THIRD CONGRESS OF THE REPUBLIC

OF THE PHILIPPINES
Second Session
(REPUBLIC ACT NO.656)
AN ACT TO CREATE AND ESTABLISH A " PROPERTY
INSURANCE FUND" AND TO PROVIDE FOR
ITS ADMINISTRATION AND FOR OTHER PURPOSES.
Be it enacted by the Senate and House of Representatives of the Philippines
of the Philippines in Congress assembled:
SECTION 1. This act shall be known as the "Property Insurance Law."
SEC. 2. In order to indemnify or compensate the Government as
defined in this Act for any damage to, or loss of, its properties due to fire,
earthquake, storm, or other casualty there is hereby established the "Property
Insurance Fund", which shall consist of all moneys resulting from the liquidation
of the insurance constituted in section three hundred forty of the Revised
Administrative
Code
and
from
premiums
and
other
incomes.
SEC. 3. For the effectuation of the purpose of this Act, the administration of the
Fund is hereby placed under the Government Service Insurance System with
powers and authority to reinsure with private insurance companies under such
terms and conditions that may be mutually agreed upon any excess risk it may
deem advisable; to prescribe necessary rules and regulations, including such
incidental powers as are necessary for its operation; and to appoint personnel,
who are certified as eligibles by the Civil Service, prescribe their duties, and fix
their remuneration. Section fifteen of Commonwealth Act Numbered One
hundred eighty-six shall not be applicable to the personnel of the Fund.
SEC.4. Definitions. - For the purposes of this Act (a) "System" means the Government Service Insurance System created under
Commonwealth
Act
Numbered
One
hundred
and
eighty-six.
(b) "Fund" means the "Property Insurance Fund" created under this Act.
(c) "Property" includes vessels and craft, motor vehicles, machineries, permanent
buildings, properties stored therein, or in buildings rented by the Government, or
properties
in
transit.
(d) The word "Government" as used in this Act refers to the National, provincial,
city or municipal government, agency, commission, board or enterprises owned
or
controlled
by
the
Government.
(e) "Disposable Surplus" means the amount left after the necessary insurance
reserves and other reserves have been set aside together with the expenses
incidental to the administration of the Fund.
SEC.5. Every government, except a municipal government below first
class, is hereby required to insure its properties, with the Fund against any
insurable risk herein provided and pay the premiums thereon, which however,
shall not exceed the premiums charged by private insurance companies:
Provided, however, That the System reserves the right to disapprove the whole
or a portion of the amount of insurance applied for: Provided further, That such
property or part thereof as may not be insurable or acceptable for insurance may
be insured with any private insurance company. A municipal government below
first class may upon application insure its properties in the Fund under such rules
and regulations as the System may prescribe.
SEC.6. Collection and payment of premiums. - (a) In accordance with
such rules and regulations as the System may prescribe under section three of
this Act, the premiums on insurance under section five hereof shall be paid in

advance

to
the
System
by
the
government
concerned.
(b) Penalties - Any cashier, treasurer or any government official
responsible for the collection and/or remittance of the premiums hereinabove
prescribed, who refuses or habitually neglects to comply with the instructions of
the System and to collect or accept payments of the said premiums, issue
receipts therefor, and/or remit the same within the time prescribed by the System,
shall be held liable for the payment of said premiums and shall pay to the System
a fine of two per centum per month of said premiums from their due dates until
received by the System.
SEC. 7 (a) There shall be collected, classified, analyzed, and kept
under the custody of the System such statistical data as may be necessary for
the proper determination of risks and rates of premiums for the insurance of
properties
herein
defined.
(b) The records and accounts of the Fund shall be kept separate and
distinct
from
those
of
other
funds
of
the
System.
During the month of October of each year, the System shall submit to
the President a report of the operations of the Fund during the preceding year.
SEC.8. The Auditor General and the Government Corporate Counsel
shall be the ex-officio auditor and legal adviser of the Fund, respectively. The
Auditor General, or his authorized representative, shall submit to the System
soon after the close of each fiscal year audited statements showing its financial
condition and progress for the fiscal year just closed and the actuary shall
likewise make an actuarial examination and valuation of the Fund.
SEC.9. Any disposable surplus that may result from the operation of
this Fund once declared by the System shall be apportioned in accordance with
the schedule approved by the System among governments whose properties are
insured in the Fund.
The Government of the Republic of the Philippines hereby guarantees
the fulfillment of the obligations of the Fund when and as they shall become due.
SEC. 10. Upon approval of this Act, the System shall require the
inventory of the property belonging to each government, determine the value
thereof for purposes of insurance, and advise the government concerned of the
total premiums each shall pay to the Fund. The government concerned shall,
upon receipt of advice from the System, set aside from any savings in its
appropriation the amount needed for such premiums and certify to the availability
thereof, and the Auditor General or his duly authorized representative shall
forthwith release the same to the credit of the System by means of a journal
voucher drawn for the purpose. Thereafter, the official concerned shall remit it to
the System immediately: Provided: That the premiums corresponding to the
insurance of properties belonging to an entity operated with a special fund shall
be payable from said Fund; otherwise, from the general fund.
SEC.11. Each government as defined herein shall include in its annual
appropriation the amount necessary to cover the premiums for the insurance of
its properties during each fiscal period and remit the same immediately to the
System as provided in section ten hereof.
SEC.12. Chapter sixteen of the Revised Administrative Code, as
amended, is hereby repealed, and all the present assets and liabilities of the
Property Insurance Fund created thereunder shall be liquidated upon approval of
this Act and turned over to the System. The Auditor General and the
Commissioner of the Budget or their authorized representative shall carry out the
provisions of this section: Provided, That the properties insured under the
Property Insurance Fund, shall continue to be governed by existing law until they
shall have been insured anew with the Fund under the provisions of this Act.

SEC.13. This Act shall take effect on the first day of the third calendar
month following that of its approval.
Approved, June 16, 1951.

MALACANANG
MANILA
PRESIDENTIAL DECREE NO. 245
AMENDIND SECTION THREE OF REPUBLIC ACT NUMBERED SIX
HUNDRED AND FIFTY SIX, OTHERWISE KNOWN AS THE 'PROPERTY
INSURANCE LAW' AND OTHER PURPOSES
WHEREAS, UNDER REPUBLIC Act 656, the property Insurance Fund
was established and placed under the administration of the Government Service
System, which Fund is separate, segregated, and distinct from the trust funds of
government employees comprising the Life Insurance Fund and the Retirement
Insurance Fund as established by Commonwealth Act 186, as amended, and
from the Medicare Fund as established by Republic Act 6111;
WHEREAS, the Property Insurance Fund was established "in order to
indemnify or compensate the Government from any damage to, or loss of, its
properties
due
to
fire,
earthquake,
storm,
or
other
casualty;
WHEREAS, inspite of the provisions of Republic Act 656, the bulk of the
insurable assets and properties of the Government worth about P4 Billion
remains uninsured, thus exposing the Government to unnecessary losses in the
event of damage to, or loss of, such assets and properties;
WHEREAS, the non-insurance of such government assets and
properties is due in part to the limited capacity of private domestic non-life
insurance companies to accept the reinsurance of large risks from the GSIS,
considering that the combined net worth of private domestic non-life insurance
companies in the country is approximately P200,000,000 not more than then per
centum (10%) of which represents their maximum retention capacity on any
single risk in accordance with law;
WHEREAS, in view of the limited capacity of local non-life insurance
companies to absorb the reinsurance to be ceded by the GSAIS in the event that
it ensures a large portion of the existing insurable assets and properties of the
government, it is necessary for the GSIS to develop its capacity to cede
reinsurance abroad;
WHEREAS, considering that the placement of reinsurance abroad by
the GSIS entails foreign exchange outflows in the form of reinsurance premium
payments, it is desirable, from the country's point of view, for the GSIS likewise to
have powers, authority, and capacity to accept inward reinsurance from abroad
and thus earn foreign exchange for the country by way of premium earnings;
WHEREAS, in a multitude of a cases, shipments to and from the
Philippines are insured by foreign insurance companies in view of the limited
capacity of the domestic insurance industry to cover such risks and to
denominate the corresponding insurance policies in foreign exchange, which, in
many cases is imposed as a requirements by the suppliers of Philippine imports
or the buyers of Philippine exports ;

WHEREAS, there are Philippine contractors undertaking work in foreign

countries who are required to present surety or performance bonds denominated
in foreign exchange, and who find it necessary to have such bonds issued by
foreign insurance companies, thereby contributing to the foreign exchange
outflows from the country in the form of premium payments;
WHEREAS, the rectification of the impediments cited above will not
only save but will also earn foreign exchange for the country and, at the same
time, place principal government assets, properties, and installations under
adequate insurance protection;
WHEREAS, such impediments can be rectified by authorizing the
Property Insurance Fund established by republic Act 656 to cede and receive
reinsurance placements within the Philippines and abroad; to issue policies,
surety and/or performance bonds denominated in foreign exchange; and to
perform all acts necessary and/or incidental to such functions;
WHEREAS, the powers and authority granted herein to the GSIS will
not, in any way, diminish the business conducted by domestic insurance
companies, but on the contrary, will increase the total volume of insurance
transactions in which private insurance companies shall participate through
increase reinsurance cessions and restrocessions to them by the GSIS;
NOW, THEREFORE, I FERDINAND E. MARCOS, President of the
Philippines, by virtue of the powers vested in me by the Constitution as
Commander-in-Chief of all Armed Forces of the Philippines and pursuant to
proclamation No. 1081 dated September 22, 1972, as amended, do hereby
decree and order the amendment of section 3, Republic Act Numbered Six
Hundred Fifty Six, otherwise known as the "Property Insurance Law," to read as
follows:
" Sec. 3. For the effectuation of the purpose of this Act, the
Administration of the Fund is hereby placed under the Government Service
Insurance System with the following powers and authority: (a) to engage in the
business and operations of all kinds of insurance and reinsurance and all other
forms of undertakings to indemnify any person or party, against loss, damage, or
liability including third party liability, arising from the unknown or contingent
events, except life insurance, subject to pertinent Central Bank rules, regulations,
and policies; (b) to reinsure with and accept reinsurance from insurance
companies in the Philippines and abroad, under such terms and conditions that
may be mutually agreed upon, any excess risk the System may deem advisable,
subject to pertinent Central Bank rules, regulations and policies; (c) to issue
policies denominated by any foreign currency provided that a certain minimum
percentage to be determined by the System in consultation with the Insurance
Commission shall be reinsured abroad and provided that Fund's liability in any
foreign currency shall be covered by a minimum amount of foreign exchange
assets, which may include forward purchases of foreign exchange from the
central bank, in accordance with rules and regulations to be formulated by the
System in consultation with the Insurance Commission and subject to pertinent
Central bank rules, regulations and policies; (d) to issue surety and/or
performance bonds in Philippine peso and/or in any foreign currency, provided
that the amount of the bond be issued on any one risk or undertaking shall be
limited to ten per centum (10%) of the net worth of the Property Insurance Fund,
and that the excess over said limit shall be reinsured with the domestic and/or
foreign insurance and re-insurance companies; provided, that the Fund's bonding
exposure in any foreign currency shall be covered by a minimum amount of
foreign exchange assets in accordance with the rules and regulations to be
formulated by the System in consultation with the Insurance Commission subject
to central Bank rules, regulations and policies; (e) to insure all insurable assets
serving as collaterals for loans extended by government financial institutions not
otherwise authorized to issue insurance policies; (f) to prescribe necessary rules
and regulations, including such incidental powers as are necessary for its

operation; (g) to appoint personnel, who are certified as eligible by the Civil
Service Commission, prescribe their duties, and fix their remuneration. Section
fifteen of Commonwealth Act Numbered One Hundred Eighty- Six shall not be
applicable to personnel of the Fund;"
To reflect faithfully the functions of the Fund in accordance with this decree, the
Property Insurance Fund shall henceforth be known as the General Insurance
Fund.
All laws, orders, proclamations, rules and regulations, or parts thereof, which are
inconsistent herewith are hereby repealed or modified accordingly.
All concerned shall act accordingly pursuant to the contents of this decree.
This decree shall take effect immediately.
Done in the City of Manila, this 13th day of July in the year of our Lord, nineteen
hundred and seventy-three.
(SIGNED)
FERDINAND
President of the Philippines

E.

MARCOS

New GSIS Processing Time

LOANS GRANTING
Salary Loan

8 hours

Regular Policy Loan

8 hours

Optional Policy Loan

8 hours

Housing Loan

5 days

Pension Loan

4 hours

POLICY ISSUANCE
Regular Policy

8 hours

Optional Policy

2 days

General Insurance Policy

2 days

CLAIMS SETTLEMENT
Compulsory Life
Maturity
CSV, Death,
Disability

date of maturity
5 days

Optional Life
Maturity
CSV, Death,
Disability

date of maturity
5 days

Retirement

5 days

Survivorship

5 days

Death of a member
Death of a
pensioner
Employees' Compensation

8 days
5 days
6 days

Pre-need

5 days

Funeral Benefits

8 hours

General Insurance
Motor

5 days

Non-motor

5 days

Social Security Contributions

Effective January 2002, your social insurance contribution consists of:
Employee's Share
Employer's Share
9% of the Basic Monthly Salary for 12 % of the employees' basic monthly
the
first
salary
P16,000
Additional 2% in excess of P16,000

12% of the employee's basic monthly

salary

Your social insurance contributions entitle you to the following benefits:

7% for Retirement and other Social
Security Benefits
Unemployment benefit
Separation benefit
Maturity
Retirement
Cash Surrender Value
Disability
Policy Loan
Permanent Total & Carer's
Dividends
Allowance
Permanent Partial
Waiver of premiums due to
Temporary Total
Permanent Total Disability
Death benefit
Survivorship
Accidental death benefit
Due to death of a member or
Free
Accidental
Death
retiree-pensioner
Pension Increases
Insurance of P10, 000 (FADI)
Christmas Gift/Bonus
Burial benefit
Burial benefit

2% for Life Insurance Benefits

Privileges
Service loans
Salary and Emergency Loans
Bahay-Ko Housing Loan

Socialized/ Special Housing

Privilege

Pension loan

Processing Time: 5 days

There are four retirement modes available to government employees. Those who
were in the service on or before May 31, 1977 may avail of retirement benefits
under RA 660, RA 1616, PD 1146 or RA 8291. While
those who entered government service after May 31, 1977 may avail of
retirement benefits under PD 1146 or RA 8291.
The GSIS offers four retirement benefit packages under the following laws:
Retirement Under RA 8291
Retirement
under
RA
7699
or
the
Portability
Law
The retirement mode applicable if your years of service to the government does
not meet the required number of years under a certain retirement law and you
have enough number of years service in the private sector to
compensate/substitute for the service requirement.
Retirement
under
Presidential
Decree
1146
The retirement mode applicable if you have been in service after May 31, 1977
but before June 24, 1997.
Retirement under Republic Act 660 or the Annuity (Pension) Benefit Plan
as
Amended
The retirement mode applicable if you were in the service on or before May 31,
1977.
Retirement under Republic Act 1616 or Gratuity Retirement Benefit
The retirement mode applicable if you were in the service on or before May 31,
1977.