March 27 special nonworking holiday in San Juan

Legal basis, declared intent, and prior frameworks

Presidential Decree No. 626 further amends Presidential Decree No. 442 (the Labor Code of the Philippines).
The amendments account for prior adjustments and extensions of coverage and titles under the Labor Code, including Presidential Decree No. 570-A and Presidential Decree No. 608.
The policy aim is to promote and develop a tax-exempt employees’ compensation program to provide prompt and adequate income and medical/related benefits for work-connected disability or death. Article 164.
The system is designed to initiate, rationalize, and coordinate the grant of benefits consistent with the overriding priority of development.

Core definitions for employees’ compensation

Article 165 defines “Code” as the Labor Code of the Philippines instituted under Presidential Decree No. 442, as amended.
“Commission” is defined as the Employees’ Compensation Commission created under this Title. Article 165.
“SSS” is the Social Security System created under Republic Act No. 1161, as amended; “GSIS” is the Government Service Insurance System created under Commonwealth Act No. 186, as amended. Article 165.
“System” means SSS or GSIS, as applicable. Article 165.
“Employer” means any person, natural or juridical, employing the services of the employee. Article 165.
“Employee” means a person compulsorily covered by GSIS under Commonwealth Act No. 186, as amended (including members of the Armed Forces of the Philippines), and any person employed as casual, emergency, temporary, substitute or contractual; or any person compulsorily covered by SSS under Republic Act No. 1161, as amended. Article 165.
“Dependents” means specified categories of a child, spouse living with the employee, and wholly dependent legitimate parents, with age and status conditions (including enrollment for ages over 18 but not over 21, and congenital incapacity beyond 21). Article 165.
“Beneficiaries” are defined as primary beneficiaries (dependent spouse until remarrying and dependent children) and, in their absence, specified secondary beneficiaries. Article 165.
“Injury” is any harmful change in the human organism sustained at work during working hours at the workplace or elsewhere while executing an order for the employer. Article 165.
“Sickness” is any illness accepted as an occupational disease listed by the Commission, or any illness caused by employment subject to proof that the risk of contracting the same is increased by working conditions. Article 165.
“Death” is loss of life resulting from injury or sickness; “Disability” and “Compensation” cover income and medical/related benefits under this Title. Article 165.
“Income benefit,” “Medical benefit,” and “Related benefit” define the categories of payments under this Title. Article 165.
“Wages” or “salary” means all actual remuneration for employment received during the month, except the portion in excess of one thousand pesos; related concepts include “monthly salary credit,” “average monthly salary credit,” “average daily salary credit,” and “Quarter”. Article 165.
“Hospital” and “Physician” are defined by legal authorization/accreditation requirements. Article 165.

Compulsory coverage and who is liable

Coverage in the State Insurance Fund is compulsory upon all employers and their employees not over sixty years of age. Article 166.
An employee over sixty years of age who is paying contributions to qualify for the retirement or life insurance benefit administered by the System is still subject to compulsory coverage. Article 166.
When an employee is both covered by SSS and GSIS, only employment with the latter is considered for purposes of coverage. Article 166.
The Commission must ensure adequate coverage of Filipino employees employed abroad, subject to regulations it prescribes. Article 167.
Compulsory coverage of the employer takes effect on the first day of his operation, and that of the employee takes effect on the date of his employment. Article 168.
Each employer and his employees must register with the System in accordance with System regulations. Article 169.

Coverage liability limits and exclusiveness

The State Insurance Fund is liable for compensation to the employee or dependents except when disability or death was occasioned by the employee’s intoxication, willful intention to injure or kill himself or another, notorious negligence, or when otherwise provided under this Title. Article 170.
Unless otherwise provided, the State Insurance Fund’s liability is exclusive and in place of all other liabilities of the employer to the employee, dependents, or anyone entitled to receive damages for the employee or dependents. Article 171.
Payment of compensation under this Title bars recovery of benefits as provided in enumerated provisions/laws whose benefits are administered by the System, during the period of such payment for the same disability or death. Article 171.

Employees’ Compensation Commission and fund management

The Employees’ Compensation Commission is created to initiate, rationalize, and coordinate policies of the employees’ compensation program. Article 174.
The Commission is composed of four ex-officio members: Secretary of Labor as Chairman; GSIS Manager; SSS Administrator; and Chairman of the Philippine Medical Care Commission; plus two appointive members (one representing employees and one representing employers) appointed by the President for a term of six years. Article 174.
Each appointive member must have at least five years experience in workmen’s compensation or social security programs; all vacancies are filled only for the unexpired term. Article 174.
The Vice-Chairman alternates yearly between the GSIS General Manager and the SSS Administrator. Article 174.
The presence of four members constitutes a quorum; meetings are held as often as necessary. Article 174.
Each member receives a per diem of one hundred pesos per meeting attended (excluding actual ordinary and necessary travel and representation expenses). Article 174.
The Commission’s general operations and management functions of the GSIS or SSS under this Title are vested in its respective chief executive officer, responsible for carrying out Commission policies. Article 174.
The Commission’s powers and duties include: assessing and fixing a rate of employer contribution; determining adjusted contribution rates for employers with high frequency of work accidents/occupational diseases due to failure to observe adequate safety measures; approving rules for claim processing and dispute settlement; initiating occupational health and safety and accident prevention policies/programs; actuarial studies for benefits; appointing staff subject to civil service rules; adopting an annual budget chargeable against the State Insurance Fund; administering oaths and issuing subpoenas/subpoenas duces tecum for appealed cases; suing and being sued; and performing acts to attain purposes of the Commission and enforce the Title. Article 175.
All revenues collected by the System under this Title must be deposited, invested, administered, and disbursed in the same manner and under the same safeguards as specified for SSS and GSIS funds, with a limitation that the Commission/SSS/GSIS may disburse not more than twelve per cent of contributions and investment earnings for operational expenses, including occupational health and safety programs, incidental to carrying out the Title. Article 176.
Revenues not needed for current operational expenses must be accumulated in a State Insurance Fund, used exclusively for payment of benefits under this Title, and may not be used for other purposes; amounts accruing must be deposited with authorized depository banks approved by the Commission or invested with due and prudent regard for liquidity needs. Article 177.

Disputes, appeals, finality, and enforcement

The System has original and exclusive jurisdiction to settle disputes arising from this Title regarding coverage, entitlement to benefits, collection and payment of contributions and penalties thereon, or other related matters, with appeal to the Commission. Article 178.
The Commission must decide appealed cases within twenty working days from submission of the evidence. Article 178.
Commission decisions/orders/resolutions may be reviewed on certiorari by the Supreme Court only on questions of law, upon petition of an aggrieved party within ten days from notice. Article 179.
Commission decisions/orders/resolutions become final and executory if no appeal is taken within ten days from notice. Article 180.
Awards granted by the Commission in cases appealed from decisions of the System must be effected within fifteen days from receipt of notice. Article 180.
Final and executory decisions/orders/resolutions are enforced as Court of First Instance decisions are enforced; the Commission may issue writs of execution to appropriate sheriffs; refusal/failure to comply triggers punishment for contempt upon Commission application. Article 180.

Employer contributions and government guarantee

Employers must remit contributions equal to one percent of monthly salary credit. Article 181.
Contribution remittance begins as of the last day of the month when an employee’s compulsory coverage takes effect and continues every month thereafter during employment. Article 181.
The contribution rate is reviewed periodically and may be revised based on experience in risk, cost of administration, and actual or anticipated as well as unexpected losses, subject to limitations in the Title. Article 181.
Contributions under this Title must be paid in their entirety by the employer; any contract or device deducting any portion from employees’ wages/salaries is null and void. Article 181.
When a covered employee dies, becomes disabled, or is separated from employment, the employer’s obligation to pay the monthly contribution arising from that employment ceases at the end of the month of contingency and during months when the employee is not receiving wages or salary. Article 181.
The Republic of the Philippines guarantees benefits prescribed under this Title and accepts general responsibility for the solvency of the State Insurance Fund; deficiencies must be covered by supplemental appropriations from the national government. Article 182.

Medical benefits and treatment rules

Immediately after an employee contracts sickness or sustains injury, the System must provide medical services and appliances during the subsequent period of disability, subject to the expense limitation prescribed by the Commission. Article 183.
The System may choose or order changes in physician, hospital, or rehabilitation facility; it is not liable for compensation for aggravation resulting from unauthorized employee changes of medical services, appliances, supplies, hospitals, rehabilitation facilities, or physician. Article 184.
Attending physicians must comply with System regulations and submit required reports in prescribed forms; relevant medical information must be made available on demand to the employee or the System. Article 185.
No information developed in connection with treatment or examination for which compensation is sought is treated as privileged communication. Article 185.
If the employee unreasonably refuses to submit to medical examination or treatment, the System stops further compensation payments during the continued refusal; what constitutes unreasonable refusal is determined by the System, which may determine the necessity, character, and sufficiency of medical services to be furnished. Article 186.
Hospital services, medical care, and appliances (excluding professional fees) must not be higher than those prevailing in hospital wards for similar services to injured or sick persons in general, and are subject to Commission regulations. Article 187.
Professional fees may be appreciably higher than those prescribed under Republic Act No. 6101, as amended, the Philippines Medical Care Act of 1969. Article 187.
The System must establish, as soon as practicable, a continuing rehabilitation program for injured and handicapped employees, providing medical/surgical/hospital treatment (including appliances if handicapped) to help achieve physical independence. Article 188.
The System must establish rehabilitation centers equipped and staffed to provide remedial treatment, vocational assessment and preparation tailored to individual needs to restore suitable employment, including assistance within resources to develop mental, vocational, or social potential. Article 188.

Income disability benefits formulas

For temporary total disability, the System pays income benefit per day or fraction thereof: ninety per cent of the employee’s average daily salary credit for each day of injury or fraction thereof, or for each day or fraction thereof after the third day of sickness. Article 189.
The daily income benefit must not be less than two pesos and fifty centavos nor more than sixteen pesos, and must not be paid for a continuous period longer than one hundred twenty days. Article 189.
The System must be notified of the injury or sickness. Article 189.
An employee may not avail both the income benefit under this Title and sick leave credits at the same time; earned sick leaves are preserved to credit if salary is not paid during such leave or absence. Article 189.
For permanent total disability, the System pays income benefit computed monthly until death but not exceeding five years. Article 190.
The monthly income benefit computation is: forty-five per cent of the first three hundred pesos of average monthly salary credit or fraction thereof; plus twenty-five per cent of the next three hundred pesos of average monthly salary credit or fraction thereof; plus one tenth of one per cent of the average monthly salary credit for each month of paid coverage in excess of one hundred twenty months as of the last day of the second quarter preceding the quarter of disability. Article 190.
The monthly income benefit must not be less than forty-five pesos, and the total income benefit must not exceed twelve thousand pesos. Article 190.
The monthly income benefit is suspended if the employee is gainfully employed, recovers from permanent total disability, or fails to present himself for examination at least once a year upon notice by the System. Article 190.
The Title deems total and permanent disability to include: temporary total disability lasting continuously for more than one hundred twenty days; complete loss of sight of both eyes; loss of two limbs at or above the ankle or wrist; permanent complete paralysis of two limbs; brain injury resulting in incurable imbecility or insanity; and cases determined by the Medical Director and approved by the Commission. Article 190.
“Number of months of paid coverage” is defined and approximated by a formula approved by the Commission. Article 190.
For permanent partial disability, the System pays an income benefit equivalent to the permanent total disability income benefit for each month, for a period not exceeding the period designated in the schedule. Article 191.
The schedule establishes monthly periods corresponding to specified losses (e.g., one thumb 8 months; one index finger 6 months; one middle finger 5 months; one ring finger 4 months; one little finger 2 months; one big toe 5 months; any toe 2 months; one hand 31 months; one arm 40 months; one foot 25 months; one leg 37 months; one ear 8 months; both ears 16 months; hearing of one ear 8 months; hearing of both ears 40 months; sight of one eye 20 months). Article 191.
Losses are treated according to specific equivalencies (e.g., loss of a wrist is treated as loss of the hand; loss of an elbow as loss of the arm; loss of an ankle as loss of the foot; loss of a knee as loss of the leg; loss of more than one joint treated as loss of the whole finger/toe; loss of only the first joint treated as loss of one-half of the whole finger/toe), and eligibility requires either functional loss of use or physical loss. Article 191.
In cases of permanent partial disability less than total loss, the System pays for a proportionate period based on the ratio of partial loss to total loss, rounding decimal fractions to the next higher integer. Article 191.
In cases of simultaneous loss of more than one member or part, the System pays for a period equal to the sum of the periods established for each specified loss, rounding decimal fractions to the next higher integer. Article 191.

Death benefits and beneficiary computation

Upon death of a covered employee, the System pays primary beneficiaries a monthly income benefit equal to the monthly income benefit for permanent total disability, increased by ten percent for each dependent child not exceeding five, beginning with the youngest and without substitution. Article 192.
The portion equivalent to the permanent total disability monthly income benefit is guaranteed for five years. Article 192.
If there is no primary beneficiary, the System pays beneficiaries or legal heirs a lump sum benefit equal to the lesser of thirty times the permanent total disability monthly income benefit and six thousand pesos. Article 192.
If the covered employee is already under permanent total disability, the System pays the balance of income benefit plus ten percent for each dependent child not exceeding five, beginning with the youngest and without substitution. Article 192.
If there is no primary beneficiary in such case, the System pays beneficiaries or legal heirs a lump sum equal to the lesser of the balance of income benefit or thirty times the permanent total disability monthly income benefit and six thousand pesos. Article 192.

Common income-benefit rules and employer penalties

All questions of relationship and dependency are determined as of the time of death. Article 193.
If an employer is delinquent in contributions, the employer is liable to the System for benefits already paid to employees or dependents and for benefits and expenses the employer owes; such liability constitutes a lien on all employer property, real or personal, preferred to any credit except taxes. Article 194.
Payment of the lump sum equivalent of such liability absolves the employer from paying delinquent contributions and penalty with respect to the concerned employee. Article 194.
Failure or refusal to pay/remit prescribed contributions does not prejudice the employee’s or dependents’ right to benefits. Article 194.
If sickness/injury/disability/death occurs before the System receives the employee’s name report, the employer is liable to the System for the lump sum equivalent of the benefits the employee or dependents may be entitled to. Article 194.
If a permanently partially disabled employee suffers another injury resulting in compensable disability greater than the previous injury, the State Insurance Fund is liable for the income benefit of the new disability. Article 195.
If the new disability is related to the previous disability, the State Insurance Fund is liable only for the difference in income benefits. Article 195.
No claim for compensation is transferable or liable to tax, attachment, garnishment, levy, or seizure by any legal process, before or after receipt, except for paying any debt of the employee to the System. Article 196.
Income benefits are payable to an employee who is entitled to receive wages, salaries, or allowances for holidays, vacation, or sick leaves, and to an employee who has an award/benefit under a collective bargaining or other agreement. Article 197.
If injury or death was due to employer failure to comply with law, or to install/maintain safety devices or take other precautions, the employer must pay to the State Insurance Fund a penalty of twenty-five per cent of the lump sum equivalent of the income benefit payable by the System to the employee. Article 198.
All employees are enjoined to undertake and strengthen measures for occupational health and safety of employees. Article 198.
A claim is not given due course unless notice is given to the employer in accordance with this Title’s notice provisions (except when notice is not required). Article 199.
The right to compensation is barred unless the claim is filed with the System within one year from notice to the employer. Article 199.
For erroneous payments made in good faith to a dependent inferior in right, the System is discharged from liability unless and until the other dependent notifies the System of his claim prior to payment. Article 200.
When doubts exist as to rights of rival claimants, the System determines to whom payment is made in accordance with Commission regulations. Article 200.
If payment is to be made to a minor or incompetent, the System pays to the person(s) it considers best qualified to take care and dispose of the minor’s or incompetent’s property for the benefit. Article 200.
Agents/attorneys/other persons preparing or filing claims must not demand or charge any fee; any contrary stipulation is null and void. Article 201.
Retention or deduction from any benefit granted for payment of such fees is prohibited. Article 201.
Violations are punished by a fine of not less than five hundred pesos nor more than five thousand pesos, or imprisonment for not less than sixty months nor more than one year, or both, at the court’s discretion. Article 201.
The State Insurance Fund and all its assets are exempt from any tax, fee, charge, levy, or customs or import duty; no future law applies to the State Insurance Fund unless it expressly states its name. Article 202.

Records, notice, and procedural compliance

Employers must keep a logbook recording chronologically sickness, injury, or death of employees, including employee name, date and place of contingency, nature of contingency, and absences. Article 203.
Logbook entries must be made within five days from notice or knowledge of the contingency. Article 203.
Within five days after entry, employers must report to the System only those contingencies they deem work-connected. Article 203.
Entries must be made by the employer or any authorized official after verification of contingencies or employee absences for a day or more. Article 203.
Upon request, the employer must furnish a certificate with required details (including entry number, page number, and date); the logbook must be made available for inspection by authorized System representatives. Article 203.
If an employer fails to record an actual sickness/injury/death within the prescribed period, gives false information, or withholds material information, the employer is liable for fifty percent of the lump sum equivalent of the income benefit to which the employee may be entitled; such payment accrues to the State Insurance Fund. Article 203.
If benefits are paid on a claim later determined fraudulent and the employer is found a party to the fraud, the employer must reimburse the System the full compensation paid. Article 203.
Notice of sickness/injury/death must be given to the employer by the employee, dependents, or any person on their behalf within five days from the occurrence of the contingency; notice to the employer is also required if the contingency is known to the employer or its agents/representatives. Article 204.

Penal provisions and enforcement consequences

The penal provisions of Republic Act No. 1161, as amended, and Commonwealth Act No. 186, as amended, regarding funds paid to, collected, or disbursed by the System, apply to collection, administration, and disbursement of funds under this Title. Article 205.
Any person who commits fraud, concealment/collision/falsification/misrepresentation of facts, or any other anomaly for purposes of securing entitlement to any benefit/payment or issuance of any certificate/document connected with this Title is punished with a 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, at the court’s discretion. Article 205.
If the act is committed by a person who has been or is employed by the Commission or System, or is a recidivist, imprisonment is not less than one year. Article 205.
If committed by a lawyer, physician, or other professional, the person is disqualified from practice of his profession in addition to the prescribed penalty. Article 205.
If committed by an official/employee/personnel of the Commission, System, or any government agency, the person is dismissed with prejudice to reemployment in government service in addition to the prescribed penalty. Article 205.
The Title applies only to injury, sickness, disability, or death occurring on or after January 1, 1975. Article 206.

Medicare plan and linkage to other code provisions

Title III of Book IV (Medicare) is amended so that the Philippine Medical Care Plan is implemented as provided under Republic Act No. 1161, as amended. Section 2; Article 207.
The Labor Code’s Book VII money-claims prescription is amended to provide:
- Money claims arising from employer-employee relations accruing during the effectivity of the Code must be filed within three (3) years from accrual; otherwise they are forever barred. Section 3; Article 331.
- Money claims accruing prior to the Code’s effectivity must be filed with appropriate entities within one year from the Code’s effectivity; otherwise they are forever barred. Section 3; Article 331.
- Workmen’s compensation claims accruing prior to the Code’s effectivity and during November 1, 1974 up to December 31, 1974 must be filed with appropriate regional offices of the Department of Labor not later than March 31, 1975; otherwise they are forever barred, and these claims are processed/adjudicated under the law and rules in force when the causes of action accrued. Section 3; Article 331.
Transitory and final provisions are amended to provide continuity and absorption of workmen’s compensation offices:
- The Bureau of Workmen’s Compensation, Workmen’s Compensation Commission, and Workmen’s Compensation Units in the Department of Labor continue to exist up to December 31, 1975; thereafter they are