Re:    Payment of Benefits








          Sonia L. Villones of Silay City and widow of Ignacio C. Villones Jr., a retired Property Custodian of Silay City Water District (SICIWA), requests the assistance of the Commission regarding the benefits of her deceased husband.


In her request, she is claiming the payment of her husband’s year-end incentive bonus, separation pay, and commutation of leave credits. She also avers that a total of 67 monthly premiums pertaining to her husband were not remitted to the SSS. Moreover, Mrs. Villones alleges that remittances to the GSIS were only for the period covering October 1992 to November 3, 1997 or a total of 55 monthly premiums and thus, the family of Ignacio Villones assumed payments for the period August 1963 to June 1976.


When requested to comment, Glenn C. Antiporda, General Manager of SICIWA, asserts, thus:


x        x        x


 “1.     A. Non-remittance of 67 monthly premiums to SSS.


“B.     Remittance to GSIS was only for the period covering the year from October 1992 to November 3, 1997 – only a total of 55 monthly premiums. Thus, the family of the late Ignacio C. Villones, Jr. assumed payments for the period August 1963 to June 1976.




“While it is true that there were lapses in the past on the SSS premium remittances of our employees, the Management of SICIWA wrote the SSS Regional Office and inquired on the possibility of paying the unremitted premiums. x x x Mr. Elberto Alburo, the cluster head of SSS replied informing us that they will be sending over an account officer to look into our records to determine what period should be billed by the SSS and that which will be under the GSIS. However up to this time no SSS account officer came to this office. xxx

“We also wrote the GSIS Bacolod City, requesting for the premium remittances of our employees from 1976 but no response was received from them x x x. The water district cannot assume the GSIS payments of Mr. Villones from August 1963 to June 1976 since he was transferred to the water district only on July 1, 1976.


“II.     Non-payment of Year-end Incentive Bonus




“We received a copy of the letter of Mr. Nilo B. Buot of the DBM, Region 6 addressed to Mrs. Sonia Villones.  x x x Based on the said letter, we wrote Mr. Buot clarifying on Mr. Villones’ entitlement to the year-end incentive on top of the Christmas Bonus and Cash Gift x x x. If we are to interpret the reply of Mr. Buot, the family of the late Mr. Villones is no longer entitled to the said benefit having been paid the Christmas Bonus.  x x x


“III.    Non Payment of Leave Credits




“We have already written Mrs. Villones thru Mrs. Susan Solis that there was an error in the certification of leave credits earned and availed. The old leave records was written in the newsprint letter and could easily be torn. So we transferred the data on the pre-printed cardboard for durability. When the leave credits was re-checked and received, it indicated that Mr. Villones has consumed all the leave credits earned. Attached are the old leave records which were transferred in the new ledger form for your reference. We do not see any tamperings (sic) except for the column on the leave balance due to errors in additions or subtractions. x x x


“As to the 68 days of sick leave and vacation leave credits which Mrs. Villones alleged were lost between the year 1976 to 1984, our records show no lost on the part of Mr. Villones. When the water district was formed in 1976, the Board of Directors approved by virtue of Board Resolution No. 8, s. 1976, the policy on granting of vacation and sick leave benefits to its employees which is as follows:


“Vacation Leave:


“For the first ten (10) years of continuous, full time service, the employee shall accrue paid vacation of 10 working days per year.


“Upon completion of 10 years of continuous, full time service, the employee shall accrue paid vacation at the rate of 15 working days per year. Such employee shall accrue paid vacation at the rate of one additional working day each two years thereafter up to a maximum of 20 working days.

“Sick Leave:


“Sick leave shall be accrued at the rate of one (1) working day for each calendar month of service, a total of twelve (12) working days per year.  x x x


“However, on December 17, 1983, or seven and a half years after, a new policy was approved by the Board, by virtue of Board Resolution No. 12, s. 1993 which is a revision of the existing Personnel Rules and Regulations.  x x x


“Employees earn 15 days vacation leave credits and 15 days sick leave credits for every calendar year of service. This policy superceded the previous Personnel Rules and Regulations.


“When the water district was formed by virtue of Presidential Decree 198, it was exempted from the provisions of the Civil Service Law being engaged in proprietary function. Thus, personnel rules and regulation including salaries were based on the laws as mandated by the Department of Labor and Employment. The Labor Code of the Philippine during this time provides for yearly service incentive leave of only five (5) days with pay to employees who have rendered at least one year of service. Thus, the water district has been granting leave with pay benefit in excess of that which was provided for by law. Art. 95 c, Chapter III of the same Labor Code states that “The grant of benefit in excess of that provided herein shall not be made as subject of arbitration or any court of Administrative action.”


“On May 30, 1990 the Board of Directors of Silay City approved the Revised Personnel Programs and Policies by virtue of Board Resolution No. 10, s. 1990. In the said policy, such leave credits can be accumulated only up to 30 days. Any excess shall be forfeited.


“When this policy was effected there were already a number of employees who have been (sic) accumulated more than 30 days. Management finds it unfair to forfeit these earned sick leave outright. Thus it was approved that sick leave credits in excess of 15 days as of December 31, 1989 shall  be  commuted  to cash, leaving the employee a balance of 15 days sick leave credits beginning January 1990. This will give him one year to earn additional 15 days sick leave before the excess can be forfeited. Mr. Villones had a sick leave credits of 65 days. Deducting 15 days which will be left as his balance, the number of days to be commuted is 50 days. The salary rate of Mr. Villones as of May, 1990 when the policy was approved was P2794.00 a month. Based on the DOLE computation, his daily rate is P127.90. Thus his commutation is computed as follows:


P127.95 x 50 days  =  P6,397.00


“Since the water district does not have enough funds to pay the employees the lump sum amount, it was decided that they be paid on installment monthly in the form of cash advances until they have consumed the amount equivalent to their commuted sick leave credits. Mr. Villones was one of the employees who were (sic) paid through this arrangement. We were able to retrieve some of the vouchers which will support this claim. x x x


“IV.    Non-Payment of Separation Pay




          “The water district does not have a clear-cut policy on retirement and separation pay for its retired/resigned employees. Although there were proposals for a policy on retirement and separation pay, this never materialized because of the lack of funds.


“However, for humanitarian reasons and depending on the availability of funds, the Board of Directors grants separation pay equivalent to one-half for every year of service for those employees who have rendered at least ten (10) years of service. As mentioned earlier, this is not a general application since there is no policy on this but this is given on a case-to-case basis and this was granted when we were still a quasi-public corporation.


“When we received the notice that we are a government owned and controlled corporation and that our employees’ insurance has been transferred from SSS to GSIS effective April 1, 1992, the Board of  Directors refrained from granting this benefit. In fact, one employee, Ms. Marilyn Causing who resigned on October 1, 1992 was not given the separation pay. The reason is there is no law that grants the payment of separation benefits to government employees who are separated other than the leave credits and that of the GSIS for retiring employees. When Mrs. Villones  wrote  us  requesting  for  separation  pay for her late husband, we inquired from the Department of Labor and Employment on the entitlement of Mr. Villones under R.A. 7641 and the reply was unfavorable.  x x x”


“When Mr. Villones reached the age of 60 years old in 1995, he retired with the SSS. Thus, he was already receiving his SSS monthly pension while still working with us, hoping that he will retire with the GSIS when he reached the age of 65. However, circumstances did not allow this to happen.


“I believe, no water district at this time, except perhaps those very large ones can afford or has fund to pay their employees who will retire under R. A. 1616 considering that we’ve only been a government entity only in 1992.”



Responding on the aforequoted comment of Antiporda, Villones stated, thus:



“I.      A. Non Remittance of 67 monthly premiums to SSS.

“B.     Remittance of GSIS premiums was only 55 months. The family of the late Ignacio Villones Jr. assumed payment for the period August 1963 to June 1976.


“Mr. Antiporda admitted that there were lapses in SSS premium payments for their employees. In the particular case of Mr. Villones the specific period was already determined by the following documents:


`1)     SSS certification issued on February 9, 1998 at Bacolod City and signed by Mrs. Preciosa Acuna – SSS Branch Manager. x x x


“2)     Siciwa certification dated September 14, 1998, signed by Mrs. Susan Solis, Siciwa Officer-in-Charge. x x x


“3)     Certification of SSS premiums payments certified correct by Mrs. Susan Solis. This record show that as early as 1983 Siciwa was already aware of their lapses in payments of monthly premiums to the SSS.  x x x


“4)     SSS records taken from Micro R3 rolls and reviewed by SSS employee Josephine Sorrola.  x x x All Siciwa has to do is make arrangement for its payment.


“Records of GSIS premium payments can also be taken from documents marked Annex B and C. As for the payments for the period from August 1963 to June 1976 I never asked Siciwa  to assume payment. I just emphasize the fact that the family of the late Ignacio Villones assumed payments for that period.


“II.     Non-payment of year end incentive bonus


          “Mr. Antiporda has erroneously interpreted the letter of Mr. Buot.


          “Mr. Buot meant that since the Christmas bonus was already given to the family of the late Ignacio Villones Jr. it will be duplication if the same should be given again. Mr. Buot, in that same letter asks to be enlightened as to the legal basis for the granting of the year-end incentive bonus but Siciwa choose to ignore the matter, I even asked Mrs. Solis to answer that part of the letter and send a copy of board resolution No. 20 series of 1995 but she likewise ignored it.


x        x        x


          “x x x I believed that Mr. Ignacio Villones Jr. is entitled to this year end incentive bonus because he has rendered 10 months of service for 1997 and the bonus is called that – year end incentive bonus for the year 1997.


“III.    Non payment of leave credits


          “Mr. Antiporda says here that there was an error on the certification of leave credits earned and availed. This is true because SICIWA do not base their date from properly accomplished records. Employees important data and information are incomplete and hastily done. Pages 7, 9, 10 and 11 have no identifying marks as to whose record it is. SICIWA employee in-charge of these very important official record has been very careless, negligent and inefficient.


“Mr. Villones was an old employee of the Silay Water Works with a service credit of 13 years, permanent status and enjoying the privilege of 15 days sick leave and 15 days vacation leave. On July 1, 1976 the Silay Waterworks became the SICIWA. Mr. Villones was already enjoying for more than 12 years, a loss of 8 days per year.


“I believe that Mr. Villones as a carried over employee should not be affected by this resolution because as a carried over employee his presence has assured SICIWA of a smooth transition and no disruption of basic services.


“It was rather very unfair that the leave credits Mr. Villones has been enjoying as an employee of Silay City Water Works will be reduced when it was converted to SICIWA.


“Regarding board resolution No. 10 series of 1990 forfeiting his sick leave in excess of 30 days, is just too much. It is very unfair on the part of Mr. Villones.


“Even if these were so-still they erred in their computations. Please note that on page 8 of the record of leave credits, Mr. Villones has accumulated 70 days of sick leave credits. If only in excess of 30 days is forfeited why did they deduct 50.5 days and leave him only 19.5 days. This is grossly unfair not to mention inaccurate. It would seem SICIWA Management could just about to do anything they want without regard for the rights and welfare of their employee.


“IV.    Non payment of separation pay


          “The Water District according to Mr. Antiporda has no clear cut policy regarding retired/resigned employees. However, for humanitarian reasons the Board of Directors do give separation pay. In fact the board of Directors gave separation pay to Rodolo Guilleguitan, Ernesto Nava, Lolita Nava and Teresita de la Peña.


x        x        x


          “It is true that they ask the Department of Labor and Employment about the entitlement of Mr. Villones under R.A. 7641 but the facts of the case of Mr. Villones was not properly presented to the Department of Labor and Employment. RA 7641 took effect on February 1993 and as you can see on the records of the SSS and of Siciwa itself the late Mr. Villones was a member of SSS up to December 1993. x x x He should be entitled to it. I am talking here about the years of service of Mr. Villones for the inclusive years of July 1976 to December 1993.


          “Siciwa will be paying less by granting Mr. Villones separation pay based on his latest salary for the 16 ½ years he was under SSS than if Mr. Villones  were  to retire under RA 1616. That is why I choose the retirement benefit that will be less expensive for SICIWA because SICIWA management told me that they don’t have enough funds.”



          Records show that Ignacio Villones was employed as Purchasing Agent of SICIWA on July 1, 1976. He retired from said office as Property Custodian on November 3, 1997 and died on November 8, 1997.


          Records further disclose that Silay Water District was formed in 1976 under PD 198 as a quasi-public corporation. Accordingly, it was under the jurisdiction of the Department of Labor and Employment and its employees were covered by the Social Security System (SSS). However, on September 13, 1991, the Supreme Court, in the case of Davao City Water District et. al. V. CSC, G.R. No. 85237-38, declared en banc that water districts are government-owned and controlled corporations and thus, are under the jurisdiction of the Civil Service Commission and covered by the GSIS. Pursuant to this ruling, SICIWA’s employees were transferred to GSIS coverage.


          The issue that needs to be resolved is whether or not Villones is entitled to year-end incentive bonus, separation pay and commutation of leave credits.


          As regards the issue on non-remittance of SSS payments, a review of the records submitted would reveal that there was indeed non-remittance of SSS premiums. Further, SICIWA did not exercise the utmost responsibility of securing complete records of SSS remittances. Although it made inquiries from the SSS, it waited for the promised accountant to arrive. The documents presented failed to show that a follow-up on the status was made. However, since the matter happened at the time when SICIWA was still a quasi-public corporation, the Commission could not direct any action by the agency concerned for lack of jurisdiction.


          Anent the GSIS premiums, the records submitted likewise reflected that premiums paid to GSIS were only for the period covering October 1992 to June 1993 and January 1994 to October 1994. The Commission cannot, however, direct SICIWA to pay the premiums because there is no law or rule granting the Commission the authority to direct a government-owned and controlled corporation, the SICIWA in this case, to remit GSIS premiums.


          On the issue of non-payment and forfeiture of leave credits, the applicable rule is Section 26, Rule XVI (Leave of Absence) of CSC Memorandum Circular No. 41, s. 1998 (as amended) which provides thus:



          “SEC. 26. Accumulation of vacation and sick leave. – Vacation and sick leave shall be cumulative and any part thereof which may not be taken within the calendar year may be carried over the succeeding years. Whenever any officer or employee retires, voluntary resigns or is allowed to resign  or is separated from the service through no fault of his own, he shall be entitled to the commutation of all accumulated vacation vacation and/or sick leave to his credit, exclusive of Saturdays, Sundays and holidays, without limitation as to the number of days of vacation and sick leave that he may accumulate provided his leave credits are not covered by special law.


          “When a person whose leave has been commuted following his separation from the service is reemployed in the government before the expiration of the leave commuted, he shall no longer refund the money value of the unexpired portion of the said leave.  Insofar as his leave is concerned, he shall start from zero balance.”


          From the aforequoted, it is clear that payment of the accrued leave credits is mandatory when the separation of an employee from the service is not for cause (CSC Resolution No. 94-5834 dated October 21, 1994 Re: Causing, Marilyn).


          Undoubtedly, when SICIWA became a government-owned and controlled corporation and Villones became a government employee, the latter is entitled to the commutation of all his leave credits exclusive of Saturdays, Sundays and holidays without limitation and regardless of the period when the credits were earned. SICIWA’s Board Resolution No. 10, series of 1990, which laid down the policy that leave credits could be accumulated only up to 30 days and any excess should be forfeited, must then be struck down for being contrary to Civil Service Law and Rules.


          With respect to the issue of whether or not Villones is entitled to year-end incentive bonus, DBM Budget Circular no. 11, s. of 1996, provides that:



                   “2.0    Coverage


          “2.1    All government personnel, whether appointive or elective, under regular, temporary or casual status, and contractual personnel whose employment is in the nature of a regular one who are under the following instances from January 1, to April 30 or from July 1 to October 31 of each year and shall be or are still in the service, respectively, as of October 31, of the same year.”



          Director Nilo Buot of the DBM clarified that since Villones was still in the service on October 31, 1997, he was entitled to the year-end incentive bonus. Nonetheless, Susan Solis, then Officer-in-Charge of SICIWA, asserted that Budget Circular No. 11 dated October 31, 1996 is applicable only to the Christmas Bonus and Cash Gift given to government employees and represented that these benefits were already paid to the family of the late Mr. Villones. Solis further explained that on top of these benefits, the Board of Directors of Silay City Water District grants year-end incentive bonus to its employees and that  the  amount  to be given usually depends on the availability of funds and is determined only when the fund is available, usually in the month of December. She said that the Board of Directors believed that this benefit should be granted only to those who were still employed with the water district at the time the same was released, and since Mr. Villones severed his employment effective November 3, 1997, he was no longer entitled to this benefit.


          It can be gleaned from the foregoing that SICIWA grants year-end incentive bonus on top of Christmas bonus and cash gift subject to the availability of funds. A perusal of the subject board resolution does not indicate that the year-end incentive bonus will be given only to employees who are in the government service as of December of each year. On the other hand, the aforecited DBM circular provides that year-end benefits are given to government personnel who are in the service as of October 31 of each year. It is axiomatic that the date of entitlement of benefits may be different from the date the said benefits are actually paid. Moreover, SICIWA did not justify its failure to give the year-end incentive bonus on top of the Christmas bonus and cash gifts. No document was presented to show that SICIWA did not give year-end incentive bonus to all its employees in December 1997 for non-availability of funds. We thus see that Villones was entitled to the year-end incentive bonus granted by the SICIWA on top of the Christmas bonus and cash gifts mandated by law.


Anent the issue on non-payment of separation pay, the documents submitted are inadequate to determine whether or not SICIWA has a retirement plan that includes the payment of separation pay. However, General Manager Antiporda represented that SICIWA does not have a clear-cut policy on the payment of separation pay. Noteworthy is the fact that the cited law, Republic Act No. 7641 (An Act Amending Article 287 of Presidential Decree No. 442, As Amended, Otherwise Known As The Labor Code Of The Philippines, By Providing For Retirement Pay To Qualified Private Sector Employees In The Absence Of Any Retirement Plan In the  Establishment) took effect on January 7, 1993, during which time Villones is no longer a private employee. Significantly, the said law covers employees of the private sector. Further, well-established is the rule that laws have  prospective and not retroactive effect. Hence, the said law is no longer applicable to Villones because at the time of the effectivity of the same, Villones was already a government, not a private, employee.


Finally, RA 7699 otherwise known as “An Act Instituting Portability Scheme in the Social Insurance Systems by Totalizing the Worker’s Creditable Services or Contributions in Each of the Systems”, specifically Section 3 thereof, provides, as follows:



          “SECTION 3. xxx a covered worker who transfer employment from one sector to another or is employed in both sectors shall have his creditable services or contributions in both system credited to his service or contribution record in each of the systems and shall be totalized for purposes of old-age, disability, survivorship and other benefits in case the covered member does not qualify for such benefits in either or both systems without totalization. xxx.”

This being so, Villones cannot be entitled to separation pay considering that in 1995, upon reaching the age of 60 years old, he retired with the SSS and was already receiving his monthly pension while still with the SICIWA.  In other words, he has already been compensated the old age benefits contemplated under RA 7699.


          WHEREFORE, the Commission rules that Ignacio C. Villones, Jr., duly represented by his wife Sonia L. Villones, is entitled to the year-end benefits and the commutation of his leave credits.


          Quezon City,  February 22, 2001














Attested by:




Director III