Social Security Act of 1997

State policy and program purpose

Section 2 declares the State policy to establish, develop, promote, and perfect a sound and viable tax-exempt social security system suitable to the needs of the people throughout the Philippines.
Section 2 mandates that the system promote social justice and provide meaningful protection to members and their beneficiaries against the hazards of disability, sickness, maternity, old age, death, and other contingencies resulting in loss of income or financial burden.
Section 2 directs the State to endeavor to extend social security protection to workers and their beneficiaries.

Social Security System governance

Section 3 creates the Social Security System (SSS) as a corporate body with principal place of business in Metro Manila.
Section 3 places the SSS under the direction and control of the Social Security Commission (Commission).
Section 3 provides that the Commission consists of: the Secretary of Labor and Employment (or a duly designated undersecretary), the SSS president, and seven (7) appointive members.
Section 3 requires the appointive members to be constituted as: three (3) representing workers (with at least one (1) woman), three (3) representing employers (with at least one (1) woman), and one (1) representing the general public (to have adequate knowledge and experience regarding social security).
Section 3 provides that the Chairman is designated by the President of the Philippines from among its members, and appointive member terms are three (3) years with rules on initial staggered terms, continuation until successors are qualified, and filling vacancies only for the unexpired term.
Section 3 sets compensation rules: appointive members receive at least PHP 2,500 per diem for each meeting actually attended, but not to exceed PHP 10,000 a month, with additional per diem rules when hearing and evaluating cases (not to exceed PHP 15,000 a month), and transportation/representation allowances not to exceed PHP 10,000 a month.
Section 3 vests the management and operations functions in the SSS President as chief executive officer, appointed by the President of the Philippines, with salary fixed by the Commission with President approval.
Section 3 requires the Commission, upon recommendation of the SSS President, to appoint an actuary and other personnel, to fix compensation/allowances/benefits, and to prescribe duties and methods to ensure efficient, honest, and economical administration.
Section 3 provides appointment and confirmation rules for SSS personnel: personnel below Vice-President are appointed by the SSS President; personnel appointed by the SSS President (except those below assistant manager) are subject to Commission confirmation; personnel must be selected from civil service eligibles and are subject to civil service rules.
Section 3 exempts the SSS from Republic Act No. 6758 and Republic Act No. 7430.

Commission and SSS powers and duties

Section 4(a) authorizes the Commission to adopt, amend, and rescind rules and regulations needed to carry out the Act subject to approval of the President of the Philippines.
Section 4(a)(2) directs the Commission to establish a Provident Fund for members consisting of voluntary contributions of employers and/or employees, self-employed and voluntary members, and earnings, for payment of benefits under Commission rules approved by the President.
Section 4(a)(3) authorizes the Commission to maintain a Provident Fund consisting of contributions made by both the SSS and its officials and employees and their earnings for payment of benefits to officials/employees or heirs under terms prescribed by the Commission.
Section 4(a)(4) authorizes the Commission to approve restructuring proposals for payment of due but unremitted contributions and unpaid loan amortizations under Commission terms and conditions.
Section 4(a)(5) permits the Commission to authorize cooperatives registered with the Cooperative Development Authority or associations registered with the appropriate government agency to act as collecting agents for their members, subject to SSS accreditation and bonding of authorized collectors.
Section 4(a)(6) empowers the Commission to compromise or release, in whole or part, any interest, penalty, or civil liability to the SSS in connection with investments authorized under Section 26, under Commission terms and conditions and President approval.
Section 4(a)(7) requires the Commission to approve, confirm, pass upon, or review actions of the SSS within its proper powers and duties.
Section 4(b) grants the SSS powers including: annual public reporting not later than April 30; requiring actuary valuations every four (4) years (or more frequently) and providing feasible benefit increases every four (4) years subject to President approval, with actuarial soundness guaranteed and no increase in the rate of contribution required for such increases; establishing offices nationwide; entering service/aid contracts; adopting budgets; setting up accounting systems; requiring statistical/economic data and investigations; acquiring and disposing property; undertaking housing projects preferably for low-income members and maintaining hospitals and institutions for the sick, aged, and disabled and schools; suing and being sued; and performing other corporate acts for enforcement of the Act.
Section 4(b)(7)-(11) further provides that the SSS may require reports and analyses, inspect offices, and carry out corporate acts necessary for administration.

Disputes, hearings, appeals, and enforcement

Section 5(a) provides that any dispute under the Act regarding coverage, benefits, contributions, penalties, or any other matter related thereto is cognizable by the Commission.
Section 5(a) requires that cases be heard by the Commission, any of its members, or hearing officers duly authorized, and decided within a mandatory period of twenty (20) days after submission of evidence.
Section 5(a) states that filing, determination, and settlement of disputes are governed by Commission rules and regulations.
Section 5(b) provides that Commission decisions become final and executory fifteen (15) days after notification if no appeal is filed as provided.
Section 5(b) allows judicial review only after exhaustion of remedies before the Commission, and deems the Commission a party to judicial action, with representation by an attorney employed by the Commission or, when requested, by the Solicitor General or a public prosecutor.
Section 5(c) grants review by the Court of Appeals (law and facts), with procedure for RTC appeals followed as far as practicable; states that appeals must be taken within fifteen (15) days from notification; provides that if issues are only questions of law, review is by the Supreme Court.
Section 5(c) provides that no appeal bond is required, the case is heard summarily, and it takes precedence over all cases except (in the Supreme Court) criminal cases where life imprisonment or death was imposed.
Section 5(c) provides that an appeal does not act as a supersedeas or stay unless the Commission or the Court of Appeals or Supreme Court so orders.
Section 5(d) authorizes the Commission to issue a writ of execution to enforce any final and executory Commission decision or award, and provides contempt sanctions for non-compliance after requiring compliance, upon application, pursuant to Rule 71 of the Rules of Court.

Definitions, coverage, and eligibility

Section 8 establishes operative definitions for SSS, Commission, Employer, Employee, Dependents, Compensation, Monthly salary credit, Monthly, Contribution, Employment, Beneficiaries, Contingency, Average monthly salary credit, Average daily salary credit, Semester, Quarter, Credited Years of Service, Member, Self-employed, Net earnings, and Fixed charges.
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 of any kind and using the services of another person under his orders regarding employment—excluding the Government and its political subdivisions, branches, or instrumentalities, including government-owned or controlled corporations; it states that a self-employed person is both employee and employer at the same time.
Section 8(d) defines Employee as any person performing services for an employer where mental and physical efforts are used and compensation is received, within an employer-employee relationship, with the same self-employed dual character.
Section 8(e) defines Dependents as: the legal spouse entitled by law to receive support; the unmarried legitimate/legitimated/legally adopted and illegitimate child under age rules or permanently incapacitated status; and the parent receiving regular support.
Section 8(f) defines Compensation as all actual remuneration including the mandated cost of living allowance and cash value of remuneration paid in any medium other than cash, except remuneration received during the month exceeding the maximum salary credit under Section 18.
Section 8(g) defines Monthly salary credit as the compensation base for contributions and benefits indicated in the schedule in Section 18.
Section 8(h) defines Monthly for payroll frequency and period measurement rules.
Section 8(i) defines Contribution as the amount paid to the SSS by and on behalf of the member under Section 18.
Section 8(j) defines Employment and lists exclusions including: purely casual employment not for occupation/business purpose; employment on or in connection with an alien vessel if employed when outside the Philippines; service in Philippine Government or instrumentality/agency; service in a foreign government or international organization or their wholly-owned instrumentality, with stated agreements for inclusion subject to Act provisions and supplementary effect; and other services of temporary and other employees excluded by Commission regulation; it also states that employees of bona fide independent contractors are not deemed employees of the employer engaging those contractors.
Section 8(k) defines Beneficiaries and provides allocation rules: dependent spouse until remarriage; dependent legitimate/legitimated/legally adopted and illegitimate children as primary beneficiaries, with illegitimate children receiving fifty percent (50%) of the legitimate children’s share; full benefits (as stated) flow to legitimate children if illegitimate disposition doesn’t apply; and if legitimate/legitimated/legally adopted children are absent, illegitimate children receive one hundred percent (100%); in their absence, dependent parents are secondary beneficiaries; and in their absence, any other person designated by the member as secondary beneficiary.
Section 8(l) defines Contingency to include retirement, death, disability, injury or sickness, and maternity of the member.
Section 8(m)-(q) provide formulas and period definitions for average salary credits, semester, and quarter, including use of last sixty (60) monthly salary credits immediately preceding the semester of contingency and other averaging methods, and define the semester as two (2) consecutive quarters and quarter as three (3) consecutive calendar months ending on March, June, September, and December.
Section 8(r) limits Member to the worker covered under Section Nine and Section Nine-A.
Section 9(a) makes coverage compulsory for all employees not over sixty (60) years of age and their employers.
Section 9(a) sets a domestic helpers threshold requiring monthly income not less than One thousand pesos (P1,000) a month.
Section 9(a) protects benefits already earned under existing private benefit plans by preventing discontinuance, reduction, or impairment.
Section 9(a) requires integration of existing private benefit plans with the SSS plan when employer contributions to private plans exceed what the employer is required to pay under this Act, limiting employer contribution to what is required by this Act while maintaining total employer contribution equivalence; it also provides that benefits adjustments needed due to reduced contributions must be subject to agreements between concerned employers and employees.
Section 9(a) provides that the private benefit plan the employer continues must remain under employer management and control unless there is an existing agreement to the contrary.
Section 9(a) preserves parties’ freedom to adopt benefits over and above those provided under the Act.
Section 9(b) allows spouses who devote full time to managing the household and family affairs—unless engaged in a vocation/employment subject to mandatory coverage—to be covered by the SSS on a voluntary basis.
Section 9(c) allows Filipinos recruited by foreign-based employers for employment abroad to be covered on a voluntary basis.
Section 9-A makes compulsory coverage apply to self-employed persons determined by the Commission under its rules, including: all self-employed professionals; partners and single proprietors; actors and actresses, directors, scriptwriters, and news correspondents not falling under the Employee definition; professional athletes, coaches, trainers, and jockeys; and individual farmers and fishermen.
Section 9-A states that, unless otherwise specified, all provisions applicable to covered employees also apply to covered self-employed persons.
Section 10 establishes effectivity: compulsory employer coverage takes effect on the first day of his operation, and employee coverage on the day of his employment; self-employed compulsory coverage takes effect upon registration with the SSS.
Section 11 provides that upon separation from employment, the employer’s contribution and obligation to pay contributions cease at the end of the month of separation, while the employee is credited with contributions paid and is entitled to benefits; the employee may continue paying to maintain full benefit rights.
Section 11-A provides that a self-employed member who realizes no income in a given month is not required to pay contributions for that month, and may continue paying under separated employee rules; it prohibits retroactive payment of contributions other than as prescribed under Section 22-A.
Section 12 defines monthly pension formulae and minimums, including that monthly pension is the highest of: the combination of PHP 300 + 20% of average monthly salary credit + 2% of average monthly salary credit for each credited year of service in excess of ten (10) years, or 40% of average monthly salary credit, or PHP 1,000, and that monthly pension is not paid for an aggregate amount of less than 60 months.
Section 12(b) sets minimum pensions: PHP 1,200 for members with at least ten (10) credited years of service, and PHP 2,400 for those with twenty (20) credited years of service.

Benefits and benefit computation rules

Section 12-A grants dependents’ pension where monthly pension is payable due to death, permanent total disability, or retirement: dependents’ pension equals ten percent (10%) of the monthly pension or PHP 250, whichever is higher, paid for each dependent child conceived on or before the contingency date, not exceeding five (5) children, beginning with the youngest and without substitution; it prioritizes legitimate children over illegitimate children where both exist.
Section 12-B(a) establishes retirement entitlement: a member with at least 120 monthly contributions prior to the semester of retirement and either (1) age 60 and already separated or ceased to be self-employed, or (2) age 65, is entitled for life to monthly pension.
Section 12-B(a) grants an option to receive the first eighteen (18) monthly pensions in a lump sum discounted at a preferential interest rate determined by the SSS.
Section 12-B(b) provides an alternative lump sum: a covered member age 60 at retirement who does not qualify for paragraph (a) receives a lump sum equal to total contributions paid, if separated and not continuing payment on his own.
Section 12-B(c) suspends monthly pension upon reemployment or resumption of self-employment of a retired member under age 65, and restates coverage requirements upon resumption by referencing Section 18 and Section 19.
Section 12-B(d) provides survivor entitlement upon death of the retired member: primary beneficiaries as of retirement receive the monthly pension; if no primary beneficiaries and death occurs within 60 months from the start of monthly pension, secondary beneficiaries receive a lump sum equal to total monthly pensions corresponding to the balance of the five-year guaranteed period, excluding dependents’ pension.
Section 12-B(e) provides that for members who retire after reaching age 60, monthly pension is the higher of (1) pension computed at the earliest time he could have retired had he been separated plus adjustments, or (2) pension computed at actual retirement.
Section 13 provides death benefits: if a member dies with at least 36 monthly contributions prior to the semester of death, primary beneficiaries receive monthly pension; if no primary beneficiaries, secondary beneficiaries receive a lump sum equal to 36 times the monthly pension.
Section 13 sets the lesser-contribution rule: if fewer than 36 contributions were paid, beneficiaries receive a lump sum equal to monthly pension times the number of monthly contributions paid or twelve (12) times the monthly pension, whichever is higher.
Section 13-A(a) provides permanent disability benefits: upon permanent total disability with at least 36 monthly contributions prior to semester of disability, the member receives monthly pension; if fewer contributions, the member receives a lump sum equal to monthly pension times number of monthly contributions or twelve (12) times monthly pension, whichever is higher.
Section 13-A(a) states that a member who received lump sum and is re-employed or resumes self-employment not earlier than one (1) year from the disability date is treated as a new member and subject again to compulsory coverage.
Section 13-A(b) suspends monthly pension and dependents’ pension upon reemployment/resumption of self-employment, recovery from permanent total disability, or failure to present for examination at least once a year upon SSS notice.
Section 13-A(c) provides survivor entitlement from a permanent total disability pension: primary beneficiaries receive monthly pension; if no primary beneficiaries and death occurs within 60 months from start of monthly pension, secondary beneficiaries receive a lump sum equal to total monthly pensions corresponding to the balance of the five-year guaranteed period excluding dependents’ pension.
Section 13-A(d) deems the following disabilities as permanent total: 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 as determined and approved by the SSS.
Section 13-A(e) governs permanent partial disabilities where disability occurs before 36 contributions: benefit is the percentage of the lump sum described in the preceding paragraph, based on degree of disability as Commission determines.
Section 13-A(f) provides a schedule for permanent partial disability compensability by number of months for each named loss/use, including one thumb (10), one index finger (8), one middle finger (6), one ring finger (5), one little finger (3), one big toe (6), one hand (39), one arm (50), one foot (31), one leg (46), one ear (10), both ears (20), hearing of one ear (10), hearing of both ears (50), and sight of one eye (25).
Section 13-A(g) provides the formula for degree of disability: the ratio of designated compensability months to seventy-five (75) rounded to the next higher integer; it prohibits additivity for distinct, unrelated permanent partial disabilities, allows additivity only for deteriorating and related permanent partial disabilities up to a maximum of one hundred percent (100%), in which case the member is deemed permanently totally disabled.
Section 13-A(h) requires lump sum for permanent partial when the monthly pension is payable for less than twelve (12) months.
Section 13-A(i) deems contributions paid for adjudication purposes during months when the member received partial disability pension, based on his last contribution prior to disability.
Section 13-A(j) states disability pension ceases upon retirement or death for a member on partial disability pension.
Section 13-B grants funeral benefit: a funeral grant equivalent to Twelve thousand pesos (P12,000) paid in cash or in kind to defray funeral expenses upon death of a member, including permanently totally disabled members or retirees.
Section 14 establishes sickness benefit: a member with at least three (3) monthly contributions in the twelve-month period immediately preceding the semester of sickness or injury who is confined more than three (3) days in a hospital or elsewhere approved by the SSS receives daily sickness benefit of ninety percent (90%) of average daily salary credit for each day of compensable confinement or fraction thereof, subject to caps and notification rules.
Section 14(a)(1) caps daily sickness benefit at one hundred twenty (120) days in one calendar year, with unused days not carried to the next year.
Section 14(a)(2) limits payment to no more than two hundred forty (240) days for the same confinement.
Section 14(a)(3) requires notification of sickness/injury within five (5) calendar days from start of confinement, with specific exceptions for hospital confinement and sickness/injury during work or within employer premises.
Section 14(b) provides that compensable confinement begins on the first day of sickness, and payments are made promptly by the employer every regular payday or on the fifteenth and last day of each month; SSS direct payment follows similarly; allowances begin only after all sick leaves with full pay are exhausted.
Section 14(c) requires SSS reimbursement of one hundred percent (100%) of daily benefits advanced by the employer upon receipt of satisfactory proof, with timing consequences on employer notification and a one-year reimbursement claim period, except hospital claims which must be filed within one year from last day of confinement.
Section 14(d) removes employer recovery of advanced daily allowance when the required notification or claim filing period results in reduction of benefit or denial.
Section 14(e) requires SSS adjudication of reimbursement claims within two (2) months from receipt, and provides that if no payment is received within one (1) month after the adjudication period, reimbursements earn simple interest of one percent (1%) per month until paid.
Section 14(f) applies the notification and filing period rules to all claims filed with the SSS.
Section 14-A provides maternity leave benefit for a female member with at least three (3) monthly contributions in the twelve-month period immediately preceding semester of childbirth or miscarriage: daily maternity benefit equals one hundred percent (100%) of average daily salary credit for sixty (60) days or seventy-eight (78) days for caesarean delivery.
Section 14-A(a) requires the employee to notify her employer of pregnancy and probable date of childbirth, transmitted to the SSS under SSS rules.
Section 14-A(b) requires the employer to advance full payment within thirty (30) days from filing of the maternity leave application.
Section 14-A(c) bars recovery of sickness benefits for the same period already covered by daily maternity benefits.
Section 14-A(d) limits maternity benefits to the first four (4) deliveries or miscarriages.
Section 14-A(e) requires immediate SSS reimbursement of one hundred percent (100%) of maternity benefits advanced by the employer upon satisfactory proof.
Section 14-A(f) imposes employer liability to pay SSS damages equivalent to benefits the employee would have been entitled to when childbirth/miscarriage occurs without remitted contributions or without prior employer notification of pregnancy time.

Payment protections, agent fees, and taxes

Section 15 requires prompt payment of benefits to persons entitled under the Act, and provides a retirement payment timing rule: SSS pays retirement benefits on the day of contingency to qualified members who submitted necessary documents at least six (6) months before.
Section 15 excludes 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, from receiving benefits.
Section 15 authorizes the Commission to direct payments regardless of nationality or country of residence when the best interest of the SSS is served.
Section 15 mandates Commission appointment of a representative when the recipient is a minor or incapable of administering his own affairs, with representative payment subject to Commission-set terms.
Section 15 provides that appointment is unnecessary when the recipient is under custody of or living with the parents or spouse of the member, and benefits are paid to the parents or spouse as representative payee.
Section 15 states benefits are not transferable and no power of attorney or document executed by entitled persons for collection through an agent/attorney/any other person is recognized, except when the person is physically unable to collect personally.
Section 15 provides that in death benefit cases where no beneficiary qualifies, benefits are paid to legal heirs under the law of succession.
Section 16 grants tax exemption to the SSS: the SSS and its assets/properties, contributions collected and accruals, income/investment earnings, and supplies/equipment/papers/documents are exempt from any tax, assessment, fee, charge, or customs/import duty.
Section 16 exempts benefit payments from taxes/fees/charges and prohibits attachments, garnishments, levies, or seizures by any legal process before or after receipt, except to pay any debt of the member to the SSS.
Section 16 provides that no tax measure applies to the SSS unless it expressly revokes the declared State policy granting tax exemption in Section 2.
Section 16 states that any tax assessment against the SSS is null and void.
Section 17 prohibits agents, attorneys, or other persons from demanding or charging any fee for preparation, filing, or pursuit of any claim for benefit, and declares stipulations contrary to the prohibition null and void.
Section 17 prohibits retention or deduction of any amount from any benefit granted for payment of fees.
Section 17 allows attorney’s fees only for members of the Philippine Bar who appear as counsel in cases heard by the Commission, capped at ten percent (10%) of benefits awarded, not payable before actual payment of benefits; stipulations to the contrary are null and void.
Section 17 imposes penalties for violating Section 17: a fine of not less than PHP 500 nor more than PHP 5,000, or imprisonment of **not less than six (6) months