EXCERPT FROM POLICY AND PROCEDURAL GUIDELINES NO.

: 279-15

FUNCTIONAL AREA : ACCOUNTS MANAGEMENT

DISTRIBUTION : All Senior Vice Presidents

All Vice Presidents
All Managers

SUBJECT : INTEREST RATES TO BE IMPOSED ON GSIS `

FOR COLLECTION

I. BACKGROUND/RATIONALE

The GSIS was created to promote the welfare of government employees by

establishing a social insurance system intended to cushion them from the adverse
economic effects brought about by death, disability and old age. In line with this,
the GSIS is mandated to preserve and maintain the Funds under its administration
to ensure that the required reserves are met to guarantee the fulfillment of its
obligations under its Charter. For this purpose, it must continually collect the
members’ and agencies’ monetary obligations to the System.

Consistent with the GSIS’ vision to pursue its social mission by preserving the
Funds for the benefit of its members, the Board recognized that the non-payment
of obligations and delay in remittances of contributions jeopardize the ability of the
Funds to satisfy their reserve requirements. It was held that there is a need to
enforce the imposition of interest, whenever proper, in the GSIS’ collection efforts.
Thus, there is a need to provide policies and implementing guidelines for the
imposition of proper and standard rates of interest that may be applied to various
GSIS accounts for collection based on the following provisions of law:

A. Sections 7 and 41 (v) and (w) of Republic Act (RA) No. 8291 which
authorize the GSIS, through its Board of Trustees (BOT) to charge interests
upon agencies which delay the remittance of any and all monies due the
GSIS at the rate of not less than two percent (2%) simple interest per month
as a means to collect and recover all indebtedness, liabilities, and/or
accountabilities, including unpaid premiums or contributions in favor of the
GSIS.

B. Bangko Sentral ng Pilipinas (BSP) Circular No. 799 Series of 2013 which
amended Section 2 of Circular No. 905-82 by reducing the rate of twelve
percent (12%) interest to six percent (6%) interest for loan or forbearance of
 money, goods or credits and the rate allowed in judgments, in the absence
of an express contract.1 The Circular took effect on 1 July 2013.

II. OBJECTIVES

This PPG aims to:

A. Provide a policy on the imposition of proper interest rates applicable to

various GSIS transactions for uniform and consistent observance by the
Operating Units Concerned (OUCs) relative to the computation, recording
and collection of any and all monies due to the GSIS; and

B. Provide a guide in computing the amount of interest imposed on various

GSIS transactions whenever applicable.

III. POLICIES

A. Agency Remittance of premium contributions and other amounts due the

GSIS:

1. Remittances pertain to Premium Contributions which are mandatorily

required to be collected and remitted by the agencies to the GSIS
consisting of Personal Share, Government Share and Employees
Compensation.

2. Interest shall be computed against the agencies, for delay or non-

remittance, at the rate of 2% simple interest per month unless otherwise
prescribed by the Board of Trustees2.

3. Interest shall run starting from the eleventh (11 th) day of the calendar
month following the month to which the contributions apply until payment 3.

4. Interest imposed shall be pro-rated where the delay consists of a fraction

of a month (exact number of days of the month), excluding the first ten
(10) days of the month following the month to which the contributions
apply.

1
Dario Nacar vs. Gallery Frames and/or Felipe Bordey, Jr. (G.R. No. 189871. August 13, 2013) which
modified the landmark case of Eastern Shipping Lines vs. Court of Appeals (G.R. No. 97412. July 12,
1994).
2
Under Section 7 of R.A. 8291, the interest charged may be prescribed by the Board but not less than
two percent (2%) simple interest per month.
3
Section 6(b) of R.A. No. 8291 – Each employer shall remit directly to the GSIS the employees' and
employers' contributions within the first ten (10) days of the calendar month following the month to which
the contributions apply. The remittance by the employer of the contributions to the GSIS shall take priority
over and above the payment of any and all obligations, except salaries and wages of its employees.
Case Illustration:

The total amount due from the agency is equal to Php200,000.00 and
payment was due on 10 January 2014. The amount due was paid on 31
December 2014.

Calculation of Interest
Late Remittance of Premium Contributions
Illustrative Example 1

Amount Due (Php) 200,000

Month Due 10-Jan-14
Month Paid 31-Dec-14
Interest per Month 2%

Calculation Using Interest

No.Rate
of Per MonthFor Cumulative
Interest
No. of Days Days of the Month Interest End of
Month in the Month Delay (Php) Month (Php)
January 31 21 2,709.68 2,709.68
February 28 28 4,000.00 6,709.68
March 31 31 4,000.00 10,709.68
April 30 30 4,000.00 14,709.68
May 31 31 4,000.00 18,709.68
June 30 30 4,000.00 22,709.68
July 31 31 4,000.00 26,709.68
August 31 31 4,000.00 30,709.68
September 30 30 4,000.00 34,709.68
October 31 31 4,000.00 38,709.68
November 30 30 4,000.00 42,709.68
December 31 31 4,000.00 46,709.68
365 355 46,709.68

Interest for the Month = Amount Due x Monthly

Interest Rate x Days of Delay/Days in Month
 Calculation of Interest
Late Remittance of Premium Contributions
Illustrative Example 2

Amount Due (Php) 200,000

Month Due 10-Apr-14
Month Paid 9-Jun-14
Interest per Month 2%

Calculation Using Interest Rate

No. of Per MonthFor Cumulative
Interest
No. of Days Days of the Month Interest End of
Month in the Month Delay (Php) Month (Php)
January 31 0 - -
February 28 0 - -
March 31 0 - -
April 30 20 2,666.67 2,666.67
May 31 31 4,000.00 6,666.67
June 30 9 1,200.00 7,866.67
July 31 0 -
August 31 0 -
September 30 0 -
October 31 0 -
November 30 0 -
December 31 0 -
Total 365 60 7,866.67

Interest for the Month = Amount Due x Monthly

Interest Rate x Days of Delay/Days in Month

5. No demand (judicial or extrajudicial) is necessary in order for the agency

to be considered in delay.4

6. The two percent (2%) simple interest rate per month for failure to remit
shall not be imposed upon the agency in the following cases:

a) When the agency has unremitted accounts covered by an existing

Memorandum of Agreement (MOA) with existing guidelines on

4
R.A. No. 8291 already prescribes the period when remittance should be made such that failure to pay
within the period constitutes legal delay.
 handling MOA with agencies5, the prevailing interest rate as
indicated in the guidelines shall be imposed on the total obligation.

b) When the failure to remit is due to any of the instances enumerated

in the existing PPG6 on Non-charging of Interest on Identified
Delayed Remittances, to wit:

1) on delayed acceptance of remittance due to difficulties

during the initial implementation of the Electronic Billing
Remittance through the Electronic Remittance File (ERF);

2) on delayed remittance due to the late implementation of

salary increases;

3) on delayed remittance due to payment of back salaries from

the dismissal of or exoneration in administrative cases;

4) on delayed remittance due to late approval of the National

Government’s Operating Budget; and

5) on delayed remittance due to calamity or other force

majeure.

B. GSIS Loan payments not required to be remitted by Agencies and directly

due from the member-borrowers:

1. Interest (regular interest) shall be charged against the member who

availed of the loan. Thus, the amount of interest computed shall be
considered in the computation of his or her GSIS loan account.

2. Interest for delay (penalty) in the payment of amortization shall be

computed at the rate stipulated in the contract or agreement, if any.

3. In the absence of stipulation, interest shall be computed at the following

rates:

a) Prior 1 July 2013, which is the effectivity date of BSP Circular No.
799, Series of 2013, the rate shall be twelve percent (12%) simple
interest per year; and

5
i.e., PPG 191-06 (Settlement of Unremitted Contributions/Premiums and Loan Repayments by Agencies
Through Memorandums of Agreement with the GSIS) as approved under Board Resolution No. 142
dated 18 October 2006.
6
GSIS PPG No. 199-07 (Non-charging of Interest on Identified Remittances) as approved under Board
Resolution No. 44 dated 7 March 2007.
 b) Effective 1 July 2013, the rate shall be six percent (6%) simple
interest per year.

4. Interest (penalty) shall be computed from the time the member incurs
delay7 until actual payment. Delay is incurred when:

a) the contract or agreement expressly states when it is incurred

without need of demand; or

b) the payment is not made after the expiration of the date specified
or stated period within which to pay as indicated in the written
demand [thirty (30) days from receipt of Notice] for payment sent
by the OUCs in cases where demand is necessary to incur delay.

c) In sending the written demand for payment of the sum due with
interest, the OUC shall monitor the receipt of the demand as proof
that due notice was given to the recipient of the amount.

C. GSIS overpayments which are considered as cases of Solutio Indebiti

where the recipient has no right to receive it and delay (default) was
incurred after demand for payment has been made:

1. Requisites for application:

a) receipt of a sum of money from the GSIS;

b) there was no right to demand it; and

c) undue payment was because of mistake.

2. Interest shall be computed at the rate of six percent (6%) simple interest
per year.

3. Interest shall be computed from the time the member incurs delay after
judicial or extrajudicial demand under the provisions of Article 1169 of the
NCC until actual payment. As such, delay will be incurred when a
demand for refund, is made by the OUC. For this purpose, there is delay:

a) When the stated period [thirty (30) days from receipt of Notice]
within which to pay has already expired; or

b) If there is no period, upon failure to pay on the date specified.

7
Under Article 1169 of the New Civil Code (NCC), there is legal delay from the time of judicial or
extrajudicial demand.
 4. In case of a written demand for payment of the sum due with interest has
been sent to the concerned party, the OUC shall monitor the receipt of the
demand as proof that due notice was given to the recipient of the amount.

5. Instances of GSIS overpayments (Solutio Indebiti) on account of mistakes

or errors committed include but are not limited to:

a) Data Error

1) Erroneous Membership Service Profile (MSP) build up so that

services previously paid are included in the computation of
second (2nd) retirement/separation benefit

2) Erroneous encoding of the amount of pension8

b) Errors in the Processing of Claim

1) Life Insurance Claim processed as Maturity instead of Cash

Surrender Value (CSV)

2) Payment of Twenty Thousand Pesos (Php20,000) Funeral

Benefit (FB) to a Philippine National Police (PNP) members
when their entitlement is only Ten Thousand Pesos (Php10,000)
FB

3) Payment to dismissed employees where the dismissal order or

information is received by the GSIS after payment of benefits

4) Mistake in the interpretation or application of laws and policies

relative to GSIS benefits or loans9

8
In GSIS Board Case No. 04-14 (Salvador Gumabon) resolved under B.R. No. 92 dated 10 July 2014,
Petitioner was completely unaware of the erroneous and inadvertent recording of the GSIS payment in
his favor. In fact, the erroneous recording was only raised for the first time through the COC’s Answer.
Petitioner was not informed of the same before that time. Hence, the Petitioner cannot be said to have
been in bad faith when he did not know that he received something more than what he should have.
Thus, no interest was imposed against the Petitioner on the ground of good faith. It should also be
stressed that in this case no bad faith, such as legal delay, could be attributed to the Petitioner that would
justify the imposition of interest under this PPG.
9
In GSIS Board Case No. 010-12 – Motion for Reconsideration (Turiano, Ramos, Bonifacio and Tugade)
resolved under B.R. No. 93 dated 10 July 2014, Petitioners sought the waiver of the six percent (6%)
legal interest imposed on the premiums they previously received from the GSIS based on the claim that
they were not at fault for the events which transpired and made them ineligible to retire under RA No.
1616 and invoked good faith. It was resolved that the Petitioners received the refund of their premiums in
good faith by virtue of the pronouncement of the Supreme Court in Herrera, et. Al. vs. National Power
Corporation(NPC) that former employees of the NPC employees who were separated from the service
due to the reorganization of the electric power industry under RA No. 9136 or the Electric Power Industry
Reform Act of 2001 (EPIRA Law) “are entitled to a refund of their contributions to the retirement fund”.
Petitioners’ request for condonation of interest was allowed.
 5) Error in programming specifically in case of Cash Gift (CG)
Benefit wherein pensioners not entitled to CG receive the
benefit due to error in the parameters programmed in the
system

c) Payment made to the wrong member, pensioner or beneficiary

1) In case of existence of adverse claimants of benefit payments

2) Wrong pick-up of Business Partner (BP) number due to similar

name

d) Double Payment of Benefits

1) Employer pays gratuity benefit under RA No. 1616 but GSIS

pays retirement with lump sum and pension benefits instead of
paying only the refund of personal share with interest and/or
government shares without interest

2) Claim previously paid in the Mainframe System (MF) but claim

record is not migrated after which the member files a claim
again and the same is processed in SAP without verification in
MF

e) Benefits paid to fictitious members or claimants caused by fraud or

illegal activities by GSIS employees and/or other persons

6. Conversion of Mode of Retirement from R.A. No. 1616 to R.A. No. 8291
which requires the refund of premiums previously received from the
GSIS.10

7. Interest shall not be imposed on GSIS overpayment of pensions11 which

are covered under the existing PPG on Pension Administration12.

Imposable interest rates for GSIS collections are summarized as follows:

10
In GSIS Board Case No. 02-11 (Alfar Mulsid) as approved under Board Resolution No. 15 dated 27
February 2014 where the Petitioner was allowed to convert the mode of his retirement from RA No. 1616
to RA No. 8291 provided he refunds the amount he received from the GSIS representing his retirement
premium contributions, the interest of six percent (6%) per annum was imposed for the period covering
the time when the amount was received up to when the request for conversion was made.
11
GSIS overpayment of pension shall refer to pension benefit and cash gift disbursed in favor of the
pensioner after his or her death, remarriage, cohabitation or engagement in a common-law relationship or
emancipation.
12
GSIS PPG No. 275-14 (Revised PPG on Pension Administration) as approved under Board Resolution
No. 202 dated 11 December 2014.
 Amounts Due to the Imposable Interest Reckoning Date or
GSIS Rate Period

1. Agency Remittance of 2% simple interest per Interest shall run starting

premium contributions month unless otherwise from the eleventh (11th)
(Personal Share, prescribed by the Board day of the calendar month
Government Share and of Trustees following the month to
Employees which the contributions
Compensation) Exceptions: apply until payment.

a) When the agency

has unremitted
accounts covered
by an existing
Memorandum of
Agreement (MOA)
with existing
guidelines on
handling MOA with
agencies , the
prevailing interest
rate as indicated in
the guidelines shall
be imposed on the
total obligation; and

b) When the failure to

remit is due to the
following:

1) on delayed
acceptance of
remittance due to
difficulties during
the initial
implementation of
the Electronic Billing
Remittance through
the Electronic
Remittance File
(ERF);

2) on delayed
remittance due to
the late
implementation of
 salary increases;

3) on delayed
remittance due to
payment of back
salaries from the
dismissal of or
exoneration in
administrative
cases;

4) on delayed
remittance due to
late approval of the
National
Government’s
Operating Budget;
and on delayed
remittance due to
calamity or other
force majeure

2. GSIS Loan payments a) At the rate stipulated Interest (penalty) shall be

not required to be remitted
by Agencies and directly
due from the member-
borrowers
in the Loan computed from the time the
Agreement; or member incurs delay until
actual payment. Delay is
b) In the absence of incurred when after
stipulation, interest demand for payment or
shall be computed at refund made:
the following rates:
a) the contract or
1) Prior 1 July 2013, agreement expressly
which is the states when it is
effectivity date of incurred without need
BSP Circular No. of demand; or
799, Series of 2013,
the rate shall be b) the payment is not
twelve percent made after the
(12%) simple expiration of the date
interest per year; specified or stated
and period within which to
pay as indicated in the
2) Effective 1 July written demand [thirty
2013, the rate shall (30) days from receipt
be six percent (6%) of Notice] for payment
 simple interest per sent by the OUCs in
year. cases where demand
is necessary to incur
delay.

3. GSIS overpayments Interest shall be Interest shall be computed

which are considered as computed at the rate of from the time the member
cases of Solutio Indebiti as six percent (6%) simple incurs delay after judicial or
illustrated in the Section III interest per year. extrajudicial demand.
(C) (5) of this PPG There is delay:

a) When the stated period

[thirty (30) days from
receipt of Notice] within
which to pay has
already expired; or

b) If there is no period,
upon failure to pay on
the date specified.

xxx xxx

All existing PPGs, Board Resolutions, Office Orders and other previous issuances by
the GSIS which are inconsistent herewith are hereby superseded, modified or repealed
accordingly.

This PPG shall take effect after its publication in the Official Gazette or in at least two
(2) newspapers of general circulation.

(Sgd.) ROBERT G. VERGARA

President and General Manager

Date Signed: 16 February 2015