Collection and Remittance of Contributions Provided in Republic Act No. 8291 and Other Amounts due the Government Service Insurance System

September 16, 1997 REVENUE MEMORANDUM CIRCULAR NO. 40-97 SUBJECT : Collection and Remittance of Contributions Provided in Republic Act No. 8291 and Other Amounts due the Government Service Insurance System TO : All Revenue Officials and Employees and Others Concerned For the information and guidance of all revenue officials and employees, quoted hereunder is the Government Service Insurance System Memorandum Circular No. 4, s. 1997 dated July 7, 1997. LLphil "A. PAYMENT OF INTEGRATED CONTRIBUTIONS UNDER REPUBLIC ACT NO. 8291 (amending CA 186, as amended by Presidential Decree No. 1146) 1. Employees subject to the payment of the integrated contributions 1.1 Any person, receiving compensation while in the service of an employer, as defined hereunder, whether by election or appointment, irrespective of status of appointment, including barangay and sanggunian officials, who have not reached the compulsory retirement age, except members of the Armed Forces of the Philippines and the Philippine National Police. 1.2 Civilian employees of the Armed Forces of the Philippines and the Philippine National Police, including employees of the Bureau of Fire Protection and the Bureau of Jail Management and Penology. Employer shall mean the national government, its political subdivisions, branches, agencies or instrumentalities, including government-owned or controlled corporations, and financial institutions with original charters, the constitutional commissions and the judiciary. 2. Members subject to the payment of life insurance contributions only. 2.1 Members of the judiciary and constitutional commissions who shall only have life insurance coverage. 3. Rates of contributions due from member/employee and employer. The percentages of monthly compensation payable by the member and employer are as indicated below. For this purpose, monthly compensation shall mean the basic pay or salary received by an employee, pursuant to his election/appointment, excluding per diems, bonuses, overtime pay, honoraria, allowances and any other emoluments received in addition to the basic pay which are not integrated into the basic pay under existing laws. It shall be mandatory for the members and the employer to pay the monthly contributions specified in the following schedule: Percentage of Monthly Compensation Payable By Monthly Compensation Employee/Member Employer I. P10,000 and below 9.0% 12% II. Over P10,000 - Up to P10,000 9.0% 12% - In excess of P10,000 2.0% 12% Members of the judiciary and constitutional commissioners shall pay three percent (3%) of their monthly compensation as personal share, and their employers a corresponding three percent (3%) share for their life insurance coverage. 4. Formulae and illustrations in the manner of computing employee's and employer's share of contribution The contributions may be computed in accordance with the following formulae: Monthly Compensation (MC) Employee/Member Employer I. P10,000.00 and below 9.0% of MC 12% of MC II. Over P10,000 P900 + 2% of MC less P10,000 12% of MC Illustrations: (Monthly Compensation MC) Contributions Employee/Member Employer Case I: P10,000 and below Ex. : P8,500 9% of P8,500 12% of P8500 =P765 =P1020 Case II: Over P10,000 Ex. 1: P16,303 P900+2% of P6,303 12% of P16303 =P900+126.06 =P1956.36 =P1026.06 Ex. 2: P11,036 P900+2% of P1,036 12% of P11036 = P900+20.72 =P1324.32 = P920.72 5. Premium for Extra Hazards Extra premiums required of the employer on account of the hazards or risks of its employees occupation shall be paid in accordance with the Schedule of Premiums for Extra Hazards prescribed by the System. 6. Effective date of enforceability of contributions The new rates of contributions took effect on June 24, 1997. The collection thereof shall start from the month of January, 1998 in so far as the government share is concerned. It is understood, however, that arrearages that may have been incurred shall be liquidated within the period from January, 1998 to March, 1998 without interest. B. PAYMENT OF OTHER AMOUNTS DUE THE SYSTEM When so authorized by the employee, the employer shall deduct from the employee's monthly compensation his employee's premium on optional insurance, loan amortization, i.e. salary loan, policy loan, real estate loan, etc., and other amounts payable by the employee to the System. The amounts deducted shall be remitted by the employer within the first ten (10) days of the calendar month following the month in which the deductions were effected, together with the supporting lists in the forms prescribed by the System. C. COLLECTION AND REMITTANCE OF CONTRIBUTIONS a). The employer shall report to the GSIS the names of all its employees, their corresponding employment status, positions, salaries and such other pertinent information, including subsequent changes therein, if any, as may be required by the GSIS; the employer shall deduct each month from the monthly salary or compensation of each employee the contribution payable by him in accordance with the schedule described herein. b). Each employer shall remit directly to the GSIS the employees' and employers' contributions within the first ten (10) days of the calendar month following the month to which the contributions apply. The remittance by the employer of the contributions to the GSIS shall take priority over and above the payment of any and all obligations except salaries and wages of its employees. D. LEGAL PROVISIONS ON REMEDIES AND PENALTIES FOR NON-DEDUCTION, NON-REMITTANCE AND/OR MISAPPROPRIATION OF CONTRIBUTION AND OTHER AMOUNTS DUE THE SYSTEM 1. The employer shall include in its annual appropriation the necessary amounts for its share of the contributions indicated herein, plus any additional premiums that may be required on account of the hazards or risks of its employees' occupation. 2. It shall be mandatory and compulsory for all employers to include the payment of contributions in their annual appropriations. Penal sanctions shall be imposed upon employers who fail to include the payment of contributions in their annual appropriations or otherwise fail to remit the accurate/exact amount of contributions on time, or delay the remittance of premium contributions to the GSIS. The heads of offices and agencies shall be administratively liable for non-remittance or delayed remittance of premium contributions to the GSIS. 3. Interests on Delayed Remittances Agencies which delay the remittance of any and all monies due the GSIS shall be charged interests as may be prescribed by the Board but not less than two percent (2%) simple interest per month, such interest shall be paid by the employers concerned. 4. The treasurer, finance officer, cashier, disbursing officer, budget officer, or other official and employee who fail to include in the annual budget the amount corresponding to the employer and employee contributions, or who fails or refuses or delays by more than thirty (30) days from the time such amount becomes due and demandable, or to deduct the monthly contributions of the employee shall, upon conviction by final judgment, suffer the penalties of imprisonment from six (6) months and one (1) day to six (6 years, and a fine of not less than Three Thousand pesos (P3,000.00) but not more than Six Thousand pesos (P6,000.00), and in addition shall suffer absolute perpetual disqualification from holding public office and from practicing any profession or calling licensed by the government. 5. Any employee, who after deducting the monthly contribution or loan amortization from a member's compensation, fails to remit the same to the GSIS within thirty (30) days from the date they should have been remitted as provided herein shall be presumed to have misappropriated such contribution or loan amortization and shall suffer the penalties provided in Article 315 of the Revised Penal Code, and in addition shall suffer absolute perpetual disqualification from holding public office and from practicing any profession or calling licensed by the government. 6. The heads of the offices of the national government, its political subdivisions, branches, agencies and instrumentalities, including government-owned or controlled corporations and government financial institutions, and the personnel of such offices who are involved in the collection of premium contributions, loan amortization and other accounts due the GSIS who shall fail, refuse or delay the payment, turnover, remittance or delivery of such accounts to the GSIS within Thirty (30) days from the time that the same shall have been due and demandable shall upon conviction by final judgment, suffer the penalties of imprisonment of not less than one (1) year nor more than five (5) years and a fine of not less than Ten Thousand pesos (P10,000.00) nor more than Twenty Thousand Pesos (P20,000.00), and in addition shall suffer absolute perpetual disqualification from holding public office and from practicing any profession or calling licensed by the government. 7. The officers and/or personnel referred to in the preceding paragraph shall be liable not only criminally but also civilly to the GSIS or to the employee or member concerned in the form of damages, including surcharges and interests. 8. For the charges or complaints referred to in paragraph (D-6), the liabilities therein set forth shall be construed as waiver of the State of its immunity from suit, hence, the above-mentioned officials and/or personnel may not invoke the defense of non-suability of the State. E. INCENTIVE FOR PROMPT REMITTANCE OF CONTRIBUTIONS The GSIS shall have the power to authorize the payment of extra remuneration to the officials and employees directly involved in the collection and/or remittance of contributions, loan repayments, and other monies due to the GSIS at such rates and under such conditions as it may adopt: Provided, That the best interest of the GSIS shall be observed thereby. Please be guided accordingly. (SGD.) CESAR N. SARINO President and General Manager" All concerned are hereby enjoined to give this Circular as wide a publicity as possible. LIWAYWAY VINZONS-CHATO Commissioner of Internal Revenue