direct pension the respondents said that
he/she will not use the lump sum pension because he/she knows that there
are consequences for using the lump sum pension in which the respondent
doesn’t want to have continues salary deduction.
With regards to the possible insufficiency of the retirement benefits system

of the PNP the respondent mentioned that the release of the retirement
benefits is delayed due to the slow batching process. With adding personnel
and more budget to the retirement funds the process would be much faster
and more retirees will be able to spend their pension as to how they feel like it.
The respondent also wrote that the policies doesn’t need to be reviewed
because it is sufficient enough, meaning that they are already satisfied with
the current system.
(Lump Sum Pension)
Most of the respondents that preferred the lump sum pension wants to
avail the lump sum pension to start up a business right away, and that they
are aware of the possible consequences in which the money might be
mishandled and in the case that there is an increase they would not be able to
avail it. Most of the respondents know that you will just advance your pension
of 3 years.
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Retirement Gratuity
For the insufficiencies some respondents wants to have further knowledge

on how to handle the money to be received from the lump sum and also with
regards to the slow processing of the benefits the respondents would also
want it to be manage properly in order for the benefits to be released on time.
Some policies that the respondents wants to be reviewed are for the killed
men or women in action to be able to also to receive the same benefits, for
those who has a partner but are not yet married to receive the benefits, also
for the benefits to be amended in relation to the legal beneficiary, and to adapt
to the evolving needs for the beneficiaries, last is to add funds and personnel
in order to make the process quicker and to avoid delays.
(Undecided)
For those that haven’t decide between lump sum and direct pension. The
respondent says that they are open to having the lump sum pension in order
for them to use it to start up a business. While the respondents are aware of
the possible consequence they also know that the system still needs a few
improvements with 1 respondent saying that there is no system yet. And
another respondent wants to have more personnel in order to avoid more
delays while claiming the pension.
Having improvements in the system may help those that are undecided to
know what method of pension to avail. Now, knowing that there are still some
flaws in the system and for some that doesn’t want to stay in line for too long
are considering lump sum but knows the consequences of availing the said
method.
Based from the data gathered, it can be concluded that majority of the PNP
retirees still prefer lump sum pension despite the fact that there are disparities
in the conditions and terms of the policies. It is also because of the early
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Retirement Gratuity
availability of the money when they would grab the lump sum pension unlike
waiting for the expected retirement date.
On the level of satisfaction in terms of the guidelines enclosed in the

Retirement Benefits System, there is a substantial satisfying response to
every indicator stated. It can be concluded that even though there are flaws in
the system, it is still a great help to them especially those who have the most
need. Nonetheless, there are still those who have been contemplating to the
discriminatory factors happening in the system that is why they have lesser
rate in terms of the satisfaction.
Considering the insufficiencies of the system, it can be concluded that

even the laws have their cons that may affect the recipients. It is indeed a
must to review and revisit the guidelines and policies in order to improve and
tally those to the needs and demands of the personnel and of course, the
present millennium.
SUMMARY OF OBSERVED INSUFFICIENCIES OF THE RETIREMENT

BENEFIT SYSTEM
Deciding between two options of benefiting retirement monetary system

is not an easy task for retirees of PNP. Most of the times, retirees prefer to
have the lump sum pension. It is due to the fact that availing such will allow
them to have their three-year amount of pension in advance. If there is really
an urgent need, the aforementioned will be really of great help. Unlike the
other option which is the direct pension, the retiree will just receive their
pensions right after the effectivity of the retirement date. But even though it is
beneficial to those lump sum pensioners, there is also a disadvantage
regarding the monetary concern. Just because they had the money earlier
than the retirement date probably means they’d spent them already. Unlike
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Retirement Gratuity
those direct pensioners, they can benefit from the gratuity when they are
already retired from the profession.
Another observed inadequacy of the retirement benefits policies is when

there is an increase in their wage, only the direct pensioners will benefit in that
differential increase. Lump sum pensioners will have no reflected increase in
the amount they supposed to enjoy. It is because they availed it earlier than
those who have the pension after the retirement date. In this, the lump sum
pensioners would not enjoy the privilege of that increase and that seems a
discriminatory aspect of this existing retirement benefits policy.
SUMMARY OF THE NEED OF REVIEWING THE POLICIES
As mentioned above, the disparity between the conditions of benefits of

the two kinds of retirement opportunities gave a clear understanding that there
is indeed a need of revisiting and reviewing the laws stating the policies.
These policies are relative to retirement benefits as bases to improve and
strengthen the office of PNP. This is not only for the benefit of the agency but
most importantly for the betterment and respect to the individuals who
rendered much loyalty and service in the community, and country.
SUGGESTIONS TO ADDRESS THE FLAWS OF THE SYSTEM
Learning the incapacities of the laws enforcing the guidelines of the

retirement benefits, suggestions arise within the conduct of the study. It is that
lump sum is never a con to the retirees especially that it indeed helps a lot.
That is why there is no need to remove the policy of that retirement option.
The only concern is that there must be an agreement of restudying the
conditions of terms applied in the pension being discussed. It might have an
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Retirement Gratuity
improvement to how it must be undertaken and especially talking about the

availing of sudden salary increases. There must be changes in the conditions
of the lump sum pension in order to be non-derogatory in terms of those who
would prefer the direct pension.
On the other hand, the researcher interviewed Ms. Grace Jamila De

Castro, the acting chief of the pension and gratuity division of the PNP
retirement to discuss the existing procedure on lump sum retirement and its
loopholes. The following is the transcript of the interview:
The Researcher: Hi ma’am good afternoon. Can I ask for a discussions or

questions to you ma’am?
Ms Grace: Ok
The Researcher: ma’am can you please introduce yourself.
Ms Grace: I am Grace Jamila De Castro, I am the acting chief of the pension

and gratuity division of the PNP retirement and benefits administration service.
Our division is in charge of the processing of the lump sum, the first pension,
the transfer, the pension for the survivors, the transferees and other gratuities
na we give to our retired personnel or killed in action in na personnel.
The Researcher: Thank you ma’am. Ma’am for my first question. Do you have
any laws, policies or guidelines on the PNP retirement claims to be specific on
lump sum when there is sub sequent increase in the PNP salary?
Ms Grace: Ok, merontayongmgasinusunodnabatas(RA8851) na nag amend

sa RA6975,meron din tayong board resolution ang NAPOLCOM BOR#8 and
then meron din potayong fiscal directives nanagiging guideline sap ag
papatupad ng mga increase natin and we have other MS’s and policies
natinitingnannatin, sinusunodnatin para ma ensure na only the eligibles will
enjoy yungmga increase nabinibigay ng PNP.
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Retirement Gratuity
The Researcher: Thank you, Can you discuss the implantation or how are we
implementing this?
Ms Grace: Sa lump sum we have to take into consideration yungating length

of service, kung ilangtaonkanagservesa PNP. Merontayong certain allocated
points by year, by monthshanggangsa days. Very specific yung gating
computations. Ito ay minumultiplysahalimbawa kung angiyongranggo,
nagretirekasaisangranggona SPO4 and angnakasaadsaiyong retirement order
is 1 rank higher. Gagamitinna base pay sayo is yung base pay ng inspector or
ng lietenant. In addition pa yanmeron pa tayongsinasamadoonnayung
longevity pay na for every 5 years 10% plus ganoonna percentage. So
halimbawanakapag serve ka ng 20 years ibibigaysayona forth long pay ka
noon na 20 years sa, meronkang additional sa 49,528 momeronkang 22,985
naidadagdagdoon then imumultiplymoyandoonsa percentage allocated to the
service. And with that makukuhamona kung magkanoyung lump sum
monaimumultiplynatinsa 3 years although sabatasnatinisinasaadna 5 years,
angnaging practice natinngayon is 3 years langdahilhindikayangbayaran ng
PNP yungbuong 5 years so inilimityung 5 years into 3 years lang.
The Researcher: may additional langpoako, Paanopoba ma avail yung lump

sum?
Ms Grace: Ok yung lump sum natin is maavail ng isang retiring personnel

kasipinaprocessnatin to usually ahead supposedly pero may times na late
yung folders nila so late narinnapaprocess, he can avail of the lump sum
pagretirenyapagwalasyang pending case kasipag pending case
kaangpwedemolangi-avail is outright pentionna, so dapatdiretsokapention no
lump sum period, so yunpoangkailangan is cleared kasalahat ng mga
clearances nanirerequire ng PNP.
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Retirement Gratuity
The Researcher: ma’am how about pagnagkaroonpo ng subsequent

increases in salary.
Ms Grace: Katuladnung may mganagretirenanung January this year.

Nagkakaroonposila ng differential, Lump sum differential. Pinaprocessnatinuli,
when nabigaynanatinyunsakaniladiba, naiprocessna yon. Gagawauli kami ng
isang voucher na dun nanakabasesa present rate natin then
imaminuslangnatinyung previous voucher naginawasakanila para
makuhanilayung differential.
The Researcher: What about yung nag avail ng lump sum are they entitled to
such increases?
Ms Grace: Yung mga previous year na nag retire?
The Researcher: During the lump sum period then nagkaroon ng increases
po.
Ms Grace: Yan sa parte nayan, angnagiging practice dito,

hindikokasimakitayung policy regarding dyan. I think walang policy
talagananagsasabina within the lump sum period hindimaavailyung increase,
but sa fiscal directive nainilalabasdoonlang kami nakabase, angaming office,
kung sinoangbibigyan ng increase. Pero halimbawa 2018 syangayon nag
increase ng 2019 as of now hindisyapwedekasi specifically
namannaineexcludesyasa directive pero as to the policy, walatayong clear cut
policy namakikita or nakita regarding that.
The Researcher: So you mean ma’am napag nag avail sila ng lump sum they
can get poyung amount, yung difference during the time na nag lump sum sila
ng 3 years and nagkaroon ng subsequent increase. Then right after that 3
years hindinanilamakukuha yon? Ever?
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Retirement Gratuity
Ms Grace: Oo, wala. Pero pag dating ng pension nila. Pension time
nanilamaeenjoynanila.
The Researcher: increase?
Ms Grace: Oo increase nayung pension nila. Pero for the lump sum period na
3 years nainavailnila as lump sum hindinilamakukuhayung increase.
The Researcher: So we don’t have policy po ma’am. Naanoponatinyung

repercussion ponito if ever may mag availnito.
Ms Grace: Ngayonprobelematalaga, kasi may

mganagrereklamonabakitsilaineexclude? Eh pareho din namansilang retired,
pareho din namansilang retiree natin, pensionarynamannatinsila. So, yunlang
may mgatanong, may mgareklamo but as of now wala pa tayongna encounter
ditona kung meronmang mag baback earn or what. Wala pa naming
umabotnaganyannakaso. Hanggangreklamolangsila.
The Researcher:Do we have any recommendation po para ma reconcile yung

issue?
Ms Grace:Masmaganda siguro magkaroon tayo ng policy or memorandum

circular. Maglabas ng memorandum circular ang ating kapunuan para maging
guidelines na din ditto sa baba kung paano natin ipapatupad yung mga
increases mga gratuities na dapat natin ibigay sa mga pensioners natin. So
yun talaga, crafting of policies, memorandum circulars or standard operating
procedures nag magiging clear cut guideline natin kung tama ba yung
gagawinnatin or hindi.
It is, therefore, conclusive fact that there is no existing policy on lump sum
retirement and there is a need to draft a memorandum circular which will cater
the need of guidelines and procedure to properly execute the said objectives.
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Retirement Gratuity
As a result of the above-mentioned findings on the necessity of a policy or

memorandum circular, the researcher has drafted a policy in consonance with
the need of guidelines on the distribution of lump sum retirement.
Republic of the Philippines

National Police Commission
NATIONAL HEADQUARTERS PHILIPPINE NATIONAL POLICE
DIRECTORATE FOR COMPTROLLERSHIP
Camp BGen Rafael T Crame, Quezon City
FISCAL DIRECTIVE
NUMBER ________
GUIDELINES AND PROCEDURES IN THE PAYMENT OF LUMP SUM

RETIREMENT IN CASE OF SALARY INCREASES
1.1 R.A. No. 6975 (General Appropriations Act FY 2019);

1.2 Presidential Decree No. 765;
1.3 Section 75 of RA 6975 as amended by Section 34 of RA 8551; and
1.4 NAPOLCOM Guidelines dated May 19, 2003.
1.0 PURPOSE:
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Retirement Gratuity
This fiscal directive prescribes the guidelines and procedures in the

implementation of payment of pension differentials of eligible PNP pensioners
based salary increases.
2.0 COVERAGE:
The following PNP pensioners are entitled to this pension differential. The
lump sum pensioner shall receive in advance his 3-year equivalent salary
and his monthly pension after three (3) years shall include the supposed
pension differential to cover what he should have received as wage increase
during said lump sum period.
2.1. Uniformed personnel who retired from the PNP service on

January 1, 1991 to November 30, 2009;
2.2. Uniformed personnel who retired from the PNP service on or

before June 30, 2010 and availed of the outright pension;

before May 31, 2011 and availed of the outright pension; and

before May 31, 2012 and availed of the outright pension.
3.0 DEFINITION OF TERMS:
3.1 PNP Pensioners – uniformed personnel who retiredfrom the

PNP service on January 1, 1991 and thereafter.
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Retirement Gratuity
3.2 Retiree – a uniformedpersonnel who retired and has rendered at

least twenty (20) years of active service through any of the
following:
a. Compulsory Retirement;
b. Optional Retirement;
c. Posthumous Retirement; and
d. Total Permanent Physical Disability (TPPD) Retirement.
3.3 Transferee - a beneficiary of a retiree who died and is entitled to

75% of the retirees derivative pension to his/her beneficiaries;
3.4 Survivor – abeneficiary of a PNP member who died while still in

the active service;
3.5 Separated – a uniformed personnelofficiallysevered/terminated

from the service with less than twenty (20) years of active service
through any of the following:
a. Posthumous; and
b. TPPD;
4.0 PROCEDURE OF PAYMENT THROUGH AUTOMATED TELLER

MACHINE (ATM):
4.1 The PNP Retirement and Benefit Administration Service (PRBS)

shall provide the Information Technology Management Service
(ITMS) and the Directorate for Comptrollership (DC) with the list
of qualified pensioners covered by this adjustment with their
corresponding amount of entitlement;
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Retirement Gratuity
4.2 The ITMS shall prepare the Pension Differential File starting
January 2020, with a retroactive effect to past pensioners who
chose the lump sum retirement which shall be submitted to the
Finance Service (FS);
4.3 The DC shall release appropriate funds to the Finance Service

(FS) for the purpose;
4.4 The FS shall prepare the Funding Warrant and endorsement

letter to Land Bank of the Philippines together with the soft copy
of the Pension Differentials File starting January 2020, with a
retroactive effect to the pensioners who chose the lump sum
pension; and
4.5 The LBP shall credit the pension differentials starting January
2020, with a retroactive effect to all pensioners who chose lump
sum pension, to all qualified PNP Pensioners with ATM pension
accounts.
5.0 EXEMPTION:
This implementation of the pension differentials of PNP pensioners

does not cover separated personnel and their transferees or survivors.
6.0 FUNDING SOURCE:
The funds for this payment shall be charged against the Pension and
Gratuity Fund under RA 11260 (General Appropriations Act FY 2020);
71
Retirement Gratuity
7.0 EFFECTIVITY:
This directive shall be implemented immediately.
III. CONCLUSION
Based from the data gathered, it can be concluded that majority of the
PNP retirees still prefer lump sum pension despite the fact that there are
disparities in the conditions and terms of the policies. It is also because of the
early availability of the money when they would grab the lump sum pension
unlike waiting for the expected retirement date.
However, according to the interview with Ms. Grace Jamila De Castro who
is the acting chief of the pension and gratuity division of the PNP retirement,
there shall be a policy which shall contain guidelines and procedure if a retiree
chooses lump sum pension, so he shall receive in advance his 3-year
equivalent salary but his monthly pension after three (3) years shall also
include the supposed “pension differential” to cover what he should have
received as wage increase during said lump sum period. The increase that he
will receive shall not only begin on the period after his lump sum but also with
retroactive increase benefit. The lump sum scheme hence shall not operate as
a waiver from getting increase in pension within 3-years unlike in case of
direct pensioner.
72
Retirement Gratuity
There shall be no disparity in the treatment of these retired pensioners.

This difference, particularly in the treatment of lump sum pensioners shall not
be discriminatory which this study seeks to address, improve and reconcile at
its end. Furthermore, the current practice of PNP in the treatment of lump sum
pensioner has no clear operating guidelines, thus the researcher successfully
drafted a policy in response to the core focus as legal issue of this research. It
resolves matters necessary for better and more orderly retirement program
implementation in the PNP and shall propose guidelines that would shed light
on its gray areas.
Considering the insufficiencies of the system, it can be concluded that

even the laws have their cons that may affect the recipients. It is indeed a
must to create guidelines and policies in order to improve and tally those to
the needs and demands of the personnel and of course, the present
millennium.
IV. RECOMMENDATION
The need to revisit the Retirement Benefit System and to follow the drafted
policy herein included in the study , most especially concerning the lump sum
pension, which is the main recommendation of the study. Upon gathering facts
and data from different reliable sources, may it be references or actual
accounts, it can be suggested that indeed the system has to be improved and
checked.
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Retirement Gratuity
It is the suggestion of the researcher that by this study, lump sum

pensioners will have just and fair opportunity from those direct pensioners.
The goal is not to remove lump sum pension but for the PNP to add three
percent (3%) interest that would serve like a loan in order to support the
growing number of pensioners. This is intended only to increase the pension
fund of the PNP as if its savings. At the same time, when they decide to avail
lump sum, their pension will not be curtailed instead it will only cover the
amount to pay for the loan and at that point, difference in their salary
increases will also be availed just as the direct pensioners do.
BIBLIOGRAPHY
Legal References
 Republic Act No. 6975 re An Act Establishing the Philippine National

Police Under a Reorganized Department of Interior and Local
Government, and for Other Purposes
 Primer On Pay And Allowances, Benefits And Privileges Of The
Philippine National Police Personnel And Their Dependents
 Republic Act No. 8291 May 30, 1997
An Act Amending Presidential Decree No. 1146, As Amended,
Expanding And Increasing The Coverage And Benefits Of The
Government Service Insurance System, Instituting Reforms Therein
And For Other Purposes
 Republic Act No. 8551 February 25, 1998An Act Providing For The
Reform And Reorganization Of The Philippine National Police And For
74
Retirement Gratuity
Other Purposes, Amending Certain Provisions Of Republic Act

Numbered Sixty-Nine Hundred And Seventy-Five Entitled, "An Act
Establishing The Philippine National Police Under A Re-Organized
Department Of The Interior And Local Government, And For Other
Purposes"
The Internet
1. https://lawphil.net/judjuris/juri2013/jul2013/gr_186610_2013.html
2. https://www.lawphil.net/judjuris/juri2017/jan2017/gr_210328_2017.html
3. https://www.pna.gov.ph/articles/1057440
4. https://www.lawphil.net/statutes/repacts/ra1997/ra_8291_1997.html
5. https://www.academia.edu/11010024/Literature_and_Studies_of_Social
_Pensions_for_indigent_senior_citizens_in_the_philippines
6. http://www.ndcp.edu.ph/index.php/library/thesis-1608/
7. http://pnp.gov.ph/17-news/latest-news/227-pnp-lump-sum-and-pension-
worth-70m-already-given-to-beneficiaries-of-saf-44
8. https://www.philstar.com/headlines/2018/12/26/1879883/court-appeals-
orders-govt-pay-inp-retirees-pension/amp/
9. http://www.chanrobles.com/cralaw/2016septemberdecisions.php?id=83
75
Retirement Gratuity
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Lumpsum Retirement

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Lumpsum Retirement

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A Review on the Retirement Benefit System of the Philippine National

Police: Basis for Proposed Guidelines on

A Thesis Presented to the

Under the concept of lump sum pension, a retiring PNP uniformed

However, the legal controversy lies in the unreasonable different

The disparity in the treatment of these retired pensioners is clear. This

List of Related Laws and Jurisprudence……………………………… 5

Background of the Study………………………………………………… 7

Relevance of the Study ………………………………………………… 11

Scope and Limitation…………………………………………………… 12

Survey of Related Laws, Jurisprudence and Literature…………………….

Key Findings and Analysis…………………………………………….. 48

LIST OF RELATED LAWS AND JURISPRUDENCE

5.) REPUBLIC ACT No. 10154 - An Act Requiring All Concerned

6.) Presidential Decree No. 1146 - As Amended, Expanding And

Retirement – the point in which someone stops working, esp. because of

Retirement Benefits – monetary benefits and assistance given to retirees of

Gratuity – an amount of money given to a retiree or who has rendered service

Lump sum pension – a retiring PNP uniformed personnel shall be entitled to

Civil Service Commission – one of the three Constitutional Commissions of

Reform – Reform means the improvement or amendment of what is wrong,

1. Background of the Study

The Philippine National Police (PNP) originated from the Philippine

After the People’s Revolution in 1986, a new Constitution was

Under Sections 39 and 74 of RA 6975 in relation to Section 34, Police

Thereafter, sometime in February 1992, the PNP, PC, NAPOLCOM,

policies basically rationalized and formalized guidelines on retirement system

Thereafter, by virtue of PNP-NHQ Order No. 09-12 dated August 5,

Upon completion of the requirements, the same shall be submitted to

The ambiguity in the PNP Retirement Law customarily emanates from

Under the constitutional provision anchored on the basic principle of

3. Relevance of the Study

For almost thirty-seven (37) years, the PNP continuously grants

This study is relevant because it will help address the perennial

4. Scope and Limitation

This study focused on the review of retirement benefits of Philippine

The study reviews the retirement benefits guidelines of Philippine

Descriptive research involves gathering data that describe events and

Descriptive research is applicable to the study since the primary

In the process of gathering data from the respondents, a questionnaire

Statistical Treatment of Data

Frequency count refers to the number of times the answer is given by

Percentage is taken by dividing the frequency of an answer by the given

The formula is:

For the level of satisfaction in terms of the guidelines and policies on

A Likert scale is commonly used to measure attitudes, knowledge,

A. Survey of Related Laws, Jurisprudence and Literature

Related Provisions of Laws

Indeed, it is inviolable to dissect and analyze different provisions of

However, to have a holistic view of the said retirement benefits, the

The Philippine National Police (PNP) originated from the Philippine

After the People’s Revolution in 1986, a new Constitution was

Pursuant to Republic Act No. 6975 as amended by Republic Act No.

of the CIS. The regular operatives of the abolished NAPOLCOM Inspection,

In order to be qualified for transfer to the PNP units in Metropolitan Manila

Moreover, Section 74 of the same law on Retirement provides that

On the other note, it is inevitable not to mention the kinds of retirement

The requirements of 36 months lump sum, TPPD and Separation Benefits

Example Computation for 36 months Lump Sum

Date of Requirement: June 3, 2008

Mode or Retirement: Section 39 and Section 74

En Cbl: July 20, 1975

Length of Service: 32-10-13