LABOR 3.3.10

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RETIREMENT PAY LAW (RA 7641)

A.WHO ARE EXEMPTED:~ retail, service, agricultural establishments~ operations employing not more

than 10 employees or workers

B.KINDS:

1.OPTIONAL - 60 years old / 5 years in service (includes authorized absences/vacations/regular

holidays/mandatory military or civic service)

2.COMPULSORY - 65 years old/ regardless or years of service (company not bound to dismiss employee)

C.BENEFITS:

1/2 month salary per year of service which shall include:1.15-day basic wage, plus

2.1/12 of the 13th month pay, plus3.5-day Service incentive leave pay plus* a fraction of at least 6 mos.

considered as one whole year4.other benefits as maybe agreed upon by er and ee** MINIMUM ~ no. 1 +no. 2 + no. 3 = n x years of service~ minimum only so employer must pay deficiency in case agreed

amount be less than the above

Republic Act No. 8282 May 01, 1997

AN ACT FURTHER STRENGTHENING THE SOCIAL SECURITY SYSTEM THEREBY AMENDING FORTHIS PURPOSE, REPUBLIC ACT NO. 1161, AS AMENDED, OTHERWISE KNOWN AS THE SOCIAL

SECURITY LAW

Be it enacted by the Senate and House of Representatives of the Philippines in Congress assembled: :

Section 1. Republic Act No. 1161, as amended, otherwise known as the "Social Security Law", is herebyfurther amended to read as follows:

"SECTION 1. Short Title. - This Act shall be known as the " AN ACT FURTHER STRENGTHENINGTHE SOCIAL SECURITY SYSTEM THEREBY AMENDING FOR THIS PURPOSE, REPUBLIC ACT NO. 1161, AS AMENDED, OTHERWISE KNOWN AS THE SOCIAL SECURITY LAW ."

"SEC. 2. Declaration of Policy . - It is the policy of the Republic of the Philippines to establish,develop, promote and perfect a sound and viable tax-exempt social security service suitable to theneeds of the people throughout the Philippines which shall promote social justice and providemeaningful protection to members and their beneficiaries against the hazards of disability,sickness, maternity, old age, death, and other contingencies resulting in loss of income or financialburden. Towards this end, the State shall endeavor to extend social security protection to workersand their beneficiaries.

http://www.lawphil.net/statutes/repacts/ra1954/ra_1161_1954.html


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"SEC. 3. Social Security System. - (a) To carry out the purposes of this Act, the Social SecuritySystem, hereinafter referred to as 'SSS', a corporate body, with principal place of business in MetroManila, Philippines is hereby created. The SSS shall be directed and controlled by a SocialSecurity Commission, hereinafter referred to as 'Commission', composed of the Secretary of Laborand Employment or his duly designated undersecretary, the SSS president and seven (7)

appointive members, three (3) of whom shall represent the workers' group, at least one of whomshall be a woman; three (3), the employers' group, at least one (1) of whom shall be a woman; andone (1), the general public whose representative shall have adequate knowledge and experienceregarding social security, to be appointed by the President of the Philippines. The six (6) membersrepresenting workers and employers shall be chosen from among the nominees of workers' andemployers' organizations, respectively. The Chairman of the Commission shall be designated bythe President of the Philippines from among its members. The term of the appointive membersshall be three (3) years: Provided , That the terms of the first six (6) appointive members shall beone (1), two (2) and three (3) years for every two members, respectively: Provided , further , Thatthey shall continue to hold office until their successors shall have been appointed and dulyqualified. All vacancies, prior to the expiration of the term, shall be filled for the unexpired term

only. The appointive members of the Commission shall receive at least two thousand five hundredpesos (P2,500.00) per diem for each meeting actually attended by them but not to exceed Tenthousand pesos (P10,000.00) a month:: Provided , That members of the Commission shall alsoreceive a per diem of at least Two thousand five hundred pesos (P2,500.00) but not to exceedFifteen thousand pesos (P15,000.00) a month: Provided , further , That said members of theCommission shall also receive reasonable transportation and representation allowances as may befixed by the Commission, but not to exceed Ten thousand pesos (P10,000.00) a month.

"(b) The general conduct of the operations and management functions of the SSS shall be vestedin the SSS President who shall serve as the chief executive officer immediately responsible forcarrying out the program of the SSS and the policies of the Commission. The SSS President shallbe a person who has had previous experience in the technical and administrative fields related tothe purposes of this Act. He shall be appointed by the President of the Philippines and shall receivesalary to be fixed by the Commission with the approval of the President of the Philippines, payablefrom the funds of the SSS.

"(c) The Commission, upon the recommendation of the SSS President, shall appoint an actuary,and such other personnel as may be deemed necessary, fix their reasonable compensation,allowances and other benefits, prescribe their duties and establish such methods and proceduresas may be necessary to insure the efficient, honest and economical administration of the provisionsand purposes of this Act: Provided , however , That the personnel of the SSS below the rank ofVice-President shall be appointed by the SSS President: Provided , further , That the personnelappointed by the SSS President, except those below the rank of assistant manager, shall besubject to the confirmation by the Commission: Provided , further , That the personnel of the SSSshall be selected only from civil service eligibles and be subject to civil service rules andregulations: Provided , finally , That the SSS shall be exempt from the provisions of Republic Act No.6758 and Republic Act No. 7430.

"SEC. 4. Powers and Duties of the Commission and SSS. - (a) The Commission. - For theattainment of its main objectives as set forth in Section 2 hereof, the Commission shall have thefollowing powers and duties:







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"(1) To adopt, amend and rescind, subject to the approval of the President of thePhilippines, such rules and regulations as may be necessary to carry out the provisionsand purposes of this Act;

"(2) To establish a provident fund for the members which will consist of voluntary

contributions of employers and/or employees, self-employed and voluntary members andtheir earnings, for the payment of benefits to such members or their beneficiaries, subjectto such rules and regulations as it may promulgate and approved by the President of thePhilippines;

"(3) To maintain a provident fund which consists of contributions made by both the SSSand its officials and employees and their earnings, for the payment of benefits to suchofficials and employees or their heirs under such terms and conditions as it may prescribe;

"(4) To approve restructuring proposals for the payment of due but unremittedcontributions and unpaid loan amortizations under such terms and conditions as it may

prescribe;

"(5) To authorize cooperatives registered with the cooperative development authority orassociations registered with the appropriate government agency to act as collecting agentsof the SSS with respect to their members: Provided , That the SSS shall accredit thecooperative or association: Provided , further , That the persons authorized to collect arebonded;

"(6) To compromise or release, in whole or in part, any interest, penalty or any civil liabilityto SSS in connection with the investments authorized under Section 26 hereof, under suchterms and conditions as it may prescribe and approved by the President of the Philippines;

and

"(7) To approve, confirm, pass upon or review any and all actions of the SSS in the properand necessary exercise of its powers and duties hereinafter enumerated.

"(b) The Social Security System. - Subject to the provision of Section four (4), paragraph seven (7)hereof, the SSS shall have the following powers and duties:

"(1) To submit annually not later than April 30, a public report to the President of thePhilippines and to the Congress of the Philippines covering its activities in theadministration and enforcement of this Act during the preceding year including informationand recommendations on broad policies for the development and perfection of theprogram of the SSS;

"(2) To require the actuary to submit a valuation report on the SSS benefit program everyfour (4) years, or more frequently as may be necessary, to undertake the necessaryactuarial studies and calculations concerning increases in benefits taking into accountinflation and the financial stability of the SSS, and to provide for feasible increases inbenefits every four (4) years, including the addition of new ones, under such rules and

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regulations as the Commission may adopt, subject to the approval of the President of thePhilippines: Provided , That the actuarial soundness of the reserve fund shall beguaranteed: Provided , further , That such increases in benefits shall not require anyincrease in the rate of contribution;

"(3) To establish offices of the SSS to cover as many provinces, cities and congressionaldistricts, whenever and wherever it may be expedient, necessary and feasible, and toinspect or cause to be inspected periodically such offices;

"(4) To enter into agreements or contracts for such service and aid, as may be needed forthe proper, efficient and stable administration of the SSS;

"(5) To adopt, from time to time, a budget of expenditures including salaries of personnel,against all funds available to the SSS under this Act;

"(6) To set up its accounting system and provide the necessary personnel therefor;

"(7) To require reports, compilations and analyses of statistical and economic data and tomake investigation as may be needed for the proper administration and development ofthe SSS;

"(8) To acquire and dispose of property, real or personal, which may be necessary orexpedient for the attainment of the purposes of this Act;

"(9) To acquire, receive, or hold, by way of purchase, expropriation or otherwise, public orprivate property for the purpose of undertaking housing projects preferably for the benefitof low-income members and for the maintenance of hospitals and institutions for the sick,

aged and disabled, as well as schools for the members and their immediate families;

"(10) To sue and be sued in court; and

"(11) To perform such other corporate acts as it may deem appropriate for the properenforcement of this Act.

"SEC. 5. Settlement of Disputes. - (a) Any dispute arising under this Act with respect to coverage,benefits, contributions and penalties thereon or any other matter related thereto, shall becognizable by the Commission, and any case filed with respect thereto shall be heard by theCommission, or any of its members, or by hearing officers duly authorized by the Commission anddecided within twenty (20) days after the submission of the evidence. The filing, determination andsettlement of disputes shall be governed by the rules and regulations promulgated by theCommission.

"(b) Appeal to Courts. - Any decision of the Commission, in the absence of an appeal therefrom asherein Provided , shall become final and executory fifteen (15) days after the date of notification,and judicial review thereof shall be permitted only after any party claiming to be aggrieved therebyhas exhausted his remedies before the Commission. The Commission shall be deemed to be a

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party to any judicial action involving any such decision, and may be represented by an attorneyemployed by the Commission, or when requested by the Commission, by the Solicitor General orany public prosecutors.

"(c) Court Review. - The decision of the Commission upon any disputed matter may be reviewed

both upon the law and the facts by the Court of Appeals. For the purpose of such review, theprocedure concerning appeals from the Regional Trial Court shall be followed as far as practicableand consistent with the purposes of this Act. Appeal from a decision of the Commission must betaken within fifteen (15) days from notification of such decision. If the decision of the Commissioninvolves only questions of law, the same shall be reviewed by the Supreme Court. No appeal bondshall be required. The case shall be heard in a summary manner, and shall take precedence overall cases, except that in the Supreme Court, criminal cases wherein life imprisonment or death hasbeen imposed by the trial court shall take precedence. No appeal shall act as a supersedeas or astay of the order of the Commission unless the Commission itself, or the Court of Appeals or theSupreme Court, shall so order.

"(d) Execution of Decisions. - The Commission may, motu proprio or on motion of any interestedparty, issue a writ of execution to enforce any of its decisions or awards, after it has become finaland executory, in the same manner as the decision of the Regional Trial Court by directing the cityor provincial sheriff or the sheriff whom it may appoint to enforce such final decision or executesuch writ; and any person who shall fail or refuse to comply with such decision, award or writ, afterbeing required to do so shall, upon application by the Commission pursuant to Rule 71 of the Rulesof Court, be punished for contempt.

"SEC. 6. Auditor and Counsel . - (a) The Chairman of the Commission on Audit shall be the ex-officio Auditor of the SSS. He or his representative shall check and audit all the accounts, fundsand properties of the SSS in the same manner and as frequently as the accounts, funds andproperties of the government are checked and audited under existing laws, and he shall have, asfar as practicable, the same powers and duties as he has with respect to the checking and auditingof public accounts, funds and properties in general.

"(b) The Secretary of Justice shall be the ex-officio counsel of the SSS. He or his representativeshall act as legal adviser and counsel thereof.

"SEC. 7. Oaths, Witnesses, and Production of Records. - When authorized by the Commission, anofficial or employee thereof shall have the power to administer oath and affirmation, takedepositions, certify to official acts, and issue subpoena and subpoena duces tecum to compel theattendance of witnesses and the production of books, papers, correspondence and other recordsdeemed necessary as evidence in connection with any question arising under this Act. Any case ofcontumacy shall be dealt with by the Commission in accordance with law.

"SEC. 8. Terms Defined . - For purposes of this Act, the following terms shall, unless the contextindicates otherwise, have the following meanings:

"(a) SSS - The Social Security System created by this Act.

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"(b) Commission - The Social Security Commission as herein created.

"(c) Employer- Any person, natural or juridical, domestic or foreign, who carries on in thePhilippines any trade, business, industry, undertaking, or activity of any kind and uses the servicesof another person who is under his orders as regards the employment, except the Government and

any of its political subdivisions, branches or instrumentalities, including corporations owned orcontrolled by the Government: Provided , That a self-employed person shall be both employee andemployer at the same time.

"(d) Employee - Any person who performs services for an employer in which either or both mentalor physical efforts are used and who receives compensation for such services, where there is anemployer-employee relationship: Provided , That a self-employed person shall be both employeeand employer at the same time.

"(e) Dependents - The dependents shall be the following:

"(1) The legal spouse entitled by law to receive support from the member;

"(2) The legitimate, legitimated or legally adopted, and illegitimate child who is unmarried,not gainfully employed, and has not reached twenty-one (21) years of age, or if overtwenty-one (21) years of age, he is congenitally or while still a minor has been permanentlyincapacitated and incapable of self-support, physically or mentally; and

"(3) The parent who is receiving regular support from the member.

"(f) Compensation - All actual remuneration for employment, including the mandated cost-of-livingallowance, as well as the cash value of any remuneration paid in any medium other than cash

except that part of the remuneration in excess of the maximum salary credit as Provided underSection Eighteen of this Act.

"(g) Monthly salary credit - The compensation base for contributions and benefits as indicated inthe schedule in Section Eighteen of this Act.

"(h) Monthly - The period from one end of the last payroll period of the preceding month to the endof the last payroll period of the current month if compensation is on hourly, daily or weekly basis; ifon any other basis, 'monthly' shall mean a period of one (1) month.

"(i) Contribution - The amount paid to the SSS by and on behalf of the members in accordance withSection Eighteen of this Act.

"(j) Employment - Any service performed by an employee for his employer except:

"(1) Employment purely casual and not for the purpose of occupation or business of theemployer;

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"(2) Service performed on or in connection with an alien vessel by an employee if he isemployed when such vessel is outside the Philippines;

"(3) Service performed in the employ of the Philippine Government or instrumentality oragency thereof;

"(4) Service performed in the employ of a foreign government or international organization,or their wholly-owned instrumentality: Provided , however , That this exemptionnotwithstanding, any foreign government, international organization or their wholly-ownedinstrumentality employing workers in the Philippines or employing Filipinos outside of thePhilippines, may enter into an agreement with the Philippine Government for the inclusionof such employees in the SSS except those already covered by their respective civilservice retirement systems: Provided , further , That the terms of such agreement shallconform with the provisions of this Act on coverage and amount of payment ofcontributions and benefits: Provided , finally , That the provisions of this Act shall besupplementary to any such agreement; and

"(5) Such other services performed by temporary and other employees which may beexcluded by regulation of the Commission. Employees of bona fide independentcontractors shall not be deemed employees of the employer engaging the service of saidcontractors.

"(k) Beneficiaries - The dependent spouse until he or she remarries, the dependent legitimate,legitimated or legally adopted, and illegitimate children, who shall be the primary beneficiaries ofthe member: Provided , That the dependent illegitimate children shall be entitled to fifty percent(50%) of the share of the legitimate, legitimated or legally adopted children: Provided , further , Thatin the absence of the dependent legitimate, legitimated children of the member, his/her dependentillegitimate children shall be entitled to one hundred percent (100%) of the benefits. In theirabsence, the dependent parents who shall be the secondary beneficiaries of the member. In theabsence of all the foregoing, any other person designated by the member as his/her secondarybeneficiary.

"(l) Contingency - The retirement, death, disability, injury or sickness and maternity of the member.

"(m) Average monthly salary credit - The result obtained by dividing the sum of the last sixty (60)monthly salary credits immediately preceding the semester of contingency by sixty (60), or theresult obtained by dividing the sum of all the monthly salary credits paid prior to the semester ofcontingency by the number of monthly contributions paid in the same period, whichever is greater:Provided , That the injury or sickness which caused the disability shall be deemed as thepermanent disability for the purpose of computing the average monthly salary credit.

"(n) Average daily salary credit- The result obtained by dividing the sum of the six (6) highestmonthly salary credits in the twelve-month period immediately preceding the semester ofcontingency by one hundred eighty (180).

"(o) Semester - A period of two (2) consecutive quarters ending in the quarter of contingency.

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"(p) Quarter - A period of three (3) consecutive calendar months ending on the last day of March,June, September and December.

"(q) Credited years of service - For a member covered prior to January nineteen hundred andeighty five (1985) minus the calendar year of coverage plus the number of calendar years in which

six (6) or more contributions have been paid from January nineteen hundred and eighty five (1985)up to the calendar year containing the semester prior to the contingency. For a member covered inor after January nineteen hundred and eighty five (1985), the number of calendar years in whichsix (6) or more contributions have been paid from the year of coverage up to the calendar yearcontaining the semester prior to the contingency: Provided , That the Commission may provide for adifferent number of contributions in a calendar year for it to be considered as a credited year ofservice.

"(r) Member - The worker who is covered under Section Nine and Section Nine-A of this Act.

"(s) Self-employed - Any person whose income is not derived from employment, as defined under

this Act, as well as those workers enumerated in Section Nine-A hereof.

"(t) Net earnings - Net income before income taxes plus non-cash charges such as depreciationand depletion appearing in the regular financial statement of the issuing or assuming institution.

"(u) Fixed charges - Recurring expense such as amortization of debt discount or rentals for leasedproperties, including interest on funded and unfunded debt.

"SEC. 9. Coverage. - (a) Coverage in the SSS shall be compulsory upon all employees not oversixty (60) years of age and their employers: Provided , That in the case of domestic helpers, theirmonthly income shall not be less than One thousand pesos (P1,000.00) a month: Provided , further ,

That any benefit already earned by the employees under private benefit plans existing at the timeof the approval of this Act shall not be discontinued, reduced or otherwise impaired: Provided ,further , That private plans which are existing and in force at the time of compulsory coverage shallbe integrated with the plan of the SSS in such a way where the employer's contribution to hisprivate plan is more than that required of him in this Act, he shall pay to the SSS only thecontribution required of him and he shall continue his contribution to such private plan less hiscontribution to the SSS so that the employer's total contribution to his benefit plan and to the SSSshall be the same as his contribution to his private benefit plan before the compulsory coverage:Provided , further , That any changes, adjustments, modifications, eliminations or improvements inthe benefits to be available under the remaining private plan, which may be necessary to adopt byreason of the reduced contributions thereto as a result of the integration, shall be subject toagreements between the employers and employees concerned: Provided , further , That the privatebenefit plan which the employer shall continue for his employees shall remain under the employer'smanagement and control unless there is an existing agreement to the contrary: Provided , finally ,That nothing in this Act shall be construed as a limitation on the right of employers and employeesto agree on and adopt benefits which are over and above those Provided under this Act.

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"(b) Spouses who devote full time to managing the household and family affairs, unless they arealso engaged in other vocation or employment which is subject to mandatory coverage, may becovered by the SSS on a voluntary basis.

"(c) Filipinos recruited by foreign-based employers for employment abroad may be covered by the

SSS on a voluntary basis.

"SEC. 9-A. Compulsory Coverage of the Self-Employed . - Coverage in the SSS shall also becompulsory upon such self-employed persons as may be determined by the Commission undersuch rules and regulations as it may prescribe, including but not limited to the following:

"1. All self-employed professionals;

"2. Partners and single proprietors of businesses;

"3. Actors and actresses, directors, scriptwriters and news correspondents who do not fall

within the definition of the term "employee" in Section 8 (d) of this Act;

"4. Professional athletes, coaches, trainers and jockeys; and

"5. Individual farmers and fishermen.

"Unless otherwise specified herein, all provisions of this Act applicable to covered employees shallalso be applicable to the covered self-employed persons.

"SEC. 10. Effective Date of Coverage. - Compulsory coverage of the employer shall take effect onthe first day of his operation and that of the employee on the day of his employment: Provided ,

That the compulsory coverage of the self-employed person shall take effect upon his registrationwith the SSS.

"SEC. 11. Effect of Separation from Employment . - When an employee under compulsorycoverage is separated from employment, his employer's contribution on his account and hisobligation to pay contributions arising from that employment shall cease at the end of the month ofseparation, but said employee shall be credited with all contributions paid on his behalf and entitledto benefits according to the provisions of this Act. He may, however, continue to pay the totalcontributions to maintain his right to full benefit.

"SEC. 11-A. Effect of Interruption of Business or Professional Income . - If the self-employed

realizes no income in any given month, he shall not be required to pay contributions for that month.He may, however, be allowed to continue paying contributions under the same rules andregulations applicable to a separated employee member: Provided , That no retroactive payment ofcontributions shall be allowed other than as prescribed under Section Twenty-two-A hereof.

"SEC. 12. Monthly Pension. - (a) The monthly pension shall be the highest of the followingamounts:

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"(1) The sum of the following:

"(i) Three hundred pesos (P300.00; plus

"(ii) Twenty percent (20%) of the average monthly salary credit; plus

"(iii) Two percent (2%) of the average monthly salary credit for each credited yearof service in excess of ten (10) years; or

"(2) Forth percent (40%) of the average monthly salary credit; or

"(3) One thousand pesos (P1,000.00): Provided , That the monthly pension shall in no casebe paid for an aggregate amount of less than sixty (60) months.

"(b) Notwithstanding the preceding paragraph, the minimum pension shall be One thousand twohundred pesos (P1,200.00) for members with at least ten (10) credited years of service and Two

thousand four hundred pesos (P2,400.00) for those with twenty (20) credited years of service.

"SEC. 12-A. Dependents' Pension. - Where monthly pension is payable on account of death,permanent total disability or retirement, dependents' pension equivalent to ten percent (10%) of themonthly pension or Two hundred fifty pesos (P250.00), whichever is higher, shall also be paid foreach dependent child conceived on or before the date of the contingency but not exceeding five(5), beginning with the youngest and without substitution: Provided , That where there are legitimateor illegitimate children, the former shall be preferred.

SEC. 12-B. Retirement Benefits. - (a) A member who has paid at least one hundred twenty (120)monthly contributions prior to the semester of retirement and who: (1) has reached the age of sixty

(60) years and is already separated from employment or has ceased to be self-employed; or (2)has reached the age of sixty-five (65) years, shall be entitled for as long as he lives to the monthlypension: Provided , That he shall have the option to receive his first eighteen (18) monthly pensionsin lump sum discounted at a preferential rate of interest to be determined by the SSS.

"(b) A covered member who is sixty (60) years old at retirement and who does not qualify forpension benefits under paragraph (a) above, shall be entitled to a lump sum benefit equal to thetotal contributions paid by him and on his behalf: Provided , That he is separated from employmentand is not continuing payment of contributions to the SSS on his own.

"(c) The monthly pension shall be suspended upon the reemployment or resumption of self -employment of a retired member who is less than sixty-five (65) years old. He shall again besubject to Section Eighteen and his employer to Section Nineteen of this Act.

"(d) Upon the death of the retired member, his primary beneficiaries as of the date of his retirementshall be entitled to receive the monthly pension: Provided , That if he has no primary beneficiariesand he dies within sixty (60) months from the start of his monthly pension, his secondarybeneficiaries shall be entitled to a lump sum benefit equivalent to the total monthly pensions

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corresponding to the balance of the five-year guaranteed period, excluding the dependents'pension.

"(e) The monthly pension of a member who retires after reaching age sixty (60) shall be the higherof either: (1) the monthly pension computed at the earliest time he could have retired had he been

separated from employment or ceased to be self-employed plus all adjustments thereto; or (2) themonthly pension computed at the time when he actually retires.

"SEC. 13. Death Benefits. - Upon the death of a member who has paid at least thirty-six (36)monthly contributions prior to the semester of death, his primary beneficiaries shall be entitled tothe monthly pension: Provided , That if he has no primary beneficiaries, his secondary beneficiariesshall be entitled to a lump sum benefit equivalent to thirty-six (36) times the monthly pension. If hehas not paid the required thirty-six (36) monthly contributions, his primary or secondarybeneficiaries shall be entitled to a lump sum benefit equivalent to the monthly pension times thenumber of monthly contributions paid to the SSS or twelve (12) times the monthly pension,whichever is higher.

"SEC. 13-A. Permanent Disability Benefits. - (a) Upon the permanent total disability of a memberwho has paid at least thirty-six (36) monthly contributions prior to the semester of disability, he shallbe entitled to the monthly pension: Provided , That if he has not paid the required thirty-six (36)monthly contributions, he shall be entitled to a lump sum benefit equivalent to the monthly pensiontimes the number of monthly contributions paid to the SSS or twelve (12) times the monthlypension, whichever is higher. A member who (1) has received a lump sum benefit; and (2) isreemployed or has resumed self-employment not earlier than one (1) year from the date of hisdisability shall again be subject to compulsory coverage and shall be considered a new member.

"(b) The monthly pension and dependents' pension shall be suspended upon the reemployment orresumption of self-employment or the recovery of the disabled member from his permanent totaldisability or his failure to present himself for examination at least once a year upon notice by theSSS.

"(c) Upon the death of the permanent total disability pensioner, his primary beneficiaries as of thedate of disability shall be entitled to receive the monthly pension: Provided , That if he has noprimary beneficiaries and he dies within sixty (60) months from the start of his monthly pension, hissecondary beneficiaries shall be entitled to a lump sum benefit equivalent to the total monthlypensions corresponding to the balance of the five-year guaranteed period excluding thedependents' pension.

"(d) The following disabilities shall be deemed permanent total:

"1. Complete loss of sight of both eyes;

"2. Loss of two limbs at or above the ankle or wrists;

"3. Permanent complete paralysis of two limbs;

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"4. Brain injury resulting to incurable imbecility or insanity; and

"5. Such cases as determined and approved by the SSS.

"(e) If the disability is permanent partial, and such disability occurs before thirty-six (36) monthly

contributions have been paid prior to the semester of disability, the benefit shall be suchpercentage of the lump sum benefit described in the preceding paragraph with due regard to thedegree of disability as the Commission may determine.

"(f) If the disability is permanent total and such disability occurs after thirty-six (36) monthlycontributions have been paid prior to the semester of disability, the benefit shall be the monthlypension for permanent total disability payable not longer than the period designated in the followingschedule:

Complete andpermanent loss of use

of

Number ofMonths

One thumb 10

One index finger 8

One middle finger 6

One right finger 5

One little finger 3

One big toe 6

One hand 39

One arm 50

One foot 31One leg 46

One ear 10

Both ears 20

Hearing of one ear 10

Hearing of both ears 50

Sight of one eye 25

"(g) The percentage degree of disability which is equivalent to the ratio that the designated number

of months of compensability bears to seventy-five (75), rounded to the next higher integer, shall notbe additive for distinct, separate and unrelated permanent partial disabilities, but shall be additivefor deteriorating and related permanent partial disabilities to a maximum of one hundred percent(100%), in which case, the member shall be deemed as permanently totally disabled.

"(h) In case of permanent partial disability, the monthly pension benefit shall be given in lump sumif it is payable for less than twelve (12) months.

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"(i) For the purpose of adjudicating retirement, death and permanent total disability pensionbenefits, contributions shall be deemed paid for the months during which the member receivedpartial disability pension: Provided , That such contributions shall be based on his last contributionprior to his disability.

"(j) Should a member who is on partial disability pension retire or die, his disability pension shallcease upon his retirement or death.

"SEC. 13-B. Funeral Benefit . - A funeral grant equivalent to Twelve thousand pesos (P12,000.00)shall be paid, in cash or in kind, to help defray the cost of funeral expenses upon the death of amember, including permanently totally disabled member or retiree.

"SEC. 14. Sickness Benefit . - (a) A member who has paid at least three (3) monthly contributions inthe twelve-month period immediately preceding the semester of sickness or injury and is confinedtherefor for more than three (3) days in a hospital or elsewhere with the approval of the SSS, shall,for each day of compensable confinement or a fraction thereof, be paid by his employer, or the

SSS, if such person is unemployed or self-employed, a daily sickness benefit equivalent to ninetypercent (90%) of his average daily salary credit, subject to the following conditions:

"(1) In no case shall the daily sickness benefit be paid longer than one hundred twenty (120) daysin one (1) calendar year, nor shall any unused portion of the one hundred twenty (120) days ofsickness benefit granted under this section be carried forward and added to the total number ofcompensable days allowable in the subsequent year;

"(2) The daily sickness benefit shall not be paid for more than two hundred forty (240) days onaccount of the same confinement; and

"(3) The employee member shall notify his employer of the fact of his sickness or injury within five(5) calendar days after the start of his confinement unless such confinement is in a hospital or theemployee became sick or was injured while working or within the premises of the employer inwhich case, notification to the employer is necessary: Provided , That if the member is unemployedor self-employed, he shall directly notify the SSS of his confinement within five (5) calendar daysafter the start thereof unless such confinement is in a hospital in which case notification is also notnecessary: Provided , further , That in cases where notification is necessary, the confinement shallbe deemed to have started not earlier than the fifth day immediately preceding the date ofnotification.

"(b) The compensable confinement shall begin on the first day of sickness, and the payment ofsuch allowances shall be promptly made by the employer every regular payday or on the fifteenthand last day of each month, and similarly in the case of direct payment by the SSS, for as long assuch allowances are due and payable: Provided , That such allowance shall begin only after all sickleaves of absence with full pay to the credit of the employee member shall have been exhausted.

"(c) One hundred percent (100%) of the daily benefits Provided in the preceding paragraph shall bereimbursed by the SSS to said employer upon receipt of satisfactory proof of such payment andlegality thereof: Provided , That the employer has notified the SSS of the confinement within five (5)

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calendar days after receipt of the notification from the employee member: Provided , further , That ifthe notification to the SSS is made by the employer beyond five (5) calendar days after receipt ofthe notification from the employee member, said employer shall be reimbursed only for each day ofconfinement starting from the tenth calendar day immediately preceding the date of notification tothe SSS: Provided , finally , That the SSS shall reimburse the employer or pay the unemployed

member only for confinement within the one-year period immediately preceding the date the claimfor benefit or reimbursement is received by the SSS, except confinement in a hospital in whichcase the claim for benefit or reimbursement must be filed within one (1) year from the last day ofconfinement.

"(d) Where the employee member has given the required notification but the employer fails to notifythe SSS of the confinement or to file the claim for reimbursement within the period prescribed inthis section resulting in the reduction of the benefit or denial of the claim, such employer shall haveno right to recover the corresponding daily allowance he advanced to the employee member asrequired in this section.

"(e)The claim of reimbursement shall be adjudicated by the SSS within a period of two (2) monthsfrom receipt thereof: Provided , That should no payment be received by the employer within one (1)month after the period prescribed herein for adjudication, the reimbursement shall thereafter earnsimple interest of one percent (1%) per month until paid.

"(f) The provisions regarding the notification required of the member and the employer as well asthe period within which the claim for benefit or reimbursement may be filed shall apply to all claimsfiled with the SSS.

"SEC. 14-A. Maternity Leave Benefit . - A female member who has paid at least three (3) monthlycontributions in the twelve-month period immediately preceding the semester of her childbirth ormiscarriage shall be paid a daily maternity benefit equivalent to one hundred percent (100%) of heraverage daily salary credit for sixty (60) days or seventy-eight (78) days in case of caesariandelivery, subject to the following conditions:

"(a) That the employee shall have notified her employer of her pregnancy and the probable date ofher childbirth, which notice shall be transmitted to the SSS in accordance with the rules andregulations it may provide;

"(b) The full payment shall be advanced by the employer within thirty (30) days from the filing of thematernity leave application;

"(c) That payment of daily maternity benefits shall be a bar to the recovery of sickness benefitsProvided by this Act for the same period for which daily maternity benefits have been received;

"(d) That the maternity benefits Provided under this section shall be paid only for the first four (4)deliveries or miscarriages;

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"(e) That the SSS shall immediately reimburse the employer of one hundred percent (100%) of theamount of maternity benefits advanced to the employee by the employer upon receipt ofsatisfactory proof of such payment and legality thereof; and

"(f) That if an employee member should give birth or suffer miscarriage without the required

contributions having been remitted for her by her employer to the SSS, or without the latter havingbeen previously notified by the employer of the time of the pregnancy, the employer shall pay tothe SSS damages equivalent to the benefits which said employee member would otherwise havebeen entitled to.

"SEC. 15. Non-Transferability of Benefits. - The SSS shall promptly pay the benefits Provided inthis Act to such persons as may be entitled thereto in accordance with the provisions of this Act:Provided , That the SSS shall pay the retirement benefits on the day of contingency to qualifiedmembers who have submitted the necessary documents at least six (6) months before: Provided ,further , That the beneficiary who is a national of a foreign country which does not extend benefitsto a Filipino beneficiary residing in the Philippines, or which is not recognized by the Philippines,

shall not be entitled to receive any benefit under this Act: Provided , further , That notwithstandingthe foregoing, where the best interest of the SSS will be served, the Commission may directpayments without regard to nationality or country of residence: Provided , further , That if therecipient is a minor or a person incapable of administering his own affairs, the Commission shallappoint a representative under such terms and conditions as it may deem proper: Provided ,further , That such appointment shall not be necessary in case the recipient is under the custody ofor living with the parents or spouse of the member in which case the benefits shall be paid to suchparents or spouse, as representative payee of the recipient. Such benefits are not transferable andno power of attorney or other document executed by those entitled thereto in favor of any agent,attorney or any other person for the collection thereof on their behalf shall be recognized, exceptwhen they are physically unable to collect personally such benefits: Provided , further , That in caseof death benefits, if no beneficiary qualifies under this Act, said benefits shall be paid to the legalheirs in accordance with the law of succession.

"SEC. 16. Exemption from Tax, Legal Process and Lien. -- All laws to the contrary notwithstanding,the SSS and all its assets and properties, all contributions collected and all accruals thereto andincome or investment earnings therefrom as well as all supplies, equipment, papers or documentsshall be exempt from any tax, assessment, fee, charge, or customs or import duty; and all benefitpayments made by the SSS shall likewise be exempt from all kinds of taxes, fees or charges, andshall not liable to attachments, garnishments, levy or seizure by or under any legal or equitableprocess whatsoever, either before or after receipt by the person or persons entitled thereto, exceptto pay any debt of the member to the SSS. No tax measure of whatever nature enacted shall applyto the SSS, unless it expressly revokes the declared policy of the State in Section 2 hereof grantingtax-exemption to the SSS. Any tax assessment imposed against the SSS shall be null and void.(As amended by Sec. 9, P.D. No. 24, S. 1972; and Sec. 14, P. D. No. 735, S. 1975).

"SEC. 17. Fee of Agents, Attorneys, Etc . - No agent, attorney or other person in charge of thepreparation, filing or pursuing any claim for benefit under this Act shall demand or charge for hisservices any fee, and any stipulation to the contrary shall be null and void. The retention ordeduction of any amount from any benefit granted under this Act for the payment of fees for such

http://www.lawphil.net/statutes/presdecs/pd1972/pd_24_1972.html




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services is prohibited: Provided , however , That any member of the Philippine Bar who appears ascounsel in any case heard by the Commission shall be entitled to attorneys' fees not exceeding tenpercent (10%) of the benefits awarded by the Commission, which fees shall not be payable beforethe actual payment of the benefits, and any stipulation to the contrary shall be null and void.

"Any violation of the provisions of this Section shall be punished by a fine of not less than Fivehundred pesos (P500.00) nor more than Five thousand pesos (P5,000.00), or imprisonment for notless than six (6) months nor more than one (1) year, or both, at the discretion of the court.

"SEC. 18. Employee's Contributions. - (a) Beginning as of the last day of the calendar month whenan employee's compulsory coverage takes effect and every month thereafter during hisemployment, the employer shall deduct and withhold from such employee's monthly salary, wage,compensation or earnings, the employee's contribution in an amount corresponding to his salary,wage, compensation or earnings during the month in accordance with the following schedule:

SALARY

BRACKET

RANGE OF

COMPENSATION

MONTHLY

SALARYCREDIT

MONTHLY CONTRIBUTION

EMPLOYER EMPLOYEE TOTAL

I 1,000.00 - 1,249.99 1000 50.70 33.30 84.00

II 1,250.00 - 1,749.99 1500 76.00 50.00 126.00

III 1,750.00 - 2,249.99 2000 101.30 66.70 168.00

IV 2,250.00 - 2,749.99 2500 126.70 83.30 210.00

V 2,750.00 - 3,249.99 3000 152.00 100.00 252.00

VI 3,250.00 - 3,749.99 3500 177.30 116.70 294.00

VII 3,750.00 - 4,249.99 4000 202.70 133.30 336.00

VIII 4,250.00 - 4,749.99 4500 228.00 150.00 378.00

IX 4,750.00 - 5,249.99 5000 253.30 166.70 420.00X 5,250.00 - 5,749.99 5500 278.70 183.70 462.40

XI 5,750.00 - 6,249.99 6000 304.00 200.00 504.00

XII 6,250.00 - 6,749.99 6500 329.30 216.78 546.00

XIII 6,750.00 - 7,249.99 7000 354.70 233.30 588.00

XIV 7,250.00 - 7,749.99 7500 380.00 250.00 630.00

XV 7,750.00 - 8.249.99 8000 403.30 266.70 672.00

XVI 8,250.00 - 8,749.99 8500 430.70 283.30 714.00

XVII 8,750.00 - OVER 9000 456.00 300.00 756.00

"The foregoing schedule of contribution shall also apply to self-employed and voluntary members.

"The maximum monthly salary credit shall be Nine thousand pesos (P9,000.00) effective JanuaryNineteen hundred and ninety six (1996); Provided , That it shall be increased by One thousandpesos (P1,000.00) every year thereafter until it shall have reached Twelve thousand pesos(P12,000.00) by Nineteen hundred and ninety nine (1999): Provided , further , That the minimumand maximum monthly salary credits as well as the rate of contributions may be fixed from time to

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time by the Commission through rules and regulations taking into consideration actuarialcalculations and rate of benefits, subject to the approval of the President of the Philippines.

"SEC. 19. Employer's Contributions. - (a) Beginning as of the last day of the month when anemployee's compulsory coverage takes effect and every month thereafter during his employment,

his employer shall pay, with respect to such covered employee, the employer's contribution inaccordance with the schedule indicated in Section Eighteen of this Act. Notwithstanding anycontract to the contrary, an employer shall not deduct, directly or indirectly, from the compensationof his employees covered by the SSS or otherwise recover from them the employer's contributionswith respect to such employees.

"(b) The remittance of such contributions by the employer shall be supported by a quarterlycollection list to be submitted to the SSS at the end of each calendar quarter indicating the correctID number of the employer, the correct names and the SSS numbers of the employees and thetotal contributions paid for their account during the quarter.

"SEC. 19-A. Contributions of the Self-Employed Member. - The contributions to the SSS of the self-employed member shall be determined in accordance with Section Eighteen of this Act: Provided ,That the monthly earnings declared by the self-employed member at the time of his registrationwith the SSS shall be considered as his monthly compensation and he shall pay both the employerand the employee contributions: Provided , further , That the contributions of self-employed personsearning One thousand pesos (P1,000.00) monthly or below may be reduced by the Commission.

"The monthly earnings declared by the self-employed member at the time of his registration shallremain the basis of his monthly salary credit, unless he makes another declaration of his monthlyearnings, in which case such latest declaration becomes the new basis of his monthly salary credit.

"SEC. 20.Government Contribution

. - As the contribution of the Government to the operation of theSSS, Congress shall annually appropriate out of any funds in the National Treasury not otherwiseappropriated, the necessary sum or sums to meet the estimated expenses of the SSS for eachensuing year. In addition to this contribution, Congress shall appropriate from time to time suchsum or sums as may be needed to assure the maintenance of an adequate working balance of thefunds of the SSS as disclosed by suitable periodic actuarial studies to be made of the operations ofthe SSS.

"SEC. 21. Government Guarantee. -- The benefits prescribed in this Act shall not be diminishedand to guarantee said benefits the Government of the Republic of the Philippines accepts generalresponsibility for the solvency of the SSS.

"SEC. 22. Remittance of Contributions. -- (a) The contributions imposed in the preceding Sectionshall be remitted to the SSS within the first ten (10) days of each calendar month following themonth for which they are applicable or within such time as the Commission may prescribe. Everyemployer required to deduct and to remit such contributions shall be liable for their payment and ifany contribution is not paid to the SSS as herein prescribed, he shall pay besides the contribution apenalty thereon of three percent (3%) per month from the date the contribution falls due until paid.If deemed expedient and advisable by the Commission, the collection and remittance of

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contributions shall be made quarterly or semi-annually in advance, the contributions payable by theemployees to be advanced by their respective employers: Provided , That upon separation of anemployee, any contribution so paid in advance but not due shall be credited or refunded to hisemployer.

"(b) The contributions payable under this Act in cases where an employer refuses or neglects topay the same shall be collected by the SSS in the same manner as taxes are made collectibleunder the National Internal Revenue Code, as amended. Failure or refusal of the employer to payor remit the contributions herein prescribed shall not prejudice the right of the covered employee tothe benefits of the coverage.

"The right to institute the necessary action against the employer may be commenced within twenty(20) years from the time the delinquency is known or the assessment is made by the SSS, or fromthe time the benefit accrues, as the case may be.

"(c) Should any person, natural or juridical, default in any payment of contributions, the

Commission may also collect the same in either of the following ways:

"1. By an action in court, which shall hear and dispose of the case in preference to anyother civil action; or

"2. By issuing a warrant to the Sheriff of any province or city commanding him to levy uponand sell any real and personal property of the debtor. The Sheriff's sale by virtue of saidwarrant shall be governed by the same procedure prescribed for executions againstproperty upon judgments by a court of record.

"(d) The last complete record of monthly contributions paid by the employer or the average of the

monthly contributions paid during the past three (3) years as of the date of filing of the action forcollection shall be presumed to be the monthly contributions payable by and due from the employerto the SSS for each of the unpaid month, unless contradicted and overcome by other evidence:Provided , That the SSS shall not be barred from determining and collecting the true and correctcontributions due the SSS even after full payment pursuant to this paragraph, nor shall theemployer be relieved of his liability under Section Twenty-eight of this Act.

"SEC. 22-A. Remittance of Contributions of Self-Employed Member . - Self-employed membersshall remit their monthly contributions quarterly on such dates and schedules as the Commissionmay specify through rules and regulations: Provided , That no retroactive payment of contributionsshall be allowed, except as Provided in this Section.

"SEC. 23. Method of Collection and Payment . - The SSS shall require a complete and propercollection and payment of contributions and proper identification of the employer and theemployee. Payment may be made in cash, checks, stamps, coupons, tickets, or other reasonabledevices that the Commission may adopt.

"SEC. 24. Employment Records and Reports. - (a) Each employer shall immediately report to theSSS the names, ages, civil status, occupations, salaries and dependents of all his employees who

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are subject to compulsory coverage: Provided , That if an employee subject to compulsorycoverage should die or become sick or disabled or reach the age of sixty (60) without the SSShaving previously received any report or written communication about him from his employer, thesaid employer shall pay to the SSS damages equivalent to the benefits to which said employeemember would have been entitled had his name been reported on time by the employer to the

SSS, except that in case of pension benefits, the employer shall be liable to pay the SSS damagesequivalent to the accumulated pension due as of the date of settlement of the claim or to the five(5) years' pension, including dependents' pension: Provided , further , That if the contingency occurswithin thirty (30) days from the date of employment, the employer shall be relieved of his liability fordamages: Provided , further , That any person or entity engaging the services of an independentcontractor shall be subsidiarily liable with such contractor for any civil liability incurred by the latterunder this Act: Provided , finally , That the same person or entity engaging the services of anindependent contractor shall require such contractor to post a surety bond to guarantee thepayment of the worker's benefits.

"(b) Should the employer misrepresent the true date of employment of the employee member or

remit to the SSS contributions which are less than those required in this Act or fail to remit anycontribution due prior to the date of contingency, resulting in a reduction of benefits, the employershall pay to the SSS damages equivalent to the difference between the amount of benefit to whichthe employee member or his beneficiary is entitled had the proper contributions been remitted tothe SSS and the amount payable on the basis of contributions actually remitted: Provided , That ifthe employee member or his beneficiary is entitled to pension benefits, damages shall beequivalent to the accumulated pension due as of the date of settlement of the claim or to the five(5) years' pension, whichever is higher, including dependents' pension.

"In addition to the liability mentioned in the preceding paragraphs (a) and (b) hereof, the employershall also be liable for the corresponding unremitted contributions and penalties thereon.

"(c) The records and reports duly accomplished and submitted to the SSS by the employer or themember, as the case may be, shall be kept confidential by the SSS except in compliance with asubpoena duces tecum issued by the Court, shall not be divulged without the consent of the SSSPresident or any official of the SSS duly authorized by him, shall be presumed correct as to thedata and other matters stated therein, unless the necessary corrections to such records andreports have been properly made by the parties concerned before the right to the benefit beingclaimed accrues, and shall be made the basis for the adjudication of the claim. If as a result of suchadjudication the SSS in good faith pays a monthly pension to a beneficiary who is inferior in right toanother beneficiary or with whom another beneficiary is entitled to share, such payments shalldischarge the SSS from liability unless and until such other beneficiary notifies the SSS of his claimprior to the payments.

"(d) Every employer shall keep true and accurate work records for such period and containing suchinformation as the Commission may prescribe, in addition to an "Annual Register of New andSeparated Employees" which shall be secured from the SSS wherein the employer shall enter onthe first day of employment or on the effective date of separation, the names of the personsemployed or separated from employment, their SSS numbers, and such other data that theCommission may require and said annual register shall be submitted to the SSS in the month of

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January of each year. Such records shall be open for inspection by the SSS or its authorizedrepresentatives quarterly or as often as the SSS may require.

"The SSS may also require each employer to submit, with respect to the persons in his employ,reports needed for the effective administration of this Act.

"(e) Each employer shall require, as a condition to employment, the presentation of a registrationnumber secured by the prospective employee from the SSS in accordance with such procedure asthe SSS may adopt: Provided , That in case of employees who have been assigned registrationnumbers by virtue of a previous employment, such numbers originally assigned to them should beused for purposes of this Section: Provided , further , That the issuance of such registration numbersby the SSS shall not exempt the employer from complying with the provisions of paragraph (a) ofthis Section.

"(f) Notwithstanding any law to the contrary, microfilm, or non-erasable optical disk and othersimilar archival media copies of original SSS records and reports, duly certified by the official

custodian thereof, shall have the same evidentiary value as the originals and be admissible asevidence in all legal proceedings.

"(g) Notwithstanding any law to the contrary, local government units shall, prior to issuing anyannual business license or permit, require submission of certificate of SSS coverage andcompliance with the provisions of this Act: Provided , That the certification or clearance shall beissued by the SSS within five (5) working days from receipt of the request.

"SEC. 24-A. Report and Registration of the Self-Employed Member . - Each covered self-employedperson shall, within thirty (30) days from the first day he started the practice of his profession orbusiness operations register and report to the SSS his name, age, civil status, and occupation,

average monthly net income and his dependents.

"SEC. 25. Deposits and Disbursements. - All money paid to or collected by the SSS every yearunder this Act, and all accruals thereto shall be deposited, administered and disbursed in the samemanner and under the same conditions and requirements as Provided by law for other publicspecial funds: Provided , That not more than twelve percent (12%) of the total yearly contributionsplus three percent (3%) of other revenues shall be disbursed for operational expenses such assalaries and wages, supplies and materials, depreciation and the maintenance of offices of theSSS: Provided , further , That if the expenses in any year are less than the maximum amountpermissible, the difference shall not be availed of as additional expenses in the following years.

"SEC. 26. Investment of Reserve Funds. - All revenues of the SSS that are not needed to meet thecurrent administrative and operational expenses incidental to the carrying out of this Act shall beaccumulated in a fund to be known as the "Reserve Fund." Such portions of the Reserve Fund asare not needed to meet the current benefit obligations thereof shall be known as the "InvestmentReserve Fund" which the Commission shall manage and invest with the skill, care, prudence anddiligence necessary under the circumstances then prevailing that a prudent man acting in likecapacity and familiar with such matters would exercise in the conduct of an enterprise of a likecharacter and with similar aims. Pursuant thereto, and in line with the basic principles of safety,

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good yield and liquidity, the Commission shall invest the funds to earn an annual income not lessthan the average rates of treasury bills or any other acceptable market yield indicator in any or inall of the following:

"(a) In bonds, securities, promissory notes or other evidence of indebtedness of the Government of

the Philippines, or in bonds, securities, promissory notes or other evidence of indebtedness towhich the full faith, credit and unconditional guarantee of the Government of the Philippines ispledged;

"(b) In bonds, securities, promissory notes or other evidence of indebtedness of the Government ofthe Philippines, or any agencies or instrumentalities to finance domestic infrastructure projectssuch as roads, bridges, ports, telecommunications, and other similar projects: Provided , That theinstruments issued by an agency or instrumentality of the government shall be guaranteed by theGovernment of the Philippines or any government financial institution or acceptable multilateralagency: Provided , further , That the SSS shall have priority over the revenues of the projects:Provided , finally , That such investments shall not exceed thirty percent (30%) of the Investment

Reserve Fund;

"(c) In bonds, securities, promissory notes or other evidence of indebtedness of governmentfinancial institutions or government corporations with acceptable credit or guarantee: Provided ,That such investments shall not exceed thirty percent (30%) of the Investment Reserve Fund;

"(d) In bonds, securities, promissory notes or other evidence of indebtedness of any bank doingbusiness in the Philippines and in good standing with the Bangko Sentral ng Pilipinas to financeloans to private corporations doing business in the Philippines, including schools, hospitals, small-and-medium scale industries, cooperatives and non-governmental organizations, in which case thecollaterals or securities shall be assigned to the SSS under such terms and conditions as theCommission may prescribe: Provided , That in the case of bank deposits, they shall not exceed atany time the unimpaired capital and surplus or total private deposits of the depository bank,whichever is smaller: Provided , further , That said bank shall first have been designated as adepository for this purpose by the Monetary Board of the Bangko Sentral ng Pilipinas: Provided ,finally , That such investments shall not exceed forty percent (40%) of the Investment ReserveFund;

"(e) In bonds, securities, promissory notes or other evidence of indebtedness of shelter agencies ofthe National Government or financial intermediaries to finance housing loans of members; and inlong-term direct individual or group housing loans giving priority to the low-income groups, up to amaximum of ninety percent (90%) of the appraised value of the properties to be mortgaged by theborrowers; and

"In short and medium term loans to members such as salary, educational, livelihood, marital,calamity and emergency loans: Provided , That not more than thirty five percent (35%) of theInvestment Reserve Fund at any time shall be invested for housing purposes: Provided , further ,That not more than ten percent (10%) of the Investment Reserve Fund shall be invested in shortand medium term loans;

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"(f) In bonds, securities, promissory notes or other evidence of indebtedness of educational ormedical institutions to finance the construction, improvement and maintenance of schools andhospitals and their equipment and facilities: Provided , That such investments shall not exceed tenpercent (10%) of the Investment Reserve Fund;

"(g) In real estate property, including shares of stocks involving real estate property, andinvestment secured by first mortgages on real estate or other collaterals acceptable to the SSS:Provided , That such projects and investments shall, in the determination of the Commission,redound to the benefit of the SSS, its members, as well as the general public: Provided , further ,That investment in real estate property, including shares of stocks involving real estate propertyshall not exceed five percent (5%) of the Investment Reserve Fund: Provided , finally , Thatinvestments in other income earning projects and investments secured by first mortgages or othercollaterals shall not exceed twenty five percent (25%) of the Investment Reserve Fund;

"(h) In bonds, debentures, securities, promissory notes or other evidence of indebtedness of anyprime corporation or multilateral institutions to finance domestic projects: Provided , That the issuing

or assuming entity or its predecessors shall not have defaulted in the payment of interest on any ofits securities and that during each of any three (3) including the last two (2) of the five (5) fiscalyears next preceding the date of acquisition by the SSS of such bonds, debentures or otherevidence of indebtedness, the net earnings of the issuing or assuming institution available for itsfixed charges, as defined in this Act, shall have been not less than one and one-quarter times thetotal of its fixed charges for such year: Provided , further , That such investments shall not exceedthirty percent (30%) of the Investment Reserve Fund;

"(i) In preferred or common shares of stocks listed or about to be listed in the stock exchange oroptions or warrants to such stocks or, subject to prior approval of the Bangko Sentral ng Pilipinas,such other risk management instruments of any prime or solvent corporation or financial institutioncreated or existing under the laws of the Philippines with proven track record of profitability over thelast three (3) years and payment of dividends at least once over the same period: Provided , Thatsuch investments shall not exceed thirty percent (30%) of the Investment Reserve Fund;

"(j) In domestic or foreign mutual funds in existence for at least three (3) years; Provided , That suchinvestments shall not exceed twenty percent (20%) of the Investment Reserve Fund: Provided ,further , That investments in foreign mutual funds shall not exceed one percent (1%) of theInvestment Reserve Fund in the first year which shall be increased by one percent (1%) for eachsucceeding year, but in no case shall it exceed seven and one-half percent (7.5%) of theInvestment Reserve Fund;

"(k) In foreign currency deposits or triple "A" foreign currency denominated debts, prime and non-speculative equities, and other Bangko Sentral ng Pilipinas approved financial instruments or otherassets issued in accordance with the existing laws of the countries where such financialinstruments are issued: Provided , That these instruments or assets are listed in bourses of therespective countries where these instruments or assets are issued: Provided , further , That theissuing company has proven track of record of profitability over the last three (3) years and arecord of regular dividend pay-out over the same period: Provided , finally , That such investmentsshall not exceed one percent (1%) of the Investment Reserve Fund in the first year which shall be

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increased by one percent (1%) for each succeeding year, but in no case shall it exceed seven andone-half percent (7.5%) of the Investment Reserve Fund;

"(l) In loans secured by such collaterals like cash, government securities or guarantees ofmultilateral institutions: Provided , That such investments shall not exceed thirty percent (30%) of

the Investment Reserve Fund; and

"(m) In other Bangko Sentral ng Pilipinas approved investment instruments with the same intrinsicquality as those enumerated in paragraphs (a) to (l) hereof, subject to the policies and guidelineswhich the Commission may formulate.

"No portion of the Investment Reserve Fund or income thereof shall accrue to the general fund ofthe National Government or to any of its agencies or instrumentalities, including government-owned or controlled corporations, except as may be allowed under this Act: Provided , That noportion of the Investment Reserve Fund shall be invested for any purpose or in any instrument,institution or industry over and above the prescribed cumulative ceilings as follows:

40% in private securities

35% in housing

30% in real estate related investments

10% in short and medium-term member loans

30% in government financial institutions and corporations

30% in infrastructure projects

15% in any particular industry

7.5% in foreign-currency denominated investments

"SEC. 26-A. Fund Managers. - As part of its investment operations, the SSS may appoint local or,in the absence thereof, foreign fund managers to manage the Investment Reserve Fund, as it maydeem appropriate.

"SEC. 26-B. Mortgagor Insurance Account. - (a) As part of its investment operations, the SSS shall

act as insurer of all or part of its interest on SSS properties mortgaged to the SSS, or lives ofmortgagors whose properties are mortgaged to the SSS. For this purpose, the SSS shall establisha separate account to be known as the "Mortgagors' Insurance Account." All amounts received bythe SSS in connection with the aforesaid insurance operations shall be placed in the Mortgagors'Insurance Account. The assets and liabilities of the Mortgagors' Insurance Account shall at alltimes be clearly identifiable and distinguishable from the assets and liabilities in all other accountsof the SSS. Notwithstanding any provision of law to the contrary, the assets held in the Mortgagors'Insurance Account shall not be chargeable with the liabilities arising out of any other business the

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SSS may conduct but shall be held and applied exclusively for the benefit of the owners orbeneficiaries of the insurance contracts issued by the SSS under this paragraph.

"(b) The SSS may insure any of its interest or part thereof with any private company or reinsurer.The Insurance Commission or its authorized representatives shall make an examination into the

financial condition and methods of transacting business of the SSS at least once in two (2) years,but such examination shall be limited to the insurance operation of the SSS as authorized underthis paragraph and shall not embrace the other operations of the SSS; and the report of saidexamination shall be submitted to the Commission and a copy thereof shall be furnished the Officeof the President of the Philippines within a reasonable time after the close of the examination:Provided , That for each examination, the SSS shall pay to the Insurance Commission an amountequal to the actual expense of the Insurance Commission in the conduct of examination, includingthe salaries of the examiners and of the actuary of the Insurance Commission who have beenassigned to make such examination for the actual time spent in said examination: Provided ,further , That the general law on insurance and the rules and regulations promulgated thereundershall have suppletory application insofar as it is not in conflict with this Act and its rules and

regulations.

"SEC. 27. Records and Reports. - The SSS President shall keep and cause to keep records ofoperations of the funds of the SSS and of disbursements thereof and all accounts of paymentsmade out of said funds. During the month of January of each year, the SSS President shall preparefor submission to the President of the Philippines and to Congress of the Philippines a report ofoperations of the SSS during the preceding year, including statistical data on the number ofpersons covered and benefited, their occupations and employment status, the duration and amountof benefits paid, the finances of the SSS at the close of the said year, and recommendations. Heshall also cause to be published in two (2) newspapers of general circulation in the Philippines asynopsis of the annual report, showing in particular the status of the finances of the SSS and thebenefits administered.

"SEC. 28. Penal Clause. - (a) Whoever, for the purpose of causing any payment to be made underthis Act, or under an agreement thereunder, where none is authorized to be paid, shall make orcause to be made false statement or representation as to any compensation paid or received orwhoever makes or causes to be made any false statement of a material fact in any claim for anybenefit payable under this Act, or application for loan with the SSS, or whoever makes or causes tobe made any false statement, representation, affidavit or document in connection with such claimor loan, shall suffer the penalties Provided for in Article One hundred seventy-two of the RevisedPenal Code.

"(b) Whoever shall obtain or receive any money or check under this Act or any agreementthereunder, without being entitled thereto with intent to defraud any member, employer or the SSS,shall be fined not less than Five thousand pesos (P5,000.00) nor more than Twenty thousandpesos (P20,000.00) and imprisoned for not less than six (6) years and one (1) day nor more thantwelve (12) years.

"(c) Whoever buys, sells, offers for sale, uses, transfers or takes or gives in exchange, or pledgesor gives in pledge, except as authorized in this Act or in regulations made pursuant thereto, any

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stamp, coupon, ticket, book or other device, prescribed pursuant to Section Twenty-three hereof bythe Commission for the collection or payment of contributions required herein, shall be fined notless than Five thousand pesos (P5,000.00) nor more than Twenty thousand pesos (P20,000.00), orimprisoned for not less than six (6) years and one (1) day nor more than twelve (12) years, or both,at the discretion of the court.

"(d) Whoever, with intent to defraud, alters, forges, makes or counterfeits any stamp, coupon,ticket, book or other device prescribed by the Commission for the collection or payment of anycontribution required herein, or uses, sells, lends, or has in his possession any such altered, forgedor counterfeited materials, or makes, uses, sells or has in his possession any such altered, forged,material in imitation of the material used in the manufacture of such stamp, coupon, ticket, book orother device, shall be fined not less than Five thousand pesos (P5,000.00) non more than Twentythousand pesos (P20,000.00) or imprisoned for not less than six years (6) and one (1) day normore than twelve (12) years, or both, at the discretion of the court.

"(e) Whoever fails or refuses to comply with the provisions of this Act or with the rules and

regulations promulgated by the Commission, shall be punished by a fine of not less than Fivethousand pesos (P5,000.00) nor more than Twenty thousand pesos (P20,000.00), or imprisonmentfor not less than six (6) years and one (1) day nor more than twelve (12) years, or both, at thediscretion of the court: Provided , That where the violation consists in failure or refusal to registeremployees or himself, in case of the covered self-employed or to deduct contributions from theemployees' compensation and remit the same to the SSS, the penalty shall be a fine of not lessFive thousand pesos (P5,000.00) nor more than Twenty thousand pesos (P20,000.00) andimprisonment for not less than six (6) years and one (1) day nor more than twelve (12) years.

"(f) If the act or omission penalized by this Act be committed by an association, partnership,corporation or any other institution, its managing head, directors or partners shall be liable for thepenalties Provided in this Act for the offense.

"(g) Any employee of the SSS who receives or keeps funds or property belonging, payable ordeliverable to the SSS and who shall appropriate the same, or shall take or misappropriate, or shallconsent, or through abandonment or negligence, shall permit any other person to take suchproperty or funds, wholly or partially, or shall otherwise be guilty of misappropriation of such fundsor property, shall suffer the penalties Provided in Article Two hundred seventeen of the RevisedPenal Code.

"(h) Any employer who, after deducting the monthly contributions or loan amortizations from hisemployee's compensation, fails to remit the said deduction to the SSS within thirty (30) days fromthe date they became due, shall be presumed to have misappropriated such contributions or loanamortizations and shall suffer the penalties Provided in Article Three hundred fifteen of the RevisedPenal Code.

"(i) Criminal action arising from a violation of the provisions of this Act may be commenced by theSSS or the employee concerned either under this Act or in appropriate cases under the RevisedPenal Code: Provided , That such criminal action may be filed by the SSS in the city or municipality

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where the SSS office is located, if the violation was committed within its territorial jurisdiction or inMetro Manila, at the option of the SSS.

"SEC. 29. Government Aid . - The establishment of the SSS shall not disqualify the members andemployers from receiving such government assistance, financial or otherwise, as may be Provided .

"SEC. 30. Transitory Clause. - Any employer who is delinquent or has not remitted all contributionsdue and payable to the SSS may, within six (6) months from the effectivity of this Act, remit saidcontributions or submit a proposal to pay the same in installment within a period of not more thantwelve (12) months from the effectivity of this Act without incurring the prescribed penalty, subjectto the implementing rules and regulations which the Commission may prescribe: Provided , That theemployer submits the corresponding collection lists together with the remittance or proposal to payin installments: Provided , further , That in case the employer fails to remit contributions within thesix-month grace period or defaults in the payment of any amortization Provided the approvedproposal, the prescribed penalty shall be imposed from the time the contributions first became dueas Provided in Section 22 (a) hereof."

Section 2. Separability Clause. - If any provision of this Act is declared invalid, the other provisions notaffected thereby shall remain valid.

Section 3. Repealing Clause. - All laws, proclamations, executive orders, rules and regulations or partsthereof inconsistent with this Act are hereby repealed, modified or amended accordingly: Provided , That noperson shall be deemed to be vested with any property or other right by virtue of the enactment oroperation of this Act.

Section 4. Effectivity Clause. - This Act shall take effect fifteen (15) days after its complete publication inthe Official Gazette or in at least two (2) national newspapers of general circulation whichever comes

earlier.

THE GOVERNMENT SERVICE INSURANCE SYSTEM ACT OF 1997

REPUBLIC ACT NO. 8291

AN ACT AMENDING PRESIDENTIAL DECREE NO. 1146, AS AMENDED, EXPANDING ANDINCREASING THE COVERAGE AND BENEFITS OF THE GOVERNMENT SERVICE INSURANCE

SYSTEM, INSTITUTING REFORMS THEREIN AND FOR OTHER PURPOSES.

SECTION 1. Presidential Decree No. 1146, as amended, otherwise known as the "Revised GovernmentService Insurance Act of 1977" , is hereby further amended to read as follows:

"SECTION 1. Title. -The title of this Act shall be: "The Government Service Insurance System Act of 1997."

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"A. DEFINITIONS

"SEC. 2. Definition of terms.- Unless the context otherwise indicates, the following terms shall mean:

"(a) GSIS- The Government Service Insurance System created by Commonwealth Act No. 186;

"(b) Board - The Board of Trustees of the Government Service Insurance System;

"(c) Employer - The national government, its political subdivisions, branches, agencies or instrumentalities,including government-owned or controlled corporations, and financial institutions with original charters, theconstitutional commissions and the judiciary;

"(d) Employee or Member - Any person receiving compensation while in the service of an employer asdefined herein, whether by election or appointment, irrespective of status of appointment, includingbarangay and Sanggunian officials;

"(e) Active Member - A member who is not separated from the service;

"(f) Dependents- Dependents shall be the following: (a) the legitimate spouse dependent for support uponthe member or pensioner; (b) the legitimate, legitimated, legally adopted child, including the illegitimatechild, who is unmarried, not gainfully employed, not over the age of majority, or is over the age of majoritybut incapacitated and incapable of self-support due to a mental or physical defect acquired prior to age ofmajority; and (c) the parents dependent upon the member for support;

"(g) Primary beneficiaries- The legal dependent spouse until he/she remarries and the dependent children;

"(h) Secondary beneficiaries- The dependent parents and, subject to the restrictions on dependent children,

the legitimate descendants;

"(i) Compensation- The basic pay or salary received by an employee, pursuant to his election/appointment,excluding per diems, bonuses, overtime pay, honoraria, allowances and any other emoluments received inaddition to the basic pay which are not integrated into the basic pay under existing laws;

"(j) Contribution- The amount payable to the GSIS by the member and the employer in accordance withSection 5 of this Act;

"(k) Current Daily Compensation- The actual daily compensation or the actual monthly compensationdivided by the number of working days in the month of contingency but not to exceed twenty-two (22) days;

"(l) Average Monthly Compensation (AMC)- The quotient arrived at after dividing the aggregatecompensation received by the member during his last thirty-six (36) months of service preceding hisseparation/retirement/ disability/death by thirty-six (36), or by the number of months he received suchcompensation if he has less than thirty-six (36) months of service: Provided, That the average monthlycompensation shall in no case exceed the amount and rate as may be respectively set by the Board underthe rules and regulations implementing this Act as determined by the actuary of the GSIS: Provided,further, That initially the average monthly compensation shall not exceed Ten thousand pesos

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(P10,000.00), and premium shall be nine percent (9%) and twelve percent (12%) for employee andemployer covering the AMC limit and below and two percent (2%) and twelve percent (12%) for employeeand employer covering the compensation above the AMC limit;

"(m) Revalued average monthly compensation- An amount equal to one hundred seventy percent (170%)

of the first One thousand pesos (P1,000.00) of the average monthly compensation plus one hundredpercent (100%) of the average monthly compensation in excess of One thousand pesos (P1,000.00);

"(n) Lump sum- The basic monthly pension multiplied by sixty (60);

"(o) Pensioner - Any person receiving old-age permanent total disability pension or any person who hasreceived the lump sum excluding one receiving survivorship pension benefits as defined in Section 20 ofthis Act;

"(p) Gainful Occupation- Any productive activity that provided the member with income at least equal to theminimum compensation of government employees;

"(q) Disability - Any loss or impairment of the normal functions of the physical and/or mental faculty of amember which reduces or eliminates his/her capacity to continue with his/her current gainful occupation orengage in any other gainful occupation;

"(r) Total Disability - Complete incapacity to continue with his present employment or engage in any gainfuloccupation due to the loss or impairment of the normal functions of the physical and/or mental faculties ofthe member;

"(s) Permanent Total Disability - Accrues or arises when recovery from the impairment mentioned in Section2 (Q) is medically remote;

"(t) Temporary Total Disability - Accrues or arises when the impaired physical and/or mental faculties can berehabilitated and/or restored to their normal functions;

"(u) Permanent Partial Disability - Accrues or arises upon the irrevocable loss or impairment of certainportion/s of the physical faculties, despite which the member is able to pursue a gainful occupation.

"B. MEMBERSHIP IN THE GSIS

"SEC. 3. Compulsory Membership. - Membership in the GSIS shall be compulsory for all employees

receiving compensation who have not reached the compulsory retirement age, irrespective of employmentstatus, except members of the Armed Forces of the Philippines and the Philippine National Police, subjectto the condition that they must settle first their financial obligation with the GSIS, and contractuals who haveno employer and employee relationship with the agencies they serve.

"Except for the members of the judiciary and constitutional commissions who shall have life insurance only,all members of the GSIS shall have life insurance, retirement, and all other social security protections suchas disability, survivorship, separation, and unemployment benefits.

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"SEC. 4. Effect of Separation from the Service. - A member separated from the service shall continue to bea member, and shall be entitled to whatever benefits he has qualified to in the event of any contingencycompensable under this Act.

"C. SOURCES OF FUNDS

"SEC. 5. Contributions. - (a) It shall be mandatory for the member and employer to pay the monthlycontributions specified in the following schedule:

"Monthly Compensation Percentage of Monthly Compensation

Payable by Member Employer

I. Maximum Average

Monthly Compensation(AMC) Limit and Below 9.0% 12.0%

II. Over the Maximum AMC Limit

-Up to the Maximum AMC Limit 9.0% 12.0%

-In Excess of the AMC Limit 2.0% 12.0%

"Members of the judiciary and constitutional commissioners shall pay three percent (3%) of their monthlycompensation as personal share and their employers a corresponding three percent (3%) share for their lifeinsurance coverage.

"(b) The employer shall include in its annual appropriation the necessary amounts for its share of thecontributions indicated above, plus any additional premiums that may be required on account of thehazards or risks of its employee’s occupation.

"(c) It shall be mandatory and compulsory for all employers to include the payment of contributions in theirannual appropriations. Penal sanctions shall be imposed upon employers who fail to include the payment ofcontributions in their annual appropriations or otherwise fail to remit the accurate/exact amount ofcontributions on time, or delay the remittance of premium contributions to the GSIS. The heads of officesand agencies shall be administratively liable for non-remittance or delayed remittance of premiumcontributions to the GSIS.

"SEC. 6. Collection and Remittance of Contributions. - (a) The employer shall report to the GSIS the namesof all its employees, their corresponding employment status, positions, salaries and such other pertinentinformation, including subsequent changes therein, if any, as may be required by the GSIS; the employer

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shall deduct each month from the monthly salary or compensation of each employee the contributionpayable by him in accordance with the schedule prescribed in the rules and regulations implementing this Act.

"(b) Each employer shall remit directly to the GSIS the employee’s and employer’s contributions within the

first ten (10) days of the calendar month following the month to which the contributions apply. Theremittance by the employer of the contribution to the GSIS shall take priority over and above the paymentof any and all obligations, except salaries and wages of its employees.

"SEC. 7. Interest on Delayed Remittances. - Agencies which delay the remittance of any and all moniesdue the GSIS shall be charged interests as may be prescribed by the Board but not less than two percent(2%) simple interest per month. Such interest shall be paid by the employers concerned.

"SEC. 8. Government Guarantee. - The government of the Republic of the Philippines hereby guaranteesthe fulfillment of the obligations of the GSIS to its members as and when they fall due.

"D. BENEFITS

"SEC. 9. Computation of the Basic Monthly Pension. - (a) The basic monthly pension is equal to:

"1) thirty-seven and one-half percent (37.5%) of the revalued average monthly compensation; plus

"2) two and one-half percent (2.5%) of said revalued average monthly compensation for each year ofservice in excess of (15) years: Provided, That the basic monthly pension shall not exceed ninety percent(90%) of the average monthly compensation.

"(b) The basic monthly pension may be adjusted upon the recommendation of the President and GeneralManager of the GSIS and approved by the President of the Philippines in accordance with the rules andregulations prescribed by the GSIS: Provided, however , that the basic monthly pension shall not be lessthan One thousand and three hundred pesos (P1,300.00): Provided, further, that the basic monthly pensionfor those who have rendered at least twenty (20) years of service after the effectivity of this Act shall not beless than Two thousand four hundred pesos (P2,400.00) a month.

"SEC. 10. Computation of Service. - (a) The computation of service for the purpose of determining theamount of benefits payable under this Act shall be from the date of original appointment/election, includingperiods of service at different times under one or more employers, those performed overseas under theauthority of the Republic of the Philippines, and those that may be prescribed by the GSIS in coordinationwith the Civil Service Commission.

"(b) All service credited for retirement, resignation or separation for which corresponding benefits havebeen awarded under this Act or other laws shall be excluded in the computation of service in case ofreinstatement in the service of an employer and subsequent retirement or separation which is compensableunder this Act.

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"For the purpose of this section, the term service shall include full-time service with compensation:Provided, that part-time and other services with compensation may be included under such rules andregulations as may be prescribed by the GSIS.

"SEPARATION BENEFITS

"SEC. 11. Separation Benefits. - The separation benefits shall consist of: (a) a cash payment equivalent toone hundred percent (100%) of his average monthly compensation for each year of service he paidcontributions, but not less than Twelve thousand pesos (P12,000) payable upon reaching sixty (60) yearsof age upon separation, whichever comes later: Provided, that the member resigns or separates from theservice after he has rendered at least three (3) years of service but less than fifteen (15) years; or

"(b) a cash payment equivalent to eighteen (18) times his basic monthly pension at the time of resignationor separation, plus an old-age pension benefit equal to the basic monthly pension payable monthly for lifeupon reaching the age of sixty (60): Provided, that the member resigns or separates from the service after

he has rendered at least fifteen (15) years of service and is below sixty (60) years of age at the time ofresignation or separation.

"SEC. 12. Unemployment or Involuntary Separation Benefits. - Unemployment benefits in the form ofmonthly cash payments equivalent to fifty percent (50%) of the average monthly compensation shall bepaid to a permanent employee who is involuntarily separated from the service due to the abolition of hisoffice or position usually resulting from reorganization: Provided, That he has been paying integratedcontributions for at least one (1) year prior to separation. Unemployment benefits shall be paid inaccordance with the following schedules:

"Contributions Made Benefit Duration

1 year but less than 3 years 2 months3 or more years but less than 6 years 3 months6 or more years but less than 9 years 4 months9 or more years but less than 11 years 5 months

11 or more years but less than 15 years 6 months

"The first payment shall be equivalent to two (2) monthly benefits. A seven-day (7) waiting period shall beimposed on succeeding monthly payments.

"All accumulated unemployment benefits paid to the employee during his entire membership with the GSISshall be deducted from voluntary separation benefits.

"The GSIS shall prescribe the detailed guidelines in the operationalization of this section in the rules andregulations implementing this Act.

"RETIREMENT BENEFITS

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"SEC. 13. Retirement Benefits. - (a) Retirement benefits shall be:

"(1) the lump sum payment as defined in this Act payable at the time of retirement plus an old-age pensionbenefit equal to the basic monthly pension payable monthly for life, starting upon expiration of the five-year(5) guaranteed period covered by the lump sum; or

"(2) cash payment equivalent to eighteen (18) months of his basic monthly pension plus monthly pensionfor life payable immediately with no five-year (5) guarantee.

"(b) Unless the service is extended by appropriate authorities, retirement shall be compulsory for anemployee of sixty-five (65) years of age with at least fifteen (15) years of service: Provided, That if he hasless than fifteen (15) years of service, he may be allowed to continue in the service in accordance withexisting civil service rules and regulations.

"SEC. 13-A. Conditions for Entitlement. - A member who retires from the service shall be entitled to theretirement benefits enumerated in paragraph (a) of Section 13 hereof: Provided, That:

(1) he has rendered at least fifteen years of service;

(2) he is at least sixty (60) years of age at the time of retirement; and

(3) he is not receiving a monthly pension benefit from permanent total disability.

"SEC. 14. Periodic Pension Adjustment. - The monthly pension of all pensioners including all thosereceiving survivorship pension benefits shall be periodically adjusted as may be recommended by the GSISactuary and approved by the Board in accordance with the rules and regulations prescribed by the GSIS.

"PERMANENT DISABILITY BENEFITS

"SEC. 15. General Conditions for Entitlement. - A member who suffers permanent disability for reasons notdue to his grave misconduct, notorious negligence, habitual intoxication, or willful intention to kill himself oranother, shall be entitled to the benefits provided for under Sections 16 and 17 immediately following,subject to the corresponding conditions thereof.

"SEC. 16. Permanent Total Disability Benefits. - (a) If the permanent disability is total, he shall receive amonthly income benefit for life equal to the basic monthly pension effective from the date of disability: Provided, That:

(1) he is in the service at the time of disability; or

(2) if separated from the service, he has paid at least thirty-six (36) monthly contributions within the five (5)year period immediately preceding disability, or has paid a total of at least one hundred eighty (180)monthly contributions, prior to his disability: Provided, further, That if at the time of disability, he was in theservice and has paid a total of at least one hundred eighty (180) monthly contributions, in addition to themonthly income benefit, he shall receive a cash payment equivalent to eighteen (18) times his basic

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monthly pension: Provided, finally, That a member cannot enjoy the monthly income benefit for permanentdisability and the old-age retirement simultaneously.

"(b) If a member who suffers permanent total disability does not satisfy conditions (1) and (2) in paragraph(a) of this section but has rendered at least three (3) years of service at the time of his disability, he shall be

advanced the cash payment equivalent to one hundred percent (100%) of his average monthlycompensation for each year of service he paid contributions, but not less than Twelve thousand pesos(P12,000.00) which should have been his separation benefit.

"(c) Unless the member has reached the minimum retirement age, disability benefit shall be suspendedwhen:

"(1) he is reemployed; or

"(2) he recovers from his disability as determined by the GSIS, whose decision shall be final andbinding; or

"(3) he fails to present himself for medical examination when required by the GSIS."(d) The following disabilities shall be deemed total and permanent:

"(1) complete loss of sight of both eyes;

"(2) loss of two (2) limbs at or above the ankle or wrist;

"(3) permanent complete paralysis of two (2) limbs;

"(4) brain injury resulting in incurable imbecility or insanity; and

"(5) such other cases as may be determined by the GSIS.

"SEC. 17. Permanent Partial Disability Benefits. - (a) If the disability is partial, he shall receive a cashpayment in accordance with a schedule of disabilities to be prescribed by the GSIS: Provided, That hesatisfies either conditions (1) or (2) of Section 16 (a);

"(b) The following disabilities shall be deemed permanent partial:

"(1) complete and permanent loss of the use of:(i) any finger(ii) any toe(iii) one arm(iv) one hand(v) one foot(vi) one leg(vii) one or both ears(viii) hearing of one or both ears

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(ix) sight of both eyes

"(2) such other cases as my be determined by the GSIS.

"TEMPORARY DISABILITY BENEFITS

"SEC. 18. Temporary Total Disability Benefits. - (a) A member who suffers temporary total disability forreasons not due to any of the conditions enumerated in Section 15 hereof shall be entitled to seventy-fivepercent (75%) of his current daily compensation for each day or fraction thereof of temporary disabilitybenefit not exceeding one hundred twenty (120) days in one calendar year after exhausting all his sickleave credits and collective bargaining agreement sick leave benefits, if any, but not earlier than the fourthday of his temporary total disability: Provided, That:

"(1) he is in the service at the time of his disability; or

"(2) if separated, he has rendered at least three (3) years of service and has paid at least six (6)monthly contributions in the twelve-month period immediately preceding his disability.

"Provided, however, That a member cannot enjoy the temporary total disability benefit and sick leave paysimultaneously: Provided, further, That if the disability requires more extensive treatment that lasts beyondone hundred twenty (120) days, the payment of the temporary total disability benefit may be extended bythe GSIS but not to exceed a total of two hundred forty (240) days.

"(b) The temporary total disability benefit shall in no case be less than Seventy pesos (P70.00) a day.

"(c) The notices required of the member and the employer, the mode of payment, and the otherrequirements for entitlement to temporary total disability benefits shall be provided in the rules andregulations to be prescribed by the GSIS.

"SEC. 19. Non-scheduled Disability. - For injuries or illnesses resulting in a disability not listed in theschedule of partial/total disability provided herein, the GSIS shall determined the nature of the disability andthe corresponding benefits therefor.

"SURVIVORSHIP BENEFITS

"SEC. 20. Survivorship Benefits. - When a member or pensioner dies, the beneficiaries shall be entitled tosurvivorship benefits provided in Sections 21 and 22 hereunder subject to the conditions therein providedfor. The survivorship pension shall consist of:

(1) the basic survivorship pension which is fifty percent (50%) of the basic monthly pension; and

(2) the dependent children’s pension not exceeding fifty percent (50%) of the basic monthly

http://www.chanrobles.com/legal4gsis.htm#CHAN%20ROBLES%20AND%20ASSOCIATES%20LAW%20FIRM%20-%20PHILIPPINE%20LABOR%20CIRCULAR-ON-LINE

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pension.

"SEC. 21. Death of a Member. - (a) Upon the death of a member, the primary beneficiaries shall be entitledto:

(1) survivorship pension: Provided, That the deceased:

(i) was in the service at the time of his death; or

(ii) if separated from the service, has at least three (3) years of service at the time of hisdeath and has paid thirty-six (36) monthly contributions within the five-year periodimmediately preceding his death; or has paid a total of at least one hundred eighty (180)monthly contributions prior to his death; or

(2) the survivorship pension plus a cash payment equivalent to one hundred percent (100%) of hisaverage monthly compensation for every year of service: Provided, That the deceased was in theservice at the time of his death with at least three (3) years of service; or

(3) a cash payment equivalent to one hundred percent (100%) of his average monthlycompensation for each year of service he paid contributions, but not less than Twelve thousandpesos (P12,000.00): Provided, That the deceased has rendered at least three (3) years of serviceprior to his death but does not qualify for the benefits under item (1) or (2) of this paragraph.

(b) The survivorship pension shall be paid as follows:(1) when the dependent spouse is the only survivor, he/she shall receive the basic survivorshippension for life or until he/she remarries;

(2) when only dependent children are the survivors, they shall be entitled to the basic survivorshippension for as long as they are qualified, plus the dependent children’s pension equivalent to tenpercent (10%) of the basic monthly pension for every dependent child not exceeding five (5),counted from the youngest and without substitution;

(3) when the survivors are the dependent spouse and the dependent children, the dependentspouse shall receive the basic survivorship pension for life or until he/she remarries, and thedependent children shall receive the dependent children’s pension mentioned in the immediatelypreceding paragraph (2) hereof.

(c) In the absence of primary beneficiaries, the secondary beneficiaries shall be entitled to:(1) the cash payment equivalent to one hundred percent (100%) of his average monthlycompensation for each year of service he paid contributions, but not less than Twelve thousand

pesos (P12,000.00): Provided, That the member is in the service at the time of his death and hasat least three (3) years of service; or

(2) in the absence of secondary beneficiaries, the benefits under this paragraph shall be paid to hislegal heirs.

(d) For purposes of the survivorship benefits, legitimate children shall include legally adopted andlegitimated children.

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"SEC. 22. Death of a Pensioner. - Upon the death of an old-age pensioner or a member receiving themonthly income benefit for permanent disability, the qualified beneficiaries shall be entitled to thesurvivorship pension defined in Section 20 of this Act, subject to the provisions of paragraph (b) of Section21 hereof. When the pensioner dies within the period covered by the lump sum, the survivorship pensionshall be paid only after the expiration of the said period.

"FUNERAL BENEFITS

"SEC. 23. Funeral Benefits. - The amount of the funeral benefits shall be determined and specified by theGSIS in the rules and regulations but shall not be less than Twelve thousand pesos (P12,000.00):Provided, That it shall be increased to at least Eighteen thousand pesos (P18,000.00) after five (5) yearsand shall be paid upon the death of:

(a) an active member as defined under Section 2 (e) of this Act; or(b) a member who has been separated from the service, but who may be entitled to future benefit

pursuant to Section 4 of this Act; or(c) a pensioner, as defined in Section 2 (o) of this Act; or(d) a retiree who at the time of his retirement was of pensionable age under this Act but who optedto retire under Republic Act No. 1616.

"LIFE INSURANCE BENEFITS

"SEC. 24. Compulsory Life Insurance. - All employees except for Members of the Armed Forces of thePhilippines (AFP) and the Philippine National Police (PNP) shall, under such terms and conditions as maybe promulgated by the GSIS, be compulsorily covered with life insurance, which shall automatically takeeffect as follows:

(1) for those employed after the effectivity of this Act, their insurance shall take effect on the date oftheir employment;(2) for those whose insurance will mature after the effectivity of this Act, their insurance shall bedeemed renewed on the day following the maturity or expiry date of their insurance;(3) for those without any life insurance as of the effectivity of this Act, their insurance shall takeeffect following said effectivity.

"SEC. 25. Dividends. - An annual dividend may be granted to all members of the GSIS whose life insuranceis in force for at least one (1) year in accordance with a dividends allocation formula to be determined bythe GSIS.

"SEC. 26. Optional Insurance. - Subject to the rules and regulations prescribed by the GSIS, a membermay apply for insurance and/or pre-need coverage embracing life, health, hospitalization, education,memorial plans, and such other plans as may be designed by the GSIS, for himself and/or his dependents. Any employer may likewise apply for group insurance coverage for its employees. The payment of thepremiums/installments for optional insurance and pre-need products may be made by the insured or hisemployer and/or any person acceptable to the GSIS.

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"SEC. 27. Reinsurance. - The GSIS may reinsure any of its interests or part thereof with any privatecompany or reinsurer whether domestic of foreign: Provided, That the GSIS shall submit an annual reporton its reinsurance operations to the Insurance Commission.

"E. ADJUDICATION OF CLAIMS AND DISPUTES

"SEC. 28. Prescription. - Claims for benefits under this Act except for life and retirement shall prescribeafter four (4) years from the date of contingency.

"SEC. 29. Facility of Payment. - The GSIS shall prescribe rules and regulations to facilitate payment ofbenefits, proceeds, and claims under this Act and any other laws administered by the GSIS. Paymentsmade by the GSIS prior to its receipt of an adverse claim, to a beneficiary or claimant subsequently foundnot entitled thereto, shall not bar the legal and eligible recipient to his right to demand the payment ofbenefits, proceeds, and claims from the GSIS, who shall, however, have a right to institute the appropriateaction in a court of law against the ineligible recipient.

"SEC. 30. Settlement of Disputes. - The GSIS shall have original and exclusive jurisdiction to settle anydisputes arising under this Act and any other laws administered by the GSIS.

The Board may designate any member of the Board, or official of the GSIS who is a lawyer, to act ashearing officer to receive evidence, make findings of fact and submit recommendations, together with alldocumentary and testimonial evidence to the Board within thirty (30) working days from the time the partieshave closed their respective evidence and filed their last pleading. The Board shall decide the case withinthirty (30) days from the receipt of the hearing officer’s findings and recommendations. The cases hearddirectly by the Board shall be decided within thirty (30) working days from the time they are submitted bythe parties for decision.

"SEC. 31. Appeals. - Appeals from any decision or award of the Board shall be governed by Rules 43 and45 of the 1997 Rules of Civil Procedure adopted by the Supreme Court on April 8, 1997 which will takeeffect on July 1, 1997: Provided, That pending cases and those filed prior to July 1, 1997 shall be governedby the applicable rules of procedure: Provided, further, That the appeal shall take precedence over all othercases except criminal cases when the penalty of life imprisonment or death or reclusion perpetua isimposable.

The appeal shall not stay the execution of the order or award unless ordered by the Board, by the Court of Appeals or by the Supreme Court and the appeal shall be without prejudice to the special civil action ofcertiorari when proper.

"SEC. 32. Execution of Decision. - When no appeal is perfected and there is no order to stay by the Board,by the Court of Appeals or by the Supreme Court, any decision or award of the Board shall be enforced andexecuted in the same manner as decisions of the Regional Trial Court. For this purpose, the Board shallhave the power to issue to the city or provincial sheriff or its appointed sheriff such writs of execution asmay be necessary for the enforcement of such decision or award, and any person who shall fail or refuse tocomply with such decision, award, writ or process after being required to do so shall, upon application bythe GSIS, be punished for contempt.

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"SEC. 33. Oaths, Witnesses, and Production of Records. - When authorized by the Board, an official oremployee of the GSIS shall have the power to administer oath and affirmation, take deposition, certify toofficial acts, and issue subpoena ad testificandum and subpoena duces tecum to compel the attendance ofwitnesses and the production of books, papers, correspondences, and other records deemed necessary asevidence in connection with any question arising under this Act. Any case of contumacy shall be dealt with

in accordance with the provisions of Section 580 of the Revised Administrative Code.

"F. FUNDS OF THE GSIS

"SEC. 34. Funds. - All contributions payable under Section 5 of this Act together with the earnings andaccruals thereon shall constitute the GSIS Social Insurance Fund. The said fund shall be used to financethe benefits administered by the GSIS under this Act. In addition, the GSIS shall administer the optionalinsurance fund for the insurance coverage described in Section 26 hereof, the Employees’ CompensationInsurance Fund created under P.D. 626, as amended, General Insurance Fund created under Act No. 656,as amended, and such other special funds existing or that may be created for special groups or persons

rendering services to the government. The GSIS shall maintain the required reserves to guarantee thefulfillment of its obligations under this Act.

The funds of the GSIS shall not be used for purposes other than what are provided for under this Act.Moreover, no portion of the funds of the GSIS or income thereof shall accrue to the General Fund of thenational government and its political subdivisions, instrumentalities and other agencies includinggovernment-owned and controlled corporations except as may be allowed under this Act.

"SEC. 35. Deposits and Disbursements. - All revenues collected and all accruals thereto shall be deposited,administered and disbursed in accordance with the law. A maximum expense loading of twelve percent(12%) of the yearly revenues from all sources may be disbursed for administrative and operationalexpenses except as may be otherwise approved by the President of the Philippines on the basis ofactuarial and management studies.

"SEC. 36. Investment of Funds. - The funds of the GSIS which are not needed to meet the currentobligations may be invested under such terms and conditions and rules and regulations as may beprescribed by the Board: Provided, That investments shall satisfy the requirements of liquidity,safety/security and yield in order to ensure the actuarial solvency of the funds of the GSIS: Provided,further, That the GSIS shall submit an annual report on all investments made to both Houses of Congressof the Philippines, to wit:

(a) in interest-bearing bonds or securities or other evidence of indebtedness of the Government ofthe Philippines;

(b) in interest-bearing deposits or securities in any domestic bank doing business in thePhilippines: Provided, That in the case of such deposits, there shall not exceed at any time theunimpaired capital and surplus or total private deposits of the depository bank, whichever issmaller: Provided, further, That the said bank has prior designation as a depository for the purposeby the Monetary Board of the Central Monetary Authority;

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(c) in direct housing loans to members and group housing projects secured by first mortgage,giving priority to the low income groups and in short and medium term loans to members such assalary, policy, educational, emergency stock purchase plan and other similar loans: Provided, Thatno less than forty percent (40%) of the investible fund of the GSIS Social Insurance Fund shall beinvested for these purposes;

(d) in bonds, securities, promissory notes or other evidence of indebtedness of educational ormedical institutions to finance the construction, improvement and maintenance of schools andhospitals;

(e) in real estate property including shares of stocks involving real state property and investmentssecured by first mortgages on real estate or other collaterals acceptable to the GSIS: Provided,That such investment shall, in the determination of the Board, redound to the benefit of the GSIS,its members as well as the general public;

(f) in debt instruments and other securities traded in the secondary markets;

(g) in loans to, or in bonds, debentures, promissory notes or other evidence of indebtedness of anysolvent corporation created or existing under the laws of the Philippines;

(h) in common and preferred stocks of any solvent corporation or financial institution created orexisting under the laws of the Philippines listed in the stock exchange with proven track record ofprofitability over the last three (3) years and payment of dividends at least once over the sameperiod;

(i) in domestic mutual funds including investments related to the operations of mutual funds; and

(j) in foreign mutual funds and in foreign currency deposits or foreign currency-denominated debts,non-speculative equities and other financial instruments or other assets issued in accordance withexisting laws of the countries where such financial instruments are issued: Provided, That theseinstruments or assets are listed in bourses of the respective countries where these instruments orassets are issued: Provided, further, That the issuing company has proven track record ofprofitability over the last three (3) years and payment of dividends at least once over the sameperiod.

"SEC. 37. Records and Reports. - The GSIS shall keep and cause to keep such records as may benecessary for the purpose of making actuarial studies, calculations and valuations of the funds of the GSISincluding such data needed in the computation of rates of disability, mortality, morbidity, separation andretirement among the members and any other information useful for the adjustment of the benefits of the

members. The GSIS shall maintain appropriate books of accounts to record its assets, liabilities, income,expenses, receipts and disbursement of funds and other financial transactions and operations.

"SEC. 38. Examination and Valuation of the Funds. - The GSIS shall make a periodic actuarial examinationand valuation of its funds in accordance with accepted actuarial principles.

"SEC. 39. Exemption from Tax, Legal Process and Lien. - It is hereby declared to be the policy of the Statethat the actuarial solvency of the funds of the GSIS shall be preserved and maintained at all times and that

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contribution rates necessary to sustain the benefits under this Act shall be kept as low as possible in ordernot to burden the members of the GSIS and their employers. Taxes imposed on the GSIS tend to impairthe actuarial solvency of its funds and increase the contribution rate necessary to sustain the benefits ofthis Act. Accordingly, notwithstanding any laws to the contrary, the GSIS, its assets, revenues including allaccruals thereto, and benefits paid, shall be exempt from all taxes, assessments, fees, charges, or duties of

all kinds. These exemptions shall continue unless expressly and specifically revoked and any assessmentagainst the GSIS as of the approval of this Act are hereby considered paid. Consequently, all laws,ordinances, regulations, issuances, opinions or jurisprudence contrary to or in derogation of this provisionare hereby deemed repealed, superseded and rendered ineffective and without legal force and effect.

"Moreover, these exemptions shall not be affected by subsequent laws to the contrary unless this section isexpressly, specifically and categorically revoked or repealed by law and a provision is enacted to substituteor replace the exemption referred to herein as an essential factor to maintain or protect the solvency of thefund, notwithstanding and independently of the guaranty of the national government to secure suchsolvency or liability.

"The funds and/or the properties referred to herein as well as the benefits, sums or monies correspondingto the benefits under this Act shall be exempt from attachment, garnishment, execution, levy or otherprocesses issued by the courts, quasi-judicial agencies or administrative bodies including Commission on Audit (COA) disallowances and from all financial obligations of the members, including his pecuniaryaccountability arising from or caused or occasioned by his exercise or performance of his official functionsor duties, or incurred relative to or in connection with his position or work except when his monetary liability,contractual or otherwise, is in favor of the GSIS.

"G. ADMINISTRATION

"SEC. 40. Implementing Body. - The Government Service Insurance System as created underCommonwealth Act No. 186 shall implement the provisions of this Act.

"SEC. 41. Powers and Functions of the GSIS. - The GSIS shall exercise the following powers andfunctions:

(a) to formulate, adopt, amend and/or rescind such rules and regulations as may be necessary tocarry out the provisions and purposes of this Act, as well as the effective exercise of the powersand functions, and the discharge of duties and responsibilities of the GSIS, its officers andemployees;

(b) to adopt or approve the annual and supplemental budget of receipts and expenditures includingsalaries and allowances of the GSIS personnel; to authorize such capital and operatingexpenditures and disbursements of the GSIS as may be necessary and proper for the effectivemanagement and operation of the GSIS;

(c) to invest the funds of the GSIS, directly or indirectly, in accordance with the provisions of this Act;

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(d) to acquire, utilize or dispose of, in any manner recognized by law, real or personal property inthe Philippines or elsewhere necessary to carry out the purposes of this Act;

(e) to conduct continuing actuarial and statistical studies and valuations to determine the financial €condition of the GSIS and taking into consideration such studies and valuations and the

limitations herein provided, re-adjust the benefits, contributions, premium rates, interest rates or theallocation or re-allocation of the funds to the contingencies covered;

(f) to have the power of succession;

(g) to sue and be sued;

(h) to enter into, make, perform and carry out contracts of every kind and description with anyperson, firm or association or corporation, domestic or foreign;

(i) to carry on any other lawful business whatsoever in pursuance of, or in connection with the

provisions of this Act;

(j) to have one or more offices in and outside of the Philippines, and to conduct its business andexercise its powers throughout and in any part of the Republic of the Philippines and/or in any or allforeign countries, states and territories: Provided, That the GSIS shall maintain a branch office inevery province where there exists a minimum of fifteen thousand (15,000) membership;

(k) to borrow funds from any source, private or government, foreign or domestic, only as anincident in the securitization of housing mortgages of the GSIS and on account of its receivablesfrom any government or private entity;

(l) to invest, own or otherwise participate in equity in any establishment, firm or entity;

(m) to approve appointments in the GSIS except appointments to positions which are policydetermining, primarily confidential or highly technical in nature according to the Civil Service rulesand regulations: Provided, That all positions in the GSIS shall be governed by the compensationand position classification system and qualifications standards approved by the GSIS Board ofTrustees based on a comprehensive job analysis and audit of actual duties and responsibilities:Provided, further, That the compensation plan shall be comparable with the prevailingcompensation plans in the private sector and shall be subject to the periodic review by the Boardno more than once every four (4) years without prejudice to yearly merit reviews or increasesbased on productivity and profitability;

(n) to design and adopt an Early Retirement Incentives Plan (ERIP) and/or financial assistance forthe purpose of retirement for its own personnel;

(o) to fix and periodically review and adjust the rates of interest and other terms and conditions forloans and credits extended to members or other persons, whether natural or juridical;

(p) to enter into agreement with the Social Security System or any other entity, enterprise,corporation or partnership for the benefit of members transferring from one system to another

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subject to the provisions of Republic Act No. 7699, otherwise known as the Portability Law;

(q) to be able to float proper instrument to liquefy long-term maturity by pooling funds for short-termsecondary market;

(r) to submit annually, not later than June 30, a public report to the President of the Philippines andtheCongress of the Philippines regarding its activities in the administration and enforcement of this Actduring the preceding year including information and recommendations on board policies for thedevelopment and perfection of the programs of the GSIS;

(s) to maintain a provident fund, which consists of contributions made by both the GSIS and itsofficials and employees and their earnings, for the payments of benefits to such officials andemployees or their heirs under such terms and conditions as it may prescribe;

(t) to approve and adopt guidelines affecting investments, insurance coverage of government

properties, settlement of claims, disposition of acquired assets, privatization or expansion ofsubsidiaries, development of housing projects, increased benefit and loan packages to members,and the enforcement of the provision of this Act;

(u) any provision of law to the contrary notwithstanding, to authorize the payment of extraremuneration to the officials and employees directly involved in the collection and/or remittances ofcontributions, loan repayments, and other monies due to the GSIS at such rates and under suchconditions as it may adopt: Provided, That the best interest of the GSIS shall be observed thereby;

(v) to determine, fix and impose interest upon unpaid premiums due from employers andemployees;

(w) to ensure the collection or recovery of all indebtedness, liabilities and/or accountabilities,including unpaid premiums or contributions in favor of the GSIS arising from any cause or sourcewhatsoever, due from obligors, whether public or private. The Board shall demand payment orsettlement of the obligations referred to herein within thirty (30) days from the date the obligationbecomes due, and in the event of failure or refusal of the obligor or debtor to comply with thedemand, to initiate or institute the necessary or proper actions or suits, criminal, civil oradministrative or otherwise, before the courts, tribunals, commissions, boards, or bodies of proper jurisdiction within thirty (30) days reckoned from the expiry date of the period fixed in the demandwithin which to pay or settle the account;

(x) to design and implement programs that will promote and mobilize savings and provideadditional resources for social security expansion and at the same time afford individual membersappropriate returns on their savings/investments. The programs shall be so designed as to spursocio-economic take-off and maintain continued growth; and

(y) to exercise such powers and perform such other acts as may be necessary, useful, incidental orauxiliary to carry out the provisions of this Act, or to attain the purposes and objectives of this Act.

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"SEC. 42. The Board of Trustees; its Composition; Tenure and Compensation. - The corporate powers andfunctions of the GSIS shall be vested in and exercised by the Board of Trustees composed of the Presidentand General Manager of the GSIS and eight (8) other members to be appointed by the President of thePhilippines, one (1) of whom shall be either the President of the Philippine Public School Teachers Association (PPSTA) or the President of the Philippine Association of School Superintendents (PASS),

another two (2) shall represent the leading organizations or associations of governmentemployees/retirees, another four (4) from the banking, finance, investment, and insurance sectors, and one(1) recognized member of the legal profession who at the time of appointment is also a member of theGSIS. The Trustees shall elect from among themselves a Chairman while the President and GeneralManager of the GSIS shall automatically be the vice-chairman.

The Trustees, except the President and General Manager who shall cease as trustee upon his separation,shall hold office for six (6) years without reappointment, or until their successors are duly appointed andqualified. Vacancy, other than through the expiration of the term, shall be filled for the unexpired term only.The members of the Board shall be entitled to a per diem of Two thousand five hundred pesos (P2,500.00)for each board meeting actually attended by them, but not to exceed Ten thousand pesos (P10,000.00) a

month and reasonable transportation and representation allowances as may be fixed by the Board.

"SEC. 43. Powers and Functions of the Board of Trustees. - The Board of Trustees shall have the followingpowers and functions:

"(a) to formulate the policies, guidelines and programs to effectively carry out the purposes of this Act;

"(b) to promulgate such rules and regulations as may be necessary or proper for the effectiveexercise of the powers and functions as well as the discharge of the duties and responsibilities ofthe GSIS, its officers and employees;

"(c) upon the recommendation of the President and General Manager, to approve the annual andsupplemental budget of receipts and expenditures of the GSIS, and to authorize such operatingand capital expenditures and disbursements of the GSIS as may be necessary or proper for theeffective management, operation and administration of the GSIS;

"(d) upon the recommendation of the President and General Manager, to approve the GSISorganizational and administrative structure and staffing pattern, and to establish, fix, review, reviseand adjust the appropriate compensation packages for the officers and employees of the GSIS andreasonable allowances, incentives, bonuses, privileges and other benefits as may be necessary orproper for the effective management, operation and administration of the GSIS, which shall beexempt from Republic Act No. 6758, otherwise known as the Attrition Law;

"(e) to fix and periodically review and adjust the rates of interest and other terms and conditions forloans and credits extended to its members or other persons, whether natural or juridical;

"(f) the provision of any law to the contrary notwithstanding, to compromise or release, in whole orin part, any claim or settle liability to the GSIS, regardless of the amount involved, under suchterms and conditions as it may impose for the best interest of the GSIS;

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"(g) to approve and adopt guidelines affecting investments, insurance coverage of governmentproperties, settlement of claims, disposition of acquired assets, development of housing projects,increased benefit and loan packages to members, and the enforcement of the provisions of this Act;

"(h) to determine, fix, and impose interest upon unpaid or unremitted premiums and/orcontributions; and

"(i) to do and perform any and all acts necessary, proper or incidental to the attainment of thepurposes and objectives of this Act.

"SEC. 44. Appointment, Qualifications, and Compensation of the President and General Manager and ofother Personnel. - The President and General Manager of the GSIS shall be its Chief Executive Officer andshall be appointed by the President of the Philippines. He shall be a person with management andinvestments expertise necessary for the effective performance of his duties and functions under this Act.

"The GSIS President and General Manager shall be assisted by one or more executive vice-presidents,senior vice-presidents and managers in addition to the usual supervisory and rank-and-file positions whoshall be appointed and removed by the President and General Manager with the approval of the Board, inaccordance with the existing Civil Service rules and regulations.

"SEC. 45. Powers and Duties of the President and General Manager. - The President and GeneralManager of the GSIS shall, among others, execute and administer the policies and resolutions approved bythe Board and direct and supervise the administration and operations of the GSIS. The President andGeneral Manager, subject to the approval of the Board, shall appoint the personnel of the GSIS, remove,suspend or otherwise discipline them for cause, in accordance with the existing Civil Service rules andregulations, and prescribe their duties and qualifications to the end that only competent persons may beemployed.

"SEC. 46. Auditor. - (a) The Chairman of the Commission on Audit shall be the ex officio auditor of theGSIS, and the necessary personnel to assist said representative in the performance of his duties.

"(b) The Chairman of the Commission on Audit or his authorized representatives, shall submit to the Boardsoon after the close of each calendar year, an audited statement showing the financial condition andprogress of the GSIS for the calendar year just ended.

"SEC. 47. Legal Counsel. - The Government Corporate Counsel shall be the legal adviser and consultant ofthe GSIS, but the GSIS may assign to the Office of the Government Corporate Counsel (OGCC) cases forlegal action or trial, issues for legal opinions, preparation and review of contracts/agreements and others,

as the GSIS may decide or determine from time to time: Provided, however, That the present legal servicesgroup in the GSIS shall serve as its in-house legal counsel.

"The GSIS may, subject to approval by the proper court, deputize any personnel of the legal service groupto act as special sheriff in the enforcement of writs and processes issued by the court, quasi-judicialagencies or administrative bodies in cases involving the GSIS.

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"SEC. 48. Powers of the Insurance Commission. - The Insurance Commissioner or his authorizedrepresentatives shall make an examination of financial condition and methods of transacting business ofthe GSIS at least once every three (3) years and the report of said examination shall be submitted to theBoard of Trustees and copies thereof be furnished the Office of the President of the Philippines and the twohouses of the Congress of the Philippines within five (5) days after the close of examination: Provided,

however, That for each examination, the GSIS shall pay the office of the Insurance Commissioner anamount equal to the actual expenses incurred by the said office in the conduct of examination, including thesalaries of the examiners and of the actuary of such examination for the actual time spent.

"H. GENERAL PROVISION

"SEC. 49. Dispensation of Social Insurance Benefits. - (a) The GSIS shall pay the retirement benefits to theemployee on his last day of service in the government: Provided, That all requirements are submitted to theGSIS within a reasonable period prior to the effective date of the retirement;

"(b) The GSIS shall discontinue the processing and adjudication of retirement claims under R.A. No. 1616except refund of retirement premium under R. A. No. 910. Instead, all agencies concerned shall processand pay the gratuities of their employees. The Board shall adopt the proper rules and procedures for theimplementation of this provision.

"SEC. 50. Development and Disposition of Acquired Assets. - The GSIS shall have the right to develop anddispose of its acquired assets obtained in the ordinary course of its business. To add value to, improveprofitability on, and/or enhance the marketability of an acquired asset, the GSIS may furtherdevelop/renovate the same either with its own capital or through a joint venture arrangement with privatecompanies or individuals.

"The GSIS may sell its acquired assets in accordance with existing Commission on Audit (COA) rules andregulations for an amount not lower than the current market value of the property. For this purpose, theGSIS shall conduct an annual appraisal of its property or acquired assets to determine its current marketvalue. All notices of sale shall be published in newspapers of general circulation.

"No injunction or restraining order issued by any court, commission, tribunal or office shall bar, impede ordelay the sale and disposition by the GSIS of its acquired assets except on questions of ownership andnational or public interest.

"SEC. 51. Government Assistance to the GSIS. - The GSIS may call upon any employer for suchassistance as may be necessary in the discharge of its duties and functions.

"I. PENAL PROVISIONS

"SEC. 52. Penalty. - (a) Any person found to have participated directly or indirectly in the commission offraud, collusion, falsification, or misrepresentation in any transaction with the GSIS, whether for him or forsome other persons, shall suffer the penalties provided for in Article 172 of the Revised Penal Code.

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"(b) Whoever shall obtain or receive any money or check invoking any provision of this Act or anyagreement thereunder, without being entitled thereto with the intent to defraud any member, any employer,the GSIS, or any third party, shall be punished by a fine of not less than Five thousand pesos (P5,000.00)nor more than Twenty thousand pesos (P20,000.00) or by imprisonment of not less than six (6) years andone (1) day to twelve (12) years, or both, at the discretion of the court.

"(c) Whoever fails or refuses to comply with the provisions of this Act or with the rules and regulationsadopted by the GSIS, shall be punished by a fine of not less than Five thousand pesos (P5,000.00) normore than Twenty thousand pesos (P20,000.00) or imprisonment of not less than six (6) years and one (1)day to twelve (12) years, or both, at the discretion of the court.

"(d) The treasurer, finance officer, cashier, disbursing officer, budget officer or other official or employeewho fails to include in the annual budget the amount corresponding to the employer and employeecontributions, or who fails or refuses or delays by more than thirty (30) days from the time such amountbecomes due and demandable, or to deduct the monthly contributions of the employee shall, uponconviction by final judgment, suffer the penalties of imprisonment from six (6) months and one (1) day to six

(6) years, and a fine of not less than Three thousand pesos (P3,000.00) but not more than Six thousandpesos (P6,000.00), and in addition, shall suffer absolute perpetual disqualification from holding public officeand from practicing any profession or calling licensed by the government.

"(e) Any employee or member who receives or keeps fund or property belonging, payable or deliverable tothe GSIS and appropriates the same, or takes or misappropriates or uses the same for any purpose otherthan authorized by this Act, or permits another person to take, misappropriate or use said fund or propertyby expressly consenting thereto, or through abandonment or negligence, or is otherwise guilty of themisappropriation of said fund or property, in whole or in part, shall suffer the penalties provided in Article217 of the Revised Penal Code, and in addition, shall suffer absolute perpetual disqualification from holdingpublic office and from practicing any profession or calling licensed by the government.

"(f) Any employee who, after deducting the monthly contribution or loan amortization from a member’scompensation, fails to remit the same to the GSIS within thirty (30) days from the date they should havebeen remitted under Section 6(a), shall be presumed to have misappropriated such contribution or loanamortization and shall suffer the penalties provided in Article 315 of the Revised Penal Code, and inaddition, shall suffer absolute perpetual disqualification from holding public office and from practicing anyprofession or calling licensed by the government.

"(g) The heads of the offices of the national government, its political subdivisions, branches, agencies andinstrumentalities, including government-owned or controlled corporations and government financialinstitutions, and the personnel of such offices who are involved in the collection of premium contributions,loan amortization and other accounts due the GSIS who shall fail, refuse or delay the payment, turnover,remittance or delivery of such accounts to the GSIS within thirty (30) days from the time that the same shallhave been due and demandable shall, upon conviction by final judgment, suffer the penalties ofimprisonment of not less than one (1) year nor more than five (5) years and a fine of not less than Tenthousand pesos (P10,000.00) nor more than Twenty thousand pesos (P20,000.00), and in addition, shallsuffer absolute perpetual disqualification from holding public office and from practicing any profession orcalling licensed by the government.

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"(h) The officers and/or personnel referred to in paragraph (g) of this section shall be liable not onlycriminally but also civilly to the GSIS or to the employee or member concerned in the form of damages,including surcharges and interests.

"(i) For the charges or complaints referred to in paragraph (g) of this section, the liabilities therein set forth

shall be construed as waiver of the State of its immunity from suit, hence, the above-mentioned officialsand/or personnel may not invoke the defense of non-suability of the State.

"(j) Failure of the Members of the GSIS Board, including the chairman and the vice-chairman, to complywith the provisions of paragraph (w) of Section 41 hereof, shall subject them to imprisonment of not lessthan six (6) months nor more than one (1) year or a fine of not less than Five thousand pesos (P5,000.00)nor more than Ten thousand pesos (P10,000.00) without prejudice to any civil or administrative liabilitywhich may also arise therefrom.

"(k) Criminal actions arising from violations of the provisions of this Act may be commenced by the GSIS orby the aggrieved member, either under this Act or, in appropriate cases, under the Revised Penal Code.

"SEC. 53. Implementing Rules and Regulations. - The implementing rules and regulations to carry out theprovisions of this Act shall be adopted and promulgated by the GSIS not later than ninety (90) days afterthe approval of this Act.

"SEC. 54. Non-impairment of Benefits, Powers, Jurisdiction, Rights, Privileges, Functions and Activities. - Nothing in this Act shall be construed to repeal, amend or limit any provision of existing laws, PresidentialDecrees and Letters of Instructions, not otherwise specifically inconsistent with the provisions of this Act.

"SEC. 55. Exclusiveness of Benefits. - Whenever other laws provide similar benefits for the samecontingencies covered by this Act, the member who qualifies to the benefits shall have the option to choose

which benefits will be paid to him. However, if the benefits provided by the law chosen are less than thebenefits provided under this Act, the GSIS shall pay only the difference.

"SEC. 56. Appropriations. - The amount necessary to carry out the provisions of this Act shall be includedin the respective budgets of the agencies in the national government obligation program of the yearfollowing its enactment into law and thereafter."

SEC. 2. Separability Clause. - Should any provision of this Act or any part thereof be declared invalid, theother provisions, so far as they are separable from the invalid ones, shall remain in force and effect.

SEC. 3. Repealing Clause. - All laws and any other law or parts of law specifically inconsistent herewith arehereby repealed or modified accordingly: Provided, That the rights under the existing laws, rules andregulations vested upon or acquired by an employee who is already in the service as of the effectivity ofthis Act shall remain in force and effect: Provided, further, That subsequent to the effectivity of this Act, anew employee or an employee who has previously retired or separated and is reemployed in the serviceshall be covered by the provisions of this Act.

SEC. 4. Effectivity. - This Act shall take effect fifteen (15) days after its publication in the Official Gazette orin at least two (2) newspapers of general circulation.

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This Act, which is a consolidation of Senate Bill No. 2013 and House Bill No. 8561, was finally passed bythe Senate and the House of Representatives on May 29, 1997 and May 28, 1997, respectively.

Approved: May 30, 1997

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Documents

Transcript of LABOR 3.3.10