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Republic Act No.

8282 May 01, 1997 hold office until their successors shall have been appointed and duly
qualified. All vacancies, prior to the expiration of the term, shall be filled
AN ACT FURTHER STRENGTHENING THE SOCIAL SECURITY SYSTEM THEREBY for the unexpired term only. The appointive members of the
AMENDING FOR THIS PURPOSE, REPUBLIC ACT NO. 1161, AS AMENDED, Commission shall receive at least two thousand five hundred pesos
OTHERWISE KNOWN AS THE SOCIAL SECURITY LAW (P2,500.00) per diem for each meeting actually attended by them but
not to exceed Ten thousand pesos (P10,000.00) a month:: Provided,
That members of the Commission shall also receive a per diem of at
Be it enacted by the Senate and House of Representatives of the Philippines in Congress least Two thousand five hundred pesos (P2,500.00) but not to exceed
assembled:: Fifteen thousand pesos (P15,000.00) a month: Provided , further, That
said members of the Commission shall also receive reasonable
Section 1. Republic Act No. 1161, as amended, otherwise known as the "Social Security transportation and representation allowances as may be fixed by the
Law", is hereby further amended to read as follows: Commission, but not to exceed Ten thousand pesos (P10,000.00) a
month.
"SECTION 1. Short Title. - This Act shall be known as the "AN ACT
FURTHER STRENGTHENING THE SOCIAL SECURITY SYSTEM "(b) The general conduct of the operations and management functions
THEREBY AMENDING FOR THIS PURPOSE, REPUBLIC ACT NO. of the SSS shall be vested in the SSS President who shall serve as the
1161, AS AMENDED, OTHERWISE KNOWN AS THE SOCIAL chief executive officer immediately responsible for carrying out the
SECURITY LAW." program of the SSS and the policies of the Commission. The SSS
President shall be a person who has had previous experience in the
"SEC. 2. Declaration of Policy. - It is the policy of the Republic of the technical and administrative fields related to the purposes of this Act.
Philippines to establish, develop, promote and perfect a sound and He shall be appointed by the President of the Philippines and shall
viable tax-exempt social security service suitable to the needs of the receive salary to be fixed by the Commission with the approval of the
people throughout the Philippines which shall promote social justice President of the Philippines, payable from the funds of the SSS.
and provide meaningful protection to members and their beneficiaries
against the hazards of disability, sickness, maternity, old age, death, "(c) The Commission, upon the recommendation of the SSS President,
and other contingencies resulting in loss of income or financial burden. shall appoint an actuary, and such other personnel as may be deemed
Towards this end, the State shall endeavor to extend social security necessary, fix their reasonable compensation, allowances and other
protection to workers and their beneficiaries. benefits, prescribe their duties and establish such methods and
procedures as may be necessary to insure the efficient, honest and
"SEC. 3. Social Security System. - (a) To carry out the purposes of this economical administration of the provisions and purposes of this Act:
Act, the Social Security System, hereinafter referred to as 'SSS', a Provided, however, That the personnel of the SSS below the rank of
corporate body, with principal place of business in Metro Manila, Vice-President shall be appointed by the SSS President: Provided,
Philippines is hereby created. The SSS shall be directed and controlled further, That the personnel appointed by the SSS President, except
by a Social Security Commission, hereinafter referred to as those below the rank of assistant manager, shall be subject to the
'Commission', composed of the Secretary of Labor and Employment or confirmation by the Commission: Provided, further, That the personnel
his duly designated undersecretary, the SSS president and seven (7) of the SSS shall be selected only from civil service eligibles and be
appointive members, three (3) of whom shall represent the workers' subject to civil service rules and regulations: Provided, finally, That the
group, at least one of whom shall be a woman; three (3), the SSS shall be exempt from the provisions of Republic Act No. 6758 and
employers' group, at least one (1) of whom shall be a woman; and one Republic Act No. 7430.
(1), the general public whose representative shall have adequate
knowledge and experience regarding social security, to be appointed "SEC. 4. Powers and Duties of the Commission and SSS. - (a) The
by the President of the Philippines. The six (6) members representing Commission. - For the attainment of its main objectives as set forth in
workers and employers shall be chosen from among the nominees of Section 2 hereof, the Commission shall have the following powers and
workers' and employers' organizations, respectively. The Chairman of duties:
the Commission shall be designated by the President of the Philippines
from among its members. The term of the appointive members shall be "(1) To adopt, amend and rescind, subject to the approval of
three (3) years: Provided, That the terms of the first six (6) appointive the President of the Philippines, such rules and regulations as
members shall be one (1), two (2) and three (3) years for every two may be necessary to carry out the provisions and purposes of
members, respectively: Provided, further, That they shall continue to this Act;

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"(2) To establish a provident fund for the members which will as may be necessary, to undertake the necessary actuarial
consist of voluntary contributions of employers and/or studies and calculations concerning increases in benefits
employees, self-employed and voluntary members and their taking into account inflation and the financial stability of the
earnings, for the payment of benefits to such members or their SSS, and to provide for feasible increases in benefits every
beneficiaries, subject to such rules and regulations as it may four (4) years, including the addition of new ones, under such
promulgate and approved by the President of the Philippines; rules and regulations as the Commission may adopt, subject
to the approval of the President of the Philippines: Provided,
"(3) To maintain a provident fund which consists of That the actuarial soundness of the reserve fund shall be
contributions made by both the SSS and its officials and guaranteed: Provided, further, That such increases in benefits
employees and their earnings, for the payment of benefits to shall not require any increase in the rate of contribution;
such officials and employees or their heirs under such terms
and conditions as it may prescribe; "(3) To establish offices of the SSS to cover as many
provinces, cities and congressional districts, whenever and
"(4) To approve restructuring proposals for the payment of wherever it may be expedient, necessary and feasible, and to
due but unremitted contributions and unpaid loan inspect or cause to be inspected periodically such offices;
amortizations under such terms and conditions as it may
prescribe; "(4) To enter into agreements or contracts for such service
and aid, as may be needed for the proper, efficient and stable
"(5) To authorize cooperatives registered with the cooperative administration of the SSS;
development authority or associations registered with the
appropriate government agency to act as collecting agents of "(5) To adopt, from time to time, a budget of expenditures
the SSS with respect to their members: Provided, That the including salaries of personnel, against all funds available to
SSS shall accredit the cooperative or association: Provided, the SSS under this Act;
further, That the persons authorized to collect are bonded;
"(6) To set up its accounting system and provide the
"(6) To compromise or release, in whole or in part, any necessary personnel therefor;
interest, penalty or any civil liability to SSS in connection with
the investments authorized under Section 26 hereof, under "(7) To require reports, compilations and analyses of statistical
such terms and conditions as it may prescribe and approved and economic data and to make investigation as may be
by the President of the Philippines; and needed for the proper administration and development of the
SSS;
"(7) To approve, confirm, pass upon or review any and all
actions of the SSS in the proper and necessary exercise of its "(8) To acquire and dispose of property, real or personal,
powers and duties hereinafter enumerated. which may be necessary or expedient for the attainment of the
purposes of this Act;
"(b) The Social Security System. - Subject to the provision of Section
four (4), paragraph seven (7) hereof, the SSS shall have the following "(9) To acquire, receive, or hold, by way of purchase,
powers and duties: expropriation or otherwise, public or private property for the
purpose of undertaking housing projects preferably for the
"(1) To submit annually not later than April 30, a public report benefit of low-income members and for the maintenance of
to the President of the Philippines and to the Congress of the hospitals and institutions for the sick, aged and disabled, as
Philippines covering its activities in the administration and well as schools for the members and their immediate families;
enforcement of this Act during the preceding year including
information and recommendations on broad policies for the "(10) To sue and be sued in court; and
development and perfection of the program of the SSS;
"(11) To perform such other corporate acts as it may deem
"(2) To require the actuary to submit a valuation report on the appropriate for the proper enforcement of this Act.
SSS benefit program every four (4) years, or more frequently
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"SEC. 5. Settlement of Disputes. - (a) Any dispute arising under this properties of the SSS in the same manner and as frequently as the
Act with respect to coverage, benefits, contributions and penalties accounts, funds and properties of the government are checked and
thereon or any other matter related thereto, shall be cognizable by the audited under existing laws, and he shall have, as far as practicable,
Commission, and any case filed with respect thereto shall be heard by the same powers and duties as he has with respect to the checking
the Commission, or any of its members, or by hearing officers duly and auditing of public accounts, funds and properties in general.
authorized by the Commission and decided within twenty (20) days
after the submission of the evidence. The filing, determination and "(b) The Secretary of Justice shall be the ex-officio counsel of the SSS.
settlement of disputes shall be governed by the rules and regulations He or his representative shall act as legal adviser and counsel thereof.
promulgated by the Commission.
"SEC. 7. Oaths, Witnesses, and Production of Records. - When
"(b) Appeal to Courts. - Any decision of the Commission, in the authorized by the Commission, an official or employee thereof shall
absence of an appeal therefrom as herein Provided, shall become final have the power to administer oath and affirmation, take depositions,
and executory fifteen (15) days after the date of notification, and certify to official acts, and issue subpoena and subpoena duces tecum
judicial review thereof shall be permitted only after any party claiming to compel the attendance of witnesses and the production of books,
to be aggrieved thereby has exhausted his remedies before the papers, correspondence and other records deemed necessary as
Commission. The Commission shall be deemed to be a party to any evidence in connection with any question arising under this Act. Any
judicial action involving any such decision, and may be represented by case of contumacy shall be dealt with by the Commission in
an attorney employed by the Commission, or when requested by the accordance with law.
Commission, by the Solicitor General or any public prosecutors.
"SEC. 8. Terms Defined. - For purposes of this Act, the following terms
"(c) Court Review. - The decision of the Commission upon any shall, unless the context indicates otherwise, have the following
disputed matter may be reviewed both upon the law and the facts by meanings:
the Court of Appeals. For the purpose of such review, the procedure
concerning appeals from the Regional Trial Court shall be followed as
far as practicable and consistent with the purposes of this Act. Appeal "(a) SSS - The Social Security System created by this Act.
from a decision of the Commission must be taken within fifteen (15)
days from notification of such decision. If the decision of the "(b) Commission - The Social Security Commission as herein created.
Commission involves only questions of law, the same shall be
reviewed by the Supreme Court. No appeal bond shall be required. "(c) Employer- Any person, natural or juridical, domestic or foreign, who
The case shall be heard in a summary manner, and shall take carries on in the Philippines any trade, business, industry, undertaking,
precedence over all cases, except that in the Supreme Court, criminal or activity of any kind and uses the services of another person who is
cases wherein life imprisonment or death has been imposed by the trial under his orders as regards the employment, except the Government
court shall take precedence. No appeal shall act as a supersedeas or a and any of its political subdivisions, branches or instrumentalities,
stay of the order of the Commission unless the Commission itself, or including corporations owned or controlled by the Government:
the Court of Appeals or the Supreme Court, shall so order. Provided, That a self-employed person shall be both employee and
employer at the same time.
"(d) Execution of Decisions. - The Commission may, motu proprio or on
motion of any interested party, issue a writ of execution to enforce any "(d) Employee - Any person who performs services for an employer in
of its decisions or awards, after it has become final and executory, in which either or both mental or physical efforts are used and who
the same manner as the decision of the Regional Trial Court by receives compensation for such services, where there is an employer-
directing the city or provincial sheriff or the sheriff whom it may appoint employee relationship: Provided, That a self-employed person shall be
to enforce such final decision or execute such writ; and any person both employee and employer at the same time.
who shall fail or refuse to comply with such decision, award or writ,
after being required to do so shall, upon application by the Commission
pursuant to Rule 71 of the Rules of Court, be punished for contempt. "(e) Dependents - The dependents shall be the following:

"SEC. 6. Auditor and Counsel. - (a) The Chairman of the Commission "(1) The legal spouse entitled by law to receive support from
on Audit shall be the ex-officio Auditor of the SSS. He or his the member;
representative shall check and audit all the accounts, funds and

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"(2) The legitimate, legitimated or legally adopted, and Philippines, may enter into an agreement with the Philippine
illegitimate child who is unmarried, not gainfully employed, Government for the inclusion of such employees in the SSS
and has not reached twenty-one (21) years of age, or if over except those already covered by their respective civil service
twenty-one (21) years of age, he is congenitally or while still a retirement systems: Provided, further, That the terms of such
minor has been permanently incapacitated and incapable of agreement shall conform with the provisions of this Act on
self-support, physically or mentally; and coverage and amount of payment of contributions and
benefits: Provided, finally, That the provisions of this Act shall
"(3) The parent who is receiving regular support from the be supplementary to any such agreement; and
member.
"(5) Such other services performed by temporary and other
"(f) Compensation - All actual remuneration for employment, including employees which may be excluded by regulation of the
the mandated cost-of-living allowance, as well as the cash value of any Commission. Employees of bona fide independent contractors
remuneration paid in any medium other than cash except that part of shall not be deemed employees of the employer engaging the
the remuneration in excess of the maximum salary credit as Provided service of said contractors.
under Section Eighteen of this Act.
"(k) Beneficiaries - The dependent spouse until he or she remarries,
"(g) Monthly salary credit - The compensation base for contributions the dependent legitimate, legitimated or legally adopted, and
and benefits as indicated in the schedule in Section Eighteen of this illegitimate children, who shall be the primary beneficiaries of the
Act. member: Provided, That the dependent illegitimate children shall be
entitled to fifty percent (50%) of the share of the legitimate, legitimated
or legally adopted children: Provided, further, That in the absence of
"(h) Monthly - The period from one end of the last payroll period of the the dependent legitimate, legitimated children of the member, his/her
preceding month to the end of the last payroll period of the current dependent illegitimate children shall be entitled to one hundred percent
month if compensation is on hourly, daily or weekly basis; if on any (100%) of the benefits. In their absence, the dependent parents who
other basis, 'monthly' shall mean a period of one (1) month. shall be the secondary beneficiaries of the member. In the absence of
all the foregoing, any other person designated by the member as
"(i) Contribution - The amount paid to the SSS by and on behalf of the his/her secondary beneficiary.
members in accordance with Section Eighteen of this Act.
"(l) Contingency - The retirement, death, disability, injury or sickness
"(j) Employment - Any service performed by an employee for his and maternity of the member.
employer except:
"(m) Average monthly salary credit - The result obtained by dividing the
"(1) Employment purely casual and not for the purpose of sum of the last sixty (60) monthly salary credits immediately preceding
occupation or business of the employer; the semester of contingency by sixty (60), or the result obtained by
dividing the sum of all the monthly salary credits paid prior to the
"(2) Service performed on or in connection with an alien semester of contingency by the number of monthly contributions paid in
vessel by an employee if he is employed when such vessel is the same period, whichever is greater: Provided, That the injury or
outside the Philippines; sickness which caused the disability shall be deemed as the
permanent disability for the purpose of computing the average monthly
salary credit.
"(3) Service performed in the employ of the Philippine
Government or instrumentality or agency thereof;
"(n) Average daily salary credit- The result obtained by dividing the sum
of the six (6) highest monthly salary credits in the twelve-month period
"(4) Service performed in the employ of a foreign government immediately preceding the semester of contingency by one hundred
or international organization, or their wholly-owned eighty (180).
instrumentality: Provided, however, That this exemption
notwithstanding, any foreign government, international
organization or their wholly-owned instrumentality employing "(o) Semester - A period of two (2) consecutive quarters ending in the
workers in the Philippines or employing Filipinos outside of the quarter of contingency.

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"(p) Quarter - A period of three (3) consecutive calendar months ending improvements in the benefits to be available under the remaining
on the last day of March, June, September and December. private plan, which may be necessary to adopt by reason of the
reduced contributions thereto as a result of the integration, shall be
"(q) Credited years of service - For a member covered prior to January subject to agreements between the employers and employees
nineteen hundred and eighty five (1985) minus the calendar year of concerned: Provided, further, That the private benefit plan which the
coverage plus the number of calendar years in which six (6) or more employer shall continue for his employees shall remain under the
contributions have been paid from January nineteen hundred and employer's management and control unless there is an existing
eighty five (1985) up to the calendar year containing the semester prior agreement to the contrary: Provided, finally, That nothing in this Act
to the contingency. For a member covered in or after January nineteen shall be construed as a limitation on the right of employers and
hundred and eighty five (1985), the number of calendar years in which employees to agree on and adopt benefits which are over and above
six (6) or more contributions have been paid from the year of coverage those Provided under this Act.
up to the calendar year containing the semester prior to the
contingency: Provided, That the Commission may provide for a "(b) Spouses who devote full time to managing the household and
different number of contributions in a calendar year for it to be family affairs, unless they are also engaged in other vocation or
considered as a credited year of service. employment which is subject to mandatory coverage, may be covered
by the SSS on a voluntary basis.
"(r) Member - The worker who is covered under Section Nine and
Section Nine-A of this Act. "(c) Filipinos recruited by foreign-based employers for employment
abroad may be covered by the SSS on a voluntary basis.
"(s) Self-employed - Any person whose income is not derived from
employment, as defined under this Act, as well as those workers "SEC. 9-A. Compulsory Coverage of the Self-Employed. - Coverage in
enumerated in Section Nine-A hereof. the SSS shall also be compulsory upon such self-employed persons as
may be determined by the Commission under such rules and
"(t) Net earnings - Net income before income taxes plus non-cash regulations as it may prescribe, including but not limited to the
charges such as depreciation and depletion appearing in the regular following:
financial statement of the issuing or assuming institution.
"1. All self-employed professionals;
"(u) Fixed charges - Recurring expense such as amortization of debt
discount or rentals for leased properties, including interest on funded "2. Partners and single proprietors of businesses;
and unfunded debt.
"3. Actors and actresses, directors, scriptwriters and news
"SEC. 9. Coverage. - (a) Coverage in the SSS shall be compulsory correspondents who do not fall within the definition of the term
upon all employees not over sixty (60) years of age and their "employee" in Section 8 (d) of this Act;
employers: Provided, That in the case of domestic helpers, their
monthly income shall not be less than One thousand pesos "4. Professional athletes, coaches, trainers and jockeys; and
(P1,000.00) a month: Provided, further, That any benefit already
earned by the employees under private benefit plans existing at the
time of the approval of this Act shall not be discontinued, reduced or "5. Individual farmers and fishermen.
otherwise impaired: Provided, further, That private plans which are
existing and in force at the time of compulsory coverage shall be "Unless otherwise specified herein, all provisions of this Act applicable
integrated with the plan of the SSS in such a way where the employer's to covered employees shall also be applicable to the covered self-
contribution to his private plan is more than that required of him in this employed persons.
Act, he shall pay to the SSS only the contribution required of him and
he shall continue his contribution to such private plan less his "SEC. 10. Effective Date of Coverage. - Compulsory coverage of the
contribution to the SSS so that the employer's total contribution to his employer shall take effect on the first day of his operation and that of
benefit plan and to the SSS shall be the same as his contribution to his the employee on the day of his employment: Provided, That the
private benefit plan before the compulsory coverage: Provided, further, compulsory coverage of the self-employed person shall take effect
That any changes, adjustments, modifications, eliminations or upon his registration with the SSS.
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"SEC. 11. Effect of Separation from Employment. - When an employee pension or Two hundred fifty pesos (P250.00), whichever is higher,
under compulsory coverage is separated from employment, his shall also be paid for each dependent child conceived on or before the
employer's contribution on his account and his obligation to pay date of the contingency but not exceeding five (5), beginning with the
contributions arising from that employment shall cease at the end of youngest and without substitution: Provided, That where there are
the month of separation, but said employee shall be credited with all legitimate or illegitimate children, the former shall be preferred.
contributions paid on his behalf and entitled to benefits according to the
provisions of this Act. He may, however, continue to pay the total SEC. 12-B. Retirement Benefits. - (a) A member who has paid at least
contributions to maintain his right to full benefit. one hundred twenty (120) monthly contributions prior to the semester
of retirement and who: (1) has reached the age of sixty (60) years and
"SEC. 11-A. Effect of Interruption of Business or Professional Income. - is already separated from employment or has ceased to be self-
If the self-employed realizes no income in any given month, he shall employed; or (2) has reached the age of sixty-five (65) years, shall be
not be required to pay contributions for that month. He may, however, entitled for as long as he lives to the monthly pension: Provided, That
be allowed to continue paying contributions under the same rules and he shall have the option to receive his first eighteen (18) monthly
regulations applicable to a separated employee member: Provided, pensions in lump sum discounted at a preferential rate of interest to be
That no retroactive payment of contributions shall be allowed other determined by the SSS.
than as prescribed under Section Twenty-two-A hereof.
"(b) A covered member who is sixty (60) years old at retirement and
"SEC. 12. Monthly Pension. - (a) The monthly pension shall be the who does not qualify for pension benefits under paragraph (a) above,
highest of the following amounts: shall be entitled to a lump sum benefit equal to the total contributions
paid by him and on his behalf: Provided, That he is separated from
"(1) The sum of the following: employment and is not continuing payment of contributions to the SSS
on his own.
"(i) Three hundred pesos (P300.00; plus
"(c) The monthly pension shall be suspended upon the reemployment
or resumption of self-employment of a retired member who is less than
"(ii) Twenty percent (20%) of the average monthly sixty-five (65) years old. He shall again be subject to Section Eighteen
salary credit; plus and his employer to Section Nineteen of this Act.

"(iii) Two percent (2%) of the average monthly salary "(d) Upon the death of the retired member, his primary beneficiaries as
credit for each credited year of service in excess of of the date of his retirement shall be entitled to receive the monthly
ten (10) years; or pension: Provided, That if he has no primary beneficiaries and he dies
within sixty (60) months from the start of his monthly pension, his
"(2) Forth percent (40%) of the average monthly salary credit; secondary beneficiaries shall be entitled to a lump sum benefit
or equivalent to the total monthly pensions corresponding to the balance
of the five-year guaranteed period, excluding the dependents' pension.
"(3) One thousand pesos (P1,000.00): Provided, That the
monthly pension shall in no case be paid for an aggregate "(e) The monthly pension of a member who retires after reaching age
amount of less than sixty (60) months. sixty (60) shall be the higher of either: (1) the monthly pension
computed at the earliest time he could have retired had he been
"(b) Notwithstanding the preceding paragraph, the minimum pension separated from employment or ceased to be self-employed plus all
shall be One thousand two hundred pesos (P1,200.00) for members adjustments thereto; or (2) the monthly pension computed at the time
with at least ten (10) credited years of service and Two thousand four when he actually retires.
hundred pesos (P2,400.00) for those with twenty (20) credited years of
service. "SEC. 13. Death Benefits. - Upon the death of a member who has paid
at least thirty-six (36) monthly contributions prior to the semester of
"SEC. 12-A. Dependents' Pension. - Where monthly pension is payable death, his primary beneficiaries shall be entitled to the monthly
on account of death, permanent total disability or retirement, pension: Provided, That if he has no primary beneficiaries, his
dependents' pension equivalent to ten percent (10%) of the monthly secondary beneficiaries shall be entitled to a lump sum benefit

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equivalent to thirty-six (36) times the monthly pension. If he has not "(e) If the disability is permanent partial, and such disability occurs
paid the required thirty-six (36) monthly contributions, his primary or before thirty-six (36) monthly contributions have been paid prior to the
secondary beneficiaries shall be entitled to a lump sum benefit semester of disability, the benefit shall be such percentage of the lump
equivalent to the monthly pension times the number of monthly sum benefit described in the preceding paragraph with due regard to
contributions paid to the SSS or twelve (12) times the monthly pension, the degree of disability as the Commission may determine.
whichever is higher.
"(f) If the disability is permanent total and such disability occurs after
"SEC. 13-A. Permanent Disability Benefits. - (a) Upon the permanent thirty-six (36) monthly contributions have been paid prior to the
total disability of a member who has paid at least thirty-six (36) monthly semester of disability, the benefit shall be the monthly pension for
contributions prior to the semester of disability, he shall be entitled to permanent total disability payable not longer than the period
the monthly pension: Provided, That if he has not paid the required designated in the following schedule:
thirty-six (36) monthly contributions, he shall be entitled to a lump sum
benefit equivalent to the monthly pension times the number of monthly
contributions paid to the SSS or twelve (12) times the monthly pension, Complete and permanent loss Number of
whichever is higher. A member who (1) has received a lump sum of use of Months
benefit; and (2) is reemployed or has resumed self-employment not One thumb 10
earlier than one (1) year from the date of his disability shall again be
One index finger 8
subject to compulsory coverage and shall be considered a new
member. One middle finger 6
One right finger 5
"(b) The monthly pension and dependents' pension shall be suspended One little finger 3
upon the reemployment or resumption of self-employment or the
recovery of the disabled member from his permanent total disability or One big toe 6
his failure to present himself for examination at least once a year upon One hand 39
notice by the SSS.
One arm 50
"(c) Upon the death of the permanent total disability pensioner, his One foot 31
primary beneficiaries as of the date of disability shall be entitled to One leg 46
receive the monthly pension: Provided, That if he has no primary
beneficiaries and he dies within sixty (60) months from the start of his One ear 10
monthly pension, his secondary beneficiaries shall be entitled to a lump Both ears 20
sum benefit equivalent to the total monthly pensions corresponding to
Hearing of one ear 10
the balance of the five-year guaranteed period excluding the
dependents' pension. Hearing of both ears 50
Sight of one eye 25
"(d) The following disabilities shall be deemed permanent total:
"(g) The percentage degree of disability which is equivalent to the ratio
"1. Complete loss of sight of both eyes; that the designated number of months of compensability bears to
seventy-five (75), rounded to the next higher integer, shall not be
"2. Loss of two limbs at or above the ankle or wrists; additive for distinct, separate and unrelated permanent partial
disabilities, but shall be additive for deteriorating and related
permanent partial disabilities to a maximum of one hundred percent
"3. Permanent complete paralysis of two limbs;
(100%), in which case, the member shall be deemed as permanently
totally disabled.
"4. Brain injury resulting to incurable imbecility or insanity; and
"(h) In case of permanent partial disability, the monthly pension benefit
"5. Such cases as determined and approved by the SSS. shall be given in lump sum if it is payable for less than twelve (12)
months.

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"(i) For the purpose of adjudicating retirement, death and permanent by the employer every regular payday or on the fifteenth and last day of
total disability pension benefits, contributions shall be deemed paid for each month, and similarly in the case of direct payment by the SSS, for
the months during which the member received partial disability as long as such allowances are due and payable: Provided, That such
pension: Provided, That such contributions shall be based on his last allowance shall begin only after all sick leaves of absence with full pay
contribution prior to his disability. to the credit of the employee member shall have been exhausted.

"(j) Should a member who is on partial disability pension retire or die, "(c) One hundred percent (100%) of the daily benefits Provided in the
his disability pension shall cease upon his retirement or death. preceding paragraph shall be reimbursed by the SSS to said employer
upon receipt of satisfactory proof of such payment and legality thereof:
"SEC. 13-B. Funeral Benefit. - A funeral grant equivalent to Twelve Provided, That the employer has notified the SSS of the confinement
thousand pesos (P12,000.00) shall be paid, in cash or in kind, to help within five (5) calendar days after receipt of the notification from the
defray the cost of funeral expenses upon the death of a member, employee member: Provided, further, That if the notification to the SSS
including permanently totally disabled member or retiree. is made by the employer beyond five (5) calendar days after receipt of
the notification from the employee member, said employer shall be
reimbursed only for each day of confinement starting from the tenth
"SEC. 14. Sickness Benefit. - (a) A member who has paid at least three calendar day immediately preceding the date of notification to the SSS:
(3) monthly contributions in the twelve-month period immediately Provided, finally, That the SSS shall reimburse the employer or pay the
preceding the semester of sickness or injury and is confined therefor unemployed member only for confinement within the one-year period
for more than three (3) days in a hospital or elsewhere with the immediately preceding the date the claim for benefit or reimbursement
approval of the SSS, shall, for each day of compensable confinement is received by the SSS, except confinement in a hospital in which case
or a fraction thereof, be paid by his employer, or the SSS, if such the claim for benefit or reimbursement must be filed within one (1) year
person is unemployed or self-employed, a daily sickness benefit from the last day of confinement.
equivalent to ninety percent (90%) of his average daily salary credit,
subject to the following conditions:
"(d) Where the employee member has given the required notification
but the employer fails to notify the SSS of the confinement or to file the
"(1) In no case shall the daily sickness benefit be paid longer than one claim for reimbursement within the period prescribed in this section
hundred twenty (120) days in one (1) calendar year, nor shall any resulting in the reduction of the benefit or denial of the claim, such
unused portion of the one hundred twenty (120) days of sickness employer shall have no right to recover the corresponding daily
benefit granted under this section be carried forward and added to the allowance he advanced to the employee member as required in this
total number of compensable days allowable in the subsequent year; section.

"(2) The daily sickness benefit shall not be paid for more than two "(e)The claim of reimbursement shall be adjudicated by the SSS within
hundred forty (240) days on account of the same confinement; and a period of two (2) months from receipt thereof: Provided, That should
no payment be received by the employer within one (1) month after the
"(3) The employee member shall notify his employer of the fact of his period prescribed herein for adjudication, the reimbursement shall
sickness or injury within five (5) calendar days after the start of his thereafter earn simple interest of one percent (1%) per month until
confinement unless such confinement is in a hospital or the employee paid.
became sick or was injured while working or within the premises of the
employer in which case, notification to the employer is necessary: "(f) The provisions regarding the notification required of the member
Provided, That if the member is unemployed or self-employed, he shall and the employer as well as the period within which the claim for
directly notify the SSS of his confinement within five (5) calendar days benefit or reimbursement may be filed shall apply to all claims filed with
after the start thereof unless such confinement is in a hospital in which the SSS.
case notification is also not necessary: Provided, further, That in cases
where notification is necessary, the confinement shall be deemed to
have started not earlier than the fifth day immediately preceding the "SEC. 14-A. Maternity Leave Benefit. - A female member who has paid
date of notification. at least three (3) monthly contributions in the twelve-month period
immediately preceding the semester of her childbirth or miscarriage
shall be paid a daily maternity benefit equivalent to one hundred
"(b) The compensable confinement shall begin on the first day of percent (100%) of her average daily salary credit for sixty (60) days or
sickness, and the payment of such allowances shall be promptly made
8
seventy-eight (78) days in case of caesarian delivery, subject to the be paid to such parents or spouse, as representative payee of the
following conditions: recipient. Such benefits are not transferable and no power of attorney
or other document executed by those entitled thereto in favor of any
"(a) That the employee shall have notified her employer of her agent, attorney or any other person for the collection thereof on their
pregnancy and the probable date of her childbirth, which notice shall be behalf shall be recognized, except when they are physically unable to
transmitted to the SSS in accordance with the rules and regulations it collect personally such benefits: Provided, further, That in case of
may provide; death benefits, if no beneficiary qualifies under this Act, said benefits
shall be paid to the legal heirs in accordance with the law of
succession.
"(b) The full payment shall be advanced by the employer within thirty
(30) days from the filing of the maternity leave application;
"SEC. 16. Exemption from Tax, Legal Process and Lien. -- All laws to
the contrary notwithstanding, the SSS and all its assets and properties,
"(c) That payment of daily maternity benefits shall be a bar to the all contributions collected and all accruals thereto and income or
recovery of sickness benefits Provided by this Act for the same period investment earnings therefrom as well as all supplies, equipment,
for which daily maternity benefits have been received; papers or documents shall be exempt from any tax, assessment, fee,
charge, or customs or import duty; and all benefit payments made by
"(d) That the maternity benefits Provided under this section shall be the SSS shall likewise be exempt from all kinds of taxes, fees or
paid only for the first four (4) deliveries or miscarriages; charges, and shall not liable to attachments, garnishments, levy or
seizure by or under any legal or equitable process whatsoever, either
"(e) That the SSS shall immediately reimburse the employer of one before or after receipt by the person or persons entitled thereto, except
hundred percent (100%) of the amount of maternity benefits advanced to pay any debt of the member to the SSS. No tax measure of
to the employee by the employer upon receipt of satisfactory proof of whatever nature enacted shall apply to the SSS, unless it expressly
such payment and legality thereof; and revokes the declared policy of the State in Section 2 hereof granting
tax-exemption to the SSS. Any tax assessment imposed against the
SSS shall be null and void. (As amended by Sec. 9, P.D. No. 24, S.
"(f) That if an employee member should give birth or suffer miscarriage 1972; and Sec. 14, P. D. No. 735, S. 1975).
without the required contributions having been remitted for her by her
employer to the SSS, or without the latter having been previously
notified by the employer of the time of the pregnancy, the employer "SEC. 17. Fee of Agents, Attorneys, Etc. - No agent, attorney or other
shall pay to the SSS damages equivalent to the benefits which said person in charge of the preparation, filing or pursuing any claim for
employee member would otherwise have been entitled to. benefit under this Act shall demand or charge for his services any fee,
and any stipulation to the contrary shall be null and void. The retention
or deduction of any amount from any benefit granted under this Act for
"SEC. 15. Non-Transferability of Benefits. - The SSS shall promptly pay the payment of fees for such services is prohibited: Provided, however,
the benefits Provided in this Act to such persons as may be entitled That any member of the Philippine Bar who appears as counsel in any
thereto in accordance with the provisions of this Act: Provided, That the case heard by the Commission shall be entitled to attorneys' fees not
SSS shall pay the retirement benefits on the day of contingency to exceeding ten percent (10%) of the benefits awarded by the
qualified members who have submitted the necessary documents at Commission, which fees shall not be payable before the actual
least six (6) months before: Provided, further, That the beneficiary who payment of the benefits, and any stipulation to the contrary shall be null
is a national of a foreign country which does not extend benefits to a and void.
Filipino beneficiary residing in the Philippines, or which is not
recognized by the Philippines, shall not be entitled to receive any
benefit under this Act: Provided, further, That notwithstanding the "Any violation of the provisions of this Section shall be punished by a
foregoing, where the best interest of the SSS will be served, the fine of not less than Five hundred pesos (P500.00) nor more than Five
Commission may direct payments without regard to nationality or thousand pesos (P5,000.00), or imprisonment for not less than six (6)
country of residence: Provided, further, That if the recipient is a minor months nor more than one (1) year, or both, at the discretion of the
or a person incapable of administering his own affairs, the Commission court.
shall appoint a representative under such terms and conditions as it
may deem proper: Provided, further, That such appointment shall not "SEC. 18. Employee's Contributions. - (a) Beginning as of the last day
be necessary in case the recipient is under the custody of or living with of the calendar month when an employee's compulsory coverage takes
the parents or spouse of the member in which case the benefits shall effect and every month thereafter during his employment, the employer

9
shall deduct and withhold from such employee's monthly salary, wage, contribution in accordance with the schedule indicated in Section
compensation or earnings, the employee's contribution in an amount Eighteen of this Act. Notwithstanding any contract to the contrary, an
corresponding to his salary, wage, compensation or earnings during employer shall not deduct, directly or indirectly, from the compensation
the month in accordance with the following schedule: of his employees covered by the SSS or otherwise recover from them
the employer's contributions with respect to such employees.
SALARY RANGE OF MONTHLY MONTHLY CONTRIBUTION
BRACKET COMPENSATION SALARY EMPLOYER EMPLOYEE "(b) The remittance of such contributions by the employer shall be
TOTAL
CREDIT supported by a quarterly collection list to be submitted to the SSS at
the end of each calendar quarter indicating the correct ID number of
I 1,000.00 - 1,249.99 1000 50.70 33.30 84.00
the employer, the correct names and the SSS numbers of the
II 1,250.00 - 1,749.99 1500 76.00 50.00 126.00 and the total contributions paid for their account during the
employees
III 1,750.00 - 2,249.99 2000 101.30 66.70 quarter.
168.00
IV 2,250.00 - 2,749.99 2500 126.70 83.30 210.00
V 2,750.00 - 3,249.99 3000 152.00 100.00 "SEC.
252.00 19-A. Contributions of the Self-Employed Member. - The
contributions to the SSS of the self-employed member shall be
VI 3,250.00 - 3,749.99 3500 177.30 116.70 294.00
determined in accordance with Section Eighteen of this Act: Provided,
VII 3,750.00 - 4,249.99 4000 202.70 133.30 336.00
That the monthly earnings declared by the self-employed member at
VIII 4,250.00 - 4,749.99 4500 228.00 150.00 the378.00
time of his registration with the SSS shall be considered as his
IX 4,750.00 - 5,249.99 5000 253.30 166.70 monthly
420.00compensation and he shall pay both the employer and the
employee contributions: Provided, further, That the contributions of
X 5,250.00 - 5,749.99 5500 278.70 183.70 462.40
self-employed persons earning One thousand pesos (P1,000.00)
XI 5,750.00 - 6,249.99 6000 304.00 200.00 504.00or below may be reduced by the Commission.
monthly
XII 6,250.00 - 6,749.99 6500 329.30 216.78 546.00
XIII 6,750.00 - 7,249.99 7000 354.70 233.30 "The monthly earnings declared by the self-employed member at the
588.00
time of his registration shall remain the basis of his monthly salary
XIV 7,250.00 - 7,749.99 7500 380.00 250.00 630.00
credit, unless he makes another declaration of his monthly earnings, in
XV 7,750.00 - 8.249.99 8000 403.30 266.70 672.00
which case such latest declaration becomes the new basis of his
XVI 8,250.00 - 8,749.99 8500 430.70 283.30 monthly
714.00salary credit.
XVII 8,750.00 - OVER 9000 456.00 300.00 756.00
"SEC. 20. Government Contribution. - As the contribution of the
Government to the operation of the SSS, Congress shall annually
"The foregoing schedule of contribution shall also apply to self-
appropriate out of any funds in the National Treasury not otherwise
employed and voluntary members.
appropriated, the necessary sum or sums to meet the estimated
expenses of the SSS for each ensuing year. In addition to this
"The maximum monthly salary credit shall be Nine thousand pesos contribution, Congress shall appropriate from time to time such sum or
(P9,000.00) effective January Nineteen hundred and ninety six (1996); sums as may be needed to assure the maintenance of an adequate
Provided, That it shall be increased by One thousand pesos working balance of the funds of the SSS as disclosed by suitable
(P1,000.00) every year thereafter until it shall have reached Twelve periodic actuarial studies to be made of the operations of the SSS.
thousand pesos (P12,000.00) by Nineteen hundred and ninety nine
(1999): Provided, further, That the minimum and maximum monthly
"SEC. 21. Government Guarantee. -- The benefits prescribed in this
salary credits as well as the rate of contributions may be fixed from
Act shall not be diminished and to guarantee said benefits the
time to time by the Commission through rules and regulations taking
Government of the Republic of the Philippines accepts general
into consideration actuarial calculations and rate of benefits, subject to
responsibility for the solvency of the SSS.
the approval of the President of the Philippines.

"SEC. 22. Remittance of Contributions. -- (a) The contributions


"SEC. 19. Employer's Contributions. - (a) Beginning as of the last day
imposed in the preceding Section shall be remitted to the SSS within
of the month when an employee's compulsory coverage takes effect
the first ten (10) days of each calendar month following the month for
and every month thereafter during his employment, his employer shall
which they are applicable or within such time as the Commission may
pay, with respect to such covered employee, the employer's
10
prescribe. Every employer required to deduct and to remit such paragraph, nor shall the employer be relieved of his liability under
contributions shall be liable for their payment and if any contribution is Section Twenty-eight of this Act.
not paid to the SSS as herein prescribed, he shall pay besides the
contribution a penalty thereon of three percent (3%) per month from the "SEC. 22-A. Remittance of Contributions of Self-Employed Member. -
date the contribution falls due until paid. If deemed expedient and Self-employed members shall remit their monthly contributions
advisable by the Commission, the collection and remittance of quarterly on such dates and schedules as the Commission may specify
contributions shall be made quarterly or semi-annually in advance, the through rules and regulations: Provided, That no retroactive payment of
contributions payable by the employees to be advanced by their contributions shall be allowed, except as Provided in this Section.
respective employers: Provided, That upon separation of an employee,
any contribution so paid in advance but not due shall be credited or
refunded to his employer. "SEC. 23. Method of Collection and Payment. - The SSS shall require
a complete and proper collection and payment of contributions and
proper identification of the employer and the employee. Payment may
"(b) The contributions payable under this Act in cases where an be made in cash, checks, stamps, coupons, tickets, or other
employer refuses or neglects to pay the same shall be collected by the reasonable devices that the Commission may adopt.
SSS in the same manner as taxes are made collectible under the
National Internal Revenue Code, as amended. Failure or refusal of the
employer to pay or remit the contributions herein prescribed shall not "SEC. 24. Employment Records and Reports. - (a) Each employer shall
prejudice the right of the covered employee to the benefits of the immediately report to the SSS the names, ages, civil status,
coverage. occupations, salaries and dependents of all his employees who are
subject to compulsory coverage: Provided, That if an employee subject
to compulsory coverage should die or become sick or disabled or reach
"The right to institute the necessary action against the employer may the age of sixty (60) without the SSS having previously received any
be commenced within twenty (20) years from the time the delinquency report or written communication about him from his employer, the said
is known or the assessment is made by the SSS, or from the time the employer shall pay to the SSS damages equivalent to the benefits to
benefit accrues, as the case may be. which said employee member would have been entitled had his name
been reported on time by the employer to the SSS, except that in case
"(c) Should any person, natural or juridical, default in any payment of of pension benefits, the employer shall be liable to pay the SSS
contributions, the Commission may also collect the same in either of damages equivalent to the accumulated pension due as of the date of
the following ways: settlement of the claim or to the five (5) years' pension, including
dependents' pension: Provided, further, That if the contingency occurs
"1. By an action in court, which shall hear and dispose of the within thirty (30) days from the date of employment, the employer shall
case in preference to any other civil action; or be relieved of his liability for damages: Provided, further, That any
person or entity engaging the services of an independent contractor
shall be subsidiarily liable with such contractor for any civil liability
"2. By issuing a warrant to the Sheriff of any province or city incurred by the latter under this Act: Provided, finally, That the same
commanding him to levy upon and sell any real and personal person or entity engaging the services of an independent contractor
property of the debtor. The Sheriff's sale by virtue of said shall require such contractor to post a surety bond to guarantee the
warrant shall be governed by the same procedure prescribed payment of the worker's benefits.
for executions against property upon judgments by a court of
record.
"(b) Should the employer misrepresent the true date of employment of
the employee member or remit to the SSS contributions which are less
"(d) The last complete record of monthly contributions paid by the than those required in this Act or fail to remit any contribution due prior
employer or the average of the monthly contributions paid during the to the date of contingency, resulting in a reduction of benefits, the
past three (3) years as of the date of filing of the action for collection employer shall pay to the SSS damages equivalent to the difference
shall be presumed to be the monthly contributions payable by and due between the amount of benefit to which the employee member or his
from the employer to the SSS for each of the unpaid month, unless beneficiary is entitled had the proper contributions been remitted to the
contradicted and overcome by other evidence: Provided, That the SSS SSS and the amount payable on the basis of contributions actually
shall not be barred from determining and collecting the true and correct remitted: Provided, That if the employee member or his beneficiary is
contributions due the SSS even after full payment pursuant to this entitled to pension benefits, damages shall be equivalent to the
accumulated pension due as of the date of settlement of the claim or to

11
the five (5) years' pension, whichever is higher, including dependents' "(f) Notwithstanding any law to the contrary, microfilm, or non-erasable
pension. optical disk and other similar archival media copies of original SSS
records and reports, duly certified by the official custodian thereof, shall
"In addition to the liability mentioned in the preceding paragraphs (a) have the same evidentiary value as the originals and be admissible as
and (b) hereof, the employer shall also be liable for the corresponding evidence in all legal proceedings.
unremitted contributions and penalties thereon.
"(g) Notwithstanding any law to the contrary, local government units
"(c) The records and reports duly accomplished and submitted to the shall, prior to issuing any annual business license or permit, require
SSS by the employer or the member, as the case may be, shall be kept submission of certificate of SSS coverage and compliance with the
confidential by the SSS except in compliance with a subpoena duces provisions of this Act: Provided, That the certification or clearance shall
tecum issued by the Court, shall not be divulged without the consent of be issued by the SSS within five (5) working days from receipt of the
the SSS President or any official of the SSS duly authorized by him, request.
shall be presumed correct as to the data and other matters stated
therein, unless the necessary corrections to such records and reports "SEC. 24-A. Report and Registration of the Self-Employed Member. -
have been properly made by the parties concerned before the right to Each covered self-employed person shall, within thirty (30) days from
the benefit being claimed accrues, and shall be made the basis for the the first day he started the practice of his profession or business
adjudication of the claim. If as a result of such adjudication the SSS in operations register and report to the SSS his name, age, civil status,
good faith pays a monthly pension to a beneficiary who is inferior in and occupation, average monthly net income and his dependents.
right to another beneficiary or with whom another beneficiary is entitled
to share, such payments shall discharge the SSS from liability unless "SEC. 25. Deposits and Disbursements. - All money paid to or
and until such other beneficiary notifies the SSS of his claim prior to the collected by the SSS every year under this Act, and all accruals thereto
payments. shall be deposited, administered and disbursed in the same manner
and under the same conditions and requirements as Provided by law
"(d) Every employer shall keep true and accurate work records for such for other public special funds: Provided, That not more than twelve
period and containing such information as the Commission may percent (12%) of the total yearly contributions plus three percent (3%)
prescribe, in addition to an "Annual Register of New and Separated of other revenues shall be disbursed for operational expenses such as
Employees" which shall be secured from the SSS wherein the salaries and wages, supplies and materials, depreciation and the
employer shall enter on the first day of employment or on the effective maintenance of offices of the SSS: Provided, further, That if the
date of separation, the names of the persons employed or separated expenses in any year are less than the maximum amount permissible,
from employment, their SSS numbers, and such other data that the the difference shall not be availed of as additional expenses in the
Commission may require and said annual register shall be submitted to following years.
the SSS in the month of January of each year. Such records shall be
open for inspection by the SSS or its authorized representatives "SEC. 26. Investment of Reserve Funds. - All revenues of the SSS that
quarterly or as often as the SSS may require. are not needed to meet the current administrative and operational
expenses incidental to the carrying out of this Act shall be accumulated
"The SSS may also require each employer to submit, with respect to in a fund to be known as the "Reserve Fund." Such portions of the
the persons in his employ, reports needed for the effective Reserve Fund as are not needed to meet the current benefit
administration of this Act. obligations thereof shall be known as the "Investment Reserve Fund"
which the Commission shall manage and invest with the skill, care,
"(e) Each employer shall require, as a condition to employment, the prudence and diligence necessary under the circumstances then
presentation of a registration number secured by the prospective prevailing that a prudent man acting in like capacity and familiar with
employee from the SSS in accordance with such procedure as the SSS such matters would exercise in the conduct of an enterprise of a like
may adopt: Provided, That in case of employees who have been character and with similar aims. Pursuant thereto, and in line with the
assigned registration numbers by virtue of a previous employment, basic principles of safety, good yield and liquidity, the Commission
such numbers originally assigned to them should be used for purposes shall invest the funds to earn an annual income not less than the
of this Section: Provided, further, That the issuance of such registration average rates of treasury bills or any other acceptable market yield
numbers by the SSS shall not exempt the employer from complying indicator in any or in all of the following:
with the provisions of paragraph (a) of this Section.

12
"(a) In bonds, securities, promissory notes or other evidence of "In short and medium term loans to members such as salary,
indebtedness of the Government of the Philippines, or in bonds, educational, livelihood, marital, calamity and emergency loans:
securities, promissory notes or other evidence of indebtedness to Provided, That not more than thirty five percent (35%) of the
which the full faith, credit and unconditional guarantee of the Investment Reserve Fund at any time shall be invested for housing
Government of the Philippines is pledged; purposes: Provided, further, That not more than ten percent (10%) of
the Investment Reserve Fund shall be invested in short and medium
"(b) In bonds, securities, promissory notes or other evidence of term loans;
indebtedness of the Government of the Philippines, or any agencies or
instrumentalities to finance domestic infrastructure projects such as "(f) In bonds, securities, promissory notes or other evidence of
roads, bridges, ports, telecommunications, and other similar projects: indebtedness of educational or medical institutions to finance the
Provided, That the instruments issued by an agency or instrumentality construction, improvement and maintenance of schools and hospitals
of the government shall be guaranteed by the Government of the and their equipment and facilities: Provided, That such investments
Philippines or any government financial institution or acceptable shall not exceed ten percent (10%) of the Investment Reserve Fund;
multilateral agency: Provided, further, That the SSS shall have priority
over the revenues of the projects: Provided, finally, That such "(g) In real estate property, including shares of stocks involving real
investments shall not exceed thirty percent (30%) of the Investment estate property, and investment secured by first mortgages on real
Reserve Fund; estate or other collaterals acceptable to the SSS: Provided, That such
projects and investments shall, in the determination of the Commission,
"(c) In bonds, securities, promissory notes or other evidence of redound to the benefit of the SSS, its members, as well as the general
indebtedness of government financial institutions or government public: Provided, further, That investment in real estate property,
corporations with acceptable credit or guarantee: Provided, That such including shares of stocks involving real estate property shall not
investments shall not exceed thirty percent (30%) of the Investment exceed five percent (5%) of the Investment Reserve Fund: Provided,
Reserve Fund; finally, That investments in other income earning projects and
investments secured by first mortgages or other collaterals shall not
"(d) In bonds, securities, promissory notes or other evidence of exceed twenty five percent (25%) of the Investment Reserve Fund;
indebtedness of any bank doing business in the Philippines and in
good standing with the Bangko Sentral ng Pilipinas to finance loans to "(h) In bonds, debentures, securities, promissory notes or other
private corporations doing business in the Philippines, including evidence of indebtedness of any prime corporation or multilateral
schools, hospitals, small-and-medium scale industries, cooperatives institutions to finance domestic projects: Provided, That the issuing or
and non-governmental organizations, in which case the collaterals or assuming entity or its predecessors shall not have defaulted in the
securities shall be assigned to the SSS under such terms and payment of interest on any of its securities and that during each of any
conditions as the Commission may prescribe: Provided, That in the three (3) including the last two (2) of the five (5) fiscal years next
case of bank deposits, they shall not exceed at any time the preceding the date of acquisition by the SSS of such bonds,
unimpaired capital and surplus or total private deposits of the debentures or other evidence of indebtedness, the net earnings of the
depository bank, whichever is smaller: Provided, further, That said issuing or assuming institution available for its fixed charges, as
bank shall first have been designated as a depository for this purpose defined in this Act, shall have been not less than one and one-quarter
by the Monetary Board of the Bangko Sentral ng Pilipinas: Provided, times the total of its fixed charges for such year: Provided, further, That
finally, That such investments shall not exceed forty percent (40%) of such investments shall not exceed thirty percent (30%) of the
the Investment Reserve Fund; Investment Reserve Fund;

"(e) In bonds, securities, promissory notes or other evidence of "(i) In preferred or common shares of stocks listed or about to be listed
indebtedness of shelter agencies of the National Government or in the stock exchange or options or warrants to such stocks or, subject
financial intermediaries to finance housing loans of members; and in to prior approval of the Bangko Sentral ng Pilipinas, such other risk
long-term direct individual or group housing loans giving priority to the management instruments of any prime or solvent corporation or
low-income groups, up to a maximum of ninety percent (90%) of the financial institution created or existing under the laws of the Philippines
appraised value of the properties to be mortgaged by the borrowers; with proven track record of profitability over the last three (3) years and
and payment of dividends at least once over the same period: Provided,
That such investments shall not exceed thirty percent (30%) of the
Investment Reserve Fund;

13
"(j) In domestic or foreign mutual funds in existence for at least three 10% in short and medium-term member loans
(3) years; Provided, That such investments shall not exceed twenty
percent (20%) of the Investment Reserve Fund: Provided, further, That 30% in government financial institutions and corporations
investments in foreign mutual funds shall not exceed one percent (1%)
of the Investment Reserve Fund in the first year which shall be
increased by one percent (1%) for each succeeding year, but in no 30% in infrastructure projects
case shall it exceed seven and one-half percent (7.5%) of the
Investment Reserve Fund; 15% in any particular industry

"(k) In foreign currency deposits or triple "A" foreign currency 7.5% in foreign-currency denominated investments
denominated debts, prime and non-speculative equities, and other
Bangko Sentral ng Pilipinas approved financial instruments or other "SEC. 26-A. Fund Managers. - As part of its investment operations, the
assets issued in accordance with the existing laws of the countries SSS may appoint local or, in the absence thereof, foreign fund
where such financial instruments are issued: Provided, That these managers to manage the Investment Reserve Fund, as it may deem
instruments or assets are listed in bourses of the respective countries appropriate.
where these instruments or assets are issued: Provided, further, That
the issuing company has proven track of record of profitability over the
last three (3) years and a record of regular dividend pay-out over the "SEC. 26-B. Mortgagor Insurance Account. - (a) As part of its
same period: Provided, finally, That such investments shall not exceed investment operations, the SSS shall act as insurer of all or part of its
one percent (1%) of the Investment Reserve Fund in the first year interest on SSS properties mortgaged to the SSS, or lives of
which shall be increased by one percent (1%) for each succeeding mortgagors whose properties are mortgaged to the SSS. For this
year, but in no case shall it exceed seven and one-half percent (7.5%) purpose, the SSS shall establish a separate account to be known as
of the Investment Reserve Fund; the "Mortgagors' Insurance Account." All amounts received by the SSS
in connection with the aforesaid insurance operations shall be placed in
the Mortgagors' Insurance Account. The assets and liabilities of the
"(l) In loans secured by such collaterals like cash, government Mortgagors' Insurance Account shall at all times be clearly identifiable
securities or guarantees of multilateral institutions: Provided, That such and distinguishable from the assets and liabilities in all other accounts
investments shall not exceed thirty percent (30%) of the Investment of the SSS. Notwithstanding any provision of law to the contrary, the
Reserve Fund; and assets held in the Mortgagors' Insurance Account shall not be
chargeable with the liabilities arising out of any other business the SSS
"(m) In other Bangko Sentral ng Pilipinas approved investment may conduct but shall be held and applied exclusively for the benefit of
instruments with the same intrinsic quality as those enumerated in the owners or beneficiaries of the insurance contracts issued by the
paragraphs (a) to (l) hereof, subject to the policies and guidelines SSS under this paragraph.
which the Commission may formulate.
"(b) The SSS may insure any of its interest or part thereof with any
"No portion of the Investment Reserve Fund or income thereof shall private company or reinsurer. The Insurance Commission or its
accrue to the general fund of the National Government or to any of its authorized representatives shall make an examination into the financial
agencies or instrumentalities, including government-owned or condition and methods of transacting business of the SSS at least once
controlled corporations, except as may be allowed under this Act: in two (2) years, but such examination shall be limited to the insurance
Provided, That no portion of the Investment Reserve Fund shall be operation of the SSS as authorized under this paragraph and shall not
invested for any purpose or in any instrument, institution or industry embrace the other operations of the SSS; and the report of said
over and above the prescribed cumulative ceilings as follows: examination shall be submitted to the Commission and a copy thereof
shall be furnished the Office of the President of the Philippines within a
40% in private securities reasonable time after the close of the examination: Provided, That for
each examination, the SSS shall pay to the Insurance Commission an
amount equal to the actual expense of the Insurance Commission in
35% in housing the conduct of examination, including the salaries of the examiners and
of the actuary of the Insurance Commission who have been assigned
30% in real estate related investments to make such examination for the actual time spent in said
examination: Provided, further, That the general law on insurance and
14
the rules and regulations promulgated thereunder shall have suppletory "(d) Whoever, with intent to defraud, alters, forges, makes or
application insofar as it is not in conflict with this Act and its rules and counterfeits any stamp, coupon, ticket, book or other device prescribed
regulations. by the Commission for the collection or payment of any contribution
required herein, or uses, sells, lends, or has in his possession any such
"SEC. 27. Records and Reports. - The SSS President shall keep and altered, forged or counterfeited materials, or makes, uses, sells or has
cause to keep records of operations of the funds of the SSS and of in his possession any such altered, forged, material in imitation of the
disbursements thereof and all accounts of payments made out of said material used in the manufacture of such stamp, coupon, ticket, book
funds. During the month of January of each year, the SSS President or other device, shall be fined not less than Five thousand pesos
shall prepare for submission to the President of the Philippines and to (P5,000.00) non more than Twenty thousand pesos (P20,000.00) or
Congress of the Philippines a report of operations of the SSS during imprisoned for not less than six years (6) and one (1) day nor more
the preceding year, including statistical data on the number of persons than twelve (12) years, or both, at the discretion of the court.
covered and benefited, their occupations and employment status, the
duration and amount of benefits paid, the finances of the SSS at the "(e) Whoever fails or refuses to comply with the provisions of this Act or
close of the said year, and recommendations. He shall also cause to with the rules and regulations promulgated by the Commission, shall
be published in two (2) newspapers of general circulation in the be punished by a fine of not less than Five thousand pesos (P5,000.00)
Philippines a synopsis of the annual report, showing in particular the nor more than Twenty thousand pesos (P20,000.00), or imprisonment
status of the finances of the SSS and the benefits administered. for not less than six (6) years and one (1) day nor more than twelve
(12) years, or both, at the discretion of the court: Provided, That where
"SEC. 28. Penal Clause. - (a) Whoever, for the purpose of causing any the violation consists in failure or refusal to register employees or
payment to be made under this Act, or under an agreement himself, in case of the covered self-employed or to deduct contributions
thereunder, where none is authorized to be paid, shall make or cause from the employees' compensation and remit the same to the SSS, the
to be made false statement or representation as to any compensation penalty shall be a fine of not less Five thousand pesos (P5,000.00) nor
paid or received or whoever makes or causes to be made any false more than Twenty thousand pesos (P20,000.00) and imprisonment for
statement of a material fact in any claim for any benefit payable under not less than six (6) years and one (1) day nor more than twelve (12)
this Act, or application for loan with the SSS, or whoever makes or years.
causes to be made any false statement, representation, affidavit or
document in connection with such claim or loan, shall suffer the "(f) If the act or omission penalized by this Act be committed by an
penalties Provided for in Article One hundred seventy-two of the association, partnership, corporation or any other institution, its
Revised Penal Code. managing head, directors or partners shall be liable for the penalties
Provided in this Act for the offense.
"(b) Whoever shall obtain or receive any money or check under this Act
or any agreement thereunder, without being entitled thereto with intent "(g) Any employee of the SSS who receives or keeps funds or property
to defraud any member, employer or the SSS, shall be fined not less belonging, payable or deliverable to the SSS and who shall appropriate
than Five thousand pesos (P5,000.00) nor more than Twenty thousand the same, or shall take or misappropriate, or shall consent, or through
pesos (P20,000.00) and imprisoned for not less than six (6) years and abandonment or negligence, shall permit any other person to take such
one (1) day nor more than twelve (12) years. property or funds, wholly or partially, or shall otherwise be guilty of
misappropriation of such funds or property, shall suffer the penalties
"(c) Whoever buys, sells, offers for sale, uses, transfers or takes or Provided in Article Two hundred seventeen of the Revised Penal Code.
gives in exchange, or pledges or gives in pledge, except as authorized
in this Act or in regulations made pursuant thereto, any stamp, coupon, "(h) Any employer who, after deducting the monthly contributions or
ticket, book or other device, prescribed pursuant to Section Twenty- loan amortizations from his employee's compensation, fails to remit the
three hereof by the Commission for the collection or payment of said deduction to the SSS within thirty (30) days from the date they
contributions required herein, shall be fined not less than Five became due, shall be presumed to have misappropriated such
thousand pesos (P5,000.00) nor more than Twenty thousand pesos contributions or loan amortizations and shall suffer the penalties
(P20,000.00), or imprisoned for not less than six (6) years and one (1) Provided in Article Three hundred fifteen of the Revised Penal Code.
day nor more than twelve (12) years, or both, at the discretion of the
court. "(i) Criminal action arising from a violation of the provisions of this Act
may be commenced by the SSS or the employee concerned either
under this Act or in appropriate cases under the Revised Penal Code:
15
Provided, That such criminal action may be filed by the SSS in the city
or municipality where the SSS office is located, if the violation was
committed within its territorial jurisdiction or in Metro Manila, at the
option of the SSS.

"SEC. 29. Government Aid. - The establishment of the SSS shall not
disqualify the members and employers from receiving such
government assistance, financial or otherwise, as may be Provided.

"SEC. 30. Transitory Clause. - Any employer who is delinquent or has


not remitted all contributions due and payable to the SSS may, within
six (6) months from the effectivity of this Act, remit said contributions or
submit a proposal to pay the same in installment within a period of not
more than twelve (12) months from the effectivity of this Act without
incurring the prescribed penalty, subject to the implementing rules and
regulations which the Commission may prescribe: Provided, That the
employer submits the corresponding collection lists together with the
remittance or proposal to pay in installments: Provided, further, That in
case the employer fails to remit contributions within the six-month
grace period or defaults in the payment of any amortization Provided
the approved proposal, the prescribed penalty shall be imposed from
the time the contributions first became due as Provided in Section 22
(a) hereof."

Section 2. Separability Clause. - If any provision of this Act is declared invalid, the other
provisions not affected thereby shall remain valid.

Section 3. Repealing Clause. - All laws, proclamations, executive orders, rules and
regulations or parts thereof inconsistent with this Act are hereby repealed, modified or
amended accordingly: Provided, That no person shall be deemed to be vested with any
property or other right by virtue of the enactment or operation of this Act.

Section 4. Effectivity Clause. - This Act shall take effect fifteen (15) days after its
complete publication in the Official Gazette or in at least two (2) national newspapers of
general circulation whichever comes earlier.

Approved: May 01, 1997

16
Republic Act No. 8291 May 30, 1997 "(h) Secondary beneficiaries- The dependent parents and, subject to the restrictions on
dependent children, the legitimate descendants;
AN ACT AMENDING PRESIDENTIAL DECREE NO. 1146, AS AMENDED, EXPANDING
AND INCREASING THE COVERAGE AND BENEFITS OF THE GOVERNMENT "(i) Compensation- The basic pay or salary received by an employee, pursuant to his
SERVICE INSURANCE SYSTEM, INSTITUTING REFORMS THEREIN AND FOR election/appointment, excluding per diems, bonuses, overtime pay, honoraria, allowances
OTHER PURPOSES and any other emoluments received in addition to the basic pay which are not integrated
into the basic pay under existing laws;
Be it enacted by the Senate and House of Representatives of the Philippines in Congress
assembled:: "(j) Contribution- The amount payable to the GSIS by the member and the employer in
accordance with Section 5 of this Act;
Section 1. Presidential Decree No. 1146, as amended, otherwise known as the "Revised
Government Service Insurance Act of 1977", is hereby further amended to read as "(k) Current Daily Compensation- The actual daily compensation or the actual monthly
follows: compensation divided by the number of working days in the month of contingency but not
to exceed twenty-two (22) days;
"SECTION 1. Title. - The title of this Act shall be: "The Government Service Insurance
System Act of 1997." "(l) Average Monthly Compensation (AMC)- The quotient arrived at after dividing the
aggregate compensation received by the member during his last thirty-six (36) months of
"A. DEFINITIONS service preceding his separation/retirement/ disability/death by thirty-six (36), or by the
number of months he received such compensation if he has less than thirty-six (36)
"SEC. 2. Definition of terms.- Unless the context otherwise indicates, the following terms months of service: Provided, That the average monthly compensation shall in no case
shall mean: exceed the amount and rate as may be respectively set by the Board under the rules and
regulations implementing this Act as determined by the actuary of the GSIS: Provided,
"(a) GSIS- The Government Service Insurance System created by Commonwealth Act
further, That initially the average monthly compensation shall not exceed Ten thousand
No. 186;
pesos (P10,000.00), and premium shall be nine percent (9%) and twelve percent (12%)
"(b) Board- The Board of Trustees of the Government Service Insurance System; for employee and employer covering the AMC limit and below and two percent (2%) and
twelve percent (12%) for employee and employer covering the compensation above the
"(c) Employer- The national government, its political subdivisions, branches, agencies or AMC limit;
instrumentalities, including government-owned or controlled corporations, and financial
institutions with original charters, the constitutional commissions and the judiciary; "(m) Revalued average monthly compensation- An amount equal to one hundred seventy
percent (170%) of the first One thousand pesos (P1,000.00) of the average monthly
"(d) Employee or Member- Any person receiving compensation while in the service of an compensation plus one hundred percent (100%) of the average monthly compensation in
employer as defined herein, whether by election or appointment, irrespective of status of excess of One thousand pesos (P1,000.00);
appointment, including barangay and Sanggunian officials;
"(n) Lump sum- The basic monthly pension multiplied by sixty (60);
"(e) Active Member- A member who is not separated from the service;
"(o) Pensioner- Any person receiving old-age permanent total disability pension or any
"(f) Dependents- Dependents shall be the following: (a) the legitimate spouse dependent person who has received the lump sum excluding one receiving survivorship pension
for support upon the member or pensioner; (b) the legitimate, legitimated, legally adopted benefits as defined in Section 20 of this Act;
child, including the illegitimate child, who is unmarried, not gainfully employed, not over
the age of majority, or is over the age of majority but incapacitated and incapable of self- "(p) Gainful Occupation- Any productive activity that provided the member with income at
support due to a mental or physical defect acquired prior to age of majority; and (c) the least equal to the minimum compensation of government employees;
parents dependent upon the member for support;
"(q) Disability- Any loss or impairment of the normal functions of the physical and/or
"(g) Primary beneficiaries- The legal dependent spouse until he/she remarries and the mental faculty of a member which reduces or eliminates his/her capacity to continue with
dependent children; his/her current gainful occupation or engage in any other gainful occupation;

17
"(r) Total Disability- Complete incapacity to continue with his present employment or "SEC. 5. Contributions. - (a) It shall be mandatory for the member and employer to pay
engage in any gainful occupation due to the loss or impairment of the normal functions of
the physical and/or mental faculties of the member;
"Monthly Compensation Percentage of Monthly Compensation
"(s) Permanent Total Disability- Accrues or arises when recovery from the impairment Payable by
mentioned in Section 2 (Q) is medically remote;
Member Employer
"(t) Temporary Total Disability- Accrues or arises when the impaired physical and/or
mental faculties can be rehabilitated and/or restored to their normal functions;
I. Maximum Average
"(u) Permanent Partial Disability- Accrues or arises upon the irrevocable loss or Monthly Compensation
impairment of certain portion/s of the physical faculties, despite which the member is able (AMC) Limit and Below 9.0% 12.0%
to pursue a gainful occupation.
II. Over the Maximum AMC Limit
"B. MEMBERSHIP IN THE GSIS
-Up to the Maximum AMC Limit 9.0% 12.0%
"SEC. 3. Compulsory Membership. - Membership in the GSIS shall be compulsory for all
employees receiving compensation who have not reached the compulsory retirement
age, irrespective of employment status, except members of the Armed Forces of the -In Excess of the AMC Limit 2.0% 12.0%
Philippines and the Philippine National Police, subject to the condition that they must
settle first their financial obligation with the GSIS, and contractuals who have no the monthly contributions specified in the following schedule:
employer and employee relationship with the agencies they serve.
"Members of the judiciary and constitutional commissioners shall pay three percent (3%)
"Except for the members of the judiciary and constitutional commissions who shall have of their monthly compensation as personal share and their employers a corresponding
life insurance only, all members of the GSIS shall have life insurance, retirement, and all three percent (3%) share for their life insurance coverage.
other social security protections such as disability, survivorship, separation, and
"(b) The employer shall include in its annual appropriation the necessary amounts for its
unemployment benefits.
share of the contributions indicated above, plus any additional premiums that may be
"SEC. 4. Effect of Separation from the Service. - A member separated from the service required on account of the hazards or risks of its employees occupation.
shall continue to be a member, and shall be entitled to whatever benefits he has qualified
"(c) It shall be mandatory and compulsory for all employers to include the payment of
to in the event of any contingency compensable under this Act.
contributions in their annual appropriations. Penal sanctions shall be imposed upon
"C. SOURCES OF FUNDS 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.

"SEC. 6. 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 prescribed in the rules and regulations implementing
this Act.

18
"(b) Each employer shall remit directly to the GSIS the employees and employers computation of service in case of reinstatement in the service of an employer and
contributions within the first ten (10) days of the calendar month following the month to subsequent retirement or separation which is compensable under this Act.
which the contributions apply. The remittance by the employer of the contribution to the
GSIS shall take priority over and above the payment of any and all obligations, except "For the purpose of this section, the term service shall include full-time service with
salaries and wages of its employees. compensation: Provided, that part-time and other services with compensation may be
included under such rules and regulations as may be prescribed by the GSIS.
"SEC. 7. Interest 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 "SEPARATION BENEFITS
Board but not less than two percent (2%) simple interest per month. Such interest shall
be paid by the employers concerned. "SEC. 11. Separation Benefits. - The separation benefits shall consist of: (a) a cash
payment equivalent to one hundred percent (100%) of his average monthly
"SEC. 8. Government Guarantee. - The government of the Republic of the Philippines compensation for each year of service he paid contributions, but not less than Twelve
hereby guarantees the fulfillment of the obligations of the GSIS to its members as and thousand pesos (P12,000) payable upon reaching sixty (60) years of age upon
when they fall due. separation, whichever comes later: Provided, that the member resigns or separates from
the service after he has rendered at least three (3) years of service but less than fifteen
"D. BENEFITS (15) years; or

"SEC. 9. Computation of the Basic Monthly Pension. - (a) The basic monthly pension is "(b) a cash payment equivalent to eighteen (18) times his basic monthly pension at the
equal to: time of resignation or separation, plus an old-age pension benefit equal to the basic
monthly pension payable monthly for life upon reaching the age of sixty (60): Provided,
"1) thirty-seven and one-half percent (37.5%) of the revalued average monthly that the member resigns or separates from the service after he has rendered at least
compensation; plus fifteen (15) years of service and is below sixty (60) years of age at the time of resignation
or separation.
"2) two and one-half percent (2.5%) of said revalued average monthly compensation for
each year of service in excess of (15) years: Provided, That the basic monthly pension "SEC. 12. Unemployment or Involuntary Separation Benefits. - Unemployment benefits in
shall not exceed ninety percent (90%) of the average monthly compensation. the form of monthly cash payments equivalent to fifty percent (50%) of the average
monthly compensation shall be paid to a permanent employee who is involuntarily
"(b) The basic monthly pension may be adjusted upon the recommendation of the separated from the service due to the abolition of his office or position usually resulting
President and General Manager of the GSIS and approved by the President of the from reorganization: Provided, That he has been paying integrated contributions for at
Philippines in accordance with the rules and regulations prescribed by the GSIS: least one (1) year prior to separation. Unemployment benefits shall be paid in accordance
Provided, however, that the basic monthly pension shall not be less than One thousand with the following schedules:
and three hundred pesos (P1,300.00): Provided, further, that the basic monthly pension
for those who have rendered at least twenty (20) years of service after the effectivity of "Contributions Made Benefit Duration
this Act shall not be less than Two thousand four hundred pesos (P2,400.00) a month.
1 year but less than 3 years 2 months
"SEC. 10. Computation of Service. - (a) The computation of service for the purpose of
determining the amount of benefits payable under this Act shall be from the date of 3 or more years but less than 6 years 3 months
original appointment/election, including periods of service at different times under one or
more employers, those performed overseas under the authority of the Republic of the 6 or more years but less than 9 years 4 months
Philippines, and those that may be prescribed by the GSIS in coordination with the Civil
Service Commission. 9 or more years but less than 11 years 5 months

"(b) All service credited for retirement, resignation or separation for which corresponding 11 or more years but less than 15 years 6 months
benefits have been awarded under this Act or other laws shall be excluded in the
"The first payment shall be equivalent to two (2) monthly benefits. A seven-day (7)
waiting period shall be imposed on succeeding monthly payments.
19
"All accumulated unemployment benefits paid to the employee during his entire "SEC. 16. Permanent Total Disability Benefits. - (a) If the permanent disability is total, he
membership with the GSIS shall be deducted from voluntary separation benefits. shall receive a monthly income benefit for life equal to the basic monthly pension
effective from the date of disability: Provided, That:
"The GSIS shall prescribe the detailed guidelines in the operationalization of this section
in the rules and regulations implementing this Act. (1) he is in the service at the time of disability; or

"RETIREMENT BENEFITS (2) if separated from the service, he has paid at least thirty-six (36) monthly contributions
within the five (5) year period immediately preceding disability, or has paid a total of at
"SEC. 13. Retirement Benefits. - (a) Retirement benefits shall be: least one hundred eighty (180) monthly contributions, prior to his disability: Provided,
further, That if at the time of disability, he was in the service and has paid a total of at
"(1) the lump sum payment as defined in this Act payable at the time of retirement plus an least one hundred eighty (180) monthly contributions, in addition to the monthly income
old-age pension benefit equal to the basic monthly pension payable monthly for life, benefit, he shall receive a cash payment equivalent to eighteen (18) times his basic
starting upon expiration of the five-year (5) guaranteed period covered by the lump sum; monthly pension: Provided, finally, That a member cannot enjoy the monthly income
or benefit for permanent disability and the old-age retirement simultaneously.

"(2) cash payment equivalent to eighteen (18) months of his basic monthly pension plus "(b) If a member who suffers permanent total disability does not satisfy conditions (1) and
monthly pension for life payable immediately with no five-year (5) guarantee. (2) in paragraph (a) of this section but has rendered at least three (3) years of service at
the time of his disability, he shall be advanced the cash payment equivalent to one
"(b) Unless the service is extended by appropriate authorities, retirement shall be
hundred percent (100%) of his average monthly compensation for each year of service
compulsory for an employee of sixty-five (65) years of age with at least fifteen (15) years
he paid contributions, but not less than Twelve thousand pesos (P12,000.00) which
of service: Provided, That if he has less than fifteen (15) years of service, he may be
should have been his separation benefit.
allowed to continue in the service in accordance with existing civil service rules and
regulations. "(c) Unless the member has reached the minimum retirement age, disability benefit shall
be suspended when:
"SEC. 13-A. Conditions for Entitlement. - A member who retires from the service shall be
entitled to the retirement benefits enumerated in paragraph (a) of Section 13 hereof: "(1) he is reemployed; or
Provided, That:
"(2) he recovers from his disability as determined by the GSIS, whose decision shall be
(1) he has rendered at least fifteen years of service; final and binding; or

(2) he is at least sixty (60) years of age at the time of retirement; and "(3) he fails to present himself for medical examination when required by the GSIS.

(3) he is not receiving a monthly pension benefit from permanent total disability. "(d) The following disabilities shall be deemed total and permanent:

"SEC. 14. Periodic Pension Adjustment. - The monthly pension of all pensioners "(1) complete loss of sight of both eyes;
including all those receiving survivorship pension benefits shall be periodically adjusted
as may be recommended by the GSIS actuary and approved by the Board in accordance "(2) loss of two (2) limbs at or above the ankle or wrist;
with the rules and regulations prescribed by the GSIS.
"(3) permanent complete paralysis of two (2) limbs;
"PERMANENT DISABILITY BENEFITS
"(4) brain injury resulting in incurable imbecility or insanity; and
"SEC. 15. General Conditions for Entitlement. - A member who suffers permanent
disability for reasons not due to his grave misconduct, notorious negligence, habitual "(5) such other cases as may be determined by the GSIS.
intoxication, or willful intention to kill himself or another, shall be entitled to the benefits
provided for under Sections 16 and 17 immediately following, subject to the
corresponding conditions thereof.

20
"SEC. 17. Permanent Partial Disability Benefits. - (a) If the disability is partial, he shall temporary total disability benefit may be extended by the GSIS but not to exceed a total
receive a cash payment in accordance with a schedule of disabilities to be prescribed by of two hundred forty (240) days.
the GSIS: Provided, That he satisfies either conditions (1) or (2) of Section 16 (a);
"(b) The temporary total disability benefit shall in no case be less than Seventy pesos
"(b) The following disabilities shall be deemed permanent partial: (P70.00) a day.

"(1) complete and permanent loss of the use of: "(c) The notices required of the member and the employer, the mode of payment, and the
other requirements for entitlement to temporary total disability benefits shall be provided
(i) any finger in the rules and regulations to be prescribed by the GSIS.

(ii) any toe "SEC. 19. Non-scheduled Disability. - For injuries or illnesses resulting in a disability not
listed in the schedule of partial/total disability provided herein, the GSIS shall determined
(iii) one arm the nature of the disability and the corresponding benefits therefor.

(iv) one hand "SURVIVORSHIP BENEFITS

(v) one foot "SEC. 20. Survivorship Benefits. - When a member or pensioner dies, the beneficiaries
shall be entitled to survivorship benefits provided in Sections 21 and 22 hereunder
(vi) one leg
subject to the conditions therein provided for. The survivorship pension shall consist of:
(vii) one or both ears
(1) the basic survivorship pension which is fifty percent (50%) of the basic monthly
(viii) hearing of one or both ears pension; and

(ix) sight of both eyes (2) the dependent childrens pension not exceeding fifty percent (50%) of the basic
monthly pension
"(2) such other cases as my be determined by the GSIS.
"SEC. 21. Death of a Member. - (a) Upon the death of a member, the primary
"TEMPORARY DISABILITY BENEFITS beneficiaries shall be entitled to:

"SEC. 18. Temporary Total Disability Benefits. - (a) A member who suffers temporary (1) survivorship pension: Provided, That the deceased:
total disability for reasons not due to any of the conditions enumerated in Section 15
hereof shall be entitled to seventy-five percent (75%) of his current daily compensation (i) was in the service at the time of his death; or
for each day or fraction thereof of temporary disability benefit not exceeding one hundred
(ii) if separated from the service, has at least three (3) years of service at the time of his
twenty (120) days in one calendar year after exhausting all his sick leave credits and
death and has paid thirty-six (36) monthly contributions within the five-year period
collective bargaining agreement sick leave benefits, if any, but not earlier than the fourth
immediately preceding his death; or has paid a total of at least one hundred eighty (180)
day of his temporary total disability: Provided, That:
monthly contributions prior to his death; or
"(1) he is in the service at the time of his disability; or
(2) the survivorship pension plus a cash payment equivalent to one hundred percent
"(2) if separated, he has rendered at least three (3) years of service and has paid at least (100%) of his average monthly compensation for every year of service: Provided, That
six (6) monthly contributions in the twelve-month period immediately preceding his the deceased was in the service at the time of his death with at least three (3) years of
disability. service; or

"Provided, however, That a member cannot enjoy the temporary total disability benefit (3) a cash payment equivalent to one hundred percent (100%) of his average monthly
and sick leave pay simultaneously: Provided, further, That if the disability requires more compensation for each year of service he paid contributions, but not less than Twelve
extensive treatment that lasts beyond one hundred twenty (120) days, the payment of the thousand pesos (P12,000.00): Provided, That the deceased has rendered at least three

21
(3) years of service prior to his death but does not qualify for the benefits under item (1) (a) an active member as defined under Section 2 (e) of this Act; or
or (2) of this paragraph.
(b) a member who has been separated from the service, but who may be entitled to
(b) The survivorship pension shall be paid as follows: future benefit pursuant to Section 4 of this Act; or

(1) when the dependent spouse is the only survivor, he/she shall receive the basic (c) a pensioner, as defined in Section 2 (o) of this Act; or
survivorship pension for life or until he/she remarries;
(d) a retiree who at the time of his retirement was of pensionable age under this Act but
(2) when only dependent children are the survivors, they shall be entitled to the basic who opted to retire under Republic Act No. 1616.
survivorship pension for as long as they are qualified, plus the dependent childrens
pension equivalent to ten percent (10%) of the basic monthly pension for every "LIFE INSURANCE BENEFITS
dependent child not exceeding five (5), counted from the youngest and without
substitution; "SEC. 24. Compulsory Life Insurance. - All employees except for Members of the Armed
Forces of the Philippines (AFP) and the Philippine National Police (PNP) shall, under
(3) when the survivors are the dependent spouse and the dependent children, the such terms and conditions as may be promulgated by the GSIS, be compulsorily covered
dependent spouse shall receive the basic survivorship pension for life or until he/she with life insurance, which shall automatically take effect as follows:
remarries, and the dependent children shall receive the dependent childrens pension
mentioned in the immediately preceding paragraph (2) hereof. (1) for those employed after the effectivity of this Act, their insurance shall take effect on
the date of their employment;
(c) In the absence of primary beneficiaries, the secondary beneficiaries shall be entitled
to: (2) for those whose insurance will mature after the effectivity of this Act, their insurance
shall be deemed renewed on the day following the maturity or expiry date of their
(1) the cash payment equivalent to one hundred percent (100%) of his average monthly insurance;
compensation for each year of service he paid contributions, but not less than Twelve
thousand pesos (P12,000.00): Provided, That the member is in the service at the time of (3) for those without any life insurance as of the effectivity of this Act, their insurance shall
his death and has at least three (3) years of service; or take effect following said effectivity.

(2) in the absence of secondary beneficiaries, the benefits under this paragraph shall be "SEC. 25. Dividends. - An annual dividend may be granted to all members of the GSIS
paid to his legal heirs. whose life insurance is in force for at least one (1) year in accordance with a dividends
allocation formula to be determined by the GSIS.
(d) For purposes of the survivorship benefits, legitimate children shall include legally
adopted and legitimated children. "SEC. 26. Optional Insurance. - Subject to the rules and regulations prescribed by the
GSIS, a member may apply for insurance and/or pre-need coverage embracing life,
"SEC. 22. Death of a Pensioner. - Upon the death of an old-age pensioner or a member health, hospitalization, education, memorial plans, and such other plans as may be
receiving the monthly income benefit for permanent disability, the qualified beneficiaries designed by the GSIS, for himself and/or his dependents. Any employer may likewise
shall be entitled to the survivorship pension defined in Section 20 of this Act, subject to apply for group insurance coverage for its employees. The payment of the
the provisions of paragraph (b) of Section 21 hereof. When the pensioner dies within the premiums/installments for optional insurance and pre-need products may be made by the
period covered by the lump sum, the survivorship pension shall be paid only after the insured or his employer and/or any person acceptable to the GSIS.
expiration of the said period.
"SEC. 27. Reinsurance. - The GSIS may reinsure any of its interests or part thereof with
"FUNERAL BENEFITS any private company or reinsurer whether domestic of foreign: Provided, That the GSIS
shall submit an annual report on its reinsurance operations to the Insurance Commission.
"SEC. 23. Funeral Benefits. - The amount of the funeral benefits shall be determined and
specified by the GSIS in the rules and regulations but shall not be less than Twelve "E. ADJUDICATION OF CLAIMS AND DISPUTES
thousand pesos (P12,000.00): Provided, That it shall be increased to at least Eighteen
thousand pesos (P18,000.00) after five (5) years and shall be paid upon the death of:
22
"SEC. 28. Prescription. - Claims for benefits under this Act except for life and retirement "SEC. 33. Oaths, Witnesses, and Production of Records. - When authorized by the
shall prescribe after four (4) years from the date of contingency. Board, an official or employee of the GSIS shall have the power to administer oath and
affirmation, take deposition, certify to official acts, and issue subpoena ad testificandum
"SEC. 29. Facility of Payment. - The GSIS shall prescribe rules and regulations to and subpoena duces tecum to compel the attendance of witnesses and the production of
facilitate payment of benefits, proceeds, and claims under this Act and any other laws books, papers, correspondences, and other records deemed necessary as evidence in
administered by the GSIS. Payments made by the GSIS prior to its receipt of an adverse connection with any question arising under this Act. Any case of contumacy shall be dealt
claim, to a beneficiary or claimant subsequently found not entitled thereto, shall not bar with in accordance with the provisions of Section 580 of the Revised Administrative
the legal and eligible recipient to his right to demand the payment of benefits, proceeds, Code.
and claims from the GSIS, who shall, however, have a right to institute the appropriate
action in a court of law against the ineligible recipient. "F. FUNDS OF THE GSIS

"SEC. 30. Settlement of Disputes. - The GSIS shall have original and exclusive "SEC. 34. Funds. - All contributions payable under Section 5 of this Act together with the
jurisdiction to settle any disputes arising under this Act and any other laws administered earnings and accruals thereon shall constitute the GSIS Social Insurance Fund. The said
by the GSIS. fund shall be used to finance the benefits administered by the GSIS under this Act. In
addition, the GSIS shall administer the optional insurance fund for the insurance
The Board may designate any member of the Board, or official of the GSIS who is a coverage described in Section 26 hereof, the Employees Compensation Insurance Fund
lawyer, to act as hearing officer to receive evidence, make findings of fact and submit created under P.D. 626, as amended, General Insurance Fund created under Act No.
recommendations, together with all documentary and testimonial evidence to the Board 656, as amended, and such other special funds existing or that may be created for
within thirty (30) working days from the time the parties have closed their respective special groups or persons rendering services to the government. The GSIS shall maintain
evidence and filed their last pleading. The Board shall decide the case within thirty (30) the required reserves to guarantee the fulfillment of its obligations under this Act.
days from the receipt of the hearing officers findings and recommendations. The cases
heard directly by the Board shall be decided within thirty (30) working days from the time The funds of the GSIS shall not be used for purposes other than what are provided for
they are submitted by the parties for decision. under this Act. Moreover, no portion of the funds of the GSIS or income thereof shall
accrue to the General Fund of the national government and its political subdivisions,
"SEC. 31. Appeals. - Appeals from any decision or award of the Board shall be governed instrumentalities and other agencies including government-owned and controlled
by Rules 43 and 45 of the 1997 Rules of Civil Procedure adopted by the Supreme Court corporations except as may be allowed under this Act.
on April 8, 1997 which will take effect on July 1, 1997: Provided, That pending cases and
those filed prior to July 1, 1997 shall be governed by the applicable rules of procedure: "SEC. 35. Deposits and Disbursements. - All revenues collected and all accruals thereto
Provided, further, That the appeal shall take precedence over all other cases except shall be deposited, administered and disbursed in accordance with the law. A maximum
criminal cases when the penalty of life imprisonment or death or reclusion perpetua is expense loading of twelve percent (12%) of the yearly revenues from all sources may be
imposable. disbursed for administrative and operational expenses except as may be otherwise
approved by the President of the Philippines on the basis of actuarial and management
The appeal shall not stay the execution of the order or award unless ordered by the studies.
Board, by the Court of Appeals or by the Supreme Court and the appeal shall be without
prejudice to the special civil action of certiorari when proper. "SEC. 36. Investment of Funds. - The funds of the GSIS which are not needed to meet
the current obligations may be invested under such terms and conditions and rules and
"SEC. 32. Execution of Decision. - When no appeal is perfected and there is no order to regulations as may be prescribed by the Board: Provided, That investments shall satisfy
stay by the Board, by the Court of Appeals or by the Supreme Court, any decision or the requirements of liquidity, safety/security and yield in order to ensure the actuarial
award of the Board shall be enforced and executed in the same manner as decisions of solvency of the funds of the GSIS: Provided, further, That the GSIS shall submit an
the Regional Trial Court. For this purpose, the Board shall have the power to issue to the annual report on all investments made to both Houses of Congress of the Philippines, to
city or provincial sheriff or its appointed sheriff such writs of execution as may be wit:
necessary for the enforcement of such decision or award, and any person who shall fail
or refuse to comply with such decision, award, writ or process after being required to do (a) in interest-bearing bonds or securities or other evidence of indebtedness of the
so shall, upon application by the GSIS, be punished for contempt. Government of the Philippines;

23
(b) in interest-bearing deposits or securities in any domestic bank doing business in the valuations of the funds of the GSIS including such data needed in the computation of
Philippines: Provided, That in the case of such deposits, there shall not exceed at any rates of disability, mortality, morbidity, separation and retirement among the members
time the unimpaired capital and surplus or total private deposits of the depository bank, and any other information useful for the adjustment of the benefits of the members. The
whichever is smaller: Provided, further, That the said bank has prior designation as a GSIS shall maintain appropriate books of accounts to record its assets, liabilities, income,
depository for the purpose by the Monetary Board of the Central Monetary Authority; expenses, receipts and disbursement of funds and other financial transactions and
operations.
(c) in direct housing loans to members and group housing projects secured by first
mortgage, giving priority to the low income groups and in short and medium term loans to "SEC. 38. Examination and Valuation of the Funds. - The GSIS shall make a periodic
members such as salary, policy, educational, emergency stock purchase plan and other actuarial examination and valuation of its funds in accordance with accepted actuarial
similar loans: Provided, That no less than forty percent (40%) of the investible fund of the principles.
GSIS Social Insurance Fund shall be invested for these purposes;
"SEC. 39. Exemption from Tax, Legal Process and Lien. - It is hereby declared to be the
(d) in bonds, securities, promissory notes or other evidence of indebtedness of policy of the State that the actuarial solvency of the funds of the GSIS shall be preserved
educational or medical institutions to finance the construction, improvement and and maintained at all times and that contribution rates necessary to sustain the benefits
maintenance of schools and hospitals; under this Act shall be kept as low as possible in order not to burden the members of the
GSIS and their employers. Taxes imposed on the GSIS tend to impair the actuarial
(e) in real estate property including shares of stocks involving real state property and solvency of its funds and increase the contribution rate necessary to sustain the benefits
investments secured by first mortgages on real estate or other collaterals acceptable to of this Act. Accordingly, notwithstanding any laws to the contrary, the GSIS, its assets,
the GSIS: Provided, That such investment shall, in the determination of the Board, revenues including all accruals thereto, and benefits paid, shall be exempt from all taxes,
redound to the benefit of the GSIS, its members as well as the general public; assessments, fees, charges, or duties of all kinds. These exemptions shall continue
unless expressly and specifically revoked and any assessment against the GSIS as of
(f) in debt instruments and other securities traded in the secondary markets; the approval of this Act are hereby considered paid. Consequently, all laws, ordinances,
regulations, issuances, opinions or jurisprudence contrary to or in derogation of this
(g) in loans to, or in bonds, debentures, promissory notes or other evidence of
provision are hereby deemed repealed, superseded and rendered ineffective and without
indebtedness of any solvent corporation created or existing under the laws of the
legal force and effect.
Philippines;
"Moreover, these exemptions shall not be affected by subsequent laws to the contrary
(h) in common and preferred stocks of any solvent corporation or financial institution
unless this section is expressly, specifically and categorically revoked or repealed by law
created or existing under the laws of the Philippines listed in the stock exchange with
and a provision is enacted to substitute or replace the exemption referred to herein as an
proven track record of profitability over the last three (3) years and payment of dividends
essential factor to maintain or protect the solvency of the fund, notwithstanding and
at least once over the same period;
independently of the guaranty of the national government to secure such solvency or
(i) in domestic mutual funds including investments related to the operations of mutual liability.
funds; and
"The funds and/or the properties referred to herein as well as the benefits, sums or
(j) in foreign mutual funds and in foreign currency deposits or foreign currency- monies corresponding to the benefits under this Act shall be exempt from attachment,
denominated debts, non-speculative equities and other financial instruments or other garnishment, execution, levy or other processes issued by the courts, quasi-judicial
assets issued in accordance with existing laws of the countries where such financial agencies or administrative bodies including Commission on Audit (COA) disallowances
instruments are issued: Provided, That these instruments or assets are listed in bourses and from all financial obligations of the members, including his pecuniary accountability
of the respective countries where these instruments or assets are issued: Provided, arising from or caused or occasioned by his exercise or performance of his official
further, That the issuing company has proven track record of profitability over the last functions or duties, or incurred relative to or in connection with his position or work except
three (3) years and payment of dividends at least once over the same period. when his monetary liability, contractual or otherwise, is in favor of the GSIS.

"SEC. 37. Records and Reports. - The GSIS shall keep and cause to keep such records "G. ADMINISTRATION
as may be necessary for the purpose of making actuarial studies, calculations and

24
"SEC. 40. Implementing Body. - The Government Service Insurance System as created (l) to invest, own or otherwise participate in equity in any establishment, firm or entity;
under Commonwealth Act No. 186 shall implement the provisions of this Act.
(m) to approve appointments in the GSIS except appointments to positions which are
"SEC. 41. Powers and Functions of the GSIS. - The GSIS shall exercise the following policy determining, primarily confidential or highly technical in nature according to the
powers and functions: Civil Service rules and regulations: Provided, That all positions in the GSIS shall be
governed by the compensation and position classification system and qualifications
(a) to formulate, adopt, amend and/or rescind such rules and regulations as may be standards approved by the GSIS Board of Trustees based on a comprehensive job
necessary to carry out the provisions and purposes of this Act, as well as the effective analysis and audit of actual duties and responsibilities: Provided, further, That the
exercise of the powers and functions, and the discharge of duties and responsibilities of compensation plan shall be comparable with the prevailing compensation plans in the
the GSIS, its officers and employees; private sector and shall be subject to the periodic review by the Board no more than once
every four (4) years without prejudice to yearly merit reviews or increases based on
(b) to adopt or approve the annual and supplemental budget of receipts and expenditures productivity and profitability;
including salaries and allowances of the GSIS personnel; to authorize such capital and
operating expenditures and disbursements of the GSIS as may be necessary and proper (n) to design and adopt an Early Retirement Incentives Plan (ERIP) and/or financial
for the effective management and operation of the GSIS; assistance for the purpose of retirement for its own personnel;

(c) to invest the funds of the GSIS, directly or indirectly, in accordance with the provisions (o) to fix and periodically review and adjust the rates of interest and other terms and
of this Act; conditions for loans and credits extended to members or other persons, whether natural
or juridical;
(d) to acquire, utilize or dispose of, in any manner recognized by law, real or personal
property in the Philippines or elsewhere necessary to carry out the purposes of this Act; (p) to enter into agreement with the Social Security System or any other entity,
enterprise, corporation or partnership for the benefit of members transferring from one
(e) to conduct continuing actuarial and statistical studies and valuations to determine the system to another subject to the provisions of Republic Act No. 7699, otherwise known
financial condition of the GSIS and taking into consideration such studies and valuations as the Portability Law;
and the limitations herein provided, re-adjust the benefits, contributions, premium rates,
interest rates or the allocation or re-allocation of the funds to the contingencies covered; (q) to be able to float proper instrument to liquefy long-term maturity by pooling funds for
short-term secondary market;
(f) to have the power of succession;
(r) to submit annually, not later than June 30, a public report to the President of the
(g) to sue and be sued; Philippines and the Congress of the Philippines regarding its activities in the
administration and enforcement of this Act during the preceding year including
(h) to enter into, make, perform and carry out contracts of every kind and description with
information and recommendations on board policies for the development and perfection
any person, firm or association or corporation, domestic or foreign;
of the programs of the GSIS;
(i) to carry on any other lawful business whatsoever in pursuance of, or in connection with
(s) to maintain a provident fund, which consists of contributions made by both the GSIS
the provisions of this Act;
and its officials and employees and their earnings, for the payments of benefits to such
(j) to have one or more offices in and outside of the Philippines, and to conduct its officials and employees or their heirs under such terms and conditions as it may
business and exercise its powers throughout and in any part of the Republic of the prescribe;
Philippines and/or in any or all foreign countries, states and territories: Provided, That the
(t) to approve and adopt guidelines affecting investments, insurance coverage of
GSIS shall maintain a branch office in every province where there exists a minimum of
government properties, settlement of claims, disposition of acquired assets, privatization
fifteen thousand (15,000) membership;
or expansion of subsidiaries, development of housing projects, increased benefit and
(k) to borrow funds from any source, private or government, foreign or domestic, only as loan packages to members, and the enforcement of the provision of this Act;
an incident in the securitization of housing mortgages of the GSIS and on account of its
receivables from any government or private entity;
25
(u) any provision of law to the contrary notwithstanding, to authorize the payment of extra of the term, shall be filled for the unexpired term only. The members of the Board shall be
remuneration to the officials and employees directly involved in the collection and/or entitled to a per diem of Two thousand five hundred pesos (P2,500.00) for each board
remittances of contributions, loan repayments, and other monies due to the GSIS at such meeting actually attended by them, but not to exceed Ten thousand pesos (P10,000.00)
rates and under such conditions as it may adopt: Provided, That the best interest of the a month and reasonable transportation and representation allowances as may be fixed
GSIS shall be observed thereby; by the Board.

(v) to determine, fix and impose interest upon unpaid premiums due from employers and "SEC. 43. Powers and Functions of the Board of Trustees. - The Board of Trustees shall
employees; have the following powers and functions:

(w) to ensure the collection or recovery of all indebtedness, liabilities and/or "(a) to formulate the policies, guidelines and programs to effectively carry out the
accountabilities, including unpaid premiums or contributions in favor of the GSIS arising purposes of this Act;
from any cause or source whatsoever, due from obligors, whether public or private. The
Board shall demand payment or settlement of the obligations referred to herein within "(b) to promulgate such rules and regulations as may be necessary or proper for the
thirty (30) days from the date the obligation becomes due, and in the event of failure or effective exercise of the powers and functions as well as the discharge of the duties and
refusal of the obligor or debtor to comply with the demand, to initiate or institute the responsibilities of the GSIS, its officers and employees;
necessary or proper actions or suits, criminal, civil or administrative or otherwise, before
the courts, tribunals, commissions, boards, or bodies of proper jurisdiction within thirty "(c) upon the recommendation of the President and General Manager, to approve the
(30) days reckoned from the expiry date of the period fixed in the demand within which to annual and supplemental budget of receipts and expenditures of the GSIS, and to
pay or settle the account; authorize such operating and capital expenditures and disbursements of the GSIS as
may be necessary or proper for the effective management, operation and administration
(x) to design and implement programs that will promote and mobilize savings and provide of the GSIS;
additional resources for social security expansion and at the same time afford individual
members appropriate returns on their savings/investments. The programs shall be so "(d) upon the recommendation of the President and General Manager, to approve the
designed as to spur socio-economic take-off and maintain continued growth; and GSIS organizational and administrative structure and staffing pattern, and to establish,
fix, review, revise and adjust the appropriate compensation packages for the officers and
(y) to exercise such powers and perform such other acts as may be necessary, useful, employees of the GSIS and reasonable allowances, incentives, bonuses, privileges and
incidental or auxiliary to carry out the provisions of this Act, or to attain the purposes and other benefits as may be necessary or proper for the effective management, operation
objectives of this Act. and administration of the GSIS, which shall be exempt from Republic Act No. 6758,
otherwise known as the Attrition Law;
"SEC. 42. The Board of Trustees; its Composition; Tenure and Compensation. - The
corporate powers and functions of the GSIS shall be vested in and exercised by the "(e) to fix and periodically review and adjust the rates of interest and other terms and
Board of Trustees composed of the President and General Manager of the GSIS and conditions for loans and credits extended to its members or other persons, whether
eight (8) other members to be appointed by the President of the Philippines, one (1) of natural or juridical;
whom shall be either the President of the Philippine Public School Teachers Association
(PPSTA) or the President of the Philippine Association of School Superintendents "(f) the provision of any law to the contrary notwithstanding, to compromise or release, in
(PASS), another two (2) shall represent the leading organizations or associations of whole or in part, any claim or settle liability to the GSIS, regardless of the amount
government employees/retirees, another four (4) from the banking, finance, investment, involved, under such terms and conditions as it may impose for the best interest of the
and insurance sectors, and one (1) recognized member of the legal profession who at the GSIS;
time of appointment is also a member of the GSIS. The Trustees shall elect from among
"(g) to approve and adopt guidelines affecting investments, insurance coverage of
themselves a Chairman while the President and General Manager of the GSIS shall
government properties, settlement of claims, disposition of acquired assets, development
automatically be the vice-chairman.
of housing projects, increased benefit and loan packages to members, and the
The Trustees, except the President and General Manager who shall cease as trustee enforcement of the provisions of this Act;
upon his separation, shall hold office for six (6) years without reappointment, or until their
successors are duly appointed and qualified. Vacancy, other than through the expiration
26
"(h) to determine, fix, and impose interest upon unpaid or unremitted premiums and/or issued by the court, quasi-judicial agencies or administrative bodies in cases involving
contributions; and the GSIS.

"(i) to do and perform any and all acts necessary, proper or incidental to the attainment of "SEC. 48. Powers of the Insurance Commission. - The Insurance Commissioner or his
the purposes and objectives of this Act. authorized representatives shall make an examination of financial condition and methods
of transacting business of the GSIS at least once every three (3) years and the report of
"SEC. 44. Appointment, Qualifications, and Compensation of the President and General said examination shall be submitted to the Board of Trustees and copies thereof be
Manager and of other Personnel. - The President and General Manager of the GSIS shall furnished the Office of the President of the Philippines and the two houses of the
be its Chief Executive Officer and shall be appointed by the President of the Philippines. Congress of the Philippines within five (5) days after the close of examination: Provided,
He shall be a person with management and investments expertise necessary for the however, That for each examination, the GSIS shall pay the office of the Insurance
effective performance of his duties and functions under this Act. Commissioner an amount equal to the actual expenses incurred by the said office in the
conduct of examination, including the salaries of the examiners and of the actuary of
"The GSIS President and General Manager shall be assisted by one or more executive such examination for the actual time spent.
vice-presidents, senior vice-presidents and managers in addition to the usual supervisory
and rank-and-file positions who shall be appointed and removed by the President and "H. GENERAL PROVISION
General Manager with the approval of the Board, in accordance with the existing Civil
Service rules and regulations. "SEC. 49. Dispensation of Social Insurance Benefits. - (a) The GSIS shall pay the
retirement benefits to the employee on his last day of service in the government:
"SEC. 45. Powers and Duties of the President and General Manager. - The President Provided, That all requirements are submitted to the GSIS within a reasonable period
and General Manager of the GSIS shall, among others, execute and administer the prior to the effective date of the retirement;
policies and resolutions approved by the Board and direct and supervise the
administration and operations of the GSIS. The President and General Manager, subject "(b) The GSIS shall discontinue the processing and adjudication of retirement claims
to the approval of the Board, shall appoint the personnel of the GSIS, remove, suspend under R.A. No. 1616 except refund of retirement premium under R. A. No. 910. Instead,
or otherwise discipline them for cause, in accordance with the existing Civil Service rules all agencies concerned shall process and pay the gratuities of their employees. The
and regulations, and prescribe their duties and qualifications to the end that only Board shall adopt the proper rules and procedures for the implementation of this
competent persons may be employed. provision.

"SEC. 46. Auditor. - (a) The Chairman of the Commission on Audit shall be the ex officio "SEC. 50. Development and Disposition of Acquired Assets. - The GSIS shall have the
auditor of the GSIS, and the necessary personnel to assist said representative in the right to develop and dispose of its acquired assets obtained in the ordinary course of its
performance of his duties. business. To add value to, improve profitability on, and/or enhance the marketability of an
acquired asset, the GSIS may further develop/renovate the same either with its own
"(b) The Chairman of the Commission on Audit or his authorized representatives, shall capital or through a joint venture arrangement with private companies or individuals.
submit to the Board soon after the close of each calendar year, an audited statement
showing the financial condition and progress of the GSIS for the calendar year just "The GSIS may sell its acquired assets in accordance with existing Commission on Audit
ended. (COA) rules and regulations for an amount not lower than the current market value of the
property. For this purpose, the GSIS shall conduct an annual appraisal of its property or
"SEC. 47. Legal Counsel. - The Government Corporate Counsel shall be the legal acquired assets to determine its current market value. All notices of sale shall be
adviser and consultant of the GSIS, but the GSIS may assign to the Office of the published in newspapers of general circulation.
Government Corporate Counsel (OGCC) cases for legal action or trial, issues for legal
opinions, preparation and review of contracts/agreements and others, as the GSIS may "No injunction or restraining order issued by any court, commission, tribunal or office shall
decide or determine from time to time: Provided, however, That the present legal services bar, impede or delay the sale and disposition by the GSIS of its acquired assets except
group in the GSIS shall serve as its in-house legal counsel. on questions of ownership and national or public interest.

"The GSIS may, subject to approval by the proper court, deputize any personnel of the "SEC. 51. Government Assistance to the GSIS. - The GSIS may call upon any employer
legal service group to act as special sheriff in the enforcement of writs and processes for such assistance as may be necessary in the discharge of its duties and functions.

27
"I. PENAL PROVISIONS 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
"SEC. 52. Penalty. - (a) Any person found to have participated directly or indirectly in the calling licensed by the government.
commission of fraud, collusion, falsification, or misrepresentation in any transaction with
the GSIS, whether for him or for some other persons, shall suffer the penalties provided "(g) The heads of the offices of the national government, its political subdivisions,
for in Article 172 of the Revised Penal Code. branches, agencies and instrumentalities, including government-owned or controlled
corporations and government financial institutions, and the personnel of such offices who
"(b) Whoever shall obtain or receive any money or check invoking any provision of this are involved in the collection of premium contributions, loan amortization and other
Act or any agreement thereunder, without being entitled thereto with the intent to defraud accounts due the GSIS who shall fail, refuse or delay the payment, turnover, remittance
any member, any employer, the GSIS, or any third party, shall be punished by a fine of or delivery of such accounts to the GSIS within thirty (30) days from the time that the
not less than Five thousand pesos (P5,000.00) nor more than Twenty thousand pesos same shall have been due and demandable shall, upon conviction by final judgment,
(P20,000.00) or by imprisonment of not less than six (6) years and one (1) day to twelve suffer the penalties of imprisonment of not less than one (1) year nor more than five (5)
(12) years, or both, at the discretion of the court. 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
"(c) Whoever fails or refuses to comply with the provisions of this Act or with the rules and disqualification from holding public office and from practicing any profession or calling
regulations adopted by the GSIS, shall be punished by a fine of not less than Five licensed by the government.
thousand pesos (P5,000.00) nor more than Twenty thousand pesos (P20,000.00) or
imprisonment of not less than six (6) years and one (1) day to twelve (12) years, or both, "(h) The officers and/or personnel referred to in paragraph (g) of this section shall be
at the discretion of the court. 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.
"(d) The treasurer, finance officer, cashier, disbursing officer, budget officer or other
official or employee who fails to include in the annual budget the amount corresponding "(i) For the charges or complaints referred to in paragraph (g) of this section, the liabilities
to the employer and employee contributions, or who fails or refuses or delays by more therein set forth shall be construed as waiver of the State of its immunity from suit, hence,
than thirty (30) days from the time such amount becomes due and demandable, or to the above-mentioned officials and/or personnel may not invoke the defense of non-
deduct the monthly contributions of the employee shall, upon conviction by final suability of the State.
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 "(j) Failure of the Members of the GSIS Board, including the chairman and the vice-
than Six thousand pesos (P6,000.00), and in addition, shall suffer absolute perpetual chairman, to comply with the provisions of paragraph (w) of Section 41 hereof, shall
disqualification from holding public office and from practicing any profession or calling subject them to imprisonment of not less than six (6) months nor more than one (1) year
licensed by the government. or a fine of not less than Five thousand pesos (P5,000.00) nor more than Ten thousand
pesos (P10,000.00) without prejudice to any civil or administrative liability which may also
"(e) Any employee or member who receives or keeps fund or property belonging, payable arise therefrom.
or deliverable to the GSIS and appropriates the same, or takes or misappropriates or
uses the same for any purpose other than authorized by this Act, or permits another "(k) Criminal actions arising from violations of the provisions of this Act may be
person to take, misappropriate or use said fund or property by expressly consenting commenced by the GSIS or by the aggrieved member, either under this Act or, in
thereto, or through abandonment or negligence, or is otherwise guilty of the appropriate cases, under the Revised Penal Code.
misappropriation of said fund or property, in whole or in part, shall suffer the penalties
provided in Article 217 of the Revised Penal Code, and in addition, shall suffer absolute "SEC. 53. Implementing Rules and Regulations. - The implementing rules and
perpetual disqualification from holding public office and from practicing any profession or regulations to carry out the provisions of this Act shall be adopted and promulgated by
calling licensed by the government. the GSIS not later than ninety (90) days after the approval of this Act.

"(f) Any employee who, after deducting the monthly contribution or loan amortization from "SEC. 54. Non-impairment of Benefits, Powers, Jurisdiction, Rights, Privileges, Functions
a members compensation, fails to remit the same to the GSIS within thirty (30) days from and Activities. - Nothing in this Act shall be construed to repeal, amend or limit any
the date they should have been remitted under Section 6(a), shall be presumed to have provision of existing laws, Presidential Decrees and Letters of Instructions, not otherwise
misappropriated such contribution or loan amortization and shall suffer the penalties specifically inconsistent with the provisions of this Act.

28
"SEC. 55. Exclusiveness of Benefits. - Whenever other laws provide similar benefits for
the same contingencies covered by this Act, the member who qualifies to the benefits
shall have the option to choose which benefits will be paid to him. However, if the
benefits provided by the law chosen are less than the benefits provided under this Act,
the GSIS shall pay only the difference.

"SEC. 56. Appropriations. - The amount necessary to carry out the provisions of this Act
shall be included in the respective budgets of the agencies in the national government
obligation program of the year following its enactment into law and thereafter."

Section 2. Separability Clause. - Should any provision of this Act or any part thereof be
declared invalid, the other provisions, so far as they are separable from the invalid ones,
shall remain in force and effect.

Section 3. Repealing Clause. - All laws and any other law or parts of law specifically
inconsistent herewith are hereby repealed or modified accordingly: Provided, That the
rights under the existing laws, rules and regulations vested upon or acquired by an
employee who is already in the service as of the effectivity of this Act shall remain in
force and effect: Provided, further, That subsequent to the effectivity of this Act, a new
employee or an employee who has previously retired or separated and is reemployed in
the service shall be covered by the provisions of this Act.

Section 4. Effectivity. - This Act shall take effect fifteen (15) days after its publication in
the Official Gazette or in at least two (2) newspapers of general circulation.

This Act, which is a consolidation of Senate Bill No. 2013 and House Bill No. 8561, was
finally passed by the Senate and the House of Representatives on May 29, 1997 and
May 28, 1997, respectively.

Approved: May 30, 1997.

29
PRESIDENTIAL DECREE No. 626 (b) "Commission" means the Employees' Compensation Commission created under this
Title.
FURTHER AMENDING CERTAIN ARTICLES OF PRESIDENTIAL DECREE NO. 442
ENTITLED "LABOR CODE OF THE PHILIPPINES" (c) "SSS" means the Social Security System created under Republic Act numbered
eleven hundred sixty-one, as amended.
WHEREAS, Presidential Decree No. 570-A amends certain provisions of Presidential
Decree No. 442, otherwise known as the Labor Code of the Philippines, and Presidential (d) "GSIS" means the Government Service Insurance System created under
Decree No. 608 extends the effectivity of Title II of Book IV on Employees' Compensation Commonwealth Act numbered one hundred eighty-six, as amended.
and State Insurance Fund and Title III of Book IV on Medicare of the same Code to
January 1, 1975; (e) "System" means the SSS or GSIS, as the case may be.

WHEREAS, pending the effectivity of said Titles, the Social Security System, (f) "Employer" means any person, natural or juridical, employing the services of the
Government Service Insurance System, Philippine Medical Care Commission, and the employee.
Department of Labor have utilized the transition period for intensive study and
consultations with labor organizations, employers' organizations, and civic, professional, (g) "Employee" means any person compulsorily covered by the GSIS under
and technical associations, representing the various sectors of the economy; Commonwealth Act Numbered one hundred eighty-six, as amended, including members
of the Armed Forces of the Philippines, and any person employed as casual, emergency,
WHEREAS, as a result of such discussions and consultations, it has found necessary to temporary, substitute or contractual; or any person compulsorily covered by the SSS
make adjustments in the text of the Labor Code to initiate, rationalize and coordinate the under Republic Act numbered eleven hundred sixty-one, as amended.
grant of benefits with the broad objectives of the Code consistent with the overriding
priority of development; (h) "Person" means any individual, partnership, firm, association, trust, corporation or
legal representative thereof.
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 the Armed (i) "Dependents" means the legitimate, legitimated or legally adopted child who is
Forces of the Philippines, and pursuant to Proclamation No. 1081 dated September 22, unmarried, not gainfully employed, and not over eighteen years of age, or over eighteen
1972, as amended, do hereby order and decree: but not over twenty-one years of age provided that he is enrolled in school, or over
twenty-one years of age provided that he is congenitally incapacitated and incapable of
Section 1. Title II of Book IV on Employees' Compensation and State Insurance Fund of self-support physically or mentally; the legitimate spouse living with the employee; and
the Labor Code of the Philippines is hereby amended to read as follows: the legitimate parents of said employee wholly dependent upon him for regular support.

TITLE II (j) "Beneficiaries" means the dependent spouse until he remarries and dependent
EMPLOYEES COMPENSATION AND STATE INSURANCE FUND children who are the primary beneficiaries. In their absence, the dependent parents
subject to the restrictions imposed on dependent children, the illegitimate children and
CHAPTER I legitimate descendants, who are the secondary beneficiaries.
Policy and Definitions
(k) "Injury" means any harmful change in the human organism sustained at work carried
Article 164. Policy. The State shall promote and develop a tax-exempt employees' out during working hours at the workplace or elsewhere while executing an order for the
compensation program whereby employees and their dependents, in the event of work- employer.
connected disability or death, may promptly secure adequate income benefit, and
medical or related benefits. (l) "Sickness" means any illness definitely accepted as an occupational disease listed by
the Commission, or any illness caused by employment subject to proof by the employee
Article 165. Definition of Terms. As used in this Title, unless the context indicates that the risk of contracting the same is increased by working conditions.
otherwise:
(m) "Death" means loss of life resulting from injury or sickness.
(a) "Code" means the Labor Code of the Philippines instituted under Presidential Decree
numbered four hundred forty-two, as amended.
30
(n) "Disability" means loss or impairment of a physical or mental function resulting from obtained by dividing the sum of all monthly salary credits by thirty times the number of
injury or sickness. calendar months of coverage.

(o) "Compensation" means all payments made under this Title for income benefits, and (aa) "Quarter" means a period of three consecutive months ending on the last day of
medical or related benefits. March, June, September and December.

(p) "Income benefit" means all payments made under this Title to the employee or his CHAPTER II
dependents. Coverage and Liability

(q) "Medical benefit" means all payments made under this Title to the providers of Article 166. Compulsory coverage. Coverage in the State Insurance Fund shall be
medical care, rehabilitation services and hospital care. compulsory upon all employers and their employees not over sixty years of age:
Provided, That an employee who is over sixty years of age and paying contributions to
(r) "Related benefit" means all payments made under this Title for appliances and qualify for the retirement or life insurance benefit administered by the System shall be
supplies. subject to compulsory coverage: Provided, further, That in case of an employee who is
both covered by the SSS and GSIS, only his employment under the GSIS shall be
(s) "Appliances" means crutches, artificial aids and other similar devices. considered for purposes of his coverage.

(t) "Supplies" means medicine and other medical, dental or surgical items. Article 167. Foreign employment. The Commission shall ensure adequate coverage of
Filipino employees employed abroad, subject to regulations as it may prescribe.
(u) "Hospital" means any medical facility, government or private, authorized by law, an
active member of good standing of the Philippine Hospital Association and accredited by Article 168. Effective date of coverage. Compulsory coverage of the employer during
the Commission. the effectivity of this Title shall take effect on the first day of his operation, and that of the
employee on the date of his employment.
(v) "Physician" means any doctor of medicine duly licensed to practice in the Philippines,
an active member of good standing of the Philippine Medical Association and accredited Article 169. Registration. Each employer and his employees shall register with the
by the Commission. System in accordance with its regulations.

(w) "Wages" or "salary" means all actual remuneration for employment received during Article 170. Limitation of liability. The State Insurance Fund shall be liable for
the month, except that part in excess of one thousand pesos. compensation to the employee or his dependents, except when the disability or death
was occasioned by the employee's intoxication, willful intention to injure or kill himself or
(x) "Monthly salary credit" means the wage or salary base for contributions as provided in
another, notorious negligence, or otherwise provided under this Title.
Republic Act numbered eleven hundred sixty-one, as amended, or the wages or salary.
Article 171. Exclusiveness of liability. Unless otherwise provided, the liability of the
(y) "Average monthly salary credit" means the result obtained by dividing the sum of the
State Insurance Fund under this Title shall be exclusive and in place of all other liabilities
monthly salary credits in the sixty-month period ending on the last day of the second
of the employer to the employee, his dependents or anyone otherwise entitled to receive
quarter preceding the quarter of death or permanent disability by sixty, except where the
damages on behalf of the employee or his dependents. The payment of compensation
month of death or permanent disability falls within eighteen calendar months from the
under this Title shall bar the recovery of benefits as provided for in Section 699 of the
month of coverage, in which case, the average month salary credit is the result obtained
Revised Administrative Code, Republic Act Numbered eleven hundred sixty-one, as
by dividing the sum of all monthly salary credits by the number of calendar months of
amended, Commonwealth Act numbered one hundred eighty-six, as amended, Republic
coverage.
Act numbered sixty-one hundred eleven, as amended, Republic Act numbered six
(z) "Average daily salary credit" means the result obtained by dividing the sum of the six hundred ten, as amended, Republic Act numbered forty-eight hundred sixty-four, as
highest monthly salary credits in the twelve-month period ending on the last day of the amended, and other laws whose benefits are administered by the System, during the
second quarter preceding the quarter of sickness or injury by one hundred eighty, except period of such payment for the same disability or death, and conversely.
where the month of injury falls within twelve calendar months from the first month of
coverage in the System, in which case the average daily salary credit is the result
31
Article 172. Liability of third parties. (a) When the disability or death is caused by Article 175. Powers and duties. The Commission shall have the following powers and
circumstances creating a legal liability against a third party, the disabled employee or the duties:
dependents in case of his death shall have the option either to claim for benefit from the
System under this Title or to sue such third party for damages in accordance with law. In (a) To assess and fix a rate of contribution from all employers.
case benefit is claimed and allowed under this Title, the System shall be subrogated to
the rights of the disabled employee or the dependents in case of his death in accordance (b) To determine the rate of contribution payable by an employer whose records show a
with the general law. high frequency of work accidents or occupational diseases due to failure by the said
employer to observe adequate safety measures.
(b) Where the System recovers from such third party damages in excess of those paid or
allowed under this Title, such excess shall be delivered to the disabled employee or other (c) To approve rules and regulations governing the processing of claims and the
persons entitled thereto, after deducting the cost of proceedings and expenses of the settlement of disputes arising therefrom as prescribed by the System.
System. The Proof of payment of compensation under this Title shall be admissible as
(d) To initiate policies and programs towards adequate occupational health and safety
evidence in any damage suit or action.
and accident prevention in the working environment.
Article 173. Deprivation of benefits. Except as otherwise provided under this Title, no
(e) To make the necessary actuarial studies and calculations concerning the grant of
contract, regulation or device whatsoever shall operate to deprive the employee or his
constant help and income benefits for permanent disability or death, and the
dependents of any part of the income benefits, and medical or related services granted
rationalization of the benefits for permanent disability and death under this Title with
under this Title. Existing medical services being provided by the employer shall be
benefits payable by the System for similar contingencies.
maintained and continued to be enjoyed by their employees.
(f) To appoint the personnel of its staff, subject to civil service law and rules.
CHAPTER III
Administration (g) To adopt annually a budget of expenditures of the Commission and its staff
chargeable against the State Insurance Fund.
Article 174. Employees Compensation Commission. (a) To initiate, rationalize and
coordinate the policies of the employees' compensation program, the Employees' (h) To have the power to administer oath and affirmation, and to issue subpoena and
Compensation Commission is hereby created to be composed of four ex-officio subpoena duces tecum in connection with any question or issue arising from appealed
members: The Secretary of Labor as Chairman, the GSIS General Manager, the SSS cases under this Title.
Administrator, the Chairman of the Philippine Medical Care Commission; and two
appointive members, one of whom shall represent the employees and the other, the (i) To sue and be sued in court.
employers, to be appointed by the President of the Philippines for a term of six years.
The appointive member shall have at least five years experience in workmen's (j) To perform such other acts as it may deem appropriate for the attainment of the
compensation or social security programs. All vacancies shall be filled for the unexpired purposes of the Commission and proper enforcement of the provisions of this Title.
term only.
Article 176. Management of funds. All revenues collected by the System under this
(b) The Vice-Chairman of the Commission shall be alternated each year between the Title shall be deposited, invested, administered and disbursed in the same manner and
GSIS General Manager and the SSS Administrator. The presence of four members shall under the same conditions, requirements and safeguards as provided by Republic Act
constitute a quorum. Meetings shall be held as often as necessary. Each member shall numbered eleven hundred and sixty-one, as amended, and Commonwealth Act
receive a per diem of one hundred pesos for every meeting actually attended by him numbered one hundred eighty-six, as amended, with regards to such other funds as are
exclusive of actual, ordinary and necessary travel and representation expenses. In his thereunder being paid to or collected by the SSS and GSIS, respectively: Provided, That
absence, any member may designate an official of the institution he serves on full time the Commission, SSS and GSIS may disburse each year not more than twelve per cent
basis as his representative to act on his behalf. of the contributions and investment earnings collected for operational expenses, including
occupational health and safety programs, incidental to the carrying out of this Title.
(c) The general conduct of the operations and management functions of the GSIS or SSS
under this Title shall be vested in its respective chief executive officer, who shall be Article 177. Investment of funds. All revenues as are not needed to meet current
immediately responsible for carrying out the policies of the Commission. operational expenses under this Title shall be accumulated in a fund to be known as the
32
State Insurance Fund, which shall be used exclusively for the payment of the benefits (c) Contributions under this Title shall be paid in their entirety by the employer and any
under this Title, and no amount thereof shall be used for any other purpose. All amounts contract or device for the deduction of any portion thereof from the wages or salaries of
accruing to the State Insurance Fund, which is hereby established in the SSS and GSIS, the employees shall be null and void.
respectively, shall be deposited with any authorized depository banks approved by the
Commission, or invested with due and prudent regard for the liquidity needs of the (d) When a covered employee dies, becomes disabled or is separated from employment,
System. his employer's obligation to pay the monthly contribution arising from that employment
shall cease at the end of the month of contingency and during such months that he is not
Article 178. Settlement of claims. The System shall have original and exclusive receiving wages or salary.
jurisdiction to settle any dispute arising from this Title with respect to coverage,
entitlement to benefits, collection and payment of contributions and penalties thereon, or Article 182. Government guarantee. The Republic of the Philippines guarantees the
any other matter related thereto, subject to appeal to the Commission, which shall decide benefits prescribed under this Title, and accepts general responsibility for the solvency of
appealed case within twenty working days from the submission of the evidence. the State Insurance Fund. In case of any deficiency, the same shall be covered by
supplemental appropriations from the national government.
Article 179. Review. Decisions, orders or resolutions by the Commission may be
reviewed on certiorari by the Supreme Court only on questions of law upon petition of an CHAPTER V
aggrieved party within ten days from notice thereof. Medica Benefits

Article 180. Enforcement of decisions. (a) Any decision, order or resolution of the Article 183. Medical Services. Immediately after an employee contracts sickness or
Commission shall become final and executory if no appeal is taken therefrom within ten sustains an injury, he shall be provided by the System during the subsequent period of
days from notice thereof. All awards granted by the Commission in cases appealed from his disability with such medical services and appliances as the nature of his sickness or
decisions of the System shall be effected within fifteen days from receipt of notice. injury and progress of his recovery may require, subject to the expense limitation
prescribed by the Commission.
(b) In all other cases, decisions, orders and resolutions of the Commission which have
become final and executory shall be enforced and executed in the same manner as Article 184. Liability. The System shall have the authority to choose or order a change
decisions of the Court of First Instance, and the Commission shall have the power to of physician, hospital or rehabilitation facility for the employee, and shall not be liable for
issue to the city or provincial sheriff or to the sheriff whom it may appoint such writs of compensation for any aggravation of the employee's injury or sickness resulting from
execution as may be necessary for the enforcement of such decisions, orders or unauthorized changes by the employee of medical services, appliances, hospitals,
resolutions, and any person who shall fail or refuse to comply therewith shall, upon rehabilitation facilities or physicians.
application by the Commission, be punished by the proper court for contempt.
Article 185. Attending physician. Any physician attending an injured or sick employee
CHAPTER IV shall comply with all the regulations of the System and submit reports in prescribed form
Contributions at such time as may be required concerning his condition or treatment. All medical
information relevant to the particular injury or sickness shall on demand be made
Article 181. Employer's contributions. (a) Under such regulations as the System may available to the employee or the System. No information developed in connection with
prescribe, beginning as of the last day of the month when an employee's compulsory treatment or examination for which compensation is sought shall be considered as
coverage takes effect and every month thereafter during his employment, his employer privileged communication.
shall prepare to remit to the System a contribution equivalent to one per cent of his
monthly salary credit. Article 186. Refusal of examination or treatment. If the employee unreasonably
refuses to submit to medical examination or treatment the System shall stop the payment
(b) The rate of contributions shall be reviewed periodically and, subject to the limitations of further compensation during such time as such refusal continues. What constitutes an
herein provided, may be revised as the experience in risk, cost of administration, and unreasonable refusal shall be determined by the System which may on its own initiative
actual or anticipated as well as unexpected losses, may require. determine the necessity character, and sufficiency of any medical services furnished or to
be furnished.

33
Article 187. Fees and other charges. All fees and other charges for hospital services, Forty-five percent of the first three hundred pesos of average monthly salary credit or
medical care and appliances, excluding professional fees, shall not be higher than those fraction thereof; plus
prevailing in wards of hospitals for similar services to injured or sick persons in general,
and shall be subject to the regulations of the Commission. Professional fees shall only be Twenty-five per cent of the next three hundred pesos of average monthly salary credit or
appreciably higher than those prescribed under Republic Act numbered sixty-one fraction thereof; plus
hundred eleven, as amended, otherwise known as the Philippines Medical Care Act of
1969. Nine per cent of each succeeding one hundred pesos of average monthly salary credit or
fraction thereof; plus
Article 188. Rehabilitation services. (a) The System shall, as soon as practicable,
establish a continuing program of the rehabilitation of injured and handicapped One tenth of one per cent of the average monthly salary credit for each month of paid
employees, who shall be entitled to rehabilitation services, which shall consist of medical, coverage in the System in excess of one hundred twenty months of paid coverage as of
surgical or hospital treatment, including appliances if he has been handicapped by the the last day of the second quarter preceding the quarter of disability: Provided, That the
injury, to help him become physically independent. monthly income benefit shall not be less than forty-five pesos.

(b) As soon as practicable, the System shall established centers equipped and staffed to (b) The monthly income benefit shall be guaranteed for five years, but the total payments
provide a balanced program of remedial treatment, vocational assessment and of which shall in no case exceed twelve thousand pesos, and shall be suspended if the
preparation designed to meet the individual needs of each handicapped employee to employee is gainfully employed or recovers from his permanent total disability or fails to
restore him to suitable employment, including assistance as may be within its resources present himself for examination at least once a year upon notice by the System.
to help each rehabilitee to develop his mental, vocational or social potential.
(c) The following disabilities shall be deemed total and permanent:
CHAPTER VI
(1) Temporary total disability lasting continuously for more than one hundred twenty days;
Disability Benefits
(2) Complete loss of sight of both eyes;
Article 189. Temporary total disability. (a) Under such regulations as the Commission
may approve, any employee under this Title who sustains an injury or contracts sickness (3) Lost of two limbs at or above the ankle or wrist;
resulting in temporary total disability shall for each day of injury or fraction thereof, or for
each day or fraction thereof after the third day of sickness, be paid by the System an (4) Permanent complete paralysis of two limbs;
income benefit equivalent to ninety per cent of his average daily salary credit, subject to
the following conditions: (1) The daily income benefit shall not be less than two pesos (5) Brain injury resulting in incurable imbecility or insanity; and
and fifty centavos nor more than sixteen pesos nor paid for a continuous period longer
than one hundred twenty days, and (2) The System shall be notified of the injury or (6) Such cases as determined by the Medical Director of the System and approved by the
sickness. Commission.

(b) The payment of such income benefit shall be in accordance with the regulations of the (d) The number of months of paid coverage shall be defined and approximated by a
Commission: Provided, That the employee shall not be entitled to avail himself of the formula to be approved by the Commission.
income benefit under this Title and his sick leave credits at the same time: Provided,
further, That all sick leaves earned by him shall be preserved to his credit if he has not Article 191. Permanent partial disability. (a) Under such regulations as the
been paid his salary during such leave of absence. Commission may approve, any employee under this Title who contracts sickness or
sustains an injury resulting in permanent partial disability shall for each month not
Article 190. Permanent Total disability. (a) Under such regulations as the Commission exceeding the period designated herein be paid by the System during such disability an
may approve, any employee under this Title who contracts sickness or sustains an injury income benefit equivalent to the income benefit for permanent total disability.
resulting in permanent total disability shall for each month until his death but not
exceeding five years be paid by the system during such disability an income benefit to be (b) The benefit shall be paid for not more than the period designated in the following
computed as follows: schedule:

34
Complete and permanent loss of the use of: No. of months

(c) A loss of a wrist shall be considered as a loss of the hand, and a loss of an
One thumb 8 elbow considered as a loss of the arm. A loss of an ankle shall be considered as
loss of the foot, and a loss of a knee considered as a loss of the leg. A loss of
more than one joint shall be considered as a loss of the whole finger or toe, and
One index finger 6
a loss of only the first joint considered as a loss of one-half the whole finger or
toe: Provided, That such loss shall be either the functional loss of the use or
One middle finger 5 physical loss of the member.

(d) In cases of permanent partial disability less than the total loss of the member
One ring finger 4 specified in the preceding paragraph, the same monthly income benefit shall be
paid for a portion of the period established for the total loss of the member in
accordance with the proportion that the partial loss bears to the total loss. If the
One little finger 2
result is a decimal fraction, the same shall be rounded off to the next higher
integer.
One big toe 5
(e) In cases of simultaneous loss of more than one member or a part thereof as
specified in this Art., the same monthly income benefit shall be paid for a period
Any toe 2 equivalent to the sum of the periods established for the loss of the member or a
part thereof. If the result is a decimal fraction, the same shall be rounded off to
the next higher integer.
One hand 31
CHAPTER VII
One arm 40 Death Benefits

Article 192. Death. (a) Under such regulations as the Commission may
One foot 25 approve, the System shall pay to the primary beneficiaries upon the death of the
covered employee under this Title a monthly income benefit equivalent to the
monthly income benefit for permanent total disability increased by ten per cent
One leg 37
for each dependent child but not exceeding five, beginning with the youngest
and without substitution: Provided, That the portion equivalent to the monthly
One ear 8 income benefit for permanent total disability shall be guaranteed for five years;
Provided, further, That if he has no primary beneficiary the System shall pay to
his beneficiaries or legal heirs a lump sum benefit equivalent to the lesser of
Both ears 16 thirty times the monthly income benefit for permanent total disability and six
thousand pesos.
Hearing of one ear 8
(b) Under such regulations as the Commission may approve, the System shall
pay to the primary beneficiaries upon the death of a covered employee who is
Hearing of both ears 40 under permanent total disability under this Title the balance of his income
benefit plus ten per cent of the monthly income benefit for each dependent child
but not exceeding five, beginning with the youngest and without substitution:
Sight of one eye 20 Provided, That if he has no primary beneficiary the System shall pay to his

35
beneficiaries or legal heirs a lump sum benefit equivalent to the lesser of the Article 198. Safety devices. In case the employee's injury or death was due to
balance of his income benefit or thirty times his monthly income benefit and six the failure of the employer to comply with any law, or to install and maintain
thousand pesos. safety devices, or take other precautions for the prevention of injury, said
employer shall pay to the State Insurance Fund a penalty of twenty-five percent
CHAPTER VIII of lump sum equivalent of the income benefit payable by the System to the
Provisions Common to Income Benefits employee. All employers, especially those who should have been paying a rate
of contribution higher than that required of them under this Title, are enjoined to
Article 193. Relationship and dependency. All questions of relationship and undertake and strengthen measures for the occupational health and safety of
dependency shall be determined as of the time of death. their employees.

Article 194. Delinquent contributions. (a) An employer who is delinquent in his Article 199. Prescriptive period. No claim for compensation shall be given due
contributions shall be liable to the System for the benefits which may have been course unless notice thereof has been given to the employer in accordance with
paid by the System to his employees or their dependents, and any benefit and the provisions herein, except when said notice is not required. The right to
expenses to which such employer is liable shall constitute a lien on all his compensation shall be barred unless said claim is filed with the System within
property, real or personal, which is hereby declared to be preferred to any credit one year from notice to the employer.
except taxes. The payment by the employer of the lump sum equivalent of such
liability shall absolve him from the payment of the delinquent contributions and Article 200. Erroneous payment. (a) If the System in good faith pays income
penalty thereon with respect to the employee concerned. benefit to a dependent who is inferior in right to another dependent or with
whom another dependent is entitled to share, such payments shall discharge
(b) Failure or refusal of the employer to pay or remit the contributions herein the System from liability, unless and until such other dependent notifies the
prescribed shall not prejudice the right of the employee or his dependents to the System of his claim prior to the payments.
benefits under this Title. If the sickness, injury, disability or death occurs before
the System receives any report of the name of his employee, the employer shall (b) In case of doubt as to the respective rights of rival claimants, the System is
be liable to the System for the lump sum equivalent of the benefits to which such hereby empowered to determine as to whom payment should be made in
employee or his dependents may be entitled. accordance with such regulations as the Commission may approve. If the
money is payable to a minor or incompetent, payment shall be made by the
Article 195. Second injuries. If any employee under permanent partial System to such person or persons as it may consider to be best qualified to take
disability suffers another injury which results in a compensable disability greater care and dispose of the minor's or incompetent's property for his benefit.
than the previous injury, the State Insurance Fund shall be liable for the income
benefit of the new disability; Provided, That if the new disability is related to the Article 201. Prohibition. No agent, attorney or other person pursuing or in
previous disability, the System shall be liable only for the difference in income charge of the preparation or filing of any claim for benefit under this Title shall
benefits. demand or charge for his services a fee, and any stipulation to the contrary shall
be null and void. The retention or deduction of any amount from any benefit
Article 196. Assignment of benefits. No claim for compensation under this granted under this Title for the payment of fees of such services is prohibited.
Title is transferrable, or liable to tax, attachment, garnishment, levy or seizure by Violation of any provision of this Article shall be punished by a fine of not less
or under any legal process whatsoever, either before or after receipt by the than five hundred pesos nor more than five thousand pesos, or imprisonment for
person or persons entitled thereto, except to pay any debt of the employee to not less than six months nor more than one year, or both, at the discretion of the
the System. court.

Article 197. Earned benefits. Income benefits shall, with respect to any period Article 202. Exemption from levy, tax, etc. All laws to the contrary
of disability, be payable in accordance with this Title to an employee who is notwithstanding, the State Insurance Fund and all its assets shall be exempt
entitled to receive wages, salaries or allowance for holidays, vacation or sick from any tax, fee, charge, levy, or customs or import duty, and no law hereafter
leaves, and any award or benefit under a collective bargaining or other enacted shall apply to the State Insurance Fund unless it is provided therein that
agreement.

36
the same is applicable by expressly stating its name. (b) Any person, who for the purpose of securing entitlement to any benefit or
payment under this Title or the issuance of any certificate or document for any
CHAPTER IX purpose connected with this Title, whether for him or for some other person,
Records, Reports, and Penal Provisions commits fraud, collusion, falsification, misrepresentation of facts or any other
kind of anomaly shall be punished with a fine of not less than five hundred
Article 203. Record of death or disability. (a) All employers shall keep a pesos nor more than five thousand pesos and an imprisonment for not less than
logbook to record chronologically the sickness, injury or death of their six months nor more than one year, at the discretion of the court.
employees, setting forth therein his name, date and place of the contingency,
nature of the contingency and absences. Entries in the logbook shall be made (c) If the act penalized by this Article is committed by any person who has been
within five days from notice or knowledge of the occurrence of the contingency. or is employed by the Commission or System, or a recidivist, the imprisonment
Within five days after entry in the logbook, the employer shall report to the shall not be less than one year; if committed by a lawyer, physician or other
System only those contingencies it deems to be work-connected. professional, he shall in addition to the penalty prescribed herein be disqualified
from the practice of his profession; and if committed by any official, employee or
(b) All entries in the employer's logbook shall be made by the employer or any of personnel of the Commission, System or any government agency, he shall in
his authorized official after verification of the contingencies or the employee's addition to the penalty prescribed herein be dismissed with prejudice to
absences for a period of a day or more. Upon request by the System, the reemployment in the government service.
employer shall furnish the necessary certificate regarding information about any
contingency appearing in the logbook, citing the entry number, page number Article 206. Applicability. This Title shall apply only to injury, sickness,
and date. Such logbook shall be made available for inspection to the duly disability or death occurring on or after January 1, 1975.
authorized representative of the System.
Section 2. Title III of Book IV on Medicare of the same Code is hereby amended
(c) Should any employer fail to record in the logbook an actual sickness, injury to read as follows:
or death of any of his employees within the period prescribed herein, give false
information or withhold material information already in his possession, he shall Article 207. Medical Care. The Philippine Medical Care Plan shall be
be held liable for fifty per cent of the lump sum equivalent of the income benefit implemented as provided under Republic Act numbered sixty-one hundred
to which the employee may be found to be entitled, the payment of which shall eleven, as amended.
accrue to the State Insurance Fund.
Section 3. Article 331 of Chapter II of Book VII on prescription of Offense and
(d) In case of payment of benefits for a claim which is later determined to be Claims of the same Code is hereby amended to read as follows:
fraudulent and the employer is found to be a party to the fraud, such employer
shall reimburse the System the full amount of the compensation paid. Article 331. Money Claims. All money claims arising from employer-employee
relations accruing during the effectivity of this Code shall be filed within three (3)
Article 204. Notice of sickness, injury or death. Notice of sickness, injury or years from the time the cause of action accrued; otherwise they shall be forever
death shall be given to the employer by the employee or by his dependents or barred.
anybody on his behalf within five days from the occurrence of the contingency.
No notice to the employer shall be required if the contingency is known to the "All money claims accruing prior to the effectivity of this Code shall be filed with
employer or his agents or representatives. the appropriate entities established under this Code within one year from the
date of such effectivity, and shall be processed or determined in accordance
Article 205. Penal provisions. (a) The penal provisions of Republic Act with implementing rules and regulations of the Code; otherwise they shall be
numbered eleven hundred sixty-one, as amended, and Commonwealth Act forever barred.
numbered one hundred eighty-six, as amended, with regard to the funds as are
thereunder being paid to, collected or disbursed by the System, shall be "Workmen's compensation claims accruing prior to the effectivity of this Code
applicable to the collection, administration and disbursement of the funds under and during the period from November 1, 1974, up to December 31, 1974, shall
this Title. The penal provisions on coverage shall also be applicable. be filed with the appropriate regional offices of the Department of Labor not later
than March 31, 1975; otherwise they shall be forever barred. These claims shall

37
be processed and adjudicated in accordance with the law and rules at the time renumbering them consecutively beginning with Art. 1.
their causes of action accrued."
Section 7. This Decree shall take effect on January 1, 1975.
Section 4. Article 336 of Chapter III of Book VII on Transitory and Final
Provisions of the same Code is hereby amended to read as follows: Done in the City of Manila, this 27th day of December, in the year of Our Lord,
nineteen hundred and seventy-four.
Article 336. Bureau of Workmen's Compensation and Workmen's Compensation
Commission. The present Bureau of Workmen's Compensation, Workmen's
Compensation Commission, and Workmen's Compensation Units in the
Department of Labor shall continue to exist up to December 31, 1975.
Thereafter, said offices shall be considered abolished and all officials and
personnel thereof shall be transferred to and mandatorily absorbed by the
Department of Labor, subject to Presidential Decree No. 6, Letters of
Instructions No. 14 and 14-A and the Civil Service law and rules.

"The salaries of the present officials and personnel of the Bureau of Workmen's
Compensation, Workmen's Compensation Commission, and Workmen's
Compensation Units in the original offices of the Department of Labor shall be
paid from the appropriations under Presidential Decree No. 503 for the fiscal
year ending June 30, 1975. Beginning July 1, 1975, their salaries shall be paid
from general appropriations."

Section 5. Article 339 of Chapter III of Book VII on Transitory and Final
Provisions of the same Code is hereby amended to read as follows:

Article 339. Disposition of pending cases. All cases pending before the Court
of Industrial Relations and the National Labor Relations Commission established
under Presidential Decree No. 21 on the date of effectivity of this Code shall be
transferred to and processed by the corresponding labor relations division or the
National Labor Relations Commission created under this Code having
cognizance of the same in accordance with the procedure laid down herein and
its implementing rules and regulations. Cases on labor relations on appeal with
the Secretary of Labor or the Office of the President of the Philippines as of the
date of effectivity of this Code shall remain under their respective jurisdiction
and shall be decided in accordance with the law, rules and regulations in force
at the time of appeal.

"All workmen's compensation cases pending before the Workmen's


Compensation Units in the regional offices of the Department of Labor and
those pending before the Workmen's Compensation Commission as of March
31, 1975, shall be processed and adjudicated in accordance with the law, rules
and procedure existing prior to the effectivity of the Employees' Compensation
and State Insurance Fund."

Section 6. The numbers of the Articles of the same Code shall be amended by
38
REPUBLIC ACT NO. 7699 Sec. 5. Nothing in this Act shall be construed to diminish or reduce the benefits being
enjoyed by a covered worker arising from existing laws, issuances, and company policies
AN ACT INSTITUTING LIMITED PORTABILITY SCHEME IN THE SOCIAL SECURITY or practices or agreements between the employer and the employees.
INSURANCE SYSTEMS BY TOTALIZING THE WORKERS' CREDITABLE SERVICES
OR CONTRIBUTIONS IN EACH OF THE SYSTEMS. Sec. 6. The Department of Labor and Employment for the private sector and the Civil
Service Commission for the government sector, together with the SSS and the GSIS
SECTION 1. It is hereby declared the policy of the State to promote the welfare of our shall, within ninety (90) days from the effectivity of this Act, promulgate the rules and
workers by recognizing their efforts in productive endeavors and to further improve their regulations necessary to implement the provisions hereof: Provided, That any conflict in
conditions by providing benefits for their long years of contribution to the national the interpretation of the law and the implementing rules and regulations shall be resolved
economy. Towards this end, the State shall institute a scheme for totalization and in favor of the workers.
portability of social security benefits with the view of establishing within a reasonable
period a unitary social security system. Sec. 7. All laws, decrees, orders, rules and regulations, or parts thereof, which are
inconsistent with the provisions of this Act are hereby repealed or modified accordingly.
Sec. 2. Definition of Terms. As used in this Act, unless the context indicates otherwise,
the following terms shall mean: Sec. 8. This Act shall take effect fifteen (15) days after its complete publication in the
Official Gazette or in at least two (2) national newspapers of general circulation,
(a) "Contributions" shall refer to the contributions paid by the employee or worker to whichever comes earlier.
either the Government Service Insurance System (GSIS) or the Social Security System
(SSS) on account of the worker's membership;

(b) "Portability" shall refer to the transfer of funds for the account and benefit of a worker
who transfers from one system to the other;

(c) "Sector" shall refer to employment either in the public or private sector;

(d) "System" shall refer to either the SSS as created under Republic Act No. 1161, as
amended or the GSIS as created under Presidential Decree No. 1146, as amended; and

(e) "Totalization" shall refer to the process of adding up the periods of creditable services
or contributions under each of the Systems, for purposes of eligibility and computation of
benefits.

Sec. 3. Provisions of any general or special law or rules and regulations to the contrary
notwithstanding, a covered worker who transfers employment from one sector to another
or is employed in both sectors shall have his credible services or contributions in both
Systems credited to his service or contribution record in each of the Systems and shall be
totalized for purposes of old-age, disability, survivorship and other benefits in case the
covered member does not qualify for such benefits in either or both Systems without
totalization: Provided, however, That overlapping periods of membership shall be
credited only once for purposes of totalization.

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.
39
REPUBLIC ACT NO. 7875 g) Innovation The Program shall adapt to changes in medical technology, health
service organizations, health care provider payment systems, scopes of professional
REPUBLIC ACT NO. 7875 - AN ACT INSTITUTING A NATIONAL HEALTH INSURANCE practice, and other trends in the health sector. It must be cognizant of the appropriate
PROGRAM FOR ALL FILIPINOS AND ESTABLISHING THE PHILIPPINE HEALTH roles and respective strengths of the public and private sectors in health care, including
INSURANCE CORPORATION FOR THE PURPOSE people's organizations and community-based health care organizations;

SECTION 1. Short Title. This Act shall be known as the "National Health Insurance h) Devolution The Program shall be implemented in consultation with local
Act of 1995." government units (LGUs), subject to the overall policy directions set by the National
Government;
ARTICLE I
i) Fiduciary Responsibility The Program shall provide effective stewardship, funds
GUIDING PRINCIPLES management, and maintenance of reserves;

SECTION 2. Declaration of Principles and Policies. Section 11, Article XIII of the j) Informed Choice The Program shall encourage members to choose from among
1987 Constitution of the Republic of the Philippines declares that the State shall adopt an accredited health care providers. The Corporation's local offices shall objectively apprise
integrated and comprehensive approach to health development which shall endeavor to its members of the full range of providers involved in the Program and of the services and
make essential goods, health and other social services available to all the people at privileges to which they are entitled as members. This explanation, which the members
affordable cost. Priority for the needs of the underprivileged, sick, elderly, disabled, may use as a guide in selecting the appropriate and most suitable provider, shall be
women, and children shall be recognized. Likewise, it shall be the policy of the State to given in clear and simple Filipino and in the local languages that is comprehensible to the
provide free medical care to paupers. member;

In the pursuit of a National Health Insurance Program, this Act shall adopt the following k) Maximum Community Participation The Program shall build on existing
guiding principles: community initiatives for its organization and human resource requirements;

a) Allocation of National Resources for Health The Program shall underscore the l) Compulsory Coverage All citizens of the Philippines shall be required to enroll in
importance for government to give priority to health as a strategy for bringing about faster the National Health Insurance Program in order to avoid adverse selection and social
economic development and improving quality of life. inequity;

b) Universality The Program shall provide all citizens with the mechanism to gain m) Cost Sharing The Program shall continuously evaluate its cost sharing schedule
financial access to health services, in combination with other government health to ensure that costs borne by the members are fair and equitable and that the charges by
programs. The National Health Insurance Program shall give the highest priority to health care providers are reasonable;
achieving coverage of the entire population with at least a basic minimum package of
health insurance benefits; n) Professional Responsibility of Health Care Providers The Program shall assure
that all participating health care providers are responsible and accountable in all their
c) Equity The Program shall provide for uniform basic benefits. Access to care must dealings with the Corporation and its members;
be a function of a person's health needs rather than his ability to pay;
o) Public Health Services The Government shall be responsible for providing public
d) Responsiveness The Program shall adequately meet the needs for personal health services for all groups such as women, children, indigenous people, displaced
health services at various stages of a member's life; communities and communities in environmentally endangered areas, while the Program
shall focus on the provision of personal health services. Preventive and promotive public
e) Social Solidarity The Program shall be guided by community spirit. It must
health services are essential for reducing the need and spending for personal health
enhance risk sharing among income groups, age groups, and persons of differing health
services;
status, and residing in different geographic areas;
p) Quality of Services The Program shall promote the improvement in the quality of
f) Effectiveness The Program shall balance economical use of resources with quality
health services provided through the institutionalization of programs of quality assurance
of care;
40
at all levels of the health service delivery system. The satisfaction of the community, as household earnings and assets, in the case of the self-employed, or on other criteria as
well as individual beneficiaries, shall be a determinant of the quality of service delivery; may be defined by the Corporation in accordance with the guiding principles set forth in
Article I of this Act.

e) Coverage The entitlement of an individual, as a member or as a dependent, to the


q) Cost Containment The program shall incorporate features of cost containment in benefits of the Program.
its design and operations and provide a viable means of helping the people pay for health
care services; and f) Dependent The legal dependents of a member are: 1) the legitimate spouse who
is not a member; 2) the unmarried and unemployed legitimate, legitimated, illegitimate,
r) Care for the Indigent The Government shall be responsible for providing a basic acknowledged children as appearing in the birth certificate; legally adopted or
package of needed personal health services to indigents through premium subsidy, or stepchildren below twenty-one (21) years of age; 3) children who are twenty-one (21)
through direct service provision until such time that the program is fully implemented. years old or above but suffering from congenital disability, either physical or mental, or
any disability acquired that renders them totally dependent on the member for support; 4)
SECTION 3. General Objectives. This Act seeks to: the parents who are sixty (60) years old or above whose monthly income is below an
amount to be determined by the Corporation in accordance with the guiding principles set
a) provide all citizens of the Philippines with the mechanism to gain financial access to
forth in Article I of this Act.
health services;
g) Diagnostic Procedure Any procedure to identify a disease or condition through
b) create the National Health Insurance Program, hereinafter referred to as the
analysis and examination.
Program, to serve as the means to help the people pay for health care services;
h) Emergency An unforeseen combination of circumstances which calls for
c) prioritize and accelerate the provision of health services to all Filipinos, especially
immediate action to preserve the life of a person or to preserve the sight of one or both
that segment of the population who cannot afford such services; and
eyes; the hearing of one or both ears; or one or two limbs at or above the ankle or wrist.
d) establish the Philippine Health Insurance Corporation, hereinafter referred to as the
i) Employee Any person who performs services for an employer in which either or
Corporation, that will administer the Program at central and local levels.
both mental and physical efforts are used and who receives compensation for such
ARTICLE II services, where there is an employer-employee relationship.

DEFINITIONS OF TERMS j) Employer A natural or juridical person who employs the services of an employee.

SECTION 4. Definitions of Terms. For the purpose of this Act, the following terms
shall be defined as follows:
k) Enrollment The process to be determined by the Corporation in order to enlist
a) Beneficiary Any person entitled to health care benefits under this Act. individuals as members or dependents covered by the Program.

l) Fee for Service A reasonable and equitable health care payment system under
which physicians and other health care providers receive a payment that does not
b) Benefit Package Services that the Program offers to its members. exceed their billed charge for each unit of service provided.

c) Capitation A payment mechanism where a fixed rate, whether per person, family, m) Global Budget An approach to the purchase of medical services by which health
household, or group, is negotiated with a health care provider who shall be responsible care provider negotiations concerning the costs of providing a specific package of
for delivering or arranging for the delivery of health services required by the covered medical benefits is based solely on a predetermined and fixed budget.
person under the conditions of a health care provider contract.
n) Government Service Insurance System The Government Service Insurance
d) Contribution The amount paid by or in behalf of a member to the Program for System created under Commonwealth Act No. 186, as amended.
coverage, based on salaries or wages in the case of formal sector employees, and on
41
o) Health Care Provider Refers to: government, to those who can afford to subsidize part but not all the required
contributions for the Program.
1) a health care institution, which is duly licensed and accredited devoted primarily to
the maintenance and operation of facilities for health promotion, prevention, diagnosis, u) Medicare The health insurance program currently being implemented by the
treatment, and care of individuals suffering from illness, disease, injury, disability or Philippine Medical Care Commission. It consists of:
deformity, or in need of obstetrical or other medical and nursing care. It shall also be
construed as any institution, building, or place where there are installed beds, cribs, or 1) Program I, which covers members of the SSS and GSIS including their legal
bassinets for twenty-four hour use or longer by patients in the treatment of diseases, dependents; and
injuries, deformities, or abnormal physical and mental states, maternity cases or sanitarial
care; or infirmaries, nurseries, dispensaries, and such other similar names by which they 2) Program II, which is intended for those not covered under Program I.
may be designated; or
v) National Health Insurance Program The compulsory health insurance program of
2) a health care professional, who is any doctor of medicine, nurse, midwife, dentist, or the government as established in this Act, which shall provide universal health insurance
other health care professional or practitioner duly licensed to practice in the Philippines coverage and ensure affordable, acceptable, available and accessible health care
and accredited by the Corporation; or services for all citizens of the Philippines.

3) a health maintenance organization, which is an entity that provides, offers, or w) Pensioner An SSS or GSIS member who receives pensions therefrom.
arranges for coverage of designated health services needed by plan members for a fixed
x) Personal Health Services Health services in which benefits accrue to the
prepaid premium; or
individual person. These are categorized into inpatient and outpatient services.
4) a community-based health care organization, which is an association of indigenous
y) Philippine Medical Care Commission The Philippine Medical Care Commission
members of the community organized for the purpose of improving the health status of
created under Republic Act No. 6111, as amended.
that community through preventive, promotive and curative health services.
z) Philippine National Drug Formulary The essential drugs list for the Philippines
p) Health Insurance Identification (ID) Card The document issued by the Corporation
which is prepared by the National Drug Committee of the Department of Health in
to members and dependents upon their enrollment to serve as the instrument for proper
consultation with experts and specialists from organized professional medical societies,
identification, eligibility verification, and utilization recording.
medical academe and the pharmaceutical industry, and which is updated every year.
q) Indigent A person who has no visible means of income, or whose income is
aa) Portability The enablement of a member to avail of Program benefits in an area
insufficient for the subsistence of his family, as identified by the Local Health Insurance
outside the jurisdiction of his Local Health Insurance Office.
Office and based on specific criteria set by the Corporation in accordance with the
guiding principles set forth in Article 1 of this Act; bb) Prescription Drug A drug which has been approved by the Bureau of Food and
Drug and which can be dispensed only pursuant to a prescription order from a physician
r) Inpatient Education Package A set of informational services made available to an
who is duly licensed to do so.
individual who is confined in a hospital to afford him with knowledge about his illness and
its treatment, and of the means available, particularly lifestyle changes, to prevent the cc) Public Health Services Services that strengthen preventive and promotive health
recurrence or aggravation of such illness and to promote his health in general. care through improving conditions in partnership with the community at large. These
include control of communicable and non-communicable diseases, health promotion,
s) Member Any person whose premiums have been regularly paid to the National
public information and education, water and sanitation, environmental protection, and
Health Program. He may be a paying member, an indigent member, or a
health-related data collection, surveillance, and outcome monitoring.
pensioner/retiree member.
dd) Quality Assurance A formal set of activities to review and ensure the quality of
t) Means Test A protocol administered at the barangay level to determine the ability
services provided. Quality assurance includes quality assessment and corrective actions
of individuals or households to pay varying levels of contributions to the Program, ranging
to remedy any deficiencies identified in the quality of direct patient, administrative, and
from the indigent in the community whose contributions should be totally subsidized by
support services.
42
ee) Residence The place where the member actually lives. provinces and cities until the Corporation shall be able to ensure that members in such
localities shall have reasonable access to adequate and acceptable health care services.
ff) Retiree A member of the Program who has reached the age of retirement or who
was retired on account of disability. SECTION 7. Enrollment. The Program shall enroll beneficiaries in order for them to
be placed under coverage that entitles them to avail of benefits with the assistance of the
gg) Self-employed A person who works for himself and is thereforee both employee financial arrangements provided by the Program. The process of enrollment shall include
and employer at the same time. the identification of beneficiaries, issuance of appropriate documentation specifying
eligibility to benefits, and indicating how membership was obtained or is being
hh) Social Security System The Social Security System created under Republic Act maintained. The enrollment shall proceed in accordance with these specific policies:
No. 1161, as amended.
a) all persons currently eligible for benefits under Medicare Program I, including SSS
ii) Treatment Procedure Any method used to remove the symptoms and cause of a and GSIS members, retirees, pensioners and their dependents, shall immediately and
disease. automatically be made members of the National Health Insurance Program;

jj) Utilization Review A formal review of patient utilization or of the appropriateness of b) all persons eligible through health insurance plans established by local governments
health care services, on a prospective, concurrent or retrospective basis. as part of Program II of Medicare or in accordance with the provisions of this Act,
including indigent members, shall also be enrolled in the Program;
ARTICLE III
c) all persons eligible for benefits as member of local health insurance plans
THE NATIONAL HEALTH INSURANCE PROGRAM
established by the Corporation in accordance with the implementing rules and regulations
SECTION 5. Establishment and Purposes. There is hereby created the National of this Act shall also be deemed to have enrolled in the Program. Enrollment of persons
Health Insurance Program which shall provide health insurance coverage and ensure who have no current health insurance coverage shall be given priority by the corporation;
affordable, acceptable, available and accessible health care services for all citizens of the and
Philippines, in accordance with the policies and specific provisions of this Act. This social
d) all persons eligible for benefits as members of other government initiated health
insurance program shall serve as the means for the healthy to help pay for the care of the
insurance programs, community-based health care organizations, cooperatives, or
sick and for those who can afford medical care to subsidize those who cannot. It shall
private non-profit health insurance plans shall be enrolled in the Program upon
initially consist of programs I and II of Medicare and be expanded progressively to
accreditation by the Corporation which shall devise and provide incentives to ensure that
constitute one universal health insurance program for the entire population. The Program
such accredited organizations will benefit from their participation in the program.
shall include a sustainable system of funds constitution, collection, management and
disbursement for financing the availment of a basic minimum package and other All indigents not enrolled in the Program shall have priority in the use and availment of
supplementary packages of health insurance benefits by a progressively expanding the services and facilities of government hospitals, health care personnel, and other
proportion of the population. The Program shall be limited to paying for the utilization of health organizations: provided, however, that such government health care providers
health services by covered beneficiaries or to purchasing health services in behalf of shall ensure that said indigents shall subsequently be enrolled in the Program.
such beneficiaries. It shall be prohibited from providing health care directly, from buying
and dispensing drugs and pharmaceuticals, from employing physicians and other SECTION 8. Health Insurance ID Card. In conjunction with the enrollment provided
professionals for the purpose of directly rendering care, and from owning or investing in above, the Corporation through its local office shall issue a health insurance ID which
health care facilities. shall be used for purposes of identification, eligibility verification, and utilization recording.
The issuance of this ID card shall be accompanied by a clear explanation to the enrollee
SECTION 6. Coverage. All citizens of the Philippines shall be covered by the of his rights, privileges and obligations as a member. A list of health care providers
National Health Insurance Program. In accordance with the principles of universality and accredited by the Local Health Insurance Office shall likewise be attached thereto.
compulsory coverage enunciated in Section 2 (b) and 2 (l) hereof, implementation of the
Program shall, furthermore, be gradual and phased in over a period of not more than SECTION 9. Change of Residence. A citizen can be under only one Local Health
fifteen (15) years: provided, that the Program shall not be made compulsory in certain Insurance Office which shall be located in the province or city of his place of residence.
A person who changes residence, becomes temporarily employed, or for other justifiable

43
reasons, is transferred to another locality should inform said Office of such transfer and 2) the initial set of services shall not be less than half of those provided under the
subsequently transfer his Program membership. current Medicare Program I in terms of overall average cost of claims paid per beneficiary
household per year.
SECTION 10. Benefit Package. Subject to the limitations specified in this Act and as
may be determined by the Corporation, the following categories of personal health 3) the services included are prioritized, first, according to its effectiveness and, second,
services granted to the member or his dependents as medically necessary or appropriate according to its potential of providing maximum relief from the financial burden on the
shall include: beneficiary: provided, that in addition to the basic minimum package, the Program shall
provide supplemental health benefit coverage to beneficiaries of contributory funds,
a) Inpatient hospital care: taking into consideration the availability of funds for the purpose from said contributory
funds: provided, further, that the Program shall progressively expand the basic minimum
1) room and board; benefit package as the proportion of the population covered reaches targeted milestones
so that the same benefits are extended to all members of the Program within five (5)
2) services of health care professionals;
years after implementation of this Act. Such expansion will provide for the gradual
3) diagnostic, laboratory, and other medical examination services; incorporation of supplementary health benefits previously extended only to some
beneficiaries into the basic minimum package extended to all beneficiaries: and provided
4) use of surgical or medical equipment and facilities; finally, that in the phased implementation of this Act, there should be no reduction or
interruption in the benefits currently enjoyed by present members of Medicare.
5) prescription drugs and biologicals; subject to the limitations stated in Section 37 of
this Act; SECTION 11. Excluded Personal Health Services. The benefits granted under this
Act shall not cover expenses for the services enumerated hereunder except when the
6) inpatient education packages; Corporation, after actuarial studies, recommend their inclusion subject to the approval of
the Board:
b) Outpatient care:
a) non-prescription drugs and devices;
1) services of health care professionals;
b) outpatient psychotherapy and counselling for mental disorders;
2) diagnostic, laboratory, and other medical examination services;
c) drug and alcohol abuse or dependency treatment;
3) personal preventive services; and
d) cosmetic surgery;
4) prescription drugs and biologicals, subject to the limitations described in Section 37
of this Act; e) home and rehabilitation services;

c) Emergency and transfer services; and f) optometric services;

d) Such other health care services that the Corporation shall determine to be g) normal obstetrical delivery; and
appropriate and cost-effective: provided, that the Program, during its initial phase of
implementation, which shall not be more than five (5) years, shall provide a basic h) cost-ineffective procedures which shall be defined by the Corporation.
minimum package of benefits which shall be defined according to the following
guidelines: SECTION 12. Entitlement to Benefits. A member whose premium contributions for at
least three (3) months have been paid within the six (6) months prior to the first day of his
1) the cost of providing said package is such that the available national and local or his dependents' availment, shall be entitled to the benefits of the Program: provided,
government subsidies for premium payments of indigents are sufficient to extend that such member can show that he contributes thereto with sufficient regularity, as
coverage to the widest possible population. evidenced in their health insurance ID card: and provided further, that he is not currently
subject to legal penalties as provided for in Section 44 of this Act.

44
The following need not pay the monthly contributions to be entitled to the Program's e) to establish branch offices as mandated in Article V of this Act;
benefits:
f) to receive and manage grants, donations, and other forms of assistance;
a) Retirees and pensioners of the SSS and GSIS prior to the effectivity of this Act;
g) to sue and be sued in court;
b) Members who reach the age of retirement as provided for by law and have paid at
least one hundred twenty (120) monthly contributions; and

c) Enrolled indigents. h) to acquire property, real and personal, which may be necessary or expedient for the
attainment of the purposes of this Act;
SECTION 13. Portability of Benefits. The corporation shall develop and enforce
mechanisms and procedures to assure that benefits are portable across Offices. i) to collect, deposit, invest, administer, and disburse the National Health Insurance
Fund in accordance with the provisions of this Act;
ARTICLE IV
j) to negotiate and enter into contracts with health care institutions, professionals, and
THE PHILIPPINE HEALTH INSURANCE CORPORATION other persons, juridical or natural, regarding the pricing, payment mechanisms, design
and implementation of administrative and operating systems and procedures, financing,
SECTION 14. Creation and Nature of the Corporation. There is hereby created a and delivery of health services;
Philippine Health Insurance Corporation, which shall have the status of a tax-exempt
government corporation attached to the Department of Health for Policy coordination and k) to authorize Local Health Insurance Offices to negotiate and enter into contracts in
guidance. the name and on behalf of the Corporation with any accredited government or private
sector health provider organization, including but not limited to health maintenance
SECTION 15. Exemption from Taxes and Duties. The Corporation shall be exempt organizations, cooperatives and medical foundations, for the provision of at least the
from the payment of taxes on all contributions thereto and all accruals on its income or minimum package of personal health services prescribed by the Corporation;
investment earnings.
l) to determine requirements and issue guidelines for the accreditation of health care
Any donation, contribution, bequest, subsidy or financial aid which may be made to the providers for the Program in accordance with this Act;
Corporation shall constitute as allowable deduction from the income of the donor for
income tax purposes and shall be exempt from donor's tax, subject to such conditions as m) to supervise the provision of health benefits with the power to inspect medical and
provided in the National Internal Revenue Code, as amended. financial records of health care providers and patients who are participants in or
members of the Program, and the power to enter and inspect accredited health care
SECTION 16. Powers and Functions. The Corporation shall have the following institutions, subject to the rules and regulations to be promulgated by the Corporation;
powers and functions:
n) to organize its office, fix the compensation of and appoint personnel as may be
a) to administer the National Health Insurance Program; deemed necessary and upon the recommendation of the president of the Corporation;

b) to formulate and promulgate policies for the sound administration of the Program; o) to submit to the President of the Philippines and to both Houses of Congress its
Annual Report which shall contain the status of the National Health Insurance Fund, its
c) to set standards, rules, and regulations necessary to ensure quality of care, total disbursements, reserves, average costings to beneficiaries, any request for
appropriate utilization of services, fund viability, member satisfaction, and overall additional appropriation, and other data pertinent to the implementation of the Program
accomplishment of Program objectives; and publish a synopsis of such report in two (2) newspapers of general circulation;

d) to formulate and implement guidelines on contributions and benefits, cost p) to keep records of the operations of the Corporation and investments of the National
containment and quality assurance; and health care provider arrangements, payment Health Insurance Fund; and
methods; and referral systems;

45
q) to perform such other acts as it may deem appropriate for the attainment of the The President of the Corporation;
objectives of the Corporation and for the proper enforcement of the provisions of this Act.
A representative of the labor sector;
SECTION 17. Quasi-Judicial Powers. The Corporation, to carry out its tasks more
effectively, shall be vested with the following powers: A representative of employers;

a) to conduct investigations for the determination of a question, controversy, complaint, The SSS Administrator or his representative;
or unresolved grievance brought to its attention, and render decisions, orders, or
resolutions thereon. It shall proceed to hear and determine the case even in the absence The GSIS General Manager or his representative;
of any party who has been properly served with notice to appear. It shall conduct its
A representative of the self-employed sector; and
proceedings or any part thereof in public or in executive session; adjourn its hearings to
any time and place; refer technical matters or accounts to an expert and to accept his A representative of health care providers.
reports as evidence; direct parties to be joined in or excluded from the proceedings; and
give all such directions as it may deem necessary or expedient in the determination of the The Secretary of Health shall be the ex officio Chairperson while the President of the
dispute before it; Corporation shall be the Vice Chairperson of the Board.

b) to summon the parties to a controversy, issue subpoenas requiring the attendance b) Appointment and Tenure The President of the Philippines shall appoint the
and testimony of witnesses or the production of documents and other materials Members of the Board upon the recommendation of the Chairman of the Board and in
necessary to a just determination of the case under investigation; consultation with the sectors concerned. Members of the Board shall have a term of four
(4) years each, renewable for a maximum of two (2) years, except for members whose
c) to suspend temporarily, revoke permanently, or restore the accreditation of a health terms shall be co-terminus with their respective positions in government. Any vacancy in
care provider or the right to benefits of a member and/or impose fines after due notice the Board shall be filled in the manner in which the original appointment was made and
and hearing. The decision shall immediately be executory, even pending appeal, when the appointee shall serve only the unexpired term of his predecessor.
the public interest so requires and as may be provided for in the implementing rules and
regulations. Suspension of accreditation shall not exceed twenty-four (24) months. c) Meetings and Quorum The Board shall hold regular meetings at least once a
Suspension of the rights of members shall not exceed six (6) months. month. Special meetings may be convened at the call of the chairperson or by a majority
of the members of the Board. The presence of six (6) voting members shall constitute a
The revocation of a health care provider's accreditation shall operate to disqualify him quorum. In the absence of the Chairperson and Vice Chairperson, a temporary presiding
from obtaining another accreditation in his own name, under a different name, or through officer shall be designated by the majority of the quorum.
another person, whether natural or juridical.
d) Allowances and Per Diems The members of the Board shall receive a per diem
The Corporation shall not be bound by the technical rules of evidence. for every meeting actually attended subject to the pertinent budgetary laws, rules and
regulations on compensation, honoraria and allowances.
SECTION 18. The Board of Directors.
SECTION 19. The President of the Corporation.
a) Composition The Corporation shall be governed by a Board of Directors
hereinafter referred to as the Board, composed of eleven members as follows: a) Appointment and Tenure The President of the Philippines shall appoint for a non-
renewable term of six (6) years the President of the Corporation, hereinafter referred to
The Secretary of Health;
as the President, upon the recommendation of the Board. The President shall not be
The Secretary of Labor and Employment or his representative; removed from office except in accordance with existing laws.

The Secretary of the Interior and Local Government or his representative; b) Duties and Functions The President shall have the duty of advising the Board and
carrying into effect its policies and decisions. His functions are as follows:
The Secretary of Social Welfare and Development or his representative;
1) to act as the chief executive officer of the Corporation; and

46
2) to be responsible for the general conduct of the operations and management LOCAL HEALTH INSURANCE OFFICE
functions of the Corporation and for other duties assigned to him by the Board.
SECTION 22. Establishment. The Corporation shall establish a Local Health
c) Qualifications The President must a Filipino citizen and must possess adequate Insurance Office, hereinafter referred to as the Office, in every province or chartered city,
and appropriate training and at least five (5) years experience in the field of health care or wherever it is deemed practicable, to bring its services closer to members of the
financing and corporate management. Program. However, one office may serve the needs of more than one province or city
when the merged operations will result in lower administrative cost and greater cross-
d) Salary The President shall receive a salary to be fixed by the Board, with the subsidy between rich and poor localities.
approval of the President of the Philippines, payable from the funds of the Corporation.
Provinces and cities where prospective members are organized shall receive priority in
e) Prohibition To avoid conflict of interest, the President must not be involved in any the establishment of local health insurance offices.
health care institution as owner or member of its board.
SECTION 23. Functions. Each Office shall have the following powers and functions:
SECTION 20. Health Finance Policy Research. Among the staff departments that
will be established by the Corporation shall be the Health Finance Policy Research a) to consult and coordinate, as needed, with the local government units within its
Department, which shall have the following duties and functions: jurisdiction in the implementation of the Program;

a) development of broad conceptual framework for implementation of the Program b) to recruit and register members of the Program from all areas within its jurisdiction;
through a national health finance master plan to ensure sustained investments in health
care, and to provide guidance for additional appropriations from the National c) to collect and receive premiums and other payment contributions to the Program;
Government;
d) to maintain and update the membership eligibility list at community levels;
b) conduct of researches and studies toward the development of policies necessary to
ensure the viability, adequacy and responsiveness of the Program; e) to supervise the conduct of means testing which shall be based on the criteria set by
the Corporation and undertaken by the Barangay Captain in coordination with the social
c) review, evaluation, and assessment of the Program's impact on the access to, as welfare officer and community-based health care organizations to determine the
well as the quality and cost of, health care in the country; economic status of all households and individuals, including those who are indigent;

d) periodic review of fees, charges, compensation rates, capitation rates, medical f) to issue health insurance ID cards to persons whose premiums have been paid
standards, health outcomes and satisfaction of members, benefits, and other matters according to the requirements of the Office and the guidelines issued by the Board;
pertinent to the operations of the Program;
g) to recommend to the Board premium schedules that provide for lower rates to be
e) comparison in the delivery, quality, use, and cost of health care services of the paid by members whose dependents include those with reduced probability of utilization,
different Offices; as in fully immunized children;

f) submission for consideration of program of quality assurance, utilization review, and h) to recommend to the Board a contribution schedule which specifies contribution
technology assessment; and levels by individuals and households, and a corresponding uniform package of personal
health service benefits which is at least equal to the minimum package of such benefits
g) submission of recommendations on policy and operational issues that will help the prescribed by the Board as applying to the nation;
Corporation meet the objectives of this Act.
i) to grant or deny accreditation to health care providers, within a period not exceeding
SECTION 21. Actuary of the Corporation. An Office of Actuary shall be created sixty (60) days whenever applicable in accordance with the rules and guidelines of the
within the Corporation to conduct the necessary actuarial studies and present Corporation;
recommendations on insurance premium, investments and other related matters.

ARTICLE V

47
j) to process, review and pay the claims of providers, within a period not exceeding d) Subsequent appropriations provided for under Sections 46 and 47 of this Act;
sixty (60) days whenever applicable in accordance with the rules and guidelines of the
Corporation; e) Donations and grants-in-aid; and

k) to pay fees, as necessary, for claims review and processing when such are f) All accruals thereof.
conducted by the central office of the Corporation or by any of its contractors;
SECTION 25. Components of the National Health Insurance Fund. The National
l) to establish referral systems and network arrangements with other Offices, as may Health Insurance Fund shall have the following components:
be necessary and following the guidelines set by the Corporation;
a) The Basic Benefit Fund. This Fund shall finance the availment of the basic
m) to establish mechanisms by which private and public sector health facilities and minimum benefit package by eligible beneficiaries. All liabilities associated with the
human resources may be shared in the interest of optimizing the use of health resources; extension of entitlement to the basic minimum benefit package to the enrolled population
shall be borne by the basic benefit fund. It shall be constituted and maintained through
n) to support the management information system requirements of the Corporation; the following process:

o) to serve as the first level for appeals and grievance cases; 1) upon the determination of the amount of government subsidies and donations
available for paying fully or partially the premium of indigent beneficiaries, a basic
p) to tap community-based volunteer health workers and barangay officials, if minimum benefit package affordable for enrolling as many of the indigent beneficiaries
necessary, for member recruitment, premium collection and similar activities, and to grant as possible shall be defined. The government subsidies will then be constituted as
such workers incentives according to the guidelines set by the Corporation and in premium payments for enrolled indigents and contributed into the basic benefit fund.
accordance with applicable laws. However, the incentives for the barangay officials shall
accrue to the barangay and not to the said officials. 2) for extending coverage of this same minimum benefit package to non-indigents who
are not members of Medicare, premium prices for specific population shall be actuarially
q) to participate in information and education activities that are consistent with the determined based on variations in risk, capacity to pay, and projected costs of services
government's priority programs on disease prevention and health promotion; and utilized. The amounts corresponding to the premium required, including costs of direct
benefit payments, all costs of administration, and provision of adequate reserves, for
r) to prepare an annual report according to guidelines set by the Board and to submit extending the coverage of the basic minimum benefit package for such population groups
the same to the central office of the Corporation. shall be contributed into the basic benefit fund.

ARTICLE VI 3) for the population enrolled through Medicare Program I under SSS, the
corresponding premium for the basic minimum benefit package, including costs of direct
THE NATIONAL HEALTH INSURANCE FUND
benefit payments, all costs of administration, and provision of adequate reserves, for
SECTION 24. Creation of the National Health Insurance Fund. There is hereby extending the coverage of the basic minimum benefit package for such population groups
created a National Health Insurance Fund, hereinafter referred to as the Fund, that shall shall be contributed into the basic benefit fund.
consist of:
4) for the population enrolled through Medicare Program I under GSIS, the
a) Contributions from Program members; corresponding premium for the basic minimum benefit package, including costs of direct
benefit payments, all costs of administration, and provision of adequate reserves, shall be
b) Current balances of the Health Insurance Funds of the SSS and the GSIS collected charged to the health insurance fund of the GSIS and paid into the basic benefit fund.
under the Philippine Medical Care Act of 1969, as amended, including arrearages of the
Government of the Philippines with the GSIS for the said Fund; 5) for groups enrolled through any of the existing or future health insurance schemes
and plans, including those created under Medicare Programs II and those organized by
c) Other appropriations earmarked by the national and local governments purposely for local government units, national agencies, cooperatives, and other similar organizations,
the implementation of the Program; the corresponding premium, including costs of direct benefit payments, all costs of
administration, and provision of adequate reserves, for extending the basic minimum

48
benefit package to their respective enrollees will be charged to their respective funds and services, and other necessary activities for the effective management of the Program.
paid into the basic benefit fund. The total annual costs for these shall not exceed twelve percent (12%) of the total
contributions, including government contributions to the Program and not more than three
b) Supplementary Benefit Funds. These are separate and distinct supplementary percent (3%) of the investment earnings collected during the immediately preceding year.
benefit funds created by the Corporation as eligible for use to provide supplementary
coverage to various groups of the population enjoying the basic benefit coverage as are SECTION 27. Reserve Fund. The Corporation shall set aside a portion of its
affordable by their respective funding sources. Each supplementary benefit fund shall accumulated revenues not needed to meet the cost of the current year's expenditures as
finance the extension and availment of additional benefits not included in the basic reserve funds: provided, that the total amount of reserves shall not exceed a ceiling
minimum benefit package but approved by the Board. Such supplementary benefits shall equivalent to the amount actuarially estimated for two years' projected Program
be financed by whatever amounts are available after deducting the costs of providing the expenditures: provided, further, that whenever actual reserves exceed the required
basic minimum benefit package, including costs of direct benefit payments, all costs of ceiling at the end of the Corporation's fiscal year, the Program's benefits shall be
administration, and provision of adequate reserves. All liabilities associated with the increased or member contributions decreased prospectively in order to adjust
extension of supplementary benefits to the defined group of enrollees shall be borne expenditures or revenues to meet the required ceiling for reserve funds. Such portions of
exclusively by the respective supplementary benefit fund. Upon the implementation of the reserve fund as are not needed to meet the current expenditure obligations shall be
this Act, the following supplementary benefit funds shall be established: invested in short-term investments to earn an average annual income at prevailing rates
of interest and shall be known as the "Investment Reserve Fund" which shall be invested
1) supplementary benefit fund for SSS-Medicare members and beneficiaries. After in any or all of the following:
deducting the amount corresponding to the premium of the basic minimum benefit
package, the balance of the SSS-Health Insurance Fund (HIF) shall be constituted into a a) In interest-bearing bonds, securities or other evidences of indebtedness of the
supplementary benefit fund to finance the extension of benefits in addition to the Government of the Philippines, or in bonds, securities, promissory notes and other
minimum basic package to SSS members and beneficiaries; and evidences of indebtedness to which full faith and credit and unconditional guarantee of
the Republic of the Philippines is pledged;
2) supplementary benefit fund for GSIS-Medicare members and beneficiaries. After
deducting the amount corresponding to the premium for the basic minimum benefit b) In interest-bearing deposits and loans to or securities in any domestic bank doing
package, the balance of the GSIS-HIF plus the arrearages of the Government of the business in the Philippines: provided, that in the case of such deposits, this shall not
Philippines with the GSIS for the said HIF shall be constituted into a supplementary exceed at any time the unimpaired capital and surplus or total private deposits of the
benefit fund to finance the extension of benefits in addition to the minimum basic package depository bank, whichever is smaller: provided, further, that said bank shall first have
to GSIS members and beneficiaries. been designated as a depository for this purpose by the Monetary Board of the Bangko
Sentral ng Pilipinas; and
In accordance with the principles of equity and social solidarity, as enunciated in Section
2 of this Act, the above supplementary benefit funds shall be maintained for not more c) In preferred stocks of any solvent corporation or institution created or existing under
than five (5) years, after which, such funds shall be merged into the basic benefit fund. the laws of the Philippines: provided, that the issuing, assuming, or guaranteeing entity or
its predecessor has paid regular dividends upon its preferred or guaranteed stocks for a
SECTION 26. Financial Management. The use, disposition, investment, period of at least three (3) years immediately preceding the date of investment in such
disbursement, administration and management of the National Health Insurance Fund, preferred or guaranteed stocks: provided, further, that if the stocks are guaranteed the
including any subsidy, grant or donation received for program operations shall be amount of stocks so guaranteed is not in excess of fifty percent (50%) of the amount of
governed by resolution of the Board of Directors of the Corporation, subject to the the preferred common stocks as the case may be of the issuing corporations: provided,
following limitations: furthermore, that if the corporation or institution has not paid dividends upon its preferred
stocks, the corporation or institution has sufficient retained earnings to declare dividends
a) All funds under the management and control of the Corporation shall be subject to all for at least two (2) years on such preferred stocks and in common stocks option or
rules and regulations applicable to public funds. warrants to common stocks of any solvent corporation or institution created or existing
under the laws of the Philippines in the stock exchange with proven track record of
b) The corporation is authorized to charge the various funds under its control for the
profitability and payment of dividends over the last three (3) years or in common stocks of
costs of administering the Program. Such costs may include administration, monitoring,
a newly organized corporation about to be listed in the stock exchange: provided, finally,
marketing and promotion, research and development, audit and evaluation, information
that such duly organized corporations shall have been rated 'A', double 'A's or triple 'A's
49
by authorized accredited domestic rating agencies or by Corporation or in mutual funds SECTION 31. Authority to Grant Accreditation. The Corporation shall have the
including allied investments. authority to grant to health care providers accreditation which confers the privilege of
participating in the Program.
ARTICLE VII
SECTION 32. Accreditation Eligibility. All health care providers, as enumerated in
FINANCING Sec. 4(o) hereof and operating for at least three (3) years may apply for accreditation.

SECTION 28. Contributions. All members of the Program shall contribute to the SECTION 33. Minimum Requirements for Accreditation. The minimum accreditation
Fund, in accordance with a reasonable, equitable and progressive contribution schedule requirements for health care providers are as follows:
to be determined by the Corporation on the basis of applicable actuarial studies and in
accordance with the following guidelines: a) human resource, equipment and physical structure in conformity with the standards
of the relevant facility, as determined by the Department of Health;
a) Formal sector employees and current medicare members and their employers shall
continue paying the same monthly contributions as provided for by law until such time b) acceptance of formal program of quality assurance and utilization review;
that the Corporation shall have determined the contribution schedule mentioned herein:
provided, that their monthly contribution shall not exceed three percent (3%) of their c) acceptance of the payment mechanisms specified in the following section;
respective monthly salaries.
d) adoption of referral protocols and health resources sharing arrangements;
b) Contributions from self-employed members shall be based primarily on household
earnings and assets; their total contributions for one year shall not, however, exceed e) recognition of the rights of patients; and
three percent (3%) of their estimated actual net income for the preceding year.
f) acceptance of information system requirements and regular transfer of information.
c) Contributions made in behalf of indigent members shall not exceed the minimum
SECTION 34. Provider Payment Mechanisms. The following mechanisms for public
contributions set for employed members.
and private providers shall be allowed in the Program:
SECTION 29. Payment for Indigent Contributions. Contributions for indigent
a) Fee-for-service based on mechanisms established by the Corporation;
members shall be subsidized partially by the local government unit where the member
resides. The Corporation shall provide counterpart financing equal to the LGU's subsidy b) Capitation of health care professionals and facilities, or networks of the same
for indigents: provided, that in the case of fourth, fifth and sixth class LGUs, the National including HMOs, medical cooperatives, and other legally formed health service groups;
Government shall provide up to ninety percent (90%) of the subsidy for indigents for a
period not exceeding five (5) years. The share of the LGUs shall be progressively c) A combination of both; and
increased until such time that its share becomes equal to that of the National
Government. d) Any or all of the above, subject to a global budget.

ARTICLE VIII Each Office shall recommend the appropriate payment mechanism within its jurisdiction
for approval by the Corporation. Special consideration shall be given to payment for
HEALTH CARE PROVIDERS services rendered by public and private health care providers serving remote or medically
underserved areas.
SECTION 30. Free Choice of Health Facility, Medical or Dental Practitioner.
Beneficiaries requiring treatment or confinement shall be free to choose from accredited SECTION 35. Fee-for-service Payments and Payments in General. Fee-for-service
health care providers. Such choice shall, however, be subject to limitations based on the payments may be made separately for professional fees and hospital charges, or both,
area of jurisdiction of the concerned Office and on the appropriateness of treatment in the based on arrangements with health care providers. This fee shall be reviewed every
facility chosen or by the desired provider. three (3) years. Fees paid for professional services rendered by salaried public providers
shall be allowed to be retained by the health facility in which services are rendered and
be pooled and distributed among health personnel. Charges paid to public facilities shall

50
be allowed to be retained by the individual facility in which services were rendered and e) inappropriate referral practices.
for which payment was made. Such revenues shall be used to defray operating costs
other than salaries, to maintain or upgrade equipment, plant or facility, and to maintain or The Corporation may deny or reduce the payment for claims when such claims are
improve the quality of service in the public sector. attended by false or incorrect information and when the claimant fails without justifiable
cause to comply with the pertinent rules and regulations of this Act.
SECTION 36. Capitation Payments. Capitation payments may be paid to public or
private providers according to rates of capitation payments based on annual capitation ARTICLE IX
rate guidelines to be issued by the Corporation.
GRIEVANCE AND APPEAL
SECTION 37. Quality Assurance. Under the guidelines approved by the Corporation
and in collaboration with their respective Offices, health care providers shall take part in SECTION 39. Grievance System. A system of grievance is hereby established,
programs of quality assurance, utilization review, and technology assessment that have wherein members, dependents, or health care providers of the Program who believe they
the following objectives: have been aggrieved by any decision of the implementors of the Program, may seek
redress of the grievance in accordance with the provisions of this Article.
a) to ensure that the quality of personal health services delivered, measured in terms of
inputs, process, and outcomes, are of reasonable quality in the context of the Philippines SECTION 40. Grounds for Grievances. The following acts shall constitute valid
over time; grounds for grievance action:

b) to ensure that the health care standards are uniform within the Office's jurisdiction a) any violation of the rights of patients;
and eventually throughout the nation; and
b) a willful neglect of duties of Program implementors that results in the loss or non-
c) to see to it that the acquisition and use of scarce and expensive medical enjoyment of benefits by members or their dependents;
technologies and equipment are consistent with actual needs and standards of medical
c) unjustifiable delay in actions on claims;
practice, and that:
d) delay in the processing of claims that extends beyond the period agreed upon; and
1) the performance of medical procedures and the administration of drugs are
appropriate, necessary and unquestionably consistent with accepted standards of e) any other act or neglect that tends to undermine or defeat the purposes of this Act.
medical practice and ethics. Drugs for which payments will be made shall be those
included in the Philippine National Drug Formulary, unless explicit exception is granted by SECTION 41. Grievance and Appeal Procedures. A member, his dependent, or a
the Corporation. health care provider may file a complaint for grievance based on any of the above
grounds, in accordance with the following procedures:
2) the performance of medical procedures and the administration of drugs are
appropriate, consistent with accepted standards of medical practice and ethics, and a) A complaint for grievance must be filed with the Office which shall rule on the
respectful of the local culture. complaint ninety (90) calendar days from receipt thereof.

SECTION 38. Safeguards Against Over and Under Utilization. It is incumbent upon b) Appeals from Office decisions must be filed with the Board within thirty (30) days
the Corporation to set up a monitoring mechanism to be operationalized through a from receipt of notice of dismissal or disallowance by the Office.
contract with health care providers to ensure that there are safeguards against:
c) The Offices shall have no jurisdiction over any issue involving the suspension or
a) over-utilization of services; revocation of accreditation, the imposition of fines, or the imposition of charges on
members or their dependents in case of revocation of their entitlement.
b) unnecessary diagnostic and therapeutic procedures and intervention;
d) All decisions by the Board as to entitlement to benefits of members or to payments of
c) irrational medication and prescriptions; health care providers shall be considered final and executory.
d) under-utilization of services; and
51
SECTION 42. Grievance and Appeal Review Committee. The Board shall create a The decision of the Board shall also become final and executory fifteen (15) days after
Grievance and Appeal Review Committee, composed of three (3) to five (5) members, notice thereof: provided, however, that it is reviewable by the Supreme Court on purely
hereinafter referred to as the Committee, which, subject to the procedures enumerated questions of law in accordance with the Rules of Court.
above, shall receive and recommend appropriate action on complaints from members
and health care providers relative to this Act and its implementing rules and regulations. The Committee and the Board, in the exercise of their quasi-judicial function, as specified
in Section 17 hereof, can administer oaths, certify to official acts and issue subpoena to
SECTION 43. Hearing Procedures of the Committee. Upon the filing of the compel the attendance and testimony of witnesses, and subpoena duces tecum or ad
complaint, the Grievance and Appeal Review Committee, from a consideration of the testificadum to enjoin the production of books, papers and other records and to testify
allegations thereof, may dismiss the case outright due to lack of verification, failure to therein on any question arising out of this Act. Any case of contumacy shall be dealt with
state the cause of action, or any other valid ground for the dismissal of the complaint after in accordance with the provisions of the Revised Administrative Code and the Rules of
consultation with the Board; or require the respondent to file a verified answer within five Court. The Board or the Committee, as the case may be, shall prescribe the necessary
(5) days from service of summons. administrative sanctions such as fines, warnings, suspension or revocation of the right to
participate in the Program.
Should the defendant fail to answer the complaint within the reglementary five-day period
herein provided, the Committee, motu proprio or upon motion of the complainant, shall In all its proceedings, the Committee and the Board shall not be bound by the technical
render judgments as may be warranted by the facts alleged in the complainant and rules of evidence: provided, however, that the Rules of Court shall apply with suppletory
limited to what is prayed for therein. effect.

After an answer is filed and the issues are joined, the Committee shall require the parties ARTICLE X
to submit, within ten (10) days from receipt of the order, the affidavits of witnesses and
other evidence on the factual issues defined therein, together with a brief statement of PENALTIES
their positions setting forth the law and the facts relied upon by them. In the event the
Committee finds, upon consideration of the pleadings, the affidavits and other evidence, SECTION 44. Penal Provisions. Any violation of the provisions of this Act, after due
and position statements submitted by the parties, that a judgment may be rendered notice and hearing, shall suffer the following penalties:
thereon without need of a formal hearing, it may proceed to render judgment not later
A fine of not less than Ten thousand pesos (P10,000) nor more than Fifty thousand
than ten (10) days from the submission of the position statements of the parties.
pesos (P50,000) in case the violation is committed by the hospital management or
In cases where the Committee deems it necessary to hold a hearing to clarify specific provider. In addition, its accreditation shall be suspended or revoked from three (3)
factual matters before rendering judgment, it shall set the case for hearing for the months to the whole term of accreditation: provided, however, that recidivists may not
purpose. At such hearing, witnesses whose affidavits were previously submitted may be anymore be accredited as a participant of the Program;
asked clarificatory questions by the proponent and by the Committee and may be cross-
A fine of not less than Five hundred pesos (P500) nor more than Five thousand pesos
examined by the adverse party. The order setting the case of hearing shall specify the
(P5,000) and imprisonment of not less than six (6) months nor more than one (1) year in
witnesses who will be called to testify, and the matters on which their examination will
case the violation is committed by the member.
deal. The hearing shall be terminated within fifteen (15) days, and the case decided by
the Committee within fifteen (15) days from such termination. Where the violations consist of failure or refusal to deduct contributions from the
employee's compensation or to remit the same to the Corporation, the penalty shall be a
The decision of the Committee shall become final and executory fifteen (15) days after
fine of not less than Five hundred pesos (P500) but not more than One Thousand pesos
notice thereof: provided, however, that it is appealable to the Board by filing the
(P1,000) multiplied by the total number of employees employed by the firm and
appellant's memorandum of appeal within fifteen (15) days from receipt of the copy of the
imprisonment of not less than six (6) months but not more than one (1) year: provided,
judgment appealed from. The appellees shall be given fifteen (15) days from notice to
further, that in the case of self-employed members, failure to remit one's own contribution
file the appellee's memorandum after which the Board shall decide the appeal within
shall be penalized with a fine of not less than Five hundred pesos (P500) but not more
thirty (30) days from the submittal of the said pleadings.
than One Thousand pesos (P1,000).

52
Any employer or any officer authorized to collect contributions under this Act who, after shall be appropriated in the General Appropriations Act solely for the National Health
collecting or deducting the monthly contributions from his employees' compensation, fails Insurance Fund.
to remit the said contributions to the Corporation within thirty (30) days from the date they
become due shall be presumed to have misappropriated such contributions and shall In addition, starting 1996 and thereafter, twenty-five percent (25%) of the incremental
suffer the penalties provided for in Article 315 of the Revised Penal Code. revenue from the increase in the documentary stamp taxes under Republic Act No. 7660
shall likewise be appropriated solely for the said fund.
Any employer who shall deduct directly or indirectly from the compensation of the
covered employees or otherwise recover from them his own contribution on behalf of SECTION 47. Additional Appropriations. The Corporation may request Congress to
such employees shall be punished by a fine not exceeding One thousand pesos (P1,000) appropriate supplemental funding to meet targeted milestones of the Program in
multiplied by the total number of employees employed by the firm, or imprisonment not accordance with Section 10(d) of this Act.
exceeding one (1) year, or both fine and imprisonment, at the discretion of the Court.
ARTICLE XII
If the act or omission penalized by this Act be committed by an association, partnership,
corporation or any other institution, its managing directors or partners or president or TRANSITORY PROVISIONS
general manager, or other persons responsible for the commission of the said act shall
SECTION 48. Appointment of Board Members. Within thirty (30) days from the date
be liable for the penalties provided for in this Act and other laws for the offense.
of effectivity of this Act, the President of the Philippines shall appoint the members of the
Any employee of the Corporation who receives or keeps funds or property belonging, Board and the President of the Corporation.
payable or deliverable to the Corporation, and who shall appropriate the same, or shall
SECTION 49. Implementing Rules and Regulations. Within thirty (30) days from the
take or misappropriate or shall consent, or through abandonment or negligence shall
completion of such appointments, the Board shall convene to formulate the rules and
permit any other person to take such property or funds wholly or partially, shall likewise
regulations necessary for the implementation of this Act.
be liable for misappropriation of funds or property and shall suffer imprisonment of not
less than six (6) years and not more than twelve (12) years and a fine of not less than SECTION 50. Promulgation. Within one (1) year from its initial meeting, the Board
Ten thousand pesos (P10,000.00) nor more than Twenty thousand pesos (P20,000). shall promulgate the aforementioned rules and regulations in at least two (2) national
Any shortage of the funds or loss of the property upon audit shall be deemed prima facie newspapers of general circulation. But until such time that the Corporation shall have
evidence of the offense. promulgated said rules and regulations, the existing rules and regulations of the PMCC
shall be followed. The present Medicare Program shall continue to be so administered,
All other violations involving funds of the Corporation shall be governed by the applicable
until the Corporation's Board deems the new system as ready for implementation in
provisions of the Revised Penal Code or other laws, taking into consideration the rules on
accordance with the provisions of this Act.
collection, remittances, and investment of funds as may be promulgated by the
Corporation. SECTION 51. Merger. Within sixty (60) days from the promulgation of the
implementing rules and regulations, all functions and assets of the Philippine Medical
ARTICLE XI
Care Commission shall be merged with those of the Corporation without need of
APPROPRIATIONS conveyance, transfer or assignment. The PMCC shall thereafter cease to exist.

SECTION 45. Initial Appropriation. The unexpended portion of the budget of the The liabilities of the PMCC shall be treated in accordance with existing laws and pertinent
Philippine Medical Care Commission (PMCC) for the year during which this Act was rules and regulations.
approved shall be utilized for establishing the Corporation and initiating its operations,
To the greatest extent possible and in accordance with existing laws, all employees of the
including the formulation of the rules and regulations necessary for the implementation of
PMCC shall be absorbed by the Corporation.
this Act. In addition, initial funding shall come from any unappropriated but available fund
of the Government. SECTION 52. Transfer of Health Insurance Funds of the SSS and GSIS . The
Health Insurance Funds being administered by the SSS and GSIS shall be transferred to
SECTION 46. Subsequent Appropriations. Starting 1995 and thereafter, twenty-five
the Corporation within sixty (60) days from the promulgation of the implementing rules
percent (25%) of the increment in total revenue collected under Republic Act No. 7654
and regulations. The SSS and GSIS shall, however, continue to perform Medicare
53
functions under contract with the Corporation until such time that such functions are Approved: February 14, 1995
assumed by the Corporation, in accordance with the following Section.

SECTION 53. Transfer of the Medicare Functions of the SSS and GSIS . Within five
(5) years from the promulgation of the implementing rules and regulations, the functions,
assets, equipment, records, operating systems, and liabilities, if any, of the Medicare
operations of the SSS and GSIS shall be transferred to the Corporation; Provided,
however, that the SSS and GSIS shall continue performing its Medicare functions beyond
the stipulated five-year period if such extension will benefit Program members, as
determined by the Corporation.

Personnel of the Medicare departments of the SSS and GSIS shall be given priority in the
hiring of the Corporation's employees.

ARTICLE XIII

MISCELLANEOUS PROVISIONS

SECTION 54. Oversight Provision. Congress shall conduct a regular review of the
National Health Insurance Program which shall entail a systematic evaluation of the
Program's performance, impact or accomplishments with respect to its objectives or
goals. Such review shall be undertaken by the Committees of the Senate and the House
of Representatives which have legislative jurisdiction over the Program.

SECTION 55. Information Campaign. There shall be provided a substantial period of


time to undertake an intensive public information campaign prior to the implementation of
the rules and regulations of this Act.

SECTION 56. Separability Clause. In the event any provision of this Act or the
application of such provision to any person or circumstances is declared invalid, the
remainder of this Act or the application of said provisions to other persons or
circumstances shall not be affected by such declaration.

SECTION 57. Repealing Clause. Executive Order 119, Presidential Decree 1519
and other laws currently applying to the administration of Medicare are hereby repealed.
All other laws, executive orders, administrative rules and regulations or parts thereof
which are inconsistent with the provisions of this Act also hereby amended, modified, or
repealed accordingly.

SECTION 58. Government Guarantee. The Government of the Philippines


guarantees the financial viability of the Program.

SECTION 59. Effectivity. This Act shall take effect fifteen (15) days after its
publication in at least three (3) national newspapers of general circulation.

54
REPUBLIC ACT NO. 9241 g) Diagnostic Procedure - Any procedure to identify a disease or condition through
analysis and examination.
February 10 2004
h) Emergency - An unforeseen combination of circumstances which calls for immediate
AN ACT AMENDING REPUBLIC ACT NO. 7875, OTHERWISE KNOWN AS "AN ACT action to preserve the life of a person or to preserve the sight of one or both eyes; the
INSTITUTING A NATIONAL HEALTH INSURANCE PROGRAM FOR ALL FILIPINOS hearing of one or both ears; or one or two limbs at or above the ankle or wrist.
AND ESTABLISHING THE PHILIPPINE HEALTH INSURANCE CORPORATION FOR
THE PURPOSE"
i) Employee - Any person who performs services for an employer in which either or both
Be it enacted by the Senate and House of Representatives of the Philippines in Congress mental and physical efforts are used and who receives compensation for such services,
assembled: where there is an employer-employee relationship.

Section 1. Sec. 4 of Republic Act No. 7875 is hereby amended to read as follows: j) Employer - A natural or juridical person who employs the services of an employee.

"Sec. 4. Definition of Terms.-For the purpose of this Act, the following terms shall be k) Enrollment - The process to be determined by the Corporation in order to enlist
defined as follows: individuals as members or dependents covered by the Program.

a) Beneficiary - Any person entitled to health care benefits under this Act. l) Fee for Service - A reasonable and equitable health care payment system under which
physicians and other health care providers receive a payment that does not exceed their
b) Benefit Package - Services that the Program offers to its members. billed charge for each unit of service provided.

c) Capitation - A payment mechanism where a fixed rate, whether per person, family, m) Global Budget - An approach to the purchase of medical services by which health
household or group, is negotiated with a health care provider who shall be responsible in care provider negotiations concerning the costs of providing a specific package of
delivering or arranging for the delivery of health services required by the covered person medical benefits is based solely on a predetermined and fixed budget.34urchase of
under the conditions of a health care provider contract. medical services by which health care provider negotiations concerning the costs of
providing a specific package of medical benefits is based solely on a predetermined and
d) Contribution - The amount paid by or in behalf of a member to the Program for
fixed budget.
coverage, based on salaries or wages in the case of formal sector employees, and on
household earnings and assets, in the case of self-employed, or on other criteria as may n) Government Service Insurance System - The Government Service Insurance System
be defined by the Corporation in accordance with the guiding principles set forth in Article created under Commonwealth Act No. 186, as amended.
1 of this Act.
o) Health Care Provider - Refers to:
e) Coverage - The entitlement of an individual, as a member or as a dependent, to the
benefits of the program. (1) a health care institution , which is duly licensed and accredited devoted primarily to
the maintenance and operation of facilities for health promotion, prevention, diagnosis,
f) Dependent - The legal dependents of a member are: 1) the legitimate spouse who is injury, disability, or deformity, drug addiction or in need of obstetrical or other medical and
not a member; 2) the unmarried and unemployed legitimate, legitimated, illegitimate, nursing care. It shall also be construed as any institution, building, or place where there
acknowledged children as appearing in the birth certificate; legally adopted or step- are installed beds, cribs, or bassinets for twenty-four hour use or longer by patients in the
children below twenty-one (21) years of age; 3)children who are twenty-one (21) years treatment of diseases, injuries, deformities, or abnormal physical and mental states,
old and above but suffering from congenital disability, either physical or mental, or any maternity cases or sanitarial care; or infirmaries, nurseries, dispensaries, rehabilitation
disability acquired that renders them totally dependent on the member of our support; 4) centers and such other similar names by which they may be designated; or
the parents who are sixty (60) years old or above whose monthly income is below an
amount to be determined by the Corporation in accordance with the guiding principles set (2) a health care professional, who is any doctor of medicine, nurse, midwife, dentist, or
forth in Article I of this Act. other health care professional or practitioner duly licensed to practice in the Philippines
and accredited by the Corporation; or

55
(3) a health maintenance organization, which is entity that provides, offers, or arranges x) Personal Health Services - Health Services in which benefits accrue to the individual
for coverage of designated health services needed by plan members for a fixed prepaid person. These are categorized into inpatient and outpatient services.
premium; or
y) Philippine Medical Care Commission - The Philippine Medical Care Commission
(4) a community-based health organization, which is an association of indigenous created under Republic Act No. 6111, as amended.
members of the community organized for the purpose of improving the health status of
that community through preventive, promotive and curative health services. z) Philippine National Drug Formulary - The essential drugs list for the Philippines which
is prepared by the National Drug Committee of the Department of Health in Consultation
p) Health Insurance Identification (ID) Card - The document issued by the Corporation to with experts and specialists from organized profession medical societies, medical
members and dependents upon their enrollment to serve as the instrument for proper academe and the pharmaceutical industry, and which is updated every year.
identification, eligibility verification, and utilization recording.
aa) Portability - The enablement of a member to avail of Program benefits in an area
q) Indigent - A person who has no visible means of income, or whose income is outside the jurisdiction of his Local Health Insurance Office.
insufficient for the subsistence of his family, as identified by the Local Health Insurance
Office and based on specific criteria set by the Corporation in accordance with the bb) Prescription Drug - A drug which has been approved by the Bureau of Food and Drug
guiding principles set forth in Article I of this Act. and which can be dispensed only pursuant to a prescription order from a physician who is
duly licensed to do so.
r) Inpatient Education Package - A set of informational services made available to an
individual who is confined in a hospital to afford him with knowledge about his illness and cc) Public Health Services - Services that strengthen preventive and promotive health
its treatment, and of the means available, particularly lifestyle changes, to prevent the care through improving conditions in partnership with the community at large. These
recurrence or aggravation of such illness and to promote his health in general. include control of communicable and non-communicable diseases, health promotion,
public information and education, water and sanitation, environmental protection, and
s) Member - Any person whose premiums have been regularly paid to the National health-related data collection, surveillance, and outcome monitoring.
Health Insurance Program. He may be a paying member, or a pensioner/retiree member.
dd) Quality Assurance - A formal set of activities to review and ensure the quality of
t) Means Test - A protocol administered at the barangay level to determine the ability of services provided. Quality assurance includes quality assessment and corrective actions
individuals or households to pay varying levels of contributions to the Program, ranging to remedy any deficiencies identified in the quality of direct patient, administrative, and
from the indigent in the community whose contributions should be totally subsidized by support services.
the government, to those who can afford to subsidize part but not all the required
contributions for the Program. ee) Residence - The place where the member actually lives.

u) Medicare - The health insurance program currently being implemented by the ff) Retiree - A member of the Program who has reached the age of retirement or who was
Philippine Medical Care Commission. It consists of: retired on account of disability.

(1) Program I, which covers members of the SSS and GSIS including their legal gg) Self-employed - A person who works for himself and is therefore both employee and
dependents; and employer at the same time.

(2) Program II, which is intended for those not covered under Program I. hh) Social Security System - The Social Security System created under Republic Act No.
1161, as amended.
v) National Health Insurance Program - The compulsory health insurance program of the
government as established in this Act, which shall provide universal health insurance ii) Treatment Procedure - Any method used to remove the symptoms and cause of a
coverage and ensure affordable, acceptable, available and accessible health care disease.
services for all citizens of the Philippines.
jj) Utilization Review - A formal review of a patient utilization or of the appropriateness of
w) Pensioner - An SSS or GSIS member who receives pensions therefrom. health care services, on a prospective, concurrent or retrospective basis.

56
kk) Rehabilitation Center - Refers to a facility, which undertakes rehabilitation of drug The Secretary of the Interior and Local Government or his Representative;
dependents. It includes institutions, agencies and the like which have for their purpose,
the development of skills, or which provides counseling, or which seeks to inculcate, The Secretary of Social Welfare and Development or his Representative;
social and moral values to clientele who have a drug problem with the pain of weaning
them from drugs and making them drug-free, adapted to their families and peers, and The President of the Corporation;
readjusted into the community as law-abiding, useful and productive citizens.
A representative of the labor sector;
ll) Home Care and Medical Rehabilitation Services - Refer to skilled nursing care, which
A representative of employers;
members get in their homes/clinics for the treatment of an illness or injury that severely
affects their activities or daily living. Home care and medical rehabilitation services The SSS Administrator or his representative;
include hospice or palliative care for people who are terminally ill but does not include
custodial and non-skilled personal care." The GSIS General Manager or his representative;

Sec. 2. Sec. 11 of the same Act shall now read as follows: The Vice chairperson for the basic sector of the National Anti-Poverty Commission or his
representative;
"Sec. 11. Excluded Personal Health Services.- The benefits granted under this Act shall
not cover expenses for the services enumerated hereunder except when the Corporation, A representative of Filipino overseas workers;
after actuarial studies, recommends their inclusion subject to the approval of the Board:
A representative of the self-employed sector; and
(a) non-prescription drugs and devices;
A representative of health care providers to be endorsed by the national associations of
(b) alcohol abuse or dependency treatment; health care institutions and medical health professionals.

(c) cosmetic surgery; The Secretary of Health shall be the ex officio Chairperson while the President of the
President of the Corporation shall be the Vice Chairperson of the Board.
(d) optometric services;
b) Appointment and Tenure - The President of the Philippines shall appoint the Members
(e) fifth and subsequent normal obstetrical deliveries; and of the Board upon the recommendation of the Chairman of the Board and in consultation
with the sectors concerned. Members of the Boards shall have a term of four (4) years
(f) cost-ineffective procedures, which shall be defined by the Corporation.
each, renewable for a maximum of two (2) years, except for members whose terms shall
Provided, That, such actuarial studies must be done within a period of three (3) years, be co-terminous with their respective positions in government. Any vacancy in the Board
and then periodically reviewed, to determine the financial sustainability of including the shall be filled in the manner in which the original appointment was made and the
foregoing personal health services in the benefit package provided for under Sec. 10 of appointee shall serve only the unexpired term of his predecessor.
this Act."
c) Meetings and Quorum. - The Board shall hold regular meetings at least once a month.
Section 3. Sec. 18 of the Law shall be amended to read as follows: Special meetings may be convened at the call of the Chairperson or by a majority of the
members of the Board. The presence of a majority of all the members shall constitute a
"Sec. 18. The Board of Directors. quorum. In the absence of the Chairperson and Vice Chairperson, a temporary presiding
officer shall be designated by the majority of the quorum.
a) Composition - The Corporation shall be governed by a Board of Directors hereinafter
referred to as the Board, composed of the following members: d) Allowances and Per Diems - The members of the Board shall receive a per diem for
every meeting actually attended subject to the pertinent budgetary laws, rules and
The Secretary of Health; regulations on compensation, honoraria and allowances."

The Secretary of Labor and Employment or his representative; Sec. 4. Sec. 29 of the Law shall now read as follows:

57
"Sec. 29. Payment of Indigent Contributions.- Contributions for indigent members shall be shall undertake studies to validate the accomplishments of the Program. The Budget
subsidized partially by the local government unit where the member resides. The required to undertake such study shall come from the income of the PhilHealth."
Corporation shall provide counterpart financing equal to the LGU's subsidy for indigents:
Provided, That in the case of the fourth, fifth and sixth class municipalities, the National Sec. 8. Separability Clause. - If any part or provision of this Act shall be held
Government shall provide up to ninety percent (90%) of the subsidy for indigents until unconstitutional or invalid, other provisions, which are not affected thereby, shall continue
such time that they shall have been upgraded to first, second or third class municipalities. to be in full force and effect.
The share of the LGUs shall be progressively increased until such time that its share
becomes equal to that of the National Government." Section 9. Repealing Clause. - All laws, presidential decrees, executive orders, rules and
regulations or parts thereof which are inconsistent with the provisions of this Act are
Sec. 5. Sec. 32 of the same Act shall now read as follows: hereby repealed, amended or modified accordingly.

"Sec. 32. Accreditation Eligibility - All health care providers, as enumerated in Sec. 4(o) Sec. 10. Effectivity. - This Act shall take effect fifteen (15) days after its publication in at
hereof and operating for at least three (3) years may apply for accreditation: Provided, least (3) national newspapers of general circulation.
That a health care provider which has not operated for at least three (3) years may
likewise apply and qualify for accreditation if it complies with all the other accreditation of This Act which is a consolidation of House Bill No. 5547 and Senate Bill No. 2630 was
and further meets any of the following conditions: finally passed by the House of Representatives and the Senate on October 15, 2003 and
October 14, 2003, respectively.
a) Its managing health care professional has had a working experience in another
accredited health care institution for at least three (3) years;

b) It operates as a tertiary facility or its equivalent;

c) It operates in a local government unit where the accredited health care provider cannot
adequately or fully service its population; and

d) Other conditions as may be determined by the Corporation."

Sec. 6. The third paragraph of Sec. 44 (penal Provisions) of the same Act shall amend to
read as follows:

"Where the violations consist of failure or refusal to deduct contributions from the
employee's compensation or to remit the same to the Corporation, the penalty shall be a
fine of not less than Five hundred pesos (P500) but not more than One thousand pesos
(P1,000) multiplied by the total number of employees employed by the firm and
imprisonment of not less than six (6) months but not more than one (1) year."

Sec. 7. Sec. 54 of the Law shall be amended to read as follows:

"Sec. 54. Oversight Provision.- Congress shall conduct regular review of the National
Health Insurance Program, which shall entail a systematic evaluation of the Program's
performance, impact or accomplishments with respect to its objectives or goals. Such
review shall be undertaken by the Committees of the Senate and the House of
Representatives, which have legislative jurisdiction over the Program.

The National Economic and Development Authority, in coordination with the National
Statistics Office and the National Institutes of Health of the University of the Philippines
58
Official Gazette PH Republic Act No. 10606 Published: June 19, 2013. Latest update: (4) the parents who are sixty (60) years old or above whose monthly income is below an
June 21, 2013. S. No. 2849 H. No. 6048 amount to be determined by the Corporation in accordance with the guiding principles set
forth in Article I of this Act; and
[REPUBLIC ACT NO. 10606]
(5) parents with permanent disability that render them totally dependent on the member
AN ACT AMENDING REPUBLIC ACT NO. 7875, OTHERWISE KNOWN AS THE for subsistence.
NATIONAL HEALTH INSURANCE ACT OF 1995, AS AMENDED, AND FOR OTHER
PURPOSES x x x

Be it enacted by the Senate and House of Representatives of the Philippines in Congress (l) Fee-for-service A fee pre-determined by the Corporation for each service delivered
assembled: by a health care provider based on the bill. The payment system shall be based on a pre-
negotiated schedule promulgated by the Corporation.
SECTION 1. Section 1 of Republic Act No. 7875, as amended, is hereby amended to
read as follows: x x x

SECTION 1. Short Title. This Act shall be known as the National Health Insurance Act (q) Indigent A person who has no visible means of income, or whose income is
of 2013. insufficient for the subsistence of his family, as identified by the Department of Social
Welfare and Development (DSWD) based on specific criteria set for this purpose in
SEC. 2. Section 2 of the same Act is hereby amended to read as follows: accordance with the guiding principles set forth in Article I of this Act.

SEC. 2. Declaration of Principles and Policies. It is hereby declared the policy of the x x x
State to adopt an integrated and comprehensive approach to health development which
shall endeavor to make essential goods, health and other social services available to all (s) Member Any person whose premiums have been regularly paid to the National
the people at affordable cost and to provide free medical care to paupers. Towards this Health Insurance Program who may be a paying member, a sponsored member, or a
end, the State shall provide comprehensive health care services to all Filipinos through a lifetime member.
socialized health insurance program that will prioritize the health care needs of the
underprivileged, sick, elderly, persons with disabilities (PWDs), women and children and x x x
provide free health care services to indigents.
(ff) Retiree A member of the Program who has reached the age of retirement as
Pursuant to this policy, the State shall adopt the following principles: provided for by law or who was retired on account of permanent disability as certified by
the employer and the Corporation.
x x x.
x x x
SEC. 3. Section 4 of the same Act is hereby further amended to read as follows:
(mm) Abandoned Children Children who have no known family willing and capable to
SEC. 4. Definition of Terms. For the purpose of this Act, the following terms shall be take care of them and are under the care of the DSWD, orphanages, churches and other
defined as follows: institutions.

x x x (nn) Case-based Payment Hospital payment method that reimburses to hospitals a


predetermined fixed rate for each treated case or disease; also called per case payment.
(f) Dependent The legal dependents of a member are:
(oo) Health Technology Assessment A field of science that investigates the value of a
x x x health technology such as procedure, process, products, or devices, specifically on their
quality, relative cost-effectiveness and safety. It usually involves the science of
epidemiology and economics. It has implications on policy, decision to adopt and invest
in these technologies, or in health benefit coverage.

59
(pp) Informal Sector Units engaged in the production of goods and services with the (yy) Sponsored Member A member whose contribution is being paid by another
primary objective of generating employment and income for the persons concerned. It individual, government agency, or private entity according to the rules as may be
consists of households, unincorporated enterprises that are market and nonmarket prescribed by the Corporation.
producers of goods, as well as market producers of services.
SEC. 4. Section 6 of the same Act is hereby amended to read as follows:
These enterprises are operated by own-account workers, which may employ unpaid
family workers as well as occasional, seasonally hired workers. SEC. 6. Mandatory Coverage. All citizens of the Philippines shall be covered by the
National Health Insurance Program. In accordance with the principles of universality and
To this sector belong, among others, street hawkers, market vendors, pedicab and compulsory coverage enunciated in Section 2(b) and 2(l) hereof, implementation of the
tricycle drivers, small construction workers and home-based industries and services. Program shall ensure sustainability of coverage and continuous enhancement of the
quality of service: Provided, That the Program shall be compulsory in all provinces, cities
(qq) Other Self-earning Individuals Individuals who render services or sell goods as a and municipalities nationwide, notwithstanding the existence of LGU-based health
means of livelihood outside of an employer-employee relationship, or as a career, but do insurance programs: Provided, further, That the Corporation, Department of Health
not belong to the informal sector. These include businessmen, entrepreneurs, actors, (DOH), local government units (LGUs), and other agencies including nongovernmental
actresses and other performers, news correspondents, professional athletes, coaches, organizations (NGOs) and other national government agencies (NGAs) shall ensure that
trainers, and other individuals as recognized by the Department of Labor and members in such localities shall have access to quality and cost-effective health care
Employment (DOLE) and/or the Bureau of Internal Revenue (BIR). services.

(rr) Out-patient Services Health services such as diagnostic consultation, examination, SEC. 5. Section 7 of the same Act is hereby amended to read as follows:
treatment, surgery and rehabilitation on an out-patient basis.
SEC. 7. Enrollment. The Corporation shall enroll beneficiaries in order for them to avail
(ss) Professional Practitioners Include doctors, lawyers, certified public accountants, of benefits under this Act with the assistance of the financial arrangements provided by
and other practitioners required to pass government licensure examinations in order to the Corporation under the following categories:
practice their professions.
(a) Members in the formal economy;
(tt) Traditional and Alternative Health Care The application of traditional knowledge,
skills and practice of alternative health care or healing methods which include reflexology, (b) Members in the informal economy;
acupuncture, massage, accupressure, chiropractics, nutritional therapy and other similar
methods in accordance with the accreditation guidelines set forth by the Corporation and (c) Indigents;
the Food and Drug Administration (FDA).
(d) Sponsored members; and
(uu) Lifetime Member A former member who has reached the age of retirement under
the law and has paid at least one hundred twenty (120) monthly premium contributions. (e) Lifetime members.

(vv) Members in the Formal Economy Workers with formal contracts and fixed terms of The process of enrollment shall include the identification of beneficiaries, issuance of
employment including workers in the government and private sector, whose premium appropriate documentation specifying eligibility to benefits, and indicating how
contribution payments are equally shared by the employee and the employer. membership was obtained or is being maintained.

(ww) Members in the Informal Economy Workers who are not covered by formal SEC. 6. Section 8 of the same Act is hereby amended to read as follows:
contracts or agreements and whose premium contributions are self-paid or subsidized by
SEC. 8. Health Insurance Identification (ID) Card and ID Number. In conjunction with
another individual through a defined criteria set by the Corporation.
the enrollment provided above, the Corporation through its local office shall issue a
(xx) Migrant Workers Documented or undocumented Filipinos who are engaged in a health insurance ID with a corresponding ID number which shall be used for purposes of
remunerated activity in another country of which they are not citizens. identification, eligibility verification, and utilization recording. The issuance of this ID card
shall be accompanied by a clear explanation to the enrollee of his rights, privileges and

60
obligations as a member. A list of health care providers accredited by the Local Health These services and packages shall be reviewed annually to determine their financial
Insurance Office shall likewise be provided to the member together with the ID card. sustainability and relevance to health innovations, with the end in view of quality
assurance, increased benefits and reduced out-of-pocket expenditure.
The absence of the ID card shall not prejudice the right of any member to avail of
benefits or medical services under the National Health Insurance Program (NHIP). SEC. 8. Section 11 of the same Act is hereby further amended to read as follows:

This health insurance ID card with a corresponding ID number shall be recognized as a SEC. 11. Excluded Personal Health Services. The Corporation shall not cover
valid government identification and shall be presented and honored in transactions expenses for health services which the Corporation and the DOH consider cost-
requiring the verification of a persons identity. ineffective through health technology assessment.

SEC. 7. Section 10 of the same Act is hereby amended to read as follows: The Corporation may institute additional exclusions and limitations as it may deem
reasonable in keeping with its protection objectives and financial sustainability.
SEC. 10. Benefit Package.
SEC. 9. Section 12 of the same Act is hereby amended to read as follows:
Members and their dependents are entitled to the following minimum services, subject to
the limitations specified in this Act and as may be determined by the Corporation: SEC. 12. Entitlement to Benefits. A member whose premium contributions for at least
three (3) months have been paid within six (6) months prior to the first day of availment,
(a) Inpatient hospital care: including those of the dependents, shall be entitled to the benefits of the Program:
Provided, That such member can show that contributions have been made with sufficient
(1) room and board; regularity: Provided, further, That the member is not currently subject to legal penalties as
provided for in Section 44 of this Act.
(2) services of health care professionals;
The following need not pay the monthly contributions to be entitled to the Programs
(3) diagnostic, laboratory, and other medical examination services;
benefits:
(4) use of surgical or medical equipment and facilities;
(a) Retirees and pensioners of the SSS and GSIS prior to the effectivity of this Act; and
(5) prescription drugs and biologicals, subject to the limitations stated in Section 37 of
(b) Lifetime members.
this Act; and
SEC. 10. Section 16 of the same Act is hereby amended to read as follows:
(6) inpatient education packages;
SEC. 16. Powers and Functions. The Corporation shall have the following powers and
(b) Outpatient care:
functions:
(1) services of health care professionals;
x x x
(2) diagnostic, laboratory, and other medical examination services;
(c) To supervise the provision of health benefits and to set standards, rules, and
(3) personal preventive services; and regulations necessary to ensure quality of care, appropriate utilization of services, fund
viability, member satisfaction, and overall accomplishment of Program objectives;
(4) prescription drugs and biologicals, subject to the limitations described in Section 37
of this Act; x x x

(c) Emergency and transfer services; and (j) To negotiate and enter into contracts with health care institutions, professionals, and
other persons, juridical or natural, regarding the pricing, payment mechanisms, design
(d) Such other health care services that the Corporation and the DOH shall determine to and implementation of administrative and operating systems and procedures, financing,
be appropriate and cost-effective. and delivery of health services in behalf of its members;

61
x x x (y) To mandate the national agencies and LGUs to require proof of PhilHealth
membership before doing business with a private individual or group;
(m) To visit, enter and inspect facilities of health care providers and employers during
office hours, unless there is reason to believe that inspection has to be done beyond (z) To accredit independent pharmacies and retail drug outlets; and
office hours, and where applicable, secure copies of their medical, financial, and other
records and data pertinent to the claims, accreditation, premium contribution, and that of (aa) To perform such other acts as it may deem appropriate for the attainment of the
their patients or employees, who are members of the Program; objectives of the Corporation and for the proper enforcement of the provisions of this
Act.
x x x
SEC. 11. Section 17 of the same Act, is hereby amended to read as follows:
(p) To keep records of the operations of the Corporation and investments of the National
Health Insurance Fund; SEC. 17. Quasi-Judicial Powers. The Corporation, to carry out its tasks more
effectively, shall be vested with the following powers:
(q) To establish and maintain an electronic database of all its members and ensure its
security to facilitate efficient and effective services; (a) Subject to the respondents right to due process, to conduct investigations for the
determination of a question, controversy, complaint, or unresolved grievance brought to
(r) To invest in the acceleration of the Corporations information technology systems; its attention, and render decisions, orders, or resolutions thereon. It shall proceed to hear
and determine the case even in the absence of any party who has been properly served
(s) To conduct an information campaign on the principles of the NHIP to the public and with notice to appear. It shall conduct its proceedings or any part thereof in public or in
to accredited health care providers. This campaign must include the current benefit executive session; adjourn its hearings to any time and place; refer technical matters or
packages provided by the Corporation, the mechanisms to avail of the current benefit accounts to an expert and to accept his reports as evidence; direct parties to be joined in
packages, the list of accredited and disaccredited health care providers, arid the list of or excluded from the proceedings; and give all such directions as it may deem necessary
offices/branches where members can pay or check the status of paid health premiums; or expedient in the determination of the dispute before it;

(t) To conduct post-audit on the quality of services rendered by health care providers; x x x

(u) To establish an office, or where it is not feasible, designate a focal person in every (c) Subject to the respondents right to due process, to suspend temporarily, revoke
Philippine Consular Office in all countries where there are Filipino citizens. The office or permanently, or restore the accreditation of a health care provider or the right to benefits
the focal person shall, among others, process, review and pay the claims of the overseas of a member and/or impose fines. The decision shall immediately be executory, even
Filipino workers (OFWs); pending appeal, when the public interest so requires and as may be provided for in the
implementing rules and regulations. Suspension of accreditation shall not exceed six (6)
(v) Notwithstanding the provisions of any law to the contrary, to impose interest and/or months. Suspension of the rights of members shall not exceed six (6) months.
surcharges of not exceeding three percent (3%) per month, as may be fixed by the
Corporation, in case of any delay in the remittance of contributions which are due within The revocation of a health care providers accreditation shall operate to disqualify him
the prescribed period by an employer, whether public or private. Notwithstanding the from obtaining another accreditation in his own name, under a different name, or through
provisions of any law to the contrary, the Corporation may also compromise, waive or another person, whether natural or juridical.
release, in whole or in part, such interest or surcharges imposed upon employers
regardless of the amount involved under such valid terms and conditions it may The Corporation shall not be bound by the technical rules of evidence.
prescribe;
SEC. 12. Section 18 of the same Act is hereby further amended to read as follows:
(w) To endeavor to support the use of technology in the delivery of health care services
especially in farflung areas such as, but not limited to, telemedicine, electronic health SEC. 18. The Board of Directors.
record, and the establishment of a comprehensive health database;
(a) Composition. The Corporation shall be governed by a Board of Directors
(x) To monitor compliance by the regulatory agencies with the requirements of this Act hereinafter referred to as the Board, composed of the following members:
and to carry out necessary actions to enforce compliance;
62
The Secretary of Health; The term of office of the appointive members of the Board shall be in accordance with
Republic Act No. 10149.
The Secretary of Labor and Employment or a permanent representative;
x x x.
The Secretary of the Interior and Local Government or a permanent representative;
SEC. 13. Section 19 of the same Act is hereby amended to read as follows:
The Secretary of Social Welfare and Development or a permanent representative;
SEC. 19. The President of the Corporation.
The Secretary of the Department of Finance (DOF) or a permanent representative;
(a) Appointment and Tenure. The President of the Philippines shall appoint the
The President and Chief Executive Officer (CEO) of the Corporation; President and CEO of the Corporation, hereinafter referred to as the President, upon the
recommendation of the Board. The President shall have a tenure of one (1) year in
The SSS Administrator or a permanent representative; accordance with the provisions of Republic Act No. 10149.

The GSIS General Manager or a permanent representative; x x x.

The Vice Chairperson for the basic sector of the National Anti-Poverty Commission or a SEC. 14. Section 20 of the same Act is hereby amended to read as follows:
permanent representative;
SEC. 20. Health Finance Policy Research. Among the staff departments that will be
The Chairperson of the Civil Service Commission (CSC) or a permanent representative; established by the Corporation shall be the Health Finance Policy Research Department,
which shall have the following duties and functions:
A permanent representative of Filipino migrant workers;
x x x
A permanent representative of the members in the informal economy;
(f) submission for consideration of program of quality assurance, utilization review, and
A permanent representative of the members in the formal economy;
technology assessment;
A representative of employers;
(g) submission of recommendations on policy and operational issues that will help the
A representative of health care providers to be endorsed by their national associations of Corporation meet the objectives of this Act; and
health care institutions and medical health professionals;
(h) conduct of client-satisfaction surveys and research in order to assess outcomes of
A permanent representative of the elected local chief executives to be endorsed by the service rendered by health care providers.
League of Provinces, League of Cities and League of Municipalities; and
SEC. 15. Section 24 of the same Act is hereby amended to read as follows:
An independent director to be appointed by the Monetary Board.
SEC. 24. Creation of the National Health Insurance Fund. There is hereby created a
The Secretary of Health shall be the ex officio Chairperson while the President and CEO National Health Insurance Fund, hereinafter referred to as the Fund, that shall consist of:
of the Corporation shall be the Vice Chairperson of the Board.
(a) Contribution from Program members;
(b) Appointment and Tenure. Except for ex officio members, the other members of the
(b) Other appropriations earmarked by the national and local governments purposely for
Board shall be appointed by the President of the Philippines in accordance with the
the implementation of the Program;
provisions of Republic Act No. 10149, otherwise known as the GOCC Governance Act of
2011: Provided, That sectoral board members shall be appointed by the President of the (c) Subsequent appropriations provided for under Sections 46 and 47 of this Act;
Philippines upon the recommendation of the Chairperson and after due consultations with
the sectors concerned. (d) Donations and grants-in-aid; and

63
(e) All accruals thereof. the amount actuarially estimated for two (2) years projected Program expenditures:
Provided, further, That whenever actual reserves exceed the required ceiling at the end
SEC. 16. Section 26 of the same Act is hereby amended to read as follows: of the Corporations fiscal year, the excess of the Corporations reserve fund shall be
used to increase the Programs benefits, decrease the members contributions, and
SEC. 26. Financial Management. The use, disposition, investment, disbursement, augment the health facilities enhancement program of the DOH.
administration and management of the National Health Insurance Fund, including any
subsidy, grant or donation received for program operations shall be governed by The remaining portion of the reserve fund that are not needed to meet the current
applicable laws and in the absence thereof, existing resolutions of the Board of Directors expenditure obligations or used for the abovementioned programs shall be placed in
of the Corporation, subject to the following limitations: investments to earn an average annual income at prevailing rates of interest and shall be
known as the Investment Reserve Fund which shall be invested in any or all of the
(a) All funds under the management and control of the Corporation shall be subject to all following:
rules and regulations applicable to public funds.
(a) In interest-bearing bonds, securities or other evidences of indebtedness of the
(b) The Corporation is authorized to charge to the various funds under its control the Government of the Philippines, or in bonds, securities, promissory notes and other
costs of administering the Program. Such costs may include administration, monitoring, evidences of indebtedness to which full faith and credit and unconditional guarantee of
marketing and promotion, research and development, audit and evaluation, information the Republic of the Philippines is pledged;
services, and other necessary activities for the effective management of the Program.
The total annual costs for these shall not exceed the sum total of the following: (b) In debt securities and corporate bonds issuances: Provided, That such securities and
bonds are rated triple A by authorized accredited domestic rating agencies: Provided,
(1) Four percent (4%) of the total premium contributions collected during the immediately further, That the issuing or assuming entity or its predecessor shall not have defaulted in
preceding year; the payment of interest on any of its securities and that during each of any three (3)
including last two (2) of the five (5) fiscal years next preceding the date of acquisition by
(2) Four percent (4%) of the total reimbursements or total cost of health services paid by
the Corporation of such bonds, securities or other evidences of indebtedness, the net
the Corporation in the immediately preceding year; and
earnings of the issuing or assuming institution available for its recurring expenses, such
(3) Five percent (5%) of the investment earnings generated during the immediately as amortization of debt discount and rentals for leased properties, including interest on
preceding year. funded and unfunded debt, shall have been not less than one and one quarter (1 )
times the total of the recurring expenses for such year: Provided, further, That such
The period for implementation of the cost ceiling provided under this section shall not be investment shall not exceed fifteen percent (15%) of the investment reserve fund;
later than five (5) years from the effectivity of this Act during which period, the total
annual cost shall not exceed the sum total of the following: (c) In interest-bearing deposits and loans to or securities in any domestic bank doing
business in the Philippines: Provided, That in the case of such deposits, this shall not
(i) Five percent (5%) of the total contributions; exceed at any time the unimpaired capital and surplus or total private deposits of the
depository bank, whichever is smaller: Provided, further, That said bank shall first have
(ii) Five percent (5%) of the total reimbursements; and been designated as a depository for this purpose by the Monetary Board of the Bangko
Sentral ng Pilipinas;
(iii) Five percent (5%) of the investment earnings generated during the immediately
preceding year. (d) In preferred stocks of any solvent corporation or institution created or existing under
the laws of the Philippines: Provided, That the issuing, assuming, or guaranteeing entity
SEC. 17. Section 27 of the same Act is hereby amended to read as follows: or its predecessor has paid regular dividends upon its preferred or guaranteed stocks for
a period of at least three (3) years immediately preceding the date of investment in such
preferred or guaranteed stocks: Provided, further, That if the stocks are guaranteed the
amount of stocks so guaranteed is not in excess of fifty percent (50%) of the amount of
SEC. 27. Reserve Fund. The Corporation shall set aside a portion of its accumulated
the preferred common stocks as the case may be of the issuing corporation: Provided,
revenues not needed to meet the cost of the current years expenditures as reserve
furthermore, That if the corporation or institution has not paid dividends upon its preferred
funds: Provided, That the total amount of reserves shall not exceed a ceiling equivalent to
stocks, the corporation or institution has sufficient retained earnings to declare dividends
64
for at least two (2) years on such preferred stocks and in common stocks of any solvent SEC. 18. Section 28 of the same Act is hereby amended to read as follows:
corporation or institution created or existing under the laws of the Philippines in the stock
exchange with proven track record of profitability and payment of dividends over the last SEC. 28. Contributions. All members who can afford to pay shall contribute to the
three (3) years; and Fund, in accordance with a reasonable, equitable and progressive contribution schedule
to be determined by the Corporation on the basis of applicable actuarial studies and in
(e) In bonds, securities, promissory notes or other evidences of indebtedness of accordance with the following guidelines:
accredited and financially sound medical institutions exclusively to finance the
construction, improvement and maintenance of hospitals and other medical facilities: (a) Members in the formal economy and their employers shall continue paying the same
Provided, That such securities and instruments are backed up by the guarantee of the monthly contributions as provided for by law until such time that the Corporation shall
Republic of the Philippines or the issuing medical institution and the issued securities and have determined a new contribution schedule: Provided, That their monthly contributions
bonds are both rated triple A by authorized accredited domestic rating agencies: shall not exceed five percent (5%) of their respective monthly salaries.
Provided, further, That said investments shall not exceed ten percent (10%) of the total
investment reserve fund. It shall be mandatory for all government agencies to include the payment of premium
contribution in their respective annual appropriations: Provided, further, That any
As part of its investments operations, the Corporation may hire institutions with valid increase in the premium contribution of the national government as employer shall only
trust licenses as its external local fund managers to manage the investment reserve fund, become effective upon inclusion of said amount in the annual General Appropriations
as it may deem appropriate, through public bidding. The fund managers shall submit Act.
annual reports on investment performance to the Corporation.
(b) Contributions from members in the informal economy shall be based primarily on
The Corporation shall set up the following funds: household earnings and assets. Those from the lowest income segment who do not
qualify for full subsidy under the means test rule of the DSWD shall be entirely subsidized
(1) A fund to secure benefit payouts to members prior to their becoming lifetime by the LGUs or through cost sharing mechanisms between/among LGUs and/or
members; legislative sponsors and/or other sponsors and/or the member, including the national
government: Provided, That the identification of beneficiaries who shall receive subsidy
(2) A fund to secure payouts to lifetime members; and from LGUs shall be based on a list to be provided by the DSWD through the same means
test rule or any other appropriate statistical method that may be adopted for said
(3) A fund for any optional supplemental benefits that are subject to additional purpose.
contributions.
(c) Contributions made in behalf of indigent members shall not exceed the minimum
A portion of each of the above funds shall be identified as current and kept in liquid contributions for employed members.
instruments. In no case shall said portion be considered part of invested assets.
(d) The required number of monthly premium contributions to qualify as a lifetime
Another portion of the said funds shall be allocated for lifetime members within six (6) member may be increased by the Corporation to sustain the financial viability of the
months after the effectivity of this Act. Said amount shall be determined by an actuary or Program: Provided, That the increase shall be based on actuarial estimate and study.
pre-calculated based on the most recent valuation of liabilities.
SEC. 19. Section 29 of the same Act is hereby further amended to read as follows:
The Corporation shall allocate a portion of all contributions to the fund for lifetime
members based on an allocation to be determined by the PHIC actuary based on a pre- SEC. 29. Payment for Indigent Contributions. Premium contributions for indigent
determined percentage using the current average age of members and the current life members as identified by the DSWD through a means test or any other appropriate
expectancy and morbidity curve of Filipinos. statistical method shall be fully subsidized by the national government. The amount
necessary shall be included in the appropriations for the DOH under the annual General
The Corporation shall manage the supplemental benefits and the lifetime members fund Appropriations Act.
in an actuarially sound manner.
SEC. 20. A new Section 29-A shall be added to read as follows:
The Corporation shall manage the supplemental benefits fund to the minimum required
to ensure that the supplemental benefit payments are secure. SEC. 29-A. Payment for Sponsored Members Contributions.
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(a) The premium contributions of orphans, abandoned and abused minors, out-of-school (a) Fee-for-service payments payments made by the Corporation for professional fees
youths, street children, PWDs, senior citizens and battered women under the care of the or hospital charges, or both, based on arrangements with health care providers. This fee
DSWD, or any of its accredited institutions run by NGOs or any nonprofit private shall be based on a schedule to be established by the Board which shall be reviewed
organizations, shall be paid by the DSWD and the funds necessary for their inclusion in periodically but hot less than every three (3) years;
the Program shall be included in the annual budget of the DSWD.
(b) Capitation of health care professionals and facilities, or networks of the same
(b) The needed premium contributions of all barangay health workers, nutrition scholars including HMOs, medical cooperatives, and other legally formed health service groups;
and other barangay workers and volunteers shall be fully borne by the LGUs concerned.
(c) Case-based payment;
(c) The annual premium contributions of househelpers shall be fully paid by their
employers, in accordance with the provisions of Republic Act No. 10361 or the (d) Global budget; and
Kasambahay Law.
(e) Such other provider payment mechanisms that may be determined and adopted by
SEC. 21. A new Section 29-B shall be added to read as follows: the Corporation.

SEC. 29-B. Coverage of Women About to Give Birth. The annual required premium for Subject to the approval of the Board, the Corporation may adopt other payment
the coverage of unenrolled women who are about to give birth shall be fully borne by the mechanism that are most beneficial to the members and the Corporation.
national government and/or LGUs and/or legislative sponsor which shall be determined
through the means testing protocol recognized by the DSWD. Each PhilHealth local office shall recommend the appropriate payment mechanism
within its jurisdiction for approval by the Corporation. Special consideration shall be given
SEC. 22. Section 32 of the same Act is hereby further amended to read as follows: to payment for services rendered by public and private health care providers serving
remote or medically underserved areas.
SEC. 32. Accreditation Eligibility. All health care providers, as enumerated in Section
4(o) hereof and operating for at least three (3) years may apply for accreditation: SEC. 24. A new Section 34-A shall be added to read as follows:
Provided, That a health care provider which has not operated for at least three (3) years
may likewise apply and qualify for accreditation if it complies with all the other SEC. 34-A. Other Provider Payment Guidelines. No other fee or expense shall be
accreditation requirements of and further meets any of the following conditions: charged to the indigent patient, subject to the guidelines issued by the Corporation.

(a) Its managing health care professional has had a working experience in another All payments for professional services rendered by salaried public providers shall be
accredited health care institution for at least three (3) years; allowed to be retained by the health facility in which services are rendered and be pooled
and distributed among health personnel. Charges paid to public facilities shall be retained
(b) It operates as a tertiary facility or its equivalent; by the individual facility in which services were rendered and for which payment was
made. Such revenues shall be used to primarily defray operating costs other than
(c) It operates in a LGU where the accredited health care provider cannot adequately or salaries, to maintain or upgrade equipment, plant or facility, and to maintain or improve
fully service its population; and the quality of service in the public sector.

(d) Other conditions as may be determined by the Corporation. SEC. 25. Section 35 of the same Act is hereby deleted and replaced with a new section
to read as follows:
A health care provider found guilty of any violation of this Act shall not be eligible to
apply for the renewal of accreditation. SEC. 35. Reimbursement and Period to File Claims. All claims for reimbursement or
payment for services rendered shall be filed within a period of sixty (60) calendar days
SEC. 23. Section 34 of the same Act is hereby amended to read as follows: from the date of discharge of the patient from the health care provider.

SEC. 34. Provider Payment Mechanisms. The following mechanisms for public and The period to file the claim may be extended for such reasonable causes determined by
private providers shall he allowed in the Program: the Corporation.

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SEC. 26. Section 36 of the same Act is hereby deleted and replaced with a new section SEC. 44. Penal Provisions. Any violation of the provisions of this Act, after due notice
to read as follows: and hearing, shall suffer the following penalties:

SEC. 36. Role of Local Government Units (LGUs). Consistent with the mandates for (a) Violation by an Accredited Health Care Provider Any accredited health care
each political subdivision under Republic Act No. 7160 or The Local Government Code provider who commits a violation, abuse, unethical practice or fraudulent act which tends
of 1991, LGUs shall provide basic health care services. to undermine or defeat the objectives of the Program shall be punished with a fine of not
less than Fifty thousand pesos (P50,000.00) but not more than One hundred thousand
To augment their funds, LGUs shall invest the capitation payments given to them by the pesos (P100,000.00) or suspension of accreditation from three (3) months to the whole
Corporation on health infrastructures or equipment, professional fees, drugs and term of accreditation, or both, at the discretion of the Corporation: Provided, That
supplies, or information technology and database: Provided, That basic health care recidivists may no longer be accredited as a participant of the Program;
services, as defined by the DOH and the Corporation, shall be ensured especially with
the end in view of improving maternal, infant and child health: (b) Violations of a Member Any member who commits any violation of this Act
independently or in connivance with the health care provider for purposes of wrongfully
Provided, further, That the capitation payments shall be segregated and placed into a claiming NHIP benefits or entitlement shall be punished with a fine of not less than Five
special trust fund created by LGUs and be accessed for the use of such mandated thousand pesos (P5,000.00) or suspension from availment of NHIP benefits for not less
purpose. than three (3) months but not more than six (6) months, or both, at the discretion of the
Corporation.
SEC. 27. Section 41 of the same Act is hereby amended to read as follows:
(c) Violations of an Employer
SEC. 41. Grievance and Appeal Procedures. A member, a dependent, or a health care
provider may file a complaint for grievance based on any of the above grounds, in (1) Failure/Refusal to Register/Deduct/Remit the Contributions Any employer who fails
accordance with the following procedures: or refuses to register employees, regardless of their employment status, or to deduct
contributions from the employees compensation or remit the same to the Corporation
(a) A complaint for grievance must be filed with the Corporation which shall refer such shall be punished with a fine of not less than Five thousand pesos (P5,000.00) multiplied
complaint to the Grievance and Appeal Review Committee. The Grievance and Appeal by the total number of employees of the firm.
Review Committee shall rule on the complaint through a notice of resolution within sixty
(60) calendar days from receipt thereof. Any employer or any officer authorized to collect contributions under this Act who, after
collecting or deducting the monthly contributions from his employees compensation, fails
(b) Appeals from the decision of the Grievance and Appeal Review Committee must be to remit the said contributions to the Corporation within thirty (30) days from the date they
filed with the Board within thirty (30) calendar days from receipt of the notice of become due shall be presumed to have misappropriated such contributions.
resolution.
(2) Unlawful Deductions Any employer or officer who shall deduct directly or indirectly
x x x. from the compensation of the covered employees or otherwise recover from them his
own contribution on behalf of such employees shall be punished with a fine of Five
SEC. 28. Section 42 of the same Act is hereby amended to read as follows:
thousand pesos (P5,000.00) multiplied by the total number of affected employees.
SEC. 42. Grievance and Appeal Review Committee. The Board shall create a
If the act or omission penalized by this Act be committed by an association, partnership,
Grievance and Appeal Review Committee, composed of five (5) members, hereinafter
corporation or any other institution, its managing directors or partners or president or
referred to as the Committee, which, subject to the procedures enumerated above, shall
general manager, or other persons responsible for the commission of the said act shall
receive and recommend appropriate action on complaints from members and health care
be liable for the penalties provided for in this Act.
providers relative to this Act and its implementing rules and regulations.
(3) Misappropriation of Funds by Employees of the Corporation Any employee of the
The Committee shall have as one of its members a representative of any of the
Corporation who receives or keeps funds or property belonging, payable or deliverable to
accredited health care providers as endorsed by the DOH.
the Corporation, and who shall appropriate the same, or shall take or misappropriate or
SEC. 29. Section 44 of the same Act is hereby further amended to read as follows: shall consent, or through abandonment or negligence shall permit any other person to

67
take such property or funds wholly or partially, shall likewise be liable for misappropriation Senate Committee on Health and Demography and the House of Representatives
of funds or property and shall be punished with a fine not less than Ten thousand pesos Committee on Health.
(P10,000.00) nor more than Twenty thousand pesos (P20,000.00). Any shortage of the
funds or loss of the property upon audit shall be deemed prima facie evidence of the The National Economic and Development Authority, in coordination with the National
offense. Statistics Office and the National Institutes of Health of the University of the Philippines
shall undertake studies to validate the accomplishments of the Program. Such validation
(d) Other Violations Other violations of the provisions of this Act or of the rules and studies shall include an assessment of the enrollees satisfaction of the benefit package
regulations promulgated by the Corporation shall be punished with a fine of not less than and services provided by the Corporation. These validation studies, as well as an annual
Five thousand pesos (P5,000.00) but not more than Twenty thousand pesos report, on the performance of the Corporation shall be submitted to the Congressional
(P20,000.00). Oversight Committee.

All other violations involving funds of the Corporation shall be governed by the applicable The Corporation shall annually transfer 0.001% of its income in the previous year for the
provisions of the Revised Penal Code or other laws, taking into consideration the rules on purpose of conducting these studies.
collection, remittances, and investment of funds as may be promulgated by the
Corporation. SEC. 32. Section 49 of the same Act is hereby amended to read as follows:

The Corporation may enumerate circumstances that will mitigate or aggravate the SEC. 49. Implementing Rules and Regulations. Within sixty (60) days from the
liability of the offender or erring health care provider, member or employer. effectivity of this Act, the Corporation, in coordination with the DOH, shall issue the
necessary rules and regulations for its effective implementation.
Despite the cessation of operation by a health care provider or termination of practice of
an independent health care professional while the complaint is being heard, the SEC. 33. Separability Clause. If any part or provision of this Act shall be held
proceeding against them shall continue until the resolution of the case. unconstitutional or invalid, other provisions which are not affected thereby shall continue
to be in full force and effect.
The dispositive part of the decision requiring payment of fines, reimbursement of paid
claim or denial of payment shall be immediately executory. SEC. 34. Repealing Clause. All laws, issuances or parts thereof inconsistent with this
Act are hereby repealed or modified accordingly.
SEC. 30. A new Section 56 is hereby added to read as follows and the numbering of the
succeeding sections are adjusted accordingly: SEC. 35. Effectivity. This Act shall sake effect fifteen (15) days after its publication in
the Official Gazette or in at least two (2) newspapers of general circulation.
SEC. 56. Requisites for Issuance or Renewal of License or Permits. Notwithstanding
any law to the contrary, all government agencies issuing professional or business license Approved,
or permit, shall require all applicants to submit certificate or proof of payment of
PhilHealth premium contributions, prior to the issuance or renewal of such license or This Act winch is a consolidation of Senate Bill No. 2849 and House Bill No. 6048 was
permit. finally passed by the Senate and the House of Representatives on February 4, 2013.

SEC. 31. Section 54 of the same Act is hereby further amended to read as follows:

SEC. 54. Oversight Provision. There is hereby created a Joint Congressional Approved: JUN 19 2013
Oversight Committee to conduct a regular review of the NHIP which shall entail a
systematic evaluation of the Programs performance, impact or accomplishments with
respect to its objectives or goals. The Oversight Committee shall be composed of five (5)
members from the Senate and five (5) members from the House of Representatives to be
appointed by the Senate President and the Speaker of the House of Representatives,
respectively. The Oversight Committee shall be jointly chaired by the Chairpersons of the

68
PART III SOCIAL LEGISLATION 3. ID.; ID.; DOCTRINE OF COMPENSABILITY; EXPLAINED. The leading doctrine on
compensability is that laid down in the case of Raro v. Employees' Compensation
G.R. No. 89222. April 7, 1993. Commission, where this court said "There is a widespread misconception that the poor
employee is still arrayed against the might and power of his rich corporate employer.
CARMEN SANTOS, petitioner, Hence, he must be given all kinds of favorable presumptions. This is fallacious. It is now
vs. EMPLOYEES' COMPENSATION COMMISSION and GOVERNMENT SERVICE the trust fund and not the employer which suffers if benefits are paid to claimants who are
INSURANCE SYSTEM (Philippine Navy), respondents. not entitled under the law. The employer joins the employee in trying to have their claims
approved. The employer is spared the problem of proving a negative proposition that the
SYLLABUS
disease was not caused by employment." The decision of this Court in Raro v. ECC (172
1. LABOR AND SOCIAL LEGISLATION; EMPLOYEES COMPENSATION; SCRA 845) in effect supersedes the cases with conclusions different from that stated
COMPENSABLE SICKNESS; DEFINED. The law defines compensable sickness as therein, such as Nemaria v. ECC, 155 SCRA 166 (1987); Ovenson v. ECC, 156 SCRA
any illness definitely accepted as occupational disease listed by the Commission, or any 21 (1987); Mercado v. ECC, 127 SCRA 664 (1984). The reason behind the present
illness caused by employment subject to proof that the risk of contracting the same is doctrine is that the New Labor Code has abolished the presumption of compensability for
increased by the working conditions. For sickness and the resulting death of an employee illness contracted by a worker during employment. To be entitled to disability benefits, the
to be compensable, the claimant must show either: (1) that it is a result of an claimant has to present evidence to prove that his ailment was the result of, or the risk of
occupational disease listed under Annex A of the Amended Rules on Employees' contracting the same were aggravated by working conditions or the nature of his work.
Compensation with the conditions set therein satisfied: or (2) if not so listed, that the risk
4. ID.; ID.; PROVISIONS THEREIN SHALL BE RESOLVED IN FAVOR OF LABOR.
of contracting the disease is increased by the working conditions.
While the presumption of compensability and theory of aggravation under the Workmen's
2. ID.; ID.; ID.; RULE WHEN AN ILLNESS IS NOT LISTED IN THE TABLE Compensation Act may have been abandoned under the new Labor Code, the liberality
OCCUPATIONAL DISEASES; CASE AT BAR. Where the claimant's illness is not of the law in general in favor of the working man still prevails. The Employees'
listed in the Table of Occupational Diseases embodied in Annex A of the Rules on Compensation Act is basically a social legislation designed to afford relief to the working
Employees' Compensation, said claimant must positively prove that the risk of contracting man and woman in our society. The Employees' Compensation Commission, as the
the disease is increased by the working conditions. Cirrhosis of the liver is not listed as agency tasked with implementing the social justice mandate guaranteed by the
an occupational disease. Nevertheless, in the very recent case of Librea v. Employees' Constitution, should be more liberal in resolving compensation claims of employees
Compensation Commission (G.R. No. 58879, 203 SCRA 545 [119]). We do not pretend especially where there is some basis in the facts for inferring a work connection to the
to be an expert in the realm of medical discipline. However, We cannot discount the fact cause of death. this interpretation gives meaning and substance to the liberal and
that the cause of death of petitioner's husband could very well be related to his previous compassionate spirit of the law as embodied in Article 4 of the New Labor Code which
working conditions. Even the Commission volunteered the theory that post necrotic states that "all doubts in the implementation and interpretation of the provisions of the
cirrhosis show that of the many types of advanced liver injury, one cause may be due to Labor Code including its implementing rules and regulations shall be resolved in favor of
toxins. As a welder, Francisco was exposed to heat, gas fumes and chemical substances labor. The policy is to extend the applicability of PD 626 to a greater number of
coming from the burning electrodes caused by welding. Generally, the metal burned is employees who can avail of the benefits under the law, which is in consonance with the
iron. In the course thereof, other compounds and oxides, such as carbon monoxide, avowed policy of the state to give maximum aid and protection to labor.
carbon dioxide, sulfur and phosphorus, may be emitted in the process of welding,
DECISION
depending on the kind of material used and extend of corrosion of the metal worked on.
These vaporized metals are inhaled by the welder in the process and significantly in this NOCON, J p:
case, Francisco had to do welding jobs within enclosed compartments. Research shows
that ingestion or inhalation of small amounts of iron over a number of years may lead to Is liver cirrhosis an illness which is compensable? This is the question put forth by
siderosis. Acute poisoning brings about circulatory collapse which may occur rapidly or petitioner, Carmen Santos, whose husband died of liver cirrhosis while still a civilian
be delayed to 48 hours with liver failure. These are industrial hazards to which Francisco employee of the Philippine Navy.
was exposed. And in the long course of time, 32 years at that, his continuous exposure to
burned electrodes and chemicals emitted therefrom would likely cause poisoning and Francisco Santos was employed as welder at the Philippine Navy and its Naval Shipyard
malfunction of the liver. as early as March 22, 1955. He spent the last 32 years of his life in the government
service, the first year as a welder helper and the last two years as shipyard assistant.
69
On December 29, 1986, Francisco was admitted at the Naval Station Hospital in Cavite Where the claimant's illness is not listed in the Table of Occupational Diseases embodied
City, on complaint that he was having epigastric pain and been vomiting blood 2 days in Annex A of the Rules of Employees' Compensation, said claimant must positively
prior to his hospitalization. His case was diagnosed as bleeding Peptic Ulcer disease prove that the risk of contracting the disease is increased by the working conditions. 2
(PUD), cholelithiasis and diabetes mellitus. On January 11, 1987, he died, the cause of
which as indicated in the Death Certificate was liver cirrhosis. Cirrhosis of the liver is not listed as an occupational disease. Nevertheless, in the very
recent case of Librea v. Employees' Compensation Commission 3 We took a liberal stand
Mrs. Carmen A. Santos filed a claim for the death benefit of her husband, Francisco, on and based on the evidence presented, pronounced the said sickness compensable. In
January 28, 1987, pursuant to Presidential Decree No. 626, as amended. However, on a the cited case, a Division Physical Education Supervisor, who likewise spent the last 32
letter dated April 30, 1987, the Government Service Insurance System (GSIS), denied years of his life in public service was adjudged entitled to the benefits of the ECC, upon
the claim on the ground that upon proofs and evidence submitted, Francisco's ailment his death due to liver cirrhosis.
cannot be considered an occupational disease as contemplated under P.D. 626, as
amended. In the said case, the ECC denied the claim of the heirs on the ground that the abundant
stress and strain experienced by the deceased employee were too farfetched to cause
Mrs. Santos then sought the assistance of the Commander of NASCOM, PN, who in turn the development of liver cirrhosis. According to the medical research made by the
wrote the GSIS requesting for a favorable action on her claim. Said letter also Commission in the case, portal cirrhosis or cirrhosis of the liver occurs chiefly in males in
substantiated petitioner's claim that her husband's duties as Senior Welder, assigned at their late middle life. Malnutrition is believed to be a predisposing factor if not the primary
the Structural Branch of the Naval Shipbuilding Facility, required him to perform delicate etiologic factor, and may account for its prevalence among alcoholics. This chronic
welding jobs inside compartments of naval vessels, like compartmentation bulk heads; disease characterized by increased connective tissue that spreads from the portal
CIC rooms; officers and PO's quarters; fuel, lube oil and fresh water tanks, where he was spaces, distorts the liver architecture thereby impairing liver functions. 4
exposed to heat and inhalation of burning chemical substances and gas fumes coming
from burning welding electrodes. In granting the petition, the Court correlated the fact that the deceased experienced
untold sufferings in the course of his inspection of barrio schools and that he became
Despite such endorsement, petitioner's motion for reconsideration was likewise denied, malnourished because of the scarcity of food in the places he travelled to. All these
upon claim of the GSIS that Francisco's job as a welder would instead cause lung factors were found to have contributed to the weakening of his health rendering him
disease rather than liver cirrhosis. susceptible to malnutrition and eventually to contracting liver cirrhosis.

On appeal to the Employees' Compensation Commission (ECC), the Commission In the case at bar, the Commission said that liver cirrhosis may be classified by a mixture
affirmed the denial of the GSIS on petitioner's claim relying on the fact that the diagnosis of etiologically and morphologically defined entities as follows:
on Francisco's illness did not specify the type of cirrhosis which caused his death.
Nevertheless, the Commission took cognizant of the fact that the deceased employee did 1) Alcoholic cirrhosis, chronic alcoholism is a major cause of alcohol cirrhosis. The
not have a previous history of alcoholism, hepatitis or a previous history of biliary amount and duration of ethanol ingestion rather than the type of alcoholic beverage of the
condition which could give a clue to the nature of cirrhosis he had. pattern of ingestion, appear to be an important determinant of liver injury. Nutritional
factors may augment the detrimental effects of chronic alcohol ingestion on the liver.
We find merit in this petition.
2) Post necrotic cirrhosis is the final pathway of many types of advanced liver injury of
The law defines compensable sickness as any illness definitely accepted as occupational both specific and unknown causes. Viral hepatitis, (hepatitis B, Non A, Non B) may be an
disease listed by the Commission, or any illness caused by employment subject to proof antecedent. Other causes are drugs, toxins and alcoholic liver disease and primary biliary
that the risk of contracting the same is increased by the working conditions. For sickness cirrhosis.
and the resulting death of an employee to be compensable, the claimant must show
either: (1) that it is a result of an occupational disease listed under Annex A of the 3) Biliary cirrhosis results from injury to or prolonged obstruction of either the intrahepatic
Amended Rules on Employees' Compensation with the conditions set therein satisfied; or or extrahepatic biliary system.
(2) if not so listed, that the risk of contracting the disease is increased by the working
conditions. 1 4) Cardiac cirrhosis prolonged severe right-sided congestive heart failure may lead to
chronic liver injury and cardiac cirrhosis.

70
5) Metabolic, hereditary, drug-related and other types. However, while the presumption of compensability and theory of aggravation under the
Workmen's Compensation Act may have been abandoned under the new Labor Code,
We do not pretend to be an expert in the realm of medical discipline. However, We the liberality of the law in general in favor of the working man still prevails. 8 The
cannot discount the fact that the cause of death of petitioner's husband could very well be Employees' Compensation Act is basically a social legislation designed to afford relief to
related to his previous working conditions. Even the Commission volunteered the theory the working man and woman in our society. The Employees' Compensation Commission,
that post necrotic cirrhosis show that of the many types of advanced liver injury, one as the agency tasked with implementing the social justice mandate guaranteed by the
cause may be due to toxins. Constitution, should be more liberal in resolving compensation claims of employees
especially where there is some basis in the facts for inferring a work connection to the
As a welder, Francisco was exposed to heat, gas fumes and chemical substances cause of death. 9
coming from the burning electrodes caused by welding. Generally, the metal burned is
iron. In the course thereof, other compounds and oxides, such as carbon monoxide, This interpretation gives meaning and substance to the liberal and compassionate spirit
carbon dioxide, sulfur and phosphorus, may be emitted in the process of welding, of the law as embodied in Article 4 of the New Labor Code which states that "all doubts in
depending on the kind of material used and extent of corrosion of the metal worked on. the implementation and interpretation of the provisions of the Labor Code including its
These vaporized metals are inhaled by the welder in the process and significantly in this implementing rules and regulations shall be resolved in favor of labor." 10
case, Francisco had to do welding jobs within enclosed compartments.
The policy is to extend the applicability of PD 626 to a greater number of employees who
Research shows that ingestion or inhalation of small amounts of iron over a number of can avail of the benefits under the law, which is in consonance with the avowed policy of
years may lead to siderosis. Acute poisoning brings about circulatory collapse which may the state to give maximum aid and protection to labor. 11
occur rapidly or be delayed to 48 hours with liver failure. 5 These are industrial hazards to
which Francisco was exposed. And in the long course of time, 32 years at that, his Premises considered, We find the petition meritorious. Liver cirrhosis, although not one
continuous exposure to burned electrodes and chemicals emitted therefrom would likely among those listed as compensable ailment, as considered in the case at bar as covered
cause poisoning and malfunction of the liver. under the Act, on the ground that the nature of the work of petitioner's husband, exposed
him to the risk of contracting the same.
The leading doctrine on compensability is that laid down in the case of Raro v.
Employees' Compensation Commission, 6 where this Court said: WHEREFORE, petition is hereby GRANTED and the decision of the Employees'
Compensation Commission is REVERSED.
"There is a widespread misconception that the poor employee is still arrayed against the
might and power of his rich corporate employer. Hence, he must be given all kinds of SO ORDERED.
favorable presumptions. This is fallacious. It is now the trust fund and not the employer
which suffers if benefits are paid to claimants who are not entitled under the law. The
employer joins the employee in trying to have their claims approved. The employer is
spared the problem of proving a negative proposition that the disease was not caused by
employment."

The decision of this Court in Raro in effect supersedes the cases with conclusions
different from that stated therein, such as Nemaria v. ECC, 155 SCRA 166 (1987);
Ovenson v. ECC, 156 SCRA 21 (1987); Mercado v. ECC, 127 SCRA 664 (1984).

The reason behind the present doctrine is that the New Labor Code has abolished the
presumption of compensability for illness contracted by a worker during employment. To
be entitled to disability benefits, the claimant has to present evidence to prove that his
ailment was the result of, or the risk of contracting the same were aggravated by working
conditions or the nature of his work. 7

71
G.R. No. L-21223 August 31, 1966 2.5% 3.5% Total
(Employee) (Employer)
PHILIPPINE BLOOMING MILLS CO., INC. (As Employer) and FRANCISCO TONG (As
Assistant General Manager) and Attorney-in-Fact of SUSUMO SONODA, SENJI
TANAKA, TAKASHIKO KUMAMOTO, HITOSHI NAKAMURA, TETSUO KODU, Susumu Sonoda 03-075177 P520.00 P175.00 P245.00 P420.00
(Employees), petitioners and appellants,
vs. SOCIAL SECURITY SYSTEM, respondent and appellee. BARRERA, J.:
Senji Tanaka 03-075178 520.00 175.00 245.00 420.00
The facts of this case are not disputed:

The Philippine Blooming Mills Co., Inc., a domestic corporation since the start of its Kahei Tanaka 03-075179 500.00 175.00 245.00 420.00
operations in 1957, has been employing Japanese technicians under a pre-arranged
contract of employment, the minimum period of which employment is 6 months and the Takashiko
maximum is 24 months. 03-075180 500.00 175.00 245.00 420.00
Kumamoto

From April 28, 1957, to October 26, 1958, the corporation had in its employ 6 Japanese
technicians. In connection with the employment of these aliens, it sent an inquiry to the Hitoshi Nakamura 03-075181 500.00 175.00 245.00 420.00
Social Security System (SSS) whether these employees are subject to compulsory
coverage under the System, which inquiry was answered by the First Deputy
Tetsuo Kudo 03-075182 500.00 175.00 245.00 420.00
Administrator of the SSS, under date of August 29, 1957, as follows:

SIR:

With reference to your letter of August 24, 1957, hereunder are our answers to your Total P1,050.00 P1,470.00 P2,520.00
queries:

Aliens employed in the Philippines: On October 7, 1958, the Assistant General Manager of the corporation, on its behalf and
as attorney-in-fact of the Japanese technicians, filed a claim with the SSS for the refund
Aliens who are employed in the Philippines shall also be compulsorily covered. But aliens of the premiums paid to the System, on the ground of termination of the members'
who are employed temporarily shall, upon their departure from the Philippines, be entitled employment. As this claim was denied, they filed a petition with the Social Security
to a rebate of a proportionate amount of their contributions; their employers shall be Commission for the return or refund of the premiums, in the total sum of P2,520.00, paid
entitled to the same proportionate rebate of their contributions in behalf of said aliens by the employer corporation and the 6 Japanese employees, plus attorneys' fees. This
employed by them. (Rule I, Sec. 3[d], Rules and Regulations.) claim was controverted by the SSS, alleging that Rule IX of the Rules and Regulations of
the System, as amended, requires membership in the System for at least 2 years before
Starting September, 1957, and until the aforementioned Japanese employees left the a separated or resigned employee may be allowed a return of his personal contributions.
Philippines on October 26, 1958, the corresponding premium contributions of the Under the same rule, the employer is not also entitled to a refund of the premium
employer and the employees on the latter's memberships in the SSS were as follows: contributions it had paid.

After hearing, the Commission denied the petition for the reason that, although under the
original provisions of Section 3 (d) of Rule I of the Rules and Regulations of the SSS,
alien-employees (who are employed temporarily) and their employers are entitled to a
rebate of a proportionate amount of their respective contributions upon the employees'
SS Monthly Amount of Premiums departure from the Philippines, said rule was amended by eliminating that portion
Name
Number Salary Contributed granting a return of the premium contributions. This amendment became effective on
January 14, 1958, or before the employment of the subject aliens terminated. The rights

72
of covered employees who are separated from employment, under the present Rules, are (d) Aliens who are employed in the Philippines shall also be compulsorily covered. But
covered by Rule IX which allows a return of the premiums only if they have been aliens who ate employed temporarily and whose visas are only for fixed terms shall, upon
members for at least 2 years. their departure from the Philippines, be entitled to a rebate of a proportionate amount of
their contributions; their employers shall be entitled to the same proportionate rebate of
It is this resolution of the Commission that is the subject of the present appeal, appellants their contributions in behalf of said aliens employed by them.
contending that the amendment of the Rules and Regulations of the SSS, insofar as it
eliminates the provision on the return of premium contributions, originally embodied in XI
Section 3(d) of Rule I, constituted an impairment of obligations of contract. It is claimed,
in effect, that when appellants-employees became members in September, 1957, and AMENDMENTS AND EFFECTIVITY
paid the corresponding premiums to the System, it 1 is subject to the condition that upon
their departure from the Philippines, these employees, as well as their employer, are 1. The Commission may, by appropriate resolution, amend, repeal, revise and/or modify
entitled to a rebate of a proportionate amount of their respective contributions. all or any part or parts of these Rules and Regulations, as well as adopt any additional
rule or rules, whenever the need therefor should arise. Any amendment and/or additional
The contention cannot be sustained. Appellants' argument is based on the theory that the rule, however, shall not take effect until and after the corresponding resolution of the
employees' membership in the System established contractual relationship between the Commission has been submitted to and approved by the President of the Philippines.
members and the System, in the sense contemplated and protected by the constitutional
prohibition against its impairment by law. But, membership in this institution is not the 2. These Rules and Regulations, any amendment thereof, or any additional rule or rules
result of a bilateral, consensual agreement where the rights and obligations of the parties subsequently adopted by the Commission, shall take effect on the date they are
are defined by and subject to their will. Republic Act 1161 requires compulsory coverage approved by the President of the Philippines.
of employers and employees under the System. It is actually a legal imposition, on said
Rule I Section 3 (d) and Rule IX, however, were later amended, which amendment was
employers and employees, designed to provide social security to the workingmen.
approved by the President on January 14, 1958, to read as follows:
Membership in the SSS is, therefore, in compliance with a lawful exercise of the police
power of the State, to which the principle of non-impairment of the obligation of contract (d) Aliens who are employed in the Philippines shall also be compulsorily covered (Sec.
is not a proper defense. 3, Rule I)
As pointed out by the Solicitor General, the issue that should be determined in this case EFFECT OF SEPARATION FROM EMPLOYMENT
is whether, in implementing the SSS law and denying appellants' claim for refund of their
premium contributions, due process was observed. When an employee under compulsory coverage is separated from employment, his
employer's contribution on his account shall cease at the end of the month of separation;
The Rules and Regulations promulgated by the SSS, pursuant to the rule-making but such employee may continue his membership in the System and receive the benefits
authority granted in Section 4(a) of Republic Act 1161, was duly approved by the of the Act, as amended, in accordance with these rules. If he continues paying the 6 per
President on July 18, 1957, and published in the Official Gazette on September 15, cent monthly premiums representing his as well as the employer's contribution, based on
1957.2 These rules and regulations, among others, provide: his monthly salary at the time of his separation; but if at the time of his separation the
covered employee has been a member of the System for at least two years, he shall
I
have the option to choose any one of the following adjustments of his membership in the
DETERMINATION OF COMPULSORY COVERAGE System:

3. The determination of whether an employer or an employee shall be compulsorily 1. A refund of an amount equivalent to his total contributions of two and one-half per
covered shall be vested in the Commission. The following general principles shall guide centum plus interests at the rate of three per centum per annum, compounded annually;
the Commission in deciding each case:
xxx xxx x x x (Rule IX)
xxx xxx xxx
These amended Rules were published in the November 10, 1958 issue of the Official
Gazette.3

73
It is not here disputed that the Rules and Regulations of the SSS, having been G.R. No. 119891 August 21, 1995
promulgated in implementation of a law, have the force and effect of a statute;" that the
amendment thereto, although approved by the President on January 14, 1958, was BEN STA. RITA, petitioner,
published in the Official Gazette in November, 1958, or after the employment of the vs. THE COURT OF APPEALS, THE PEOPLE OF THE PHILIPPINES and THE SOCIAL
Japanese technicians had ceased and the corresponding claim for the refund of the SECURITY SYSTEM, respondents. FELICIANO, J.:
premium contributions was filed with the System. The question pertinent to this case now
is whether or not appellants are bound by the amended Rules requiring membership for This is a Petition for Review an Certiorari of the Decision of the Court of Appeals ("CA")
two years before refund of the premium contributions may be allowed.1wph1.t in CA-G.R. SP. No. 34384 which ordered the Regional Trial Court ("RTC"), Branch 92,
Quezon City, to reinstate Criminal Case No. Q-92-35426 filed against petitioner Ben Sta.
These rules and regulations were promulgated to provide guidelines to be observed in Rita.
the enforcement of the law. As a matter of fact, Section 3 of Rule I is merely an
enumeration of the "general principles to (shall) guide the Commission" in the Petitioner Sta. Rita was charged in the RTC with violating Section 2(a) in relation to
determination of the extent or scope of the compulsory coverage of the law. One of these Sections 22(d) and 28(e) of Republic Act No. 1161, as amended, otherwise known as the
guiding principles is paragraph (d) relied upon by appellants, on the coverage of Social Security Law. The Information alleged that petitioner, "as President/General
temporarily-employed aliens. It is not here pretended, that the amendment of this Section Manager of B. Sta. Rita Co., Inc. a compulsorily (sic) covered employer under the Social
3(d) of Rule I, as to eliminate the provision granting to these aliens the right to a refund of Security Law, as amended, did then and there willfully and unlawfully fail, neglect and
part of their premium contributions upon their departure from the Philippines, is not in refuse and still fails, neglects and refuses to remit to the Social Security System
implementation of the law or beyond the authority of the Commission to do. contributions for SSS, Medicare and Employees Compensation for its covered
employees." 1
It may be argued, however, that while the amendment to the Rules may have been
lawfully made by the Commission and duly approved by the President on January 14, Petitioner Sta. Rita moved to dismiss said criminal case on the following grounds:
1958, such amendment was only published in the November 1958 issue of the Official
1. That the facts charged do not constitute an offense, and;
Gazette, and after appellants' employment had already ceased. Suffice it to say, in this
regard, that under Article 2 of the Civil Code,5 the date of publication of laws in the 2. That the RTC has no jurisdiction over this case. 2
Official Gazette is material for the purpose of determining their effectivity, only if the
statutes themselves do not so provide. The RTC sustained petitioner's motion and dismissed the criminal case filed against him.
It ruled that the Memorandum of Agreement entered into between the Department of
In the present case, the original Rules and Regulations of the SSS specifically provide Labor and Employment ("DOLE") and the Social Security System ("SSS") extending the
that any amendment thereto subsequently adopted by the Commission, shall take effect coverage of Social Security, Medical Care and Employment Compensation laws to
on the date of its approval by the President. Consequently, the delayed publication of the Filipino seafarers on board foreign vessels was null and void as it was entered into by the
amended rules in the Official Gazette did not affect the date of their effectivity, which is Administrator of the SSS without the sanction of the Commission and approval of the
January 14, 1958, when they were approved by the President. It follows that when the President of the Philippines, in contravention of Section 4 (a) of R.A. No. 1161, as
Japanese technicians were separated from employment in October, 1958, the rule amended. 3
governing refund of premiums is Rule IX of the amended Rules and Regulations, which
requires membership for 2 years before such refund of premiums may be allowed. The People, through the Solicitor General, filed in the Court of Appeals a petition for
certiorari, prohibition and mandamus assailing the order of dismissal issued by the trial
Wherefore, finding no error in the resolution of the Commission appealed from, the same court. Respondent appellate court granted the petition and ordered the Presiding Judge
is hereby affirmed, with costs against the appellants. So ordered. of the trial court to reinstate the criminal case against petitioner. A motion for
reconsideration thereof was denied by the CA in a Resolution dated 17 April 1995.

Thereafter, petitioner filed in this Court a motion for extension of thirty (30) days from the
expiration of reglementary period within which to file a petition for review on certiorari.
The Court granted the motion and gave petitioner until 9 June 1995 to file the petition
with warning that no further extension will be given. Despite the warning, the petition was

74
filed only on 13 June 1995 or four (4) days after the due date. Moreover, it failed to petitioner's failure to remit his contributions to the SSS. The CA found that there is prima
comply with requirement no. 2 of Circular No. 1-88, as amended and Circular No. 19-91 facie evidence to support the allegations in the Information and to warrant the
of the Court as it did not contain an affidavit of service of copies thereof to respondents. It prosecution of petitioner.
was only on 14 July 1995, through an ex-parte manifestation, that the affidavit of service
was belatedly submitted to this Court. Respondent appellate court correctly upheld the validity of the Memorandum of
Agreement entered into between the DOLE and the SSS. Upon the one hand, contrary to
In the Petition for Review, petitioner Sta. Rita contends that the Filipino seafarers the trial court's finding, the Memorandum of Agreement was approved by the Social
recruited by B. Sta. Rita Co. and deployed on board foreign vessels outside the Security Commission per the Commission's Resolution No. 437, dated 14 July 1988. 6
Philippines are exempt from the coverage of R.A. No. 1161 under Section 8 (j) (5) Upon the other hand, the Memorandum of Agreement is not a rule or regulation enacted
thereof: by the Commission in the exercise of the latter's quasi-legislative authority Under Section
4 (a) of R.A. No. 1161, as amended, which reads as follows:
Terms Defined
Sec. 4. Powers and Duties of the Commission. For the attainment of its main
EMPLOYMENT Any service performed by an employee for his employer, except objectives as set forth in section two hereof, the Commission shall have the following
powers and duties:
xxx xxx xxx
(a) To adopt, amend and rescind, subject to the approval of the President, such rules and
(5) Service performed on or in connection with an alien vessel by an employee if he is regulations as may be necessary to carry out the provisions and purposes of this Act.
employed when such vessel is outside the Philippines.
xxx xxx xxx
xxx xxx xxx
What the Memorandum of Agreement did was to record the understanding between the
According to petitioner, the Memorandum of Agreement entered into by the DOLE and SSS on the one hand and the DOLE on the other hand that the latter would include
the SSS is null and void as it has the effect of amending the aforequoted provision of among the provisions of the Standard Contract of Employment required in case of
R.A. No. 1161 by expanding its coverage. This allegedly cannot be done as only overseas employment, a stipulation providing for coverage of the Filipino seafarer by the
Congress may validly amend legislative enactments. SSS. The Memorandum of Agreement is not an implementing rule or regulation of the
Social Security Commission which, under Section 4 (a) abovequoted, is subject to the
Petitioner prays that the Court set aside the decision of the Court of Appeals ordering the
approval of the President. Indeed, as a matter of strict law, the participation of the SSS in
reinstatement of Criminal Case No. Q-92-35426 and that the Order of the RTC
the establishment by the DOLE of a uniform stipulation in the Standard Contract of
dismissing the same be upheld.
Employment for Filipino seafarers was not necessary; the Memorandum of Agreement
It is well-settled in our jurisdiction that the right to appeal is a statutory right and a party related simply to the administrative convenience of the two (2) agencies of government.
who seeks to avail of the right must comply with the rules. 4 These rules, particularly the
Moreover, the Court finds no merit in petitioner's contention that Section 8 (j) (5) of R.A.
statutory requirement for perfecting an appeal within the reglementary period laid down
No. 1161, as amended, absolutely exempts Filipino seafarers on board foreign vessels
by law, must be strictly followed as they are considered indispensable interdictions
from the coverage of the SSS statute. Section 8 (j) (5) simply defines the term
against needless delays and for orderly discharge of judicial business. 5 Petitioner's
"employment" and does not in any way relate to the scope of coverage of the Social
failure to seasonably file the Petition and its failure to comply with the aforequoted
Security System. That coverage is, upon the other hand, set out in Section 9 of R.A. No.
Circulars of the Court necessitate the denial of the Petition.
1161 as amended, which defines the scope of SSS coverage in the following terms:
Besides, even if the Petition had been filed on time and had complied with the Circulars,
Sec. 9 Compulsory Coverage. (a) Coverage in the SSS shall be compulsory upon all
it would still have to be denied as petitioner has failed to show that respondent appellate
employees not over sixty years of age and their employers; Provided, . . . .
court committed any reversible error in rendering the assailed decision.
(b) Fillpinos recruited in the Philippines by foreign employers for employment abroad may
The Court agrees with the CA that the Information filed against petitioner was sufficient
be covered by the SSS on a voluntary basis. (As amended by Sec. 2, P.D. No. 177, S-
as it clearly stated the designation of the offense by the statute, i.e. violation of the Social
1973 and Sec. 6, P.D. No. 735-S-1975) (Emphasis supplied)
Security Law, and the acts or omissions complained of as constituting the offense, i.e.,
75
It will be seen that the Memorandum of Agreement is in line with paragraph 9 (b) of the It is, finally, worthy of special note that by extending the benefits of the Social Security
Social Security statute quoted above. The Memorandum of Agreement provides, inter Act to Filipino seafarers on board foreign vessels, the individual employment agreements
alia, that: entered into with the stipulation for such coverage contemplated in the DOLE-SSS
Memorandum of Agreement, merely give effect to the constitutional mandate to the State
xxx xxx xxx to afford protection to labor whether "local or overseas." 9 Nullification of the SSS
stipulation in those individual employment contracts, through nullification of the
NOW THEREFORE, for and in consideration of the foregoing premises, the parties Memorandum of Agreement, constituted serious reversible error on the part of the trial
hereto agree and stipulate that one of the conditions that will be imposed by the court. That petitioner should seek to deprive his countrymen of social security protection
Department of Labor and Employment is the contract for overseas employment is the after his foreign principal had agreed to such protection, is cause for dismay and is to be
registration for coverage of seafarers with the Social Security System, through the deplored.
manning agencies as the authorized representatives of the foreign employers in
conformity with Section 9, paragraph (b) of the Social Security Law (R.A. No. 1161, as The Court of Appeals properly held that the reinstatement of the criminal case against
amended), subject to the following terms and conditions: petitioner did not violate his right against double jeopardy since the dismissal of the
information by the trial court had been effected at his own instance. 10 There are only two
xxx xxx xxx 7 (2) instances where double jeopardy will attach notwithstanding the fact that the case
was dismissed with the express consent of the accused. The first is where the ground for
(Emphasis supplied)
dismissal is insufficiency of evidence for the prosecution; and the second is where the
Thus, the Standard Contract of Employment to be entered into between foreign criminal proceedings have been unreasonably prolonged in violation of the accused's
shipowners and Filipino seafarers is the instrument by which the former express their right to speedy trial. 11 Neither situation exists in the case at bar. There is no legal
assent to the inclusion of the latter in the coverage of the Social Security Act. In other impediment to the reinstatement of Criminal Case No. Q-92-35426 against petitioner Sta.
words, the extension of the coverage of the Social Security System to Filipino seafarers Rita.
arises by virtue of the assent given in the contract of employment signed by employer
WHEREFORE, the Court Resolved to DENY the Petition for having been filed late, for
and seafarer; that same contract binds petitioner Sta. Rita or B. Sta. Rita Company, who
failure to comply with applicable Court Circulars and for lack of merit. The assailed
is solidarily liable with the foreign shipowners/employers.
Decision of the Court of Appeals is hereby AFFIRMED. Cost against petitioner.
It may be noted that foreign shipowners and manning agencies had generally expressed
their conformity to the inclusion of Filipino seafarers within the coverage of the Social
Security Act even prior to the signing of the DOLE-SSS Memorandum of Agreement.
Thus, the Whereas clauses of the Memorandum of Agreement state that:

WHEREAS, in the 74th Maritime Session (ILO) held from September 24 to October 9,
1987 in Geneva, it was agreed that as an internationally accepted principle, seafarers
shall have the right to social security protection;

xxx xxx xxx

WHEREAS, after a series of consultations with seafaring unions and manning agencies,
it was the consensus that Philippine social security coverage be extended to seafarers
under the employ of vessels flying foreign flags;

xxx xxx xxx 8

(Emphasis supplied)

76
G.R. No. L-21448 August 30, 1967 coverage: Provided, That if an employee subject to compulsory coverage should die or
become sick or disabled without the System having previously received a report about
POBLETE CONSTRUCTION CO., petitioner, him from his employer, the said employer shall pay to the employee or his legal heirs
vs. JUDITH ASIAIN, SOCIAL SECURITY COMMISSION and BENITO MACRHON, in his damages equivalent to the benefits to which said employee would have been entitled had
capacity as Sheriff of Rizal, respondents. MAKALINTAL, J.: his name been reported on time by the employer to the System.

Miguel Asiain was an employee of the Poblete Construction Company from 1956 until his It appears that although the deceased Miguel Asiain had been employed in the Poblete
death on November 22, 1959, with a monthly salary of P300. Upon his death his widow, Construction Company since 1956 and had accomplished SSS Form E-1 (Employees'
Judith Asiain, for herself and her minor children, filed a petition before the Social Security Date Record) and transmitted the same to the said company's Manila Office, it was never
Commission against the company and its manager, Domingo Poblete (Case No. 78), to filed with the Social Security System for the reason, according to the company, that he
recover the following sum: (1) P3,600.00 equivalent to one year's salary of the deceased; refused to have his share of the corresponding monthly contributions deducted from his
(2) P600.00 representing his unpaid salary for two months; (3) P288.00 "representing the salary. Upon these facts the company maintains that the deceased was not a member of
cash received by respondents from their laborers as contribution to the family of the the System when he died and hence the adjudication of the claim for damages under
deceased;" and (4) P2,000.00 by way of attorney's fees. Section 24, supra, does not pertain to the Commission but to the courts of justice.

The respondents below moved to dismiss the petition on the grounds that the Social We find the argument untenable. There is no question that the deceased Miguel Asiain
Security Commission had no jurisdiction over the subject-matter and that the petitioner was subject to compulsory coverage in the Social Security System.1 It was the duty of the
Judith Asiain had no capacity to sue. The Commission denied the motion to dismiss in its employer to "report immediately to the System" his name, age, civil status, occupation,
order of February 25, 1960 and ordered the respondents to file their answer. When no salary and dependents. Compliance with this duty did not depend upon the employee's
answer was forthcoming, the respondents were declared in default in an order dated willingness to give his share of the contribution. Section 24 is mandatory, to such an
March 9, 1960, and the petitioners were allowed to present their evidence. extent that if the employee should die or become sick or disabled without the report
having been made by the employer, the latter is liable for an amount equivalent to the
In its resolution of September 15, 1960 the Commission declared itself without jurisdiction benefits to which the employee would have been entitled had such report been made. It
to entertain the claims in the petition except the one for the sum of P3,600, which it is true that the provision uses the word "damages" in referring to the amount that may be
awarded on the basis of the evidence adduced at the hearing and pursuant to Section 24 claimed. But this fact alone does not mean that the Social Security Commission lacks
of Republic Act No. 1161, as amended. A subsequent motion for reconsideration filed by jurisdiction to award the same. Section 5(a) of the Social Security Act provides that "the
the respondents was denied, and they elevated the case for review by the Court of filing, determination and settlement of claims shall be governed by the rules and
Appeals, which upon proper application issued a writ of preliminary injunction to stop all regulations promulgated by the Commission;" and the rules and regulations thus
further proceedings below, including execution of the award. promulgated state that "the effectivity of membership in the System, as well as the final
determination and settlement of claims, shall be vested in the Commission." The term
The case was afterwards certified to the Court for the reason that when the respondents
"claims" is broad enough to include a claim for "damages" under Section 24. Otherwise
below were declared in default they lost their standing before the Commission, and not
an employer could nullify the jurisdiction of the Commission by the simple expedient of
having regained the same by a motion to set aside or petition for relief, they had no right
not making a report as required by said Section. The collection of the employee's share is
to appeal from the default judgment; and that in any event no questions of fact are
a duty imposed by law, and his unwillingness to have it deducted from his salary does not
involved and hence, if at all appealable, the appeal should be directly to this Court.
excuse the employer's failure to make the report aforesaid. It is precisely in this situation
The procedural issues, we believe, need not concern us. The main point raised here by that the employer is liable, and there is no question as to the amount of such liability in
the Poblete Construction Company, which it raised also in its motion to dismiss before this case.
the Commission, is that the said body had no jurisdiction to entertain the claim of P3,600,
The decision of the Social Security Commission is affirmed, and the writ of preliminary
which should have been presented before the ordinary courts. This claim was filed under
injunction is dissolved, with costs against herein petitioner.
Section 24 of the Social Security Act (R.A. 1191 as amended), which provides:

Sec. 24. Employment records and reports.(a) Each employer shall report immediately
to the System the names, ages, civil status, occupations, salaries and dependents of all
his employees who are in his employ and who are or may later be subject to compulsory

77
G.R. No. L-26298 September 28, 1984 After both parties have submitted their respective memoranda, the Commission issued
on January 14, 1960, Resolution No. 91, 2 the dispositive portion of which reads as
CMS ESTATE, INC., petitioner, follows:
vs. SOCIAL SECURITY SYSTEM and SOCIAL SECURITY COMMISSION, respondents.
CUEVAS, J.: Premises considered, the instant petition is hereby denied and petitioner is hereby
adjudged to be subject to compulsory coverage as of Sept. 1, 1957 and the Social
This appeal by the CMS Estate, Inc. from the decision rendered by the Social Security Security System is hereby directed to effect such coverage of petitioner's employees in
Commission in its Case No. 12, entitled "CMS Estate, Inc. vs. Social Security System, its logging and real estate business conformably to the provisions of Rep. Act No. 1161,
declaring CMS subject to compulsory coverage as of September 1, 1957 and "directing as amended.
the Social Security System to effect such coverage of the petitioner's employees in its
logging and real estate business conformably to the provision of Republic Act No. 1161, SO ORDERED.
as amended was certified to Us by the defunct Court of Appeals 1 for further disposition
considering that purely questions of law are involved. Petitioner's motion for reconsideration was denied in Resolution No. 609 of the
Commission.
Petitioner is a domestic corporation organized primarily for the purpose of engaging in the
real estate business. On December 1, 1952, it started doing business with only six (6) These two (2) resolutions are now the subject of petitioner's appeal. Petitioner submits
employees. It's Articles of Incorporation was amended on June 4, 1956 in order to that respondent Commission erred in holding
engage in the logging business. The Securities and Exchange Commission issued the
certificate of filing of said amended articles on June 18, 1956. Petitioner likewise obtained (1) that the contributions required of employers and employees under our Social Security
an ordinary license from the Bureau of Forestry to operate a forest concession of 13,000 Act of 1954 are not in the nature of excise taxes because the said Act was allegedly
hectares situated in the municipality of Baganga, Province of Davao. enacted by Congress in the exercise of the police power of the State, not of its taxing
power;
On January 28, 1957, petitioner entered into a contract of management with one Eufracio
D. Rojas for the operation and exploitation of the forest concession The logging operation (2) that no contractee independent contractor relationship existed between petitioner
actually started on April 1, 1957 with four monthly salaried employees. As of September and Eufracio D. Rojas during the time that he was operating its forest concession at
1, 1957, petitioner had 89 employees and laborers in the logging operation. On Baganga, Davao;
December 26, 1957, petitioner revoked its contract of management with Mr. Rojas.
(3) that a corporation which has been in operation for more than two years in one
On August 1, 1958, petitioner became a member of the Social Security System with business is immediately covered with respect to any new and independent business it
respect to its real estate business. On September 6, 1958, petitioner remitted to the may subsequently engage in;
System the sum of P203.13 representing the initial premium on the monthly salaries of
(4) that a corporation should be treated as a single employing unit for purposes of
the employees in its logging business. However, on October 9, 1958, petitioner
coverage under the Social Security Act, irrespective of its separate, unrelated and
demanded the refund of the said amount, claiming that it is not yet subject to compulsory
independent business established and operated at different places and on different
coverage with respect to its logging business. The request was denied by respondent
dates; and
System on the ground that the logging business was a mere expansion of petitioner's
activities and for purposes of the Social Security Act, petitioner should be considered a (5) that Section 9 of the Social Security Act on the question of compulsory membership
member of the System since December 1, 1952 when it commenced its real estate and employers should be given a liberal interpretation.
business.
Respondent, on the other hand, advances the following propositions, inter alia:
On November 10, 1958, petitioner filed a petition with the Social Security Commission
praying for the determination of the effectivity date of the compulsory coverage of (1) that the Social Security Act speaks of compulsory coverage of employers and not of
petitioner's logging business. business;

78
(2) that once an employer is initially covered under the Social Security Act, any other Because of the broad social purpose of the Social Security Act, all doubts in construing
business undertaken or established by the same employer is likewise subject in spite of the Act should favor coverage rather than exemption.
the fact that the latter has not been in operation for at least two years;
Prior to its amendment, Sec. 9 of the Act provides that before an employer could be
(3) that petitioner's logging business while actually of a different, distinct, separate and compelled to become a member of the System, he must have been in operation for at
independent nature from its real estate business should be considered as an operation least two years and has at the time of admission at least six employees. It should be
under the same management; pointed out that it is the employer, either natural, or judicial person, who is subject to
compulsory coverage and not the business. If the intention of the legislature was to
(4) that the amendment of petitioner's articles of incorporation, so as to enable it to consider every venture of the employer as the basis of a separate coverage, an express
engage in the logging business did not alter the juridical personality of petitioner; and provision to that effect could have been made. Unfortunately, however, none of that sort
appeared provided for in the said law.
(5) the petitioner's logging operation is a mere expansion of its business activities.
Should each business venture of the employer be considered as the basis of the
The Social Security Law was enacted pursuant to the policy of the government "to coverage, an employer with more than one line of business but with less than six
develop, establish gradually and perfect a social security system which shall be suitable employees in each, would never be covered although he has in his employ a total of
to the needs of the people throughout the Philippines, and shall provide protection more than six employees which is sufficient to bring him within the ambit of compulsory
against the hazards of disability, sickness, old age and death" (Sec. 2, RA 1161, as coverage. This would frustrate rather than foster the policy of the Act. The legislative
amended). It is thus clear that said enactment implements the general welfare mandate intent must be respected. In the absence of an express provision for a separate coverage
of the Constitution and constitutes a legitimate exercise of the police power of the State. for each kind of business, the reasonable interpretation is that once an employer is
As held in the case of Philippine Blooming Mills Co., Inc., et al. vs. SSS 3 covered in a particular kind of business, he should be automatically covered with respect
to any new name. Any interpretation which would defeat rather than promote the ends for
Membership in the SSS is not a result of bilateral, concensual agreement where the
which the Social Security Act was enacted should be eschewed. 5
rights and obligations of the parties are defined by and subject to their will, RA 1161
requires compulsory coverage of employees and employers under the System. It is Petitioner contends that the Commission cannot indiscriminately combine for purposes of
actually a legal imposition on said employers and employees, designed to provide social coverage two distinct and separate businesses when one has not yet been in operation
security to the workingmen. Membership in the SSS is therefore, in compliance with the for more than two years thus rendering nugatory the period for more than two years thus
lawful exercise of the police power of the State, to which the principle of non-impairment rendering nugatory the period of stabilization fixed by the Act. This contention lacks merit
of the obligation of contract is not a proper defense. since the amendatory law, RA 2658, which was approved on June 18, 1960, eliminated
the two-year stabilization period as employers now become automatically covered
xxx xxx xxx
immediately upon the start of the business.
The taxing power of the State is exercised for the purpose of raising revenues. However,
Section 10 (formerly Sec. 9) of RA 1161, as amended by RA 2658 now provides:
under our Social Security Law, the emphasis is more on the promotion of the general
welfare. The Act is not part of out Internal Revenue Code nor are the contributions and Sec. 10. Effective date of coverage. Compulsory coverage of the employer shall take
premiums therein dealt with and provided for, collectible by the Bureau of Internal effect on the first day of his operation, and that of the employee on the date of his
Revenue. The funds contributed to the System belong to the members who will receive employment. (Emphasis supplied)
benefits, as a matter of right, whenever the hazards provided by the law occur.
As We have previously mentioned, it is the intention of the law to cover as many persons
All that is required of appellant is to make monthly contributions to the System for as possible so as to promote the constitutional objective of social justice. It is axiomatic
covered employees in its employ. These contributions, contrary to appellant's contention, that a later law prevails over a prior statute and moreover the legislative in tent must be
are not 'in the nature of taxes on employment.' Together with the contributions imposed given effect. 6
upon employees and the Government, they are intended for the protection of said
employees against the hazards of disability, sickness, old age and death in line with the Petitioner further submits that Eufrancio Rojas is an independent contractor who engages
constitutional mandate to promote social justice to insure the well-being and economic in an independent business of his own consisting of the operation of the timber
security of all the people. 4 concession of the former. Rojas was appointed as operations manager of the logging

79
consession; 7 he has no power to appoint or hire employees; as the term implies, he only G.R. No. L-39949 October 31, 1984
manages the employees and it is petitioner who furnishes him the necessary equipment
for use in the logging business; and he is not free from the control and direction of his MANUEL H. SANTIAGO, ET AL., petitioners,
employer in matter connected with the performance of his work. These factors clearly vs. COURT OF APPEALS and SOCIAL SECURITY SYSTEM, respondents. MELENCIO-
indicate that Rojas is not an independent contractor but merely an employee of petitioner; HERRERA, J.:
and should be entitled to the compulsory coverage of the Act.
A Petition to review the Decision of the then Court of Appeals (in CA-G.R. No. SP-
The records indubitably show that petitioner started its real estate business on December 01897-R), which affirmed the Resolution of the Social Security Commission (in Case No.
1, 1952 while its logging operation was actually commenced on April 1, 1957. Applying 1073-SSC), denying the petition of Manuel H. Santiago, et als., to credit in their favor the
the provision of Sec. 10 of the Act, petitioner is subject to compulsory coverage as of salary deductions, by way of premium contributions and salary loan installment
December 1, 1952 with respect to the real estate business and as of April 1, 1957 with payments, made by their former employer, I-Feng Enamelling Company (Phil.) Inc., (the
respect to its logging operation. Employer, for brevity), but which the latter failed to remit to the Social Security System
(the System, for short).
WHEREFORE, premises considered, the appeal is hereby DISMISSED. With costs
against petitioner. There is no dispute as to the facts, as found by the then Court of Appeals.

SO ORDERED. There is no dispute that petitioners were employees of I-Feng Enamelling Company
(Phil.) Inc. for several years, some from 1950 up to the time the company closed its
business on May 1, 1965, and that since the enactment of the Social Security Act,
Republic Act No. 1161, as amended, said employees have been paying, through salary
deductions, their personal contributions to the System There is likewise no dispute that
appellants, during their employment, also enjoyed salary loan benefits, their installment
payments thereto were likewise deducted and collected by their employer, and that said
employer failed to remit to the System not only the installment payments to their salary
loans in the amount of P7,940.13 but also the back premiums in the amount of
P137,787.90 as of July 1966, excluding of course the penalties therefor in the amount of
P63,734.97 as of August 9,1966 (Exhibit "B" ). 1

Petitioners sought to have the amounts credited in their favor but the Commission denied
their petition, stating:

WHEREFORE, in the light of the foregoing discussion, the stand taken by petitioners in
its case is untenable, hence their petition is hereby dismissed. If it is the claim of
petitioner that there are deductions made on their salaries which were not remitted to the
System then petitioners should have proceeded against the I-Feng Enamelling Company
(Phil.) Inc., their alleged employer.

The System is likewise directed to study and determine what action to take under the
premises in order to protect the interest of the System.

Petitioners appealed to the then Court of Appeals, which, in its Decision promulgated on
December 23, 1974, upheld the findings of the Commission and affirmed the challenged
Resolution. Petitioners are now before us assailing the foregoing Resolution and
Decision on the following grounds:

80
I said to exist between the employer and the System. But petitioners also rely on the
"Current Employer's Certification/Agreement" (Exhibits "N-1 ", "U-1 ", "V1" and "WI ")
The respondents erred in holding that there exists no contract Of agency between the providing that the employer is empowered:
Social Security System and I-Feng Enamelling
1. To deduct monthly from the salaries of said employee the installments due on the loan
Company (Phil.) Inc. in the collection of the salary loan installment payments from the that may be granted by virtue of this application and to remit the same to the System not
petitioners and, therefore, the said unremitted salary loan installment payments may not later than the 20th day of the month following the end of each calendar quarter, the
be credited to petitioners. employer being entitled to deduct from the total quarterly collections P.07 for every
P10.00 thereof as his collection fee.
II
The foregoing reiterates the proviso in SSS Circular No. 52, reading:
The Respondents likewise erred in holding that the collections of premium contributions
by the I-Feng Enamelling Company (Phil.) Inc. is not a collection by the System and, V. Service and Collection Fee. -The System shall charge a service fee of P3.50 for every
therefore, such unremitted premium contributions collected thru salary deductions from approved application deductible in advance from the proceeds of the loan.
the salaries of the petitioners by the I-Feng Enamelling Company (Phil.) Inc. and which
the latter failed to remit to the System may not be credited to the petitioners. However, the employer shall be entitled to deduct from the total quarterly collections that
he remits to the System a collection fee of seven centavos (P.07) for every ten pesos
The sole issue for consideration is whether or not the premium contributions and (P10.00) or fraction thereof.
payments of salary loans by petitioners, which were deducted and collected from their
salaries by their Employer, but hot remitted to the System, should be credited in their The entitlement to the collection fee by the employer neither makes the latter the agent of
favor by the System. the System. The fee was devised to encourage employers to be prompt in the remittance
of their collections to the System. As held by respondent Appellate Court:
Petitioners argue that they are entitled to full credit for the unremitted premium
contributions and salary loan installment payments deducted from their wages because, To us, this negligible collection fee is only an incentive granted to all employers
by law, a contract of agency exists between the SSS and the Employer in the collection throughout the country covered by the Social Security Act for their efforts in helping the
of the salary loan installment payments, and therefore, as such agent, payment to the System collect the necessary contributions and payments made to the latter by the
Employer is payment to the principal, which is the System. innumerable individual members. This incentive is for administrative policy, efficiency and
expediency with the end in view that the purposes for which the System has been
On the matter of payments of salary loans, SSS Circular No. 52 provides: created by law shall be effectively carried out. ... .

(2) in case the borrower is in active employment, payment shall be made thru this To rule otherwise would be to open the door for unscrupulous employers to circumvent
employer by means of salary deductions. For this purpose, he shall expressly authorize the law by not remitting their collections of salary loans installment payments from
in the application form his employer and the subsequent employers to whom he may later employees since, anyway, the System would credit them with what they had paid to the
on transfer to deduct from his salaries the installments due. The employer, in turn shall Employer even though the latter fails to remit them to the System.
remit to the System these installments in accordance with the procedure laid down in
heading VII hereof. There is a difference, however, in respect of premium contributions, by reason of the
explicit provision of Section 22(b) of the Social Security Act, reading:
lt should be noted from the abovequoted rule that it is the borrower who expressly
authorizes his employer and subsequent employers to deduct from his salary the (b) The contributions payable under this Act in cases where an employer refuses or
installments due on his salary loan. The employer then remits the installments due to the neglects to pay the same shall be collected by the System in the same manner as taxes
System in accordance with rules that the System has laid down. The employer, in so are made collectible under the National Internal Revenue Code, as amended, Failure or
deducting the installment payments from the borrower, does so upon the latter's refusal of the employer to pay or remit the contributions herein prescribed shall not
authorization. The employer is merely the conduit for remitting the premiums for reasons prejudice the right of the covered employee to the benefits of the coverage.
of administrative convenience and expediency iii order that SSS members may be served
efficiently and expeditiously. No contract of agency, in the legal sense, therefore may be Clearly, if the employer neglects to pay the premium contributions, the System may
proceed with the collection in the same manner as the Bureau of Internal Revenue in
81
case of unpaid taxes. Plainly, too, notwithstanding non-remittance by employers of the G.R. No. 74689 March 21, 1990
premium contributions, covered employees are entitled to the benefits of the coverage,
such as death sickness, retirement, and permanent disability benefits. 2 These benefits ROBERTO R. BENEDICTO, petitioner,
continue to be enjoyed by the employees by operation of law and not, as petitioners vs. HON. QUIRINO D. ABAD SANTOS, JR., in his capacity as Presiding Judge of the
allege, because the premium contributions and salary loan installment payments have Regional Trial Court of Negros Occidental, and SOCIAL SECURITY SYSTEM,
already became the money of the System upon payment by the employees to the respondents. FELICIANO, J.:
employer. It should be remembered that funds contributed to the System by compulsion
of law are funds belonging to the members, which are merely held in trust by the In this Petition for Prohibition and Mandamus with preliminary injunction, petitioner
government.3 The mentioned benefits, however, do not include the salary loan privileges Roberto R. Benedicto seeks to set aside the Orders of respondent Judge dated 3 March
that member-employees apply for. The System may or may not grant those loans 1986 and 21 April 1986 denying, respectively, petitioner's Motion to Quash Criminal Case
pursuant to its rules and regulations. The salary loans are not covered by law but by No. 3863 and his related Motion for Reconsideration.
contract between the System as lender, and the private employee, as borrower.
Petitioner Benedicto started a trucking business sometime in March 1971 in which
Contrary to petitioners' contention, the penalty of 3% per month imposed on the business he employed the late Salvador Pillon as truck driver. Petitioner, however, did
employer, if any premium contribution is not paid to the System, prescribed by Section 22 not report Pillon's employment to the Social Security System ("SSS") for compulsory
of the Act from the date the contribution falls due until paid, does not necessarily make coverage and did not pay the corresponding SSS contributions.
the employer the agent of the System. The prescribed penalty is intended to exact
The above facts came to the knowledge of the SSS sometime in 1975. On 19 October
compliance by the employer. It is evidently of a punitive character to assure that
1975, after Pillon's death, Mr. Antonio Obillos, Jr., an investigator of the SSS Regional
employers do not take lightly the State's exercise of the police power in the
Office in Bacolod City, was deputized to conduct an enquiry in respect of Benedicto's
implementation of the Republic's declared policy to develop, establish gradually, and
alleged violations of the Social Security Act (Republic Act No. 1161, as amended). In his
perfect a Social Security System which shag be suitable to the needs of the people
Field Investigation Report, dated 29 October 1975, 1 Obillos stated that Benedicto had
throughout the Philippines and to provide protection to employees against the hazards of
admitted having failed to report and to register with the SSS Pillon's employment for the
disability, sickness, old age, and death.'
period from March 1971 up to the time of Pillon's death in 1974, and to pay the
WHEREFORE, the judgment under review is hereby modified in that only the premium corresponding SSS contributions; that upon Obillos' suggestion, petitioner Benedicto had
contributions paid by petitioners to its employer, the I-Feng Enamelling Company (Phil.) accomplished and submitted SSS Forms E-1 and R-1A reporting himself and Pillon for
Inc., shall be credited in petitioners' favor so that they may continue to enjoy the benefits SSS compulsory coverage; that Benedicto and Pillon were assigned SSS Identification
of the coverage as provided by law. No costs. Nos. 07-17376-00 and 07-0687-312 effective 1 March 1971; that Benedicto was
assessed SSS premiums in the total amount of P491.70 excluding penalties. Obillos
SO ORDERED. recommended that his report be transmitted to the Legal Department of the SSS in
Quezon City for appropriate action.

Approximately ten (10) years later, on 18 July 1985, upon complaint of the Legal
Department of the SSS, the Assistant City Fiscal of Bacolod City filed an information
charging petitioner Benedicto with violations of Section 24 (a) in relation to Section 28 (e)
of the Social Security Act, as amended. The information read as follows:

That during the period from March 1971 to March 1974, in the City of Bacolod,
Philippines, and within the territorial jurisdiction of the Social Security System, Regional
Office 07, situated in Bacolod City, Philippines and within the jurisdiction of this
Honorable Court, the herein accused, with address at Punay Street, Silay City, did, then
and there, willfully, unlawfully and feloniously fail and refuse, without lawful cause to
report register on time for SSS Coverage his employee, the late Salvador Pillon, thereby
rendering him liable for damages in the amount of SIX THOUSAND THREE HUNDRED
EIGHTY ONE PESOS AND 00/100 CENTAVOS (P6,381.00), Philippine Currency, the
82
amount equivalent to the benefits the heirs of the late Salvador Pillon would have been Sec. 22. Remittance of Contributions.
entitled to, had the name of the deceased member been reported/registered to the SSS
on time which the accused failed and refused to pay despite demands in violation of the xxx xxx xxx
aforementioned law.
(b) The contribution payable under this Act in cases where an employer refuses or
Not (sic) contrary to law. 2 neglects to pay the same shall be collected by the SSS in the same manner as taxes are
made collectible under the National Internal Revenue Code, as amended. Failure or
Before arraignment, petitioner Benedicto moved to quash the information asserting that refusal of the employer to pay or remit the contributions herein penalized shall not
his liability thereunder had already been extinguished by prescription. Upon the other prejudice the right of the covered employee to the benefits of the employee.
hand, the complainant SSS opposed the Motion to Quash contending that the offense
charged in the information had not yet prescribed since the applicable prescriptive period The right to institute the necessary action against the employer may be commenced
was twenty (20) years and since the information was filed within this 20-year period. within twenty (20) years from the time the delinquency is known or the assessment is
made by the SSS, or from the time the benefit accrues, as the case may be. (Emphasis
In an Order dated 3 March 1986, respondent Judge denied petitioner Benedicto's Motion supplied)
to Quash stating, tersely that:
Section 28 (e) of Republic Act No. 1161 as amended by P.D. No. 177 (promulgated 23
xxx xxx xxx April 1973) prescribed the penalty for the crime charged in the information:

Paragraph B of Section 22 of the Republic Act 1161 as amended by Section 15 of the PD Sec. 28. Penal Clause . . .
1636 is quoted hereunder to wit:
xxx xxx xxx
The right to institute the necessary action against the employer may be commenced
within Twenty Years (20) from the time the Delinquency is known or the assignment is (e) Whoever fails or refuses to comply with the provisions of this Act or with the rules and
made by the SSS, or from the time the Benefit Accrues, as the case may be. regulations promulgated by the Commission, shall be punished by a fine of not less than
five hundred pesos nor more than five thousand pesos, or imprisonment for not less than
In view of the foregoing, the motion to quash is denied for lack of merit. six months nor more than one year, or both, at the discretion of the court: Provided, That,
where the violation consists in failure or refusal to register employees, or to deduct
SO ORDERED. contributions from employee's compensation and remit the same to the SSS, the penalty
shall be a fine of not less than five hundred pesos nor more than five thousand pesos and
Petitioner moved for reconsideration of the above order, without success. imprisonment for not less than six months nor more than one year.

Hence the present Petition for Prohibition and Mandamus with preliminary injunction. The Upon the other hand, Act No. 3326, as amended by Act No. 3763 provides as follows:
Court ordered the SSS impleaded as party respondent and to file a Comment on the
Petition. The Solicitor General filed a Comment for the SSS. Sec. 1. Violations penalized by special acts shall, unless otherwise provided in such acts,
prescribe in accordance with the following rules: (a) after a year for offenses punished
The central issue here posed is whether or not the offense with which petitioner only by a fine or by imprisonment for not more than one month, or both; (b) after four
Benedicto is charged has prescribed. years for those punished by imprisonment for more than one month, but less than two
years; (c) after eight years for those punished by imprisonment for two years or more, but
Petitioner Benedicto does not dispute that he had not reported his employee Pillon to the
less than six years; and (d) after twelve years for any other offence punished by
SSS as required by the Social Security Act. He, however, argues that the 20-year
imprisonment for six years or more, . . .: Provided, however, That all offenses against any
prescriptive period established in Section 22 (b) of the Social Security Act relied upon by
law or part of law administered by the Bureau of Internal Revenue shall prescribe after
the respondent Judge, applies only in respect of administrative and civil actions involving
five years. Violations penalized by municipal ordinances shall prescribe after two months.
delinquency in the remittance of contributions to the SSS, and not to a criminal action like
that initiated in the case at bar. Section 22 (b) of the Social Security Act, as amended by Violations of the regulations or conditions of certificates of public convenience issued by
P.D. No. 1636 provides that: the Public Service Commission, shall prescribe after two months. (Emphasis supplied)

83
Petitioner Benedicto argues that since the Social Security Act itself had not established a the penalties of death and reclusion perpetua prescribe in twenty (20) years; all other
prescriptive period in respect of criminal liability for violations of the Social Security Act or penalties prescribe in lesser periods of time ranging from fifteen (15) years to one (1)
the Rules and Regulations promulgated by the Social Security Commission concerning year. The prescriptive periods for offenses penalized by special statutes established
registration of employees and remittance of contributions to the SSS, the applicable under Act No. 3326, as amended, quoted above, are comparable; they range from twelve
statute of limitations was four (4) years under Act No. 3326, as amended, quoted above. (12) years (for offenses penalized with 6 years of imprisonment) to one (1) year (for
offenses penalized with a fine only or with one month of imprisonment). We note also that
It was, however, argued by the SSS as complainant before the trial court, as it is argued under the National Internal Revenue Code (in the form it existed at the time of the
by the Solicitor General in the Petition at bar, that Act No. 3326, as amended, was not commission of the acts here involved) to which Section 22 (b) of the Social Security Act
applicable to the instant case for the reason that the Social Security Act itself had refers, penal sanctions for violations of provisions of that Code prescribe in five (5) years
established a statute of limitations in Section 22 (b) of the Social Security Act as 3 and that the period of prescription applicable in respect of civil remedies for the

amended by P.D. No. 1636, quoted earlier. It appears to be the position of the SSS that collection of internal revenue taxes is also five (5) years. 4
the 20-year statute of limitations embodied in Section 22 (b) is applicable in respect of all
kinds of actions against a delinquent employer, whether criminal or civil. We find it difficult Upon the other hand, the criminal penalties prescribed by the Social Security Act itself for
to accept this view as correct. violations of its provisions and of rules and regulations promulgated by the Social
Security Commission, are significantly lighter than reclusion perpetua or reclusion
We note, in the first place, that the 20-year prescriptive period is found in Section 22 of temporal. The most severe penalty imposed by the Social Security Act itself does not
the Social Security Act which deals generally with the remittance of contributions to the exceed five (5) years. Of course, certain provisions of Section 28 of the Social Security
SSS. Section 22 (b) does not deal with penal sanctions for violations of provisions of the Act, as amended, refer to penalties provided for in certain articles of the Revised Penal
Social Security Act nor of the rules and regulations promulgated by the Social Security Code. Thus, Section 28 (a) refers to penalties established in Article 172 of the Revised
Commission. The penal sanctions established by the Social Security Act are found in Penal Code (falsification of public and commercial documents and use thereof by private
Section 28 which forms part of the final portion or chapter of the Act denominated as "G. individual); Section 28 (g) refers to Article 217 of the Revised Penal Code (malversation
Miscellaneous Provisions." In contrast, Section 22 is found in chapter E entitled "Sources of public funds and property); and Section 28 (h) refers to penalties established under
of Funds Employment Records and Reports." But an examination of Section 28 Article 315 of the Revised Penal Code (swindling and estafa). It thus appears to us that to
entitled "Penal Clauses" shows that none of the subsections thereof purports to establish apply a single, uniform 20-year prescriptive period to both civil actions for collection of
a prescriptive period in respect of such criminal sanctions. If the 20-year period of unremitted SSS premiums and to criminal prosecutions for violations of provisions of the
prescription had been intended by the legislative authority to apply to the penal sanctions Social Security Act and of rules and regulations promulgated by the Social Security
established by the statute, one would expect it either to be textually located in chapter G Commission, would be both grossly disproportional and too simplistic. Such a result
"Miscellaneous Provisions" and not in chapter E "Sources of Funds," or at the very least cannot lightly be assumed to have been intended by the legislative authority in enacting
to refer to the sections on penal sanctions in chapter G. In other words, the context of Section 22 (b), second paragraph, of the Social Security Act.
Section 22 (b) indicates that it does not relate to criminal sanctions at all.
In the case at bar, the information was filed against petitioner Benedicto ten (10) years
Secondly, close examination of Section 22 (b) will show that the "necessary action after the alleged violations had been discovered by the SSS. We hold that the statutory
against the employer" referred to in the second paragraph thereof is an action that is crime here charged had prescribed by then, the prescriptive period here applicable being
brought against the employer for the collection of contributions payable under the Social four (4) years.
Security Act which the employer has refused or neglected to pay.
The foregoing, however, is concerned only with the extinguishment of the criminal liability
Thirdly, a 20-year statute of limitation if made applicable in respect of criminal liability of for the offense charged in the information. The general rule is, of course, that extinction of
an employer for failure to remit contributions to the SSS would constitute a the penal action does not carry with it the extinction of the civil action to enforce civil
disproportionately long statute of limitations if one compared it with either the applicable liability arising from the offense charged, unless the extinction proceeds from a
prescriptive periods in respect of crimes punishable under the Revised Penal Code or the declaration in a final judgment that the fact from which the civil might arise did not exist. 5
prescriptive periods applicable to crimes punished by special statutes under Act No. In the case at bar, no final judgment had been rendered by the trial court since the
3326, as amended. Under Article 90 of the Revised Penal Code, only crimes punishable criminal case was in effect aborted by the Motion to Quash. Thus, the extinction of the
by death, reclusion perpetua or reclusion temporal prescribe in twenty (20) years; all criminal liability of petitioner by reason of prescription has had no impact upon the related
other crimes prescribe in fifteen (15) years, ten (10) years, five (5) years, one (1) year, six civil action for enforcement of the civil liability of petitioner. Said civil action, in
(6) months or two (2) months. Similarly, under Article 92 of the Revised Penal Code, only
84
accordance with the provisions of Section 22 (b), second paragraph quoted above of the G.R. No. 125837 October 6, 2004
Social Security Act, may be brought within twenty (20) years from the time the employer's
delinquency was discovered. Since at the time of the institution of the criminal REYNALDO CANO CHUA, doing business under the name & style PRIME MOVER
proceedings against petitioner Benedicto, so far as the record shows, no reservation had CONSTRUCTION DEVELOPMENT, petitioner,
been made for institution of a separate civil action for recovery of the civil liability arising vs. COURT OF APPEALS, SOCIAL SECURITY COMMISSION, SOCIAL SECURITY
from the criminal acts charged, such civil action must be deemed to have been instituted SYSTEM, ANDRES PAGUIO, PABLO CANALE, RUEL PANGAN, AURELIO PAGUIO,
simultaneously with the commencement of the criminal proceedings. Such civil action ROLANDO TRINIDAD, ROMEO TAPANG and CARLOS MALIWAT, respondents.
may proceed notwithstanding the extinction of the criminal action against petitioner TINGA, J.:
Benedicto.
This is a petition for review of the Decision1 of the Court of Appeals in CA-G.R. CV No.
It remains only to note that the information against petitioner Benedicto itself specified the 38269 dated 06 March 1996, and its Resolution dated 30 July 1996 denying petitioners
amount of the civil liability P6,381.00, being the amount equivalent to the benefits Motion for Reconsideration,2 affirming the Order of the Social Security Commission
which the heirs of the deceased Salvador Pillon would have been entitled to had Pillon (SSC) dated 1 February 19953 which held that private respondents were regular
been reported and registered with the SSS on the time and the necessary contributions employees of the petitioner and ordered petitioner to pay the Social Security System
remitted to the SSS. That amount will, upon collection, be payable to Salvador Pillon's (SSS) for its unpaid contributions, as well as penalty for the delayed remittance thereof.
heirs.
On 20 August 1985, private respondents Andres Paguio, Pablo Canale, Ruel Pangan,
WHEREFORE, the Petition for Prohibition and Mandamus with preliminary injunction is Aurelio Paguio, Rolando Trinidad, Romeo Tapang and Carlos Maliwat (hereinafter
hereby GRANTED insofar as prosecution of the criminal action against petitioner referred to as respondents) filed a Petition4 with the SSC for SSS coverage and
Benedicto is concerned. The same Petition is hereby DISMISSED insofar as the civil contributions against petitioner Reynaldo Chua, owner of Prime Mover Construction
action for the enforcement of the civil liability arising from the offense charged, is Development, claiming that they were all regular employees of the petitioner in his
concerned, and the case REMANDED to the trial court for continuation of such civil construction business.5
action. The Temporary Restraining Order issued by the Court on 11 June 1986 is hereby
made PERMANENT insofar as Criminal Case No. 3863 is concerned and LIFTED insofar Private respondents claimed that they were assigned by petitioner in his various
as the related civil action is concerned. No pronouncement as to costs. construction projects continuously in the following capacity, since the period indicated,
and with the corresponding basic salaries,6 to wit:
SO ORDERED.
Andres Paguio Carpenter 1977 P 42/day

Pablo Canale Mason 1977 42/day

Ruel Pangan Mason 1979 39/day

Aurelio Paguio Fine grading 1979 42/day

Romeo Tapang Fine grading 1979 42/day

Rolando Trinidad Carpenter 1983 (Jan.) 39/day

85
Petitioner also questioned the failure to apply the rules on prescription of actions and of
Carlos Maliwat Mason 1977 42/day
laches, claiming that the case, being one for the injury to the rights of the private
respondents, should have been filed within four (4) years from the time their cause of
Private respondents alleged that petitioner dismissed all of them without justifiable action accrued, or from the time they were hired as project employees. He added that
grounds and without notice to them and to the then Ministry of Labor and Employment. private respondents "went into a long swoon, folded their arms and closed their eyes" 23
They further alleged that petitioner did not report them to the SSS for compulsory and filed their claim only in 1985, or six (6) years or eight (8) years after they were taken
coverage in flagrant violation of the Social Security Act. 7 in by petitioner.24
In his Answer,8 petitioner claimed that private respondents had no cause of action In resolving the petition, the Court of Appeals synthesized the issues in the petition, to
against him, and assuming there was any, the same was barred by prescription and wit: (1) whether private respondents were regular employees of petitioner, and whether
laches. In addition, he claimed that private respondents were not regular employees, but their causes of action as such are barred by prescription or laches; (2) if so, whether
project employees whose work had been fixed for a specific project or undertaking the petitioner is now liable to pay the SSS contributions and penalties during the period of
completion of which was determined at the time of their engagement. This being the employment.25
case, he concluded that said employees were not entitled to coverage under the Social
Security Act.9 The Court of Appeals, citing Article 280 of the Labor Code, 26 declared that private
respondents were all regular employees of the petitioner in relation to certain activities
Meanwhile, the SSS filed a Petition in Intervention10 alleging that it has an interest in the since they all worked either as masons, carpenters and fine graders in petitioners
petition filed by private respondents as it is charged with the implementation and various construction projects for at least one year, and that their work was necessary and
enforcement of the provisions of the Social Security Act. The SSS stated that it is the desirable to petitioners business which involved the construction of roads and bridges. 27
mandatory obligation of every employer to report its employees to the SSS for coverage It cited the case of Mehitabel Furniture Company, Inc. v. NLRC,28 particularly the ruling
and to remit the required contribution, including the penalty imposed for late premium therein which states:
remittances.
By petitioners own admission, the private respondents have been hired to work on
On 01 February 1995, the SSC issued its Order11 which ruled in favor of private certain special orders that as a matter of business policy it cannot decline. These projects
respondents. The SSC, relying on NLRC Case No. RAB-III-8-2373-85,12 declared private are necessary or desirable in its usual business or trade, otherwise they would not have
respondents to be petitioners regular employees. 13 It ordered petitioner to pay the SSS accepted . Significantly, such special orders are not really seasonal but more or less
the unpaid SS/EC and Medicare contributions plus penalty for the delayed remittance regular, requiring the virtually continuous services of the "temporary workers." The NLRC
thereof, without prejudice to any other penalties which may have accrued. 14 The SSC also correctly observed that "if we were to accept respondents theory, it would have no
denied the Motion for Reconsideration15 of petitioner for lack of merit.16 regular workers because all of its orders would be special undertakings or projects." The
petitioner could then hire all its workers on a contract basis only and prevent them from
Petitioner elevated the matter to the Court of Appeals via a Petition for Review.17 He
attaining permanent status.
claimed that private respondents were project employees, whose periods of employment
were terminated upon completion of the project. Thus, he claimed, no employer- Furthermore, the NLRC has determined that the private respondents have worked for
employee relation existed between the parties. 18 There being no employer-employee more than one year in the so-called "special projects" of the petitioner and so fall under
relationship, private respondents are not entitled to coverage under the Social Security the second condition specified in the above-quoted provision (Article 280, Labor Code).29
Act.19 In addition, petitioner claimed that private respondents length of service did not
change their status from project to regular employees.20 The Court of Appeals rejected the claim of prescription, stating that the filing of private
respondents claims was well within the twenty (20)-year period provided by the Social
Moreover, granting that private respondents were entitled to coverage under the Act, Security Act.30 It found that the principle of laches could not also apply to the instant case
petitioner claimed that the SSC erred in imposing penalties since his failure to include since delay could not be attributed to private respondents, having filed the case within the
private respondents under SSS coverage was neither willful nor deliberate, but due to the prescriptive period, and that there was no evidence that petitioner lacked knowledge that
honest belief that project employees are not regular employees. 21 Likewise, he claimed private respondents would assert their rights.31
that the SSC erred in ordering payment of contributions and penalties even for long
periods between projects when private respondents were not working. 22 Petitioner filed a Motion for Reconsideration,32 claiming that the Court of Appeals
overlooked (1) the doctrine that length of service of a project employee is not the
86
controlling test of employment tenure, and (2) petitioners failure to place private well as the means and methods by which the same were accomplished. Suffice it to say
respondents under SSS coverage was in good faith. The motion was denied for lack of that regardless of the nature of their employment, whether it is regular or project, private
merit.33 respondents are subject of the compulsory coverage under the SSS Law, their
employment not falling under the exceptions provided by the law. 41 This rule is in accord
In the present Petition for Review, petitioner again insists that private respondents were with the Courts ruling in Luzon Stevedoring Corp. v. SSS42 to the effect that all
not regular, but project, employees and thus not subject to SSS coverage. In addition, employees, regardless of tenure, would qualify for compulsory membership in the SSS,
petitioner claims that assuming private respondents were subject to SSS coverage, their except those classes of employees contemplated in Section 8(j) of the Social Security
petition was barred by prescription and laches. Moreover, petitioner invokes the defense Act.43
of good faith, or his honest belief that project employees are not regular employees under
Article 280 of the Labor Code.lawphil.net This Court also finds no reason to deviate from the finding of the Court of Appeals
regarding the nature of employment of private respondents. Despite the insistence of
Petitioners arguments are mere reiterations of his arguments submitted before the SSC petitioner that they were project employees, the facts show that as masons, carpenters
and the Court of Appeals. More importantly, petitioner wants this Court to review factual and fine graders in petitioners various construction projects, they performed work which
questions already passed upon by the SSC and the Court of Appeals which are not was usually necessary and desirable to petitioners business which involves construction
cognizable by a petition for review under Rule 45. Well-entrenched is the rule that the of roads and bridges. In Violeta v. NLRC,44 this Court ruled that to be exempted from the
Supreme Courts jurisdiction in a petition for review is limited to reviewing or revising presumption of regularity of employment, the agreement between a project employee and
errors of law allegedly committed by the appellate court, the findings of fact being his employer must strictly conform to the requirements and conditions under Article 280
generally conclusive on the Court and it is not for the Court to weigh evidence all over of the Labor Code. It is not enough that an employee is hired for a specific project or
again.34 phase of work. There must also be a determination of, or a clear agreement on, the
completion or termination of the project at the time the employee was engaged if the
Stripped of the lengthy, if not repetitive, disquisition of the private parties in the case, and objectives of Article 280 are to be achieved. 45 This second requirement was not met in
also of the public respondents, on the nature of private respondents employment, the this case.
controversy boils down to one issue: the entitlement of private respondents to
compulsory SSS coverage. Moreover, while it may be true that private respondents were initially hired for specific
projects or undertakings, the repeated re-hiring and continuing need for their services
The Social Security Act was enacted pursuant to the policy of the government "to over a long span of timethe shortest being two years and the longest being eight
develop, establish gradually and perfect a social security system which shall be suitable have undeniably made them regular employees. 46 This Court has held that an
to the needs of the laborers throughout the Philippines, and shall provide protection employment ceases to be co-terminus with specific projects when the employee is
against the hazards of disability, sickness, old age and death." 35 It provides for continuously rehired due to the demands of the employers business and re-engaged for
compulsory coverage of all employees not over sixty years of age and their employers.36 many more projects without interruption.47 The Court likewise takes note of the fact that,
as cited by the SSC, even the National Labor Relations Commission in a labor case
Well-settled is the rule that the mandatory coverage of Republic Act No. 1161, as
involving the same parties, found that private respondents were regular employees of the
amended, is premised on the existence of an employer-employee relationship, the
petitioner.48
essential elements of which are: (a) selection and engagement of the employee; (b)
payment of wages; (c) the power of dismissal; and (d) the power of control with regard to Another cogent factor militates against the allegations of the petitioner. In the
the means and methods by which the work is to be accomplished, with the power of proceedings before the SSC and the Court of Appeals, petitioner was unable to show that
control being the most determinative factor.37 private respondents were appraised of the project nature of their employment, the
specific projects themselves or any phase thereof undertaken by petitioner and for which
There is no dispute that private respondents were employees of petitioner. Petitioner
private respondents were hired. He failed to show any document such as private
himself admitted that they worked in his construction projects, 38 although the period of
respondents employment contracts and employment records that would indicate the
their employment was allegedly co-terminus with their phase of work.39 Even without
dates of hiring and termination in relation to the particular construction project or phases
such admission from petitioner, the existence of an employer-employee relationship
in which they were employed.49 Moreover, it is peculiar that petitioner did not show proof
between the parties can easily be determined by the application of the "control test," 40 the
that he submitted reports of termination after the completion of his construction projects,
elements of which are enumerated above. It is clear that private respondents are
employees of petitioner, the latter having control over the results of the work done, as
87
considering that he alleges that private respondents were hired and rehired for various
projects or phases of work therein.

Anent the issue of prescription, this Court rules that private respondents right to file their
claim had not yet prescribed at the time of the filing of their petition, considering that a
mere eight (8) years had passed from the time delinquency was discovered or the proper
assessment was made. Republic Act No. 1161, as amended, prescribes a period of
twenty (20) years, from the time the delinquency is known or assessment is made by the
SSS, within which to file a claim for non-remittance against employers.50

Likewise, this Court is in full accord with the findings of the Court of Appeals that private
respondents are not guilty of laches. The principle of laches or "stale demands" ordains
that the failure or neglect, for an unreasonable and unexplained length of time, to do that
which by exercising due diligence could or should have been done earlier, or the
negligence or omission to assert a right within a reasonable time, warrants a presumption
that the party entitled to assert it either has abandoned it or declined to assert it. 51 In the
instant case, this Court finds no proof that private respondents had failed or neglected to
assert their right, considering that they filed their claim within the period prescribed by
law.

This Court finds no merit in petitioners protestations of good faith. In United Christian
Missionary Society v. Social Security Commission,52 this Court ruled that good faith or
bad faith is irrelevant for purposes of assessment and collection of the penalty for
delayed remittance of premiums, since the law makes no distinction between an
employer who professes good reasons for delaying the remittance of premiums and
another who deliberately disregards the legal duty imposed upon him to make such
remittance.53 For the same reasons, petitioner cannot now invoke the defense of good
faith.

WHEREFORE, the Petition is DENIED. The Decision and Resolution of the Court of
Appeals promulgated on 6 March 1996 and 30 July 1996 respectively, are AFFIRMED.
Costs against petitioner.

SO ORDERED.

88
G.R. No. 134028 December 17, 1999 This Court has consistently ruled that "disability should not be understood more on its
medical significance but on the loss of earning capacity. Permanent total disability means
EMPLOYEES' COMPENSATION COMMISSION (SOCIAL SECURITY SYSTEM), disablement of an employee to earn wages in the same kind of work, or work of similar
petitioner, nature that [he] was trained for or accustomed to perform, or any kind of work which a
vs. EDMUND SANICO, respondent. KAPUNAN, J.: person of [his] mentality and attainment could do. It does not mean absolute
helplessness." 1 This Court has also held that:
Through this petition for review, the Employees' Compensation Commission seeks to set
aside the decision of the Court of Appeals (CA) in CA G.R. SP No. 47804, dated 28 May In disability compensation, it is not the injury which is compensated, but rather it is the
1998, reversing petitioner's decision, dated 20 March 1997, in ECC Case No. 8342 and incapacity to work resulting in the impairment of one's earning capacity. 2
granting Edmund Sanico's (private respondent's) claim for compensation benefits under
Presidential Decree No. 626, as amended (Book IV, Title II of the Labor Code). Petitioner thus seriously erred when it affirmed the decision of the SSS denying private
respondent's claim on the ground of prescription. In determining whether or not private
Private respondent was a former employee of John Gotamco and Sons. He worked in respondent's claim was filed within the three-year prescriptive period under Article 201 of
said company as "wood filer" from 1986 until he was separated from employment on 31 the Labor Code, petitioner and the SSS reckoned the accrual of private respondent's
December 1991 due to his illness. His medical evaluation report, dated 31 September cause of action on 31 September 1991, when his PTB became known. This is erroneous.
1991, showed that he was suffering from pulmonary tuberculosis (PTB). Subsequent
chest x-rays taken on 9 October 1994 and 3 May 1995 diagnostically confirmed his Following the foregoing rulings, the prescriptive period for filing compensation claims
illness. should be reckoned from the time the employee lost his earning capacity, i.e., terminated
from employment, due to his illness and not when the same first became manifest.
On 9 November 1994, private respondent filed with the Social Security System (SSS) a Indeed, a person's disability might not emerge at one precise moment in time but rather
claim for compensation benefits under P.D. No. 626, as amended. On 23 April 1996, the over a period of time. 3 In this case, private respondent's employment was terminated on
SSS denied private respondent's claim on the ground of prescription. The SSS ruled that 31 December 1991 due to his illness, he filed his claim for compensation benefits on 9
under Article 201 or the Labor Code, a claim for compensation shall be given due course November 1994. Accordingly, private respondent's claim was filed within the three-year
only when the same is filed with the System three (3) years from the time the cause of prescriptive period under Article 201 of the Labor Code.
action accrued. In private respondent's case, the SSS reckoned the three-year
prescriptive period on 21 September 1991 when his PTB first became manifest. When he In this light, the Court finds no need at this time to rule on the seeming conflict between
filed his claim on 9 November 1994, the claim had allegedly already prescribed. the prescriptive period for filing claims for compensation benefits under Article 201 of the
Labor Code and Article 1144(2) of the Civil Code.
On appeal, petitioner affirmed the decision of the SSS. Private respondent then elevated
the case to the CA, which reversed petitioner's decision and granted private respondent's In conclusion, the Court takes this opportunity to once again remind petitioner that P.D.
claim for compensation benefits. In ruling that private respondent's claim was filed well No. 626, as amended, is a social legislation whose primordial purpose is to provide
within the prescriptive period under the law, the CA reconciled Article 201 of the Labor meaningful protection to the working class against the hazards of disability, illness and
Code with Article 1144(2) of the Civil Code. Under the latter provision of law, an action other contingencies resulting in the loss of income. Thus:
upon an obligation created by law must be filed within ten (10) years from the time the
cause of action accrues. Thus, while private respondent's illness became manifest in As an official agent charged by law to implement social justice guaranteed and secured
September 1991, the filing of his compensation claim on 9 November 1994 was within, by the Constitution, the ECC should adopt a liberal attitude in favor of the employee in
even long before, the prescriptive period. deciding claims for compensability especially where there is some basis in the facts for
inferring a work connection with the incident. This kind of interpretation gives meaning
The sole issue to be resolved in this case is whether or not private respondent's claim for and substance to the compassionate spirit of the law as embodied in Article 4 of the New
compensation benefit had already prescribed when he filed his claim on 9 November Labor Code which states that all doubts in the implementation and interpretation of the
1994. provisions of the Labor Code including its implementing rules and regulations should be
resolved in favor of labor. 4
We rule in favor of private respondent.
WHEREFORE, premises considered, the instant petition is hereby DISMISSED.

89
G.R. No. 152058 September 27, 2004 letters of 11 April 1999, 10 September 1999, 28 September 1999, 4 April 2000, and 17
April 2000. The denial was based on the medical findings of the Cebu City office that he
SOCIAL SECURITY COMMISSION and SOCIAL SECURITY SYSTEM, petitioners, vs was not totally prevented from engaging in any gainful occupation. 9
COURT OF APPEALS and JOSE RAGO, respondents. DAVIDE, JR., C.J.:
Undaunted, on 3 April 2000, Rago filed with the petitioner Social Security Commission
This is a petition for the review of the decision1 of 18 October 2001 and the resolution of (SSC) a petition for total permanent disability benefits based on the following grounds:
30 January 2002 of the Court of Appeals in CA-G.R. SP No. 63389 entitled Jose Rago
vs. Social Security Commission and Social Security System. The decision reversed the 1. his convalescence period from the time of his hospital confinement to home
20 December 2000 Resolution of the Social Security Commission (SSC) in SSC Case confinement totaled 268 days and under SSS guidelines, if the injury persisted for more
No. 4-15009-2000 denying respondent Jose Ragos request to convert his monthly than 240 days, the injury would be considered as a permanent total disability;
pension from permanent partial disability to permanent total disability. The resolution
denied the motion to reconsider the decision. 2. his x-ray results showed a deterioration of his condition without any visible
improvement on the disabilities resulting from the accident; and
Private respondent Jose Rago (hereafter Rago) worked as an electrician for Legend
Engineering in Basak, Pardo, Cebu City. On 1 December 1993, at about 6:15 p.m., while 3. he had lost his original capacity to work as an electrician and has been unemployed
working on the ceiling of a building, he stepped on a weak ceiling joist. The structure since the accident.
gave way and he crashed into the corridor twelve feet below. The x-rays taken that day
revealed that he had a (1) marked compression fracture of L1 vertebra without signs of The petition was docketed as SSC Case No. 4-15009-2000.10
dislocation and bone destruction; and (2) slight kyphosis at the level of L1 vertebrae, with
In its position paper dated 24 August 2000, the SSS argued that Rago had already been
the alignment of the spine still normal.2 He was confined at the Perpetual Succour
granted the maximum partial disability benefits. The physical examination conducted by
Hospital in Cebu City for twenty-four (24) days from 1 December 1993 to 24 December
the Cebu City office of the SSS showed that he was more than capable of physically
1993,3 and, thereafter, he was confined in his home from 25 December 1993 to 25
engaging in any gainful occupation and that there was no manifestation of progression of
August 1994.4
illness. Thus, the SSS recommended the denial of Ragos petition. 11
On 20 May 1994, Rago filed a claim for permanent partial disability with the Cebu City
In a resolution dated 20 December 2000, the SSC denied Ragos petition for lack of
office of the Social Security System (SSS). Since he had only 35 monthly contributions,
merit. The SSC ruled that he was not entitled to permanent partial disability more than
he was granted only a lump sum benefit.5 He made additional premium contributions on 6
what was already granted, more so to permanent total disability benefits since he was
November 1995, and sought the adjustment of his approved partial disability benefits
already granted the maximum allowable benefit for his injury.12
from lump sum to monthly payments. The adjustment was resolved in his favor on 18
October 1995.6 Without filing a motion for reconsideration, Rago appealed to the Court of Appeals by
filing a petition for review and reiterating his claim for permanent disability benefits under
On 9 November 1995, Rago filed a claim for Employees Compensation (EC) sickness
Section 13-A (g) of R.A. No. 1161, as amended by R.A. No. 8282.13 The petition was
benefit, which was supported by an x-ray report dated 1 December 1993. This was
docketed as CA-G.R. SP No. 63389.
approved for a maximum of 120 days to cover the period of illness from 1 December
1993 to 30 March 1994. In its decision of 18 October 2001, the Court of Appeals reversed the SSCs resolution,
and decreed as follows:
On 7 June 1996, Rago filed another claim to convert his SSS disability to EC disability.
Again, it was resolved in his favor on 14 June 1996.7 WHEREFORE, the assailed decision of the Social Security Commission is hereby
reversed and set aside. Petitioners plea for conversion of his disability status from
Two years later, on 16 June 1998, Rago claimed for the extension of his EC partial
permanent partial to permanent total is granted. The SSS is hereby directed to pay him
disability. A rating of 50% OB (of the body) was granted corresponding to the maximum
the necessary compensation benefits in accordance with the proper computation.
benefit allowed under the Manual on Ratings of Physical Impairment. 8
The SSS seasonably filed a motion for reconsideration on the ground that the Court of
Thereafter, Rago filed several requests for the adjustment of his partial disability to total
Appeals should have considered an order issued by the SSC dated 11 July 2001 which
disability. This time, his requests were denied by the Cebu City office of the SSS in its
affirmed, but clarified, its 20 December 2000 Resolution under appeal. The SSS then
90
referred to the findings and conclusions of the SSC in said 11 July 2001 order, which the same body effectively altered the tenor of the earlier ruling, amounting to a violation
emphasized that: (1) Rago failed to file a motion for reconsideration with the SSC, which of the petitioners right to due process and fair play, and, therefore, null and void.
is mandatory, before filing a petition for review with the Court of Appeals; (2) the manual
verification of the monthly contributions of Rago revealed that he had only 35 Moreover, the specific arguments raised by the Commission are not convincing to
contributions and not 59; and (3) thus, whether or not the sickness or disability of Rago encourage a reversal of our earlier decision.
had showed signs of progression, a conversion of the same from permanent partial
disability to permanent total disability could not be granted. This is because Rago lacked To be sure, the alleged failure to file a motion for reconsideration of the Commissions
the required number of contributions mentioned in Section 13-A (a) of R.A. 1161, as December 20, 2000 resolution is not a fatal mistake, it appearing that the same was in
amended, which reads: clear violation of the petitioners rights and claims, as a member of the Social Security
System. It is the established rule that the filing of a motion for reconsideration may be
SEC. 13-A. Permanent disability benefits. (a) Upon the permanent total disability of a dispensed with when the assailed ruling is a patent nullity. Furthermore, the fact that the
member who has paid at least thirty-six (36) monthly contributions prior to the semester petitioner as credited by SSS monthly contributions short to entitle him to be qualified for
of disability, he shall be entitled to the monthly pension: Provided, That if he has not paid permanent total disability benefits appear to be largely due to the SSS and its branches
the required thirty-six (36) monthly contributions, he shall be entitled to a lump sum failure to accurately account the petitioners total payments, and not on the petitioners or
benefit equivalent to the monthly pension times the number of monthly contributions paid his employers failure to do so. The same July 11, 2001 Order shows that the SSS
to the SSS or twelve (12) times the monthly pension, whichever is higher. A member who Cotabato City Branch and the SSS Davao Hub Branch Office were unable to account for
(1) has received a lump sum benefit and (2) is re-employed or has resumed self- the complete contributions of the petitioner while he was employed by the San Miguel
employment or has resumed self-employment not earlier than one (1) year from the date Corporation.15
of his disability shall again be subject to compulsory coverage and shall be considered a
new member. Thus, in their petition in the case at bar, the SSS and the SSC pray to set aside the Court
of Appeals decision of 18 October 2001 and resolution of 30 January 2002 and to
With that, the SSC ordered the SSS to re-compute the lump sum benefit due Rago and remand the case to the SSC for further proceedings.16
his EC benefit on the basis of the actual monthly contributions remitted in his behalf and
to collect all excess payments made to him.14 In support of their prayer, the petitioners assert that the Court of Appeals erred in
disregarding the established jurisprudence that the filing of a motion for reconsideration is
In its resolution of 30 January 2002, the Court of Appeals denied the motion for a prerequisite to the filing of a petition for review to enable the tribunal, board or office
reconsideration. It explained the denial in this wise: concerned to pass upon and correct its mistakes without the intervention of the higher
court. Failure to do so is a fatal procedural defect.17
At the outset, the Court strikes down the Commissions July 11, 2001 clarificatory order
as an exercise of grave abuse of authority amounting to lack and/or excess of jurisdiction. The petitioners likewise argue that they had not violated Ragos rights; hence, his case
The said Order was issued at a time when the Commission itself was knowledgeable of does not fall within the purview of Arroyo v. House of Representatives Electoral Tribunal 18
the petition for review pending before this Court. It must be pointed out that when where we held that a prior motion for reconsideration could be dispensed with if
petitioner timely filed his petition for review, [the] appeal from the Commissions fundamental rights to due process were violated.
resolution had thus become perfected, and it is this Court which therefore had jurisdiction
over the matter, and sole authority to make any affirmation or modification of the assailed Additionally, the petitioners contend that the SSCs 11 July 2001 clarificatory order was
resolution. Once appeal is perfected, the lower tribunal loses its jurisdiction over the issued to rectify its perceived error in the 20 January 2000 resolution relative to the
case, in favor of the appellate tribunal. The Court deems it the height of injustice for the number of Ragos contributions which directly affected the computation of his disability
Commission to add to and bolster its final ruling with additional observations and benefits. Petitioners further maintain that the Court of Appeals relied heavily on the x-ray
justifications, not otherwise embodied in the original ruling, after the losing claimant had reports which contained no statement that Rago could no longer work. However, a
already perfected and was actively pursuing his appeal. It behooves upon the certain Alvin C. Cabreros attested in an affidavit that Rago went out "disco[e]ing" after the
Commission, therefore, to refrain from making any substantial addition, or modification of accident, for which reason, Rago is not totally helpless as he portrayed himself to be.
its assailed ruling, such authority in law, now having been transferred to this Court. What
On 20 March 2003, we received a handwritten letter from Rago informing us that his
prompted the Social Security Commission to issue its clarificatory order is not made clear
lawyer had withdrawn from the case and of his difficulty in securing a new counsel. After
in its motion for reconsideration, nor in the clarificatory order itself. In any case, any
naming Attys. Pedro Rosito, Arturo Fernan or Fritz Quianola of the IBP Cebu City at
modification of the tenor and justification of the assailed resolution of the Commission by
91
Capitol Compound as his "informal lawyers," he asked us to consider, in lieu of his This is as far as we go in construing the provision in isolation because a second
Comment, an attached copy of the opposition to the motion for reconsideration he filed procedural rule now comes into play: the requirements for appeals filed against the
with the Court of Appeals. In said pleading, Rago argued that the word "may" as used in rulings of quasi-judicial agencies in the exercise of its quasi-judicial functions.
the provision concerning the filing of a motion for reconsideration in the SSCs 1997
Revised Rules of Procedure is not mandatory but merely permissive. He also agreed with Section 1 of Rule VII of the SSC rules provides:
the conclusion of the Court of Appeals that a very strict interpretation of procedural rules
would defeat the constitutional mandate on social justice. [A]ny order, resolution, award or decision of the Commission, in the absence of an appeal
therefrom as herein provides, shall become final and executory fifteen (15) days after the
We gave due course to the petition and required the parties to submit their Memoranda, date of notification to the parties, and judicial review thereof shall be permitted only after
which they did. any party claiming to be aggrieved thereby has exhausted his remedies before the
Commission.
We shall first dispose of the procedural issue of prematurity raised by petitioners which is
Ragos failure to file a motion for reconsideration. Section 5, Rule VI of the SSCs 1997 It now becomes apparent that the permissive nature of a motion for reconsideration with
Revised Rules of Procedure provides: the SSC must be read in conjunction with the requirements for judicial review, or the
conditions sine qua non before a party can institute certain civil actions. A combined
The party aggrieved by the order, resolution, award or decision of the Commission may reading of Section 5 of Rule VI, quoted earlier, and Section 1 of Rule VII of the SSCs
file a motion for reconsideration thereof within fifteen (15) days from receipt of the same. 1997 Revised Rules of Procedure reveals that the petitioners are correct in asserting that
Only one motion for reconsideration shall be allowed any party. a motion for reconsideration is mandatory in the sense that it is a precondition to the
institution of an appeal or a petition for review before the Court of Appeals. Stated
The filing of the motion for reconsideration shall interrupt the running of the period to differently, while Rago certainly had the option to file a motion for reconsideration before
appeal, unless said motion is pro forma. the SSC, it was nevertheless mandatory that he do so if he wanted to subsequently avail
of judicial remedies.
The ordinary acceptations of the terms "may" and "shall" may be resorted to as guides in
ascertaining the mandatory or directory character of statutory provisions. As regards This rule is explicit in Rule 43 of the Rules of Court, which states:
adjective rules in general, the term "may" is construed as permissive and operating to
confer discretion, while the word "shall" is imperative and operating to impose a duty Sec. 1. Scope This Rule shall apply to appeals from judgments or final orders of the
which may be enforced.19 However, these are not absolute and inflexible criteria in the Court of Tax Appeals and from awards, judgments, final orders or resolutions of or
vast areas of law and equity. Depending upon a consideration of the entire provision, its authorized by any quasi-judicial agency in the exercise of its quasi-judicial functions.
nature, its object and the consequences that would follow from construing it one way or Among these agencies are theSocial Security Commission.
the other, the convertibility of said terms either as mandatory or permissive is a standard
recourse in statutory construction.20 Sec. 4. Period of appeal. The appeal shall be taken within fifteen (15) days from notice
of the award, judgment, final order or resolution, or from the date of its last publication, if
Conformably therewith, we have consistently held that the term "may" is indicative of a publication is required by law for its effectivity, or of the denial of petitioners motion for
mere possibility, an opportunity or an option. The grantee of that opportunity is vested new trial or reconsideration duly filed in accordance with the governing law of the court or
with a right or faculty which he has the option to exercise.21 If he chooses to exercise the agency a quo. Only one (1) motion for reconsideration shall be allowed.
right, he must comply with the conditions attached thereto.22
The policy of judicial bodies to give quasi-judicial agencies, such as the SSC, an
Applying these guidelines, we can construe Section 5, Rule VI as granting Rago, or any opportunity to correct its mistakes by way of motions for reconsideration or other statutory
member of the System aggrieved by the SSCs resolution, the option of filing a motion for remedies before accepting appeals therefrom finds extensive doctrinal support in the
reconsideration which he may or may not exercise. Should he choose to do so, he is well-entrenched principle of exhaustion of administrative remedies.
allowed to file only one motion for reconsideration within fifteen days from the
promulgation of the questioned resolution. The reason for the principle rests upon the presumption that the administrative body, if
given the chance to correct its mistake or error, may amend its decision on a given matter
and decide it properly.23 The principle insures orderly procedure and withholds judicial
interference until the administrative process would have been allowed to duly run its

92
course. This is but practical since availing of administrative remedies entails lesser clarificatory order, it classified the disability based on the amount of contributions Rago
expenses and provides for a speedier disposition of controversies. 24 Even comity dictates had paid.31
that unless the available administrative remedies have been resorted to and appropriate
authorities given an opportunity to act and correct the errors committed in the To give the SSC another chance to rectify its error in accordance with the principle of
administrative forum, judicial recourse must be held to be inappropriate, impermissible, 25 exhaustion of administrative remedies would inevitably result in the same inflexible
premature, and even unnecessary.26 stance in defense of its error. We say another chance because we can consider the
SSCs clarificatory order as in the nature of a judgment on Ragos motion for
However, we are not unmindful of the doctrine that the principle of exhaustion of reconsideration as if he had filed one. Otherwise, to admit the misnamed order which was
administrative remedies is not an ironclad rule. It may be disregarded (1) when there is a issued when the SSC no longer had jurisdiction over the case, and which modified and
violation of due process, (2) when the issue involved is purely a legal question, (3) when altered the contents and tenor of its original resolution, would have amounted to a
the administrative action is patently illegal amounting to lack or excess of jurisdiction, (4) violation of Ragos right to due process. To this extent we give imprimatur to the assailed
when there is estoppel on the part of the administrative agency concerned, (5) when decision and resolution of the Court of Appeals, and uphold its factual determination that
there is irreparable injury, (6) when the respondent is a department secretary whose acts Rago is entitled to the conversion of his permanent partial disability to permanent total
as an alter ego of the President bears the implied and assumed approval of the latter, (7) disability. Thus:
when to require exhaustion of administrative remedies would be unreasonable, (8) when
it would amount to a nullification of a claim, (9) when the subject matter is a private land There is merit in the petition. Evidently clear from the recitals of the assailed decision
in land case proceedings, (10) when the rule does not provide a plain, speedy and some indicia of petitioners state of permanent total disability. To emphasize, he was
adequate remedy, (11) when there are circumstances indicating the urgency of judicial granted sickness benefit for a maximum period of 120 days from December 1, 1993 to
intervention,27 (12) when no administrative review is provided by law, (13) where the rule March 30, 1994. Then he was awarded lump sum permanent partial disability benefits
of qualified political agency applies, and (14) when the issue of non-exhaustion of paid on June 15, 1994, which was then adjusted on October 18, 1995 to monthly pension
administrative remedies has been rendered moot.28 benefit covering the period of 30 months from May 20, 1994 to October 1996. More, the
permanent partial disability benefit was extended for another eight (8) months from July
Fortunately for Rago, his case falls within some of these exceptions as discussed below. 3, 1998 to February 1999, all in all covering a period of 38 months. If temporary total
disability lasting continuously for more than 120 days is deemed total and permanent, it is
Petitioners attempts to distinguish Arroyo v. House of Representatives Electoral not therefore amiss to consider the payment of permanent partial disability benefits for 38
Tribunal29 from this case is misplaced. The ground relied upon by the Court of Appeals months as recognition of permanent total disability. Award of permanent partial disability
for exempting this case from exhaustion of administrative remedies was not the denial of benefits for 19 months was considered by the Supreme Court as an acknowledgment
due process but of the patent nullity of the SSC decision in question. that the awardee was suffering from permanent total disability. (Diopenes vs. GSIS (205
SCRA 331[1992]).
It is true that Rago disregarded procedural and curative rules in taking immediate
recourse to the appellate court. The Court of Appeals similarly erred in taking cognizance xxx
of Ragos appeal. We likewise do not subscribe to issuing rulings or decisions that do not
acknowledge or give reason for the disregard of the procedural defect of the petition, The test of whether or not an employee suffers from permanent total disability is a
especially when it was specifically raised as an issue in respondents answer. 30 showing of the capacity of the employee to continue performing his work notwithstanding
the disability he incurred. (IJARES v. Court of Appeals, 313 SCRA 141 [1999]). The cited
Nevertheless, to require Rago to comply with the principle of exhaustion of administrative radiologic report under date of February 26, 1999 is demonstrative of the fact that
remedies at this stage of the proceedings would be unreasonable, unjust and inequitable. petitioner is still in a state which at the time of the taking deters him from performing his
It would prolong needlessly and uselessly the resolution of his claim. job or any such related function. It is evident that the pain caused to petitioner by his
injuries still persists even after more than 5 years when the accident occurred on
Petitioners SSS and SSC have consistently shown their obstinacy in their stand to deny December 1, 1993. The disability caused thereby which had earlier been diagnosed as
Ragos request to convert his permanent partial disability to permanent total disability. permanent partial had possibly became permanent total. (GSIS vs. CA 260 SCRA 133,
The SSCs reliance on the SSS recommendations, which did not consider other evidence [1996]). Also in the case of Tria vs. ECC, (supra) a disability is total and permanent if as
of the illness progression and its disregard of long-standing jurisprudence, made for the a result of the injury, the employee is not able to perform any gainful occupation for a
patent nullity of the SSC decision. The error was made more blatant when, in the SSCs period exceeding 120 days.

93
Moreover, prior payment of compensation benefits for permanent partial disability may on become permanent or one who suffers a partial disability becomes totally and
not foreclose his right to compensation benefits for permanent total disability. Otherwise, permanently disabled from the same cause.36
the social justice policy underlying the enactment of labor laws would lose its meaning.
With this, petitioners additional arguments that the x-ray reports lacked a physicians
Caution should be taken against a too strict interpretation of the rules lest the finding that Rago could no longer work and that Mr. Cabreros affidavit attested to the
constitutional mandate of social justice policy calls for a liberal and sympathetic approval contrary lose persuasive worth. X-ray reports and its confirmation by a physician are
of the pleas of disabled employees like herein petitioner. Compassion for him is not a simply appraised for their evidentiary value and are not considered as indispensable
dole out. It is a right. (GSIS vs. Court of Appeals, 285 SCRA 430 [1998]). 32 prerequisites to compensation.37 Even then, the three x-ray reports submitted by Rago
clearly show the degenerative condition of his injury, viz.
The Court of Appeals correctly observed that Ragos injury made him unable to perform
any gainful occupation for a continuous period exceeding 120 days. The SSS had (a) Radiology report stated 1 December 1993 revealed "Mark compression fracture o L1
granted Rago sickness benefit for 120 days and, thereafter, permanent partial disability vertebra without signs of dislocation and bone destruction and slight kyphosis at the level
for 38 months. Such grant is an apparent recognition by the SSS that his injury is of L1 vertebra but the alignment of the spine is normal";
permanent and total as we have pronounced in several cases. 33 This is in conformity with
Section 2 (b), Rule VII of the Amended Rules on Employees Compensation which (b) Radiology report dated 4 may 1994 showed that "consistent with compression fracture
defines a disability to be total and permanent if, as a result of the injury or sickness, the with mild posterior dislocation of the L1"; and
employee is unable to perform any gainful occupation for a continuous period exceeding
120 days, and Section 1, b (1) of Rule XI of the same Amended Rules which provides (c) Radiology report dated 26 February 1999 showed anterior wedging or compression
that a temporary total disability lasting continuously for more than 120 days, shall be fracture of L1 with gibbus deformity and thoraco-lumber junction and suggested lumbo-
considered permanent. sacral AP for further study. [emphasis supplied]

In Vicente vs. Employees Compensation Commission,34 we laid down the litmus test and Clearly, Rago is entitled to permanent total disability benefits.
distinction between Permanent Total Disability and Permanent Partial Disability, to wit:
One final note. Although the SSS and the SSC should be commended for their vigilance
[W]hile permanent total disability invariably results in an employees loss of work or against unjustified claims that will deplete the funds intended to be disbursed for the
inability to perform his usual work, permanent partial disability, on the other hand, occurs benefit only of deserving disabled employees, they should be cautioned against a very
when an employee loses the use of any particular anatomical part of his body which strict interpretation of the rules lest it results in the withholding of full assistance from
disables him to continue with his former work. Stated otherwise, the test of whether or not those whose capabilities have been diminished, if not completely impaired, as a
an employee suffers from permanent total disability is a showing of the capacity of the consequence of their dedicated service. A humanitarian impulse, dictated by no less than
employee to continue performing his work notwithstanding the disability he incurred. the Constitution under its social justice policy, calls for a liberal and sympathetic
Thus, if by reason of the injury or sickness he sustained, the employee is unable to approach to the legitimate appeals of disabled workers like Rago. Compassion for them
perform his customary job for more than 120 days and he does not come within the is not a dole out but a right.38
coverage of Rule X of the Amended Rules on Employees Compensability (which, in a
WHEREFORE, the decision of the Court of Appeals dated 18 October 2001 and its
more detailed manner, describes what constitutes temporary total disability), then the
resolution of 30 January 2002 in CA-G.R. SP No. 63389 reversing the Social Security
said employee undoubtedly suffers from permanent total disability regardless of whether
Commissions Resolution of 20 December 2000 in SSC Case No. 4-15009-2000 are
or not he loses the use of any part of his body.
hereby AFFIRMED.
We further reiterate that disability should be understood less on its medical significance
than on the loss of earning capacity. Permanent total disability means disablement of an
employee to earn wages in the same kind of work, or work of similar nature that he was
trained for or accustomed to perform, or any kind of work which a person of his mentality
and attainment could do. It does not mean absolute helplessness.35 Moreover, a persons
disability may not manifest fully at one precise moment in time but rather over a period of
time. It is possible that an injury which at first was considered to be temporary may later

94
G.R. No. 117572 January 29, 1998 total disability. Moreover, she was told that the pension granted to her was the maximum
benefit due her under the Rating Schedule established by the ECC. 7
GOVERNMENT SERVICE INSURANCE SYSTEM (GSIS), petitioner,
vs. THE HON. COURT OF APPEALS and ROSA BALAIS, respondents. ROMERO, J.: The denial of her request then prompted private respondent to file on May 4, 1993 a
request for reconsideration of the earlier denial of her application for the conversion of
This is a petition for review on certiorari seeking to annul and set aside decision 1 her disability benefits from permanent partial disability to permanent total disability,
rendered by the Court of Appeals dated October 17, 1994 which reversed the decision explaining that since the time of her operation she continued to suffer from dizziness,
issued by the Employees. Compensation Commission (ECC) in ECC Case No. 6462 headaches, loss of memory and inability to properly sleep. Moreover, she contended that
dated November 17, 1993, affirming the decision of petitioner Government Service there were instances when she felt extremely weak and could not walk without support.
Insurance System (GSIS) that private respondent Rosa Balais is not entitled to She further stated that she was required to take medication for life. 8
conversion of compensation benefits from partial disability for a 9-month period after
retirement to total disability. The GSIS, however, denied reconsideration which denial was later on affirmed on appeal
by the ECC in its decision dated November 17, 1993. 9
Private respondent started working as an emergency employee of the National Housing
Authority (NHA) in 1952. She then rose from the ranks until she was promoted to Chief Undaunted, private respondent filed a petition for review with the Court of Appeals, which
Paying Cashier in 1984. 2 promulgated a decision favorable to her on October 17, 1994, the dispositive portion of
which reads:
Medical records disclose that on December 17, 1989, private respondent suddenly
experienced chills, followed by loss of consciousness. She was brought to the Capitol WHEREFORE, this petition for review is granted and the decision of the Employees
Medical Center where she was sedated but allowed to go home after three hours. Later, Compensation Commission in ECC Case 6462 dated 17 November 1993 should be, as it
on the same day, however, she vomited several times and suffered from parie-occipital is hereby REVERSED . 10
pains. She was again rushed to U.E.R.M. Medical Center where she underwent a
thorough medical examination. She was diagnosed be suffering from Subarachnoid Petitioner GSIS now comes to this Court by way of a petition for review on certiorari
Hemorrhage Secondary to Ruptured Aneurysm. After undergoing craniotomy, she was alleging that the Court of Appeals erred:
finally discharged from the hospital January 20, 1990. 3
1. In reversing and setting aside the decision of the Employees' Compensation
Despite her operation, private respondent could not perform her duties as efficiently as Commission which affirmed the decision of herein petitioner GSIS.
she had done prior to her illness. This forced her to retire
early from the government service on March 1, 1990 at the age of sixty-two (62) years. 4 2. In considering the ailment of Subarachnoid Hemorrhage Secondary to Ruptured
Aneurysm as permanent total disability. 11
On March 13, 1990, private respondent filed a claim for disability benefits with the GSIS
for the above-described ailment. Her illness was evaluated as compensable by the GSIS The sole issue to be resolved here is whether private respondent is entitled to conversion
Medical Evaluation and Underwriting Group. Accordingly, the GSIS granted her of her benefits from permanent partial disability to permanent total disability.
temporary total disability (TTD) benefits for the period starting from December 17, 1989
Both petitioner and the Solicitor General argue against private respondent's request for
to January 31, 1990 and subsequently, permanent partial disability (PPD) benefits for
the conversion of her disability benefits on the ground that she had already been
nine months starting on March 2, 1990. 5
awarded the benefits commensurate to the degree of her physical condition at the time of
In a letter dated November 17, 1992, private respondent requested the GSIS for the her retirement. They contend that her ailment Subarachnoid Hemorrhage Secondary to
conversion of the classification of her disability benefits from permanent partial disability Ruptured Aneurysm only entitled her to receive benefits for permanent partial disability
(PPD) to permanent total disability (PTD). 6 and such illness does not satisfy the criteria for permanent total disability. Furthermore,
they aver that private respondent's request for conversion cannot be granted because
Such plea, however, was denied by the GSIS in a letter dated December 8, 1992 on the other than alleging abnormalities and non-improvement of memory she failed to show
ground that the GSIS Medical Evaluation and Underwriting Department which evaluated sufficient medical basis that would warrant said conversion.
her claim found no basis to alter its findings. She was informed that the results of the
physical examination conducted on June 5, 1990 did not satisfy the criteria for permanent Petitioner also maintains that, although private respondent was awarded permanent
partial disability benefits for nine (9) months commencing on the day of her retirement, it
95
does not automatically follow that petitioner recognized her disability as permanent and disability is permanent and total. As held by this Court, "the fact of an employee's
total because the period of 120 days mentioned in Sec. 2, Rule 7 of the Amended Rules disability is placed beyond question with the approval of the employee's optional
on Employees' Compensation is not the determining factor. Petitioner contends that an retirement, for such is authorized only when the employee is physically incapable to
injury or illness that goes beyond the said 120 days may still be considered as permanent render sound and efficient service' . . . ." 7
partial disability pursuant to Sec. 2, Rule 10 of the same rules.
In the case at bar, the denial of the claim for permanent total disability benefit of private
The Court has already dismissed the same arguments before in similar cases. respondent who, for 38 long years during her prime had rendered her best service with
Petitioner's insistence must therefore suffer the same fate in the instant case. an unblemished record and who was compelled to retire on account of her worsening
condition, would indeed subvert the salutary intentions the law in favor of the worker. The
While it is true that the degree of private respondent's physical condition at the time of Court, therefore, affirms the decision of respondent Court of Appeals decreeing
her retirement was not considered as permanent total disability, yet, it cannot be denied conversion of private respondent's disability from permanent partial disability to
that her condition subsequently worsened after her head operation and consequent permanent total disability.
retirement. In fact, she suffered afterwards from some ailments like headaches,
dizziness, weakness, inability to properly sleep, inability to walk without support and One final note. The GSIS and ECC should be commended for their vigilance against
failure to regain her memory. All these circumstances ineluctably demonstrate the unjustified claims that will deplete the funds intended to be disbursed for the benefit only
seriousness of her condition, contrary to the claim of petitioner. More than that, it was of deserving disabled employees. Nevertheless, we should caution them against a too
also undisputed that private respondent was made to take her medication for life. strict interpretation of the rules lest it result in the withholding of full assistance from those
whose capabilities have been diminished, if not completely impaired, as a consequence
A person's disability may not manifest fully at one precise moment in time but rather over of their dedicated service in the government. A humanitarian impulse, dictated by no less
a period of time. It is possible that an injury which at first was considered to be temporary than the Constitution itself under the social justice policy, calls for a liberal and
may later on become permanent or one who suffers a partial disability becomes totally sympathetic approach to the legitimate appeals of disabled public servants like the herein
and permanently disabled from the same cause. 12 private respondent. Compassion for them is not a doleout but a right. 18

In the same vein, this Court has ruled that "disability should not be understood more on WHEREFORE, the instant petition is hereby DENIED, and the challenged decision of the
its medical significance but on the loss of earning capacity." 13 Private respondent's Court of Appeals dated October 17, 1994 is AFFIRMED in toto.
persistent illness indeed forced her to retire early which, in turn, resulted in her
unemployment, and loss of earning capacity. SO ORDERED.

Judicial precedents likewise show that disability is intimately related to one's earning
capacity. It has been a consistent pronouncement of this Court that "permanent total
disability means disablement of an employee to earn wages in the same kind of work, or
work of a similar nature that she was trained for or accustomed to perform, or any kind of
work which a person of her mentality attainment could do." 14 "It does not mean state of
absolute helplessness, but inability to do substantially all material acts necessary to
prosecution of an occupation for remuneration or profit in substantially customary and
usual manner." 15

The Court has construed permanent total disability as the "lack of ability to follow
continuously some substantially gainful occupation without serious discomfort or pain and
without material injury or danger to life." 16 It is, therefore, clear from established
jurisprudence that the loss of one's earning capacity determines the disability
compensation one is entitled to.

It is also important to note that private respondent was constrained to retire the age of 62
years because of her impaired physical condition. This, again, another indication that her

96
G.R. No. 132648 March 4, 1999 But petitioner GSIS denied his request for Permanent Total Disability on the ground that
the degree of private respondent's disability as evaluated by, petitioner's medical officers,
GOVERNMENT SERVICE INSURANCE SYSTEM (GSIS), petitioner, did not satisfy the criteria for Permanent Total Disability. His motion for reconsideration
vs. COURT OF APPEALS and ROMEO S. BELLA, respondents. PURISIMA, J.: was similarly denied. On appeal, the Employees Compensation Commission (ECC)
affirmed the Decision of the GSIS, denying private respondent's request for conversion of
At bar is a Petition for Review on Certiorari under Rule 45 of the Revised Rules of Court his Permanent Partial Disability benefit to Permanent Total Disability benefit.
seeking to set aside the Decision 1 of the Court of Appeals 2 dated February 12, 1998 in
CA-G.R. SP NO. 44465, reversing the Decision of the Government Service Insurance Dissatisfied, private respondent went to the Court of Appeals on a Petition for Review.
System (GSIS), which affirmed the Decision of the Employees Compensation
Commission (ECC) in ECC Case No. M.G. 7872 - 1295. On February 12, 1998, the Court of Appeals came out with its decision reversing the
Decision of the Employees Compensation Commission; disposing, thus:
The antecedent facts are, as follows:
WHEREFORE, the appealed decision is hereby REVERSED and SET ASIDE.
On June 10, 1964, private respondent Romeo S. Bella was employed by the Bureau of Accordingly, another judgment is rendered granting petitioner's claim for Permanent Total
Animal Industry as a livestock inspector. He retired from the service on August 16, 1986. Disability (PTD) benefits.
On July 16, 1987, he was re-employed by the Department of Agriculture as Agricultural
Food Technologist and on March 1, !994, promoted to the position of Agriculturist II. No Pronouncements as to costs.

As disclosed by his records of employment, private respondent was suspended without SO ORDERED. 9
pay from September 1, 1993 to March 1, 1994. A month after, or on April 1, 1994, to be
precise, he was reinstated to his former position as Agriculturist II at the Provincial Therefrom, petitioner GSIS found its way to this Court via the present petition, theorizing:
Agricultural Office in Tacurong, Sultan Kudarat. On July 1, 1995, private respondent who
was then 56 3 years old, filed a terminal leave of absence due to physical disability. I

The medical records of private respondent reveal that he was suffering from Acute THAT THE RESPONDENT HONORABLE COURT OF APPEALS GRAVELY ERRED IN
Myocardial Infraction 4 and was confined at the Notre Dame Hospital in Cotabato City REVERSING AND SETTING ASIDE THE DECISION OF THE EMPLOYEES
from September 13, 1988 to September 19, 1988 and at the Philippine Heart Center from COMPENSATION COMMISSION WHICH AFFIRMED THE DECISION OF HEREIN
September 6, 1994 to September 26, 1994. PETITIONER GSIS.

Thus, private respondent filed with the GSIS Cotabato Branch, a claim for compensation II
benefits under P.D. 626, 5 as amended. Finding his application meritorious and his
THAT THE HONORABLE COURT OF APPEALS ERRED IN CONSIDERING THE
ailment compensable, the GSIS awarded him a Temporary Total Disability income benefit
CONVERSION OF PERMANENT PARTIAL DISABILITY (PPD) BENEFITS OF HEREIN
during the periods of July 16 to July 21, 1994 and August 24 to August 29, 1994, as well
RESPONDENT TO PERMANENT TOTAL DISABILITY UNDER P.D. 626, AS
as reimbursement for medical expenses. Private respondent Romeo S. Bella was also
AMENDED.
granted a Permanent Partial Disability income benefit equivalent to thirty-eight (38)
months for his Ischemic Cardiomayopathy. III
Private respondent requested for the conversion of his benefits from Permanent Partial THAT THE DECISION OF THE RESPONDENT HONORABLE COURT OF APPEALS IS
Disability to Permanent Total Disability, reasoning out that his ailments of Ischemic CONTRARY TO LAW AND APPLICABLE JURISPRUDENCE.
Cardiomayopathy 6 and Chronic Obstructure Pulmonary Disease 7 rendered him unable
to engage in any gainful occupation for a continuous period exceeding 120 days, as The pivot of inquiry here is: whether or riot the private respondent is entitled to permanent
certified to by his attending physicians, Dr. Romulo Uy, Dr. Anne Marie Luat, Dr. Danilo total disability benefits.
Rustia, Dr. Juanito Lastimosa and Dr. Eldefonso Maglasang. 8
The labor Code classifies employees' disability into three distinct categories, namely: a)
10
temporary total disability; b) permanent total

97
disability; 11 and c) permanent partial disability. 12 Section 2, Rule VII, of the Rules and Petitioner contends that the criteria for Permanent Total Disability, like permanent
Regulation Implementing Title II, Book IV of the Labor Code defines and clarifies these complete paralysis of two, limbs have not been met 17 by private respondent's ailment
categories, as follows: and physical condition. As aptly pointed out by the Solicitor General, "total disability does
not mean a state of absolute helplessness, but disablement of an employee to earn
Sec. 2. Disability. (a) A total disability is temporary if as a result of the injury or wages in the same kind of work or a work of similar nature, that he was trained or
sickness the employee is unable to perform any gainful occupation for a continuous accustomed to perform, or any kind of work which a person of his mentality and
period not exceeding 120 days, except as otherwise provided for in Rule X of these attachments could do. 18 The fact that he was forced to retire at the early age of 56, due
Rules. to a sickness disabling him from performing his job as Agriculturist II, qualifies his
disability as a Permanent Total Disability, though he lost no use of any particular
(b) A disability is total and permanent if as a result of the injury or sickness the employee anatomical part of his body.
is unable to perform any gainful occupation for a continuous period exceeding 120 days
except as otherwise provided for in Rule X 13 of these Rules. So also, no less than five doctors certified that private respondent's illness disabled him
from performing any gainful occupation for a continuous period exceeding 120 days.
(c) A disability is partial and permanent if as a result of the injury or sickness the Then too, even petitioner GSIS granted private respondent an income benefit amounting
employee suffers a permanent partial loss of the use of any part of his body. to the equivalent of 38 months. Well settled is the rule that a physician's report of
sickness or accident substantiates the disability claim. 19 "A doctor's certification as to the
In Vicente vs. Employees Compensation Commission, 14 the Court laid down the litmus
nature of the claimant's disability may be given credence as he would not normally make
test and distinction between Permanent Total Disability and Permanent Partial Disability,
false certification for the sake of a lowly school teacher." 20
to wit:
It is then beyond cavil that the sickness of the private respondent made him unable to
. . . While "permanent total disability" invariably results in an employee's loss of work or
perform any gainful occupation for a continuous period exceeding 120 days, thus entitling
inability to perform his usual work, "permanent partial disability," on the other hand,
him to permanent total disability benefits.
occurs when an employee loses the use of any particular anatomical part of his body
which disables him to continue with his former work. Stated otherwise, the test of whether Clearly, the position taken by the GSIS and the ECC runs counter to the avowed policy of
or not an employee suffers from "permanent total disability" is a showing of the capacity the State to construe social legislations liberally in favor of the beneficiaries. "The court
of the employee to continue performing his work notwithstanding the disability he takes this occasion to stress once more its abiding concern for the welfare of the
incurred. Thus, if by, reason of the injury or sickness he sustained, the employee is government workers, especially the humble rank and file, whose patience, industry and
unable to perform his customary job for more than 120 days and he does not come within dedication to duty have often gone unheralded, but who, in spite of every little
the coverage of Rule X of the Amended Rules on Employees Compensability (which, in a recognition, plod on dutifully to perform their appointed tasks. It is for this reason that the
more detailed manner, describes what constitutes temporary total disability). then the sympathy of the law on social security is toward its beneficiaries, and the law, by its own
said employee undoubtedly suffers from "permanent total disability" regardless of terms, requires a construction of utmost liberality in their favor." 21
whether or not he loses the use of any part of his body. 15
Sec. 18, Article II of the Constitution, provides:
To justify its finding that private respondent's disability cannot be a Permanent Total
Disability, the ECC ratiocinated: Sec. 18. The State affirms labor as a primary social economic force. It shall protect the
rights of workers and promote their welfare.
. . . Under the ECC Schedule of Compensation, appellant was already awarded the
maximum benefits commensurate to the degree of his disability. Under this schedule, All things studiedly considered, we are of the ineluctable conclusion that the Court of
appellant's Ischemlc Cardiomyopathy merits a disability rating of 38 months Permanent Appeals erred not in granting private respondent's claim for Permanent Total Disability
Partial Disability (PPD), and this has already been granted him. The nature of his ailment benefits.
and his present physical condition which the medical officers of the System were able to
evaluate when he came to follow-up his request showed that the criteria for Permanent WHEREFORE, the petition is hereby DENIED, and the assailed Decision of the Court of
Total Disability (PTD) like the permanent complete paralysis of two limbs has not been Appeals in CA-G.R. SP NO. 44465 AFFIRMED. No pronouncement as to costs.
satisfied. Thus, we see no reason to alter the earlier ruling of the respondent System 16
SO ORDERED.

98
G.R. No. L-58445 April 27, 1989 2. Whether the presumption of compensability is absolutely inapplicable under the
present compensation laws when a disease is not listed as occupational disease. (p. 17,
ZAIDA G. RARO, petitioner, Rollo)
vs. EMPLOYEES' COMPENSATION COMMISSION and GOVERNMENT SERVICE
INSURANCE SYSTEM (Bureau of Mines and Geo-Sciences), respondents. The key argument of the petitioner is based on the fact that medical science cannot, as
GUTIERREZ, JR., J.: yet, positively identify the causes of various types of cancer. It is a disease that strikes
people in general. The nature of a person's employment appears to have no relevance.
Jurisprudence on the compensability of cancer ailments has of late become a source of Cancer can strike a lowly paid laborer or a highly paid executive or one who works on
confusion among the claimants and the government agencies enforcing the employees' land, in water, or in the bowels of the earth. It makes the difference whether the victim is
compensation law. The strongly lingering influence of the principles of 94 presumption of employed or unemployed, a white collar employee or a blue collar worker, a
compensability" and "aggravation" found in the defunct Workmen's Compensation Act but housekeeper, an urban dweller or a resident of a rural area.
expressly discarded under the present compensation scheme has led to conflict and
inconsistency in employees' compensation decisions. It is not also correct to say that all cancers are not compensable. The list of occupational
diseases prepared by the Commission includes some cancers as compensable, namely
The problem is attributable to the inherent difficulty in applying the new principle of "proof
of increased risk." There are two approaches to a solution in cases where it cannot be
proved that the risk of contracting an illness not listed as an occupational disease was Occupational Diseases Nature of Employment
increased by the claimant's working conditions. The one espoused by the petitioner
insists that if a claimant cannot prove the necessary work connection because the causes xxx xxx xxx xxx
of the disease are still unknown, it must be presumed that working conditions increased
the risk of contracting the ailment. On the other hand, the respondents state that if there 16. Cancer of stomach and other Woodworkers, wood products lymphatic and blood
is no proof of the required work connection, the disease is not compensable because the forming vessels; industry carpenters, nasal cavity and sinuses and employees in pulp
law says so. and paper mills and plywood mills.

The petitioner states that she was in perfect health when employed as a clerk by the 17. Cancer of the lungs, liver Vinyl chloride workers, and brain plastic workers.
Bureau of Mines and Geo-Sciences at its Daet, Camarines Norte regional office on
(Annex A, Amended Rules on Employees Compensation)
March 17, 1975. About four years later, she began suffering from severe and recurrent
headaches coupled with blurring of vision. Forced to take sick leaves every now and The petitioner questions the above listing. We see no arbitrariness in the Commission's
then, she sought medical treatment in Manila. She was then a Mining Recorder in the allowing vinyl chloride workers or plastic workers to be compensated for brain cancer.
Bureau. There are certain cancers which are reasonably considered as strongly induced by
specific causes. Heavy doses of radiation as in Chernobyl, USSR, cigarette smoke over a
The petitioner was diagnosed at the Makati Medical Center to be suffering from brain
long period for lung cancer, certain chemicals for specific cancers, and asbestos dust,
tumor. By that time, her memory, sense of time, vision, and reasoning power had been
among others, are generally accepted as increasing the risks of contracting specific
lost.
cancers. What the law requires for others is proof.
A claim for disability benefits filed by her husband with the Government Service
The first thing that stands in the way of the petition is the law itself.
Insurance System (GSIS) was denied. A motion for reconsideration was similarly denied.
An appeal to the Employees' Compensation Commission resulted in the Commission's Presidential Decree No. 422, as amended, the Labor Code of the Philippines defines
affirming the GSIS decision. "sickness" as follows:
The following issues are raised in this petition: ART. 167. Definition of Terms. As used in this Title unless the context indicates
otherwise:
1. Whether brain tumor which causes are unknown but contracted during employment is
compensable under the present compensation laws. xxx xxx xxx

99
(1) Sickness means any illness definitely accepted as an occupational disease listed by Employees' Compensation Commission, 98 SCRA 483 [1980]; Armena v. Employees'
the Commission, or any illness caused by employment subject to proof by the employee Compensation Commission, 122 SCRA 851 [1983]; Erese v. Employees' Compensation
that the risk of contracting the same is by working conditions. For this purpose, the Co on Commission, 138 SCRA 192 [1985]; De Jesus v. Employees' Compensation
is empowered to determine and approve occupational and work- related illnesses that Commission, 142 SCRA 92 [1986]; Sarmiento v. Employees' Compensation Commission,
may be considered compensable sable based on hazards of employment. (PD 1368, et al., GR No. 65680, May 11, 1988).
May 1, 1978).
Instead of an adversarial contest by the worker or his family against the employer, we
Section 1 (b), Rule III of the Amended Rules on Employees Compensation clearly defines now have a social insurance scheme where regular premiums are paid by employers to a
who are entitled. It provides: trust fund and claims are paid from the trust fund to those who can prove entitlement.

SECTION 1. In Sarmiento v. Employees' Compensation Commission (supra), we affirmed the validity


of the new law by explaining the present system as follows:
xxx xxx xxx
We cannot give serious consideration to the petitioner's attack against the
(b) For the sickness and the resulting disability or death to be compensable, the sickness constitutionality of the new law on employee's compensation. It must be noted that the
must be the result of an occupational disease under Annex A of these rules with the petitioner filed his claim under the provisions of this same law. It was only when his claim
conditions set therein satisfied; otherwise, proof must be shown that the risk of was rejected that he now questions the constitutionality of this law on appeal by certiorari.
contracting the disease is increase by the working conditions. (Emphasis supplied)
The Court has recognized the validity of the present law and has granted and rejected
The law, as it now stands requires the claimant to prove a positive thing the illness was claims according to its provisions. We find in it no infringement of the worker's
caused by employment and the risk of contracting the disease is increased by the constitutional rights.
working conditions. To say that since the proof is not available, therefore, the trust fund
has the obligation to pay is contrary to the legal requirement that proof must be adduced. xxx xxx xxx
The existence of otherwise non-existent proof cannot be presumed .
The new law establishes a state insurance fund built up by the contributions of employers
In Navalta v. Government Service Insurance System (G.R. No. 46684, April 27, 1988) based on the salaries of their employees. The injured worker does not have to litigate his
this Court recognized the fact that cancer is a disease of still unknown origin which right to compensation. No employer opposes his claim There is no notice of injury nor
strikes; people in all walks of life, employed or unemployed. Unless it be shown that a requirement of controversion. The sick worker simply files a claim with a new neutral
particular form of cancer is caused by specific working conditions (e. g. chemical fumes, Employees' Compensation Commission which then determines on the basis of the
nuclear radiation, asbestos dust, etc.) we cannot conclude that it was the employment employee's supporting papers and medical evidence whether or not compensation may
which increased the risk of contracting the disease . be paid. The payment of benefits is more prompt. The cost of administration is low. The
amount of death benefits has also been doubled.
To understand why the "Presumption of compensability" together with the host of
decisions interpreting the "arising out of and in the course of employment" provision of On the other hand, the employer's duty is only to pay the regular monthly premiums to
the defunct law has been stricken from the present law, one has to go into the distinctions the scheme. It does not look for insurance companies to meet sudden demands for
between the old workmen's compensation law and the present scheme. compensation payments or set up its own fund to meet these contingencies. It does not
have to defend itself from spuriously documented or long past claims.
On January 1, 1975, the Workmen's Compensation Act was replaced by a novel scheme
under the new Labor Code. The new law discarded, among others, the concepts of The new law applies the social security principle in the handling of workmen's
"presumption of compensability" and "aggravation" and substituted a system based on compensation. The Commission administers and settles claims from a fired under its
social security principles. The present system is also administered by social insurance exclusive control. The employer does not intervene in the compensation process and it
agencies the Government Service Insurance System and Social Security System has no control, as in the past, over payment of benefits. The open ended Table of
under the Employees' Compensation Commission. The intent was to restore a sensible Occupational Diseases requires no proof of causation. A covered claimant suffering from
equilibrium between the employer's obligation to pay workmen's compensation and the an occupational disease is automatically paid benefits.
employee's right to receive reparation for work- connected death or disability. (Sulit v.

100
Since there is no employer opposing or fighting a claim for compensation, the rules on We have no actuarial expertise in this Court. If diseases not intended by the law to be
presumption of compensability and controversion cease to have importance. The compensated are inadvertently or recklessly included, the integrity of the State Insurance
lopsided situation of an employer versus one employee, which called for equalization Fund is endangered. Compassion for the victims of diseases not covered by the law
through the various rules and concepts favoring the claimant, is now absent. ignores the need to show a greater concern for the trust fund to winch the tens of millions
of workers and their families look for compensation whenever covered accidents, salary
xxx xxx xxx and deaths occur. As earlier stated, if increased contributions or premiums must be paid
in order to give benefits to those who are now excluded, it is Congress which should
The petitioner's challenge is really against the desirability of the new law. There is no amend the law after proper actuarial studies. This Court cannot engage in judicial
serious attempt to assail it on constitutional grounds. legislation on such a complex subject with such far reaching implications.

The wisdom of the present scheme of workmen's compensation is a matter that should We trust that the public respondents and the Social Security System are continually
be addressed to the President and Congress, not to this Court. Whether or not the former evaluating the actuarial soundness of the trust funds they administer. In this way, more
workmen's compensation program with its presumptions, controversions, adversarial types of cancers and other excluded diseases may be included in the list of covered
procedures, and levels of payment is preferable to the present scheme must be decided occupational diseases. Or legislation may be recommended to Congress either
by the political departments. The present law was enacted in the belief that it better increasing the contribution rates of employers, increasing benefit payments, or making it
complies with the mandate on social justice and is more advantageous to the greater easier to prove entitlement. We regret that these are beyond the powers of this Court to
number of working men and women. Until Congress and the President decide to improve accomplish.
or amend the law, our duty is to apply it. (at pp. 4, 5, and 6)
For the guidance of the administrative agencies and practising lawyers concerned, this
The non-adversarial nature of employees' compensation proceedings is crucial to an decision expressly supersedes the decisions in Panotes v. Employees' Compensation
understanding of the present scheme. There is a widespread misconception that the poor Commission [128 SCRA 473 (1984)]; Mercado v. Employees' Compensation Commission
employee is still arrayed against the might and power of his rich corporate employer. [127 SCRA 664 (1984)]; Ovenson v. Employees' Compensation Commission [156 SCRA
Hence, he must be given all kinds of favorable presumptions. This is fallacious. It is now 21 (1987)]; Nemaria v. Employees' Compensation Commission [155 SCRA 166 (1987)]
the trust fund and not the employer which suffers if benefits are paid to claimants who are and other cases with conclusions different from those stated above.
not entitled under the law. The employer joins its employees in trying to have their claims
approved. The employer is spared the problem of proving a negative proposition that the WHEREFORE, the petition is hereby DISMISSED The questioned decision of the public
disease was not caused by employment. It is a government institution which protects the respondents is AFFIRMED.
stability and integrity of the State Insurance Fund against the payment of non-
compensable claims. The employee, this time assisted by his employer, is required to SO ORDERED.
prove a positive proposition, that the risk of contracting the is increased by working
conditions.

The social insurance aspect of the present law is the other important feature which
distinguishes it from the old and familiar system.

Employees' compensation is based on social security principles. All covered employers


throughout the country are required by law to contribute fixed and regular premiums or
contributions to a trust fund for their employees. Benefits are paid from this trust fund. At
the time the amount of contributions was being fixed, actuarial studies were undertaken.
The actuarially determined number of workers who would probably file claims within any
given year is important in insuring the stability of the said fund and making certain that
the system can pay benefits when due to all who are entitled and in the increased
amounts fixed by law.

101
G. R. No. 84777 January 30, 1992 On 29 September 1987, the GSIS again denied petitioner's request. 7 This denial was
appealed by the petitioner to the Employees' Compensation Commission (ECC) in a
JOSE A. BEJERANO, petitioner, letter dated 8 October 1987. On 5 July 1988, the ECC ruled that the disability benefits
vs. EMPLOYEES COMPENSATION COMMISSION, respondent. PADILLA, J.: previously awarded to the petitioner were already commensurate to the degree of the
petitioner's disability. In affirming the GSIS decision, the ECC declared, in part, that:
Assailed in this petition for review on certiorari is the decision of respondent Employees'
Compensation Commission (ECC) affirming the award of the Government Service . . . Appellant's disability could not be considered permanent total disability in the sense
Insurance System (GSIS) to petitioner Jose Bejerano of temporary total disability benefits that he is not completely incapable of engaging in gainful occupation. . . . 8
for the period of 6-9 December 1985 and permanent partial disability benefits for nineteen
(19) months corresponding to the period from January 1986 to July 1987.* Hence, this petition.

Petitioner Jose Bejerano was a cash supervisor of the Development Bank of the The only issue to be resolved is whether petitioner's disability would entitle him to
Philippines, Zamboanga City Branch Office. He retired at the age of sixty-two (62), after compensation benefits corresponding to permanent total disability.
having served the bank for almost twenty-nine (29) years. 1 Medical records disclose that
sometime in 1985, petitioner complained of dyspnea or shortness of breath accompanied Petitioner contends that there is substantial evidence showing that his disability is
by productive cough. He was admitted to the Brent Hospital, where he was attended to permanent and total. On the other hand, respondent ECC argues that the petitioner's
by Dr. Arcadio Salazar, who medically diagnosed his illness as Chronic Obstructive Lung disability was classified by respondent as permanent partial because the criteria for
Disease Emphysema with severe asthmatic component. The medical certificate issued permanent total disability, as laid down by the medical guidelines of the Commission,
by Dr. Salazar states that petitioner was admitted three (3) times to Brent Hospital in the were not satisfied. Respondent maintains that "disability should be understood more on
year 1985, not including the petitioner's confinement at Brent Hospital on 6-9 December its medical significance rather than loss of earning capacity." 9
1985, for treatment of chronic obstructive lung disease. Dr. Salazar, in the same medical
certificate, classified petitioner's disability as permanent total. 2 We find for petitioner.

Due to his disability, petitioner was forced to retire at the age of sixty-two (62) on 31 Respondent ECC's contention that "disability should be understood more on its medical
December 1985 and received the sum of P60,890.57 corresponding to five (5) years significance rather than loss of earning capacity" is without basis in jurisprudence.
lump sum of his annuity. 3 Precedents in earlier cases show that disability is intimately related to one's earning
capacity.
In the year 1987, petitioner was again confined at the Zamboanga Regional Hospital on
the following dates: It has been repeatedly held by this Court that "permanent total disability means
disablement of an employee to earn wages in the same kind of work, or work of a similar
1. 27 February 1987 up to 2 March 1987; nature that she was trained for or accustomed to perform, or any kind of work which a
person of her mentality and attainment could do." 10
2. 23 April 1987 up to 26 April 1987;
It does not mean state of absolute helplessness, but inability to do substantially all
4
3. 5 May 1987 up to 18 May 1987. material acts necessary to prosecution of an occupation for remuneration or profit in
substantially customary and usual manner. 11
Subsequently, petitioner filed a claim for compensation benefits with the Government
Service Insurance System (GSIS), which was favorably acted upon. The GSIS awarded Permanent total disability is the lack of ability to follow continuously some substantially
petitioner Bejerano benefits for temporary total disability for the period of 6-9 December gainful occupation without serious discomfort or pain and without material injury or
1985 and permanent partial disability from January 1986 to July 1987. 5 danger to life. 12

Not satisfied with the award, petitioner in a letter dated 17 March 1987 requested the It is therefore clear from the aforecited rulings that the loss of one's earning capacity
GSIS for a change of the classification of his disability benefits from permanent partial to determines the disability compensation one is entitled to. Thus, this Court ruled:
permanent total. Such request was denied by the GSIS, which prompted petitioner to file,
on 13 July 1987, a request for reconsideration of the earlier denial of his request for the
conversion of his disability benefits from permanent partial to permanent total. 6
102
In disability compensation, it is not the injury which is compensated, but rather it is the second certification on July 12, 1979, knowing fully well that he would be perpetuating an
incapacity to work resulting in the impairment of one's earning capacity (Ulibas vs. erroneous or false report. Under normal circumstances, he would not sacrifice his
Republic, 83 SCRA 819; Roma vs. WCC, 80 SCRA 1270). 13 medical career for the sake of a lowly public school teacher. 19

A thorough examination of the records convinces us that petitioner's claim is It is also of importance to note that petitioner was forced to retire at the age of 62
substantiated with enough evidence to show that his disability is permanent and total. because of his physical condition. This, again, is another indication that petitioner's
disability is permanent and total. As held by this Court, "the fact of an employee's
First, the attending physician during the petitioner's treatment on 6-9 December 1985 at disability is placed beyond question with the approval of the employee's optional
Brent Hospital, Zamboanga Branch, Dr. Arcadio Salazar, diagnosed petitioner's condition retirement, for such is authorized only when the employee is "physically incapable to
as Chronic Obstructive Lung Disease and classified petitioner's disability as permanent render sound and efficient service" . . ." 20
and total. 14 Second, the Medical Examiner's report on Claim for Disability Benefits dated
26 August 1987 prepared by Medical Examiner Silvester L. Martinez also classified "Finally, denying petitioner's permanent total disability benefit, who for more than twenty
petitioner's disability as total and permanent and described the symptoms of petitioner's (20) years had rendered his best service unblemished and only because his ailments
illness as follows: forced him to retire, would subvert the very essence of the Workmen's Compensation Act
to implement the social justice provision of the Constitution." 21
Shortness of breath, difficulty of walking distances longer than ten (10) meters without
having respiratory problems; inability to walk a flight of stairs without intervals of rest. 15 WHEREFORE, the decision of the Employees' Compensation Commission is MODIFIED
and the GSIS is hereby ordered to pay petitioner compensation benefits for permanent
Again, in another medical certificate dated 8 June 1988 issued by Dr. Arcadio Salazar, total disability effective January 1986, which is the start of the period when his earning
the petitioner's disability was classified as total and permanent for the following reasons: capacity was impaired due to his disability.

1. The patient has a tendency to develop acute exacerbation of his ailment resulting in SO ORDERED.
frequent hospitalizations (1985 to 1987);

2. The patient's condition stabilizes only on strict confinement at home;

3. The physical capacity of the patient has deteriorated markedly. He could walk a
distance of only 10 meters before dyspnea develops;

16
4. The patient is confined at home and under continuous medication.

It is evident from the foregoing that, as per his physician's opinion, petitioner is totally
incapacitated from engaging in any gainful occupation, and that therefore his disability is
permanent and total.

In earlier cases, this Court ruled that the physician's report of sickness or accident
substantiates the disability claim. 17

In one case, this Court ruled that a doctor's certification as to the nature of claimant's
disability may be given credence as he would not normally make a false certification for
the sake of a lowly school teacher. 18 According to this Court:

. . . No physician in his right mind and who is aware of the far-reaching and serious effect
that his statements would cause on a money claim filed with a government agency, would
issue certifications indiscriminately without even minding his own interests and protection.
In fact, if he were not sure of what he was certifying to, then he would not have issued the
103
G.R. No. 132558 May 9, 2000 Records Division, the cause of death was "uremia [secondary] to chronic renal failure.
Chronic glomerulonephritis. . . ."7
BEBERISA RIO, petitioner,
vs. EMPLOYEES COMPENSATION COMMISSION and SOCIAL SECURITY SYSTEM, Petitioner Beberisa Rio, his spouse, filed a claim for death benefits before the Social
respondents. PANGANIBAN, J.: Security System (SSS). However, the SSS denied the claim in this wise:8

Death benefits under the Labor Code, as amended, are awarded only when the cause of The cause of death of your husband cannot be considered work-connected because
death is listed as an occupational disease by the Employees' Compensation based on the clinical abstract you submitted, your husband had already on and off attack
Commission, or when the claimant presents proof that the working conditions increased of edema and hypertension which are signs of kidney disease even before his
the risk of contracting the fatal disease. employment with the company.9

The Case On appeal, the ECC affirmed the findings of the SSS. 10 Ruling that petitioner failed to
present relevant evidence to establish the causal connection between the deceased's
Before us is a Petition for Review on Certiorari under Rule 45 of the Rules of Court ailment and his work as stevedore, the ECC held:
seeking to set aside the June 30, 1997 Decision1 of the Court of Appeals (CA)2 in CA-GR
SP No. 41257. The dispositive portion of the challenged CA Decision reads: Moreover, medical evaluation suggests that Uremia is the sine qua non of chronic renal
failure. It results from the retention in the blood of urea and other end products of
WHEREFORE, the decision of the Employees' Compensation Commission is metabolism normally excreted into the urine. Chronic Renal Failure on the other hand, is
AFFIRMED, and the petition DISMISSED.3 a toxic clinical condition associated with renal insufficiency and retention in the blood of
nitrogenous waste products. It may be due to the following:
The Decision of the Employees' Compensation Commission (ECC) affirmed by the CA
disposed as follows: a) nephritis

Based on the foregoing medical findings, it would appear that the etiology of deceased's b) congestive heart failure
ailment which caused his death is not attributable to his employment. Since the ailment is
not deemed work-connected, the instant claim for death benefits cannot be given due c) couch syndrome
course.
d) poison
WHEREFORE, the decision of the respondent Social Security System appealed from is
hereby AFFIRMED, and the instant case is dismissed for want of merit. 4 (Reference: Harrison's Principles of Internal Medicine, 11th Edition p. 1155).

Petitioner also assails the January 29, 1998 Resolution5 of the appellate court denying Based on the foregoing medical findings, it would appear that the etiology of deceased's
reconsideration. ailment which caused his death is not attributable to his employment. Since the ailment is
not deemed work-connected, the instant claim for death benefits cannot be given due
The Facts course. 11

Virgilio T. Rio Sr., husband of herein petitioner, was employed by Allied Port Services After the ECC denied the Motion for Reconsideration, 12 petitioner appealed to the CA.
Inc. as stevedore since July, 1982. His duties included: (1) handling of steel cargoes; (2)
loading and unloading of silica sand; (3) handling, loading and unloading of lumber Ruling of the Court of Appeals
products; (4) supervising other stevedores; and (5) performing other related work.6
In affirming the ECC, the Court of Appeals ruled:
On July 19, 1992, Virgilio Rio collapsed while working at the South Harbor, Manila. He
was rushed to the Philippine General Hospital (PGH) because of "melena, fever, chills Since petitioner failed to establish any causal connection of the disease which led to the
and abdominal pains 8 days [prior to confinement] . . . ." He died three days later. death of her husband with the nature of his working conditions, and, in particular, that
According to the Medical Certificate issued by Fe B. Bais, chief of the PGH Medical said working condition had increased the risk of contracting the disease, then the claim
for death benefits must fail.

104
The former law on compensation, the Workmen's Compensation Act, was replaced by a failure or
novel scheme in the New Labor Code under the title "Employees" Compensation and glomerulonephritis. 19
State Insurance Fund.' The new law discarded, among others, the concept of
"presumption of compensability and aggravation" and substituted one based on social As we ruled in Sante v. Employees' Compensation Commission, 20 ". . . a claimant must
security principles. The purpose was to restore a sensible equilibrium between the submit such proof as would constitute a reasonable basis for concluding either that the
employer's obligation to pay workmen's compensation and employee's right to receive conditions of employment of the claimant caused the ailment or that such working
reparation for work-connected death or disability. . . . conditions had aggravated the risk of contracting that ailment. What kind and quantum of
evidence would constitute an adequate basis for a reasonable man (not necessarily a
While as a rule, labor and social welfare legislation should be liberally construed in favor medical scientist) to reach one or the other conclusion, can obviously be determined only
of the applicant, such liberal construction of labor laws may not be applied where the on a case-to-case basis. That evidence must, however, be real and substantial, and not
pertinent provisions of law are clear and leave no room for interpretation. 1 merely apparent; for the duty to prove work-causation or work-aggravation imposed by
existing law is real . . . not merely apparent." At most, petitioner merely claims that:
Hence, this Petition for Review. 14
. . . The nature of his work required physical strength in handling cargoes and at the
Issue same time giving full attention in supervising his men as the group's leadman assigned at
Del Pan Area. It is worth mentioning that in the place where the deceased was assigned,
The lone issue submitted for this Court's resolution is: there were no available comfort rooms to enable him to answer the "call of nature". In
effect, delayed urination was a reality, coupled with the fact that being the leadman of his
Whether . . . petitioner's claim for death benefits under P.D. No. 626, as amended, shall
group, his continuing physical presence at the work's premises was indispensable. . . . 21
prosper under the increased risk theory. 15
Such bare allegation does not ipso facto make Virgilio's death compensable. Awards of
This Court's Ruling
compensation cannot rest on speculations or presumptions. 22 The beneficiaries must
The Petition has no merit. present evidence to prove a positive proposition. 2

Main Issue: While this Court has ruled that the sympathy of the law on social security is toward its
beneficiaries, 24 it is likewise important to note that such sympathy must be balanced by
Compensability of Rio's Death the equally vital interest of denying undeserving claims for compensation. "Compassion
for the victims of diseases not covered by the law ignores the need to show a greater
Under the Labor Code, as amended, 16 the beneficiaries of an employee are entitled to concern for the trust fund to which the tens of millions of workers and their families to look
death benefits if the cause of death is a sickness listed as occupational disease by the to for compensation whenever covered accidents, diseases and deaths occur." 25 In this
ECC; or any other illness caused by employment, subject to proof that the risk of case, this Court has no other course but to apply the clear provisions of the law. 26
contracting the same is increased by the working conditions. 17
WHEREFORE, the Petition is hereby DENIED and the assailed Decision and Resolution
The primary and antecedent causes of Virgilio Rio's death are not listed as occupational AFFIRMED. No pronouncement as to costs.
diseases. Hence, petitioner should have presented substantial evidence, or such relevant
evidence which a reasonable mind might accept as adequate to justify a conclusion, SO ORDERED.
showing that the nature of her husband's employment or working conditions increased
the risk of uremia, chronic renal failure or chronic glomerulonephritis. 18 This the petitioner
failed to do.

Petitioner did not adduce any proof of a reasonable connection between the work of the
deceased and the cause of his death. There was no showing that the progression of the
disease was brought about largely by the conditions in Virgilio's job. Indeed, petitioner
presented no medical history, records or physician's report in order to substantiate her
claim that the working conditions at the Port Area increased the risk of uremia, renal
105
G.R. No. 89168 May 14, 1991 a) For the injury and the resulting death to be compensable, the injury must be the result
of an employment accident satisfying all of the following conditions:
ROSA LENTEJAS, petitioner,
vs. EMPLOYEES' COMPENSATION COMMISSION, respondent. FELICIANO, J.:p 1. the employee must have been injured at the place where his work requires him to be;

Victorio Lentejas, the husband of petitioner Rosa Lentejas, entered the government 2. the employee must have been performing his official function petitions:
service on 13 January 1968 as Maintenance "Capataz" at the Bureau of Public Highways
in Calbayog City, Western Samar. He rose from the ranks until he became a 3. if the injury is sustained elsewhere, the employee must have been executing an order
maintenance foreman in 1978, a construction foreman in 1979, and eventually general for the employer.
foreman at the City Engineer's Office of Calbayog City. His official working hours were
from 8:00 A.M. to 5:00 P.M. xxx xxx xxx

On 25 July 1984, Victorio as general foreman of the City Engineer's Office, went to It is not disputed that on 24 July 1984, Victorio Lentejas, a general foreman at the City
Barangay Banti, Tinambacan District, Calbayog City, there to inspect work being done on Engineer's Office, Calbayog City, was assigned the task of inspecting the construction or
a damaged seawall protecting the shoreline against encroachment by the sea. At around rehabilitation work then in process on the damaged seawall along the shoreline of
4:30 P.M., being then (according to the police report) on his way home from that place, Barangay Banti. While he was on his way from Barangay Banti, Arnulfo Luaton attacked
Victorio was suddenly attacked and stabbed with a knife by Arnulfo Luaton who inflicted and stabbed him with deadly effect. He was dead when the police reached the scene of
upon him multiple stab wounds on different parts of the body causing his instantaneous the crime; the circumstances of Victorio's death were related by an eyewitness to the
death. police officers. Thus, there was no definite evidence to show that the deceased was
actually on his way home at the time of the attack upon him. The killing took place at 4:30
Police investigation showed that the killing was brought about by a personal grudge. The P.M., that is, during the deceased's official hours of work and hence, Victorio might well
deceased Victorio and the killer Arnulfo were owners of adjoining lots situated in San have been on his way back to the City Engineer's Office when he was set upon and
Vicente St., Tinambacan District, Calbayog City and they were in disagreement as to the killed. He was, in other words, on official time and in the course of performing his official
correct boundary between their respective lots. About six (6) months earlier, petitioner functions when he was attacked. The deceased was at a place where his work required
and Arnulfo's father had a heated argument regarding this boundary dispute. him to be, that is, at Barangay Banti and there is no evidence to show that the route he
took leaving the situs of the damaged seawall was not a usual or convenient route from
Because of Victorio's death, petitioner as the surviving spouse filed with the Government that place. He was not, to borrow a phrase from the common law of torts, on "a frolic of
Service Insurance System (GSIS) a claim for compensation benefits under the provisions his own." 1
of Presidential Decree No. 626, as amended. The GSIS denied her claim upon the
ground that the killing was not work-connected since the motive of the assailant in slaying In a line of cases, this Court has held that an injury sustained by the employee while on
her husband was a personal grudge. Petitioner filed a motion for reconsideration, which his way to or from his place of work, and which is otherwise compensable, is deemed to
motion was denied by the GSIS. This denial was elevated by the petitioner to public have arisen out of and in the course of his employment. In Vda. de Torbela V.
respondent Employees' Compensation Commission (ECC). The ECC, however, in its Employees' Compensation Commission, 2 the Court held:
decision dated 24 May 1989, affirmed the decision of the GSIS denying petitioner's claim
for compensation benefits on the same basis that the cause of Victorio's death was not It is a fact that Jose P. Torbela, Sr. died on March 3, 1975 at about 5:45 o'clock in the
work-connected. morning due to injuries sustained by him in a vehicular accident while he was on his way
to school from Bacolod City, where he lived, to Hinigaran, Negros Occidental where the
Deliberating on the instant Petition for Review on Certiorari, the Court believes that the School of which he was the principal was located and that at the time of the accident he
decision of the ECC should be reversed and petitioner's claim for compensation benefits had in his possession official papers he allegedly worked on in his residence on the eve
granted. of his death.

Under, the Amended Rules on Employees' Compensation promulgated by the ECC and The claim is compensable. When an employee is accidentally injured at a point
relating to both government and private sector employees, more particularly Section 1 of reasonably proximate to the place at work, while he is going to and from his work, such
Rule III, the requirements for compensability of an injury and the resulting death are as injury is deemed to have arisen out of and in the course of his employment. 3
follows:

106
4
In Alano v. Employees' Compensation Commission, the Court had before it the Torbela to Lazo, the events which caused or precipitated injury or death did not involve
following facts: the intentional inflicting of harm or injury or death upon the employee concerned. In the
instant case, however, as noted earlier, Victorio's death was the result of a murderous
Dedicacion de Vera, a government employee during her lifetime, worked as principal of assault upon him. Thus, the precise technical issue here is whether or not the
Salinap Community School in San Carlos City, Pangasinan. Her tour of duty was from circumstance that Victorio's death was the result of a criminal attack by another person,
7:30 a.m. to 5:30 p.m. On November 29, 1976, at 7:00 A.M., while she was waiting for a not a member of the staff of the Calbayog City Engineer's Office, had the effect of
ride at Plaza Jaycee in San Carlos City on her way to the school, she was bumped and rendering his death non-compensable although such death had occurred in the course of
run over by a speeding Toyota mini-bus which resulted in her instantaneous death. She performance of official functions.
is survived by her four sons and a daughter.
After careful examination of the Vda. de Torbela, Alano and Lazo cases, we believe and
xxx xxx xxx 5 so hold that the case at bar falls within the scope of the rule set out in those cases. There
is no question that the deceased in the instant case did not foresee, and could not have
and held as follows: foreseen, the attack on himself when he undertook to go to Barangay Banti to inspect
and oversee the municipal construction work then on-going in that place. In so far as the
In this case, it is not disputed that the deceased died while going to her place of work.
mind and will of the victim were concerned, the homicidal intent on the part of Arnulfo
She was at the place where, as the petitioner puts it, her job necessarily required to be if
Luaton was as external and fortuitous an event as a speeding mini-bus or a recklessly
she was to reach her place of work on time. There was nothing private or personal about
negligent jeepney driver. In other words, we do not think that the third person's criminal
the school principal's being at the place of the accident. She was there because her
intent should be regarded as a supervening cause having the effect of nullifying the
employment required her to be there. 6
circumstance that, when Victorio was attacked and killed, he was where his work
The Vda. de Torbela and Alano cases were reiterated in Vano v. Government Service required him to be and that he was then in the course of performing his official duties. It
Insurance System. 7 In the very recent case of Lazo v. Employees' Compensation seems pertinent to note that inflicting physical injuries or death through negligence
Commission, 8 the deceased, a security guard of the Central Bank, was injured when the constitutes a criminal offense both under the Revised Penal Code (Article 365) and a
passenger jeepney he was riding on his way home from work turned turtle. In awarding special statute (Republic Act No. 4136, the Land Transportation and Traffic Code), just as
compensation, the Court held that: much as homicide or murder.

In the case at bar, it can be seen that petitioner left his station at the Central Bank several ACCORDINGLY, the Court Resolved to GRANT due course to the Petition for Review, to
hours after his regular time off, because the reliever did not arrive, and so petitioner was TREAT the Comment of respondent Commission as its Answer, and to REVERSE and
asked to go on overtime. After permission to leave was given, he went home. There is no SET ASIDE the decision of the Employees' Compensation Commission dated 24 May
evidence on record that petitioner deviated from his usual, regular homeward route or 1989. The case is hereby REMANDED to the ECC and the GSIS for disposition
that interruptions occurred in the journey. conformably with this Resolution.

While the presumption of compensability in theory of aggravation under the Workmen's


Compensation Acts (under which the Baldebrin case was decided) may have been
abandoned under the new labor code it is significant that the liberality of the law in
general in favor of the working man still subsists. As agent charged by the law to
implement social justice guaranteed and secured by the Constitution, the Employees
Compensation Commission should adopt a liberal attitude in favor of the employee in
deciding claims for compensability, especially where there is some basis in the facts for
inferring a work connection to the accident. 9

We note that under the foregoing cases, it is quite clear that although Victorio might have
been on his way home from Barangay Banti at the time he was attacked and killed by
Arnulfo Luaton, that circumstance did not by itself operate to render his death non-
compensable. We note, at the same time, that in all the cases noted above from Vda. de

107
[G.R. No. 49454 : December 21, 1990.] 192 SCRA 548 prescriptive period should be counted from the date of the alleged violation as this was
not concealed and did not have to be discovered. The statements of Collantes were not
PEOPLE OF THE PHILIPPINES, Appellant, vs. SALVADOR MONTEIRO, Appellee. admissible evidence because they had not been formally offered; hence, no proof of
CRUZ, J.: discovery had been presented by the appellant. He also suggests that the subsequent
registration of Collantes with the SSS had the effect of extinguishing the offense and that
The appellant is questioning the order of the Court of First Instance of Laguna 1 dated in any case the appeal would place him in double jeopardy.
May 17, 1976, granting the motion to quash the following information against Salvador
Monteiro: In the recent case of Benedicto v. Abad Santos, 5 also involving the failure to register an
employee with the SSS, the Court declared:
That on or about the period from January 1964 to May 31, 1974 at Liliw, Laguna and
within the jurisdiction of this Honorable Court, the above-named accused, being the In the case at bar, the information was filed against petitioner Benedicto ten (10) years
operator and owner of "Monteiro's Footwear," an establishment engaged in the after the alleged violations had been discovered by the SSS. We hold that the statutory
manufacture of footwear, did then and there wilfully, unlawfully and feloniously fail to crime here charged had prescribed by then, the prescriptive period here applicable being
register and/or report to the Social Security System, Elizabeth Collantes as member four (4) years.
thereof who was employed in said firm or establishment from January 1964 to May 1974
in violation of the Social Security Laws; and despite demands failed to register aforesaid Although this was not the ratio decidendi of that case, we affirm the conclusion that the
employee to the damage and prejudice of the offended party. period of prescription for the offense of failure to register with the SSS shall begin from
the day of the discovery of the violation if this was not shown at the time of its
The reason for the quashal was prescription. The trial court agreed with the appellee that commission. A contrary view would be dangerous as the successful concealment of an
the crime charged, which is punishable only with a fine from P500.00 to P5,000.00 or offense during the period fixed for its prescription would be the very means by which the
imprisonment of not less than six months to more than one year, or both, could no longer offender may escape punishment.
be prosecuted. 2 The law applied was Section 1(b) of Act 3326, as amended, providing
that offenses punishable with imprisonment for more than one month but less than two The Solicitor General was, indeed, not changing his theory on appeal but merely shifting
years prescribe after four years. his emphasis. Even in the lower court, he had consistently opposed the contention that
the offense had prescribed.
The trial court reckoned the 4-year prescriptive period from January 1964, holding that
the crime was deemed committed from the time the private respondent failed to register We cannot accept the appellee's argument that the appeal should be dismissed because
the employee. No other act was needed to complete the crime. The Order applied the the appellant had failed to show that it was only in 1974 that the offense was discovered.
case of People v. Ching Lak, 3 where this Court declared that the prescriptive period for That was not his responsibility. On the contrary, the burden of proving that the crime had
violation of the War Profits Tax Law commenced from the date the accused failed to pay prescribed fell on the appellee because it was he who was invoking that affirmative
his war profits tax. As the information against Monteiro was filed only on November 10, defense. 6 The fact of prescription not being apparent on the face of the information, it
1975, it was clear that it was already time-barred under the cited provision. was incumbent on the appellee to establish the basis of that defense. 7

The appellant contends otherwise. According to the Solicitor General, the 4-year period The trial court should have applied Section 7 of Rule 133 of the Rules of Court, providing
should commence, not in January 1964, when the violation started, but in May 1974, as follows:
when it was discovered. He cites in support of his view Elizabeth Collantes's statements
4 at the preliminary investigation of the case and Section 2 of the same Act, providing as Sec. 7. Evidence on Motion. When a motion is based on facts not appearing of record,
follows: the court may hear the matter on affidavits or depositions presented by the respective
parties, but the court may direct that the matter be heard wholly or partly on oral
SEC. 2. Prescription shall commence to run on the day of the commission of the violation testimony or depositions.
of the law and if the same be not known at that time, from the discovery thereof and the
institution of judicial proceedings for its investigation and punishment.:-cralaw In Sapida v. De Villanueva, 8 we held that "while the court may rule upon motions solely
on the basis of affidavits and counter-affidavits, if the affidavits contradict each other on
For his part, the appellee argues that the appellant cannot change its theory on appeal matters of fact, the court can have no basis to make its findings of facts and the prudent
from its original position that the offense was a continuing one. He insists that the

108
course is to subject the affiants to cross-examination so that the court can decide whom G.R. No. 147745 April 9, 2003
to believe."
MARIA BUENA OBRA, petitioner,
We note that in the case at bar, the trial court resolved the motion merely on the basis of vs. SOCIAL SECURITY SYSTEM (Jollar Industrial Sales and Services Inc.),
the amended information, the motion to quash and the opposition thereto. These were respondents. PUNO, J.:
insufficient bases for the findings of fact needed to justify the grant of the motion. The trial
judge did not require submission of affidavits and counter-affidavits or hold a preliminary On appeal is the Decision1 of the Court of Appeals in CA-G.R. SP No. 60704 dated
hearing to inform himself of the date when the prescriptive period was supposed to have September 27, 2000 sustaining the Decision 2 of the Employees' Compensation
commenced. This was because he assumed at the outset that the period of prescription Commission dated April 13, 2000, as well as its subsequent Resolution 3 dated March 6,
began in 1964.:-cralaw 2001 denying petitioner's Motion for Reconsideration.

In holding that the prescriptive period should begin in January 1964, the trial judge was The facts of the case are as follows:
merely presuming that the appellant was already aware on that date of the commission of
the crime. There is no proof of this, nor is such knowledge deducible from a reading of Juanito Buena Obra, husband of petitioner, worked as a driver for twenty-four (24) years
the information. Even the motion to quash did not allege that the appellant already knew and five (5) months. His first and second employers were logging companies. Thereafter,
of the violation immediately when it began in January 1964. he was employed at Jollar Industrial Sales and Services Inc. as a dump truck driver from
January 1980 to June 1988. He was assigned to the following projects: 4
The case of People v. Dinsay, 9 where the Court dismissed the information because it
had been filed beyond the prescriptive period is not in point. The estafa committed by the 1. January 1980 to December 1981 F.F. Cruz Project, Nabua, Camarines Sur
accused was known to the offended party from the very start; one would say the hauling/delivery of filling materials from quarry to job site
commission and the discovery of the offense were simultaneous. In the case at bar, it
2. January 1982 to December 1983 F.F. Cruz, 300 MW Coal Fire Thermal Plant,
does not appear that Collantes knew at the outset, that is, from January 1964, that she
Calaca, Bacungan and Makban Geothermal Plant, Los Baos, Laguna hauling/delivery
had not been registered by the appellee with the SSS. In fact, she said she learned she
of filling materials from quarry to job site
was not a member only much later, when she wanted to avail herself of SSS benefits
because of the hospitalization of her husband. 10 3. January 1984 to December 1985 Dizon Copper Silver Mines, Pili, San Marcelino,
Zambales hauling/delivery filling materials from quarry to job site
The appellee's claim that his subsequent registration of Collantes with the SSS
extinguished his current liability, if any, is not acceptable. If subsequent compliance with 4. January 1986 to June 1988 Metro Manila Hauling Project
the law were sufficient to condone past violation, then the penal clause might as well be
deleted from the statute. Many an unscrupulous employer could simply not register his On 27 June 1988, Juanito suffered a heart attack while driving a dump truck inside the
employees and, when found out and prosecuted, register them belatedly. Such an work compound, and died shortly thereafter. In the Report of Death5 submitted by his
interpretation would nullify the purpose of the law, which is precisely to protect the employer to the Social Security System (SSS), Juanito expired at the Worker's Quarters
members of the working class. at 10:30 a.m., of Myocardial Infarction.

The invocation of the rule against double jeopardy must also be rejected. Double Petitioner Maria M. Buenaobra immediately filed her claim for death benefits under the
jeopardy will attach only if there is: (a) a valid complaint or information; (b) filed before a SSS law. She started receiving her pension in November 1988. Petitioner was, however,
competent court; (c) to which the defendant had pleaded; and (d) of which he had been unaware of the other compensation benefits due her under Presidential Decree No. 626,
previously acquitted or convicted or which was dismissed or otherwise terminated without as amended, or the Law on Employees' Compensation. In September 1998, or more than
his express consent. 11 The herein appellee has not yet been arraigned and it was upon ten (10) years after the death of her husband, that she learned of the benefits under P.D.
his express motion that the information was quashed and the case dismissed. No. 626 through the television program of then broadcaster Ted Failon who informed that
one may claim for Employees Compensation Commission (ECC) benefits if the spouse
WHEREFORE, the challenged Order dated May 17, 1976, is SET ASIDE. This case is died while working for the company. Petitioner prepared the documents to support her
remanded to the Regional Trial Court of Laguna for determination, after hearing, of the claim for ECC benefits. On 23 April 1999, she filed with the SSS her claim for funeral
date when the alleged offense was discovered and the prescriptive period commenced to benefits under P.D. No. 626, as amended, which was docketed as SSS # 04-0089326-0.6
run. No costs.:SO ORDERED.
109
On 28 July 1999, the SSS denied the claim of petitioner for funeral benefits ruling that the Compensation as an occupational disease, and satisfying all conditions set forth therein;
cause of death of Juanito was not work-connected, absent a causal relationship between or if not listed as an occupational disease, or listed but has not satisfied the conditions set
the illness and the job. Caridad R. Borja, Assistant Vice-President National Capital forth therein, it must be proven by substantial evidence that the risk of contracting the
Region (AVP NCR) Central of the SSS Member Assistance Center in Quezon City disease which caused the death of the member, was increased by the member's working
wrote: conditions.10

"Please be informed that funeral claim under the Employees Compensation is hereby The appellate court likewise held that the three-year prescriptive period does not apply in
denied. Per medical evaluation, cause of death of subject member's (sic) cannot be the instant case. Instead, it applied Art. 1142(2) of the Civil Code which reads:
considered work connected since there is no causal relationship between the illness and
the job." "Art. 1144. The following actions must be brought within ten (10) years from the time the
right of action accrues:
On 8 October 1999, petitioner wrote to Atty. Teofilo E. Hebron, Executive Director of the
ECC, appealing the denial of her claim. On 11 November 1999, Atty. Hebron ordered Dr. (1) Upon a written contract;
Simeon Z. Gonzales, Assistant Vice-President (AVP) of the Medical Services Group of
the SSS to review the claim of petitioner. (2) Upon an obligation created by law;

On 23 November 1999, the Medical Services Group through Dr. Perla A. Taday, AVP for (3) Upon a judgment. [Emphasis supplied.]"
Medical Operations, concluded its re-evaluation and affirmed the denial of petitioner's
The appellate court then held that the petitioner's cause of action has prescribed.
claim. It reiterated that "there is no causal relationship between the cause of death/illness
Petitioner's husband died on 27 June 1988. She filed her claim for funeral benefits under
and member's job as dump truck driver." 7 Pursuant to Section 5, Rule XVIII of the
P.D. No. 626 or the Law on Employees' Compensation only on 23 April 1999, or more
Implementing Rules of PD 626, the records of the deceased Juanito were elevated to the
than ten (10) years from his death.
Commission.
Lastly, the appellate court ruled that even assuming petitioner's cause of action has not
On 13 April 2000, the Commission rendered a decision, dismissing the appeal. 8 It ruled
prescribed, her claim for Employees' Compensation benefits cannot prosper because of
that petitioner failed to show by substantial evidence that her husband's cause of death
her failure to prove by substantial evidence that her husband's working conditions
was due to, or the risk of contracting his ailment was increased by his occupation and
increased the risk of contracting the myocardial infarction that caused his death.
working conditions, as per Section 1(b), Rule III of P.D. No. 626, as amended. In addition,
the Commission declared that petitioner's claim has prescribed, citing ECC Resolution Petitioner's Motion for Reconsideration dated 27 September 2000 was denied by the
No. 93-08-0068. appellate court in a Resolution promulgated on 6 March 2001.
Petitioner appealed to the Court of Appeals. She alleged that her cause of action had not Hence, this petition. The following issues are raised: 11
prescribed because the filing of her claim for SSS benefits shortly after Juanito's death
suspended the running of the prescriptive period for filing EC claims, as per Item No. III of (1) WHETHER, INDEED, THE CLAIM OF PETITIONER, HAD PRESCRIBED.
ECC Resolution No. 90-03-0022 dated 23 March 1990. The appellate court dismissed the
petition. It ruled that petitioner's filing of her claim for SSS benefits shortly after Juanito's (2) WHETHER OR NOT THE ILLNESS OF PETITIONER'S HUSBAND, MYOCARDIAL
death did not suspend the running of the prescriptive period for filing EC claims. It INFARCTION, IS WORK-RELATED.
interpreted the aforementioned ECC Resolutions to mean that a claimant must indicate
the kind of claim filed before the running of the prescriptive period for filing EC claims On the first issue, we rule that the claim of petitioner for funeral benefits under P.D. No.
may be interrupted. In the case at bar, petitioner indeed filed a claim with SSS. In fact, 626, as amended, has not yet prescribed.
she has been receiving her pension since November 1988. However, she failed to
specify whether the basis of her claim was any contingency which may be held The issue of prescription in the case at bar is governed by P.D. No. 626, or the Law on
compensable under the EC Program.9 Employees' Compensation. Art. 201 of P.D. No. 626 and Sec. 6, Rule VII of the 1987
Amended Rules on Employees' Compensation both read as follows:
In addition, the Court of Appeals cited P.D. No. 626 which states that a contingency may
be held compensable if listed in Annex "A" of the Rules Implementing Employees'
110
"No claim for compensation shall be given due course unless said claim is filed with the SSS is the very same agency where claims for payment of sickness/disability/death
System within three years from the time the cause of action accrued." benefits under P.D. No. 626 are filed.

This is the general rule. The exceptions are found in Board Resolution 93-08-0068 and Section 4(b)(2), Rule 3 of the ECC Rules of Procedure for the Filing and Disposition of
ECC Rules of Procedure for the Filing and Disposition of Employees' Compensation the Employees' Compensation Claims, quoted above, also provides for the conditions
Claims. Board Resolution 93-08-0068 issued on 5 August 1993, states: when EC claims filed beyond the three-year prescriptive period may still be given due
course. Section 4(b)(2) states the condition for private sector employees, requiring that a
"A claim for employee's compensation must be filed with System (SSS/GSIS) within three claim for Medicare, sickness, burial, disability or death should be filed within three (3)
(3) years from the time the cause of action accrued, provided however, that any claim years from the occurrence of the contingency. In the instant case, the petitioner was able
filed within the System for any contingency that may be held compensable under the to file her claim for death benefits under the SSS law within the three-year prescriptive
Employee's Compensation Program (ECP) shall be considered as the EC claim itself. period. In fact, she has been receiving her pension under the SSS law since November
The three-year prescriptive period shall be reckoned from the onset of disability, or date 1988.
of death. In case of presumptive death, the three (3) years limitation shall be counted
from the date the missing person was officially declared to be presumptively dead." It is true that under the proviso, the employees' compensation claim shall be filed with the
(emphasis supplied) GSIS/SSS within a reasonable time as provided by law. It should be noted that neither
statute nor jurisprudence has defined the limits of "reasonable time." Thus, what is
In addition, Section 4(b), Rule 3 of the ECC Rules of Procedure for the Filing and reasonable time depends upon the peculiar facts and circumstances of each case. 12 In
Disposition of Employees' Compensation Claims, reads: the case at bar, we also find petitioner's claim to have been filed within a reasonable time
considering the situation and condition of the petitioner. We have ruled that when the
"RULE 3. FILING OF CLAIM petitioner filed her claim for death benefits under the SSS law, her claim for the same
benefits under the Employees' Compensation Law should be considered as filed. The
Section 4. When to file.
evidence shows that the System failed to process her compensation claim. Under the
(a) Benefit claims shall be filed with the GSIS or the SSS within three (3) years from the circumstances, the petitioner cannot be made to suffer for the lapse committed by the
date of the occurrence of the contingency (sickness, injury, disability or death). System. It is the avowed policy of the State to construe social legislations liberally in favor
of the beneficiaries.13 This court has time and again upheld the policy of liberality of the
(b) Claims filed beyond the 3-year prescriptive period may still be given due course, law in favor of labor. Presidential Decree No. 626 itself, in its Art. 166 reads:
provided that:
"ART. 166. Policy. The State shall promote and develop a tax-exempt employees'
1. A claim was filed for Medicare, retirement with disability, burial, death claims, or life compensation program whereby employees and their dependents, in the event of work-
(disability) insurance, with the GSIS within three (3) years from the occurrence of the connected disability or death, may promptly secure adequate income benefit, and
contingency. medical or related benefits." (emphasis supplied)

2. In the case of the private sector employees, a claim for Medicare, sickness, burial, Furthermore, Art. 4 of P.D. No. 442, as amended, otherwise known as the Labor Code of
disability or death was filed within three (3) years from the occurrence of the contingency. the Philippines, which P.D. No. 626 forms a part of, reads as follows:

3. In any of the foregoing cases, the employees' compensation claim shall be filed with "ART. 4. Construction in favor of labor. All doubts in the implementation and
the GSIS or the SSS within a reasonable time as provided by law. [Emphasis supplied.]" interpretation of the provisions of this Code, including its implementing rules and
regulations, shall be resolved in favor of labor."
We agree with the petitioner that her claim for death benefits under the SSS law should
be considered as the Employees' Compensation claim itself. This is but logical and Particularly, the policy of liberality in deciding claims for compensability was given
reasonable because the claim for death benefits which petitioner filed with the SSS is of emphasis by this court in the case of Employees' Compensation Commission vs. Court of
the same nature as her claim before the ECC. Furthermore, the SSS is the same agency Appeals,14 where it held that:
with which Employees' Compensation claims are filed. As correctly contended by the
petitioner, when she filed her claim for death benefits with the SSS under the SSS law, ". . . the liberality of law in favor of the working man and woman still prevails and the
she had already notified the SSS of her employees' compensation claim, because the official agency charged by law to implement the constitutional guarantee of social justice

111
should adopt a liberal attitude in favor of the employee in deciding claims for It is a major cause of sudden death in adults. Heavy exertion or emotional stress can
compensability, especially in light of compassionate policy towards labor which the 1987 trigger a heart attack.16
Constitution vivifies and enhances. Elsewise stated, a humanitarian impulse, dictated by
no less than the Constitution itself under the social justice policy, calls for a liberal and In the case at bar, the petitioner's husband's heart disease falls under the second
sympathetic approach to legitimate appeals of disabled public servants; or that all doubts condition of ECC Resolution No. 432 dated July 20, 1977 which states that the strain of
to the right to compensation must be resolved in favor of the employee or laborer. Verily work that brought about the acute attack must be of sufficient severity and must be
the policy is to extend the applicability of the law on employees' compensation to as followed within 24 hours by the clinical signs of a cardiac insult to constitute causal
many employees who can avail of the benefits thereunder." relationship. Petitioner's husband was driving a dump truck within the company premises
where they were stacking gravel and sand when he suffered the heart attack. He had to
Claims falling under the Employees' Compensation Act should be liberally resolved to be taken down from the truck and brought to the workers' quarters where he expired at
fulfill its essence as a social legislation designed to afford relief to the working man and 10:30 a.m., just a few minutes after the heart attack, which is much less than the 24
woman in our society.15 hours required by ECC Resolution No. 432. This is a clear indication that severe strain of
work brought about the acute attack that caused his death.
The second issue of whether or not the illness of petitioner's husband, myocardial
infarction which was the cause of his death is work-related, must likewise be resolved in Professional drivers, especially truck drivers like the decedent in the instant case, carry
favor of the petitioner. the burden of being more exposed and subjected to the stress and strain of everyday
traffic, and the greater physical exertion brought about by driving a large and heavy
Under the law on employees' compensation, death is compensable only when it results vehicle. In addition, according to the petitioner, her husband was under a lot of stress in
from a work-connected injury or sickness. In the instant case, the cause of petitioner's the workplace. He was a model worker and his employer highly depended on him. He
husband's death was myocardial infarction and it must be considered work-connected. became the object of envy of his co-workers which caused him much emotional stress.
While it is true that myocardial infarction is not among the occupational diseases listed Add to this the fact that he has been a truck driver for more than twenty-four (24) years.
under Annex "A" of the Amended Rules on Employees' Compensation, the Commission, Due to the combination of emotional stress and vigorous physical exertion, it was easy
under ECC Resolution No. 432 dated July 20, 1977, laid down the conditions under for him to succumb to the heart ailment. We hold that the illness of the decedent which
which cardio-vascular or heart diseases can be considered as work-related and thus caused his death is work-connected, and thus compensable by virtue of ECC Resolution
compensable, viz: No. 432 dated 20 July 1977.

(a) If the heart disease was known to have been present during employment, there must As a final note, we find it necessary to reiterate that P.D. No. 626, as amended, is a
be proof that an acute exacerbation was clearly precipitated by the unusual strain by social legislation whose primordial purpose is to provide meaningful protection to the
reasons of the nature of his/her/her work. working class against the hazards of disability, illness and other contingencies resulting in
the loss of income. Thus, as the official agents charged by law to implement social justice
(b) The strain of work that brings about an acute attack must be of sufficient severity and guaranteed by the Constitution, the ECC and the SSS should adopt a liberal attitude in
must be followed within 24 hours by the clinical signs of a cardiac insult to constitute favor of the employee in deciding claims for compensability especially where there is
causal relationship. some basis in the facts for inferring a work connection with the illness or injury, as the
case may be. It is only this kind of interpretation that can give meaning and substance to
(c) If a person who was apparently asymptomatic before being subjected to strain at work
the compassionate spirit of the law as embodied in Article 4 of the New Labor Code
showed signs and symptoms of cardiac injury during the performance of his/her work and
which states that all doubts in the implementation and interpretation of the provisions of
such symptoms and signs persisted, it is reasonable to claim a causal relationship.
the Labor Code including its implementing rules and regulations should be resolved in
Myocardial infarction is also known as heart attack. It results in permanent heart damage favor of labor.17
or death. A heart attack is called myocardial infarction because part of the heart muscle
IN VIEW WHEREOF, the petition is GRANTED. The Decision of the Court of Appeals in
(myocardium) may literally die (infarction). This occurs when a blood clot blocks one of
CA-G.R. SP No. 60704 dated 27 September 2000 and its Resolution dated 06 March
the coronary arteries (the blood vessels that bring blood and oxygen to the heart muscle).
2001 are hereby SET ASIDE. The SSS is hereby directed to pay herein petitioner the
When the heart muscle does not obtain the oxygen-rich blood that it needs, it will begin to
death/funeral benefits due him under the existing law.
die. The severity of a heart attack usually depends on how much of the heart muscle is
injured or dies during the heart attack. Heart attack accounts for 1 out of every 5 deaths. SO ORDERED.
112
G.R. No. L-43674 June 30, 1987 Sec. 5 Exclusive right to compensation. The rights and remedies granted by this Act to
an employee by reason of a personal injury entitling him to compensation shall exclude
YSMAEL MARITIME CORPORATION, petitioner, all other rights and remedies accruing to the employee, his personal representatives,
vs. HON. CELSO AVELINO, in his capacity as Presiding Judge of Branch XIII, Court of dependents or nearest of kin against the employer under the Civil Code and other laws,
First Instance of Cebu and SPOUSES FELIX C. LIM and CONSTANCIA GEVEIA because of said injury,
respondents. FERNAN, J.:
Art. 173 Exclusive of liability. Unless other wise provided, the liability of the State
This special civil action for certiorari raises the question of whether the compensation Insurance Fund under this Title shall be exclusive and in place of all other liabilities of the
remedy under the Workmen's Compensation Act [WCA], and now under the Labor Code, employer to the employee, his dependents or anyone otherwise entitled to receive
for work-connected death or injuries sustained by an employee, is exclusive of the other damages on behalf of the employee or his dependents. The payment of compensation
remedies available under the Civil Code. under this Title shall bar the recovery of benefits as provided for in Section 699 of the
Revised Administrative Code, Republic Act No. 1161, as amended, Commonwealth Act
It appears that on December 22, 1971. Rolando G. Lim, single, a licensed second mate, No. 186, as amended, Republic Act No. 610, as amended, Republic Act No. 4864, as
was on board the vessel M/S Rajah, owned by petitioner Ysmael Maritime Corporation, amended, and other laws whose benefits are administered by the System, during the
when the same ran ground and sank near Sabtan Island, Batanes. Rolando perished as period of such payment for the same disability or death, and conversely.
a result of that incident.
In the recent case of Floresca vs. Philex Mining Company, L-30642, April 30, 1985, 136
Claiming that Rolando's untimely death at the age of twenty- five was due to the SCRA 141, involving a complaint for damages for the death of five miners in a cave in on
negligence of petitioner, his parents, respondents Felix Lim and Consorcia Geveia, sued June 28, 1967, this Court was confronted with three divergent opinions on the exclusivity
petitioner in the Court of First Instance on January 28, 1972 for damages [Civil Case No. rule as presented by several amici curiae One view is that the injured employee or his
R-12861]. heirs, in case of death, may initiate an action to recover damages [not compensation
under the Workmen's Compensation Act) with the regular courts on the basis of
In its answer, petitioner-defendant alleged by way of affirmative defenses [1] that the
negligence of the employer pursuant to the Civil Code. Another view, as enunciated in
complaint stated no cause of action; [2] that respondent-plaintiffs had received P4,160
the Robles case, is that the remedy of an employee for work connected injury or accident
from petitioner and had signed release papers discharging petitioner from any liability
is exclusive in accordance with Section 5 of the WCA. A third view is that the action is
arising from the death of their son, and [3] that most significantly, the respondents had
selective and the employee or his heirs have a choice of availing themselves of the
already been compensated by the Workmen's Compensation Commission [NCC] for the
benefits under the WCA or of suing in the regular courts under the Civil Code for higher
same incident, for which reason they are now precluded from seeking other remedies
damages from the employer by reason of his negligence. But once the election has been
against the same employer under the Civil Code.
exercised, the employee or his heirs are no longer free to opt for the other remedy. In
A protracted legal battle over procedural points ensued. Finally, on July 30, 1975, the other words, the employee cannot pursue both actions simultaneously. This latter view
case was set for pre-trial. Petitioner sought the dismissal of the complaint on the ground was adopted by the majority, in the Floresca case, reiterating as main authority its earlier
that the trial court had no jurisdiction over the subject matter of the action. decision in Pacaa vs. Cebu Autobus Company, L-25382, April 30, 1982, 32 SCRA 442.
In so doing, the Court rejected the doctrine of exclusivity of the rights and remedies
In his order of December 29, 1975, respondent Judge Avelino upheld respondents' granted by the WCA as laid down in the Robles case. 'Three justices dissented.
vigorous opposition and denied petitioner's motion to dismiss for being unmeritorious. Its
motion for reconsideration having met the same fate on February 3, 1976, petitioner filed It is readily apparent from the succession of cases dealing with the matter at issue * that
the instant special civil action for certiorari, prohibition and mandamus with preliminary this Court has vacillated from one school of thought to the other. Even now, the concepts
injunction, contending that respondent judge acted with grave abuse of discretion when pertaining thereto have remained fluid. But unless and until the Floresca ruling is
he refused to dismiss the complaint for damages on the ground of lack of jurisdiction. modified or superseded, and We are not so inclined, it is deemed to be the controlling
This Court subsequently granted a temporary restraining order prohibiting the trial court jurisprudence vice the Robles case.
from proceeding with the hearing of the case.
As thus applied to the case at bar, respondent Lim spouses cannot be allowed to
At issue is the exclusory provision of Section 5 of the Workmen's Compensation Act maintain their present action to recover additional damages against petitioner under the
reiterated in Article 173 of the Labor Code 7 Civil Code. In open court, respondent Consorcia Geveia admitted that they had
previously filed a claim for death benefits with the WCC and had received the
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compensation payable to them under the WCA [Rollo, pp. 22-23, 29-30]. It is therefore G.R. No. 84307 April 17, 1989
clear that respondents had not only opted to recover under the Act but they had also
been duly paid. At the very least, a sense of fair play would demand that if a person CIRIACO HINOGUIN petitioner,
entitled to a choice of remedies made a first election and accepted the benefits thereof, vs. EMPLOYEES' COMPENSATION COMMISSION and GOVERNMENT SERVICE
he should no longer be allowed to exercise the second option. "Having staked his INSURANCE SYSTEM (Armed Forces of the Philippines), respondents. FELICIANO, J.:
fortunes on a particular remedy, [he] is precluded from pursuing the alternate course, at
least until the prior claim is rejected by the Compensation Commission." [See Separate This Petition for Review is directed against the Decision of the Employees' Compensation
Opinion by Justice Teehankee in Robles vs. Yap Wing, supra on pp. 281-282]. Commission ("ECC") in ECC Case No. 3275 (Ciriaco Hinoguin v. Government Service
Insurance System [Armed Forces of the Philippines]) which affirmed the decision of the
In the light of this Court's recent pronouncement in the Floresca case, respondent Judge Government Service Insurance System ("GSIS") denying petitioner's claim for
Avelino's denial order of petitioner's motion to dismiss is adjudged to be improper. compensation benefit on account of the death of petitioner's son, Sgt. Lemick G.
Hinoguin
WHEREFORE, respondent Judge Avelino's orders dated December 29, 1975 and
February 3, 1976 are reversed and set aside, Civil Case No. 12861, entitled "The The deceased, Sgt. Hinoguin started his military service in 1974, when he was called to
Spouses Felix C. Lim, and Consorcia Geveia vs. Ysmael Maritime Corp." is hereby military training by the Philippine Army. He later on enlisted in the Philippine Army as a
ordered dismissed. The temporary restraining order issued by this Court on May 5, 1978 private first class. At the time of his death on 7 August 1985, he was holding the rank of
enjoining respondent Judge Avelino from conducting further proceedings in said case is Sergeant per Special Order P-4200, HPA dated 15 October 1985, in "A" company 14th
made permanent. No costs. Infantry Battalion, 5th Infantry Division, PA. The Headquarters of the 14th Infantry
Battalion was located at Bical, Muoz, Nueva Ecija. Sgt. Hinoguin was Detachment Non-
SO ORDERED. Commissioned Officer at Capintalan, Carranglan, Nueva Ecija, "A" Company being
stationed at Carranglan, Nueva Ecija.

On 1 August 1985, Sgt. Hinoguin and two (2) members of his Detachment, Cpl. Rogelio
Clavo and Dft. Nicomedes Alibuyog, sought permission from Captain Frankie Z. Besas,
Commanding Officer of "A" Company to go on overnight pass to Aritao, Nueva Viscaya,
"to settle [an] important matter thereat." 1 Captain Besas orally granted them permission
to go to Aritao and to take their issued firearms with them, considering that Aritao was
regarded as "a critical place " 2 that is, it had peace and order problems due to the
presence of elements of the New People's Army ("NPA!') in or in the vicinity of Aritao.

Sgt. Hinoguin, Cpl. Clavo and Dft. Alibuyog left Carranglan, Nueva Ecija, about noon on 1
August 1985 and arrived in Aritao, Nueva Viscaya, about 1:30 o'clock P.M. on the same
day. 3 They proceeded to the home of Dft. Alibuyog's parents where they had lunch.
About 4:00 o'clock P.M., the three (3) soldiers with a fourth man, a civilian and relative of
Dft. Alibuyog, had some gin and beer, finishing a bottle of gin and two (2) large bottles of
beer. Three hours later, at about 7:00 o'clock P.M., the soldiers left the Alibuyog home to
return to their Company Headquarters. They boarded a tricycle, presumably a motor-
driven one, Sgt. Hinoguin and Cpl. Clavo seating themselves in the tricycle cab while Dft.
Alibuyog occupied the seat behind the driver. Upon reaching the poblacion of Aritao, Dft.
Alibuyog dismounted, walked towards and in front of the tricycle cab, holding his M-16
rifle in his right hand, not noticing that the rifle's safety lever was on semi automatic (and
not on "safety"). He accidentally touched the trigger, firing a single shot in the process
and hitting Sgt. Hinoguin, then still sitting in the cab, in the left lower abdomen. The
Sergeant did not apparently realize immediately that he had been hit; he took three (3)
steps forward, cried that he had been hit and fell to the ground.
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His companions rushed Sgt. Hinoguin to a hospital in Bayombong, Nueva Viscaya, for Petitioner filed a Motion for Reconsideration which Motion was, however, denied by the
treatment. Their Company Commander, Capt. Besas, hurried to the hospital upon being GSIS. This denial was confirmed by the Workmen's Compensation Commission ("WCC")
notified of the shooting and there talked with the wounded Sergeant. The latter confirmed in a Decision dated 24 May 1988 which stated that:
to Capt. Besas that he had indeed been accidentally shot by Dft. Alibuyog Sgt. Hinoguin
was later moved to the AFP Medical Center in Quezon City and there he died on 7 [F]rom the recital of the facts therein [we found it] very difficult for us to perceive where
August 1985. The Death Certificate lists "septic shock" as immediate cause of death, and the work-connection of the events that led to appellant's son's death lies. Under the law,
"generalized septicemia of peritonitis" as antecedent cause, following his sustaining a death resulting from injury is considered compensable if it arises out of and in the course
gunshot wound. of employment. Definitely, the death of Hinoguin did not arises out of employment.
Clearly, the facts showed that he was not on his place of work nor was he performing
An investigation conducted by H.Q., 14th Infantry Battalion on 11 August 1985 concluded official functions. On the contrary, he was on pass and had just came from a
that the shooting of Sgt. Hinoguin was "purely accidental in nature." 4 On 19 November merrymaking when accidentally shot by his companion, 7 (Emphasis supplied)
1985, a "Line of Duty Board of Officers" was convened by H.Q. 14th Infantry Battalion, "to
determine Line of Duty Status of [the] late Sgt. Lemick Hinoguin 640407 (Inf.) PA, a The sole issue to be resolved in this case is whether or not the death of Sgt. Lemick
member of "A" Co., 14IB, 5 ID, PA who died ... due to Gun Shot Wound as a result of an Hinoguin is compensable under the applicable statute and regulations.
accidental fire (sic) committed by Dft. Nicomedes Alibuyog 085-5009 (Inf.) PA ... ." After
receiving and deliberating . g on the Investigation Report dated 11 August 1985 together Considering that Sgt. Hinoguin died on 7 August 1985, the applicable law is to be found
with the sworn statements of witnesses Alibuyog, Clavo and Besas, and after some in Book Four, Title III of the Labor Code, as amended. It may be noted at the outset that
further questioning of Capt. Besas, the Line of Duty Board reached the following under Article 167 (g) of the Labor Code, as amended and Section 4 (b) (1) of Rule I of the
conclusion and recommendation: Amended (Implementing) Rules on Employees' Compensation, the term "employee"
includes a "member of the Armed Forces of the Philippines." Rule XIII entitled "Death", of
Sgt. Hinoguin was then the designated Detachment Commander of Capintalan the Amended (Implementing) Rules provides in part as follows:
detachment. On or about 011300H August 1985 Dft. Alibuyog invited Sgt. Hinoguin and
Cpl. Clavo to his home to celebrate at Aritao, Nueva Viscaya. They asked permission to SECTION 1. Conditions to Entitlement. (a) The beneficiaries of a deceased employee
go on overnight and to allow them to carry their firearms with them because the place shall be entitled to an income benefit if all of the following conditions are satisfied:
where they were going is critical. They were given such permission verbally by their
(1) The employee had been duly reported to the System;
Commanding Officer. The death of Sgt. Hinoguin was purely accidental as the
Investigation Report presented here proved beyond reasonable [doubt] the fact that Dft. (2) He died as a result of injury or sickness; and
Alibuyog had no grudge either [against] Cpl. Clavo or Sgt. Hinoguin
(3) The System has been duly notified of his death, as well as the injury or sickness
RECOMMENDATION: which caused his death. His employer shall be liable for the benefit if such death
occurred before the employee is duly reported for coverage of the System.
The recommendation written by the Chairman and unanimously voted for by the
members contain the following: xxx xxx xxx
The Board after a thorough deliberation on presented evidences declares that the Death Article 167 (k) of the Labor Code as amended defines a compensable "injury" quite
of Sgt. Lemick Hinoguin 640407 (Inf.) PA is in Line of Duty. simply as "any harmful change in the human organism from any accident arising out of
and in the course of the employment." The Amended (Implementing) Rules have,
The Board recommend farther that all benefits due the legal dependents of the late Sgt.
however, elaborated considerably on the simple and succinct statutory provision. Rule III,
Lemick Hinoguin be given. 5 (Emphasis supplied)
Section 1 (a) reads:
Sometime in March 1986, petitioner filed his claim for compensation benefits under P.D.
SECTION 1. Grounds. (a) For the injury and the resulting disability or death to be
No. 626 (as amended), claiming that the death of his son was work-connected and
compensable, the injury must be the result of an employment accident satisfying all of the
therefore compensable. This was denied 6 by the GSIS on the ground that petitioner's
following grounds:
son was not at his work place nor performing his duty as a soldier of the Philippine Army
at the time of his death. (1) The employee must have been injured at the place work requires him to be;
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(2) The employee must have been performing his official functions; and unless he is shown to have clearly and unequivocally put aside that status or condition
temporarily by, e.g., going on an approved vacation leave. 8 Even vacation leave may, it
(3) If the injury is sustained elsewhere, the employee must have been executing an order should be remembered, be preterminated by superior orders.
for the employer.
More generally, a soldier in the Armed Forces must accept certain risks, for instance, that
xxx xxx xxx he will be fired upon by forces hostile to the State or the Government. That is not, of
course, the only ask that he is compelled to accept by the very nature of his occupation
(Emphasis supplied) or profession as a soldier. Most of the persons around him are necessarily also members
of the Armed Forces who carry firearms, too. In other words, a soldier must also assume
It will be seen that because the Amended (Implementing) Rules are intended to apply to
the risk of being accidentally fired upon by his fellow soldiers. This is reasonably
all kinds of employment, such rules must be read and applied with reasonable flexibility
regarded as a hazard or risk inherent in his employment as a soldier.
and comprehensiveness. The concept of a "work place" referred to in Ground 1, for
instance, cannot always be literally applied to a soldier on active duty status, as if he We hold, therefore, that the death of Sgt. Hinoguin that resulted from his being hit by an
were a machine operator or a worker in an assembly line in a factory or a clerk in a accidental discharge of the M-16 of Dft. Alibuyog, in the circumstances of this case, arose
particular fixed office. Obviously, a soldier must go where his company is stationed. In the out of and in the course of his employment as a soldier on active duty status in the Armed
instant case, Aritao, Nueva Viscaya was not, of course, Carranglan, Nueva Ecija. Aritao Forces of the Philippines and hence compensable.
being approximately 1-1/2 hours away from the latter by public transportation. But Sgt.
Hinoguin, Cpl. Clavo and Dft. Alibuyog had permission from their Commanding Officer to It may be well to add that what we have written above in respect of performance of official
proceed to Aritao, and it appears to us that a place which soldiers have secured lawful functions of members of the Armed Forces must be understood in the context of the
permission to be at cannot be very different, legally speaking, from a place where they specific purpose at hand, that is, the interpretation and application of the compensation
are required to go by their commanding officer. We note that the three (3) soldiers were provisions of the Labor Code and applicable related regulations. It is commonplace that
on an overnight pass which, notably, they did not utilize in full. They were not on vacation those provisions should, to the extent possible, be given the interpretation most likely to
leave. Moreover, they were required or authorized to carry their firearms with which effectuate the beneficient and humanitarian purposes infusing the Labor Code.
presumably they were to defend themselves if NPA elements happened to attack them
while en route to and from Aritao or with which to attack and seek to capture such NPA ACCORDINGLY, the Decision of the GSIS taken through its Claim Review Committee
elements as they might encounter. Indeed, if the three (3) soldiers had in fact dated 20 November 1986 and the Decision dated 24 May 1988 of the Employees'
encountered NPAs while on their way to or from Aritao and been fired upon by them and Compensation Commission in ECC Case No. 3275, are hereby REVERSED and the
if Sgt. Hinoguin had been killed by an NPA bullet, we do not believe that respondent GSIS is hereby DIRECTED to award all applicable benefits in respect of the death of Sgt.
GSIS would have had any difficulty in holding the death a compensable one. Lemick G. Hinoguin, to petitioner. No pronouncement as to costs.

Turning to the question of whether Sgt. Hinoguin was performing official functions at the SO ORDERED.
time he sustained the gunshot wound, it has already been pointed out above that the Line
of Duty Board of Officers of the 14th Infantry Battalion Headquarters had already
determined that the death of Sgt. Hinoguin had occurred "in line of duty." It may be noted
in this connection that a soldier on active duty status is really on 24 hours a day official
duty status and is subject to military discipline and military law 24 hours a day. He is
subject to call and to the orders of his superior officers at all times, 7 days a week,
except, of course, when he is on vacation leave status (which Sgt. Hinoguin was not).
'Thus, we think that the work-connected character of Sgt. Hinoguins injury and death was
not effectively precluded by the simple circumstance that he was on an overnight pass to
go to the home of Dft. Alibuyog, a soldier under his own command. Sgt. Hinoguin did not
effectively cease performing "official functions" because he was granted a pass. While
going to a fellow soldier's home for a few hours for a meal and some drinks was not a
specific military duty, he was nonetheless in the course of performance of official
functions. Indeed, it appears to us that a soldier should be presumed to be on official duty
116