feous F RPRESENTATIVES

eae Bs

TIME: Rey

Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

SEVENTEENTH CONGRESS

First Regular Session RATION UNIT

BILLS AND INDEX SERVICE

House Bill No. 3453

Introduced by AKBAYAN Representative Tomasito 8. Villarin

EXPLANATORY NOTE

The Government Service Insurance System was created in 14 November 192
by virtue of Commonwealth Act No. 186 to ensure that government employees
who have dedicated their lives to public service are taken care of once they
retire. To pursue this mandate, the System’s Charter was amended by
Presidential Decree No. 1146, Republic Act No. 660, Republic Act No. 1616,
and, the lat , by Republic Act No. 8291 (Revised Government Service
Insurance System Act of 1997). All these amendments have the objective of
providing better benefits to public servants.

With 1,649,330 active members, 113,883 survivorship pensioners, and
245,156 old age pensioners, the Government Service Insurance System is
perhaps the most effective way by which the State protects employees in the
public sector from socio-economic impacts of old age, death, loss of job and
disability a State mandate pursuant to Article XII (Social Justice and Human
Rights), Section 3 of the 1987 Philippine Constitution, which directs the State
to afford full protection to labor. Public servants rely heavily on the System’s
mechanisms on pension, life insurance, disability insurance, employees’
compensation, burial benefits, survivorship benefits and accessible loans to
cushion the impact of such contingencies.

s hence, this bill introduces amendments to Republic Act No.
8291 to make it more responsive to the changing needs of the System and its
members, It further reinforces the value of the contribution of government

workers-members, specifically of the organized public sector unions by
introducing membership rights. It strengthens the participation of worke

members in developing and crafting policies of the System. ‘This bill proposes
measures to further the rights of workers-members towards a more

responsive, efficient and professional System.

Core to the bill of rights is the right to be heard through institutionalization
of regular interactions with public sector unions, employees’ and retirees’
organizations and other stakeholders, a mechanism which would not only
enable workers-members to voice out their issues and concerns but also



capacitate the System to formulate policies which are more responsive to the
need of workers-members.

‘This bill further introduces the notion of socially responsible investments
which would also make it a policy of the System of opportunities for high
returns but would also make it a policy of the System to invest in activities
that would contribute to the building of better communities, ensuring the
protection of human rights, and working towards sustainable development.

The introduction of harsher penalties and the enumeration of acts
inconsistent with the System’s objective of promoting workers bers
rights are also introduced to deter further violations, primarily with regard to
the failure to remit premium and loan amortizations of members by
employers-agencies.

‘This bill will increase the coverage and amount of certain benefits to addre
the changing times and need of the System’s members.

Lastly, this legislative proposal was filed by Akbayan’s representatives during
the 16 Congress. In view of the foregoing, the immediate passage of this bill
is earnestly sought.

TOMASITO S. VILLARIN


Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

SEVENTEENTH CONGRESS
First Regular Session

-
House Bill No. 345 3

Introduced by AKBAYAN Representative Tomasito S. Villarin

AN ACT
FURTHER STRENGTHENING THE GOVERNMENT SERVICE INSURANCE
SYSTEM

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

SECTION 1. Short Title. —This Act shall be known as the “Government
Service Insurance System Act of 2016.”

SECTION 2. Declaration of Policy. —It is a declared policy of the State to
provide, develop and promote a sound social security system responsive to
the needs of its employees. Likewise, the State shall review and strengthen
policies that advance and protect the welfare of employees in the public sector
and ensure their right to participate in policy and decision-making processes
affecting their rights and benefits.

Toward this end, the State shall:

(a) Ensure the adoption of policies beneficial to GSIS members, paving the
way for a responsible, integrated and transparent social security system;

(b) Provide greater representation for members at the highest policy-making
Jevel of the GSIS;

() Insulate the Social Insurance Fund from dissipation due to the volatility
of the global economy; and

(d) Ensure that top-level o
mismanagement and inefficienc!
and beneficiaries,

of the GSIS are held accountable for
in the delivery of services to members

A. DEFINITIONS

SECTION 3. Definition of Terms. —As used in this Act, and unless the
context otherwise indicates:


(a) ‘Government Service Insurance System’ or ‘GSIS’ shall refer to the system
created under Commonwealth Act No. 186

(b) ‘Board’ shall refer to the Board of Trustees of the GSIS.

(c) ‘Employer’ refers to the national government, its political subdivisions,
branches, agencies or instrumentalities, including, government-owned or
-controlled corporations, and financial institutions with original charters,
the Congress of the Philippines, the Constitutional Commissions and the
Judiciary.

(A) ‘Employee’ or ‘Member’ refers to any person, receiving compensation while
in the service of an employer, as the latter is defined in this Section,
whether by election or appointment: Provided, That employees or members
who are occupying appointive positions are considered employees or
members regardless of the status of their appointment: Provided, further,
‘That elected barangay and sanggunian officials are included in the term
employee or member: Provided, finally, That such employee or member
does not fall under Section 4(d) of this Act.

(c) ‘Active Member refers to a member who is not separated from the service.
(0) ‘Beneficiaries’ refer to the following:
(1) For married members:

() The legitimate spouse; and

(i) All. legitimate, legitimated, legally adopted and illegitimate
unmarried child: Provided, That the child shall not be over the
age of majority: Provided, however, That a child who is a person
with disability and who is incapable of self-support due to a
mental, physical or sensory impairment can still be a beneficiary
regardless of age: Provided, finally, That such a mental or
physical impairment was acquired or is present before the person
with disability reached the age of majority.

(2) For unmarried members:

(i) All. legitimate, legitimated, legally adopted and illegitimate
unmarried child: Provided, That the child shall not be over the
age of majority: Provided, further, That a child who is a person
with disability and who is incapable of self-support due to a
mental or physical impairment can still be a beneficiary
regardless of age: Provided, finally, That such a mental or
physical impairment was acquired or is present before the person
with disability reached the age of majority;

(i) In the absence of children, the parents; or



(iii) In the absence of either (i) and (ii), a designated beneficiary who
shall have the same qualifications and be entitled to the same
benefits as a legitimate, legitimated, legally adopted or illegitimate
child under paragraph ({(1)(ii) of this Section: Provided, That the
designation must be made before the member turns fifty (50)
years old: Provided, further, That such a designation can only be
made once.

(3) A decree of legal separation shall operate to disqualify the legitimate

$ eficiary under this Act, consistent with the provisions of
Article 63(4) in relation to Section 43(1) of Executive Order No, 209
otherwise known as The Family Code of the Philippines.

A person who is deemed a beneficiary under the definitions in this Section
shall likewise be disqualified after the member disinherits such a person
or after such person is deemed to be unworthy to succeed.

Such a disinheritance and unworthiness may be (a) effected in a probated
will, which shall specily the ground for disinheritance in compliance with
Article 916, such grounds thereof are understood to be provided for in
Articles 919 (disinheritance of legitimate and illegitimate children and
descendants), 920 (disinheritance of legitimate and illegitimate parents or
ascendants) or 921 (disinheritance of a spouse), of Republic Act No. 386
otherwise known as the Civil Code of the Philippines; or (b) proved and
effected by a court decree of incapacity to succeed the member by reason
of unworthiness under the grounds in Article 1032 of Republic Act No. 386
otherwise known as the Civil Code of the Philippines.

(g) ‘Benefits’ refers to those administered by GSIS on behalf of its members,

as found under Sections 14 to 38 of this Act, specifically: retirement,
separation, unemployment, disability, death/funeral, survivorship and life
insurance.

(h) ‘Compensation’ refers to the basic pay or salary received by an employee,
pursuant to election or appointment: Provided, That the term does not
include per diems, bonuses, overtime pay, honoraria, allowances and any
other emoluments received in addition to the basic pay and which are not
integrated into the basic pay under existing laws,

(i) ‘Contribution’ refers to the amount payable to the GSIS by the member and
the employer in accordance with Section 10 of this Act.

(i) ‘Current Daily Compensation’ refers to the actual daily compensation or the
actual monthly compensation divided by the number of working days in
the month of contingency but not to exceed twenty-two (22) working days.

(k) ‘Average Monthly Compensation’ or refers to the amount arrived at after
dividing the aggregate compensation received by the member during the

3


last thirty-six (36) months of service preceding separation, retirement,
disability or death by thirty-six (36): Provided, That for employees or
members receiving compensation for less than thirty-six month (36), the
amount shall be equal to the total compensation received: Provided,
further, That the average monthly compensation shall in no case exceed
the amount and rate as may be respectively set by the Board under the
rules and regulations implementing this Act, and as determined by the
actuary of the GSIS.

()) ‘Revalued Average Monthly Compensation’ refers to an amount equal to one
hundred seventy percent (170%) of the first One Thousand Pesos (PhP
1,000.00) of the average monthly compensation plus one hundred percent
(100%) of the average monthly compensation in excess of One Thousand
Pesos (PhP 1,000.00).

(m) ‘Pensioner’ refers to any person receiving old-age or permanent total
disability pension or any person who has received the retirement benefits
Provided, however, That one who is receiving survivorship pension benefits
as defined in Sections 33 to 36 of this Act is not considered a pensioner.

(n) Disability’ refers to any loss or impairment of the normal functions of the
physical or mental faculty of a member which reduces or eliminates the
capacity to continue with current gainful occupation.

(0) ‘Permanent Partial Disability’ refers to a condition accruing or arising from
the complete and permanent loss of certain portions of the physical
faculties, resulting in the disability to work for a limited period of time.

(p) ‘Permanent Total Disability’ refers to a condition accruing or arising from
injury or disease which causes complete, irreversible, and permanent
incapacity permanently disabling a member to work or engage in the same
occupation resulting in loss of income.

(q) ‘Temporary Total Disability’ refers to a condition accruing or arising from
the impaired physical or mental faculties can be rehabilitated or restored
to their normal functions whenever such disability results in temporary
incapacity to work or engage in any occupation.

(1) ‘Total Admitted Assets’ refers to the value, as appearing in the GSIS’
financial statements, of its revenues, income, and other property, less the
amount of its liabilities.

(s) ‘Total Length of Service’ refers to the number of years in government
service, regardless of status of employment, with or without premium
contributions, to be used in determining the eligibility of a member for
retirement under this Act. Total length of service includes fulltime service
with compensation: Provided, That part time and other services with
compensation may be included under such rules and regulations as may
be prescribed by the GSIS.



(t) ‘Revaluation Factor refers to the supplemental amount to the average
monthly compensation that is calculated relative to the annual average
inflation rate. The revaluation factor shall be periodically adjusted as may
be recommended by the GSIS actuary and approved by the Board of
Trustees;

(u) ‘Total Income’ refers to the amount of profit derived from the GSIS’
operations and investments: Provided, That compulsory and optional
premium contributions to the Social Insurance Fund from both employers
and employees shall not form part of GSIS’ total income.

B. MEMBERSHIP IN THE GSIS
SECTION 4. Compulsory Membership. —

(a) All government personnel, whether elective or appointive, irrespective of
status of appointment, provided they are receiving fixed monthly
compensation and have not reached the mandatory retirement age of
sixty-five (65) years, are compulsorily covered as members of the GSIS and
shall be required to pay contributions.

(b) Contractual and casual employees who have an employee-employer
relationship with a government agency are also compulsorily covered.

(c) An employee who is already beyond the mandatory retirement age of sixty-
five (65) but whose appointment in government service has been approved
by the Office of the President of the Philippines or has been extended by
the Civil Service Commission for the purpose of completing the fifteen (15)
years of service required under Republic Act No. 8291 (otherwise known
as the Revised GSIS Act of 1977) to qualify for retirement benefits.

(A) The following government employees are not members of the GSIS:

(1) Uniformed personnel of the Armed Forced of the Philippines, Philippine
National Police, Bureau of Fire Protection and Bureau of Jail
Management and Penology;

(2) Barangay, sanggunian and other government officials who are not
receiving fixed monthly compensation;

(3) Government employees covered by separate re
enumerated under Section 4(c) of this Act; and

(4) Personnel who are not receiving fixed monthly compensation or do not
have monthly regular hours of work.

ement schemes,

(c) The following, who are covered by separate retirement schemes, are also
required to remit regular monthly contributions to the GSIS for their life
insurance policies in order to answer for their life insurance benefits
defined under this Act:


(1) Members of the Constitutional bodies;

(2) Members of the Judiciary, including those with equivalent ranks;

(3) Members of the National Prosecution Service; and

(4) All other who are or may be subsequently covered by a separate
retirement law,

SECTION 5. Optional Membership. —The following shall be given the option
to continue their membership in GSIS, even beyond the mandatory retirement
age of sixty-five (65):

(a) An official elected to public office before age sixty-five (65) but who will
reach the mandatory retirement age of sixty-five (65) during the term. ‘The
elective official shail be allowed to continue paying life and retirement
premiums until the end of the term, including any periods of re-election or
election to another public office: Provided, That such periods of re-election
or election are continuous.

(b) An official appointed by the President of the Philippines to public office
before age sixty-five (65) for a fixed term and with a fixed monthly
compensation, but who will reach the mandatory retirement age of sixty-
five (65) during tenure. The appointive official shall be allowed to continue
paying life and retirement premiums until the end of the tenure, including
any periods of term extension or re-appointment to another office:
Provided, That the periods of extension or re-appointment are continuous

(c) An official or employee who holds a co-terminus or highly confidential
position who reaches the age of sixty-five (65) years, and whose services
are considered automatically extended until the expiration of the
employee’s or official’s appointment or until the employee’s or official’s
services are earlier terminated.

SECTION 6. Effect of Separation From the Service. —A member separated
from the servi either by resignation, retirement, disability, dismissal from
the service or retrenchment shall be deemed an inactive member of the
system. An inactive member shall be entitled to whatever benefits qualified
for in the event of any contingency compensable under this Act.

SECTION 7. Members’ Rights. —In addition to their rights under existing
laws, the members shall have the following rights:

(a) Right to professional, courteous and responsive service.

(1) To be considered a GSIS Member from the first day of government
service;

(2) To be provided prompt and accurate service;

(3)To be accorded respect by the executives and all employees and
personnel of the GSIS; and

(4) To be afforded comfortable and customer-friendly facilities when
transacting with the GSIS.

6


(b) Right to accurate and timely information.

(1) To be informed of the laws, regulations, policies or programs affecting
the members’ rights, ben obligations, and privileges, including
amendments or changes thereto;

(2) To be informed of GSIS policies and regulations pertaining to benefits
and claims administration;

(3) To be informed of the various modes and options in availing themselves
of benefits;

(4)To receive accurate and updated membership data, records and
information, including records of premium remittances and loan
payments;

(5) To have GSIS data and records protected from unauthorized, unlawful,
or improper disclosure; and

(6) To be informed in advance of documents required to facilitate
transaction, processing period, and updated status of claims or loan
application:

(7) To receive a clear and prompt reply to queries forwarded to GSIS offices.

(c) Right to GSIS benefits.

(1) To receive on time the benefits the member has qualified to even after
separation from the service;

(2) To avail of a mode of retirement from among the different applicable
retirement laws and to be allowed to change the chosen mode: Provided,
‘That the member has met the qualifications required under the chosen
mode: Provided, further, That the pension has not yet been received or
paid;

(3) To be protected against discrimination and thus receive the same
benefits and privileges granted other members similarly situated; and

(4) To receive benefits exempt from all taxes, fees, charges and duties of all
kinds except for monetary liabilities due to the Social Insurance Fund:
Provided, That members are given sufficient options on how to settle
their monetary liability with the GSIS upon their separation or
retirement from government service.

(5) To be protected from the failure of the employer to deduct or remit, or
from deficiency or delay in remittance, of premium payments to the
GSIS.

(d) Right to expeditious processing of claims and loans.

(1) To claim and receive on time benefits provided under applicable laws;

(2) To have accessible systems for the processing of applications for claims
and loans;

(3) To transact business with the GSIS in person or through electronic
access points;

(4) To exhaust all legal remedies under existing laws;



(5) To be protected from diminution of benefits that may arise with the
passage of a subsequent law or regulation; and
(6) To transact business with the GSIS in person.

(e) Right to be heard.

(1) To be represented in the GSIS governing Board of Trustees;

(2) To have meaningful exchange of views, dialogues and forums with the
GSIS through the institutionalization of regular interactions with public
sector unions, employees’ and retirees organizations, and other
stakeholders; and

(3) To have access to a grievance mechanism where members can convey
their complaints and issues, and be accorded immediate response.

SECTION 8, Special Rights for the Elderly, Persons with Disabilities, and
Seriously-ill Members, Pensioners and Beneficiaries. —The following
special rights are to be afforded to the elderly, persons with disabilities and
seriously-ill members, pensioners and beneficiaries:

(a) To be provided special access lanes;

(b) To be prioritized in the processing and releasing of claims and benefits;

(c) To be given preference in the dissemination of information pertaining to
policies; and

(d) To be accorded leniency in the submission of documents.

SECTION 9. Agencies/Employers’ Responsibilities. —The government
agencies covered by this Act, as employers, shall have the following
responsibilities:

(a) To prioritize deduction and remittance of employees’ and employer’s
contributions to the GSIS, loan amortizations and other members’
accounts within the prescribed time mandated by law, and rules and
regulations;

(b) To promptly provide documents required to facilitate the processing of
claims and loans;

(c) To maintain accurat ice records of their employees;

(d) To provide additional documents as necessary to reconcile the records of
accounts; and

(c) To promptly inform GSIS of any update pertaining to personal or service
records that may affect the processing of their employees’ claims and
benefits.

C, SOURCES OF FUNDS
SECTION 10. Contributions. —

(a It shall be mandatory for the member and the employer to pay the monthly
contributions specified in the following schedule:


“Percentage of monthly compensation payable

Members who are excluded from compulsory retirement coverage as
enumerated under Section 4(e) of this Act shall pay three percent
(3%) of their monthly compensation as personal share, and their employers
a corresponding three percent (3%), for their life insurance coverage.

| Monthly compensation |

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

(c) It shall be mandatory and compulsory for all employers to include the
payment of contributions in their annual appropriations. ‘The appropriate
penal, civil and administrative sanctions under Section 65 of this Act shall
be imposed upon employers who fail to include the payment of
contributions in their annual appropriations or otherwise fail to remit the
accurate or exact amount of contributions on time, or delay the remittance
of premium contributions to the GSIS.

SECTION 11. Collection and remittance of contributions.—

(a) The employer shall report to the GSIS the names of all its employees, their
corresponding employment status, positions, salaries and such other
pertinent information, including subsequent changes therein, if any, as
may be required by the GSIS. The employer shall deduct each month from
the monthly salary or compensation of each employee the contribution
payable by the employee in accordance with the schedule prescribed in the
rules and regulations implementing this Act.

(b) Each employer shall remit directly to the GSIS the employees’ and
employers’ contributions and loan amortizations within the first ten (10)
days of the calendar month following the month to which the contributions
apply. The collection and remittance by the employer of the contributions
and loan amortizations to the GSIS shall take priority over and above the
payment of any and all obligations, except salaries and wages of its
employees.

(o) All outstanding government share premium contributions which are not
paid by any government office or agency shall be included in the annual
budget and shall be remitted automatically by the Department of Budget
and Management to the GSIS.

SECTION 12. Interests on delayed remittances.—Agencies which delay the
remittance of any and all monies due the GSIS shall be charged interest as
may be prescribed by the Board but not more than two percent (2%) simple


interest per month: Provided, That such interest shall be paid by the
employers concerned.

SECTION 13. Government Guarantee.—The government of the Republic of
the Philippines hereby guarantees the fulfillment of the obligations of the GSIS.
to its members as and when they fall due.

D. BENEFITS
SECTION 14. Determination of amount of benefits —

{a) The computation of total length of service for the purpose of determining a
member’s eligibility to the benefits payable under this Act shall be based
on the service rendered starting from the date of original
appointment/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.

(b) The computation of actual benefits payable under this Act shall be based
on the total length of service. In cases where contributions have not been
paid or remitted, computation of benefits shall be based on period/s of
service when required premium contributions were paid.

RETIREMENT BENEFITS

SECTION 15. General conditions for entitlement—A member who retires
from service shall be entitled to the retirement benefits enumerated in Section
16{a) hereof: Provided, That the member:

(a) Has rendered at least fifteen (15) years of service;
(b) Is at least sixty (60) years of age at the time of retirement; and
(c) Is not receiving a monthly pension benefit from permanent total disability.

SECTION 16. Retirement benefits —
(a) Retirement benefit shall either be:

(1) Cash payment equivalent to sixty (60) months of the member's basic
monthly pension payable at the time of retirement plus an old-age
pension benefit equal to the basic monthly pension payable monthly for
life, starting upon expiration of the five-year (5) guaranteed period
covered by the cash payment; or

(2) Cash payment equivalent to eighteen (18) months of the member’s basic
monthly pension plus monthly pension for life payable immediately
with no five-year (5) guarantee.

(b) Unless the service is allowed under Section 5 of this Act or extended by
appropriate authorities, retirement shall be compulsory for an employee at

10


sixty-five (65) years of age with at least fifteen (15) years of service:
Provided, That if the employee has less than fifteen (15) years of service,
he/she may be allowed to continue in the service in accordance with
existing civil service rules and regulations.

SECTION 17. Computation of the Basic Monthly Pension —

(a) The basic monthly pension is equal to two and one half percent (2.5%) of
the sum of the Average Monthly Compensation and Revaluation Factor,
multiplied by the total length of service and taking into consideration
Section 14 of this Act: Provided, That the basic monthly pensions shall not
exceed ninety percent (90%) of the average monthly compensation.

(b) The basic monthly pension may be adjusted upon the recommendation of
the GSIS actuary, and approved by the Board of Trustees.

SECTION 18. Periodic pension adjustment—The monthly pension of all
pensioners including all those receiving survivorship pension benefits shall
be periodically adjusted as may be recommended by the GSIS actuary and
approved by the Board in accordance with the rules and regulations
prescribed by the GSIS.

SEPARATION BENEFITS

SECTION 19. General conditions for entitlement——A member who
separates from the service before he/she is eligible for retirement under
Section 15 of this Act shall be entitled to the separation benefits enumerated
in Section 20 hereof: Provided, That the member:

(a) Has rendered at least three (3) years of service; and
(b) Is not receiving a monthly pension benefit from permanent total disability.

SECTION 20. Separation benefits. —The separation benefit shall be paid as
follows:

{a) If the member has rendered at least three (3) years but less than fifteen
(15) years of service and is at least sixty (60) years of age at the time of
resignation or separation, such member shall be entitled to a one-time
cash payment equivalent to one hundred percent (100%) of the average
monthly compensation for each year of service with paid premium
contributions, but not less than twelve thousand Philippine pesos (PhP
12,000.00). The one-time cash payment shall be payable immediately or
upon reaching sixty (60) years of age, at the option of the member:
Provided, That the average monthly compensation is equivalent to the
average salary received by the member during the last three (3) years of
service.

(b) If the member has rendered at least fifteen (15) years of service but is below
sixty (60) years of age at the time of resignation or separation, he/she shall

TT


be entitled to a one-time cash payment equivalent to eighteen (18) times
his/her basic monthly pension at the time of resignation or separation,
plus an old-age pension benefit equal to the basic monthly pension payable
monthly for life upon reaching the age of sixty (60).

SECTION 21. Effect of re-employment in government service after
separation.—All service credited for retirement, resignation or separation for
which corresponding benefits have been paid under this Act or other laws
shall be excluded in the computation of service in case of reinstatement in
government service and subsequent retirement or separation which is
compensable under this Act.

UNEMPLOYMENT BENEFITS

SECTION 22. General conditions for entitlement.—A member who is
separated from the service due to the abolition of office or position resulting
from reorganization shall be entitled to the unemployment benefits
enumerated in Section 23 hereof: Provided, That the member:

(a) Has been paying the required contributions for at least one (1) year prior
to separation;

(b) Has not been paid the voluntary separation benefit equivalent to one-time
cash payment or eighteen (18) times the Basic Monthly Pension, should
the option of the member is to avail of the same before reaching the age of
sixty (60) years; and

(c) Has not availed of any early retirement program as a result of the
reorganization.

SECTION 23. Unemployment or involuntary separation benefits —
Unemployment benefits shall be computed as fifty percent (50%) of the
average monthly compensation of the member, payable in accordance with
the following schedule:

Contributions made Benefit duration
One (1) year but less than three (3) TWo'() months
years
Three (3) or more years but less
than six (6) years
Six (6) or more years but less than
nine (9) years
Nine (9) or more years but less than
eleven (11) years
Eleven (11) or more years but less
than fifteen (15) years

Three (3) months

Four (4) months

Five (5) months,

Six (6) months

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

12


All accumulated unemployment benefits paid to the employee during the
entire membership with the GSIS shall be deducted from voluntary separation
benefits.

The GSIS shall prescribe the detailed guidelines in the operationalization of
this Section in the rules and regulations implementing this Act.

PERMANENT DISABILITY BENEFITS

SECTION 24. General conditions for entitlement—A member who suffers
permanent disability for reasons not due to his grave misconduct, notorious
negligence, habitual intoxication, or willful intention to kill one’s self or
another, shall be entitled to the disability benefits provided for in this Act:
Provided, That the member is in the service at the time of disability or has
paid a total of at least one hundred eighty (180) monthly contributions prior
to his/her disability, if already separated from the service.

SECTION 25. Types of disability benefits—There are two (2) types of
permanent disability, which shall be determined by the GSIS based on
established medical standards:

(a) Permanent total disability, and
(b) Permanent partial disability.

SECTION 26. Permanent total disability benefits —
(a) The following shall be deemed permanent and total disabilities:

(1) Complete loss of sight of both eyes;

(2) Loss of two (2) limbs at or above the ankle and wrist;

(3) Permanent complete paralysis of two (2) limbs;

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

(5) Such other case as may be determined by the GSIS Board of Trustees.

(b) The member shall receive a month income benefit for life equal to the basic
monthly pension effective from the date of disability.

(c) A cash payment equivalent to eighteen (18) times the basic monthly
pension shall also be given if the member is in the service at the time of
disability and has paid a total of at least one hundred eighty (180) monthly
contributions.

(4)A member cannot enjoy the monthly income benefit for permanent
disability and old-age retirement simultaneously.

(c) Ifa member does not satisfy the conditions stated under Section 24 hereof
but has rendered at least three (3) years of service at the time of the
disability, the cash payment equivalent to one hundred percent (100%) of

13


the average monthly compensation for each year of service he/she paid
contributions, but not less than twelve thousand Philippine pesos (PhP
12,000.00), which should have been the separation benefit, shall be
advanced to the member.

() Unless the member has reached the minimum retirement age at the time
of disability, entitlement to permanent total disability benefit shall be
suspended when:

(1) The member recovers from disability as determined by the GSIS, whose
decision shall be final and binding; or

(2) The member fails to undergo medical examination when required by the
GsIS.

SECTION 27. Effect of re-employment on the disability benefits being
received.—

{a) Entitlement to permanent total disability benefit shall continue in the
event of reemployment and the member’s new salary grade, rank or
position is lower than that of the previous employment prior to disability:
Provided, That the member has properly informed the GSIS of the fact of
re-employment;

(b) The disability benefits to be received after re-employment shall be adjusted
by the GSIS and is to be computed as the difference between the amount
of the existing disability benefit and the member's salary from his/her new
employment;

(c) Deliberate failure by the member to inform the GSIS of the re-employment
shall result in the suspension of disability benefits being received.

PERMANENT PARTIAL DISABILITY BENEFITS
SECTION 28. Permanent partial disability benefits —
(a) The following shall be deemed permanent partial disabilities:
(1) Complete and permanent loss of the use of:
(i) Any finger,
(ii) Any toe,
(iii) One arm,
(iv) One hand,
(vy) One foot,
(vi) One leg,
(vii) One or both ears, and
(viii) Sight of one eye.
(2) Such other cases as may be determined by the GSIS Board of Trustees.

14


(b) The member shall receive a cash payment in accordance with a schedule
of disabilities to be prescribed by the GSIS.

TEMPORARY TOTAL DISABILITY BENEFITS

SECTION 29. General conditions for entitlement—An active member
whose injuries result in temporary incapacity to work or to engage in any
occupation, shall be entitled to the temporary total disability benefits provided
for in this Act.

SECTION 29. Temporary total disability benefit —

(a) A member shall be entitled to seventy-five percent (75%) of the current
daily compensation for each day or fraction thereof of temporary disability
benefit not exceeding one hundred twenty (120) days in one (1) calendar
year after exhausting all sick leave credits and collective negotiation
agreement sick leave benefits, if any, but not earlier than the fourth day of
the temporary total disability: Provided, however, That a member cannot
enjoy the temporary total disability benefit and sick leave pay
simultaneously: Provided, further, That if the disability requires more
extensive treatment that lasts beyond one hundred twenty (120) days, the
payment of the temporary total disability benefit may be extended by the
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 one
hundred sixty-five Philippine pesos (PhP 165.00) a day: Provided, That this
amount is subject to periodic review every three (3) years;

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

SECTION 31. Non-scheduled disability. —For injuries or illnesses resulting
in a disability not listed in the schedule of partial or total disabilities provided
herein, the GSIS shall determine the nature of the disability and the
corresponding benefits therefor.

DEATH BENEFITS

SECTION 32. 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 thirty thousand Philippine pesos (PhP 30,000.00): Provided,
‘That it shall be adjusted after five (5) years upon proper recommendation by
the GSIS President and General Manager and approved by the GSIS Board of
‘Trustees and shall be paid upon the death of any of the following:

(a) An active member as defined under Section 3(e) of this Act; or

15


(b) A member who has been separated from the service, but who may be
entitled to future benefit pursuant to Section 6 of this Act; or

(c) A pensioner, as defined in Section 3(m) of this Act; or

(d) A retiree who at the time of retirement was of pensionable age under this
‘Act but who opted to retire under Republic Act No. 1616 (“Take All Option’).

SURVIVORSHIP BENEFITS

SECTION 33. General entitlement to survivorship benefits.—When a
member or pensioner dies, the qualified beneficiaries shall be entitled to the
survivorship benefits provided under Sections 34 to 36, subject to the
conditions therein.

SECTION 34. Survivorship Pension—The survivorship pension shall
consist of:

(a) The basic survivorship pension which is fifty percent (50%) of the basic
monthly pension but shall not be more than fifty percent (50%) of the
maximum step salary of an Undersecretary. The cap on the survivorship
pension may be reviewed every five (5) years by the Board, based on the
recommendations of the GSIS actuary, by considering the issuances on
the salary standardization law; and

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

‘The maximum amount of basic survivorship pension prevailing at the time of
death of the member or pensioner shall apply. Any subsequent increases in
the maximum step salary of an Undersecretary will not result in any
adjustment to the survivorship pension already being paid.

SECTION 35. Death of a member—Upon the death of a member, the
qualified beneficiaries shall be entitled to survivorship benefits, which shall
be paid as follows:

(a) If at the time of death, a married member was in active service and has
rendered at least fifteen (15) years of service:

(1) The legitimate spouse, if the sole beneficiary, shall receive the cash
payment equivalent to eighteen (18) multiplied by the basic monthly
pension and the basic survivorship pension for life;

(2) The qualified children, as defined under Section 3(f)(1)(ii) of this Act, if
the only beneficiaries, shall be entitled to pension equivalent to ten
percent (10%) of the basic monthly pension for each child but not to
exceed fifty percent (50%) of the basic monthly income;


(3)When the survivors are the legitimate spouse and the qualified
children, the legitimate spouse shall receive the cash payment
equivalent to eighteen (18) multiplied by the the basic monthly pension
and the basic survivorship pension, and the qualified children shall
receive the children’s pension mentioned in subparagraph (a)(2) of this
Section.

(b) If at the time of death, the unmarried member was in the active service
and has rendered at least fifteen (15) years of service:

(1) When the qualified children, as defined under Section 3((2)(ii) of this
Act are the only beneficiaries, they shall be entitled to pension
equivalent to ten percent (10%) of the BMP for each child but not to
exceed fifty percent (50%) of the basic monthly pension;

(2) When the parents are the only qualified beneficiaries, they shall receive
the cash payment equivalent to eighteen (18) multiplied by the basic
monthly pension;

(3) In the absence of a child and of the parents, the designated beneficiary,
as defined under Section 3(f(2)(iii) of this Act, if qualified, shall receive
the cash payment equivalent to eighteen (18) multiplied by the basic
monthly pension: Provided, however, That if the designated beneficiary
is a child, such child shall be entitled to a pension equivalent to ten
percent of the basic monthly pension: Provided, further, that this
entitlement should last only until such child reaches the age of
majority.

(c) If at the time of death, the member was in active service with less than
fifteen (15) years of service, the qualified beneficiaries shall receive the
cash payment equivalent to one hundred percent (100%) of the average
monthly compensation for every year of service but not Jess than twelve
thousand Philippine pesos (PhP 12,000.00), to be computed in accordance
with Section 14 of this Act.

(d) If at the time of death, the member was separated from the service, the
qualified survivors shall be entitled to:

(1) The survivorship pension if the inactive member has at least fifteen (15)
years of service; or

(2) The cash payment equivalent to one hundred percent (100%) of the
average monthly compensation for every year with paid contributions,
but not less than twelve thousand Philippine pesos (PhP 12,000.00):
Provided, That the inactive member has at least three (3) years but less
than fifteen (15) years of service, was less than sixty (60) years old at
the time of death, and has not yet received separation benefits from the
GSIS.

SECTION 36. Death of a pensioner—Upon the death of an old-age
pensioner or a member receiving the monthly income benefit for permanent
disability, the qualified beneficiaries shall be entitled to the survivorship

7


pension defined in Section 34 of this Act, subject to the provisions of Section
35 hereof. When the pensioner dies within the five-year guaranteed period
covered by the cash payment, the survivorship pension shall be paid only after
the expiration of the said period.

LIFE INSURANCE BENEFITS

SECTION 37. Compulsory life insurance_—All employees, except for those
enumerated under Section 4(e) of this Act, shall, under such terms and
conditions as may be promulgated by the GSIS, be compulsorily covered with
life insurance, which shall automatically take effect on the date of their
employment.

SECTION 38. Dividends.—An annual dividend may be granted to all
members of the GSIS whose life insurance is in force for at least one (1) year
in accordance with a dividend allocation formula to be determined by the
qsis.

SECTION 39. Optional insurance.—Subject to the rules and regulations
prescribed by the GSIS, a member may 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 the member and/or
dependents. Any employer may likewise apply for group insurance coverage
for its employees. The insured, the employer, and/or any person, acceptable
to the GSIS, may make the payment of the premiums or installments for
optional insurance and pre-need products.

SECTION 40. Reinsurance—The GSIS may reinsure any of its interest or
part thereof with any private company or reinsurer whether domestic or
foreign: Provided, That the GSIS shall submit an annual report on its
reinsurance operations to the Insurance Commission.

E. ADJUDICATION OF CLAIMS AND DISPUTES

SECTION 41. Prescription.—Claims for benefits administered by the GSIS
as defined under Section 3(g) of this Act shall not prescribe: Provided,
however, That a claim based on a contingency which occurred prior to the
efiectivity of this Act shall be subject to the four-year prescriptive period.

SECTION 42. Facility of payment—The GSIS shall prescribe rules and
regulations to facilitate payment of benefits, proceeds, and claims for benefits
under this Act and any other laws administered by the GSIS. Payments made
by the GSIS prior to its receipt of an adverse claim, to a beneficiary or claimant
subsequently found not entitled thereto, shall not bar the legal and eligible
recipient to demand the payment of benefits, proceeds, and claims from the
GsIs.

18


SECTION 43. Settlement of disputes —The GSIS shall have original and
exclusive jurisdiction to settle any dispute regarding claims and benefits
arising under this Act and any other laws administered by the GSIS.

The Board may designate any of its member or an official of the GSIS, who is
a lawyer, to act as hearing officer to receive evidence, make findings of fact
and recommendations. Such findings of fact and all documentary and
testimonial evidence, shall be submitted to the Board within thirty (30)
working days from the time the parties have closed their respective evidence
and filed their last pleading. The Board shall decide the case within thirty (30)
days from the receipt of the hearing officer’s findings and recommendations.
The cases heard directly by the Board shall be decided within thirty (30)
working days from the time they are submitted by the parties for decision.

SECTION 44. Appeals.—Decisions of the Board of Trustees shall be
appealable to the Court of Appeals. The pendency of an appeal shall not stay
the execution of the award or decision, unless such is ordered by the Court of
Appeals or by the Supreme Court.

SECTION 45. Execution of decision—When no appeal is perfected and
there is no order to stay execution is issued by the Board, the Court of
Appeals, or the Supreme Court, any decision or award of the Board shall be
enforced and executed in the same manner as decisions and final orders of
regional trial courts.

For this purpose, the Board shall have the power to issue such writs of
execution, addressed to the city or provincial sheriff or its appointed sheriff,
as may be necessary for the enforcement of such decision or award, and any
person who shall fail or refuse to comply with such decision, award, writ or
process after being required to do so shall, upon application by the GSIS, be
punished for contempt.

SECTION 46. Oaths, witnesses, and production of records.—When
authorized by the Board, an official or employee of the GSIS shall have the
power to administer oath and affirmation, take depositions, certify to official
acts, and issue subpoena ad testificandum and subpoena duces tecum to
compel the attendance of witnesses and the production of books, papers,
correspondences and other records deemed necessary as evidence 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 (Powers incidental to the taking of testimony) of Executive
Order No. 292 series of 1987 (otherwise known as the Revised Administrative
Code of the Philippines).

F. FUNDS OF THE GSIS

SECTION 47. Funds.—The GSIS shall administer the Social Insurance Fund,
which consists of all contributions payable under Section 10 of this Act

19


together with the earnings and accruals thereon. The Social Insurance Fund
shall be used to finance the benefits administered by the GSIS under this Act.

In addition to the Social Insurance Fund, the GSIS shall administer the
following funds, collectively as the “GSIS-Administered Funds,” to wit:

(a) The Optional Insurance Fund for the insurance coverage described in
Section 39 hereof,

(b) The Employees’ Compensation Insurance Fund created under Presidential
Decree No. 626, as amended;

(c) The General Insurance Fund created under Act No. 656, as amended; and

(d) Such other special funds existing or that may be created for special groups
or persons who render services to the government.

The GSIS shall appropriate part of the surplus of the Optional Insurance
Fund, General Insurance Fund and other special funds under this Section to
the Social Insurance Fund to guarantee the fulfillment of its obligations. The
appropriated surplus shall be maintained to ensure the payment of benefits
under this Act and the other GSIS Administered Funds governed under the
above-mentioned laws. The appropriated surplus cannot be used for any
purposes other than those for which they were set aside and appropriated.

The funds administered by the GSIS shall not be used for purposes other than
those provided for under this Act.

The Board of Trustees may allocate an amount not exceeding fifty percent
(50%) of the unappropriated surplus from any of the GSIS-Administered
Funds to the Social Insurance Fund: Provided, That these do not come from
the Employees’ Compensation Insurance Fund: Provided, further, That the
amount shall be used solely to meet the required reserves to fulfill the
obligations of the GSIS to its members: Provided, finally, That such an
allocation over the unappropriated surplus is approved by the President of
the Philippines.

No portion of the funds of the GSIS or income thereof shall accrue to the
general fund of the national government and its political subdivisions,
instrumentalities and other agencies including government-owned and
controlled corporations except as may be allowed under this Act.

SECTION 48. Deposits and disbursements.—All revenues collected and all
accruals thereto shall be deposited, administered and disbursed in
accordance with law. A maximum expense loading of twelve percent (12%) of
the yearly total income and zero point seven percent (0.7%) of the total
admitted assets 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.

20


SECTION 49. Investment of funds—The funds of the GSIS which are not
need 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 investment shall optimize the requirements of liquidity, safety
or security and yield as embodied in formal investment policy guidelines
approved by the Board in order to ensure the actuarial solvency of the funds:
Provided, further, That the GSIS shall develop policies and strategies for
socially responsible investments: Provided, finally, That the GSIS shall submit
an annual report on all investments made to both Houses of Congress of the
Philippines, to wit:

(a) Interest-bearing or zero-coupon bonds or securities or other evidence of
indebtedness of the Government of the Philippines;

(b) Interest-bearing or zero-coupon deposits or securities in any domestic
bank doing business in the Philippines: Provided, That in the case of such
deposits, these shall not exceed at any time the unimpaired capital and
surplus or total private deposits of the depository bank, whichever is
smaller: Provided, further, That said bank has prior designation as a
depository for the purpose by the Monetary Board of the Central Monetary
Authority;

(c) Direct loans to members, with priority to low income groups and to short-
and medium-term loans to members such as salary, policy, educational,
emergency, and other similar loans: Provided, That, for purposes of the
said loans, GSIS shall endeavor to lend no less than forty percent (40%) of
the investable fund of the GSIS Social Insurance Fund.

‘The deduction and remittance by the employer of loan amortization due to
the GSIS shall, at all time, take priority over and above the deductions and
payment of any and all obligations and payment of any and all obligations
of the member due to private creditors.

(a) Bonds, securities, promissory notes or other evidence of indebtedness of
educational or medical institutions to finance the construction,
improvement and maintenance of schools and hospitals;

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

() Debt instruments and other securities traded in the secondary market:

(g) Loans to or in bonds, debentures, promissory notes or other evidence of
indebtedness of any solvent corporation created or existing under the laws
of the Philippines.

2


(h) Common and preferred stocks of any solvent corporation or financial
institution created or existing under the laws of the Philippines listed in
the stock exchange subject to the requirements of liquidity, safety,
security, and expected returns as embodied in formal investment policy
guidelines approved by the GSIS Board of Trustees;

fi

Domestic mutual funds including investments related to the operations of
mutual funds; and

() 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
these instruments or assets are tradable and/or listed in a duly recognized
exchange: Provided further, That not more than ten percent (10%) of the
investible funds shall be invested abroad.

SECTION 50. Records and reports.—The GSIS shall keep and cause to keep
such records as may be necessary for the purpose of making actuarial studies,
calculations and valuations of the funds of the GSIS including such data
needed in the computation of rates of disability, mortality, morbidity,
separation and retirement 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 disbursements of funds and other financial
transactions and operations.

SECTION 51. Examination and valuation of the funds—The GSIS shall
make a periodic actuarial examination and valuation of its funds in
accordance with accepted actuarial principles.

SECTION 52. Exemption from tax, legal processes and lien. —It is hereby
reaffirmed as a State policy that the actuarial solvency of the funds of the
GSIS shall be preserved and maintained at all times, and that contribution
rates necessary to sustain the benefits under this Act shall be kept as low as
possible in order not to burden the members of the GSIS and their employers.

‘Taxes imposed on the GSIS tend to impair the actuarial solvency of its funds
and increase the contribution rate necessary to sustain the benefits of this
Act. Accordingly, and notwithstanding any laws to the contrary, the GSIS, its
assets, revenues (including all accruals thereto), transactions and benefits
paid shall remain exempt from all forms and kinds of direct or indirect taxes,
assessments, fees, charges or duties imposed by the national or local
government. These exemptions shall continue unless expressly, specifically,
and categorically revoked or repealed by law, and any assessment against the
GSIS as of the approval of this Act is hereby considered paid and cancelled.
Consequently, all laws, ordinances, regulations, issuances, opinions or
jurisprudence contrary to or in derogation of this provision are hereby deemed

22


repealed, superseded and rendered ineffective and without legal force and
effect.

‘The exemptions provided herein shall neither be affected nor derogated by
subsequent laws to the contrary unless this Section is expressly, specifically,
and categorically revoked or repealed by law and a provision is enacted to
substitute or replace the exemption referred to herein as an essential factor
to maintain or protect the solvency of the fund, notwithstanding and
independently of the guarantee of the national government to secure such
solvency or liability.

The funds and/or the properties of the GSIS referred to herein shall be exempt
from attachment, garnishment, execution, levy or other processes issued by
the courts, quasi-judicial agencies or administrative bodies including
Commission on Audit disallowances. The benefits, sums or monies
corresponding to the benefits under this Act shall likewise be exempt from
attachment, garnishment, execution, levy or other processes issued based on
financial obligations or liability of any member, including any pecuniary
accountability arising from or caused or occasioned by his/her exercise or
performance of his/her official functions or duties, or incurred relative to or
in connection with his/her position or work except when his/her monetary
liability, contractual or otherwise, is in favor of the GSIS.

G. ADMINISTRATION

SECTION 53. Implementing body—The Government Service Insurance
Systems as created under Commonwealth Act No. 186 shall implement the
provisions of this Act.

SECTION 54. Powers and functions of the GSIS.—The GSIS shall exercise
the following powers and functions:

(a) Formulate, adopt, amend and/or rescind such rules and regulations as
may be necessary to carry out the provisions and purposes of this Act, as
well as the effective exercise of the powers and functions, and the discharge
of duties and responsibilities of the GSIS, its officers and employees:
Provided, That these implementing rules and regulations shall not
contravene the provisions of this Act, nor shall it result in the diminution
of any benefit provided by law.

(b) Adopt or approve the annual and supplemental budget of receipts and
expenditures including salaries and allowances of the GSIS personnel and
to authorize such capital and operating expenditures and disbursements
of the GSIS as may be necessary and proper for the effective management
and operation of the GSIS.

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


(a) Acquire, utilize or dispose of, in any manner recognized by law, real or
personal property in the Philippines or elsewhere necessary to carry out
the purposes of this Act.

(e) 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 the allocation or re-allocation of the funds to the contingencies
covered.

() Have the power of succession.
(g) Sue and be sued.

(h) Enter into, make, perform and carry out contracts of every kind and
description with any person, firm or association or corporation, domestic
or foreign.

() Carry on any other lawful business whatsoever in pursuance of, or in
connection with the provisions of this Act.

() 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 in any or all foreign countries, states
and territories: Provided, That the GSIS shall maintain a branch office in
every province only where there exists a minimum of fifteen thousand
(15,000) membership.

(k) Borrow funds from any source, private or government, foreign or domestic,
only as an incident to the securitization of housing mortgages of the GSIS
and on account of its receivables from any government or private entity.

(I) Invest, own or otherwise participate in equity in any establishment, firm
or entity.

(m) Approve appointments in the GSIS, except appointments to positions
which are policy determining, primarily confidential or highly technical in
nature, according to the Civil Service rules and regulations: Provided, That
all positions in the GSIS shall be governed by a compensation and position
classification system and qualifications standards approved by the GSIS
Board of Trustees based on a comprehensive job analysis and audit of
actual duties and responsibilities: Provided, further, That the
compensation plan shall be comparable with the prevailing compensation
plans in the private sector and shall be subject to the periodic review by
the Board no more than once every four (4) years without prejudice to
yearly merit reviews or increases based on productivity and profitability.

24


(n) Design and adopt an Early Retirement Incentive Plan and/or financial
assistance for the purpose of retirement for its own personnel.

(0) Fix and periodically review and adjust the rates of interest and other terms
and conditions for loans and credits extended to members or other
persons, whether natural or juridical.

(p) 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 subject to the provision of
Republic Act No. 7699, otherwise known as the Portability Law.

(q) Float proper instrument to liquefy long term maturity by pooling funds for
short-term secondary market.

(r) Submit annually, not later than June 30, a public report to the President
of the Philippines and the Congress of the Philippines regarding its
activities in the administration and enforcement of this Act during the
preceding year including information and recommendations on Board
policies for the development and perfection of the programs of the GSIS.

(s) Maintain a provident fund, which consists of contributions made by both
the GSIS and its officials and employees and their earnings, for the
payment of benefits to such officials and employees or their heirs under
such terms and conditions as it may prescribe.

(

Approve and adopt guidelines affecting investments, insurance coverage of
government properties, settlement of claims, disposition of acquired
assets, privatization or expansion of subsidiaries, development of housing
projects, increased benefit and loan packages to members and the
enforcement of the provisions of this Act.

(u) 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.

(v) Determine, fix and impose interest upon unpaid premiums due from
employers and employees.

(w)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 source whatsoever, due from all
obligors, whether public or private. The GSIS shall demand payment or
settlement of the obligations referred to herein within thirty (30) days from
the date the obligation becomes due, and in the event of failure or refusal
of the obligor or debtor to comply with the demand, to initiate or institute

25


the necessary or proper actions or suits, criminal, civil or administrative
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 demand within which to pay or settle the account.

(x) Design and implement programs that will promote and mobilize savings
and provide additional resources for social security expansion and at the
same time afford individual members appropriate returns on their
savings/investments. The programs shall be so designed as to spur socio-
economic take-off and maintain continued growth.

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

SECTION 85. The Board of Trustees. —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)
other members to be appointed by the President of the Philippines.

The members of the Board of Trustees shall be come from the following
sectors:

(a) A member who shall either be the President of the Philippine Public School
Teachers Association (PPSTA) or the President of the Philippine Association
of School Superintendents (PASS), to represent the employees in the public
education sector;

(b) Two (2) members from the leading organizations or associations of
government employees or retirees;

(c) Four (4) members from the banking, finance, investment, and insurance
sectors, who are presumed to have expertise and technical knowledge in
their specialized fields; and

(4) One (1) member from the legal profession, who is a member of the
Integrated Bar of the Philippines in good standing and who, at the time of
appointment, is also a member of the GSIS.

The Trustees shall elect from among themselves a Chairman. The President
and General Manager 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 two (2) years subject to
reappointment following the Fit and Proper Rule and other criteria as provided
for by law: Provided, That a Trustee may only hold office for a maximum of six
(6) years: Provided further, That vacancy, other than through the expiration of
the term, shall be filled for the unexpired term only.


‘The compensation, per diems, allowances and incentives of the members of
the Board shall be determined in accordance law.

SECTION 56. Powers and functions of the Board of Trustees.—The Board
of Trustees shall have the following powers and functions:

(a) Formulate the policies, guidelines and programs to effectively carry out the
purposes of this Act.

(b) Promulgate such rules and regulations as may be necessary or proper for
the effective exercise of the powers and functions as well as the discharge
of the duties and responsibilities of the GSIS, its officers and employees.

(c) Upon the recommendation of the President and General Manager, to
approve the annual and supplemental budget of receipts and expenditures
of the GSIS, and to authorize such operating and capital expenditures and
disbursements of the GSIS as may be necessary or proper for the effective
management, operation and administration of the GSIS.

(d) Upon the recommendation of the President and General Manager, to
approve the GSIS’ organizational and administrative structures and
staffing pattern subject to existing civil service laws, rules and regulations,
and to establish, fix, review, revise and adjust 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.

(c) Fix and periodically review and adjust the rates of interest and other terms
and conditions for loans and credits extended to its members or other
persons, whether natural or juridical.

() Any provision of any law to the contrary notwithstanding, to compromise
or release, in whole or in part, any claim or settle liability to the GSIS,
regardless of the amount involved, under such terms and conditions as it
may impose for the best interest of the GSIS.

(g) Approve and adopt guidelines affecting investments, insurance coverage of
government properties, 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) Determine, fix and impose interest upon unpaid or unremitted premiums
and/or contributions.

() Do and perform any and all acts necessary, proper or incidental to the
attainment of the purposes and objectives of this Act.

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SECTION 57. Positions in the GSIS.—The President and General Manager
of the GSIS shall be its Chief Executive Officer and shall be appointed by the
President of the Philippines and shall be a person with management and
investments 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, vice-presidents and
managers in addition to the usual supervisory and rank and file positions who
shall be appointed and removed by the President and General Manager with
the approval of the Board, in accordance with the existing Civil Service rules
and regulations.

SECTION 58. Powers and duties of the President and General
Manager.—The President and General Manager of the GSIS shall, among
others, execute and administer the policies and resolutions approved by the
Board and direct and supervise the administration and operations of the
GSIS. The President and General 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 existing Civil Service rules and
regulations, and prescribe their duties and qualifications to the end that only
competent persons may be employed.

SECTION 59. Auditor.—The Chairperson of the Commission on Audit:

(a) Shall be the ex officio auditor of the GSIS and may assign the necessary
personnel to assist the chairman of the commission on audit in the
performance of his/her duties.

(b) Or the authorized representative shall submit to the Board soon after the
close of each calendar year, an audited statement showing the financial
condition and progress of the GSIS for the calendar year just ended.

SECTION 60. Legal counsel—The Government Corporate Counsel shall be
the legal adviser and consultant of the GSIS, but the GSIS may assign to the
Office of the Government Corporate Counsel cases for legal 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 services group in the GSIS shall serve as its
in-house legal counsel.

SECTION 61. Powers of the Insurance Commission —The Insurance
Commissioner or an authorized representatives shall make an examination of
the financial condition of the GSIS at least once every three (3) years: Provided,
however, That the GSIS shall pay the Office of the Insurance Commissioner
an amount equal to the actual expenses incurred by the said office in the
conduct of the examination, including the salaries of the examiners and of the
actuary of such examination for actual time spent.

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‘The report of said examination shall be submitted to the Board of Trustees
and considered by the GSIS in the formulation of guidelines affecting
insurance coverage of government properties. Copies thereof shall likewise be
furnished to the Office of the President and the two Houses of Congress of the
Philippines within five (5) days after the close of examination.

H. GENERAL PROVISIONS
SECTION 63. Dispensation of social insurance benefits. —

(a) The GSIS shall release the retirement benefits to the employee within thirty
(30) days from the actual date of retirement: Provided, That all
requirements are submitted to the GSIS at least ninety (90) days prior to
the effective date of the retirement.

(b) The GSIS shall not process nor adjudicate retirement claims under
Republic Aact No. 1616 which function shall be vested in the agencies
concerned, who shall process and pay the gratuities of their employees.
The GSIS shall process and adjudicate only the refund of retirement
premium under Republic Act. No. 910. The Board shall adopt the proper
rules and procedures for the implementation of this provision.

SECTION 63. Development and disposition of acquired assets.—The
GSIS shall have the right to develop and dispose of its acquired assets
obtained in the ordinary course of its business. To add value to, improve
profitability on, and/or enhance the marketability of an acquired asset, the
GSIS may further develop/renovate its assets, either with its own capital or
through a joint venture arrangement with private companies or individuals.

‘The GSIS may sell its acquired assets in accordance with existing Commission
on Audit rules and regulations for an amount not lower than the current
market value of the property. For this purpose, the GSIS shall conduct an
annual appraisal of its property or acquired assets to determine its current
market value. 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 or delay the sale and disposition by the GSIS of its
acquired assets except on questions of ownership and national or public
interest.

SECTION 64. Government assistance to the GSIS—The GSIS may call
upon any employer for such assistance as may be necessary in the discharge
of its duties and functions.

I. SANCTIONS

SECTION 65. Penalties.—


{a) Imprisonment from not less than twenty (20) years but not more than
thirty (30) years, a fine of not less than five hundred thousand Philippine
pesos (PhP 500,000.00) but not more than five million Philippine pesos
(PhP 5,000,000.00), upon the discretion of the court, absolute perpetual
disqualification from holding public office, and other accessory penalties
as may be provided by law, shall be imposed upon the following:

(1) The head of an office of the national government, any of its political
subdivisions, branches, agencies and instrumentalities, including
government-owned or -controlled corporations and government
financial institutions, who fails, refuses or delays the payment,
turnover, remittance or delivery of such accounts to the GSIS within
thirty (30) days from the time that the same shall have been due and
demandable.

(2) A member of the personnel of such offices mentioned in subparagraph
(a)(1) of this Section who is involved in the collection of premium
contributions, loan amortization and other accounts due the GSIS who
fails, refuses or delays the payment, turnover, remittance or delivery of
such accounts to the GSIS within thirty (30) days from the time that
the same shall have been due and demandable.

(b) Imprisonment from not less than twelve (12) years and one (1) day to
twenty (20) years, a fine of not less than five hundred thousand Philippine
pesos (PhP 500,000.00) but not more than two million Philippine pesos
(PhP 2,000,000.00), upon the discretion of the court, and absolute
perpetual disqualification from holding public office, shall be imposed
upon the following:

(1) Agency personnel involved in the deduction of loan amortizations from
employees’ salaries, emoluments or other benefits, who fails to observe
the order of preference provided in Section 49(c).

(2)A head of an office of the national government, any of its political
subdivisions, branches, agencies and instrumentalities, including
government-owned or -controlled corporations and government
financial institutions, who fails to include in the annual budget the
amount corresponding to the employer or deduct the monthly
contributions of the employee.

(3) The treasurer, finance officer, budget officer or other official or employee
in the office mentioned in subparagraph (b)(2) of this Section directly
responsible in the preparation of the budget or involved in the
deductions of premiums who fails to include in the annual budget the
amount corresponding to the employer or deduct the monthly
contributions of the employee.

(4) The treasurer, financial officer, budget officer or any other official or
employee responsible for deducting the monthly contribution, loan
amortization or other accounts of the member and remitting the same
to the GSIS, who, after deducting the aforementioned obligations from
the members’ compensation, fails to remit the same to the GSIS within

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thirty (30) days from the date they should have been remitted under
Section 11(b): Provided, That failure to remit within the period specified
shall give rise to the presumption that such person misappropriated
such contribution, loan amortization or other accounts.

(5) The head of the office of the officer mentioned in subparagraph (b)(4)
and found liable under this Section.

(6) An employee or member who receives or keeps fund or property
belonging, payable or deliverable to the GSIS and appropriates the
same, or take or misappropriates or uses the same for any purpose
other than that authorized by this Act, permits another person to take,
misappropriate or use said fund or property by expressly consenting
thereto, or through abandonment or negligence, or is otherwise guilty
of the misappropriation of said fund or property, in whole or in part.

(c) Imprisonment from six (6) years and one (1) day to twelve (12) years, a fine
of not less than five hundred thousand Philippine pesos (PhP 500,000.00)
but not more than two million Philippine pesos (PhP 2,000,000.00), upon
the discretion of the court, and absolute perpetual disqualification from
holding public office, shall be imposed upon any person found to have
participated directly or indirectly in the commission of fraud, collusion,
falsification, or misrepresentation in any transaction with the GSIS,
whether for himself or for some other persons.

(d) Imprisonment from not less than six (6) years and one (1) day to twelve
(12) years, a fine of not less than five hundred thousand Philippine pesos
(PhP 500,000.00) but not more than one million Philippine pesos (PhP
1,000,000.00), upon the discretion of the court, and such other accessory
penalties as may be provided by law, shall be imposed upon the following:

(1) Any person who shall obtain or receive any money or check invoking
any provision of this Act or any agreement hereunder, without being
entitled thereto, with the intent to defraud any member, employer, the
GSIS, or any third party.

(2) A GSIS official responsible for the collection of premium contributions,
loan amortizations and other members’ accounts who fail to demand
remittance of premium contributions, loan amortizations and other
members’ accounts due the GSIS, and to institute the necessary
administrative, civil and criminal case against the concerned officials
within a reasonable time after demand has been given: Provided, That
prosecution under this subparagraph shall be without prejudice to any
civil or administrative liability which may also arise from the acts
committed.

(3) Any person who fails or refuses to comply with any of the provisions of
this Act or with the rules and regulations adopted by the GSIS, where
such failure or refusal is not otherwise specifically penalized in this Act.

(e) Suspension from six (6) months to one (1) year or a fine of not less than
five hundred thousand Philippine pesos (PhP 500,000.00) but not more
than two million Philippine pesos (PhP 2,000,000.00), without prejudice to

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any civil or administrative liability which may also arise therefrom shall be
imposed upon the President and General Manager and/or Members of the
Board, in the event of their failure, without justifiable cause, to comply
with their duties and obligations under this Act.

In addition to the penalties provided in this Section, the persons found liable
under this Act shall be solidarily liable in their personal capacity to the GSIS
for the amount of the contribution, loan amortization and other accounts
which was not remitted to GSIS, and for the interests, penalties and
surcharges due the GSIS in case of delayed remittances. Officers and/or
members of personnel are also solidarily liable in their personal capacity to
the employee or member concerned in the form of damages, including
surcharges and interests.

All the liabilities from charges and complaints under this Section shall be
construed as a waiver of State immunity from suit. Officers and/or members
of personnel may not invoke the defense of non-suability of the State.

Criminal actions arising from violations of the provisions of this Act may be
commenced by the GSIS or by the aggrieved member, either under this Act
or, in appropriate cases, under Act No. 3815 otherwise known as the Revised
Penal Code, and other special laws.

SECTION 66. Implementing rules and regulations.—The implementing
rules and regulations to carry out the provisions of this Act shall be adopted
and promulgated by the GSIS, in consultation with the Governance
Commission on Government-Owned and Controlled Corporations not later
than ninety (90) days after the approval of this Act.

SECTION 67. 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, Presidential Decrees,
Letters of Instructions, not otherwise specifically inconsistent with the
provisions of this Act.

SECTION 68. Exclusiveness of benefits—Whenever other laws provide
similar benefits for the same contingencies covered by this Act, the member
who qualifies for these benefits shall have the option to choose which benefits
will be paid to such a member: Provided, however, That if the benefits provided
by the law chosen are less than the benefits provided under this Act, the GSIS
shall pay only the difference.

SECTION 69. Appropriations—The amount necessary to carry out the
provisions of this Act shall be included in the respective budgets of the
agencies in the national government obligation program of the year following
its enactment into law and thereafter.


SECTION 70. Separability clause—Should any provision of this Act or any
part thereof be declared invalid, the other provisions, so far as they are
separable from the invalid ones, shall remain in force and effect.

SECTION 71. Repealing clause—Presidential Decree No. 1146, Republic
‘Act No. 8291, Presidential Decree No. 712, and Section 9 of Republic Act No.
656, as amended by Presidential Decree No. 245, are hereby expressly
repealed.

All other laws and any other law or parts of law specifically inconsistent
herewith are hereby repealed or modified accordingly: Provided, That the
rights under the existing laws, rules and regulations vested upon or acquired
by an employee who is already in the service as of the effectivity of this Act
shall remain in force and effect: Provided, further, That subsequent to the
eflectivity of this Act, a new employee or an employee who has previously
retired or separated and is reemployed in the service shall be covered by the
provisions of this Act.

SECTION 72. Effectivity.—This Act shall take effect fifteen (15) days after its
publication in at least two (2) newspapers of general circulation.

Approved,

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