Still on the National government's debt to GSIS.

This is an addendum to my post yesterday regarding the debt that the DepEd owes the GSIS representing arrears in premium on the insurance coverage of teachers and other personnel.

Practically, the entire bureaucracy including LGUs have incurred prior years' obligation with the GSIS since 1997. How did these obligations came about? In the case of national government agencies (I'll make a post on the case of LGUs later)- that "utang" was attributed to the 2.5% increase in the national government share in the premium rate from 9.5% to 12.5% starting July 1997 to December 1998. The premium deficiency was not paid because the appropriations in the GAA during the said period for the Retirement and Life Insurance Premium (RLIP) of state employees were computed at the rate of 9.5% only.

The reconciliation as to the actual amount of deficiency went on for several years. When the figures were finally established, the mode of settlement became another issue. The first option was for the DOF to issue a fixed rate treasury bond in favor of the GSIS. A MOA to that effect was executed between the DOF and DBM representing the national government, and the GSIS. For undisclosed reasons, the settlement did not push through. The second option which also did not materialize was for the national government to turn over to the GSIS a governmnent-owned property in exchange for the writing off of the debt. On the third settlement attempt, Congress agreed to appropriate the amount of P3,299,791,000 as part of the supplemental appropriation for 2006 through RA 9358 (the national government then was operating on a reenacted budget).

Joint Memorandum Circular No. 2007-1 signed by GSIS President Winston Garcia and DBM Secretary Rolando Andaya, Jr., was issued to implement the said appropriation. In gist, the joint circular prescribes that:

1) The DBM shall release the appropriated amount of P3,299,791,000 to the GSIS as payment of the deficiency in government share on the premium contribution from July 1997 to December 1998. The GSIS shall apply said payment on the principal amount only, not on any interest that it has imposed thereon;

2) The DBM shall post in its website the amount of increase in RLIP per agency as computed by the GSIS;

3) The GSIS shall post to the individual account of the GSIS retirees and members the said payment. Any interest imposed by the GSIS shall not be charged against the retiree/member but shall be subject to separate discussion by the DBM and GSIS;

4) The GSIS shall pay the members the amount pertaining to the adjustment in retirement benefits and basic monthly pension as well as refund the full amount deducted from the active members whose matured policies and salary/policy loans were reduced.

The issue of the settlement of the RLIP deficiency (principal amount) should be put to rest, that is, if the GSIS has fully complied with its commitment as drawn in the joint circular. But the matter of the interest imposed by the GSIS that it insists should be paid by the national government, is left hanging as negotiation between the former and the DBM has not been finalized yet.

Since this is a government to government negotiation, why can't the GSIS condone the said interest charges? The HDMF (PagIBIG) has resorted to this time and again.