Lost option

When a retired government employee is re-employed in another government office, can his previous government service be credited in the computation of his retirement benefit? This is the issue raised in this case of Pepe.

On August 18, 1986 Pepe retired from the Department of Agrarian Reform (DAR) after rendering almost 21 years service. At the time of his retirement, the applicable law was P.D. 1146 as amended by P.D. 1981 which gave him the right to choose the law to govern the computation of his retirement benefits. And he chose R.A. 1616 wherein he was granted gratuity benefits plus return of contribution.

On January 2, 1989, Pepe was re-employed in the Office of the Ombudsman for Luzon. After another 8 years of service or in 1997, Pepe initiated moves to avail of early retirement under R.A. 660 wherein he will receive 5 years lump sum pension and after 5 years, life time pension. He requested and received a computation from the GSIS Operating Unit amounting to P667,937.40. So Pepe formally applied for retirement under R.A. 660 in January 1998.

But in a letter dated May 4, 1998, the GSIS Operating Unit informed Pepe that he could no longer retire under R.A. 660 but he could do so only under R.A. 8291 which amended P.D. 1146. Under R.A. 8291 all service credited for retirement for which corresponding benefits have been awarded shall be excluded in the computation of service when a retiree is re-employed. In effect he shall be considered a new entrant. Hence Pepe is entitled to a reduced benefit of P81,557.20 only because the computation did not consider his almost 21 years of service with DAR prior to his previous retirement.

This ruling was affirmed by the GSIS Committee on Claims and later on the GSIS Board of Trustees. The Board and the Committee ruled that Pepe’s right to choose the law under which he would retire so as to                                                                                    be covered by R.A. 660 is no longer available because he had already exercised said right when he availed of it during his previous retirement in 1986. In 1986 he chose to forego the benefits of R.A. 660 and retired under R.A. 1616.

Pepe questioned the decision on the Committee and the GSIS Board. He contended that he is still entitled to exercise the option to again retire under the old law upon his re-employment. So he can chose between R.A. 660 and R.A. 8291. Was Pepe correct?

No. When Pepe first retired in 1986, the applicable law was P.D. 1146 as amended by P.D. 1981 wherein the government employee still has the option to retire pursuant to the old law, CA 186 or under P.D. 1146, and if the said option is exercised they may change the mode of retirement chosen within one year from the date of retirement. Once the retired employee is however re-employed, they shall subsequently retire only under P.D. 1146. The clear legislative intent of P.D. 1981 amending P.D. 1146 is to withhold the availability of retirement option from those who have been re-employed and are retiring for the second time.

Furthermore, when Pepe formally applied for retirement the second time in 1998, R.A. 8291 which amended P.D. 1146 was already in place. So, it was indubitably the law applicable to his second retirement. In Section 3 of said R.A. 8291, a new employee or an employee who has previously retired or separated and re-employed in the service shall be covered by its provisions. And in Section 10 (b) thereof, all service credited for retirement… for which corresponding benefits have been awarded shall be excluded in the computation of future benefits.

As a re-employed member of the government service who is retiring during the effectivity of R.A. 8291 therefore, Pepe cannot have his previous government service with the DAR credited in the computation of his retirement benefits. Neither can he choose a mode of retirement except that provided under R.A. 8291 (Santos vs. Committee on Claims Settlement and GSIS, G.R. 158071, April 2, 2009). –Jose C. Sison, Philippine Star

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