Policy and purpose
- Section 2 declares it to be the policy of the Republic of the Philippines 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.
- The declared policy is to provide covered employees and their families protection against the hazards of disability, sickness, old age, and death.
- The declared policy is implemented in the spirit of social justice.
Social Security System governance
- Section 3 creates the Social Security System (SSS) with its principal place of business in Manila or Quezon City, Philippines.
- Section 3 directs and controls the SSS through a Social Security Commission composed of: the Secretary of Labor, the SSS Administrator, and six appointive members.
- Section 3 requires the six appointive members to represent: the labor group (2), the management group (2), and the general public (2).
- Section 3 provides that appointive members are appointed by the President with the consent of the Commission on Appointments, and the Chairman is designated by the President from among the members.
- Section 3 sets the appointive members’ term at three years, with special rules for the first six appointive members and that vacancies are filled only for the unexpired term.
- Section 3 sets per diem compensation at fifty pesos per meeting actually attended, not exceeding eight meetings a month.
- Section 3 vests the SSS’s general operations and management in an Administrator as chief executive officer responsible for implementing the SSS program and Commission policies.
- Section 3 requires the Administrator to have prior technical and administrative experience related to the Act’s purposes, appointed by the President with the consent of the Commission on Appointments, with salary fixed by the Commission with the approval of the President and payable from SSS funds.
Enforcement of Commission decisions
- Section 4 provides that any decision or award of the Commission that has become final and executory shall be enforced like decisions of Courts of First Instance.
- Section 4 grants the Commission power to issue writs of execution to the city or provincial sheriff or the sheriff it appoints.
- Section 4 provides that a person who fails or refuses to comply, after being required to do so, may be punished by the proper court for contempt upon application by the Commission.
Key benefit and eligibility rules
- Section 5 defines “Compensation” for contributions and benefits as actual remuneration for employment, including the cash value of remuneration paid other than cash, except the part of remuneration in excess of one thousand pesos received during the month.
- Section 5 defines Monthly salary credits as the compensation base for contributions and benefits as indicated in Section Eighteen.
- Section 5 defines “Contribution” as the amounts paid by the employee and the employer to the SSS in accordance with Section Eighteen.
- Section 5 defines “Average monthly salary credit” using specified averaging formulas over the relevant periods, with a special rule when the month of death or permanent disability falls within eighteen months from the month of coverage.
- Section 6 amends Retirement benefits: a covered employee is entitled to a monthly pension for life but not less than five years if at least one of the following applies:
- 120 monthly contributions and age 60 and separated from employment or (if still employed) receiving less than 250 pesos monthly compensation; or
- 120 monthly contributions and age 65; or
- 36 monthly contributions and permanent total disability.
- Section 6 requires the retirement pension to be computed as:
- Forty-five per cent of the first three hundred pesos of the average monthly salary credit (or fraction thereof);
- plus Nine per cent of the excess over three hundred pesos; plus
- One tenth of one per cent of the average monthly salary credit for each monthly contribution in excess of 120, paid as of the last day of the second quarter preceding the quarter of retirement.
- Section 6 provides a special benefit rule for members covered prior to June 18, 1962 who were fifty years of age or over on the date of coverage, based on contributions equivalent to calendar months of coverage at age sixty, but not less than twenty-four.
- Section 6 provides a floor: the monthly pension shall in no case be less than forty-five pesos.
- Section 6 suspends the monthly pension:
- upon re-employment of a retired employee less than 65 years old receiving 250 pesos or more monthly compensation, in which case the employee again becomes subject to Section eighteen and the employer to Section nineteen; or
- upon recovery of an employee retired due to permanent total disability, or failure to present for examination at least once a year upon notice by the SSS.
- Section 6 increases the monthly pension of a surviving pensioner retired before December 1, 1972 by fifty per cent, effective beginning December 1, 1972.
Death, disability, and sickness benefits
Section 7 amends Death and permanent disability benefits.
Section 7(a) provides that upon death, beneficiaries receive:
- the basic lump sum amount, plus
- five-twelfths of one per cent of the basic lump sum amount for each monthly contribution in excess of 120,
- if at least one condition is satisfied at the time of death:
- at least 18 monthly contributions within the 36 calendar month period ending on the last day of the second quarter preceding the quarter of death; or
- payment ratio of at least eighty per cent.
Section 7(a) provides that if neither condition is satisfied, the death benefit equals the foregoing amount multiplied by one and one-fourth times the payment ratio.
Section 7(a) sets minimums: death benefit shall not be less than the total contributions paid by the employee and employer in the employee’s behalf to the SSS, nor less than five hundred pesos.
Section 7(a) provides that a covered employee who dies in the month of coverage is entitled to the minimum benefit.
Section 7(b) provides that for permanent total disability occurring before 36 monthly contributions, the entitled benefit is the basic lump sum amount, subject to specified qualifying conditions at the time of permanent total disability:
- at least 18 monthly contributions within the 36 calendar month period ending on the last day of the second quarter preceding the quarter of permanent total disability; or
- payment ratio not less than eighty per cent.
Section 7(b) provides that if neither condition is satisfied, the permanent total disability benefit equals the benefit multiplied by one and one-fourth times the payment ratio.
Section 7(b) sets minimums: the permanent total disability benefit shall not be less than total contributions paid by the employee and employer in the employee’s behalf, nor less than five hundred pesos.
Section 7(b) provides that a covered employee who becomes permanently, totally disabled in the month of coverage is entitled to the minimum benefit.
Section 7(c) addresses partial but permanent disability:
- the benefit equals the specified percentage of the sum of (i) the benefit described in Section 7(a) or (b) plus (ii) five-twelfths of one per cent of the basic lump sum amount for each monthly contribution in excess of 120,
- with the Commission determining the percentage degree of disability.
Section 7(c) provides limits on disability percentages:
- distinct, separate and unrelated permanent partial disabilities are not additive;
- deteriorating and related permanent partial disabilities are additive up to a maximum of one hundred per cent;
- at one hundred per cent, the employee is deemed permanently totally disabled.
Section 8 amends Sickness benefit.
Section 8(a) provides that a covered employee who has paid at least twelve monthly contributions and is confined for more than five days in a hospital (or elsewhere with the Commission’s approval) is paid, per day of confinement (or fraction thereof), an allowance equivalent to seventy per cent of the average daily salary credit.
Section 8(a)(1) sets a daily allowance floor and ceiling:
- not less than two pesos and fifty centavos,
- and not exceed twelve pesos,
- and sickness benefit is payable for a period longer than one hundred twenty days in one calendar year.
Section 8(a)(1) forbids carry-forward: any unused portion of the one hundred twenty days in one calendar year is not carried forward to the subsequent year.
Section 8(a)(2) limits payment for the same confinement: no sickness benefit is paid for more than two hundred forty days on account of the same confinement.
Section 8(a)(3) imposes notification duties on the employee:
- the employee must notify the employer within five calendar days after the start of confinement, except when confinement is in a hospital or sickness/injury occurs while working or within the employer’s premises.
- if the member is unemployed, the member must directly notify the SSS within five calendar days after the start of confinement, except when confinement is in a hospital.
- where notification is necessary, confinement is deemed to start not earlier than the fifth day immediately preceding the date of notification.
Section 8(b) governs payment timing:
- allowances must be promptly made by the employer every regular pay day, or on the fifteenth and last day of each month when the SSS makes direct payment,
- for as long as due and payable.
Section 8(b) allows employer reimbursement for current sick leaves (if any), subject to reimbursement up to an amount not exceeding the sickness benefit, upon employer application.
Section 8(c) requires reimbursement of one hundred per cent of daily benefits to the employer upon satisfactory proof of payment and legality, with conditions:
- employer must have notified the SSS within five calendar days after receipt of employee’s notification; otherwise reimbursement is limited to confinement days starting from the tenth calendar day immediately preceding SSS notification.
- the SSS reimburses or pays only for confinement within the one year period immediately preceding the date the claim for benefit or reimbursement is received by the SSS; for hospital confinement, the claim must be filed within one year from the last day of confinement.
Section 8(d) penalizes procedural non-compliance: if the employee gave the required notification but the employer fails to notify the SSS or file the claim for reimbursement within the period prescribed, the employer has no right to recover daily allowances advanced as required.
Section 8(e) adjudication timetable: reimbursement claims are adjudicated by the SSS within two months from receipt; if no payment is received by the employer within one month after the adjudication period, reimbursement thereafter earns simple interest of one per cent per month until paid.
Section 8(f) makes application rules apply to all claims filed with the SSS beginning January 1, 1973.
Non-transferability, nationality limits, and representatives
- Section 8-A provides that the SSS pays benefits to persons entitled under the Act.
- Section 8-A bars benefit receipt by a beneficiary who is a national of a foreign country that does not extend benefits to a Filipino beneficiary residing in the Philippines, or which is not recognized by the Philippines.
- Section 8-A authorizes the Commission, where serving the best interests of the SSS, to direct payments without regard to nationality or country of residence.
- Section 8-A requires the Commission to appoint a representative for recipients who are minors or incapable of administering their own affairs, under terms and conditions deemed proper by the Commission.
- Section 8-A provides that appointment of a representative is unnecessary if the recipient is under the custody of, or living with, parents or spouse; in that case benefits are paid to the parents or spouse as representative payee.
- Section 8-A declares benefits are not transferable.
- Section 8-A provides that no power of attorney or other document executed by those entitled to benefits in favor of any agent, attorney, or any other individual for collection is recognized except when the entitled persons are physically and legally unable to collect personally.
- Section 8-A provides that in case of death benefits, if no beneficiary has been designated, the benefits are paid to the legal heirs in accordance with the law of succession.
Exemption from tax and process
- Section 9 provides that all SSS assets, contributions collected and accruals thereto and income therefrom, and all benefit payments, and related papers or documents required for operation or execution of the Act are exempt from any tax, assessment, fee, charge, or customs or import duty.
- Section 9 provides that benefit payments made by the SSS are exempt from all kinds of taxes, fees or charges.
- Section 9 provides that benefit payments are not liable to attachment, garnishment, levy or seizure by or under any legal or equitable process whatsoever, either before or after receipt by the entitled person, except to pay any debt of the covered employee to the SSS.
Contributions: definitions, schedules, and employer duties
Section 10 amends employee’s contribution and sets contribution mechanics beginning with the last day of the calendar month when compulsory coverage takes effect, and every month thereafter during employment.
Section 10 requires that employee and employer contributions follow a schedule effective on January 1, 1973, based on salary brackets and corresponding monthly salary credits and contribution amounts.
Section 10 sets employee contribution rates by salary brackets within the schedule, and sets total contribution as stated for each bracket.
Section 10(b) mandates increments in employer’s and employee’s contributions equal to one-sixth of their respective contributions in the schedule, rounded to the nearest ten centavos, to be added on January 1, 1974 and January 1, 1979.
Section 10(c) requires every employer to issue a receipt for all contributions deducted or indicate such deductions on the employee’s pay envelopes.
Section 11 amends employer’s contribution.
Section 11(a) requires the employer to pay the employer’s contribution for each covered employee in accordance with the schedule in Section eighteen beginning the last day of the month when compulsory coverage takes effect and monthly thereafter during employment.
Section 11(a) forbids reimbursement by the employer: an employer may not deduct, directly or indirectly, from the compensation of SSS-covered employees, nor recover from them, the employer’s contributions.
Section 11(b) requires remittance support by a quarterly collection list submitted at the end of each calendar quarter showing employee names and SSS numbers, actual compensation, and total contributions paid for the quarter.
Remittance, penalties, and delinquency grace
Section 12 amends Remittance of contributions.
Section 12(a) requires remittance of contributions imposed in preceding sections within the first seven days of each calendar month following the month for which they are applicable, or within such time as the Commission may prescribe.
Section 12(a) imposes liability on employers for contribution payments, and if any contribution is not paid as prescribed, the employer must pay:
- besides the contribution, a penalty of three per cent per month from the date the contribution falls due until paid.
Section 12(a) authorizes quarterly or semi-annually in advance collection and remittance if deemed expedient by the Commission, with employee contributions advanced by employers.
Section 12(a) provides that upon separation of an employee, any contributions advanced but not due shall be credited or refunded to the employer.
Section 12(d) establishes presumptions for collections actions: the last complete record of monthly contributions paid as of the filing date for collection action is presumed to be the monthly contributions for the employees listed, payable by and due from the employer for each unpaid month, unless contradicted by other evidence.
Section 12(d) provides that full payment under this paragraph does not bar the SSS from determining and collecting true and correct contributions due, and does not relieve employer liability under Section twenty-eight.
Section 12(e) grants a limited grace period for delinquent or non-remitting employers:
- an employer delinquent or not remitting all monthly contributions due and payable may remit within six (6) months from approval of this amendatory act,
- submit corresponding collection lists,
- and avoid the prescribed three per cent penalty.
Section 12(e) provides penalty consequences: if an employer fails to remit within the six-month grace period, the three per cent penalty applies from the time the contributions first became due under Section 12(a).
Employment records, reporting, confidentiality, and registration
Section 13 amends Employment records and reports and imposes employer reporting and record-keeping duties.
Section 13(a) requires each employer to immediately report to the SSS the names, ages, civil statuses, occupations, salaries and dependents of employees who are or may later be subject to compulsory coverage.
Section 13(a) provides employer damages if contingency occurs without timely reporting or contributions:
- if an employee subject to compulsory coverage dies, becomes sick or disabled, or reaches age sixty without the SSS receiving any report or written communication about him or a contribution paid in his name, the employer pays damages equivalent to benefits the employee would have received had the name been reported on time.
- for pension benefits, employer liability is limited to the total five-year guaranteed pension.
Section 13(a) provides an exemption from damages where contingency occurs within thirty days from the date of employment.
Section 13(b) provides damages where employer misrepresentation or under-remittance reduces benefits:
- if the employer misrepresents the true date of employment or remits contributions less than required, resulting in reduction of benefits, the employer pays damages to the extent of the reduction.
Section 13(c) makes SSS handling of records strict:
- records and reports accomplished and submitted by employee or employer are kept confidential except in compliance with a subpoena duces tecum issued by the courts;
- records are not divulged without consent of the administrator or an authorized SSS official duly authorized by the administrator;
- such records and reports are presumed correct as to stated data, unless necessary corrections are made before the right to the benefit being claimed accrues;
- such records and reports form the basis for adjudication, and the adjudication is final.
Section 13(d) requires employers to keep true and accurate work records for such period and containing such information as the Commission prescribes, including an annual register of new and separated employees.
Section 13(d) requires the annual register be secured from the SSS, and that on the first day of employment or effective separation date, employers enter employee names, SSS numbers, and other data the Commission requires.
Section 13(d) mandates submission of the annual register to the SSS in January of each year.
Section 13(d) provides that records are open for inspection by the SSS or its authorized representatives quarterly or as often as required by the SSS.
Section 13(d) authorizes the SSS to require employers to submit reports needed for effective administration of the Act.
Section 13(e) requires that effective July 1, 1973, each employer must require as a condition to employment the presentation of an SSS registration number secured by the prospective employee in accordance with SSS procedures.
Section 13(e) provides that employees earlier assigned registration numbers by virtue of previous employment shall use the originally assigned numbers for this purpose.
Section 13(e) provides that issuing registration numbers by the SSS does not exempt employers from complying with Section 13(a) reporting and communication duties.
Administrative fund operations and decentralization
- Section 13-A amends Deposit and Disbursements for SSS funds.
- Section 13-A requires that all moneys paid to or collected by the SSS every year and all accruals thereto be deposited, administered and disbursed in the same manner and under the same conditions and requirements as provided by law for other public special funds.
- Section 13-A directs that not more than twelve per cent of total yearly collection of contributions and gross income from investments during fiscal year 1966-67 shall be disbursed for salaries and wages, purchases of office equipment and materials, operational expenses and establishment of regional offices of the SSS.
- Section 13-A requires the percentage limit to decrease by one-half per cent each succeeding fiscal year, but not less than seven per cent.
- Section 13-A bars carry-over of savings as additional expenses in later years: if expenses in any year are less than the maximum permissible, the difference shall not be used as additional expenses in following years.
- Section 13-A mandates priority to decentralization implementation and requires the SSS to submit to Congress an annual progress report on development of this program.
Reserve fund investment rules
- Section 14 amends Investment of reserve funds.
- Section 14 provides that revenues not needed to meet current administrative and operational expenses are accumulated in a Reserve Fund used exclusively for payment of benefits under the Act.
- Section 14 prohibits withdrawal or use of the Reserve Fund for any other purpose.
- Section 14 requires that portions not needed to meet current benefit obligations be invested to earn an average annual income of at least seven per cent.
- Section 14 requires a five per cent allocation to bank deposits as the contingency reserve fund for death, sickness, and disability claims.
- Section 14 requires the remaining balance to be credited to an investment reserve fund and invested by the Commission only through enumerated modes:
- interest-bearing Government of the Philippines bonds or securities, or such securities pledged for interest and principal;
- interest-bearing deposits or securities in a domestic bank doing business in the Philippines, subject to limits not exceeding the bank’s unimpaired capital and surplus or total private deposits (whichever is smaller), with prior Monetary Board designation as depository, and equitable distribution among designated depository banks;
- loans or interest-bearing advances to the National Government for construction of permanent toll bridges, toll roads or government office buildings under actuarial considerations and legal conditions, with tolls collected by the SSS for a reasonable fee;
- direct housing loans to covered employees giving priority to low-income groups, up to a maximum of ninety per cent of the appraised value of mortgaged properties under rules and regulations adopted by the Commission, and building projects under Section four (j) for hospitals and institutions for the sick, aged and infirmed members and their families;
- investments providing credit facilities for small short-term loans to covered employees, with not more than ten per cent of the investment reserve fund invested for this purpose at any time;
- other income-earning projects and investments secured by first mortgages on real estate collaterals determined by the Commission to benefit the SSS, members, and the public welfare, using due diligence and prudence to earn the highest possible interest consistent with safety.
- Section 14(g) requires the SSS, as part of investment operations, to act as insurer of all or part of its interest on mortgaged properties or on the lives of mortgagors mortgaging to the SSS, with the Commission fixing premium rates not higher than those approved by the insurance commissioner, based on actuary studies.
- Section 14(g) permits the SSS to insure all or part with a private company or reinsurer.
- Section 14(g) provides that the general law on insurance and its rules and regulations apply suppletorily insofar as not in conflict with the Social Security Law and its rules.
Penal clause and criminal consequences
- Section 15 amends the Penal Clause.
- Section 28(a) makes it punishable when a person, for the purpose of causing any payment to be made under the Act or under an agreement thereunder, where none is authorized:
- makes or causes to be made false statements or representations about compensation paid or received; or
- makes or causes to be made false statements of material fact in claims for benefits or in applications for loans; or
- makes or causes to be made any false statement, representation, affidavit, or document in connection with such claim.
- Section 28(a) prescribes penalties for Section 28(a) offenses: fine of not less than PHP 500 nor more than PHP 5,000, or imprisonment of not less than six months nor more than one year, or both, at the court’s discretion.
- Section 28(b) punishes whoever obtains or receives any money or check under the Act or under an agreement thereunder, without being entitled thereto with intent to defraud any covered employee, employer or the SSS, with the same penalty structure: fine not less than PHP 500 nor more than PHP 5,000, or imprisonment of not less than six months nor more than one year, or both.
- Section 28(h) establishes a presumption against employers:
- an employer who, after deducting monthly contributions or loan amortizations from an employee’s compensation, fails to remit those deductions within thirty days from the date they became due is presumed to have misappropriated such contributions or loan amortizations.
- such employer shall suffer penalties provided in Article three hundred fifteen of the Revised Penal Code.
- Section 28(i) authorizes enforcement:
- criminal actions arising from violation of the Act may be commenced by the SSS or the employee concerned either under the Act or, in appropriate cases, under the Revised Penal Code.