VITALICIA, Editha G.
Re: Query; Extension of Service of Presidential Appointee;
      Leave Credits; Retirement; Gratuity Pay;
      Terminal Leave Benefits
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RESOLUTION NO. 020365

 

          Editha G. Vitalicia, Human Resource Management Officer IV, National Dairy Authority (NDA), Quezon City, seeks the Commission’s ruling on matters concerning the extension of service of Dr. Onofre S. Bonifacio as Deputy Administrator of the NDA, specifically with respect to the latter’s entitlement to leave credits, application for retirement, and computation of Gratuity Pay and Terminal Leave Benefits.

         In her letter dated October 10, 2001, which was referred to the Commission by the CSC-NCR Field Office on October 30, 2001, Vitalicia presented the following issues:

"1. Is Dr. Onofre S. Bonifacio, Deputy Administrator of this Office who turned 65 years old on June 12, 1999 but whose term of office was extended by the President for three (3) more years be entitled to leave credits until the expiration of his 3-year appointment on February 3, 2002?

"2. In the event he applies for retirement, will the effectivity date be June 12, 1999 (65 years old) or February 3, 2002 (expiration of his 3-year appointment)?

"3. In computing his Gratuity Pay and Terminal Leave Benefits, will it be based on the last salary he will be receiving as of February 3, 2002 or the last salary he received when he reached the compulsory retirement age of 65?"

          Republic Act No. 7884, also known as the National Dairy Development Act of 1995, created the National Dairy Authority. Section 9 of the said Act, which provides for the appointment of the Deputy Administrator, reads, as follows:

          "SECTION 9. Management of the Authority.- There shall be a full time Administrator who shall manage the operations of the Authority, to be assisted by a Deputy Administrator. Both the Administrator and the Deputy Administrator shall be appointed by the President of the Philippines."

         It should be recalled that Dr. Bonifacio was appointed to the position of Deputy Administrator of the NDA on January 15,1996 by then President Fidel V. Ramos. On February 1, 1999, then President Joseph E. Estrada reappointed Bonifacio for a term of three years or until February 3, 2002. The word "term" is loosely used in this sense since R.A. No. 7884 does not provide for a specific term of office for the Deputy Administrator.

         When Bonifacio reached the compulsory retirement age of sixty-five (65) on June 12, 1999, he requested the Office of the President for an extension of his service since under Executive Order No. 136 (E.O. No. 136) dated July 31, 1999, presidential approval is required for the extension in the service of presidential appointees beyond the compulsory retirement age. Then President Estrada approved the said extension on April 24, 2000 thereby allowing Bonifacio to continue serving until February 3, 2002. It should be noted that Bonifacio's service was extended for two (2) years, seven (7) months and twenty-two (22) days beyond his date of retirement which is more than the maximum one-year extension provided for in Section 4 of E.O. No. 136. Said provision states, as follows:

          "SECTION 4. Upon approval of the President, the first extension of services for Presidential appointees shall be for six (6) months, and subsequently for a second extension of six (6) months, or for a maximum extension of one (1) year only."

         The first issue to be resolved is whether Dr. Bonifacio is entitled to leave credits during the extension of his service as Deputy Administrator of the NDA. Being a presidential appointee, Bonifacio’s extension of service is governed by E.O. No. 136 dated July 31, 1999, relevant portions of which read, as follows:

          "SECTION 1. The President shall approve the extension of services of Presidential appointees beyond the compulsory retirement age, only upon recommendation by the concerned Department Secretary, unless otherwise provided by law. The extension of services of non-Presidential appointees shall be subject to the approval of the Civil Service Commission, only upon the recommendation of the concerned Department Secretary and in accordance to Executive Order No. 292, otherwise known as `The Administrative Code of 1987’ and other existing laws.

x x x

          "SECTION 3. Any officer or employee requesting for retention in the service shall not be allowed to assume or continue in office pending receipt of authority from the Office of the President."

         It is worth emphasizing that E.O. No. 136 does not specify the benefits to which the presidential appointee is entitled to in case his service is extended beyond the compulsory retirement age. Nor are there any existing laws that would justify the entitlement of leave credits to a presidential appointee on extended service.

         In correlation, Section 12, Rule XIII of the Revised Omnibus Rules on Appointments and other Personnel Actions as amended by CSC Memorandum Circular No. 15, s. 1999 states, as follows:

          "Sec.12. No person who has reached the compulsory retirement age of 65 years can be appointed to any position in the government.

          "The Commission however may, in meritorious cases, extend the services of one who has reached compulsory retirement age of 65 years for a period of six (6) months. Such extension shall be at the maximum period of one (1) year for those who will complete the fifteen (15) years of service required under GSIS law. Request for extension shall be made by the head of office and shall be filed with the Commission prior to the date of the official/employee’s compulsory retirement.

          "Services rendered during the period of extension, for those who shall complete the 15 years of service required under the GSIS law, shall be credited as part of the government service. Otherwise, the same shall not be credited as government service for purposes of retirement.

          "Officials and employees on service extension shall be entitled to salaries, allowances, and other remunerations, that are normally considered part and parcel of an employee’s compensation package. Their entitlement to such salaries, allowances, and other remunerations shall be subject to existing regulations on the grant thereof. Such extension of service shall not entitle the employee to leave credits." (Emphasis supplied)

         As can be gleaned from above, an officer or employee who was granted an extension of service by the CSC is not entitled to leave credits. Analogously, one whose service was extended by the President is likewise not entitled to leave credits. To do so would create the impression that a presidential appointee who was granted an extension of service is better situated than one whose extension of service was granted by the CSC.

         In CSC Resolution No. 01-0526 dated March 2, 2001, the Commission reiterated the adopted policy that a government employee on extended service is not entitled to leave credits. The Commission ruled, to wit:

          "It is, thus, clear that a government official or employee is deemed separated from the service upon reaching their 65th birthday and service rendered during the period of extension of service is no longer credited as government service. Under such circumstance, the official/employee no longer earns leave credits."

         The Commission has adopted the said policy even in the earlier case of Briccio D. Supremo, CSC Resolution No. 97-4643, relevant portions of which read, as follows:

          "On the question whether or not Supremo is entitled to vacation and sick leave credits during the extension period, the Commission in CSC Resolution No. 972824 dated March 20, 1997, had the occasion to say that no vacation and sick leave credits shall accrue in favor of the person whose service has been extended from the compulsory retirement age of 65."

         Based from the foregoing, it is clear that Bonifacio is not entitled to leave credits during the period of his extension of service from June 13, 1999 up to the expiration of his term on February 3, 2002.

         Anent the second issue, whether the effectivity date of Bonifacio’s retirement should be June 12, 1999, which was the date he turned 65 or February 3, 2002, the expiration date of his extension of service, the Commission resolves that the former date should be the effectivity date of his retirement.

         A key issue in determining the effectivity date of retirement of an employee on extended service is whether the extension will be counted as government service. Again, E.O. NO. 136 is silent on the matter. Therefore, Paragraph 3, Section 12, Rule XIII of the Revised Omnibus Rules on Appointments and other Personnel Actions is herein applied suppletorily:

          "Services rendered during the period of extension, for those who shall complete the 15 years of service required under the GSIS law, shall be credited as part of the government service. Otherwise, the same shall not be credited as government service for purposes of retirement" (Emphasis supplied)

         The Commission’s ruling on this issue in the Maleficio case, CSC Resolution No. 01-0526 dated March 2, 2001 bears equal importance:

          "On the other hand, the general rule is that during the extended service, an employee no longer earns leave credits and that the extended service is no longer part of government service. xxx His extended term is, furthermore, not included in the computation of his retirement benefits. All told, since Maleficio is not entitled to earn leave credits during his extended term of office, it follows that such extension could not be included in the computation of his retirement benefits." (Emphasis supplied)

         In Dr. Bonifacio’s case, since he was appointed to a career position, the service he has rendered after he reached the age of 65 is not considered as government service. It would have been different if his service was extended for the purpose of completing the 15 years of service required under GSIS Law since it is only at this instance when the extension is considered as government service. Accordingly, the date of effectivity of his retirement should be the date when he reached the compulsory retirement age of 65, which is June 12, 1999.

         Finally, as to the computation of Bonifacio's Gratuity Pay and Terminal Leave Benefits, the Commission rules that the same should be based on the highest monthly salary received at the time when he reached the compulsory retirement age of 65.

         As to his Terminal Leave Benefits, of relevance is Section 39, Rule XVI of the Omnibus Rules Implementing Book V of the Administrative Code of 1987 as amended by CSC Memorandum Circular No. 41, s. 1998 which provides, as follows:

          "Sec.39 Basis of computation of terminal leave- Payment of terminal leave for purposes of retirement or voluntary resignation shall be based on the highest monthly salary received at any time during his period of employment in the government service and not on his latest salary, unless the latter is the highest received by the retiree." (Emphasis supplied)

         Based on the aforementioned, in the computation of Bonifacio's Gratuity Pay and Terminal Leave Benefits, the same should be based on the highest monthly salary he has received at the date of his retirement which is June 12, 1999. This is because the extended term should not be included in the computation of retirement benefits. As held in the Supremo case, CSC Resolution No. 97-4643:

          "However, services rendered shall not be credited as part of Supremo's government services nor the salary rate existing at the time of extension be used as basis for computing his retirement benefits.

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          "The intent of the Commission in including said stipulation, is to forestall the situation whereby the privilege of having an employee's service extended may just be used to unscrupulously increase the retirement benefits."

         In determining the basis of the Gratuity Pay and Terminal Leave Benefits, the salary received during the extended service, even if the same is the highest received by the retiree, should not be considered. Therefore, the basis for the computation of the said benefits should be the highest salary received as of June 12, 1999.

         WHEREFORE, the Commission declares that the extended service of Dr. Onofre S. Bonifacio as Deputy Administrator of the National Dairy Authority is not considered as government service. Accordingly, he is not entitled to leave credits during the period of his extended term of office from June 13, 1999 to February 3, 2002. Furthermore, the date of effectivity of his retirement should be construed as the date when he has reached the compulsory retirement age of sixty-five (65) which is June 12, 1999. The same date should also be the cut-off date in determining the highest monthly salary received in the computation of his Gratuity Pay and Terminal Leave Benefits.

         Quezon City, MAR 07 2002



(Signed)
KARINA CONSTANTINO-DAVID
Chairman
(Signed)
JOSE F. ERESTAIN, JR.
Commissioner
   
   
(Signed)
J. WALDEMAR V. VALMORES
Commissioner

Attested by:


(Signed)
ARIEL G. RONQUILLO
Director III

FPG/RTM/X1/X15/jca175
O-01-0589
20011106-016
/vitalicia’r