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'~19., No.i.._~"

NATIONAL BUDGETCIRCULARNo. 429'

September 30, 1993

TO Heads of Departments of Health, Agriculture,

Environment and Natural Resources, Social Welfare and
Development, Local Government Units and All Others
Concerned

SUBJECT: Separation and Retirement Benefits of National

Government Agency Personnel Devolved to the Local
Governmen t U ni ts

SECTION1. Purpose. This Circular is issued in compliance with

Executive Order No. 503, dated January 22, 1992, which provides the rules
and regulations implementing Republic Act No. 7160, otherwise known as
the Local Government Code of 1991. .
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SECTION2. Coverage. All officials and employees ~f national
government agencies (NGAs) affected by the devolution of powers,
functions and responsibilities to the local government units (LGUs)
pursuant to R.A. 7160.

SECTION 3. Rules and Regulations.

3.1 An official! employee to be devolved, who opts for retirement

from the service shall be entitled, if qualified under existing
laws, to receive retirement gratuities and other benefits
/ . accruing thereon. .

3.2 An official/employee to be devolved who is not eligible for

retirement, but opts to be separated from the service shall be
entitled to separation pay equivalent to one (1) month salary
for every year of service, plus proportionate amount for any
fraction thereof over and above the monetary value of his
accumulated leave credits, pursuant to existing laws.

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3.3 An official or employee who is devolved to the LGU under

Section 7 of Rule XVI of the Omnibus Rules Implementing
Book V of Executive Order No. 292 and other pertinent Civil i
Service Rules may, at the time of tr. ,nsfer, choose either of the
following modes relative to his unused vacation and/or sick
leave credits, to wit:

3.3.1 Have it commuted; or

3.3.2 Have it transferred to his new agency.

3.4 The payment of retirement benefits to an official/employee

specified under Sub-Sections 3.1 and 3.2 shall be assumed solely
by the NGA concerned. Likewise, the payment of commuted
leave credits under Sub-Section 3.3.1 shall be assumed by the
NGA concerned.

3.5 An official or employee who is transferred to the LGU but who

subsequently retires or is separated from the service shall be
paid retirement benefits proportionately shared by the NGA
and the LGU concerned based on the cumulative length of
service in both agencies.
SECTION 4. Funding Source.

4.1 Retirement Gratuity, Separation Pay and/or. Terminal Leave

Pay of officials/ employees to be devolved but opt to retire/be
separated from the service shall be funded from the lump-sum
tI appropriation for Miscellaneous Personnel Benefits Fund
(MPBF) .

4.2 Retirement Gratuity and Terminal Leave Pay of NGA

officials/ employees ,who were transferred to the LGU shall be
funded as follows:

A. Retirement Gratuity ,.

A.l MPBF, for services rendered in the national

government; and

A.2 Local funds, for services rendered in the LGU.

B. Terminal Leave Pay

B.l MPBF, for terminal leave pay of officials/ employees

who opted to have their accumulated leave credits
commuted before transferring to the LGU;

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B.2 MPBF, for leave credits earned in NGA and

transferred to the LGU; and

B.3 Local funds, for leave credits earned in the LGU.

4.3 Illustrative examples of the computation of the

retirement/ separation and terminal leave benefits are found in
"ANNEX A."

SECTION 5. Responsibility.

5.1 The Department of Budget and Management (DBM) shall

provide, priority funding to the separation/retirement and
other benefits of officials/employees specified in Sub-Sections
3.1 and 3.2.

5.2 The DBM shall provide priority funding .to the proportionate
share of the national government in the retirement and other
benefits of an official/employee devolved to the LGU.

5.3 The LGU concerned shall provide priority funding to the

proportionate share of the LGU in the retirement and other
benefits of an official! employee devolved from the NGA.

SECTION6. Saving Clause. Cases not covered by the provisions of

this Circular shall be referred to the DBM for appropriate .action.

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SALVA~~..::.,
yrbR-M.-EN ~
QUEZ ~

/ ' Secretary ,J .

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ANNEX "A"

ILLUSTRATIVE EXAMPLES

1.1 An employee who is with a national government agency (NGA)

from July 8, 1961 was devolved to the LGU effective July 1,
1992. Said employee retired from the government service
effective September 10, 1993 with highest monthly salary
received of P6,588.00. His )eave credits transferred to the
LGU pursuant to Section 7 of Rule XVI of the Omnibus Rules
implementing Book V of E. O. No. 292 is 200 days and has
accumulated additional 22 days while in the LGU.
COMPUTATION OF TOTAL BENEFITS
-----------------------------
A. Retirement Gratuity

1. Creditable Service
-------------------

National
--------
06/30/92 92.58219
07/08/61 61.60525 30.97694
-----------

Local
--------
09/10/93 93.71740
07/01/92 92.58607 1.13133
----------- -----------
Total 32.10827
-----------
-----------
t
2. Gratuity Months
-----------------
1st 20 years 20.0 x 1 - 20.0000
21-30 years 10.0 x 1. 5 - 15.0000
Over 30 years 2.10827 x 2 = 4.2165
--~-------
Total : 39.2165
========-==

3. Retirement Gratuity
----------------------
P 6,588 x 39.2165 = p 258.358
----------
----------

NGA Share = 30.97694/32.10827 x 258,358 = p 249,255

LGU Share = 1.13133/32.10827 x 258,358 = 9,103
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Total p 258,358
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B. Terminal .Leave Pay

P 6,588/22 working days x 222 days = P 66,47,9

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j-----

NGA Share = 30.97694/32.10827 x 66,479 =

-
P 64,137
LGU Share = 1.13133/32.10827 x 66,479 2,342
----------
P 66,479
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----------

1.2 An employee who is with an LGU from January 1, 1972 was

absorbed by the NGA by virtue of Executive Order No. 112 of
the Office of the President effective January 1, 1987. The
same employee is devolved as of June 30, 1992 to the LGU.
He retired from the government service effective January 1,
1998 with highest monthly salary received of P10,135.00
Based on certificationof leave credits earned, he has
unused leave credits of 150 days as a local employee and 15
days as a national government employee which was transferred
to the LGU pursuant to Section 7 of Rule XVI of the Omnibus
Rules Implementing Book V of E. O. 292.
COMPUTATION OF TOTAL BENEFITS

A. Retirement Gratuity
1. Creditable Service
------------------
Local
'
12/31/86 87.08493
01/01/72 72.08607 14.99886
-----------
tI

01/01/98 98.08607
07/01/92 92.58607 5.50000 20.49886
----------- -----------

National
-----------
06/30/92 92.58219
: 5.49612
01/01/87 87.08607
----------- ----------
Total 25.99498
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----------

2. Gratuity Months
----------------
1st 20 years 20.0 x 1 = 20.00000
-
Over 20 years 5.99498 x 1. 5 8.99247
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Total 28.99247
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3. Retirement Gratuity
--------------------
P 10,135 x 28.99247 = P 298,839
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----------

LGU Share = 20.49886/25.99498 x 293,839 = P 231,713

NGA Share = 5.49612/25.99498 x 293,839 = 62,126
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Total P 293,839
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----------

B. Terminal Leave
P 10,135/22 working days x 165 days = P 76,012
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LGU Share = 150/165 x 76.012 = P 69,102

NGA Share = 15/165 x 76.012 = 6,910
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Total P 76,012
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1.3 An employee who is to be devolved to the LGU opted to be

separated from the government service. He rendered 10 years
government service and unused leave credits of 150 days.
His latest monthly salary amounts to P3,540.00.
COMPUTATION OF SEPARATION PAY AND MONETARY VALUE OF UNUSED
LEAVE CREDITS

A. Separation Pay
P 3,540.00 x 10 years = P 35,400
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----------
.
B. Money Value of Unused Leave Credits
P 3,540/22 working days x 150 days
- P 24,136
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