REPUBLIC ACT NO.

8291

AN ACT AMENDING PRESIDENTIAL DECREE NO. 1146, AS AMENDED, EXPANDING AND

INCREASING THE COVERAGE AND BENEFITS OF THE GOVERNMENT SERVICE INSURANCE
SYSTEM, INSTITUTING REFORMS THEREIN AND FOR OTHER PURPOSES

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

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

"A. DEFINITIONS

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

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

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

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

"(d) Employee or Member Any person, receiving compensation while in the service of an employer as
defined herein, whether by election or appointment, irrespective of status of appointment, including barangay
and sanggunian officials;

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

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

"(g) Primary beneficiaries The legal dependent spouse until he/she

remarries and the dependent children;

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

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

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

"(k) Current Daily Compensation 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) days;

"(l) Average Monthly Compensation (AMC) The quotient arrived at after dividing the aggregate
compensation received by the member during his last thirty-six (36) months of service preceding his
separation/retirement/disability/death by thirty-six (36), or by the number of months he received such
compensation if he has less than thirty-six (36) months of service: Provided, 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 as determined by the actuary of the GSIS: Provided, further, That
initially the average monthly compensation shall not exceed Ten thousand pesos (P10,000.00), and premium
shall be nine percent (9%) and twelve percent (12%) for employee and employer covering the AMC limit and
below; and two percent (2%) and twelve percent (12%) for employee and employer covering the compensation
above the AMC limit;

"(m) Revalued average monthly compensation An amount equal to one hundred seventy percent (170%) of
the first One thousand pesos (P1,000) of the average monthly compensation plus one hundred percent (100%)
of the average monthly compensation in excess of One thousand pesos (P1,000);

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

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

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

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

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

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

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

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

"B. MEMBERSHIP IN THE GSIS

"SECTION 3. Compulsory Membership. Membership in the GSIS shall be compulsory for all employees
receiving compensation who have not reached the compulsory retirement age, irrespective of employment
status, except members of the Armed Forces of the Philippines and the Philippine National Police, subject to the
condition that they must settle first their financial obligation with the GSIS, and contractuals who have no
employer and employee relationship with the agencies they serve.

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

"SECTION 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.

"C. SOURCES OF FUNDS

"SECTION 5. Contributions. (a) It shall be mandatory for the member and the employer to pay the monthly
contributions specified in the following schedule:

"Monthly Compensation Percentage of Monthly

Compensation Payable by

Member Employer

I. Maximum Average
Monthly Compensation

(AMC) Limit and Below 9.0% 12.0%

II. Over the Maximum AMC Limit

III.

Up to the Maximum AMC Limit 9.0% 12.0%

In Excess of the AMC Limit 2.0% 12.0%

"Members of the judiciary and constitutional commissioners shall pay three percent (3%) of their monthly
compensation as personal share, and their employers a corresponding three percent (3%) share for their life
insurance coverage.

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

"SECTION 6. 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 him
in accordance with the schedule prescribed in the rules and regulations implementing this Act.

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

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

"SECTION 8. 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 9. Computation of the Basic Monthly Pension. (a) the basic monthly pension is equal to:

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

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

"(b) The basic monthly pension may be adjusted upon the recommendation of the President and General
Manager of the GSIS and approved by the President of the Philippines in accordance with the rules and
regulations prescribed by the GSIS: Provided, however, That the basic monthly pension shall not be less than
One thousand and three hundred pesos (P1,300.00): Provided, further, That the basic monthly pension for those
who have rendered at least twenty (20) years of service after the effectivity of this Act shall not be less than
Two thousand four hundred pesos (P2,400.00) a month.
"SECTION 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/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) All service credited for retirement, resignation or separation for which corresponding benefits have been
awarded under this Act or other laws shall be excluded in the computation of service in case of reinstatement in
the service of an employer and subsequent retirement or separation which is compensable under this Act.

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

"SEPARATION BENEFITS

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

"(b) A cash payment equivalent to eighteen (18) times his basic monthly pension payable 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): Provided, That the member resigns or separates from the service
after he has rendered at least fifteen (15) years of service and is below sixty (60) years of age at the time of
resignation or separation.

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

"Contributions Made Benefit Duration

1 year but less than 3 years 2 months

3 or more years but less than 6 years 3 months

6 or more years but less than 9 years 4 months

9 or more years but less than 11 years 5 months

11 or more years but less than 15 years 6 months

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

"All accumulated unemployment benefits paid to the employee during his 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.

"RETIREMENT BENEFITS

"SECTION 13. Retirement Benefits. (a) Retirement benefit shall be:

"(1) the lump sum payment as defined in this Act 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 lump sum; or

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

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

"SECTION 13-A. Conditions for Entitlement. A member who retires from the service shall be entitled to the
retirement benefits 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.

"SECTION 14. 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.

"PERMANENT DISABILITY BENEFITS

"SECTION 15. 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 himself
or another, shall be entitled to the benefits provided for under Sections 16 and 17 immediately following,
subject to the corresponding conditions therefor.

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

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

(2) if separated from the service, he has paid at least thirty-six (36) monthly contributions within the five (5)
year period immediately preceding his disability, or has paid a total of at least one hundred eighty
(180) monthly contributions, prior to his disability: Provided, further, That if at the time of disability,
he was in the service and has paid a total of at least one hundred eighty (180) monthly contributions,
in addition to the monthly income benefit, he shall receive a cash payment equivalent to eighteen
(18) times his basic monthly pension: Provided, finally, That a member cannot enjoy the monthly
income benefit for permanent disability and the old-age retirement simultaneously.

"(b) If a member who suffers permanent total disability does not satisfy conditions (1) and (2) in paragraph (a)
of this section but has rendered at least three (3) years service at the time of his disability, he shall be advanced
the cash payment equivalent to one hundred percent (100%) of his average monthly compensation for each year
of service he paid contributions, but not less than Twelve Thousand pesos (P12,000) which should have been
his separation benefit.

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

"(1) he is reemployed or

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

"(3) he fails to present himself for medical examination when required by the GSIS.

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

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

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

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

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

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

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

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

"(1) complete and permanent loss of the use of:

(i) any finger

(ii) any toe

(iii) one arm

(iv) one hand

(v) one foot

(vi) one leg

(vii) one or both ears

(viii) hearing of one or both ears

(ix) sight of one eye

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

"TEMPORARY DISABILITY BENEFITS

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

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

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

Provided, however, That a member cannot enjoy the temporary total disability benefit and sick leave 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 Seventy pesos (P70.00) a day.

"(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 19. Non-scheduled Disability. For injuries or illnesses resulting in a disability not listed in the
schedule of partial/total disability, as provided herein, the GSIS shall determine the nature of the disability and
the corresponding benefits therefor.

"SURVIVORSHIP BENEFITS

"SECTION 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%) of the basic monthly pension; and

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

(3)

"SECTION 21. Death of a Member. (a) Upon the death of a member, the primary beneficiaries shall be
entitled to:

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

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

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

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

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

(b) The survivorship pension shall be paid as follows:

(1) when the dependent spouse is the only survivor, he/she shall receive the basic survivorship
pension for life or until he/she remarries;

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

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

(c) In the absence of primary beneficiaries, the secondary beneficiaries shall be entitled to:

(1) the cash payment equivalent to one hundred percent (100%) of his average monthly
compensation for each year of service he paid contributions, but not less than Twelve thousand pesos
(P12,000): Provided, That the member is in the service at the time of his death and has at least three (3)
years of service; or

(2) in the absence of secondary beneficiaries, the benefits under this paragraph shall be paid to
his legal heirs.
 (d) For purposes of the survivorship benefits, legitimate children shall include legally adopted and
legitimate children.

"SECTION 22. 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
pension defined in Section 20 of this Act, subject to the provisions of paragraph (b) of Section 21 hereof. When
the pensioner dies within the period covered by the lump sum, the survivorship pension shall be paid only after
the expiration of the said period.

"FUNERAL BENEFITS

"SECTION 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): Provided, That
it shall be increased to at least Eighteen thousand pesos (P18,000.00) after five (5) years and shall be paid upon
the death of:

(a) an active member as defined under Section 2(e) of this Act; or

(b) a member who has been separated from the service, but who may be entitled to future benefit pursuant to
Section 4 of this Act; or

(c) a pensioner, as defined in Section 2(o) of this Act; or

(d) a retiree who at the time of his retirement was of pensionable age under this Act but who opted to retire
under Republic Act No. 1616.

"LIFE INSURANCE BENEFITS

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

(1) for those employed after the effectivity of this Act, their insurance shall take effect on the date of their
employment;

(2) for those whose insurance will mature after the effectivity of this Act, their insurance shall be deemed
renewed on the day following the maturity or expiry date of their insurance;

(3) for those without any life insurance as of the effectivity of this Act, their insurance shall take effect
following said effectivity.

"SECTION 25. 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 GSIS.

"SECTION 26. 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 himself and/or his dependents. Any employer
may likewise apply for group insurance coverage for its employees. The payment of the premiums/installments
for optional insurance and pre-need products may be made by the insured or his employer and/or any person
acceptable to the GSIS.

"SECTION 27. Reinsurance. The GSIS may reinsure any of its interests 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 28. Prescription. Claims for benefits under this Act except for life and retirement shall prescribe
after four (4) years from the date of contingency.
"SECTION 29. Facility of Payment. The GSIS shall prescribe rules and regulations to facilitate payment of
benefit, proceeds, and claims 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 his right to demand the payment of benefits, proceeds,
and claims from the GSIS, who shall, however, have a right to institute the appropriate action in a court of law
against the ineligible recipient.

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

The Board may designate any member of the Board, or official of the GSIS who is a lawyer, to act as hearing
officer to receive evidence, make findings of fact and submit recommendations thereon. The hearing officer
shall submit his findings and recommendations, together with all the documentary and testimonial evidence 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 31. Appeals. Appeals from any decision or award of the Board shall be governed by Rules 43
and 45 of the 1997 Rules of Civil Procedure adopted by the Supreme Court on April 8, 1997 which will take
effect on July 1, 1997: Provided, That pending cases and those filed prior to July 1, 1997 shall be governed by
the applicable rules of procedure: Provided, further, That the appeal shall take precedence over all other cases
except criminal cases when the penalty of life imprisonment or death or reclusion perpetua is imposable.

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

"SECTION 32. Execution of Decision. When no appeal is perfected and there is no order to stay by the
Board, by the Court of Appeals or by the Supreme Court, any decision or award of the Board shall be enforced
and executed in the same manner as decisions of the Regional Trial Court. For this purpose, the Board shall
have the power to issue to the city or provincial sheriff or its appointed sheriff such writs of execution 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 33. 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 of the Revised Administrative Code.

"F. FUNDS OF THE GSIS

"SECTION 34. Funds. All contributions payable under Section 5 of this Act together with the earnings and
accruals thereon shall constitute the GSIS Social Insurance Fund. The said Fund shall be used to finance the
benefits administered by the GSIS under this Act. In addition, the GSIS shall administer the optional insurance
fund for the insurance coverage described in Section 26 hereof, the employees' Compensation Insurance Fund
created under P.D. 626, as amended, the General Insurance Fund created under Act No. 656, as amended, and
such other special funds existing or that may be created for special groups or persons rendering services to the
government. The GSIS shall maintain the required reserves to guarantee the fulfillment of its obligations under
this Act.

"The funds of the GSIS shall not be used for purposes other than what are provided for under this Act.
Moreover, no portion of the funds of the GSIS or income thereof shall accrue to the General Fund of 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 35. Deposits and Disbursements. All revenues collected and all accruals thereto shall be
deposited, administered and disbursed in accordance with the law. A maximum expense loading of twelve
percent (12%) of the yearly revenues from all sources may be disbursed for administrative and operational
expenses except as may be otherwise approved by the President of the Philippines on the basis of actuarial and
management studies.

"SECTION 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 requirements of liquidity, safety/security and yield in
order to ensure the actuarial solvency of the funds of the GSIS: Provided, further, That the GSIS shall submit an
annual report on all investments made to both Houses of Congress of the Philippines, to wit:

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

(b) In interest-bearing 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) in direct housing loans to members and group housing projects secured by first mortgage, giving priority to
the low income groups and in short-and-medium-term loans to members such as salary, policy, educational,
emergency, stock purchase plan and other similar loans: Provided, That no less than forty percent (40%) of the
investable fund of the GSIS Social Insurance Fund shall be invested for these purposes;

(d) in 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) in 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;

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

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

(h) In 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 with proven track record or profitability over the last
three (3) years and payment of dividends at least once over the same period;

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

(j) In foreign mutual funds and in foreign currency deposits or foreign currency-denominated debts, non-
speculative equities and other financial instruments or other assets issued in accordance with existing laws of
the countries where such financial instruments are issued: Provided, That these instruments or assets are listed
in bourses of the respective countries where these instruments or assets 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.

"SECTION 37. 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 38. 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 39. Exemption from Tax, Legal Process and Lien. It is hereby declared to be the policy of the
State 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, notwithstanding any laws to the contrary, the GSIS, its assets, revenues including all accruals
thereto, and benefits paid, shall be exempt from all taxes, assessments, fees, charges or duties of all kinds. These
exemptions shall continue unless expressly and specifically revoked and any assessment against the GSIS as of
the approval of this Act are hereby considered paid. Consequently, all laws, ordinances, regulations, issuances,
opinions or jurisprudence contrary to or in derogation of this provision are hereby deemed repealed, superseded
and rendered ineffective and without legal force and effect.

"Moreover, these exemptions shall not be affected by subsequent laws to the contrary unless this section 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 guaranty of the national government to secure such solvency or
liability.

"The funds and/or the properties referred to herein as well as the benefits, sums or monies corresponding to the
benefits under this Act 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 (COA)
disallowances and from all financial obligations of the members, including his pecuniary accountability arising
from or caused or occasioned by his exercise or performance of his official functions or duties, or incurred
relative to or in connection with his position or work except when his monetary liability, contractual or
otherwise, is in favor of the GSIS.

"G. ADMINISTRATION

"SECTION 40. Implementing Body. The Government Service Insurance System as created under
Commonwealth Act No. 186 shall implement the provisions of this Act.

"SECTION 41. Powers and Functions of the GSIS. The GSIS shall exercise the following powers and
functions:

(a) to 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;

(b) to adopt or approve the annual and supplemental budget of receipts and expenditures including salaries and
allowances of the GSIS personnel; 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) to invest the funds of the GSIS, directly or indirectly, in accordance with the provisions of this Act;

(d) to 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) to conduct continuing actuarial and statistical studies and valuations to determine the financial condition of
the GSIS and taking into consideration such studies and valuations and the limitations herein provided, re-adjust
the benefits, contributions, premium rates, interest rates or the allocation or re-allocation of the funds to the
contingencies covered;

(f) to have the power of succession;

(g) to sue and be sued;

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

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

(j) to have one or more offices in and outside of the Philippines, and to conduct its business 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 where there
exists a minimum of fifteen thousand (15,000) membership;
(k) to borrow funds from any source, private or government, foreign or domestic, only as an incident in the
securitization of housing mortgages of the GSIS and on account of its receivables from any government or
private entity;

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

(m) to approve appointments in the GSIS except appointments to positions which are 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;

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

(o) to 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) to enter into agreement with the Social Security System or any other entity, enterprise, corporation or
partnership for the benefit of members transferring from one system to another subject to the provision of
Republic Act No. 7699, otherwise known as the Portability Law;

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

(r) to 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 broad policies for the development and
perfection of the programs of the GSIS;

(s) to 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;

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

(w) to ensure the collection or recovery of all indebtedness, liabilities and/or accountabilities, including unpaid
premiums or contributions in favor of the GSIS arising from any cause or source whatsoever, due from all
obligors, whether public or private. The Board 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 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) to 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; and
(y) to 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 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) 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), another two (2) shall
represent the leading organizations or associations of government employees/retirees, another four (4) from the
banking, finance, investment, and insurance sectors, and one (1) recognized member of the legal profession who
at the time of appointment is also a member of 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.

The Trustees, except the President and General Manager who shall cease as trustee upon his separation, shall
hold office for six (6) years without reappointment, or until their successors are duly appointed and qualified.
Vacancy, other than through the expiration of the term, shall be filled for the unexpired term only. The members
of the Board shall be entitled to a per diem of Two thousand five hundred pesos (P2,500) for each board
meeting actually attended by them, but not to exceed Ten thousand pesos (P10,000) a month and reasonable
transportation and representation allowances as may be fixed by the Board.

"SECTION 43. Powers and Functions of the Board of Trustees. The Board of Trustees shall have the
following powers and functions:

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

"(b) to promulgate such rules and regulations as may be necessary or proper for the 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, 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;

"(e) to 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;

"(f) the 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) to 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) to determine, fix and impose interest upon unpaid or unremitted premiums and/or contributions; and

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

"SECTION 44. Appointment, Qualifications, and Compensation of the President and General Manager and of
Other Personnel. The President and General Manager of the GSIS shall be its Chief Executive Officer and
shall be appointed by the President of the Philippines. He 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 45. 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 46. Auditor. (a) The Chairman of the Commission on Audit shall be the ex officio auditor of the
GSIS. For this purpose, he may appoint a representative who shall be the Auditor of the GSIS, and the
necessary personnel to assist said representative in the performance of his duties.

"(b) The Chairman of the Commission on Audit or his authorized 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 47. 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 (OGCC) 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.

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

"SECTION 48. Powers of the Insurance Commission. The Insurance Commissioner or his authorized
representatives shall make an examination of the financial condition and methods of transacting business of the
GSIS at least once every three (3) years and the report of said examination shall be submitted to the Board of
Trustees and copies thereof be furnished the Office of the President of the Philippines and the two Houses of the
Congress of the Philippines within five (5) days after the close of examination: Provided, however, That for
each examination the GSIS shall pay the office of the Insurance Commissioner 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 the actual time spent.

"H. GENERAL PROVISIONS

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

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

"SECTION 50. 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
the same 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 (COA) 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 51. 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.

"L. PENAL PROVISIONS

"SECTION 52. Penalty. (a) 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 him or for
some other persons, shall suffer the penalties provided for in Article 172 of the Revised Penal Code.

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

"(c) Whoever fails or refuses to comply with the provisions of this Act or with the rules and regulations adopted
by the GSIS shall be punished by a fine of not less than Five thousand pesos (P5,000.00) nor more than Twenty
thousand pesos (P20,000.00), or by imprisonment of not less than six (6) years and one (1) day to twelve (12)
years, or both, at the discretion of the court.

"(d) The treasurer, finance officer, cashier, disbursing officer, budget officer or other official or employee who
fails to include in the annual budget the amount corresponding to the employer and employee contributions, or
who fails or refuses or delays by more than thirty (30) days from the time such amount becomes due and
demandable, or to deduct the monthly contributions of the employee shall, upon conviction by final judgment,
suffer the penalties of imprisonment from six (6) months and one (1) day to six (6) years, and a fine of not less
than Three thousand pesos (P3,000.00) but not more than Six thousand pesos (P6,000.00), and in addition shall
suffer absolute perpetual disqualification from holding public office and from practicing any profession or
calling licensed by the government.

"(e) Any employee or member who receives or keeps fund or property belonging, payable or deliverable to the
GSIS and appropriates the same, or takes or misappropriates or uses the same to any purpose other than that
authorized by this Act, or 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, shall suffer the penalties provided in Article 217
of the Revised Penal Code, and in addition shall suffer absolute perpetual disqualification from holding public
office and from practicing any profession or calling licensed by the government.

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

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

"(h) The officers and/or personnel referred to in paragraph (g) of this section shall be liable not only criminally
but also civilly to the GSIS or to the employee or member concerned in the form of damages, including
surcharges and interests.
"(i) For the charges or complaints referred to in paragraph (g) of this Section, the liabilities therein set forth
shall be construed as waiver of the State of its immunity from suit, hence, the above-mentioned officials and/or
personnel may not invoke the defense of non-suability of the State.

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

"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 the Revised Penal Code.

"SECTION 53. 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 not later than ninety (90) days after the
approval of this Act.

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

"SECTION 55. Exclusiveness of Benefits. Whenever other laws provide similar benefits for the same
contingencies covered by this Act, the member who qualifies to the benefits shall have the option to choose
which benefits will be paid to him. However, if the benefits provided by the law chosen are less than the
benefits provided under this Act, the GSIS shall pay only the difference.

"SECTION 56. 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 2. 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 3. Repealing Clause. All laws and any other law or parts of law specifically inconsistent herewith
are hereby repealed or modified accordingly: Provided, That the rights under 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 effectivity 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 4. Effectivity. This Act shall take effect fifteen (15) days after its publication in the Official
Gazette or in at least two (2) newspapers of general circulation.

Approved: May 30, 1997

Published in Malaya, The Philippine Star, Philippine Daily Inquirer, and the Manila Bulletin on June 9, 1997.
July 28, 1997.

Published in the Official Gazette, Vol. 93 No. 29 page 4360 on July 21, 1997.

Republic of the Philippines

Congress of the Philippines
Metro Manila
 Tenth Congress

Republic Act No. 8282 May 01, 1997

AN ACT FURTHER STRENGTHENING THE SOCIAL SECURITY SYSTEM THEREBY

AMENDING FOR THIS PURPOSE, REPUBLIC ACT NO. 1161, AS AMENDED, OTHERWISE
KNOWN AS THE SOCIAL SECURITY LAW

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

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

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

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

"SEC. 3. Social Security System.

(a) To carry out the purposes of this Act, the Social Security System, hereinafter referred to as 'SSS', a
corporate body, with principal place of business in Metro Manila, Philippines is hereby created. The SSS
shall be directed and controlled by a Social Security Commission, hereinafter referred to as
'Commission', composed of the Secretary of Labor and Employment or his duly designated
undersecretary, the SSS president and seven (7) appointive members, three (3) of whom shall represent
the workers' group, at least one of whom shall be a woman; three (3), the employers' group, at least one
(1) of whom shall be a woman; and one (1), the general public whose representative shall have adequate
knowledge and experience regarding social security, to be appointed by the President of the Philippines.
The six (6) members representing workers and employers shall be chosen from among the nominees of
workers' and employers' organizations, respectively. The Chairman of the Commission shall be
designated by the President of the Philippines from among its members. The term of the appointive
members shall be three (3) years: Provided, That the terms of the first six (6) appointive members shall
be one (1), two (2) and three (3) years for every two members, respectively: Provided, further, That they
shall continue to hold office until their successors shall have been appointed and duly qualified. All
vacancies, prior to the expiration of the term, shall be filled for the unexpired term only. The appointive
members of the Commission shall receive at least two thousand five hundred pesos (P2,500.00) per
diem for each meeting actually attended by them but not to exceed Ten thousand pesos (P10,000.00) a
month:: Provided, That members of the Commission shall also receive a per diem of at least Two
thousand five hundred pesos (P2,500.00) but not to exceed Fifteen thousand pesos (P15,000.00) a
month: Provided , further, That said members of the Commission shall also receive reasonable
transportation and representation allowances as may be fixed by the Commission, but not to exceed Ten
thousand pesos (P10,000.00) a month.

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

"(c) The Commission, upon the recommendation of the SSS President, shall appoint an actuary, and
such other personnel as may be deemed necessary, fix their reasonable compensation, allowances and
other benefits, prescribe their duties and establish such methods and procedures as may be necessary to
insure the efficient, honest and economical administration of the provisions and purposes of this
Act: Provided,however, That the personnel of the SSS below the rank of Vice-President shall be
appointed by the SSS President: Provided, further, That the personnel appointed by the SSS President,
except those below the rank of assistant manager, shall be subject to the confirmation by the
Commission: Provided, further, That the personnel of the SSS shall be selected only from civil service
eligibles and be subject to civil service rules and regulations: Provided, finally, That the SSS shall be
exempt from the provisions of Republic Act No. 6758 ("Compensation and Position Classification Act
of 1989.") and Republic Act No. 7430 (AN ACT PROVIDING FOR OPTIMUM UTILIZATION OF
PERSONNEL IN GOVERNMENT SERVICE THROUGH A SYSTEM OF ATTRITION, PROVIDING
PENALTIES FOR VIOLATION THEREOF, AND FOR OTHER PURPOSES.) .

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

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

"(2) To establish a provident fund for the members which will consist of voluntary contributions
of employers and/or employees, self-employed and voluntary members and their earnings, for
the payment of benefits to such members or their beneficiaries, subject to such rules and
regulations as it may promulgate and approved by the President of the Philippines;

"(3) To maintain a provident fund which consists of contributions made by both the SSS 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;

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

"(5) To authorize cooperatives registered with the cooperative development authority or

associations registered with the appropriate government agency to act as collecting agents of the
SSS with respect to their members: Provided, That the SSS shall accredit the cooperative or
association: Provided,further, That the persons authorized to collect are bonded;

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

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

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

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

"(2) To require the actuary to submit a valuation report on the SSS benefit program every four
(4) years, or more frequently as may be necessary, to undertake the necessary actuarial studies
and calculations concerning increases in benefits taking into account inflation and the financial
stability of the SSS, and to provide for feasible increases in benefits every four (4) years,
including the addition of new ones, under such rules and regulations as the Commission may
adopt, subject to the approval of the President of the Philippines: Provided, That the actuarial
soundness of the reserve fund shall be guaranteed: Provided, further, That such increases in
benefits shall not require any increase in the rate of contribution;
 "(3) To establish offices of the SSS to cover as many provinces, cities and congressional
districts, whenever and wherever it may be expedient, necessary and feasible, and to inspect or
cause to be inspected periodically such offices;

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

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

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

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

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

"(9) To acquire, receive, or hold, by way of purchase, expropriation or otherwise, public or

private property for the purpose of undertaking housing projects preferably for the benefit of
low-income members and for the maintenance of hospitals and institutions for the sick, aged and
disabled, as well as schools for the members and their immediate families;

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

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

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

"(b) Appeal to Courts. - Any decision of the Commission, in the absence of an appeal therefrom as
hereinProvided, shall become final and executory fifteen (15) days after the date of notification, and
judicial review thereof shall be permitted only after any party claiming to be aggrieved thereby has
exhausted his remedies before the Commission. The Commission shall be deemed to be a party to any
judicial action involving any such decision, and may be represented by an attorney employed by the
Commission, or when requested by the Commission, by the Solicitor General or any public prosecutors.

"(c) Court Review. - The decision of the Commission upon any disputed matter may be reviewed both
upon the law and the facts by the Court of Appeals. For the purpose of such review, the procedure
concerning appeals from the Regional Trial Court shall be followed as far as practicable and consistent
with the purposes of this Act. Appeal from a decision of the Commission must be taken within fifteen
(15) days from notification of such decision. If the decision of the Commission involves only questions
of law, the same shall be reviewed by the Supreme Court. No appeal bond shall be required. The case
shall be heard in a summary manner, and shall take precedence over all cases, except that in the
Supreme Court, criminal cases wherein life imprisonment or death has been imposed by the trial court
shall take precedence. No appeal shall act as a supersedeas or a stay of the order of the Commission
unless the Commission itself, or the Court of Appeals or the Supreme Court, shall so order.

"(d) Execution of Decisions. - The Commission may, motu proprio or on motion of any interested party,
issue a writ of execution to enforce any of its decisions or awards, after it has become final and
executory, in the same manner as the decision of the Regional Trial Court by directing the city or
provincial sheriff or the sheriff whom it may appoint to enforce such final decision or execute such writ;
and any person who shall fail or refuse to comply with such decision, award or writ, after being required
to do so shall, upon application by the Commission pursuant to Rule 71 of the Rules of Court, be
punished for contempt.
"SEC. 6. Auditor and Counsel. - (a) The Chairman of the Commission on Audit shall be the ex-officio
Auditor of the SSS. He or his representative shall check and audit all the accounts, funds and properties
of the SSS in the same manner and as frequently as the accounts, funds and properties of the government
are checked and audited under existing laws, and he shall have, as far as practicable, the same powers
and duties as he has with respect to the checking and auditing of public accounts, funds and properties in
general.

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

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

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

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

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

"(c) Employer- Any person, natural or juridical, domestic or foreign, who carries on in the Philippines
any trade, business, industry, undertaking, or activity of any kind and uses the services of another person
who is under his orders as regards the employment, except the Government and any of its political
subdivisions, branches or instrumentalities, including corporations owned or controlled by the
Government: Provided, That a self-employed person shall be both employee and employer at the same
time.

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

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

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

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

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

"(f) Compensation - All actual remuneration for employment, including the mandated cost-of-living
allowance, as well as the cash value of any remuneration paid in any medium other than cash except that
part of the remuneration in excess of the maximum salary credit as Provided under Section Eighteen of
this Act.

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

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

"(i) Contribution - The amount paid to the SSS by and on behalf of the members in accordance with
Section Eighteen of this Act.
"(j) Employment - Any service performed by an employee for his employer except:

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

"(2) Service performed on or in connection with an alien vessel by an employee if he is

employed when such vessel is outside the Philippines;

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

"(4) Service performed in the employ of a foreign government or international organization, or

their wholly-owned instrumentality: Provided, however, That this exemption notwithstanding,
any foreign government, international organization or their wholly-owned instrumentality
employing workers in the Philippines or employing Filipinos outside of the Philippines, may
enter into an agreement with the Philippine Government for the inclusion of such employees in
the SSS except those already covered by their respective civil service retirement
systems: Provided, further, That the terms of such agreement shall conform with the provisions
of this Act on coverage and amount of payment of contributions and benefits: Provided, finally,
That the provisions of this Act shall be supplementary to any such agreement; and

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

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

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

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

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

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

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

"(q) Credited years of service - For a member covered prior to January nineteen hundred and eighty five
(1985) minus the calendar year of coverage plus the number of calendar years in which six (6) or more
contributions have been paid from January nineteen hundred and eighty five (1985) up to the calendar
year containing the semester prior to the contingency. For a member covered in or after January nineteen
hundred and eighty five (1985), the number of calendar years in which six (6) or more contributions
have been paid from the year of coverage up to the calendar year containing the semester prior to the
contingency: Provided, That the Commission may provide for a different number of contributions in a
calendar year for it to be considered as a credited year of service.

"(r) Member - The worker who is covered under Section Nine and Section Nine-A of this Act.
"(s) Self-employed - Any person whose income is not derived from employment, as defined under this
Act, as well as those workers enumerated in Section Nine-A hereof.

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

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

"SEC. 9. Coverage. - (a) Coverage in the SSS shall be compulsory upon all employees not over sixty
(60) years of age and their employers: Provided, That in the case of domestic helpers, their monthly
income shall not be less than One thousand pesos (P1,000.00) a month: Provided, further, That any
benefit already earned by the employees under private benefit plans existing at the time of the approval
of this Act shall not be discontinued, reduced or otherwise impaired: Provided, further, That private
plans which are existing and in force at the time of compulsory coverage shall be integrated with the
plan of the SSS in such a way where the employer's contribution to his private plan is more than that
required of him in this Act, he shall pay to the SSS only the contribution required of him and he shall
continue his contribution to such private plan less his contribution to the SSS so that the employer's total
contribution to his benefit plan and to the SSS shall be the same as his contribution to his private benefit
plan before the compulsory coverage: Provided,further, That any changes, adjustments, modifications,
eliminations or improvements in the benefits to be available under the remaining private plan, which
may be necessary to adopt by reason of the reduced contributions thereto as a result of the integration,
shall be subject to agreements between the employers and employees concerned: Provided, further, That
the private benefit plan which the employer shall continue for his employees shall remain under the
employer's management and control unless there is an existing agreement to the
contrary: Provided, finally, That nothing in this Act shall be construed as a limitation on the right of
employers and employees to agree on and adopt benefits which are over and above those Provided under
this Act.

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

"(c) Filipinos recruited by foreign-based employers for employment abroad may be covered by the SSS
on a voluntary basis.

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

"1. All self-employed professionals;

"2. Partners and single proprietors of businesses;

"3. Actors and actresses, directors, scriptwriters and news correspondents who do not fall within
the definition of the term "employee" in Section 8 (d) of this Act;

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

"5. Individual farmers and fishermen.

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

"SEC. 10. Effective Date of Coverage. - Compulsory coverage of the employer shall take effect on the
first day of his operation and that of the employee on the day of his employment: Provided, That the
compulsory coverage of the self-employed person shall take effect upon his registration with the SSS.

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

"SEC. 11-A. Effect of Interruption of Business or Professional Income. - If the self-employed realizes no
income in any given month, he shall not be required to pay contributions for that month. He may,
however, be allowed to continue paying contributions under the same rules and regulations applicable to
a separated employee member: Provided, That no retroactive payment of contributions shall be allowed
other than as prescribed under Section Twenty-two-A hereof.

"SEC. 12. Monthly Pension.

(a) The monthly pension shall be the highest of the following amounts:

"(1) The sum of the following:

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

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

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

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

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

"(b) Notwithstanding the preceding paragraph, the minimum pension shall be One thousand two
hundred pesos (P1,200.00) for members with at least ten (10) credited years of service and Two
thousand four hundred pesos (P2,400.00) for those with twenty (20) credited years of service.

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

SEC. 12-B. Retirement Benefits. - (a) A member who has paid at least one hundred twenty (120)
monthly contributions prior to the semester of retirement and who: (1) has reached the age of sixty (60)
years and is already separated from employment or has ceased to be self-employed; or (2) has reached
the age of sixty-five (65) years, shall be entitled for as long as he lives to the monthly pension: Provided,
That he shall have the option to receive his first eighteen (18) monthly pensions in lump sum discounted
at a preferential rate of interest to be determined by the SSS.

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

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

"(d) Upon the death of the retired member, his primary beneficiaries as of the date of his retirement shall
be entitled to receive the monthly pension: Provided, That if he has no primary beneficiaries and he dies
within sixty (60) months from the start of his monthly pension, his secondary beneficiaries shall be
entitled to a lump sum benefit equivalent to the total monthly pensions corresponding to the balance of
the five-year guaranteed period, excluding the dependents' pension.
"(e) The monthly pension of a member who retires after reaching age sixty (60) shall be the higher of
either: (1) the monthly pension computed at the earliest time he could have retired had he been separated
from employment or ceased to be self-employed plus all adjustments thereto; or (2) the monthly pension
computed at the time when he actually retires.

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

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

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

"(c) Upon the death of the permanent total disability pensioner, his primary beneficiaries as of the date
of disability shall be entitled to receive the monthly pension: Provided, That if he has no primary
beneficiaries and he dies within sixty (60) months from the start of his monthly pension, his secondary
beneficiaries shall be entitled to a lump sum benefit equivalent to the total monthly pensions
corresponding to the balance of the five-year guaranteed period excluding the dependents' pension.

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

"1. Complete loss of sight of both eyes;

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

"3. Permanent complete paralysis of two limbs;

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

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

"(e) If the disability is permanent partial, and such disability occurs before thirty-six (36) monthly
contributions have been paid prior to the semester of disability, the benefit shall be such percentage of
the lump sum benefit described in the preceding paragraph with due regard to the degree of disability as
the Commission may determine.

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

Complete and permanent Number of

loss of use of Months
One thumb 10
One index finger 8
One middle finger 6
One right finger 5
One little finger 3
 One big toe 6
One hand 39
One arm 50
One foot 31
One leg 46
One ear 10
Both ears 20
Hearing of one ear 10
Hearing of both ears 50
Sight of one eye 25

"(g) The percentage degree of disability which is equivalent to the ratio that the designated number of
months of compensability bears to seventy-five (75), rounded to the next higher integer, shall not be
additive for distinct, separate and unrelated permanent partial disabilities, but shall be additive for
deteriorating and related permanent partial disabilities to a maximum of one hundred percent (100%), in
which case, the member shall be deemed as permanently totally disabled.

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

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

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

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

"SEC. 14. Sickness Benefit. - (a) A member who has paid at least three (3) monthly contributions in the
twelve-month period immediately preceding the semester of sickness or injury and is confined therefor
for more than three (3) days in a hospital or elsewhere with the approval of the SSS, shall, for each day
of compensable confinement or a fraction thereof, be paid by his employer, or the SSS, if such person is
unemployed or self-employed, a daily sickness benefit equivalent to ninety percent (90%) of his average
daily salary credit, subject to the following conditions:

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

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

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

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

"(c) One hundred percent (100%) of the daily benefits Provided in the preceding paragraph shall be
reimbursed by the SSS to said employer upon receipt of satisfactory proof of such payment and legality
thereof: Provided, That the employer has notified the SSS of the confinement within five (5) calendar
days after receipt of the notification from the employee member: Provided, further, That if the
notification to the SSS is made by the employer beyond five (5) calendar days after receipt of the
notification from the employee member, said employer shall be reimbursed only for each day of
confinement starting from the tenth calendar day immediately preceding the date of notification to the
SSS: Provided, finally, That the SSS shall reimburse the employer or pay the unemployed member only
for confinement within the one-year period immediately preceding the date the claim for benefit or
reimbursement is received by the SSS, except confinement in a hospital in which case the claim for
benefit or reimbursement must be filed within one (1) year from the last day of confinement.

"(d) Where the employee member has given the required notification but the employer fails to notify the
SSS of the confinement or to file the claim for reimbursement within the period prescribed in this
section resulting in the reduction of the benefit or denial of the claim, such employer shall have no right
to recover the corresponding daily allowance he advanced to the employee member as required in this
section.

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

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

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

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

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

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

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

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

"(f) That if an employee member should give birth or suffer miscarriage without the required
contributions having been remitted for her by her employer to the SSS, or without the latter having been
previously notified by the employer of the time of the pregnancy, the employer shall pay to the SSS
damages equivalent to the benefits which said employee member would otherwise have been entitled to.

"SEC. 15. Non-Transferability of Benefits. - The SSS shall promptly pay the benefits Provided in this
Act to such persons as may be entitled thereto in accordance with the provisions of this Act: Provided,
That the SSS shall pay the retirement benefits on the day of contingency to qualified members who have
submitted the necessary documents at least six (6) months before: Provided, further, That the
beneficiary who is a national of a foreign country which does not extend benefits to a Filipino
beneficiary residing in the Philippines, or which is not recognized by the Philippines, shall not be
entitled to receive any benefit under this Act: Provided, further, That notwithstanding the foregoing,
where the best interest of the SSS will be served, the Commission may direct payments without regard
to nationality or country of residence: Provided,further, That if the recipient is a minor or a person
incapable of administering his own affairs, the Commission shall appoint a representative under such
terms and conditions as it may deem proper:Provided, further, That such appointment shall not be
necessary in case the recipient is under the custody of or living with the parents or spouse of the member
in which case the benefits shall be paid to such parents or spouse, as representative payee of the
recipient. Such benefits are not transferable and no power of attorney or other document executed by
those entitled thereto in favor of any agent, attorney or any other person for the collection thereof on
their behalf shall be recognized, except when they are physically unable to collect personally such
benefits: Provided, further, That in case of death benefits, if no beneficiary qualifies under this Act, said
benefits shall be paid to the legal heirs in accordance with the law of succession.

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

"SEC. 17. Fee of Agents, Attorneys, Etc. - No agent, attorney or other person in charge of the
preparation, filing or pursuing any claim for benefit under this Act shall demand or charge for his
services any fee, and any stipulation to the contrary shall be null and void. The retention or deduction of
any amount from any benefit granted under this Act for the payment of fees for such services is
prohibited: Provided, however, That any member of the Philippine Bar who appears as counsel in any
case heard by the Commission shall be entitled to attorneys' fees not exceeding ten percent (10%) of the
benefits awarded by the Commission, which fees shall not be payable before the actual payment of the
benefits, and any stipulation to the contrary shall be null and void.

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

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

SALARY RANGE OF MONTHLY MONTHLY CONTRIBUTION

BRACKET COMPENSATION SALARY EMPLOYER EMPLOYEE TOTAL
CREDIT
I 1,000.00 - 1,249.99 1000 50.70 33.30 84.00
II 1,250.00 - 1,749.99 1500 76.00 50.00 126.00
III 1,750.00 - 2,249.99 2000 101.30 66.70 168.00
IV 2,250.00 - 2,749.99 2500 126 83.30 210.00

.70
V 2,750.00 - 3,249.99 3000 152.00 100.00 252.00
VI 3,250.00 - 3,749.99 3500 177.30 116.70 294.00
VII 3,750.00 - 4,249.99 4000 202.70 133.30 336.00
VIII 4,250.00 - 4,749.99 4500 228.00 150.00 378.00
IX 4,750.00 - 5,249.99 5000 253.30 166.70 420.00
 X 5,250.00 - 5,749.99 5500 278.70 183.70 462.40
XI 5,750.00 - 6,249.99 6000 304.00 200.00 504.00
XII 6,250.00 - 6,749.99 6500 329.30 216.78 546.00
XIII 6,750.00 - 7,249.99 7000 354.70 233.30 588.00
XIV 7,250.00 - 7,749.99 7500 380.00 250.00 630.00
XV 7,750.00 - 8.249.99 8000 403.30 266.70 672.00
XVI 8,250.00 - 8,749.99 8500 430.70 283.30 714.00
XVII 8,750.00 - OVER 9000 456.00 300.00 756.00

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

"The maximum monthly salary credit shall be Nine thousand pesos (P9,000.00) effective January
Nineteen hundred and ninety six (1996); Provided, That it shall be increased by One thousand pesos
(P1,000.00) every year thereafter until it shall have reached Twelve thousand pesos (P12,000.00) by
Nineteen hundred and ninety nine (1999): Provided, further, That the minimum and maximum monthly
salary credits as well as the rate of contributions may be fixed from time to time by the Commission
through rules and regulations taking into consideration actuarial calculations and rate of benefits, subject
to the approval of the President of the Philippines.

"SEC. 19. Employer's Contributions. - (a) Beginning as of the last day of the month when an employee's
compulsory coverage takes effect and every month thereafter during his employment, his employer shall
pay, with respect to such covered employee, the employer's contribution in accordance with the schedule
indicated in Section Eighteen of this Act. Notwithstanding any contract to the contrary, an employer
shall not deduct, directly or indirectly, from the compensation of his employees covered by the SSS or
otherwise recover from them the employer's contributions with respect to such employees.

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

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

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

"SEC. 20. Government Contribution. - As the contribution of the Government to the operation of the
SSS, Congress shall annually appropriate out of any funds in the National Treasury not otherwise
appropriated, the necessary sum or sums to meet the estimated expenses of the SSS for each ensuing
year. In addition to this contribution, Congress shall appropriate from time to time such sum or sums as
may be needed to assure the maintenance of an adequate working balance of the funds of the SSS as
disclosed by suitable periodic actuarial studies to be made of the operations of the SSS.

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

"SEC. 22. Remittance of Contributions. -- (a) The contributions imposed in the preceding Section shall
be remitted to the SSS within the first ten (10) days of each calendar month following the month for
which they are applicable or within such time as the Commission may prescribe. Every employer
required to deduct and to remit such contributions shall be liable for their payment and if any
contribution is not paid to the SSS as herein prescribed, he shall pay besides the contribution a penalty
thereon of three percent (3%) per month from the date the contribution falls due until paid. If deemed
expedient and advisable by the Commission, the collection and remittance of contributions shall be
made quarterly or semi-annually in advance, the contributions payable by the employees to be advanced
by their respective employers: Provided, That upon separation of an employee, any contribution so paid
in advance but not due shall be credited or refunded to his employer.

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

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

"(c) Should any person, natural or juridical, default in any payment of contributions, the Commission
may also collect the same in either of the following ways:

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

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

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

"SEC. 22-A. Remittance of Contributions of Self-Employed Member. - Self-employed members shall

remit their monthly contributions quarterly on such dates and schedules as the Commission may specify
through rules and regulations: Provided, That no retroactive payment of contributions shall be allowed,
except asProvided in this Section.

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

"SEC. 24. Employment Records and Reports. - (a) Each employer shall immediately report to the SSS
the names, ages, civil status, occupations, salaries and dependents of all his employees who are subject
to compulsory coverage: Provided, That if an employee subject to compulsory coverage should die or
become sick or disabled or reach the age of sixty (60) without the SSS having previously received any
report or written communication about him from his employer, the said employer shall pay to the SSS
damages equivalent to the benefits to which said employee member would have been entitled had his
name been reported on time by the employer to the SSS, except that in case of pension benefits, the
employer shall be liable to pay the SSS damages equivalent to the accumulated pension due as of the
date of settlement of the claim or to the five (5) years' pension, including dependents'
pension: Provided, further, That if the contingency occurs within thirty (30) days from the date of
employment, the employer shall be relieved of his liability for damages: Provided, further, That any
person or entity engaging the services of an independent contractor shall be subsidiarily liable with such
contractor for any civil liability incurred by the latter under this Act: Provided, finally, That the same
person or entity engaging the services of an independent contractor shall require such contractor to post
a surety bond to guarantee the payment of the worker's benefits.

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

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

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

"(d) Every employer shall keep true and accurate work records for such period and containing such
information as the Commission may prescribe, in addition to an "Annual Register of New and Separated
Employees" which shall be secured from the SSS wherein the employer shall enter on the first day of
employment or on the effective date of separation, the names of the persons employed or separated from
employment, their SSS numbers, and such other data that the Commission may require and said annual
register shall be submitted to the SSS in the month of January of each year. Such records shall be open
for inspection by the SSS or its authorized representatives quarterly or as often as the SSS may require.

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

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

"(f) Notwithstanding any law to the contrary, microfilm, or non-erasable optical disk and other similar
archival media copies of original SSS records and reports, duly certified by the official custodian
thereof, shall have the same evidentiary value as the originals and be admissible as evidence in all legal
proceedings.

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

"SEC. 24-A. Report and Registration of the Self-Employed Member. - Each covered self-employed
person shall, within thirty (30) days from the first day he started the practice of his profession or
business operations register and report to the SSS his name, age, civil status, and occupation, average
monthly net income and his dependents.

"SEC. 25. Deposits and Disbursements. - All money paid to or collected by the SSS every year under
this Act, and all accruals thereto shall be deposited, administered and disbursed in the same manner and
under the same conditions and requirements as Provided by law for other public special funds: Provided,
That not more than twelve percent (12%) of the total yearly contributions plus three percent (3%) of
other revenues shall be disbursed for operational expenses such as salaries and wages, supplies and
materials, depreciation and the maintenance of offices of the SSS: Provided, further, That if the
expenses in any year are less than the maximum amount permissible, the difference shall not be availed
of as additional expenses in the following years.
"SEC. 26. Investment of Reserve Funds. - All revenues of the SSS that are not needed to meet the
current administrative and operational expenses incidental to the carrying out of this Act shall be
accumulated in a fund to be known as the "Reserve Fund." Such portions of the Reserve Fund as are not
needed to meet the current benefit obligations thereof shall be known as the "Investment Reserve Fund"
which the Commission shall manage and invest with the skill, care, prudence and diligence necessary
under the circumstances then prevailing that a prudent man acting in like capacity and familiar with such
matters would exercise in the conduct of an enterprise of a like character and with similar aims. Pursuant
thereto, and in line with the basic principles of safety, good yield and liquidity, the Commission shall
invest the funds to earn an annual income not less than the average rates of treasury bills or any other
acceptable market yield indicator in any or in all of the following:

"(a) In bonds, securities, promissory notes or other evidence of indebtedness of the Government of the
Philippines, or in bonds, securities, promissory notes or other evidence of indebtedness to which the full
faith, credit and unconditional guarantee of the Government of the Philippines is pledged;

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

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

"(d) In bonds, securities, promissory notes or other evidence of indebtedness of any bank doing business
in the Philippines and in good standing with the Bangko Sentral ng Pilipinas to finance loans to private
corporations doing business in the Philippines, including schools, hospitals, small-and-medium scale
industries, cooperatives and non-governmental organizations, in which case the collaterals or securities
shall be assigned to the SSS under such terms and conditions as the Commission may
prescribe: Provided, That in the case of bank deposits, they 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 shall first have been designated as a depository for this
purpose by the Monetary Board of the Bangko Sentral ng Pilipinas: Provided, finally, That such
investments shall not exceed forty percent (40%) of the Investment Reserve Fund;

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

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

"(f) In 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 and their
equipment and facilities: Provided, That such investments shall not exceed ten percent (10%) of the
Investment Reserve Fund;

"(g) In real estate property, including shares of stocks involving real estate property, and investment
secured by first mortgages on real estate or other collaterals acceptable to the SSS: Provided, That such
projects and investments shall, in the determination of the Commission, redound to the benefit of the
SSS, its members, as well as the general public: Provided, further, That investment in real estate
property, including shares of stocks involving real estate property shall not exceed five percent (5%) of
the Investment Reserve Fund: Provided, finally, That investments in other income earning projects and
investments secured by first mortgages or other collaterals shall not exceed twenty five percent (25%) of
the Investment Reserve Fund;
"(h) In bonds, debentures, securities, promissory notes or other evidence of indebtedness of any prime
corporation or multilateral institutions to finance domestic projects: Provided, That the issuing or
assuming entity or its predecessors shall not have defaulted in the payment of interest on any of its
securities and that during each of any three (3) including the last two (2) of the five (5) fiscal years next
preceding the date of acquisition by the SSS of such bonds, debentures or other evidence of
indebtedness, the net earnings of the issuing or assuming institution available for its fixed charges, as
defined in this Act, shall have been not less than one and one-quarter times the total of its fixed charges
for such year: Provided, further, That such investments shall not exceed thirty percent (30%) of the
Investment Reserve Fund;

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

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

"(k) In foreign currency deposits or triple "A" foreign currency denominated debts, prime and non-
speculative equities, and other Bangko Sentral ng Pilipinas approved financial instruments or other
assets issued in accordance with the existing laws of the countries where such financial instruments are
issued:Provided, That these instruments or assets are listed in bourses of the respective countries where
these instruments or assets are issued: Provided, further, That the issuing company has proven track of
record of profitability over the last three (3) years and a record of regular dividend pay-out over the
same period:Provided, finally, That such investments shall not exceed one percent (1%) of the
Investment Reserve Fund in the first year which shall be increased by one percent (1%) for each
succeeding year, but in no case shall it exceed seven and one-half percent (7.5%) of the Investment
Reserve Fund;

"(l) In loans secured by such collaterals like cash, government securities or guarantees of multilateral
institutions: Provided, That such investments shall not exceed thirty percent (30%) of the Investment
Reserve Fund; and

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

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

40% in private securities

35% in housing

30% in real estate related investments

10% in short and medium-term member loans

30% in government financial institutions and corporations

30% in infrastructure projects

15% in any particular industry

 7.5% in foreign-currency denominated investments

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

"SEC. 26-B. Mortgagor Insurance Account. - (a) As part of its investment operations, the SSS shall act
as insurer of all or part of its interest on SSS properties mortgaged to the SSS, or lives of mortgagors
whose properties are mortgaged to the SSS. For this purpose, the SSS shall establish a separate account
to be known as the "Mortgagors' Insurance Account." All amounts received by the SSS in connection
with the aforesaid insurance operations shall be placed in the Mortgagors' Insurance Account. The assets
and liabilities of the Mortgagors' Insurance Account shall at all times be clearly identifiable and
distinguishable from the assets and liabilities in all other accounts of the SSS. Notwithstanding any
provision of law to the contrary, the assets held in the Mortgagors' Insurance Account shall not be
chargeable with the liabilities arising out of any other business the SSS may conduct but shall be held
and applied exclusively for the benefit of the owners or beneficiaries of the insurance contracts issued by
the SSS under this paragraph.

"(b) The SSS may insure any of its interest or part thereof with any private company or reinsurer. The
Insurance Commission or its authorized representatives shall make an examination into the financial
condition and methods of transacting business of the SSS at least once in two (2) years, but such
examination shall be limited to the insurance operation of the SSS as authorized under this paragraph
and shall not embrace the other operations of the SSS; and the report of said examination shall be
submitted to the Commission and a copy thereof shall be furnished the Office of the President of the
Philippines within a reasonable time after the close of the examination: Provided, That for each
examination, the SSS shall pay to the Insurance Commission an amount equal to the actual expense of
the Insurance Commission in the conduct of examination, including the salaries of the examiners and of
the actuary of the Insurance Commission who have been assigned to make such examination for the
actual time spent in said examination: Provided, further, That the general law on insurance and the rules
and regulations promulgated thereunder shall have suppletory application insofar as it is not in conflict
with this Act and its rules and regulations.

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

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

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

"(c) Whoever buys, sells, offers for sale, uses, transfers or takes or gives in exchange, or pledges or
gives in pledge, except as authorized in this Act or in regulations made pursuant thereto, any stamp,
coupon, ticket, book or other device, prescribed pursuant to Section Twenty-three hereof by the
Commission for the collection or payment of contributions required herein, shall be fined not less than
Five thousand pesos (P5,000.00) nor more than Twenty thousand pesos (P20,000.00), or imprisoned for
not less than six (6) years and one (1) day nor more than twelve (12) years, or both, at the discretion of
the court.
 "(d) Whoever, with intent to defraud, alters, forges, makes or counterfeits any stamp, coupon, ticket,
book or other device prescribed by the Commission for the collection or payment of any contribution
required herein, or uses, sells, lends, or has in his possession any such altered, forged or counterfeited
materials, or makes, uses, sells or has in his possession any such altered, forged, material in imitation of
the material used in the manufacture of such stamp, coupon, ticket, book or other device, shall be fined
not less than Five thousand pesos (P5,000.00) non more than Twenty thousand pesos (P20,000.00) or
imprisoned for not less than six years (6) and one (1) day nor more than twelve (12) years, or both, at the
discretion of the court.

"(e) Whoever fails or refuses to comply with the provisions of this Act or with the rules and regulations
promulgated by the Commission, shall be punished by a fine of not less than Five thousand pesos
(P5,000.00) nor more than Twenty thousand pesos (P20,000.00), or imprisonment for not less than six
(6) years and one (1) day nor more than twelve (12) years, or both, at the discretion of the
court: Provided, That where the violation consists in failure or refusal to register employees or himself,
in case of the covered self-employed or to deduct contributions from the employees' compensation and
remit the same to the SSS, the penalty shall be a fine of not less Five thousand pesos (P5,000.00) nor
more than Twenty thousand pesos (P20,000.00) and imprisonment for not less than six (6) years and one
(1) day nor more than twelve (12) years.

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

"(g) Any employee of the SSS who receives or keeps funds or property belonging, payable or
deliverable to the SSS and who shall appropriate the same, or shall take or misappropriate, or shall
consent, or through abandonment or negligence, shall permit any other person to take such property or
funds, wholly or partially, or shall otherwise be guilty of misappropriation of such funds or property,
shall suffer the penaltiesProvided in Article Two hundred seventeen of the Revised Penal Code.

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

"(i) Criminal action arising from a violation of the provisions of this Act may be commenced by the SSS
or the employee concerned either under this Act or in appropriate cases under the Revised Penal
Code: Provided, That such criminal action may be filed by the SSS in the city or municipality where the
SSS office is located, if the violation was committed within its territorial jurisdiction or in Metro Manila,
at the option of the SSS.

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

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

Section 2. Separability Clause. - If any provision of this Act is declared invalid, the other provisions not
affected thereby shall remain valid.

Section 3. Repealing Clause. - All laws, proclamations, executive orders, rules and regulations or parts thereof
inconsistent with this Act are hereby repealed, modified or amended accordingly: Provided, That no person
shall be deemed to be vested with any property or other right by virtue of the enactment or operation of this Act.
Section 4. Effectivity Clause. - This Act shall take effect fifteen (15) days after its complete publication in the
Official Gazette or in at least two (2) national newspapers of general circulation whichever comes earlier.

Approved: May 01, 1997