RMC No. 38-2004 — Publishes the full text of Circular Letter No. 2004-10 issued by the Secretary of the Department of Budget and Management regarding unpaid Social Insurance Premiums to the GSIS. Digest | Full Text

REPUBLIC OF THE PHILIPPINES DEPARTMENT OF FINANCE BUREAU OF INTERNAL REVENUE Quezon City June 23, 2004 REVENUE MEMORANDUM CIRCULAR NO. 38 - 2004 SUBJECT: Publishing the full text of CIRCULAR LETTER NO. 2004 � 10 by the Secretary of the Department of Budget and Management dated June 8, 2004 entitled unpaid social insurance premiums to the GSIS. TO : All Internal Revenue Officers, Employees and Others Concerned For the information and guidance of all internal revenue officers, employees and others concerned, quoted hereunder is the full text of Circular Letter No. 2004-10 by the Secretary of the Department of Budget and Management dated June 8, 2004: REPUBLIC OF THE PHILIPPINES DEPARTMENT OF BUDGET AND MANAGEMENT Malaca�ang, Manila CIRCULAR LETTER NO. 2004 - 10 June 8, 2004 FOR : All Heads of Departments/Agencies/State Universities and Colleges, Other Offices of the National Government/Local Government Units and All Others Concerned SUBJECT: Unpaid Social Insurance Premiums to the GSIS 1.0 Purpose: This circular is issued to clarify persistent issues regarding the following: 1.1 Social insurance premiums payable to GSIS covering 1997 and prior years; and, 1.2 Deficiency in premiums payments for the period July, 1997 to December, 1998 due to increase in rates, i.e., from 9.5 % to 12 % pursuant to the new GSIS Act, RA No. 8291. 2.0 On item 1.1 Prior to 1997, the DBM was responsible in remitting to GSIS the employers' share in the social insurance premiums of National Government Agencies (NGAs). Likewise, DBM deducted from the Internal Revenue Allotment (IRA) of Local Government Units (LGUs) the unremitted employers' share in the insurance premiums of LGU employees. Effective CY

1997, however, DBM releases to agencies the amount needed to cover the employers' share in the social insurance premiums of government employees. Hence, it is now the responsibility of agencies to remit the employers' share in the social insurance premiums of government employees to the GSIS. Relative to the premiums payable to GSIS covering 1997 and prior years, a Memorandum of Agreement was entered into by and among DBM, GSIS and the Bureau of Treasury specifying the mode to be adopted to settle the same. Based on reconciliations made, the unremitted premiums payable by DBM to GSIS amount to P6,464,146,431.63 broken down as follows: NGAs P 2,699,483,567.00 Life and Retirement 248,963,384.00 Employees Compensation & Insurance Premium 3,515,699,480.63 LGUs ------------------------ P 6,464,146,431.63 Total ========== 3.0 On item 1.2 3.1 There had been a deficiency in premium payments for the period July, 1997 to December, 1998 due to increase in premium rates from 9.5 % to 12 % pursuant to the new GSIS Act, RA No. 8291. The said increase in premium rates was not provided in the annual budgets of the National Government in 1997 and 1998, mainly because the effectivity of the premium rate increase took effect mid-1997 at the tine when the 1997 budget was being executed and the 1998 budget was already submitted by the Executive to Congress. 3.2 A circular letter has been issued (Circular Letter No. 2004-5 dated March 5, 2004) where all agencies are enjoined to confirm the amount reflected by the GSIS as t he actual deficiency in premium payments resulting from the premium rate increase covering the period 1997-1998. 3.3 After determining the total requirement involved to cover such deficiency, the needed amount will be submitted to Congress for possible legislation of the appropriate budget cover. 4.0 To date, DBM and GSIS have agreed to a scheme to settle the aforecited valid government obligations, subject to reconciliation of any discrepancy that may arise out of the confirmation from agencies per CL 2004-5. 5.0 Non-payment of the above unremitted premiums shall not, however, be used by GSIS as basis to withhold the grant of loans to GSIS qualified members nor should it affect retirement claims payable by GSIS. (SGD.)EMILIA T. BONCODIN Secretary All revenue officials and employees are enjoined to give this Circular as wide a publicity as possible. (Original Signed) NORMA L. LIPANA ACIR � Financial & Administrative Service OIC � Resource Management Group