SOCIAL SECURITY ACT OF 1997

REPUBLIC ACT NO. 8282

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.

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 "Social Security
Act of 1997."

"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 employers 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
employers 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 employers 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 employers
contribution on his account and his obligation to pay contributions arising
from that employment shall cease at the end of the month of separation, but
said employee shall be credited with all contributions paid on his behalf and
entitled to benefits according to the provisions of this Act. He may, however,
continue to pay the total contributions to maintain his right to full benefit.

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

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

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

"(1) The sum of the following:

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

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

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

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

"(3) One thousand pesos (P1,000.00): Provided, That the monthly pension
shall in no case be paid for an aggregate amount of less than sixty (60)
months.
"(b) Notwithstanding the preceding paragraph, the minimum pension shall
be One thousand two hundred pesos (P1,200.00) for members with at least
ten (10) credited years of service and Two thousand four hundred pesos
(P2,400.00) for those with twenty (20) credited years of service.

"SEC. 12-A. Dependents Pension. - Where monthly pension is payable on

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

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

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

"(c) The monthly pension shall be suspended upon the reemployment or

resumption of self-employment of a retired member who is less than sixty-
five (65) years old. He shall again be subject to Section Eighteen and his
employer to Section Nineteen of this Act.

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

"(e) The monthly pension of a member who retires after reaching age sixty
(60) shall be the higher of either: (1) the monthly pension computed at the
earliest time he could have retired had he been separated from employment
or ceased to be self-employed plus all adjustments thereto; or (2) the
monthly pension computed at the time when he actually retires.

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

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

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

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

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

"1. Complete loss of sight of both eyes;

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

"3. Permanent complete paralysis of two limbs;

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

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

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

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

COMPLETE
AND PERMANENT NUMBER OF
LOSS OF USE OF MONTHS

One thumb 10
One index finger 8
One middle finger 6
One ring 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. Employees Contributions. - (a) Beginning as of the last day of the
calendar month when an employees compulsory coverage takes effect and
every month thereafter during his employment, the employer shall deduct
and withhold from such employees monthly salary, wage, compensation or
earnings, the employees 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
CREDIT EMPLOYER EMPLOYEE TOTAL

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

II 1,250.00 - 1,749.99 1500 76.00 50.00 126.00
III 1,750.00 -
2,249.99 2000 101.30 66.70 168.00
IV 2,250.00 - 2,749.99 2500 126.70 83.30 210.00
V 2,750.00 - 3,249.99 3000 152.00 100.00 252.00
VI 3,250.00 -
3,749.99 3500 177.30 116.70 294.00
VII 3,750.00 -
4,249.99 4000 202.70 133.30 336.00
VIII 4,250.00 -
4,749.99 4500 228.00 150.00 378.00
IX 4,750.00 -
5,249.99 5000 253.30 166.70 420.00
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. Employers Contributions. - (a) Beginning as of the last day of the
month when an employees compulsory coverage takes effect and every
month thereafter during his employment, his employer shall pay, with
respect to such covered employee, the employers 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 employers 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
Sheriffs 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 workers
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 employees 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."

SEC. 2. Separability Clause. - If any provision of this Act is declared invalid,

the other provisions not affected thereby shall remain valid.

SEC. 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.

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

Approved: May 01, 1997

(Sgd.) FIDEL V. RAMOS

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

"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 employees and
employers contributions within the first ten (10) days of the calendar month
following the month to which the contributions apply. The remittance by the
employer of the 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; cha n roblesv irt ualawli bra ry

"(2) loss of two (2) limbs at or above the ankle or wrist; cha nro blesvi rtua lawlib rary

"(3) permanent complete paralysis of two (2) limbs; c han roblesv irt ualawli bra ry

"(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 childrens 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; chanroble svi rtualaw lib rary

(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 childrens 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; chan rob lesvi rtua lawlib rary

(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 childrens 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 officers 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; chan roble svirtualawl ibra ry

(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;chan roblesv irtualawli bra ry

(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; chan roble svi rtualaw lib rary

(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;
chan roble svirtualawl ibra ry
 (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; cha nro blesvi rtua lawlib rary

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

markets; cha nrob lesvi rtua lawlib rary

(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; c hanro blesvi rt ualawlib ra ry

(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;cha nrob lesvi rtua lawlib rary

(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; chan rob lesvi rtualaw lib rary

(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; chan roble svirtualawl ibra ry

(c) to invest the funds of the GSIS, directly or indirectly, in accordance

with the provisions of this Act;c hanro blesvi rt ualawlib ra ry

(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; chan roble svirtualawl ibra ry

(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; chanrob lesvi rtualaw lib rary

(f) to have the power of succession; c han roblesv irt ualawli bra ry

(g) to sue and be sued; c hanro blesvi rt ualawlib ra ry

(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; chan rob lesvi rtualaw lib rary

(i) to carry on any other lawful business whatsoever in pursuance of,

or in connection with the provisions of this Act; c hanro blesvi rt ualawlib ra ry
(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; chan roble svirtualawl ibra ry

(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; chan rob lesvi rtua lawlib rary

(l) to invest, own or otherwise participate in equity in any

establishment, firm or entity;
chan roble svirtualawl ibra ry

(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; chan roble svirtualawl ibra ry

(n) to design and adopt an Early Retirement Incentives Plan (ERIP)

and/or financial assistance for the purpose of retirement for its own
personnel; chan roble svirtualawl ibra ry

(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; chan rob lesvi rtualaw lib rary

(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;chanro blesv irt ualawli bra ry

(q) to be able to float proper instrument to liquefy long-term maturity

by pooling funds for short-term secondary market; c han roblesv irt ualawli bra ry
(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; chan roble svirtualawl ibra ry

(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; chan roblesv irtualawl ibra ry

(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; chan roble svi rtualawl ib rary

(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; chan roble svirtualawl ibra ry

(v) to determine, fix and impose interest upon unpaid premiums due
from employers and employees; chanrob lesvi rtua lawlib rary

(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; chan roble svirtualawl ibra ry

(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; chan roble svirtualawl ibra ry

"(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; chan roblesv irtualawli bra ry
 "(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; cha nrob lesvi rtua lawlib rary

"(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; chanro blesv irt ualawli bra ry

"(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; chan roble svi rtualawl ib rary

"(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; chan roble svi rtualaw lib rary

"(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; chan roble svirtualawl ibra ry

"(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 members 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

(Sgd.) FIDEL V. RAMOS

President of the Philippines