Fifteenth Congress
First Regular Session

HOUSE BILL NO. 38785

Introduced by Honorable Edgar S. San Luis

EXPLANATORY NOTE

This bill seeks to improve the welfare benefits for all the members of
the Government Service Insurance System (GSIS), amending for the
purpose Presidential Decree No. 1146, otherwise known as the “Revised
Government Service Insurance System Act of 1977,” as amended.

The GSIS was created in 1936 under Commonwealth Act No. 186
with the goal to promote the efficiency and welfare of the employees of the
Philippine Government. Since then, various social insurance legislations
were enacted to further improve the structure and provide better benefits
schemes, financing coverage, administration and organization.

In 1977, Presidential Decree No. 1146 was issued which effected a
major revision of the GSIS charter. It aimed to enhance the quality of life of
the government workers by increasing, expanding and integrating their
social security insurance benefits and facilitating the payment thereof. It
was amended by Republic Act No. 8291 in 1997, which further expanded
and increased the coverage and benefits provided by the GSIS.

However, given the noble intent of said laws, the GSIS found itself
mired in controversy owing to questionable policies and rules issued by the
GSIS which its members found to be unjust, vague and detrimental to the
interests of all government employees nationwide. Among the issues are
mismanagement of funds, exorbitant salaries and allowances of the GSIS
executives and employees, delayed release of retirement benefits, whimsical
investment strategies of the GSIS, lack of transparency, disproportionate
representation of teachers and retirees to the Board of Trustees, and limited
coverage of benefits. As a result, majority of the GSIS members are
clamoring for remedies to ensure that their hard-earned contributions and


interests can be duly safeguarded and not squandered, with utmost fidelity
and care.

The broad authority granted the GSIS needs to be revised in order to
assure its members that no excesses can be committed at the members’
expense. The GSIS was established supposedly for the well-being of all
government employees especially after they have rendered invaluable
services to the government. It therefore befits the members that their
contributions be administered efficiently, protected, invested and spent for
their sole benefit.

In order to dissipate the growing doubts and discontent of government
employees with the GSIS and to restore the fund managers’ credibility, vital
reforms must be instituted. In view of the foregoing, approval of this bill is
earnestly sought.

UIS



Fifteenth Congress
First Regular Session
3785

HOUSE BILL NO.

Introduced by Honorable Edgar S. San Luis

AN ACT
IMPROVING THE WELFARE BENEFITS FOR THE MEMBERS OF
THE GOVERNMENT SERVICE INSURANCE SYSTEM, FURTHER
AMENDING FOR THE PURPOSE PRESIDENTIAL DECREE NO.
1146, AS AMENDED, OTHERWISE KNOWN AS THE “REVISED
GOVERNMENT SERVICE INSURANCE SYSTEM ACT OF 1977”

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

SECTION 1. Section 4 of Presidential Decree No. 1146, as amended,
is hereby further amended to read as follows:
“SEC. 4. Effect of Separation from the Service. — A
member separated from the service shall continue to be a
member, and shall be entitled to whatever benefits he has
qualified to in the event of any contingency compensable under

this Act.


AFTER SEPARATION FROM THE SERVICE, A
MEMBER MAY OPT TO CONTINUE THE PAYMENT OF
THE NECESSARY CONTRIBUTIONS IN ORDER TO
QUALIFY FOR ANY OF THE AVAILABLE GSIS
BENEFITS.”

SEC. 2. Section 7 of the same Presidential Decree is hereby amended
to read as follows:

“SEC.7. Interests on Delayed Remittances,
OVERPAYMENTS OF BENEFITS. Agencies which delay the
remittance of any and all monies due to the GSIS shall be
charged [interest 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].

HOWEVER, THE GSIS SHALL BE LIABLE TO PAY
THE MEMBER TWO PERCENT (2%) SIMPLE INTEREST
PER MONTH IN CASES WHEN: (A) THE MEMBER
MAKES A LOAN OVERPAYMENT TO THE GSIS; OR (B)
ANY BENEFIT DUE TO THE MEMBER IS NOT

+ REFUNDED OR RELEASED BY THE GSIS WITHIN


THIRTY (30) DAYS AFTER SUBMISSION OF ALL THE

REQUIREMENTS TO THE GSIS.”

SEC. 3. Section 10 of the same Presidential Decree is hereby
amended to read as follows:

“SEC. 10. Computation of Service. — (a) The
computation of service for the purpose of determining the
amount of benefits payable under this Act shall be from the date
of original appointment[/] OR election,
NOTWITHSTANDING THAT THE PAYMENT OF
PREMIUM WAS MADE AT A LATER DATE THAN THE
DATE OF THE ORIGINAL APPOINTMENT OR
ELECTION, including periods of service at different times
under one or more employers, those performed overseas under
the authority of the Republic of the Philippines, and those that
may be prescribed by the GSIS in coordination with the Civil
Service Commission.”

SEC. 4. Section 13 of the same Presidential Decree is hereby

amended to read as follows:


“SEC. 13. Retirement Benefits. — (a) Retirement benefit
shall be:

x x x

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

(1) He has rendered at least fifteen (15) 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.

HOWEVER, THE RETIREMENT AGE
REQUIREMENT UNDER THIS ACT SHALL BE WAIVED
IF A MEMBER HAS RENDERED AT LEAST TWENTY (20)
YEARS OF SERVICE,.”

SEC. 5. Section 20 of the same Presidential Decree is hereby

further amended to read as follows:


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

(1) The basic survivorship pension which is [fifty
percent (50%)] ONE HUNDRED PERCENT (100%) of the
basic monthly pension; and

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

SEC. 6. Section 23 of the same Presidential Decree is hereby
amended to read as follows:

“SEC. 23. Funeral Benefit. - The amount of funeral
benefit shall be determined and specified: by the GSIS-in the
rules and regulations but shall not be less than [Twelve
thousand pesos (P12,000.00)] TWENTY THOUSAND PESOS
(P20,000.00): Provided, That it shall be increased to at least
[Eighteen thousand pesos (P18,000.00)] THIRTY THOUSAND

PESOS (P30,000.00) after five years AND ADDITIONAL


TWO THOUSAND PESOS (P2,000.00) EVERY TWO (2)
YEARS THEREAFTER FOR THE NEXT TEN (10) YEARS.”
SEC. 7. Section 35 of the same Presidential Decree is likewise
hereby amended to read as follows:
“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 TOTAL MEMBER CONTRIBUTIONS AND
THREE PERCENT (3%) of the yearly revenues from all
sources may be disbursed for administrative and operational
expenses. [except as may be otherwise approved by the
President of the Philippines on the basis of actuarial and
management studies.”
SEC. 8. Section 36 of the same Presidential Decree is likewise
hereby amended to read as follows:
“SEC. 36. Investment of Funds. - The funds of the
GSIS which are not needed to meet the current obligations may

be invested under such terms and conditions and rules and


regulations as may be prescribed by the Board; Provided, That
investments shall satisfy the requirement 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 Congress of the Philippines, to wit:

(a) In interest-bearing bonds or securities or other
evidence of indebtedness of the government of the Philippines;

x x x

[G) 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 with existing laws of the countries
where such financial instruments are issued: Provided, That
there instruments or assets are listed in bourses of the respective
countries where these instruments are issued: Provided,
further, That the issuing company has proven track record of
profitability over the last three (3) years and payment of

dividends at least once over the same period.]


THE FUNDS OF THE GSIS THAT ARE INVESTED
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 WITH EXISTING
LAWS OF THE COUNTRIES WHERE SUCH FINANCIAL
INSTRUMENTS ARE ISSUED, SHALL BE LIQUIDATED
WITHIN ONE YEAR AFTER THE EFFECTIVITY OF THIS
ACT IN ACCORDANCE WITH THE GUIDELINES THAT
THE GSIS BOARD OF TRUSTEES SHALL PROMULGATE.
ALL SUCH INVESTMENTS, INCLUDING ALL PROFITS
AND EARNINGS DERIVED THEREFROM SHALL
REVERT TO THE GENERAL FUND OF THE GSIS.”
SEC: 9. a) Section 41 of the same Presidential Decree is hereby

further amended to read as follows:

“SEC. 41. Powers and Functions of the GSIS. - The

GSIS shall exercise the following powers and functions:

(a) x x x


(To have one or more offices in and outside of the
Philippines, and to conduct its business and exercise its powers
throughout and in any part of the Republic of the Philippines
[and/or] OR in any or all foreign countries, states and
territories: Provided, That the GSIS shall ESTABLISH AND
maintain a branch office in every province where there exists a
minimum of [fifteen] TEN thousand [(15,000)] (10,000)
membership; PROVIDED, FURTHER, THAT THE GSIS
MAY OPT TO ESTABLISH AND MAINTAIN A BRANCH
OFFICE IN ANY CITY OR MUNICIPALITY WHENEVER
AND WHEREVER IT MAY BE EXPEDIENT, NECESSARY
AND FEASIBLE, AND TO INSPECT OR CAUSE TO BE
INSPECTED SUCH OFFICES PERIODICALLY;

x x x

[(@) Any provision of law to the contrary
notwithstanding, to authorize the payment of | extra
remuneration to the officials and employees directly involved in
the collection and/or remittance of contributions, loan

repayments, and other monies due to the GSIS at such rates and


under such conditions as it may adopt: Provided, That the best

interest of the GSIS shall be observed thereby;]”

b) The succeeding sub-sections after sub-section “u” are hereby
renumbered accordingly.

SEC. 10. Section 42 of the same Presidential Decree is hereby
further amended to read as follows:

“SEC. 42. The Board of Trustees: Its Composition,

Tenure and Compensation. — The corporate powers and

functions of the GSIS shall be vested in and exercised by the

Board of Trustees composed of the President and General

Manager of the GSIS and [eight (8)] TWELVE (12) other

members to be appointed by the President of the Philippines,

[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),] FOUR (4) SHALL BE PUBLIC SCHOOL

TEACHERS WHO SHALL BE NOMINATED BY ANY

TEACHERS’ ORGANIZATIONS OR ASSOCIATIONS

NATIONWIDE, another [two (2)] THREE (3) shall represent


the leading organizations or associations of government
employees[/] OR retirees, ONE OF WHOM SHALL BE
NOMINATED BY THE GOVERNMENT RETIREES
ASSOCIATION OF THE PHILIPPINES, 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 the GSIS. The Trustees
shall elect from among themselves a Chairman while the
President and General Manager of the GSIS shall automatically
be the vice-chairman.”

SEC. 11. Section 43 of the same Presidential Decree is hereby

further amended to read as follows:

“SEC. 43. Powers and Functions of the Board of
Trustees. — The Board of Trustees shall have the following
powers and functions:

(a) To formulate, ADOPT, AMEND AND RESCIND,
SUBJECT TO THE APPROVAL OF THE PRESIDENT OF
THE PHILIPPINES, the policies, guidelines and programs to

effectively carry out the purposes of this Act;


x x x
(d) Upon recommendation of the President and
» General Manager, to approve the GSIS’s organizations and
administrative structures and staffing pattern, and to establish,
fix, review, revise and adjust, SUBJECT TO THE APPROVAL
OF THE PRESIDENT OF THE PHILIPPINES, the appropriate
compensation package for the officers and employees of the
GSIS_ with reasonable allowances, incentives, bonuses,
privileges and other benefits as may be necessary or proper for
the effective management, operation and administration of the
GSIS, which shall be exempt from Republic Act No. 6758,
otherwise known as the Salary Standardization Law and

Republic Act No. 7430, otherwise known as the Attrition Law;

x x x?

SEC. 12. Repealing Clause. — The provisions of Presidential
Decree No. 1146, as amended by Republic Act No. 8291, and all other laws,

decrees, executive orders,

mations, rules and regulations, and
issuances, or parts thereof, which are inconsistent with the provisions of this

Act are hereby repealed or amended accordingly.


SEC. 13.  Effectivity. — This Act shall take effect fifteen (15) days
after its publication in the Official Gazette or in two (2) national newspapers
of general circulation.

Approved,