SAN BEDA UNIVERSITY

COLLEGE OF LAW
S.Y. 2021-2022

In Partial Fulfillment of the Requirements in

Agrarian Law and Social Legislation

Social Security Act of 2018 (R.A. No. 11199)

Government Service Insurance System Act of 1997 (R.A. No. 8291)

A Group Written Report submitted to:

Atty. Algie Kwillon B. Mariacos

San Beda University
College of Law

Submitted by:

Aban, Mae Joan A.

Bunyi, Christian C.
Cabañero, Giane Valerie U.
Paderon, Joyce Anne D.

Block 2I

June 25, 2022

 TABLE OF CONTENTS

Chapter I Social Security Act of 2018 (R.A. No. 11199)

1. Summary of the Law 3
2. Purpose 3
3. Coverage 3
4. Excluded from SSS Coverage 5
5. Dependents and Beneficiaries 5
6. Benefits 6
7. Requirement for Enjoyment of Benefits 6
8. Transferability of Benefits 9
9. Fees of Agents, Attorneys or Other Persons 9
10. Contributions 9
11. Penalties 10
12. Supreme Court Decisions 11

Chapter II Government Service Insurance System Act of 1997 (R.A. No. 8291)
1. Summary of the Law 16
2. Purpose 16
3. Coverage 17
4. Compulsory Members 17
5. Effectivity of Coverage 18
6. Effect of Separation from Service 18
7. Intended Beneficiaries 18
8. Benefits 18
9. Dividends 24
10. Optional Insurance 24
11. Contributions 24
12. Members 24
13. Penalties 25
14. Supreme Court Decisions 27

Additional Topic

Chapter III Limited Portability Law ( R.A No. 7699)

1. Portability 29
2. Coverage 29
3. Limited Portability Scheme 29
4. Totalization Rule 29
5. Creditable Services 30

2
 Chapter I
Social Security Act of 2018
Republic Act No. 11199

1. SUMMARY OF THE LAW

The SSS began its operations on September 1, 1957, after its creation under Republic Act
No. 1161 (Social Security Act of 1954), which was later amended by RA No. 8282 (Social
Security Act of 1997). After 21 years, the SSS was further strengthened by RA No. 11199, or the
Social Security Act of 2018, which was signed into law in February 2019.
In the pursuit of the State policy to establish, develop, promote and perfect a sound and
viable tax-exempt social security system, the value of “work, save, invest and prosper” is
enshrined in the new law. The SSS is tasked to implement meaningful programs so that all
private sector workers, including those in the informal sector, are covered with the prompt,
convenient, and reliable social protection that they deserve, not just now but also in the future.1

2. PURPOSE
The Social Security Law was enacted under the policy of the State to establish, develop,
and promote a sound and viable tax-exempt social security system suitable to the needs of the
people through the Philippines and provide meaningful protection to members and their
beneficiaries against hazards of disability, sickness, maternity, old age, death and other
contingencies resulting in the loss of income or financial benefits. Towards this end, the State
shall endeavor to extend. social security protection to workers and their beneficiaries.2

3. WHO ARE COVERED BY THE SSS LAW?

3.1 Compulsory3
a. All employers4
b. A private sector employee, whether permanent, temporary, or provisional, who is not
over 60 years old (up to the day of his/her 60th birthday);
c. A household helper or domestic worker not over 60 years of age (up to his/ her 60th
birthday);
d. An employee of foreign government or organization based in the Philippines, which
entered into an administrative agreement with the SSS;
e. A public utility driver and operator;
f. A self-employed person, who is not over 60 years old and has no employer other than
himself/herself, and derives income of at least P1,000 a month, from a trade, business, or
occupation. Self-employed persons may include, but are not limited to, the following:
i. All self-employed professionals;
ii. Partners and single proprietors of businesses;
iii. Actors and actresses, directors, scriptwriters and news correspondents who do not
fall within the definition of the term “employee”;
iv. Professional athletes, coaches, trainers and jockeys; and

1
SSS Membership Primer, August 2019, p. 1
2
R.A. No. 11199, Section 2
3
SSS Membership Primer, August 2019, p. 1-2
4
R.A. No. 11199, Section 9(a)

3
 v. Other self-employed persons as may be determined by the Social Security
Commission (SSC) under rules and regulations it may prescribe.
g. A farmer, fisherman, or a worker in the informal sector (IS)
Note: An IS member being defined as one whose income is irregular or seasonal and who
may be registered as a self-employed member under the SSS AlkanSSSya Program
h. An OFW not over 60 years of age (up his/her 60th birthday), whether land-based or
sea-based

Effective Date of SSS Coverage

a) Employer — on the first day of operation
b) Employee — on the first day of employment5
c) Self-employed — upon his/her registration with the SSS. Registration shall mean
payment of first contribution
d) OFW - on the applicable month and year of the first contribution paid, which may
be earlier than the registration date6
Note: Under the new SSS law, OFWs are now compulsory covered, hence, the
effectivity date takes effect on the first day of his employment (R.A. No. 11199,
Sec. 10)
e) Domestic worker – upon rendering at least 1 month of service7

3.2 Voluntary
a. Non-working 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;8
b. Filipino permanent migrants, including Filipino immigrants, permanent residents and
naturalized citizens of their host countries;9
c. Separated member: A member who is separated from employment or who ceased to be
self-employed, an OFW, or a non- working spouse, but still intends to continue paying
SSS contributions on his/her own account.10

Effective Date of SSS Coverage

a) Non-working spouse — on the applicable month and year of the first payment of
contribution;
b) Separated member — on the month he/she resumed payment of contribution11
c) OFW - on the applicable month and year of the first contribution payment

3.3 Can members withdraw their SSS membership?

No. When a person registers for SSS membership in any capacity, he/she becomes a
member for life. Thus, withdrawal of membership is not possible. Even if there are periods when

5
R.A. No. 11199, Sec. 10
6
SSS Membership Primer, August 2019, p. 7
7
R.A. No. 10361, Sec. 30
8
R.A. No. 11199, Sec 9, par.(b)
9
R.A. No. 11199, Sec 9, par.(g)
10
SSS Membership Primer, August 2019, p. 1-2
11
SSS Membership Primer, August 2019, p. 7

4
the member failed to contribute, he/she may still be eligible for benefits and loan privileges,
provided he/she meets the qualifying conditions.12

4. WHO ARE EXCLUDED FROM THE SSS COVERAGE?

1. Employer - Government and any of its political subdivision, branches or
instrumentalities, including corporations owned and controlled by the Government with
original charters.
2. Workers whose employment or service falls under any of the following
circumstances:
a) Service performed in the employ of foreign governments or international
organizations or their wholly-owned instrumentality;13 and
b) Temporary employees, if excluded by regulation of the Social Security
Commission (SSC).14

5. WHO ARE THE DEPENDENTS AND BENEFICIARIES?

5.1 Dependents
a. The legal spouse entitled by law to receive support from the member;
b. The legitimate, legitimated or legally adopted and illegitimate child who is:
i. Unmarried
ii. Not gainfully employed
iii. Has not reached 21 years of age, or if over 21 years of age, he/she is congenitally
or while still a minor has been permanently incapacitated and incapable of
self-support, physically or mentally.
Note: A child who has entered in a common-law relationship and has not reached the age
of 18 is still a dependent. However, upon reaching the age of 18, the child is no longer qualified
as a dependent. 15
iv. The parent who is receiving regular support from the member.16
5.2 Beneficiaries
Primary Beneficiaries
a. The dependent spouse until he or she remarries;
b. The dependent legitimate, legitimated or legally adopted, and illegitimate children
Note: The dependent illegitimate children shall be entitled to 50% of the share of the
legitimate, legitimated or legally adopted children. However, in the absence of the dependent
legitimate, legitimated children of the member, his/her dependent illegitimate children shall be
entitled to 100% of the benefits.
Secondary Beneficiaries
a. The dependent parent, in the absence of the primary beneficiaries;
b. In the absence of dependent parents, any other person/s designated and reported
by the member to the SSS.17

12
SSS Membership Primer, August 2019, p. 7
13
R.A. No. 11199, Sec 8(j)(3)
14
R.A. No. 11199, Sec 8(j)(4)
15
IRR of RA No. 11199, Rule 12, Sec. 5(ii)(c)
16
R.A. No. 11199, Sec 8(e)
17
R.A. No. 11199, Sec. 8(k)

5
 Note: The person designated by the member shall be someone who has a right to claim
for support from the deceased member under the Family Code of the Philippines, including
dependent children who have reached the age of majority.18

6. WHAT ARE THE BENEFITS UNDER R.A. 11199?

a. Retirement Benefit - it is a cash benefit paid either in monthly pension or as a lump sum
to a member who can no longer work due to old age.19 It is available to members who
have reached the age of 60 years (optional retirement) or 65 years compulsory
retirement).20
b. Death Benefit - a cash benefit granted—either as a monthly pension or a lump sum
amount—to the beneficiaries of a deceased member. 21
c. Disability Benefit - a cash benefit granted—either as a monthly pension or a lump sum
amount—to a member who becomes permanently disabled, either partially or totally.22
d. Funeral Benefit - a cash benefit given to whoever paid for the burial expenses of the
deceased member or pensioner.23
e. Sickness Benefit - a daily cash allowance paid for the number of days a member is
unable to work due to sickness or injury.24
f. Maternity Leave Benefit - a daily cash allowance granted to a female member in every
instance of pregnancy resulting in childbirth, miscarriage or emergency termination of
pregnancy, regardless of frequency, her civil status, employment status or the legitimacy
of her child.25
g. Unemployment Insurance or Involuntary Separation Benefits - a cash benefit granted
to eligible employees – including house helpers and OFWs – who were involuntarily
separated from employment. 26 A covered employee who is involuntarily unemployed can
only claim unemployment benefits once every three (3) years starting from the date of the
involuntary separation or unemployment.27

7. WHAT ARE THE REQUIREMENTS FOR THE ENJOYMENT OF THE

BENEFITS?

Retirement Benefit
1. The member must have at least 120 monthly contributions prior to the semester of
retirement; and:
2. Has reached 60 years old and is separated from employment or has ceased to be
self-employed, except:
a. In the case of an underground mine worker [R.A. No. 8558], at least 55 years old
effective 13 March 1998; and

18
Agrarian Law and Social Legislation, Paulino Ungos Jr, Paulino Ungos III., 2021 ed. p.482
19
IRR of R.A. No. 11199, Rule 21, Sec. 1
20
Agrarian Law and Social Legislation, Paulino Ungos Jr, Paulino Ungos III., 2021 ed. p.488
21
SSS Membership Primer, August 2019, p.8
22
Ibid.
23
Ibid.
24
SSS Membership Primer, August 2019, p.7
25
Ibid.
26
SSS Membership Primer, August 2019, p.8
27
IRR of R.A. No. 11199, Rule 27, Sec. 3

6
 b. In the case of an underground or a surface mineworker [R.A. No. 10757], at least
55 years old effective 27 April 2016 28
3. Is at least 65 years old, except:
a. In the case of an underground mine worker [R.A. No. 8558] or a surface
mineworker [R.A. No. 10757], at least 60 years old,
b. In the case of a racehorse jockey [R.A. No. 10789], at least 55 years old effective
4 May 2016.29

Death Benefit
The member must have at least 36 monthly contributions prior to the semester of death
for the primary beneficiaries to be entitled to a monthly pension. If the member has no primary
beneficiaries, the secondary beneficiaries shall be entitled to a lump sum benefit equivalent to 36
times the monthly pension.30 A lump sum amount is also granted to designated beneficiary/ies
and legal heirs in the absence of both the primary and secondary beneficiaries.
If the required monthly contributions were not met, the member’s 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 12 times the monthly pension, whichever is
higher.31

Permanent Disability Benefit

The member must have at least 36 monthly contributions prior to the semester of the
disability. If the disability is a permanent partial disability, the monthly pension is given in lump
sum if it is payable for less than 12 months.

Funeral Benefit
The funeral benefit may be paid either in cash or in kind, depending on the date of
contingency and may be adjusted by the Commission:
1. PHP 12,000.00, effective May 24, 1997;
2. PHP 15,000.00, effective September 1, 1998;
3. PHP 20,000.00, effective September 1, 2000; or
4. A variable amount ranging from PHP 20,000.00 to PHP 40,000.00, depending on the
member's number of contributions and AMSC, effective August 1, 2015. 32

Sickness Benefit
1. The member must have paid at least three (3) monthly contributions within the
twelve-month (12) period immediately before the semester of sickness or injury;
2. The member must have been confined for at least four (4) days either in hospital or
elsewhere;
3. The employed member must have notified the employer, or the SSS, if he/she is
unemployed, self-employed, or voluntary member, of the sickness or injury;

28
IRR of R.A. No. 11199, Rule 21, Sec. 2
29
Ibid.
30
R.A. No. 11199, Sec. 13
31
Ibid.
32
IRR of R.A. No. 11199, Rule 24, Sec. 2

7
 4. The member must have used up all current company sick leave with pay for the current
year, if he/she is employed, except the sea-based OFWs.

Maternity Leave Benefit

The female member must have paid at least 3 monthly contributions in the twelve-month
(12) period immediately preceding the semester of her childbirth, miscarriage or emergency
termination of pregnancy to be entitled to the daily maternity benefit equivalent which shall be
computed based on her average monthly salary credit for 105 days, regardless of whether she
gave birth via caesarian section or natural delivery, subject to the following conditions:
a. That the female worker 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. That 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 under Republic Act No. 1161, as amended, for the same period for
which daily maternity benefits have been received;
d. That the SSS shall immediately reimburse the employer of one hundred percent (100%)
of amount of maternity benefits advanced to the female worker by the employer upon
receipt of satisfactory and legal proof of such payment; and
e. That if a female worker should give birth or suffer a miscarriage or emergency
termination of pregnancy without the require d 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 female member would otherwise have been entitled
to.33

Unemployment Insurance or Involuntary Separation Benefits

1. The member must not be over 60 years old at the time of involuntary separation, except;
a. In the case of underground mine workers or surface mine workers [R.A. No.
10757], not over 50 years old; or
b. In the case of racehorse jockey [R.A. No. 10789], not over 55 years old.
2. The member must have paid at least 36 monthly contributions, 12 months of which
should be in the 18 month period immediately preceding the unemployment or
involuntary separation;
3. The member must have been involuntary separated from employment provided that it did
not arise from the employee’s own fault or negligence and which may be attributed to any
of, but not limited to the following:
a. Installation of labor-saving devices;
b. Redundancy;
c. Retrenchment to prevent loss;
d. Closure or cessation of operation; or
e. Disease/illness.

8. ARE THE BENEFITS UNDER RA NO. 11199 TRANSFERABLE?

33
R.A. No. 11210

8
 The benefits payable under R.A. 11199 are not transferable and a power of attorney or
other documents executed in favor of any agent, attorney or any other person for the collection
thereof on their behalf is not allowed. The only exception is when the payee is physically unable
to collect the benefits personally.34

9. ARE THE FEES OF AGENTS, ATTORNEYS, OR OTHER PERSONS

ALLOWED?
Demanding or charging any fee for the services provided by the agents, attorneys, or
other persons in the preparation or filing of any claim for benefit under the Social Security Act of
2018 is prohibited. Any stipulation to the contrary is null and void. The retention or deduction of
the amount from any benefit for the payment of the fees is also prohibited.35

9.1 When can we allow Attorney’s Fees?

An attorney who appears as counsel in any case heard by the Commission is entitled to
attorney’s fees not exceeding 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.36

10. HOW ARE THE CONTRIBUTIONS MADE?

Employee’s Contributions
The employee’s monthly salary, wage, compensation or earnings shall be deducted on the
last day of the calendar month when an employee’s compulsory coverage takes effect and every
month thereafter during his/her employment. The deduction shall correspond to the employee’s
salary, wage, compensation or earnings. The monthly salary credits, the schedule and the rate of
contributions shall also apply to self-employed, voluntary, and other members.37 The employer
shall either issue a receipt for the contributions deducted or indicate it in the employee’s pay slips
or envelopes.38

Employer’s Contributions
Beginning on the last day of the month when an employee’s compulsory coverage takes
effect and every month thereafter during his employment, his employer shall pay, with respect to
such covered employee, the employer’s contribution in accordance with the schedule provided in
R.A. 11199.39 The employer is not permitted to deduct, directly or indirectly, from the
employee’s compensation or recover from them the contributions made by the employers.

Self-Employed Member’s Contributions

The contributions made by the self-employed member shall be determined in accordance
with the schedule provided by R.A. 11199, provided that the declared monthly earning at the
time of his/her registration shall be considered as the monthly salary credit (MSC), unless the
self-employed member makes another declaration of the monthly earnings, in which case the

34
R.A. No. 11199, Sec. 14-A, Sec. 15
35
R.A. No. 11199, Sec. 17
36
Ibid.
37
R.A. No. 11199, Sec. 18
38
IRR of R.A. No. 11199, Rule 31, Sec. 3
39
R.A. No. 11199, Sec. 19

9
latest declaration becomes the new basis of the MSC. The contributions of those who earn PHP
1,000.00 monthly or below may be reduced.

Government Contribution
The Congress shall annually appropriate out of any funds in the National Treasury not
otherwise appropriated, the sums to meet the estimated expenses of the SSS for each ensuing
year as contribution of the government to the operation of the SSS and 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.40 The SSS shall request the
Government for the appropriation of funds.

10.1 What is the method of collection and payment under R.A. 11199?
The SSS shall require a complete and proper collection and payment of contributions and
proper identification of the employer and the employee. The payment may be made in cash,
checks, stamps, coupons, tickets or other reasonable devices that the Commission may accept
and adopt subject to the guidelines it may issue.

11. WHAT ARE THE PENALTIES FOR THE VIOLATIONS OF THE PROVISIONS
OF R.A. 11199?
a. On False Statement, Representation, Affidavit, or Document: Penalties provided for
in Article 172 of the Revised Penal Code (Section 28 [a], R.A. 11199)
b. To Obtain or Receive Any Money or Check: Fine of not less than PHP 5,000.00 nor
more than PHP 20,000.00 and imprisonment for not less than six (6) years and one (1)
day nor more than 12 years.
c. To Buy, Sell, Offer for Sale, Uses, etc., Any Stamp, Coupon, Ticket, etc.: Fine of not
less than PHP 5,000.00 nor more than PHP 20,000.00 and/or imprisonment for not less
than six (6) years and one (1) day nor more than 12 years, at the discretion of the Court.
d. To Defraud, etc., Any Stamp, etc.: Fine of not less than PHP 5,000.00 nor more than
PHP 20,000.00 and/or imprisonment for not less than six (6) years and one (1) day nor
more than 12 years, at the discretion of the Court.
e. To Fail or Refuse to Comply with the Provisions of the Social Security Act of 2018
and its IRR: Fine of not less than PHP 5,000.00 nor more than PHP 20,000.00 and/or
imprisonment for not less than six (6) years and one (1) day nor more than 12 years, at
the discretion of the Court.
f. To Fail or Refuse to Register Employees or Self-Employed Individuals: Fine of not
less than PHP 5,000.00 nor more than PHP 20,000.00 and imprisonment for not less than
six (6) years and one (1) day nor more than 12 years
g. To Fail or Refuse to Deduct and Remit Contributions: Fine of not less than PHP
5,000.00 nor more than PHP 20,000.00 and imprisonment for not less than six (6) years
and one (1) day nor more than 12 years
h. Liability When Committed by Association, Partnership, Corporation or Any
Institution: Liable for the penalties provided in the Social Security Act of 2018 for the
offense
i. In the case of sea-based OFWs, the person/s having direct control,
management, or direction of the manning agencies, who are considered
40
R.A. No. 11199, Sec. 20

10
 employers of sea-based OFWs: Liable for any act or omission penalized under
the Social Security Act of 2018 (Section 28 [f]) in relation to Section 9 (b)
i. Misappropriation of Funds: Penalty provided for Malversation of Public Funds or
Property under Article 217 of the Revised Penal Code
j. Failure to Remit Declarations to the SSS within 30 Days: Penalty provided for
Swindling or Estafa under Article 315 of the Revised Penal Code.
k. Demanding or Charging Fees: Fine of not less than PHP 500.00 nor more than PHP
5,000.00 and/or imprisonment for not less than six (6) months nor more than one (1) year,
at the discretion of the Court (Section 17).

12. SUPREME COURT DECISIONS

CMS Estate, Inc. v. Social Security System
GR. No. L-26298, September 28, 1984

Facts: CMS Estate, Inc. is engaged in the real estate business. It started doing business
with only six (6) employees on December 1, 1952. Its Articles of Incorporation was amended on
June 4, 1956 in order to also engage in the logging business. The certificate of the Company’s
amended articles was issued by the Securities and Exchange Commission on June 18, 1956.
On January 28, 1957, petitioner entered into a contract of management with one Eufracio
D. Rojas for the operation and exploitation of the forest concession The logging operation
actually started on April 1, 1957 with four monthly salaried employees. As of September 1,
1957, petitioner had 89 employees and laborers in the logging operation.
On August 1, 1958, petitioner became a member of the Social Security System with
respect to its real estate business. On September 6, 1958, petitioner remitted to the System the
sum of P203.13 representing the initial premium on the monthly salaries of the employees in its
logging business. However, on October 9, 1958, petitioner demanded the refund of the said
amount, claiming that it is not yet subject to compulsory coverage with respect to its logging
business.

Ruling: Because of the broad social purpose of the Social Security Act, all doubts in
construing the Act should favor coverage rather than exemption.
Prior to its amendment, Sec. 9 of the RA1161 provides that before an employer could be
compelled to become a member of the System, he must have been in operation for at least two
years and has, at the time of admission, at least six employees. It should be pointed out that it is
the employer, either natural, or judicial person, who is subject to compulsory coverage and not
the business. If the intention of the legislature was to consider every venture of the employer as
the basis of a separate coverage, an express provision to that effect could have been made.
Unfortunately, however, none of that sort appeared provided for in the said law.
Section 10 (formerly Sec. 9 of RA 1161), as amended by RA 2658 provides: 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 date of his employment. Applying the
provision of Sec. 10 of the RA 2658, petitioner is subject to compulsory coverage as of
December 1, 1952 with respect to the real estate business and as of April 1, 1957 with respect to
its logging operation.

United Christian Missionary Society v. Social Security Commission

11
 GR. Nos. L-26712-16, December 27, 1969
​Facts: Petitioners filed with the respondent Commission a petition praying for
condonation of assessed penalties against them for delayed social security premium remittances
in the aggregate amount of P69,446.42 for the period from September, 1958 to September, 1963.
In support of their request for condonation, petitioners alleged that they had labored
under the impression that as international organizations, they were not subject to coverage under
the Philippine Social Security System, but upon advice by certain Social Security System
officials, they paid to the System in October, 1963, the total amount of P81,341.80, representing
their back premiums for the period from September, 1958 to September, 1963. They further
claimed that the penalties assessed against them appear to be inequitable, citing several
resolutions of the respondent Commission which in the past allegedly permitted condonation of
such penalties.
However, the respondent System dismissed the petition the ground that "the Social
Security Commission has no power or authority to condone penalties for late premium
remittance, holding that in the absence of an express provision in the Social Security Act vesting
in the Commission the power to condone penalties, it cannot legally do so. Hence, the petition.

Ruling: The Court finds no error in the Commission's action. Remittance of contribution
to the SSS under Section 22(a) of the Social Security Act is mandatory. The Court explicitly
explains that no discretion or alternative is granted to the respondent Commission in the
enforcement of the law's mandate that the employer who fails to comply with his legal obligation
to remit the premiums to the System within the prescribed period shall pay a penalty of three 3%
per month. The prescribed penalty is evidently of a punitive character, provided by the
legislature to assure that employers do not take lightly the State's exercise of the police power in
the implementation of the Republic's declared policy "to develop, establish gradually and perfect
a social security system which shall be suitable to the needs of the people throughout the
Philippines and (to) provide protection to employers against the hazards of disability, sickness,
old age and death. In this concept, good faith or bad faith is rendered irrelevant, since the law
makes no distinction between an employer who professes good reasons for delaying the
remittance of premiums and another who deliberately disregards the legal duty imposed upon
him to make such remittance. From the moment the remittance of premiums due is delayed, the
penalty immediately attaches to the delayed premium payments by force of law.
On the petitioner’s contention that the respondent Commission had granted condonation
of penalties on delayed premium payments, the Court held that the past instances of alleged
condonation granted by the Commission are not, however, before the Court, and the unilateral
conclusion asserted by petitioners that the Commission had granted such condonations would be
of no avail, without a review of the pertinent records of said cases. That the Commission, in its
appealed Order of September 22, 1966 makes of record that since its Resolution No. 536, series
of 1964, which it reiterated in another resolution dated August 18, 1966, it had definitely taken
the legal stand, pursuant to the recommendation of its Committee on Legal Matters and
Legislation, that in the absence of an express provision in the Social Security Act vesting in the
Commission the power to condone penalties, it "has no power to condone, waive or relinquish
the penalties for late premium remittances which may be imposed under the Social Security Act.
No grave abuse of discretion was committed, therefore, by the Commission in issuing its Order
dismissing the petition for condonation of penalties for late payment of premium.

12
 Philippine American Life Insurance Co. v. Social Security Commission
GR. No. L-20383, May 24, 1967
Facts: The Social Security System issued, with the approval of the Chairman of the
Social Security Commission, Circular No. 34 requiring all insurance firms to submit immediately
the names of their agents, solicitors or underwriters, who, pursuant to the Social Security Act, are
employees of said firms, subject to compulsory coverage of the System, and to pay the
corresponding premiums, based on the actual commissions received by each agent during each
month. Sometime later, the System sent to the Philippine American Life Insurance Company
communication enclosing therewith SSS Form R-1-A.1, advising plaintiff that, pursuant to said
Circular No. 34, the insurance agents thereof are considered its employees, subject to
compulsory coverage under said Act, and urging plaintiff to accomplish said SSS Form and to
submit the same, within ten (10) days, to avoid the penalties provided for by law.Instead of
complying, plaintiff objected to the aforementioned compulsory coverage upon the ground that
plaintiff’s insurance agents, solicitors or underwriters are not its employees.

After appropriate proceedings, the lower court rendered the decision to restrain the
System from compelling plaintiff to remit contributions to the administrative branch of the
System, as an incident of the alleged inclusion of plaintiff's agents, solicitors or underwriters in
the compulsory coverage of the System. The System maintains that decisions of the Commission
may not be reviewed by courts of first instance, not only because the two have the same rank,
but, also, because said decisions are, pursuant to the Acts reviewable by the Court of Appeals on
questions of law and fact, or by the Supreme Court, on questions purely of law.

Ruling: The Court ruled that the quasi-judicial nature of the functions of the Commission
is emphasized by its authority, expressly granted by said Section 5 (a), to promulgate rules and
regulations governing "the filing, determination and settlement of claims." Hence, the lower
court had no jurisdiction to issue the writ of prohibition prayed for.

Besides, the Commission performs administrative, as well as quasi-judicial, functions.

Although it can sue and be sued in courts of first instance, either as regards its administrative
functions, or in the enforcement and protection of its private rights, the rule is otherwise when
the act complained of forms part of its quasi-judicial functions. For this reason, Section 5 (c) of
said Act, explicitly provides, in connection with "decisions" of the Commission, or the
determinations thereof in the exercise of said functions, that the same "may be reviewed both
upon the law and the facts by the Court of Appeals," or, "if the decision of the Commission
involves only questions of law, . . . by the Supreme Court."

Social Security System v. Davac

GR. No. L-21642, July 30, 1966

Facts: The late Petronilo Davac, a former employee of Lianga Bay Logging Co., Inc.
became a member of the Social Security System on September 1, 1957. As such member, he
designated respondent Candelaria Davac as his beneficiary and indicated his relationship to her
as that of "wife". He died on April 5, 1959 and, thereupon, each of the respondents filed their
claims for death benefit with the SSS. It appears from their respective claims and the documents
submitted in support thereof, that the deceased contracted two marriages, the first, with claimant

13
Lourdes Tuplano on August 29, 1946, who bore him a child, Romeo Davac, and the second, with
Candelaria Davac on January 18, 1949, with whom he had a minor daughter Elizabeth Davac.
Due to their conflicting claims, the processing thereof was held in abeyance, whereupon the SSS
filed this petition praying that respondents be required to interpose and litigate between
themselves their conflicting claims over the death benefits in question. The Social Security
Commission declared respondent Candelaria Davac as the person entitled to receive the death
benefits payable for the death of Petronilo Davac.

Ruling: Without deciding whether the naming of a beneficiary of the benefits accruing
from membership in the Social Security System is a donation, or that it creates a situation
analogous to the relation of an insured and the beneficiary under a life insurance policy, it is
enough, for the purpose of the instant case, to state that the disqualification mentioned in Article
739 “The following donations shall be void: (1) Those made between persons who were guilty of
adultery or concubinage at the time of the donation” is not applicable to Candelaria Davac
because she was not guilty of concubinage, there being no proof that she had knowledge of the
previous marriage of her husband Petronilo.
Regarding the second point raised by appellant, the benefits accruing from membership
in the Social Security System do not form part of the properties of the conjugal partnership of the
covered member. They are disbursed from a public special fund created by Congress in
pursuance to the declared policy of the Republic "to develop, establish gradually and perfect a
social security system which shall provide protection against the hazards of disability, sickness,
old age and death." In short, if there is a named beneficiary and the designation is not invalid, as
it is not so in this case, it is not the heirs of the employee who are entitled to receive the benefits,
unless they are the designated beneficiaries themselves. It is only when there are no designated
beneficiaries or when the designation is void, that the laws of succession are applicable.

Poblete Construction Co. v. Social Security Commission

GR. No. L-17605, January 22, 1964

Facts: Judith Asiain sought to recover from respondent the death benefits she would have
been entitled to receive from the Social Security System had Poblete Construction Co., employer
of her deceased husband, had reported him to the System for coverage prior to his death, as
required by law. Petitioner argued that the Social Security Commission (the Commission) had no
jurisdiction over the case, as respondent’s husband was not covered by the System, and that the
subject matter of which should have been submitted in an ordinary civil action before the regular
courts.

Ruling: The case is under the jurisdiction of the Commission. In taking cognizance of the
petition filed by Judith Asiain, the Social Security Commission was exercising its quasi-judicial
powers granted by Section 5 (a) of Republic Act No. 1161, as amended.
It must be observed that in accordance with the provisions of Section 5, paragraphs (a)
and (c) of Republic Act No. 1161, as amended, the decisions of said Commission are reviewable
both upon law and facts by the Court of Appeals, and that if the appeal from its decision is only
on questions of law, the review shall be made by the Supreme Court. It is clear from these
provisions that the Commission, in exercising its quasi-judicial powers, ranks with the Public
Service Commission and the Courts of First Instance.

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 Franklin Baker Company of the Philippines v. Social Security System
GR. No. L-17361, April 29, 1963

Facts: Franklin Baker Company of the Philippines was engaged in the manufacture of
desiccated coconut. One of its employees was the deceased Tomas Zamora. They were
compulsory members of the Social Security System (SSS). The petitioner temporarily ceased its
operations from December 22, 1957 to February 18, 1958 due to the annual overhauling of its
machinery and also to lack of production orders. Zamora had no actual services during that time
and he went on sick leave w/o pay from March 9, 1958, up to the day of his death, June 13, 1958.
A death claim application was received by the SSS from petitioners for and on behalf of
Zamora’s designated beneficiaries. It was found out that he had no premium remittances for the
months of February, March and June, 1958. Because of the unpaid premiums, the employee was
also charged and Zamora’s share of the unpaid premiums was subsequently deducted from the
death benefits awarded to his beneficiaries.

Ruling: The payment of contributions by an employer is compulsory during its coverage

and it is determined solely by the existence of an employer-employee relationship. Even if the
employee is on leave without pay, he is still an employee as the contract of employment still
exists, hence the employee is still entitled to the benefits of the SSS when he returns. The
employer, on the one hand, is also still liable to pay his contributions on account of its employee
who is on leave without pay.
Moreover, if the employee does not earn any compensation for a particular month, the
basis for his premium contributions shall be the salary for the month immediately preceding the
wageless month or, in case of a variable wage earner, then, it shall be his daily rate of
compensation multiplied by the number of days in which he would have worked for that
wageless month. The provision of the Social Security Act should be liberally construed in favor
of those seeking its benefits.

Tecson v. Social Security System

GR. No. L-15798, December 28, 1961

Facts: The late Lim Hoc, a former employee of the Yuyitung Publishing Company, was,
at the time of his death on November 3, 1957, a member of the System, having qualified as such
on September 1, 1957. In the SSS-Form E-1 accomplished and filed by him with the System, he
gave his civil status as married, but made no mention of the members of his family or other
relatives. Instead, he designated the petitioner Jose P. Tecson, reportedly a friend and co-worker
of his, as his beneficiary. After the death of Lim Hoc, petitioner, in his capacity as the designated
beneficiary, filed with the System a claim for death benefits.

Ruling: Jose P. Tecson designation as a beneficiary is proper. The commission in its rules
and regulations states that “ In the absence of any of the foregoing relatives, any other person
designated by the employee. (Rule 7, [3], of the Rules and Regulations of the Social Security
System).” In this case Lim Hoc made no mention of his wife nor his family but instead wrote the
name of Jose P. Tecson as his beneficiary.

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 In re Catholic Archbishop of Manila v. Social Security Commission
GR. No. L-15045, January 20, 1961

Facts: The Roman Catholic Archbishop of Manila filed with the Social Security
Commission a request to exempt the "Catholic Charities, and all religious and charitable
institutions and/or organizations, which are directly or indirectly, wholly or partially, operated by
the Roman Catholic Archbishop of Manila from the compulsory coverage of RA 1161, as
amended, otherwise known as the Social Security Law of 1954. It contended that the RA 1161,
as amended, was a labor law and did not cover religious and charitable institutions but was
limited to businesses and activities organized for profit.

Ruling: The Social Security Law was enacted pursuant to the "policy of the Republic of
the Philippines to develop, establish gradually and perfect a social security system which shall be
suitable to the needs of the people throughout the Philippines and shall provide protection to
employees against the hazards of disability, sickness, old age and death." (Republic Act No.
1161, as amended). Such enactment is a legitimate exercise of the police power. It affords
protection to labor, especially to working women and minors, and is in full accord with the
constitutional provisions on the "promotion of social justice to insure the well-being and
economic security of all the people." Being in fact a social legislation, compatible with the policy
of the Church to ameliorate living conditions of the working class, appellant cannot arbitrarily
delimit the extent of its provisions to relations between capital and labor in industry and
agriculture.
Neither may it be validly argued that the enforcement of the Social Security Law impairs
appellant's right to disseminate religious information. All that is required of appellant is to make
monthly contributions to the System for covered employees in its employ. These contributions
are not in the nature of taxes on employment. They are intended for the protection of said
employees against the hazards of disability, sickness, old age and death in line with the
constitutional mandate to promote social justice to insure the well-being and economic security
of all the people.

Chapter II
Government Service Insurance System Act of 1997 (R.A. No. 8291)

1. SUMMARY OF THE LAW

Government Service Insurance System Act of 1997 (R.A. No. 8291) amended
Presidential Decree 1146. The law expanded and increased the coverage and benefits of the
Government Service Insurance System, Instituting Reforms therein and for other purposes. The
law provides for the membership, benefits, adjudication of claims and disputes, sources and uses
of funds of the GSIS, and the reports needed to ensure that these funds are appropriately used,
administration of the GSIS and the penalties which may be imposed for violations of this law.
It was approved on May 30, 1997 and it took effect 15 days after its publication in the
Official Gazette or in at least two newspapers of general circulation.

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2. PURPOSE
Under PD 1146, the law was enacted:
1. Because it is necessary to preserve at all times the actuarial solvency of the funds
administered by the GSIS;
2. Because it is necessary to guarantee to the government employee all the benefits due
him and to expand and increase the benefits made available to him and his dependents
to the extent permitted by available resources;
3. There is a need that the social security and insurance benefits of government
employees must be continuously re-examined and improved to assure comprehensive
and integrated social security and insurance programs that will provide benefits
responsive to their needs and those of their dependents in the event of sickness, disability,
death, retirement, and other contingencies; and to serve as a filing reward for dedicated
public service;
4. To expand and improve the social security and insurance programs administered by
the Government Service Insurance System, specifically, among others, by increasing
pension benefits, expanding disability benefits, introducing survivorship benefits,
introducing sickness income benefits, and eventually extending the compulsory coverage
of these programs to all government employees regardless of employment status.

3. WHAT IS THE COVERAGE OF R.A. 8291?

The GSIS covers government employees, irrespective of their status, who are employed
with the:
1. National Government - its political subdivisions, branches, agencies of instrumentalities
2. Government-owned or controlled corporations;
3. Government financial institutions with original charters
- ‘with original charter,’ in effect held that government-owned and controlled
corporations with original charter refer to corporations chartered by special law as
distinguished from corporations organized under our general incorporation statute
— the Corporation Code.
4. Constitutional Commissions; and
5. Judiciary

4. WHO ARE REQUIRED TO BE COMPULSORY MEMBERS OF THE GSIS?

1. All government personnel,
a. whether elective or appointive,
b. who are receiving fixed monthly compensation, and
c. who have not reached the mandatory retirement of 65 years
2. Elective officials who will be more than 65 years old at the end of his term
3. Officials appointed by the President
4. Contractual or casual employees who receive fixed monthly compensation and render the
required number of working hours for the month
4.1 Who are those NOT required to be compulsory members of the GSIS?
1. Uniformed personnel of Armed forces of the Philippines, Philippine National
Police, Bureau of Fire and Protection, Bureau of Jail Management and Penology;
2. Barangay and Sanggunian Officials not receiving fixed monthly compensation;
3. Contractual employees who are not receiving fixed monthly compensation;

17
 4. Employees who are not receiving fixed monthly compensation and do not have
monthly regular working hours

5. WHEN IS MEMBERSHIP WITH THE GSIS EFFECTIVE?

It takes effect on the date of assumption to office by virtue of the original appointment or
election.

6. WHAT IS THE EFFECT OF SEPARATION FROM THE SERVICE?

The member continues to be a member, and therefore entitled to whatever benefits he has
qualified to in the event of any compensable contingency.

7. WHO ARE THE INTENDED BENEFICIARIES OF THE LAW?

a. Primary beneficiaries- The legal dependent spouse until he/she remarries and the
dependent children;
b. Secondary beneficiaries- The dependent parents and, subject to the restrictions on
dependent children, the legitimate descendants;
7.1 The word “dependent” was used in defining the beneficiaries.
Who is a dependent?
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;

8. WHAT ARE THE BENEFITS UNDER R.A. 8291?

a. Separation Benefits
i. Separation Benefits
ii. Unemployment or involuntary separation benefits
b. Retirement Benefits
c. Permanent Disability benefits
i. Permanent total disability benefits
ii. Permanent partial disability benefits
d. Temporary Disability Benefits
e. Survivorship Benefits
f. Funeral Benefits
g. Sickness Benefits
h. Death Benefits
i. Life Insurance Benefits

8.1 Separation Benefits

● Separation Benefits
a. What is the amount of benefits?
Members with at least 3 years but less than 15 years service:
Cash Payment = (Average Monthly Compensation x 100%)
x Years in Service with paid contributions

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 Members with at least 15 years in service and below 60 years old at the
time of separation:
*Cash payment (Basic Monthly Pension x 18) and
**Old Age Pension = Basic Monthly Pension

*payable at the time of resignation or separation

**payable every month, for life, upon reaching the age of
60 years

b. What is the condition for entitlement?

This is available to members who resign or are separated from service
● Unemployment or Involuntary Separation Benefits
a. What is the amount of benefits?
Cash Payment = (Average Monthly Compensation x 50%)
b. What is the duration of payment?
Members who have made contributions for:
1 year but less than 3 years 2 months
3 years but less than 6 years 3 months
6 years but less than 9 years 4 months
9 years but less than 11 years 5 months
11 years but less than 15 years 6 months
c. What is/ are the conditions for entitlement?
1. Must be permanent employee at the time of separation
2. The separation was due to the abolition of his office
3. He has paid the premium contributions for at least 1 year prior to
separation

8.2 Retirement Benefits

a. What is the amount of benefits?
i. Option 1:
Cash Payment = Basic Monthly Pension x 18, and
Monthly Pension for life
ii. Option 2:
Lump Sum = Basic Monthly Pension x 60 months, and
After lapse of 5 years, Basic Monthly Pension
b. What is/ are the conditions for entitlement?
i. Members who have reached at least the age of 60 years
ii. Have rendered at least 15 years of service; and
iii. Are not receiving a monthly pension benefit from permanent total disability

8.3 Permanent Disability Benefits

● Permanent Total Disability
a. What is the amount of benefits?
i. Disability suffered while in service by a member who has paid at least 180
monthly contributions:

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 Cash payment = Basic Monthly Pension x 18, and
Lifetime Basic Monthly Pension
ii. Disability suffered after separation from service by a member who has
paid 180 monthly contributions or 36 monthly contributions within the
5-year period immediately preceding his disability:
Lifetime Basic Monthly Pension
iii. Disability suffered after separation from service by a member who has
paid at least 3 years of service but has not paid the required minimum
contributions:
Cash Payment = Average Monthly Compensation x 100% x No. of
years in service
b. What is/ are the conditions for entitlement?
i. Members who suffer:
1. Complete loss of sight for both eyes
2. Loss of two limbs at or above ankle or wrists
3. Permanent complete paralysis of two limbs
4. Brain injury resulting in incurable imbecility or insanity
5. And such other cases as may be determined and approved by the
GSIS
c. What are the reasons for suspension of Permanent Total Disability Benefit?
1. When he is reemployed
2. Recovers from disability
3. Fails to present himself for medical examination when required by GSIS
● Permanent Partial Disability
a. What is the amount of benefits?
Cash Payment in accordance with the schedule of disabilities prescribed
by the GSIS
b. What are the conditions for entitlement?
i. Members who get incapacitated to work for a limited period because of
complete or permanent loss of any of a body part:
Any finger, any toe, one arm, one hand, one leg, one foot, one or both ears
hearing of one or both ears, sight of one eye, such cases as may be
determined by GSIS
ii. Be in the service at the time of disability or
iii. if already separated from service:
iv. Has paid at least 36 contributions within 5 year period immediately
preceding his disability, or
v. Has paid a total of at least 180 months contributions prior to the disability

8.4 Temporary Total Disability Benefits

a. What is the amount of benefits?

75% of the current daily compensation for each day of disability for a period not
exceeding 120 days in one calendar year
Note:

20
 If the disability requires more extensive treatment beyond 120 days, the
temporary total disability benefit may be extended by GSIS for a period not exceeding
240 days
b. What are the conditions for entitlement?
● Must be in the service at the time of his disability;
● If separated, must have rendered at least 3 years of service and paid at least 6
monthly contributions in the 12-month period immediately preceding his
disability; and
● Must have exhausted all sick leave credits

8.5 Funeral Benefits

The prevailing amount approved by the Board of Trustees at the time of death of the
member or pensioner is currently fixed at Php 30,000.00. For uniformed members of the PNP,
BJMP and BFP, the amount of funeral benefit is fixed at P10,000.00.
a. What are the conditions for entitlement?
i. An active member
ii. A member who has been separated from the service, but who may be entitled to
future benefit
iii. A pensioner
iv. A retiree who at the time of his retirement was of pensionable age under this Act
but who opted to retire under a different law.

8.6 Sickness Benefits

The amount of benefits is 75% of the current daily compensation for everyday or fraction
thereof of disability. The limitation is a maximum of 120 days per one calendar year. Sickness
confinement is 240 days for 2 consecutive years. To be entitled to the benefit, the member must
have at least 6 monthly contributions in the 12-month period immediately prior to disability.
a. Requirements for Eligibility:
i. In service at the time of disability;
ii. If separated, he has rendered at least 3 years of service;
iii. All sick leave credits including CBA sick leaves for the current year has been
used up.

8.7 Death Benefits

a. What are the benefits?
i. Survivorship pension, but only after the 5-year guaranteed period.
ii. If the deceased member opted for the 5- year lump sum benefit – 60 monthly
pensions
iii. If the member opted for immediate pension – 18 monthly basic pension, up to the
death of the retiree
iv. In case the deceased member failed to indicate in his retirement option, it shall be
computed as if he opted for immediate pension.
b. What are the conditions for entitlement?
i. Primary beneficiaries are entitled to only one of the following:
Survivorship pension
a. If he was in the service when he died; or

21
 b. Even if separated from the service, he has at least 3 years of service and
has paid 36 monthly contributions within the 5 years immediately
preceding death; or
c. Even if separated from the service, he has paid 180 monthly contributions
prior to death.

Survivorship pension plus cash payment of 100% average monthly compensation

for every year of service. (essentially pension plus total contributions made)
a. If he was in the service when he died; and
b. With 3 years of service

Cash payment equivalent to 100% average monthly compensation for each year
of service he paid contributions or12,000, whichever is higher
a. With 3 years of service; and
b. He has failed to qualify in the prior 2 schemes.

8.8 Compulsory Life Insurance

All employees are covered except for members of the AFP and PNP. It shall
automatically take effect as follows:
a. For those employed after the effectivity of this act - on the date of their employment;
b. For those whose insurance will mature after the effectivity of this Act - shall be deemed
renewed on the day following the maturity or expiry date of their insurance;
c. For those without any life insurance as of the effectivity of this Act - shall take effect
following said effectivity.

8.9 The GSIS administers two types of life insurance policy:

Life Endowment Policy Enhanced Life Policy

Maturity Benefit No Maturity Benefit

Cash Surrender Value Termination Value ( TV), Which is 25% of

monthly life insurance premium paid

Waiver of Premiums due to Permanent Total No Waiver of Premium due to Permanent

Disability Disability

Death Benefit Death Benefit

Accidental Death Benefit No Accidental Death Benefit

Annual Dividend Annual Dividend

Policy Loan ( 50% of CSV) Policy Loan ( 90% of TV)

8.10 Life Endowment Policy

8.10a Who are covered by Life Endowment Policy?

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 LEP is the old insurance coverage issued to GSIS members who entered the government
service before August 1, 2003. New entrants in the government service, on or after August 1,
2003 are now covered by ELP.
8.10b What are the benefits of LEP?
If you are a LEP holder, you are entitled to the following benefits:
1. Maturity Benefit – the amount payable upon maturity of the endowment policy as
defined in the policy contract or the certificate of coverage and is equivalent to the
original amount of insurance, plus the supplementary and less all outstanding obligations.
2. Cash Surrender Value – the cash value of the policy earned during the term of the
insurance and is payable to members, less all outstanding obligations, when they resign
or separate from the service before the maturity of the insurance or when they incur
permanent total disability. This benefit has no prescription period under RA 8291.
3. Waiver of premiums due to PTD. Premiums that may become due and payable during
the period of the PTD shall be deemed waived and considered paid. PTD is caused by an
injury or disease that results in complete, irreversible, and lifelong incapacity to work or
to engage in any gainful occupation. Since the PTD benefit has a prescription period
underRA 8291, application for such should be filed within 4 years from the date of
disability.
4. Death benefit – the amount payable to designated beneficiaries or, in their absence, to
legal heirs upon the member’s death due to natural causes prior to the maturity of
insurance or during its continuance. This benefit is a life insurance claim. Accidental
Death Benefit – additional benefit equivalent to the amount of death benefit if the
member’s death is due to accident, as determined by the System and in conformity with
its policies. This benefit is also dubbed “double indemnity” for eligible members. Section
11.9.1 of RA 8291 states: “The GSIS shall pay the accidental death benefit upon receipt
of written notice within 30 days from the date of death of the member and due proof that
such death resulted, directly and independently of all other causes, from bodily injury and
while his/her insurance is in force, and that said death was caused solely by external,
violent, and accidental means and not intentionally caused or provoked by the member,
and occurred within 90 days from the date of the accident. ”
5. Annual Dividend – the sum of money paid to GSIS policyholders whose life insurance
has been in force for at least 1 year based on records submitted by the employer, subject
to the amount and conditions recommended by the GSIS Actuary Office and approved by
the GSIS Board of Trustees. Eligible members may still request payment of back
dividends that were unclaimed in previous dividend years by filling out a Member’s
Request Form.
6. Policy Loan – equivalent to 50% of the cash value of the policy that could be borrowed
by the member.
7. GSIS Retirement and Other Social Insurance Benefits

8.11 Enhanced Life Policy Coverage

8.11a Who is covered by the ELP and what are the conditions?
a. A government employee who entered the service after July 31, 2003;
b. His LEP matured after July 31, 2003.
c. A Regular GSIS member whose LEP has lapsed due to nonpayment of life insurance
premiums but continue to be in active service.; or

23
 d. A regular GSIS member who opted to convert your existing LEP into ELP.
8.11b What are the benefits of ELP?
1. Termination Value – the accumulated amount earned based on premium payment while
the ELP is in force. It is equivalent to 25% of the monthly life insurance premium paid,
which can be withdrawn upon separation or retirement.
2. Death Benefit – equivalent to the last annual salary multiplied by 1.5. Compared to LEP,
ELP has higher death benefit as this is focused more on the financial support to the
family and beneficiaries of the deceased member.
3. Annual dividend based on the termination value and earnings of the Social Insurance
Fund.
4. Policy loan equivalent to 90% of the termination value.

9. DIVIDENDS
An annual dividend may be granted to all members of the GSIS whose life insurance is in
force for at least 1 year in accordance with a dividends allocation formula to be determined by
the GSIS.

10. OPTIONAL INSURANCE

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 insured or his employer and/or any person may make the
payment of the premiums/installments for optional insurance and pre-need products acceptable
to the GSIS.
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.
Note: Judiciary and Constitutional Commissions are entitled to life insurance only.

11. CONTRIBUTIONS
It is mandatory for all employers to deduct each month from the monthly salary or
compensation of employees, the contribution payable by them and remit directly to GSIS, the
employer’s and employees’ contributions within the first ten days of the calendar month
following the month to which the contributions apply. All employers should also deduct the loan
amortizations from the fixed monthly compensation of its employees.

12. WHO ARE THE MEMBERS?

Regular Members
Government employees who receive fixed monthly compensation while in the service of
a government agency (their employer) by virtue of an appointment or election to public office
and regardless of status of appointment. The employees’ share in the life insurance and
retirement contributions of regular members is 9% of their basic salary while the employers’
share is 12% of the same. This is mandated under Section 5 of RA 8291 or the GSIS Charter.

Social Insurance Percentage of Break Down of the Contribution

Contribution Contribution

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 Life Insurance Retirement

Personal/ Employee 9% 2% 7%
Share

Government/ 12% 2% 10%

Employer Share

Government/ 12% 2% 10%

Employer Share

Total 21% 4% 17%

*Of the basic monthly salary

Special Members
Government employees who, based on the Constitution or by virtue of a special law or
charter, are covered under retirement schemes that are separate from the GSIS, funded by their
own agency or by the National Treasury, and recognized by the Department of Budget and
Management (DBM).
Special members are required to remit life insurance premiums only equivalent to 3% of
their basic salary. Members of the judiciary and constitutional commissions fall under this
category. The contribution of special members and their employers is shown as follows:

Social Insurance Contribution Percentage* of Contribution

Personal/ Employee Share 3%

Government/ Employer Share 3%

Total 6%
*Of the basic monthly salary

12.1 Other classifications of members

a. Active members – GSIS members, whether regular or special, who are in the government
service.
b. Inactive members – members who have been separated from the service by resignation,
retirement, disability, dismissal, or retrenchment.

13. WHAT ARE THE PENALTIES FOR THE VIOLATIONS OF THE PROVISIONS
OF R.A. 8291?
a. On directly or indirectly participating in the commission of fraud, collusion,
falsification, or misrepresentation: Prisión correccional in its medium and
maximum periods and a fine of not more than ₱1,000,000
b. To obtain or receive any money or check: A fine of not less than P5,000.00 nor
more than P20,000.00 or by imprisonment of not less than 6 years and 1 day to 12
years, or both, at the discretion of the court.

25
c. Failure or refusal to comply with the provisions of RA 8291 or with the rules
and regulations adopted by the GSIS: A fine of not less than P5,000.00 nor more
than P20,000.00 or by imprisonment of not less than 6 years and 1 day to 12 years, or
both, at the discretion of the court.
d. Failure of the treasurer, officers, employees, or officials to include in the
annual budget the amount corresponding to the contributions, or who fails or
refuses or delays by more than 30 days from the time such amount becomes due
and demandable, or to deduct the monthly contributions of the employee:
Imprisonment from 6 months and 1 day to 6 years, and a fine of not less than
P3,000.00but not more than 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. Malversation of Public Funds and Property: 1) The penalty of prisión
correccional in its medium and maximum periods, if the amount involved in the
misappropriation or malversation does not exceed ₱40,000; 2) The penalty of prisión
mayor in its minimum and medium periods, if the amount involved is more than
₱40,000 but does not exceed ₱1,200,000; 3) The penalty of prisión mayor in its
maximum period to reclusion temporal in its minimum period, if the amount involved
is more than ₱1,200,000 but does not exceed ₱2,400,000; 4) The penalty of reclusion
temporal, in its medium and maximum periods, if the amount involved is more than
₱2,400,000 but does not exceed ₱4,400,000; 5) The penalty of reclusion temporal in
its maximum period, if the amount involved is more than 4,400,000 but does not
exceed ₱8,800,000. If the amount exceeds the latter, the penalty shall be reclusion
perpetua; And in addition shall suffer absolute perpetual disqualification from holding
public office and from practicing any profession or calling licensed by the
government.
f. Failure of an employee to remit the same to the GSIS within 30 days shall be
presumed to have misappropriated such contribution or loan amortization: 1)
The penalty of prisión correccional in its maximum period to prisión mayor in its
minimum period, if the amount of the fraud is over ₱2,400,000 but does not exceed
₱4,400,000, and if such amount exceeds the latter sum, the penalty provided in this
paragraph shall be imposed in its maximum period, adding one year for each
additional ₱2,000,000; but the total penalty which may be imposed shall not exceed
twenty years. 2) The penalty of prisión correccional in its minimum and medium
periods, if the amount of the fraud is over ₱1,200,000 but does not exceed
₱2,400,000; 3) The penalty of arresto mayor in its maximum period to prisión
correccional in its minimum period, if such amount is over ₱40,000 but does not
₱1,200,000; 4) By arresto mayor in its medium and maximum periods, if such
amount does not exceed Forty thousand pesos (₱40,000):
g. Failure, refusal or delay of the payment, turnover, remittance or delivery of
accounts to the GSIS of heads of offices of the national government and its
political subdivisions, and the personnel of such offices who are involved in the
collection of premium contributions, loan amortization and other accounts due
to the GSIS within 30 days from the time that the same shall have been due and
demandable: Imprisonment of not less than 1 year nor more than 5 years and a fine
of not less than P10,000.00 nor more than P20,000.00, and in addition shall suffer

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 absolute perpetual disqualification from holding public office and from practicing any
profession or calling licensed by the government. They are liable civilly to the GSIS
or to the employee or member concerned in the form of damages, including
surcharges and interests. The liabilities shall be construed as waiver of the State of its
immunity from suit, hence, the mentioned officials and/or personnel may not invoke
the defense of non-suability of the State.
h. Failure of the Members of the GSIS Board, to ensure the collection or recovery
of all indebtedness, liabilities and/or accountabilities, in favor of the GSIS
arising from any cause or source whatsoever: Imprisonment of not less than 6
months nor more than 1 year or a fine of not less than P5,000.00 nor more than
P10,00.00 without prejudice to any civil or administrative liability which may also
arise therefrom.
Note: 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.

14. SUPREME COURT DECISIONS

Aguja vs. Government Service Insurance System

G.R. No. 84846. August 5, 1991
Facts: Jesus D. Aguja worked as a janitor in the Office of the Municipal Treasurer in
Libmanan, Camarines Sur. While he was cleaning the office toilet sometime in April, 1979, the
bottle of muriatic acid he was using suddenly fell to the floor, causing the contents to splash all
over. Some of the acid hit the petitioner’s right eye which caused gradual loss of vision, finally
culminating in blindness. The petitioner’s left eye was not blinded, but it contracted “pterygium
nasal side with visions of 20/40”, per certification of Dr. Delfin M. Rosales. Notwithstanding his
blindness on the right eye, the petitioner continued to work but retired finally from service on
February 26, 1982. On the basis of the accident in 1979, the petitioner claimed compensation
benefits with the GSIS. He was awarded temporary total disability benefits from September 5 to
29, 1979 and was thereafter granted permanent partial disability benefit for a period of
twenty-five months. After receipt of the corresponding monetary benefits from the System, the
petitioner asked for additional benefits on the ground of permanent total disability under PD 626,
claiming that he was also gradually losing vision of his left eye. This was denied by the GSIS on
the ground that he had already previously received the maximum which could be awarded to him
under the law. Furthermore, the condition of his left eye which allegedly had normal vision did
not satisfy the criteria for a grant of permanent total disability benefits. ECC also affirmed the
decision of GSIS.
The petitioner is entitled to a conversion of his disability benefits from permanent partial
to permanent total. The injury caused on the left eye of petitioner is considered as
work-connected, hence, compensable. The left eye was found to be burned which only goes to
show that the present condition can be traced back to the accident which occurred in April, 1979
and no other. There is no showing that there was any supervening event which may have caused
the blindness of the left eye. Undeniably, the injury was caused by the splashing of muriatic acid
while the janitor was cleaning the government building’s toilet. This accident not only blinded
the right eye but also “compromised” the left eye. According to the medical certificate issued in

27
1985, a pterygium was already growing on the nasal side of the left eye. In such a case, the injury
caused on the left eye is considered as work-connected; hence, compensable.
Total disability does not mean a state of absolute helplessness, but disablement of an
employee to earn wages in the same kind of work or a work of similar nature, that he was trained
for or accustomed to perform, or any kind of work which a person of his mentality and
attachments could do. A person’s disability might not emerge at one precise moment in time but
rather over a period of time. It is possible that an injury which at first was considered to be
temporary may later on become permanent or one who suffers a partial disability becomes totally
and permanently disabled from the same cause as in the case at bar. Unfortunately, the
petitioner’s permanent disability has further deteriorated affecting also the vision of his left eye.
The aggravation of the petitioner's condition arose from the same injury or disability. The
petitioner was compelled to retire from work on account of the blindness of his right eye. With
the gradual loss of vision of his left eye, it would even be more difficult, if not impossible for the
petitioner to be gainfully employed now.

Pauig vs GSIS
GR No. 210328, January 30, 2017

Facts: Respondent Pauig started working in the government service as casual status in
February 1964, temporary employee in July 1972 and permanent employee in July 1977 and
became a GSIS member in August 1977. In November 2004, he retired from the service upon
reaching the mandatory retirement age of 65 years old with the total length of service on record
as 27 years. Disagreeing with the computation of 27 years, Pauig wrote a letter-complaint to the
GSIS, arguing that his first14 years in the government service had been erroneously omitted.
RTC ruled in favor of respondent, as relied on Policy 2 of Policy and Procedural Guidelines No.
171-03 dated February 2, 2003, which states: "Services, for purposes of computing all the
benefits that a member may secure from GSIS shall mean only such services rendered by a
member in any government agency, whether national, local or government-owned or controlled
corporation under the following conditions: The member was receiving a fixed basic monthly
compensation for such services. The corresponding monthly premium contributions were timely
and currently remitted or paid to the GSIS." The tribunal explained that it is clear from the
aforequoted provision that the word "service" is not qualified and does not refer only to service
with a permanent status. Thus, the instant petition.

Ruling: GSIS should not include Pauig's first 14 years in government service for the
calculation of the latter's retirement benefits claim. In order to bring life to the true intention of
the law, however, Policy and Procedural Guidelines No. 171-03 must be read together with other
laws pertinent at the time of the contested period of service. Republic Act (R.A.) Nos. 4968 and
660, amending C.A. No. 186, thus: SEC. 4. Scope of application of System.-(a) Membership in
the System shall be compulsory upon all regularly and permanently appointed employees,
including those whose tenure of office is fixed or limited by law; upon all teachers except only
those who are substitutes; and upon all regular officers and saluted men of the Armed Forces of
the Philippines: Provided, That it shall be compulsory upon regularly and permanently appointed
employees of a municipal government below first class only if and when said government has
joined the System under such terms and conditions as the latter may prescribe. The Court finds
that the language of the retirement law is clear and unequivocal; no room for construction or
interpretation exists, only the application of the letter of the law. The primordial reason why

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there were no deductions during those 14 years was because Pauig was not yet a GSIS member
at that time. There was thus no legal obligation to pay the premium as no basis for the remittance
of the same existed. And since only periods of service where premium payments were actually
made and duly remitted to the SIS shall be included in the computation of retirement benefits,
said disputed period of 14 years must corollarily be removed from Pauig's creditable service.

Chapter 3
Limited Portability Law

1. WHAT IS PORTABILITY?
Portability refers to the transfer of funds for the account, and benefit of a worker who
transfers from one system to the other41. The term system herein refers to SSS or GSIS. It refers
to instances where a worker transfers from private employment to government employment, and
vice versa, thereby transferring from being SSS member to GSIS member, and vice versa.
The transfer of funds is to ensure that his/ her years of service are duly credited.

2. WHO ARE COVERED BY THE LPL?

Section 1, Rule I of R.A. No. 7699 provides that the rules and regulations shall apply to
all worker-members of the Government Service Insurance System and/or Social Security
System who transfer from one sector to another, and who wish to retain their membership in
both Systems.

3. WHAT IS LIMITED PORTABILITY SCHEME?

R.A. No. 7699 was enacted to enable those from the private sector who transfer to the
government service or from the government sector to the private sector to combine their years of
service and contributions which have been credited with the SSS or GSIS, as the case may be, to
satisfy the required number of years of service for entitlement to the benefits under the
applicable laws. 42.

4. WHAT IS TOTALIZATION RULE?

It refers to the process of adding up the periods of creditable services or contributions
under each of the Systems, SSS or GSIS, for the purpose of eligibility and computation of
benefits 43. Hence, if a worker is not entitled to any benefits under SSS or GSIS because the
periods of his creditable services or contributions does not qualify to avail any benefit under SSS
or GSIS, as the case may be, he/she could apply the totalization rule. Applying the totalization
rule can increase the chances of a worker to avail of benefits under the subject law. Section 3,
Rule V of R.A. No. 7699 provides instances where totalization applies, to wit:
1. If a worker is not qualified for any benefits from both Systems:
2. If a worker in the public sector is not qualified for any benefits in the GSIS; or
3. If a worker in the private sector is not qualified for any benefits from the SSS.
4. If a work qualifies for benefits in both Systems,totalization shall not apply. 44 .

41
(Section 1(b), Rule Ill of R.A. No. 7699)
42
Chan, Joselito, Bar Reviewer on Labor Law, 2017 3' Revised Edition, pg. 445
43
Chan, Joselito, Bar Reviewer on Labor Law, 2017 3' Revised Edition, pg. 445
44
Section 5, Rule V of R.A. No. 7699

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5. WHAT ARE CONSIDERED CREDITABLE SERVICES?
For the public sector, the following shall be considered creditable services:
1. All previous services rendered by an official/employee pursuant to an appointment
whether permanent, provisional or temporary.
2. All previous services rendered by an official/employee pursuant to a duly approved
appointment to a position in the Civil Service with compensation or salary
3. The period during which an official/employee was on authorized sick leave of absence
without pay not exceeding one year;
4. The period during which an official or employee was out of the service as a result of
illegal termination of his service as finally decided by the proper authorities; and
5. All previous services with compensation or salary rendered by elective officials.

In the case of Gamogamo v. PNOC Shipping and Transport Corporation,45 the pivotal
issue was whether, for the purpose of computing an employee's retirement pay, prior service
rendered in a government agency can be tacked on and added to the creditable service later
acquired in a government-owned and controlled corporation without original charter. Petitioner
Gamogamo was first employed with the Department of Health for 14 years until he resigned.
After which, he was employed by a private domestic corporation. Said corporation was
subsequently acquired by PNOC Shipping and Transport Corporation. Respondents then
implemented a Manpower Reduction Program under which, retrenched employees shall receive a
two-month pay for every year of service. Petitioner requested to be included in the next
retrenchment schedule, but was declined, hence the complaint for full payment of his retirement
benefits, and that his service with DOH should have been included in the computation of his
years of service. The Court ruled in the negative.
The Supreme Court stated, to wit: "Petitioner's contention that the principle of tacking of
creditable service is mandated by Republic Act No. 7699 is baseless. Obviously, totalization of
service credits is only resorted to when the retiree does not qualify for benefits in either or both
of the Systems. Here, petitioner is qualified to receive benefits granted by the Government
Security Insurance System , if such right has not yet been exercised.
Under this law, retirees may combine their years of service in the private sector
represented by contributions to the Social Security System with their government service and
contributions to the GSIS to satisfy the required years of service under PD 1146 and RA 8291.
However, if retirees have already satisfied the required years of service under the SIS retirement
option they have chosen, they would not be allowed to incorporate their contributions to the SSS
anymore for availment of additional benefits. In case of death, disability and old age, the periods
of creditable services or contributions to the SSS and GSIS shall be added to entitle retirees to
receive the benefits under either PD 1146 or RA 8291.
If qualified under R.A. 8291, all the benefits shall apply except the cash payment. The
Portability Law provides that only benefits common to both Systems shall be paid. Cash
payment is not included in the benefits provided by the SSS.

45
Gamogamo v. PNOC Shipping and Transport Corp., G.R. No. 141707, May 7, 2002

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