RETIREMENT PAY LAW (RA 7641)

A.WHO ARE EXEMPTED:~ retail, service, agricultural establishments~ operations employing not more
than 10 employees or workers

B.KINDS:

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

holidays/mandatory military or civic service)

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

C.BENEFITS:

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

2.1/12 of the 13th month pay, plus3.5-day Service incentive leave pay plus* a fraction of at least 6 mos.
considered as one whole year4.other benefits as maybe agreed upon by er and ee** MINIMUM ~ no. 1 +
no. 2 + no. 3 = n x years of service~ minimum only so employer must pay deficiency in case agreed
amount be less than the above

Republic Act No. 8282 May 01, 1997

AN ACT FURTHER STRENGTHENING THE SOCIAL SECURITY SYSTEM THEREBY AMENDING 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
further amended 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 and Republic Act No. 7430.

"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
herein Provided, shall become final and executory fifteen (15) days after the date of notification,
and judicial review thereof shall be permitted only after any party claiming to be aggrieved 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 Number of

permanent loss of use Months
of
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 126.70 83.30 210.00
V 2,750.00 - 3,249.99 3000 152.00 100.00 252.00
VI 3,250.00 - 3,749.99 3500 177.30 116.70 294.00
VII 3,750.00 - 4,249.99 4000 202.70 133.30 336.00
VIII 4,250.00 - 4,749.99 4500 228.00 150.00 378.00
IX 4,750.00 - 5,249.99 5000 253.30 166.70 420.00
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 as Provided 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 penalties Provided 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 penalties Provided 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.

THE
GOVERNMENT SERVICE INSURANCE SYSTEM ACT OF 1997

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 title of this Act shall be: "The Government Service Insurance System Act of 1997."
 "A. DEFINITIONS

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

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

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

"(c) Employer- The national government, its political subdivisions, branches, agencies or instrumentalities,
including government-owned or controlled corporations, and financial institutions with original charters, 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 (P1,000.00) of the average monthly compensation plus one hundred
percent (100%) of the average monthly compensation in excess of One thousand pesos (P1,000.00);

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

"(o) Pensioner- Any person receiving old-age permanent total disability pension or any person who 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

"SEC. 3. Compulsory Membership. - Membership in the GSIS shall be compulsory for all employees
receiving compensation who have not reached the compulsory retirement age, irrespective of 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 protections such
as disability, survivorship, separation, and unemployment benefits.
"SEC. 4. Effect of Separation from the Service. - A member separated from the service shall continue to be
a member, and shall be entitled to whatever benefits he has qualified to in the event of any contingency
compensable under this Act.

"C. SOURCES OF FUNDS

"SEC. 5. Contributions. - (a) It shall be mandatory for the member and 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

-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 employee’s 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.

"SEC. 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 employee’s and employer’s 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 contribution to the GSIS shall take priority over and above the payment
of any and all obligations, except salaries and wages of its employees.

"SEC. 7. Interest on Delayed Remittances. - Agencies which delay the remittance of any and all 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.

"SEC. 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

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

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

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

"(b) The basic monthly pension may be adjusted upon the recommendation of the President and 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.

"SEC. 10. Computation of Service. - (a) The computation of service for the purpose of determining the
amount of benefits payable under this Act shall be from the date of original appointment/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

"SEC. 11. Separation Benefits. - The separation benefits 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 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 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.

"SEC. 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 schedules:

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

"(1) the lump sum payment as defined in this Act payable at the time of retirement plus an old-age 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 of 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.

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

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

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

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

"SEC. 14. Periodic Pension Adjustment. - The monthly pension of all pensioners including all 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

"SEC. 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 thereof.

"SEC. 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 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 of 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
(P12,000.00) 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 his 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.

"SEC. 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 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 both eyes

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

"TEMPORARY DISABILITY BENEFITS

"SEC. 18. Temporary Total Disability Benefits. - (a) A member who suffers temporary total disability 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.

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

"SURVIVORSHIP BENEFITS

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

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

(2) the dependent children’s pension not exceeding fifty percent (50%) of the basic monthly
 pension
.
"SEC. 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 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 (P12,000.00): 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
legitimated children.
"SEC. 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

"SEC. 23. Funeral Benefits. - The amount of the funeral benefits 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

"SEC. 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.

"SEC. 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 dividends allocation formula to be determined by
the GSIS.

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

"E. ADJUDICATION OF CLAIMS AND DISPUTES

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

"SEC. 29. Facility of Payment. - The GSIS shall prescribe rules and regulations to facilitate payment of
benefits, 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.

"SEC. 30. Settlement of Disputes. - The GSIS shall have original and exclusive jurisdiction to settle any
disputes 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, together with all
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.

"SEC. 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.

"SEC. 32. Execution of Decision. - When no appeal is perfected and there is no order to stay by the Board,
by the Court of Appeals or by the Supreme Court, any decision or award of the Board shall be enforced 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.
"SEC. 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 deposition, 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

"SEC. 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, 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.

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

"SEC. 36. Investment of Funds. - The funds of the GSIS which are not needed to meet the current
obligations may be invested under such terms and conditions and rules and regulations as may be
prescribed by the Board: Provided, That investments shall satisfy the 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, there 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 the 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 investible 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 state property and investments
secured by first mortgages on real estate or other collaterals acceptable to the GSIS: Provided,
That such investment shall, in the determination of the Board, redound to the benefit of the GSIS,
its members as well as the general public;

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

(g) in loans to, or in bonds, debentures, promissory notes or other evidence of indebtedness of 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 of
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.

"SEC. 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 disbursement of funds and other financial transactions and operations.

"SEC. 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.

"SEC. 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

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

"SEC. 41. Powers and Functions of the GSIS. - The GSIS shall exercise the following powers 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 the 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 Incentives 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 provisions of Republic Act No. 7699, otherwise known as the Portability Law;

(q) to be able to float proper instrument to liquefy long-term maturity by pooling funds for short-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 board 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 payments 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 provision 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 remittances 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 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.
"SEC. 42. The Board of Trustees; its Composition; Tenure and Compensation. - The corporate powers and
functions of the GSIS shall be vested in and exercised by the Board of Trustees composed of the President
and General Manager of the GSIS and eight (8) 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 (P2,500.00)
for each board meeting actually attended by them, but not to exceed Ten thousand pesos (P10,000.00) a
month and reasonable transportation and representation allowances as may be fixed by the Board.

"SEC. 43. Powers and Functions of the Board of Trustees. - The Board of Trustees shall have the 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 structure and staffing pattern, and to establish, fix, review, revise
and adjust the appropriate compensation packages for the officers and employees of the GSIS and
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 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.

"SEC. 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 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.

"SEC. 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 the existing Civil Service rules and
regulations, and prescribe their duties and qualifications to the end that only competent persons may be
employed.

"SEC. 46. Auditor. - (a) The Chairman of the Commission on Audit shall be the ex officio 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 representatives, 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.

"SEC. 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.
"SEC. 48. Powers of the Insurance Commission. - The Insurance Commissioner or his authorized
representatives shall make an examination of 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 examination, including the
salaries of the examiners and of the actuary of such examination for the actual time spent.

"H. GENERAL PROVISION

"SEC. 49. Dispensation of Social Insurance Benefits. - (a) The GSIS shall pay the retirement benefits to 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 under 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.

"SEC. 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.

"SEC. 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.

"I. PENAL PROVISIONS

"SEC. 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 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 for any purpose other
than 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.

"(k) 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.

"SEC. 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.

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

"SEC. 55. Exclusiveness of Benefits. - Whenever other laws provide similar benefits for the 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.

"SEC. 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."

SEC. 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.

SEC. 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 the existing laws, rules and
regulations vested upon or acquired by an employee who is already in the service as of the effectivity of
this Act shall remain in force and effect: Provided, further, That subsequent to the 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.

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

Approved: May 30, 1997