COMMISSION ON AUDIT CIRCULAR NO.

76-38 October 20, 1976

TO : All Provincial Governors, City Mayors, Municipal Mayors, Provincial, City and
Municipal Treasurers, Provincial and City Auditors and Others Concerned.

SUBJECT : Guidelines in the Implementation of Longevity Pay Grants.

It has been observed that some local government units have granted longevity pay to
their officials and employees upon prior authority or approval of the Office of the President,
based on the length of services rendered in the government. One such entity is the City of
Manila which has been authorized by the Office of the President to grant longevity pay to its
employees in the amount of P10.00 for every five (5) years of service, subject to the availability
of funds and the usual accounting and auditing requirements.

On the premise that longevity pay is being given in consideration of length of service in
the government, it stands to reason that such service be continuous, satisfactory, and
untarnished by any administrative case. This given rationale, it is believed, may not be
impugned on grounds of equity and justice, in like manner that the purpose of the grant of leave
privileges which are predicted on continuous, faithful and satisfactory services may not be
opened to question.

In view thereof, there is a need for a regulation to govern the payment of longevity pay
benefits. For this purpose, continuous service should mean service for at least five (5) years
without interruption, provided that service over ten (10) years should allow only a gap or break
of less than one (1) year to be considered as continuous. On the quality of service rendered,
the performance rating of the employee concerned should be at least "satisfactory" for the last
three (3) grading periods. As to record, the employee should not have any pending
administrative case, or be found guilty therein. (A reprimand or warning is not, however,
considered a penalty for this purpose.) The following guidelines are, therefore, prescribed for
the guidance of all concerned:

1. Longevity pay shall not be granted where service in the government is less than
five (5) years;

2. Where service in the government is ten (10) years or over, and there is a break or
gap of more than one year beyond the minimum 5-year requirement, a deduction
of 5% of the rate of the monthly longevity pay pertaining to that period beyond 5
years shall be made for every year's hiatus;

3. If an employee's performance rating for any of the last 3 grading periods is below
satisfactory standard, a deduction of 5% of the rate of monthly longevity pay due
for that fiscal period shall be deducted;

4. Longevity pay shall not be allowed to any employee during the pendency of any
administrative case against him, but the same shall be paid in the event he is
exonerated therefrom;
 5. No longevity pay shall be allowed where the employee concerned is on leave of
absence without pay or on terminal leave, corresponding to the duration of such
leave.

6. A certain percentage of the monthly longevity pay shall be deducted where the
employee concerned has been found guilty of an administrative offense, the rate of
deduction of which shall depend upon the gravity of the penalty imposed and the
recommendation of the head of office.

It is to be understood that longevity pay does not form part of the basic monthly salary
and, therefore, shall not be included in the computation of claims for terminal leave, or
considered as basis in the computation of retirement pay.

(SGD.) FRANCISCO S. TANTUICO, JR., Acting Chairman