Republic Act No. 7699 or The Portability Law as a Remedy of an Employee Who is Not Qualified for Benefits under the SSS Law or GSIS Law

Related articles: Understanding SSS and its benefits and Salient Features of Republic Act No. 8291 or the Government Service Insurance System Act of 1997

Private employees are mandated to be members of Social Security System (SSS) while Government Employees are to be members of Government Service Insurance System (GSIS). When private employees stayed as such until they retire, they can get retirement benefits under SSS provided they meet other qualifications provided by law. The same goes for government employees under GSIS law. What if, a private employee shifts to work as government employee? How can she/he claim retirement benefits? Republic Act No. 7699 or The Portability Law provides the answer for such situation.

What is Portability?

Portability refers to the transfer of funds for the account, and benefit of a worker who transfers from one system to the other (Section 1(b), Rule III of R.A. No. 7699). The term system herein refers to SSS or GSIS. It refers to instances where a worker transfers from private employment to government employment, and vice versa, thereby transferring from being SSS member to GSIS member, and vice versa. The transfer of funds is to ensure that his/her years of service are duly credited.

Coverage

Section 1, Rule I of R.A. No. 7699 provides that the rules and regulations shall apply to all worker‐members of the Government Service Insurance System (GSIS) and/or Social Security System (SSS) who transfer from one sector to another, and who wish to retain their membership in both Systems.

Limited Portability Scheme

R.A. No. 7699 was enacted to enable those from the private sector who transfer to the government service or from the government sector to the private sector to combine their years of service and contributions which have been credited with the SSS or GSIS, as the case may be, to satisfy the required number of years of service for entitlement to the benefits under the applicable laws (Chan, Joselito, Bar Reviewer on Labor Law, 2017 3^rd Revised Edition, pg. 445).

Totalization

It refers to the process of adding up the periods of creditable services or contributions under each of the Systems, SSS or GSIS, for the purpose of eligibility and computation of benefits (Chan, Joselito, Bar Reviewer on Labor Law, 2017 3^rd Revised Edition, pg. 445). Hence, if a worker is not entitled to any benefits under SSS or GSIS because the periods of his creditable services or contributions does not qualify to avail any benefit under SSS or GSIS, as the case may be, he/she could apply the totalization rule. Applying the totalization rule can increase the chances of a worker to avail of benefits under the subject law. 

                Section 3, Rule V of R.A. No. 7699 provides instances where totalization applies, to wit:

1. If a worker is not qualified for any benefits from both Systems;
2. If a worker in the public sector is not qualified for any benefits in the GSIS; or
3. If a worker in the private sector is not qualified for any benefits from the SSS.

If a work qualifies for benefits in both Systems, totalization shall not apply (Section 5, Rule V of R.A. No. 7699).

In the case Gamogamo v. PNOC Shipping and Transport Corp., G.R. No. 141707, dated May 7, 2002, the pivotal issue was whether, for the purpose of computing an employee’s retirement pay, prior service rendered in a government agency can be tacked in and added to the creditable service later acquired in a government-owned and controlled corporation without original charter. Petitioner Gamogamo was first employed with the Department of Health (DOH) for fourteen (14) years until he resigned. After which, he was employed by a private domestic corporation, LUSTEVECO. Said corporation was subsequently acquired by PNOC Shipping and Transport Corporation. Respondent then implemented a Manpower Reduction Program under which, retrenched employees shall receive a two-month pay for every year of service. Petitioner requested to be included in the next retrenchment schedule, but was declined. Hence, petitioner filed a complaint for the full payment of his retirement benefits, and that his service with DOH should have been included in the computation of his years of service. The Court ruled in the negative. The Supreme Court stated, to wit:

“Petitioner’s contention that the principle of tacking of creditable service is mandated by Republic Act No. 7699 is baseless. xxx

Obviously, totalization of service credits is only resorted to when the retiree does not qualify for benefits in either or both of the Systems. Here, petitioner is qualified to receive benefits granted by the Government Security Insurance System (GSIS), if such right has not yet been exercised. The pertinent provisions of law are:

SEC. 12 Old Age Pension. — (a) xxx

(b) A member who has rendered at least three years but less than fifteen years of service at the time of separation shall, upon reaching sixty years of age or upon separation after age sixty, receive a cash payment equivalent to one hundred percent of his average monthly compensation for every year of service with an employer (Presidential Decree No. 1146, as amended, otherwise known as the Government Service Insurance Act of 1977).

SEC. 4. All contributions paid by such member personally, and those that were paid by his employers to both Systems shall be considered in the processing of benefits which he can claim from either or both Systems: Provided, however, That the amount of benefits to be paid by one System shall be in proportion to the number of contributions actually remitted to that System (Republic Act No. 7699).

In any case, petitioner’s fourteen years of service with the DOH may not remain uncompensated because it may be recognized by the GSIS pursuant to the aforequoted Section 12, as may be determined by the GSIS. Since petitioner may be entitled to some benefits from the GSIS, he cannot avail of the benefits under R.A. No. 7699.” (Emphasis supplied)

Hence, if an employee is entitled to some benefits either from GSIS or SSS, as the case may be, then the rule on totalization will not apply. Totalization is only resorted to when one cannot avail any benefits from GSIS or SSS, as the case may be, since the subject law intends that the employee may be able to get some benefits for his/her years of work. This is in conformity with the objective of the Portability Law which is to ensure the social welfare of employees in any sector.

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Alburo Alburo and Associates Law Offices specializes in business law and labor law consulting. For inquiries, you may reach us at info@alburolaw.com, or dial us at (02)7745-4391/0917-5772207.

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