Amendments to Social Security Law

Constitutional policy and statutory intent

Article II, Section 7 of the Constitution declares the State policy to establish, maintain, and ensure adequate social services in the field of social security to guarantee a decent standard of living.
Section 2 of Republic Act No. 1161 declares the policy to establish, develop, promote, and perfect a sound and viable tax-exempt social security service suitable to the needs of the people throughout the Philippines to promote well-being in the spirit of social justice.
Presidential Decree No. 1636 is enacted to enable the Social Security System to further increase benefits to cushion rising cost of living in light of changing economic conditions.

Powers of SSS Commission; actuarial stability

Section 4(c) of Republic Act No. 1161 authorizes the Social Security Commission to ensure necessary actuarial studies and calculations concerning increases in benefits and the financial stability of the SSS.
Section 4(c) directs the Commission to provide for feasible increases in benefits and the addition of new ones under rules and regulations adopted by the Commission subject to Presidential approval.
Section 4(c) requires that actuarial stability or solvency of the reserve fund be guaranteed.
Section 4(c) provides that such increases in benefits shall not require any increase in contribution.

Core definitions expanded; self-employed

Section 8(a) defines “SSS” as the Social Security System created by Republic Act No. 1161.
Section 8(c) defines “Employer” as any person—natural or juridical, domestic or foreign—carrying on in the Philippines any trade, business, industry, undertaking, or activity that uses the services of another person under his orders as regards employment, except the Government and any of its political subdivision, branches, or instrumentalities, including government-owned or controlled corporations.
Section 8(c) states that a self-employed professional shall be both employee and employer at the same time.
Section 8(d) defines “Employee” as any person performing services for an employer in which either or both mental and physical efforts are used and who receives compensation, where an employer-employee relationship exists.
Section 8(d) provides that a self-employed professional shall be both employee and employer at the same time.
Section 8(q) defines “Replacement ratio” as the sum of twenty percent and the quotient obtained by dividing three hundred by the sum of three hundred forty and the average monthly salary credit.
Section 8(r) defines “Credited years of service” using two formulas depending on whether the member was covered prior to January 1975 or covered in or after January 1975.

Coverage rules: compulsory self-employed

Section 9-A establishes compulsory coverage for all self-employed persons earning P1,800.00 or more per annum.
Section 9-A provides that the Commission determines the effectivity of coverage of certain groups of self-employed under Commission rules and regulations.
Section 9-A sets effectivity for specific self-employed persons in accordance with Section 10(b).
Section 9-A enumerates covered self-employed persons including:
- (1) all self-employed professionals licensed by the Professional Regulations Commission or those licensed to practice law;
- (2) partners and single proprietors of businesses;
- (3) actors and actresses, directors, script writers and news correspondents who do not fall within Section 8(d)’s definition of “employee”;
- (4) professional athletes, coaches, trainers licensed by the Games and Amusement Board, and jockeys and trainers licensed by the Philippine Racing Commission.
Section 9-A mandates that, unless otherwise specified, all provisions applicable to cover employees shall also be applicable to covered self-employed persons.

When coverage begins; business income interruption

Section 10 provides that compulsory coverage of the employer takes effect on the first day of his operation, and compulsory coverage of the employee takes effect on the day of his employment.
Section 10 provides that compulsory coverage of the self-employed persons referred to in Section 9-A(1) to (4) takes effect on the first day of January following the calendar year they started professional practice or business operations, but in no case earlier than January 1, 1980.
Section 11-A states that if the self-employed realizes no net professional or business income in any calendar year, he is not required to pay contributions for the succeeding year.
Section 11-A allows the self-employed to continue paying contributions under the same rules and regulations applicable to separated covered employees.

Benefits: monthly pension and retirement

Section 12(a) sets the monthly pension as:
- the average monthly salary credit multiplied by the replacement ratio; plus
- one and a half percent of the average monthly salary credit for each credited year of service in excess of ten years.
Section 12(b) requires a minimum monthly pension of one hundred twenty pesos.
Section 12(b) provides that the monthly pension shall not be paid in an aggregate amount of less than sixty times the monthly pension, except to a secondary beneficiary.
Section 12(b) provides that the monthly pension of surviving pensioners is increased by twenty percent.
Section 12-B(a) grants retirement pension to a covered employee who paid at least one hundred twenty monthly contributions prior to the semester of retirement and:
- reached age sixty and is not receiving monthly compensation of at least three hundred pesos; or
- reached age sixty-five,
  for as long as he lives.
Section 12-B(a) grants dependents’ pension to dependents born before retirement of a marriage subsisting when the member was fifty-seven years old.
Section 12-B(b) provides a lump sum benefit equal to the total contributions paid by him and on his behalf for a covered member who is sixty years old at retirement but does not qualify for pension under Section 12-B(a), conditioned on separation from employment and not continuing payment of contributions on his own.
Section 12-B(c) provides that the monthly pension is reduced upon re-employment of a retired employee who is less than sixty-five years old by an amount equivalent to one-half of his earnings over three hundred pesos, and that he is again subject to Section 18 and his employer to Section 19.
Section 12-B(d) provides that upon death of a retired employee pensioner:
- primary beneficiaries receive eighty percent of the monthly pension; and
- dependents receive the dependents’ pension.
Section 12-B(d) provides that if there are no primary beneficiaries and death occurs within sixty months from the start of monthly pension, secondary beneficiaries receive a lump sum equal to the smaller of:
- twenty times the monthly pension; or
- the difference between sixty times the monthly pension and the total monthly pensions paid by the SSS excluding the dependents’ pension.

Benefits: death, permanent disability

Section 13 provides that upon the covered employee’s death, primary beneficiaries receive the monthly pension and dependents receive the dependents’ pension.
Section 13 requires that the employee has paid at least thirty-six monthly contributions prior to the semester of death.
Section 13 provides a lump sum of thirty-five times the monthly pension to primary beneficiaries if the thirty-six-contribution condition is not satisfied.
Section 13 provides that if there are no primary beneficiaries, secondary beneficiaries receive twenty times the monthly pension.
Section 13 sets a minimum death benefit: it shall not be less than the total contributions paid by him and his employer on his behalf nor less than one thousand pesos.
Section 13 provides that beneficiaries of a covered employee who dies without having paid at least three monthly contributions are entitled to the minimum benefit.
Section 13-A(a) provides that for permanent total disability, if the disability occurs after at least thirty-six monthly contributions have been paid prior to the semester of disability, the employee receives the monthly pension and dependents receive the dependents’ pension.
Section 13-A(a) provides that if permanent total disability occurs before thirty-six monthly contributions have been paid prior to the semester of disability, the benefit is a lump sum equal to thirty-five times the monthly pension.
Section 13-A(a) sets a minimum disability benefit: not less than the total contributions paid by him and his employer on his behalf nor less than one thousand pesos.
Section 13-A(a) provides that a covered employee who becomes permanently totally disabled without having paid at least three monthly contributions receives the minimum benefit.
Section 13-A(a) treats a member who (1) received a lump sum benefit and (2) is re-employed not earlier than one year from the disability date as again subject to compulsory coverage and considered a new member.
Section 13-A(b) reduces the monthly pension upon re-employment by an amount equivalent to one-half of earnings over three hundred pesos.
Section 13-A(b) suspends the monthly pension and dependents’ pension upon recovery from permanent total disability, or upon failure to present himself for examination at least once a year upon notice by the SSS.
Section 13-A(c) grants upon death of the permanent total disability pensioner:
- primary beneficiaries eighty percent of the monthly pension; and
- dependents the dependents’ pension.
Section 13-A(c) provides that if there are no primary beneficiaries and death occurs within sixty months from the start of monthly pension, secondary beneficiaries receive the smaller of:
- twenty times the monthly pension; or
- the difference of sixty times the monthly pension and the total monthly pensions paid by the SSS excluding the dependents’ pension.
Section 13-A(d) deems permanent total disability to include:
- complete loss of sight of both eyes;
- loss of two limbs at or above the ankle or wrists;
- permanent complete paralysis of two limbs;
- brain injury resulting in incurable imbecility or insanity; and
- cases determined and approved by the SSS.
Section 13-A(e) provides that for permanent partial disability occurring before thirty-six monthly contributions, the benefit is a percentage of the lump sum benefit determined with due regard to degree of disability as the Commission determines.
Section 13-A(f) provides that for permanent partial disability occurring after thirty-six monthly contributions, the benefit is the monthly pension for permanent total disability payable not longer than the period designated in the schedule of months for specific losses (including thumbs, fingers, hands, arms, feet, legs, ears, hearing, and sight).
Section 13-A(g) provides a method for computing the percentage degree of disability as the ratio of the designated number of months of compensability to seventy-five, rounded to the next higher integer; it provides that such percentage is:
- not additive for distinct, separate, unrelated permanent partial disabilities; but
- additive for deteriorating and related permanent partial disabilities up to one hundred percent, in which case the employee is deemed permanently totally disabled.

Benefits: sickness and maternity leave

Section 14(a) provides that sickness benefit applies to a covered employee who paid at least three monthly contributions in the twelve-month period immediately preceding the semester of sickness and is confined for more than three days in a hospital or elsewhere with the Commission’s approval.
Section 14(a) provides that for each day of compensable confinement or fraction thereof, the employer pays an allowance equivalent to eighty-five percent of the employee’s average daily salary credit, subject to conditions.
Section 14(a)(1) sets limits: total daily allowance shall not be less than four pesos nor exceed twenty pesos, and not longer than one hundred twenty days in one calendar year; unused portions of the one hundred twenty days are not carried forward to add to subsequent-year compensable days.
Section 14(a)(2) caps sickness benefit for the same confinement at two hundred forty days.
Section 14(a)(3) requires notification within five calendar days after the start of confinement, with exceptions when confined in a hospital or when the employee became sick or was injured while working or within the employer’s premises.
Section 14(a) provides that if unemployed, the employee notifies the SSS directly within five calendar days after start of confinement, and notification is not necessary if confined in a hospital.
Section 14(a) provides that where notification is necessary, confinement is deemed to have started not earlier than the fifth day immediately preceding the notification date.
Section 14-A provides maternity leave benefit for a covered female employee who paid at least three monthly contributions in the twelve-month period immediately preceding the semester of childbirth, abortion, or miscarriage and is currently employed.
Section 14-A grants daily maternity benefit equal to one hundred percent of average daily salary credit for forty-five days, subject to conditions.
Section 14-A(a) requires the employee to notify her employer of pregnancy and probable childbirth date, and that notice must be transmitted to the SSS under rules and regulations.
Section 14-A(b) requires the employer to advance payment in two equal installments within thirty days from filing of the maternity leave application.
Section 14-A(c) makes daily maternity benefits a bar to recovery of sickness benefits under the same Act for the same compensable period of forty-five days for the same childbirth, abortion, or miscarriage.
Section 14-A(d) limits maternity benefits to the first four deliveries after March 13, 1973.
Section 14-A(e) requires the SSS to reimburse the employer immediately upon receipt of satisfactory proof of payment and legality of payment, reimbursing one hundred percent of maternity benefits advanced.
Section 14-A(f) imposes employer liability to pay to the SSS damages equivalent to the benefits the employee would otherwise have been entitled to when contributions were not remitted or employer was not previously notified of the pregnancy; it then requires the SSS to pay that amount to the employee concerned.

Contributions: rates, deductions, and reporting

Section 18(a) makes employer deduction mandatory: beginning on the last day of the calendar month when an employee’s compulsory coverage takes effect and every month thereafter during employment, the employer must deduct and withhold the employee’s contribution from salary, wage, compensation, or earnings.
Section 18(a) provides that the schedule effective on January 1, 1980 determines contributions according to salary bracket, including the following monthly contribution schedule:
- I (P1–P49.99): Monthly salary credit P25; employer P0.40; employee P0.40; total P2.10.
- II (P50–P99.99): Monthly salary credit 75; employer P4.30; employee P2.00; total P6.30.
- III (P100–P149.99): Monthly salary credit 125; employer P6.40; employee P4.10; total P10.50.
- IV (P150–P199.99): Monthly salary credit 175; employer P9.00; employee P5.70; total P14.70.
- V (P200–P249.99): Monthly salary credit 225; employer P11.40; employee P7.50; total P18.90.
- VI (P250–P349.99): Monthly salary credit 300; employer P15.20; employee P10.00; total P25.20.
- VII (P350–P499.99): Monthly salary credit 425; employer P21.60; employee P14.10; total P35.70.
- VIII (P500–P699.99): Monthly salary credit 600; employer P30.40; employee P20.00; total P50.40.
- IX (P700–P899.99): Monthly salary credit 800; employer P40.50; employee P26.70; total P67.20.
- X (P900–over): Monthly salary credit 1000; employer P50.70; employee P33.30; total P34.00.
Section 18(b) requires every employer to issue a receipt for all contributions deducted or indicate such deductions on the employee’s pay envelopes.
Section 19(b) requires that remittance by the employer be supported by a quarterly collection list submitted to the SSS at the end of each calendar quarter, indicating correct employer ID number, correct names and SSS numbers of employees, and total contributions paid for their account during the quarter.
Section 19-A provides that self-employed contributions are determined in accordance with Section 18, but the self-employed declares average monthly net earnings at registration as monthly compensation, and pays both employer and employee contributions.
Section 19-A defines “net earnings” for self-employed members as net income from business or profession shown in the immediately preceding year’s income tax return, excluding rental incomes, dividend, interest investments and the like, or other incomes not derived from the registered business or profession.
Section 19-A requires the declared average monthly net earnings to remain the basis of monthly salary credit unless, at the start of the year, the self-employed makes another declaration based on the latest income tax returns for the immediately preceding year, in which case the latest declaration becomes the new basis.
Section 22(b) provides that if an employer refuses or neglects to pay contributions, the SSS collects them in the same manner taxes are collectible under the National Internal Revenue Code, as amended.
Section 22(b) states that failure or refusal by the employer does not prejudice the right of the covered employee to the benefits.
Section 22(b) permits the necessary action against the employer to be commenced within twenty (20) years from when delinquency is known or assessment is made by the SSS, or from when the benefit accrues, as the case may be.
Section 22-A requires self-employed members to remit monthly contributions quarterly on dates and schedules the Commission specifies through rules and regulations.
Section 22-A applies the three percent per month penalty for late payments and the manner of collection of contributions specified in Section 22(b), (c), and (d) to penalties and contributions of covered self-employed.

Employment records; self-employed registration reporting

Section 24(b) imposes damages on an employer who misrepresents the true date of employment or remits contributions less than those required, resulting in a deduction of benefits; the employer must pay the SSS damages to the extent of such reduction.
Section 24(d) imposes additional liability: beyond the damages liability under Section 24(a) and Section 24(b), the employer is liable for payment of corresponding unremitted contributions and penalties thereon.
Section 24-A requires each covered self-employed person to report to the SSS within thirty (30) days from the effective date of coverage: name, age, civil status, occupation, average monthly net income, and dependents.
Section 24-A provides that if the self-employed dies, becomes sick or disabled, or reaches age sixty (60) after the thirty (30) days period without the SSS having previously received such report, the SSS does not pay the corresponding benefit.

SSS reserve fund investment

Section 26 requires that all SSS revenues not needed to meet current administrative and operational expenses be accumulated in a fund called the Reserve Fund.
Section 26 requires that the Reserve Fund be used exclusively for payment of benefits under the Act and that no amount be withdrawn or used for any other purpose.
Section 26 requires investment of portions of the reserve fund not needed for current benefit obligations to earn an average annual income of at least nine percent.
Section 26 mandates that five percent be invested in bank deposits as the Contingency Reserve Fund to meet and cover contingent and extraordinary disbursements for death, sickness, and disability claims under the Act.
Section 26 mandates that the remaining balance be credited to the Investment Reserve Fund and invested by the Commission in any or all of the following ways only.

Penal clause; sanctions for non-compliance

Section 28(e) imposes a penalty on anyone who fails or refuses to comply with the provisions of the Act or Commission rules and regulations.
Section 28(e) provides that punishment is a fine of not less than five hundred pesos nor more than five thousand pesos, or imprisonment of not less than six months nor more than one year, or both, at the discretion of the court.
Section 28(e) proviso increases applicability where the violation consists in failure or refusal to register employees or register oneself (for the covered self-employed), or to deduct employee contributions and remit them to the SSS; the penalty remains fine of not less than five hundred pesos nor more than five thousand pesos, and imprisonment of not less than six months nor more than one year.

Transitory and implementing timing rules

Section 3 (via Section 9-A and Section 10) sets timing for effectivity of coverage for enumerated self-employed persons, with a minimum earliest date of January 1, 1980 for those effectivity rules.
Section 4 (via Section 12 and Section 12-B, Section 13, Section 13-A, Section 14, Section 14-A) governs benefit calculations and qualifying conditions without imposing separate transitory benefit windows except for the delivery limitation in Section 14-A(d) tied to deliveries after March 13, 1973.
Section 18(a) applies the contribution schedule effective January 1, 1980.