BIR Ruling [DA-082-99]

February 11, 1999 BIR RULING [DA-082-99] Ms. Estelita V. Datu Chief, Personnel Division This Bureau M a d a m : This refers to your Indorsement and letter dated July 1, 1998 and July 8, 1998, respectively, requesting for legal opinion as to whether or not the leave credits earned by former employees of the defunct Revenue Information Systems Services, Incorporated (RISSI) who were subsequently employed by the Bureau of Internal Revenue (BIR) may be transferred/included in the computation of their terminal leave with the BIR notwithstanding the fifth guideline of the Memorandum of the Commissioner dated December 8, 1997 and Page 4, No. 1 of Resolution No. 93-192 of the Civil Service Commission which states as follows: "1. While it is true that services rendered at RISSI are not government service, it is the view of the Commission that under E.O. 468, the BIR should pay their separation benefits. This is logical because the BIR has now the assets and liabilities of RISSI upon its dissolution. aisadc "However, let it be further clarified that for those who are absorbed by BIR and therefore not entitled to separation pay, it is the view of this Commission that the services at RISSI shall in the future be considered in the computation of their retirement benefits, chargeable against the funds of the BIR." Among the claimants of terminal leave benefits are Mesdames Aurora de Joya and Gerundia Nisperos and Mr. Leonardo Rebuelta, who were absorbed by the BIR on August 16, 1993, August 2, 1993 and December 1, 1993, respectively, but were duly paid their separation pay prior to their retirement in accordance with Section 4 of E.O. No. 468 and the letter dated September 8, 1997 of the Secretary of Finance. Verbal inquiries made by former RISSI employees concerning their individual cases were made part of this opinion. In reply, please be informed as follows: Pursuant to the Decision of the NLRC First Division in NLRC NCR Case #00-04-02440-93 dated March 10, 1995, referring to CSC Resolution Nos. 92-1669 and 93-132 with respect to the separation pay of employees of the defunct RISSI, the BIR which acquired all the assets and properties of RISSI shall have to pay all the liabilities of the latter including the separation pay of the employees duly awarded by Labor Arbiter Valentin C. Reyes and later affirmed by the NLRC, first Division. Reconciling the decision of the NLRC to the Memorandum of the Commissioner dated December 18, 1997 and pronouncements made by the Civil Service Commission in the abovementioned CSC Resolutions, viz: " Resolution No . 92-1669 "1. Officers and employees of the RISSI who continue to perform their duties and functions at the BIR are deemed BIR employees by operation of RO 468. "2. For appointment to BIR, they shall possess the required qualifications for the position including appropriate civil service eligibility. However, for those who do not have appropriate eligibility at the time of appointment, they shall be given temporary appointment without prejudice to their future qualification under CSC MC No. 10 and Res. 435. "3. The period of their employment with RISSI shall not be considered government service because clearly, they were rendered and performed for a private entity. "4. All RISSI employee who shall be separated from the service because they are not given appointment at BIR are entitled to separation benefits provided for under RA 6656. "5. If a RISSI employee is absorbed by the BIR , then he is not separated and therefore not entitled to separation pay. If separated , then he does qualify for separation pay. "6. The option to be separated as well as to apply for appointment at BIR after separation belongs to the person himself. The option to appoint them belongs to the BIR." "Resolution No. 93-132 "1. All services rendered with RISSI and all leave credits earned with the same are included in the computation of separation benefits under RA 6656 and commutation of leave credits earned with the BIR, respectively. "BIR shall pay said separation benefits and money value of leave credits earned during the said period. For those who are to be absorbed by BIR and therefore not entitled to separation pay, their service at RISSI shall in the future be considered in the computation of their retirement benefits chargeable against the funds of BIR. "2. Those who had received separation benefits under RA 6656 need not return to the BIR the amount of the separation "However, let it be further clarified that for those who are absorbed by BIR and therefore not entitled to separation pay, it is the view of this Commission that the services at RISSI shall in the future be considered in the computation of their retirement benefits, chargeable against the funds of the BIR." RISSI employees who were then considered private employees, but were subsequently absorbed by the BIR shall not be entitled to a separation pay. Further, such services rendered with RISSI, specifically their leave credits thereat, shall be considered and added to their respective services in the BIR in computing their retirement benefits. It should be noted therefore, that their subsequent re-appointment with the BIR will result in the non-entitlement to a separation pay which was awarded as a consequence of RISSI's dissolution. After a careful study of the foregoing, this Office, with the ultimate intention of upholding the Decision of the NLRC which is consistent with provisions of the Labor Code, and to rectify the error which could have been committed in the implementation of said Decision and CSC Resolutions, is of the opinion as it hereby holds that: A) For a former RISSI employees who were appointed in the BIR and therefore not entitled to separation benefits pursuant to CSC Res. No. 93-132, they shall likewise be paid of such benefits consisting of the separation/severance pay and the corresponding money value of their incentive leave credits earned in RISSI, as mandated under Arts. 283 and 95 of the Labor Code. This is so, because, categorically, such benefits had accrued to them as a consequence of their separation from private employment, i.e., at RISSI. Thereafter, since they were duly appointed in the government service, i.e., at BIR, upon their retirement therefrom, they are also entitled to the retirement benefits granted to a government employee including commutation of leave credits earned in the BIR. B) For those RISSI employees duly appointed in the BIR but nonetheless were paid their corresponding separation benefits pursuant to CSC Res. No. 93-132, but exclusive of money value of leave credits earned at RISSI, they shall be altogether entitled to the payment of the same. As earlier stated, the separation pay and money value of leave credits are distinct and exclusive from each other. C) In both cases, for the purpose of computing the retirement benefits (as contra-distinguished from separation/severance pay), the length of government service shall be reckoned from the date the appointment in the BIR was duly approved. Thus, the payment (or non-payment) of separation benefits consisting of separation/severance pay and money value of leave credits earned in RISSI, which were all duly litigated before the Labor Arbiter and confirmed by the NLRC did not and will not affect the length of service in the government pursuant to CSC Res. No. 92-1669 which states that " services rendered at RISSI are deemed rendered and performed for private entity ". D) Further, the entitlement to separation pay is not conditioned on the non-appointment to BIR, nor the appointment to government service, in the BIR in this case, dependent on the non-payment of such separation pay. On the contrary, per CSC Res. 92-1669, for re-appointment to BIR, an employee of the RISSI must possess the required qualification for the position including appropriate civil service eligibility; and for those who did not have the appropriate eligibility at the time of such appointment, they were given temporary appointment without prejudice to their future qualification under CSC MC No. 10 and Res. 435. F) Finally, an employee who had resigned from RISSI immediately before the SEC approved RISSI's dissolution and before the award of the individual employees' separation pay shall not be entitled to the benefits granted under the Labor Code as a consequence of RISSI dissolution. Very truly yours, (SGD.) BEETHOVEN L. RUALO Commissioner of Internal Revenue