Revised Government Service Insurance Act, 1977

Policy, purpose, and coverage design

The Act mandates preservation of the actuarial solvency of System funds at all times (Section 33; also reflected in the policy statements).
The Act guarantees government employees the benefits due them as a priority welfare objective (P.D. No. 1146 preamble).
The Act expands and improves social security and insurance benefits, including pension, disability, survivorship, and sickness income benefits, and supports eventual expansion to cover all government employees regardless of employment status (as stated in the preamble; operationalized through Section 3).
The Act provides that the State guarantees System obligations as they fall due (Section 8).

Key definitions for benefits and coverage

“System” means the Government Service Insurance System created and established by Commonwealth Act No. 186 (Section 2(a)).
“Board” means the Board of Trustees of the Government Service Insurance System (Section 2(b)).
“Employer” includes the National Government, its political subdivisions, branches, agencies or instrumentalities, government-owned and/or controlled corporations, the Philippine Tuberculosis Society, the Philippine National Red Cross, and the Philippine Veterans Bank (Section 2(c)).
“Employee” means any person in the service of an employer who receives compensation for such service (Section 2(d)).
“Member” means any person compulsorily covered by the System under Section 3 (Section 2(e)).
“Dependent” means a child (legitimate, legally adopted, acknowledged natural, or illegitimate) who is unmarried, not gainfully employed, and not over twenty-one years of age, or over twenty-one but physically or mentally incapacitated and incapable of self-support, plus a legitimate spouse dependent for support upon the member, and legitimate parents wholly dependent upon the member for support (Section 2(f)).
“Primary beneficiaries” are the dependent spouse until remarriage and the dependent children (Section 2(g)).
“Secondary beneficiaries” are the dependent parents and legitimate descendants other than dependent children (Section 2(h)).
“Compensation” means the basic pay or salary received by an employee pursuant to employment/appointment/s, excluding per diems, bonuses, overtime pay, and allowances (Section 2(i)).
“Contribution” means the amount payable to the System by the member and the employer under Section 5 (Section 2(j)).
“Average monthly compensation” is the quotient of aggregate compensation received for the last three years immediately preceding death/separation/disability/retirement divided by the number of months received, or three thousand pesos, whichever is smaller (Section 2(k)).
“Revalued average monthly compensation” equals one hundred seventy percent of the first two hundred pesos of average monthly compensation plus one hundred percent of average monthly compensation in excess of two hundred pesos (Section 2(l)).
“Lump sum” means the present value of basic monthly pensions for five years discounted at an interest rate determined by the System but not less than six percent per annum (Section 2(m)).
“Pensioner” means any person who receives old-age or disability pension whether in lump sum or otherwise (Section 2(n)).
“Disability” means loss or reduction of earning capacity due to impairment of normal functions of physical and/or mental faculties reducing ability to engage in any gainful occupation (Section 2(o)).
“Total disability” arises when loss or reduction of earning capacity is at least seventy-five percent, or when aggregate loss/reduction from more than one injury/disease amounts to at least one hundred percent (Section 2(p)).
“Permanent total disability” arises when recovery from the impairment is medically remote (Section 2(q)).
“Temporary total disability” arises when impaired faculties can be rehabilitated and/or restored to normal functions (Section 2(r)).
“Permanent partial disability” arises when loss or reduction is less than seventy-five percent or aggregate from more than one injury/disease amounts to less than one hundred percent, due to an irrecoverable anatomical loss (Section 2(s)).

Compulsory membership and separation effects

Membership in the System is compulsory for all permanent employees below 60 years of age upon appointment to permanent status (Section 3).
Compulsory coverage may be extended to non-permanent employees of national government agencies and local governments only upon approval by the President of the Philippines and subject to availability of funds, either simultaneously in phases or by groups (Section 3).
Non-permanent employees of government-owned or controlled corporations may be covered upon approval by the System upon request of their respective governing boards (Section 3).
Coverage of temporary employees under R.A. No. 49 remains in force (Section 3).
A member continues as a member notwithstanding separation from service and is entitled to whatever benefits have accrued or been earned at separation in any compensable contingency, unless separation terms provide otherwise (Section 4).

Contributions, remittance, and employer default

Employee contributions are mandatory under a monthly compensation schedule (Section 5(a)):
- P200 or less: employee 7.5% and employer 10.5%.
- Over P200 up to P3,000: employee 8.5% and employer 9.5%.
- Over P3,000: employee 8.5% on the first P3,000 and 3.6% on excess; employer 9.5% (Section 5(a)).
Employers must include their share in their annual appropriation, include any extra premiums required due to occupational hazards/risks, remit such amounts to the System, and pay according to employer capacity if the System determines the employer cannot afford full payment (Section 5(b)).
If employer rates are reduced due to inability to pay, benefits payable to the member and/or beneficiaries are adjusted according to the System’s rules and regulations (Section 5(b)).
For pension increases for services rendered prior to June Sixteen, nineteen hundred and fifty-one, the National Government pays necessary additional amounts determined by the System and agreed upon by the National Government and the System (Section 5(c)), covering increases under Republic Act numbers forty-nine hundred sixty-eight, fifty-nine hundred sixty-nine and Presidential Decree number seven hundred twelve (Section 5(c)).
Employers must deduct and withhold each month from employees’ salaries the employee contribution and remit both employee and employer shares to the System within the first ten days of each calendar month following the contribution month (Section 6(a)).
Employers may remit in advance quarterly, semi-annually, or annually, with employee contributions advanced by the employer (Section 6(a)).
On employee separation, contributions paid in advance but not due are to be credited or refunded to the employer (Section 6(a)).
Remittance of contributions has preference over payment of other obligations except salaries and wages of employees (Section 6(a)).
If an employer defaults, the Secretary of Finance or the Chairman of the Commission on Audit must take necessary steps to have the obligation paid promptly and may authorize withholding from revenues/income of the defaulting employer the amounts necessary to pay obligations and remit them immediately to the System (Section 6(b)).
If an employer is insolvent, the employer’s obligations under the Act are paid in preference to all other obligations except salaries and wages of employees (Section 6(b)).
Unremitted collections earn interest at a rate the Board prescribes, not exceeding two percent per month from due date to payment date, payable by the employer (Section 7).
The Government guarantees fulfillment of System obligations to members as they fall due (Section 8).

Benefit rules: computation and retirement

The basic monthly pension equals:
- thirty-seven and one-half percent of revalued average monthly compensation, plus
- two and one-half percent of revalued average monthly compensation for each year of service in excess of fifteen years,
- but the basic monthly pension shall not exceed ninety percent of the average monthly compensation (Section 9(a)).
The basic monthly pension may be adjusted upon recommendation of the President and General Manager and approved by the President of the Philippines under the System’s rules and regulations (Section 9(b)).
Service used for pension computation includes:
- periods of honorable service in the Philippines under authority of the United States Government if rendered prior to July four, nineteen hundred and forty-six, and
- periods from January one, nineteen hundred and forty-two to February twenty-eight, nineteen hundred and forty-six for those in service on December eight, nineteen hundred and forty-one (Section 10).
Service computation excludes:
- periods of military service for which an employee receives separation, retirement, or disability pay, and
- periods of service after June sixteen, nineteen hundred and fifty-one during which contributions were not required, unless contributions with interest are later paid to the System (Section 10).
Service covers only full-time service with compensation; part-time and other services with compensation may be included under the System’s rules and regulations (Section 10).

Old-age pension entitlement and retirement effects

Old-age pension is payable to a member who has at least fifteen years of service, is at least sixty years of age, and is separated from service (Section 11(a)).
Retirement is compulsory at sixty-five years of age for employees with at least fifteen years of service, unless service is extended by appropriate authorities (Section 11(b)).
If an employee has less than fifteen years of service, the employee may continue in service to complete fifteen years (Section 11(b)).
A member entitled to old-age pension receives the basic monthly pension for life but in no case for less than five years (Section 12(a)).
A member may convert the basic monthly pensions for the first five years into a lump sum (Section 12(a)).
If the pensioner dies before expiration of the five-year period, primary beneficiaries receive the remaining balance; if no primary beneficiaries, amounts are paid to legal heirs (Section 12(a)).
If a pensioner receiving a monthly pension is reemployed, the pension is suspended (Section 12(c)).
If a pensioner who received a lump sum is reemployed before the lump-sum period expires, the pensioner refunds to the System the amount corresponding to the unexpired period (Section 12(c)).
In either case, when compensation is less than the pension, the pensioner receives the difference; upon termination of reemployment, the pension resumes (Section 12(c)).

Retirement option under existing coverage

Employees in government service on the effectivity of the Act may, at the time of retirement, choose to retire under this Act or under Commonwealth Act No. 186 as previously amended (Section 13).

Permanent disability benefits

A member is entitled to permanent disability benefits effective from the date of disability if the member:
- has paid at least thirty-six monthly contributions within the five-year period immediately preceding disability, or
- has paid a total of at least one hundred eighty monthly contributions prior to disability, and
- the disability is not compensable under any other law (Section 14).
If a member becomes permanently disabled before qualifying for old-age pension:
- total permanent disability entitles the member to the basic monthly pension for life,
- partial disability entitles the member to basic monthly pension payable according to the System’s rules and regulations (Section 15(a)).
If at time of disability the member is qualified for old-age pension, the member is entitled to basic monthly pension for life but in no case for less than five years, with an option to convert the first five years into a lump sum (Section 15(b)).
The basic monthly pension is suspended when:
- the member is reemployed and receives monthly compensation at least equal to the basic monthly pension (otherwise, the member receives the difference),
- the member recovers as determined by the System (final and binding),
- the member fails to present himself for medical examination when required by the System (Section 15(c)).
If at the time of disability the member is not entitled to benefits under Sections 15(a) and 15(b), the member receives a cash payment equal to one hundred percent of average monthly compensation for every year of service with contributions, but not less than five hundred pesos (Section 15(d)).

Survivorship benefits upon death

When a member or pensioner dies, beneficiaries receive survivorship benefits consisting of:
- basic survivorship pension equal to fifty percent of the basic monthly pension, plus
- a dependent’s pension not exceeding fifty percent of the basic monthly pension payable under System rules (Section 16).
Death of a member—primary beneficiaries (Section 17(a)):
- receive the basic monthly pension guaranteed for five years, payable in lump sum at beneficiaries’ option, if the member was entitled to old-age pension at death (Section 17(a)(1)), or
- receive basic survivorship pension guaranteed for thirty months plus dependent’s pension, if the deceased had paid at least thirty-six monthly contributions within the five-year period immediately preceding death, or a total of at least one hundred eighty monthly contributions prior to death (Section 17(a)(2)).
After guaranteed periods (Section 17(b)):
- if dependent spouse is the only survivor: basic survivorship pension for life or until remarriage;
- if only dependent children are survivors: survivorship pension as long as they remain qualified;
- if dependent spouse and dependent children survive: survivorship pension so long as there are dependent children, then surviving spouse receives basic survivorship pension for life or until remarriage.
Death of a member—secondary beneficiaries in absence of primary beneficiaries (Section 17(c)):
- if the member was qualified for old-age pension: cash payment equal to thirty times the basic survivorship pension; or
- otherwise/for qualification with contribution requirements under the same provision: cash payment equal to fifty percent of average monthly compensation for each year of contributions, but not less than five hundred pesos,
- subject to the member having paid at least thirty-six contributions within the five-year period preceding death or a total of at least one hundred eighty monthly contributions prior to death (Section 17(c)).
Death of a member—primary beneficiaries not entitled under Section 17(a) (Section 17(d)):
- receive a cash payment equal to one hundred percent of average monthly compensation for each year of contributions, but not less than five hundred pesos; in the absence of primary beneficiaries, the amount reverts to System funds (Section 17(d)).

Death of a pensioner and marriage condition

Upon death of a pensioner, primary beneficiaries receive the applicable pension mentioned in Section 17(b) (Section 18).
The dependent spouse is not entitled if the marriage with the pensioner was contracted within three years before the pensioner qualified for the pension (Section 18).
If the pensioner dies within the period covered by the lump sum, survivorship pension is paid only after expiration of the lump-sum period (Section 18).
Survivorship benefit for pensioners living as of effectivity is based on the monthly pension received at time of death (Section 18).

Funeral benefit and sickness income benefits

Funeral benefit is one thousand pesos paid upon death of a member or pensioner (Section 19).
Sickness income benefits are payable when a member suffers a non-work connected sickness or injury resulting in temporary total disability if:
- the member receives sixty-five percent of current daily compensation for each day or fraction thereof of sickness/injury, for each sickness year not exceeding sixty days after exhausting sick leave credits, but not earlier than the fourth day,
- the member has paid at least six monthly contributions in the twelve-month period immediately preceding sickness/injury,
- and the member cannot enjoy sickness income benefits and sick leave pay simultaneously (Section 20(a)).
Sickness income benefit is not less than four pesos nor more than twenty pesos a day (Section 20(b)).
Notices required of the member and employer, mode of payment, and other entitlement requirements are provided in the System’s rules and regulations (Section 20(c)).

Life insurance coverage and options

Life insurance is compulsory for all employees and automatically takes effect based on employment and maturity/expiry timing, subject to the System’s rules and regulations (Sections 21–22).
For employees employed after the Act: insurance takes effect on the date of employment (Section 21(a)(1)).
For insurance that matured and was not renewed before the Act: insurance is deemed renewed on the day following effectivity of the Act (Section 21(a)(2)).
For insurance that will mature or expire after the Act: insurance is deemed renewed on the day following the maturity or expiry date of prior insurance (Section 21(a)(3)).
For employees without life insurance as of effectivity: insurance takes effect on the day following effectivity (Section 21(a)(4)).
Members may apply at any time for optional life insurance for themselves and/or dependents; premiums may be paid by the insured, or by the employer, and/or any person acceptable to the System, subject to System rules and regulations (Section 22).

Claims, disputes, jurisdiction, and appeals

The System prescribes rules and regulations to facilitate payment of benefits, proceeds, and claims (Section 23).
Payments made before the System receives an adverse claim to a beneficiary/claimant later found not entitled free the System from liability to persons legally entitled; legally entitled persons may institute the appropriate court action against the ineligible recipient (Section 23).
The System has original and exclusive jurisdiction to settle any dispute arising under the Act (Section 24).
The Board may designate a Board member or System official as hearing officer to receive evidence, make findings of fact, and submit recommendations to the Board (Section 24).
The hearing officer submits findings, recommendations, and all documentary and testimonial evidence to the Board within thirty working days from the time parties have closed their evidence and filed their last pleading (Section 24).
The Board decides the case within thirty days from receipt of the hearing officer’s submission (Section 24).
Cases heard directly by the Board are decided within thirty working days from submission for decision (Section 24).

Appeal timeline and enforcement mechanics

Within fifteen days from receipt of notice of decision or award, the aggrieved party may appeal to the Court of Appeals on questions of law and facts using procedures for appeals from the Court of First Instance to the Court of Appeals as far as practicable and consistent with the Act (Section 25).
If the appeal is only on questions of law, it is brought directly to the Supreme Court on certiorari (Section 25).
No appeal bond is required (Section 25).
Appeals take precedence over all other cases except criminal cases where the penalty of life imprisonment or death has been imposed by the trial court (Section 25).
Appeals do not stay the Board’s decision unless ordered by the Board, the Court of Appeals, or the Supreme Court (Section 25).
A Board decision or award is enforced if no appeal is perfected and there is no order to stay by the Board, Court of Appeals, or Supreme Court (Section 26).
The Board may issue writs of execution through the city or provincial sheriff or its appointed sheriff (Section 26).
Non-compliance after requirement upon System application is punishable for contempt (Section 26).
System officials authorized by the Board may administer oaths, affirmations, certify official acts, and issue subpoenas and subpoenas duces tecum to compel attendance and production of books, papers, correspondences, and other records for questions arising under the Act (Section 27).
Contumacy is dealt with under Section 580 of the Revised Administrative Code (Section 27).

System funds, reserves, expenses, and investment

System funds consist of old-age, disability, survivorship, health insurance, state insurance, life insurance, and general insurance funds (Section 28).
Reserves and/or net worth finance the benefits administered by the System (Section 28).
Any amount in excess of required reserves, as determined by the System actuary, may be subject to interfund borrowing at an imputed interest determined by the Board (Section 28).
All revenues collected and accruals are deposited, administered, and disbursed in accordance with law (Section 29(a)).
Administrative and operational expenses may be disbursed up to a maximum expense loading of twelve percent of yearly revenues from all sources, unless otherwise approved by the President of the Philippines based on actuarial and management studies (Section 29(a)).
Funds not needed for current obligations may be invested under terms and conditions determined by the Board (Section 30).
The System keeps records for actuarial studies, calculations, and valuations, including data to compute rates of disability, mortality, morbidity, separation, and retirement, and maintains separate and distinct records of each branch’s operations (Section 31).
The System maintains appropriate books of accounts for assets, liabilities, income, expenses, receipts, disbursements, and other financial transactions and operations (Section 31).
The System conducts periodic actuarial examinations and valuations of its funds in accordance with accepted actuarial principles (Section 32).

Tax immunity and protection from process

The State policy requires preservation of actuarial solvency by keeping contribution rates as low as possible to avoid burdening members and/or employees (Section 33).
The System is exempt from all taxes, assessments, fees, charges, or duties of all kinds, including for its assets, revenues and all accruals, and benefits paid, notwithstanding laws to the contrary (Section 33).
The exemptions continue unless expressly and specifically revoked, and any assessment against the System as of approval is considered paid (Section 33).
Benefits granted under the Act are not subject to attachment, garnishment, levy, or other processes, subject to the exception for obligations of the member to the System or the employer, or when benefits are assigned by the member with the authority of the System (Section 33).

Administration: Board, officials, audit, counsel

The Government Service Insurance System implements the provisions of the Act (Section 34).
The System has powers and functions to adopt rules, adopt budgets, invest funds, acquire/use/dispose of property, conduct continuing actuarial and statistical studies to readjust benefits and rates, succession, sue and be sued, contract, conduct lawful business, operate through offices in and outside the Philippines and exercise powers throughout the Republic and in foreign states/territories, borrow funds, invest or participate in equity, form and maintain subsidiaries, and perform acts necessary or incidental to the Act’s provisions (Section 35).
Corporate powers and functions are vested in and exercised by the Board of Trustees composed of the President and General Manager and seven other members appointed by the President of the Philippines, including three trustees representing three leading organizations or associations of government employees (Section 36).
The trustees elect from among themselves a chairman and vice-chairman (Section 36).
Except for the President and General Manager (who cease as trustee upon separation), trustees hold office for three years or until successors are appointed and qualified (Section 36).
Vacancy (other than expiration) is filled for the unexpired term only (Section 36).
Trustees receive a per diem of five hundred pesos for each board meeting actually attended, capped at two thousand pesos a month, plus reasonable transportation and representation allowances fixed by the Board (Section 36).
The Board as presently constituted continues until successors are appointed and duly qualified (Section 36).
The President and General Manager is the System’s Chief Executive Officer appointed by the President of the Philippines and must be experienced in technical and administrative fields related to the Act’s purposes (Section 37).
The President and General Manager is assisted by executive vice-presidents, senior vice-presidents, and vice-presidents appointed and removed by the President and General Manager with Board approval (Section 37).
Position classification and compensation rates are subject to approval of the President of the Philippines under P.D. No. 985 (Section 37).
The President and General Manager execute and administer Board-approved policies and resolutions, supervise administration and operations, appoint personnel, remove/suspend/discipline for cause, and prescribe duties and qualifications so only competent persons are employed, subject to Board approval for appointments/removals affecting administrative governance as described (Section 38).
The Chairman of the Commission on Audit serves as ex-officio auditor of the System; the Chairman may appoint a representative and necessary personnel, with number and salaries determined by the Chairman subject to appropriation by the Board; disagreements are submitted to the President of the Philippines for final decision (Section 39).
The audited statement of financial condition and progress is submitted to the Board soon after close of each calendar year (Section 39(b)).
The Government Corporate Counsel is the System’s legal counsel; the Board appropriates, and the President and General Manager remit, the amounts determined by the Government Corporate Counsel with the approval of the Secretary of Justice (Section 40).

Enforcement assistance and criminal penalties

The System may call upon any employer for assistance necessary to discharge System duties (Section 41).
Fraud, collusion, falsification, or misrepresentation in any transaction with the System (directly or indirectly, for oneself or other persons) triggers penalties under Article one hundred seventy-two of the Revised Penal Code (Section 42(a)).
Anyone obtaining or receiving money or a check invoking any provision of the Act or any agreement thereunder without entitlement, with intent to defraud a member, employer, the System, or a third party, is punished by:
- a fine of not less than five hundred pesos nor more than **