TWELFTH CONGRESS OF THE REPUBLIC ) 
OF THE PHILIPPINES 
Second Regular Session 
1 
1 
S E N A T E  
S. B. No. 2127 
Introduced by SENATOR LUISA “LOI” P. EJERCITO ESTRADA 
EXPLANATORYNOTE 
For almost 30 years now, the Employees’ Compensation Program 
(ECP), established by virtue of Presidential Decree No. 626, in 
collaboration with 
the four (4) implementing agencies namely: 
The 
Employees’ Compensation Commission (ECC) for policy formulation, case 
disposition and program coordination; the Social Security System (SSS) 
and the Government Service Insurance System (GSIS) for program 
implementation and State Insurance Fund (SIF) administration; and the 
Occupational Safety and Heath Center (OSHC) has granted a total 
amount of P22.91 billion worth of compensation claims and benefits to 
3,153,3 16 employees and their dependents. 
In the face of this reported significant accomplishment, it has been 
established that there is a need to review the law to address the 
fragmented implementation of these agencies that has resulted in the 
following: 
1. The contrasting performance and status of the two State 
Insurance Funds (SIFs) respectively managed by the GSIS and 
sss; 
2. The disparity and inequity in the enjoyment of ECP benefits by 
the public vis-a-vis private sector workers who are both 
beneficiaries of the same program; 
3. The delay in the processing of EC claims due to the involvement 
of three agencies separately operating under their respective 
systems, procedures and policies; 
4. The high administrative costs arising from the maintenance of 
these four independent agencies; and 
5. The over-emphasis on the compensatory aspect of the program 
to the detriment of the equally important work contingency 
prevention program and the rehabilitation of occupationdly- 
disabled workers (ODWs). 
6. The weak and ineffective program implementation because the 
two Systems have their primary mandates to pursue under 
their respective charters resulting into a lesser priority given to 
the ECP implementation at the field level. 


The intent of this proposed measure is to enact a law that is more 
responsive to the urgent demands of the Filipino workforce and the 
dynamic changes in social economic development. It seeks to provide the 
following 
1. 
A clear declaration of state policy which serves as basis for 
the establishment of the Workers Compensation Program; 
2. 
A clear description of the Program and its component 
namely, coverage, benefits, rehabilitation of occupationally 
disabled workers and the work contingency prevention; 
The setting up of a single fund from which payment of 
benefits shall be sourced which is now aptly and more 
accurately/descriptively 
called 
the Work 
Contingency 
Insurance Fund (WCIF). Provisions for a more systematic 
collection of contributions have been included to minimize 
defaults in payment which partly was the reason for the 
present state of the public sector SIF; 
The simplication of the benefits system to avoid confusion 
particularly in the grant of the primary and basic benefits 
under the Workers Compensation Program which is the loss- 
of-income benefits. 
More importantly, the concept of 
working life was introduced to define the extent in time to 
which a worker or his/her beneficiaries may be entitled to 
enjoy the loss-of-income benefits; 
3. 
4. 
5. 
The importance now given to the corollary but equally 
important concerns of the Workers Compensation Program 
which are: (1) the rehabilitation of disabled victims of 
occupational diseases or work accidents; and (2) the work- 
contingency prevention or the minimization, if not the 
complete prevention of the occurrence of work accidents and 
occupational diseases; 
The provision for the possible coverage of informal sector 
workers and the overseas Filipino workers under the 
program; and 
6. 
7. 
The unified administration of the program through the 
proposed 
Philippine Workers Compensation Authority. 
For premises considered, the passage of this bill is earnestly 
sought. 
SEN. LUISA “LOI’ 
CITO ESTRADA 


THIRTEENTH CONGRESS OF THE) 
REPUBLIC OF THE PHILIPPINES ) 
Second Regular Session 
1 
S.B. NO. . 
212’;” 
Introduced by SENATOR LUISA “LOI” P. EJERCITO ESTRADA 
AN ACT 
ESTABLISHING THE WORKERS’ COMPENSATION PROGRAM, THE 
WORK 
CONTINGENCY 
INSURANCE 
FUND, 
THE 
PHILIPPINE 
WORKERS’ 
COMPENSATION AUTHORITY AND DEFINING ITS 
POWERS AND FUNCTIONS AND AMENDING FOR THIS PURPOSE 
DECREE NO. 442, AS AMENDED OTHERWISE KNOWN AS THE 
LABOR CODE OF THE PHILIPPINES AND APPROPRIATING FUNDS 
THEREFOR. 
ARTICLES 166 TO 208-A OF TITLE 2 BOOK IV OF PRESIDENTIAL 
Be it enacted by the Senate and the House of Representatives of the 
Philippines in Congress assembled: 
SECTION 1. SHORT TITLE.- This Act shall be known as the 
C6Workersy 
Compensation Act of 2005”. 
CHAPTER I 
DECLARATION OF PRINCIPLES 
SEC. 2. BASIC PRINCIPLES.- The State affirms labor as a primary 
social economic force. It shall protect the rights of the workers and 
promote their welfare. Toward this end, the state shall establish a tax- 
exempt Workers’ Compensation Program which shall: 
1. Build and sustain among workers and employers a culture of 
safe and healthy work environment in order to minimize the 
incidence of work contingencies; 
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2. 
their dependents in the event of work contingencies; and 
3. Provide occupationally-disabled workers with rehabilitation 
services to enable them to become productive members of society. 
Ensure prompt and adequate compensation for workers and 
For this purpose, the Workers’ Compensation Program is hereby 
established. 
CHAPTER I1 
DEFINITIONS 
SEC. 3. 
context indicates otherwise: 
DEFINITION OF TERMS.- A s  used in this Act unless the 
1. “Authority” 
means 
the 
Philippine 
Workers’ 
Compensation 
Authority. 
2. 
“Beneficiary” means the legitimate spouse, the legitimate, 
legitimated, legally adopted children, and illegitimate children, who shall 
be the primary beneficiaries; in their absence, the dependent parents or, 
subject to the restrictions imposed on dependent children, the legitimate 
or the illegitimate descendants who are the secondary beneficiaries. 
3. 
Compensation Authority. 
4. 
“Compensation” means all benefit payments made under this Act. 
5. “Contribution” means the amount remitted or to be remitted by an 
employer to the Work Contingency Insurance Fund for each employee 
under his/ her employ. 
6. “Dependent” means the legitimate, legitimated, legally adopted or 
illegitimate child who is unmarried, not gainfully employed, and not over 
twenty-one years (2 1) of age or over twenty-one years (2 1) of age provided 
hefshe is incapacitated and incapable of self-support due to a physical 
or mental defect which is congenital or acquired during minority; the 
“Board” means the Board of Trustees of the Philippine Workers’ 
2 


legitimate spouse living with the worker; and the parents of said worker 
wholly dependent upon him/ her for regular support. 
7. ‘‘Disability” means loss or substantial reduction of earning power 
due to an injury or a disease arising out of and in the course of 
employment. 
8. “Employer” means any person, natural or juridical, domestic or 
foreign, who carries on in the Philippines any trade, business, industry, 
undertaking or activity of any kind and uses the services of another 
person who is under hislher orders as regards the employment, 
including the national government, its political subdivisions, agencies or 
instrumentalities and government-owned or controlled corporations. 
9. “Fund” means the Work Contingency Insurance Fund. 
10. 46GSIS” means the Government Service Insurance System. 
11. “Occupationally Msabled Worker” or ODW refers to a worker 
whose usual work capability and earning capacity has been affected by 
his J her work-connected disease or injury. 
12. “SSS” means the Social Security System. 
13. “System” means the SSS or GSIS, as the case may be. 
14. “Work Contingene“ refers to any disease, injury or death arising 
out of employment. 
15. “Worker” means any person employed in a private or government 
entity and who is a member of the System. 
16. ccWor&g Life” means the normal productive life of a worker until 
the compulsory age of retirement. 
3 


CHAPTER 111 
THE WORKERS’ COMPENSATION PROGRAM 
A. COVERAGE 
SEC. 4. 
COVERAGE.- (a) Coverage in the Program shall be 
compulsory upon all employers and their workers. 
(b) Compulsory coverage of the employer shall take effect on the first day 
of its business operation, and that of the worker, on the first day of 
employment. 
(c) The Authority may consider coverage of overseas Filipino workers and 
workers in the informal sector subject to regulations as it may prescribe. 
SEC. 5. REGISTRATION.- The registration of an employer and 
his/her workers with the SSS or GSIS shall be automatic registration in 
the Program. Their respective membership numbers provided by the 
Systems shall be the same numbers that will be used under this Act. 
B. BENEFITS 
B. 1 LOSS-OF-INCOME BENEFIT 
SEC. 6. 
LOSS-OF-INCOME BENEFIT.- Under such regulations 
as the Authority may approve, any worker who sustains a work- 
connected injury or contracts a work-connected disease resulting into 
loss of income due to his/ her inability to work shall, for each day of such 
inability to work, be paid a loss-of-income benefit. The amount for the 
loss-of-income benefit shall be fixed by the Authority. 
The payment of the loss-of-income benefit shall be for the duration 
of the inability of the worker to work but shall not extend beyond the 
working life of the worker. It shall be suspended or terminated if he/she: 
1. Fails to present himself/herself for periodic medical and 
physical examination as may be required by the Authority; 
2. Recovers from his/her disease or injury; or 
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3. Be gainfully employed. 
B.2 BENEFIT FOR LOSS OR LOSS OF USE OF BODY PART 
SEC. 7. LUMP SUM BENEFIT.- Under such regulations as the 
Authority may approve, any worker who contracts a work-connected 
disease or sustains a work-connected injury resulting in permanent loss 
or loss of use of body part shall be paid a lump sum benefit in an 
amount fixed by the Authority in accordance with the prevailing 
international standards as defined 
by 
the International Labor 
Organization (ILO) or similar bodies; Provided, that the following loss or 
loss of use of body parts shall not entitle the worker to a lump sum 
benefit but only to a loss-of-income benefit for the duration of his/her 
working life: 
1. Complete loss of sight of both eyes; 
2. Loss of two limbs at or above the ankle or wrist; 
3. Permanent complete paralysis of two limbs; 
3. Brain injury resulting in incurable imbecility or insanity; and 
4. Such other cases as may be determined by the Authority. 
B.3 MEDICAL AND ALLIED BENEFITS 
SEC. 8. MEDICAL AND ALLIED BENEFITS.- Upon due notice to 
the Authority, a worker who suffers from a work-connected disease or 
injury shall be provided with medical benefits and prosthetic devices as 
the nature of his/her disease or injury may require subject to the 
expense limitation as may be prescribed by the Authority; Provided, that 
the worker submits himself/herself to a medical examination as may be 
required by the Authority; and Provided, further, that payment of benefits 
5 


shall be suspended if the worker unreasonably refuses to submit 
himself/herself to the medical examination. 
E.4 CARER’S ALLOWANCE 
SEC. 9. CARER’S ALLOWANCE- 
In cases where the workers’ 
incapacity resulting from a work-connected injury or disease is of such 
magnitude as determined by the Authority that he/she must have the 
constant help of another person, the worker shall for the duration of 
his/her disability but not to exceed his/her working life, be entitled to a 
Carer’s allowance. 
B.5 DEATH BENEFITS 
SEC. 10. DEATH.- Under such regulations as it may approve, the 
Authority shall pay to the primary beneficiaries upon the death of the 
covered worker the underlying cause of which is a work-connected 
disease or injury an amount equivalent to his/her loss-of-income benefit 
for the remainder of hisjher working life, plus ten percent (10%) thereof 
for each dependent child, but not exceeding five, beginning with the 
youngest and without substitution; Provided, that if he/she has no 
primary beneficiary, the Authority shall pay to his/her secondary 
beneficiaries the loss-of-income benefit. 
A funeral benefit in an amount as may be determined by the 
Authority shall also be paid upon the death of a covered worker due to a 
work-connected disease or injury. 
B.6 PROVISIONS COMMON TO ALL BENEFITS 
SEC. 11. RELATIONSHIP AND DEPENDENCY.- All questions of 
relationship and dependency shall be determined at the time of the 
6 


covered worker’s contingency. If the Authority in good faith pays loss-of- 
income benefit to a dependent who is inferior in right to another 
dependent or with whom another dependent is entitled to share, such 
payment shall discharge the Authority from liability, unless and until 
such other dependent notifies the Authority of his/her claim prior to the 
payments. 
In case of doubt as to the respective rights of rival claimants, the 
Authority is hereby empowered to determine as to whom payments 
should be made in accordance with such regulations as the Authority 
may approve. If the money is payable to a minor or incompetent, 
payment shall be made by the Authority to the surviving parent or legal 
guardian. 
SEC. 12. SECOND INJURIES/DISEASE.- If a worker receiving a 
loss-of-income benefit suffers another work-connected disease, the 
worker shall be entitled to an additional medical and other allied benefits 
necessary for the treatment of the second work-connected disease 
subject to the cost limitation as may be prescribed by the Authority. 
SEC. 13. 
EARNED BENEFITS.- (a) A worker who is receiving 
loss-of-income, benefits shall not be deprived of his/her right to receive 
earned benefits such as allowances for holidays, vacation leaves and any 
benefit granted under the collective bargaining or other agreements with 
the employer during the period that he/she is enjoying loss-of-income 
benefit. 
(b) Except as othemise provided, no contract, regulation or device 
whatsoever shall operate to deprive the worker or his/her dependents of 
any part of the income benefits and medical or related services granted. 
Existing medical services being provided by the employer shall be 
maintained and continued to be enjoyed by their workers. 
I 


(e) Benefits shall not be transferable nor liable to tax, attachment, 
garnishment, levy or seizure by or under any legal process whatsoever, 
either before or after receipt by the person or persons entitled thereto, 
except to pay any debt of the worker to the Fund. 
SEC. 14. 
PRESCRIPTIVE PERIOD.- NO claim for compensation 
shall be given due course unless said claim is filed with the Authority 
within three (3) years from the time the work-connected disease or injury 
happened. 
SEC. 15. 
PROHIBITION.- No agent, attorney, or other person 
pursuing or in-charge of the preparation or filing of any claim for benefit 
shall demand or charge for his/her services any fee and any stipulation 
to the contrary shall be null and void. The retention or deduction of any 
amount from any benefit granted for the payment of fees of such services 
is prohibited. Violation of this Article shall be punished by a fine of not 
less than Five Hundred Pesos nor more than Five Thousand Pesos, or 
imprisonment for not less than six (6) months but not more than one (1) 
year, or both, at the discretion of the court. 
C. REHABILITATION OF OCCUPATIONALLY-DISABLED 
WORKERS 
SEC. 16. REHABILITATION SERVICES.- (a) The Authority shall 
establish a continuing program designed to meet the individual needs of 
an occupationally-disabled worker to restore his/her earning capability. 
In this regard, the Authority may maintain or avail of the services of 
specialized private and public rehabilitation facilities or centers that can 
provide the necessary assistance that respond to the needs of 
occupationally-disabled workers. 
8 


(b) Arrangements for placement of vocationally/ technically trained 
occupationally-disabled workers shall be an integral part of the 
rehabilitation program. A s  an incentive to employers, the Authority may 
enter into agreements to share in the payment of wages of re-employed 
occupationally-disabled workers subject to the conditions it may provide. 
D. WORK CONTINGENCY PREVENTION 
SEC. 17. WORK CONTINGENCY PREVENTION.- The Authority 
shall establish a continuing program that will increase awareness among 
employers and their employees on the importance of work contingency 
prevention. It shall ensure that an appropriate culture of occupational 
health and safety is developed among them and the general public as 
well in order that the occurrence of occupational diseases or injuries is 
minimized, if not completely prevented. It shall undertake continuing 
studies and researches and develop and implement an information, 
education, and communication and training programs in the field of 
work contingency prevention. 
SEC. 
18. 
EMPLOYER’S 
RESPONSIBILITY 
ON 
WORK 
CONTINGENCY PREVENTION.- All employers shall install and maintain 
safety devices and shall put in place all necessary precautionary 
measures and safeguards for the prevention of work accidents and 
occupational diseases. Any employer who fails to comply with these 
requirements upon determination by an appropriate authority shall pay 
to the Authority a penalty equivalent to fifty (50%) percent of the benefits 
payable to the worker who suffers from an accident or contracts an 
occupational disease at the workplace. In the case of employers who were 
previously assessed by the Authority a higher rate of contribution 
because of the high frequency of work accidents or occupational 
9 


diseases, the penalty shall be one hundred percent (100%) of the benefits 
payable to the worker who suffers from an accident or occupational 
disease at the workplace. 
CHAPTER IV 
THE WORK CONTINGENCY INSURANCE FUND 
A. THEFUND 
SEC. 19. WORK CONTINGENCY INSURANCE FUND.- There is 
hereby created a Work Contingency Insurance Fund hereinafter referred 
to as the Fund which shall be under the direct administration of the 
Philippine Workers’ Compensation Authority. The Fund shall consist of 
1. Contributions remitted by employers at rates prescribed by the 
Authority pursuant to Chapter V of this Act; 
2. The current balances of the State Insurance Fund collected and 
administered by the SSS and the GSIS under P.D. 626, as 
amended, including arrearages of the government with the GSIS 
and of private employers with the SSS for the said Fund; 
3. Subsequent appropriations pursuant to Articles 20 (b) and 34 of 
this Act; 
4. Donations and grants-in-aids; and 
5. All accruals thereof including investment earnings. 
The Fund shall be used for the payment of the compensation and other 
benefits to all qualified beneficiaries for work-connected disease, injury 
or 
death 
and for work-contingency 
prevention 
programs and 
rehabilitation services programs for occupationally-disabled workers and 
for other purposes necessary and authorized under this Act. 
SEC. 20. MANAGEMENT AND INVESTMENT OF FUND.- (a) The 
use, disposition, investments, disbursements, administration and 
10 


management of the Fund including any subsidy, grant or donation 
received for Program operations shall be governed by resolution of the 
Board provided that: 
1. All funds under the management and control of the Authority 
shall be subjected to all rules and regulations applicable to all 
public funds; and 
The Authority may disburse each year not more than twelve 
percent (12%) of the contributions and investment earnings 
collected for its operational expenses. 
2. 
(b) A portion of the Fund that is not needed to meet the current 
obligations may be invested under such terms and conditions and rules 
and regulations as may be prescribed by the Authority; Provided, that 
investments shall satisfy the requirements of liquidity, safety, security 
and yield in order to ensure the actuarial solvency of the Fund. 
SEC. 21. 
GOVERNMENT GUARANTEE.- The Republic of the 
Philippines guarantees the benefits under this Act and accepts general 
responsibility for the solvency of the Fund. In case of any deficiency, the 
same shall be covered by supplemental appropriations from the national 
government. 
SEC. 22. 
LIABILITIES.- (a) The Fund shall be liable for the 
compensation due to the worker or his/ her dependents, except when the 
disability or death is occasioned by the worker’s intoxication, willful 
intent to injure or kill himselfjherself or another, notorious negligence, 
or otherwise provided under this Act. 
(b) Unless otherwise provided, the liability of the Fund under this Act 
shall be exclusive and in place of the liabilities of the employer to the 
worker or his/ her dependents with respect to work-connected disease, 
injury or death. The payment of compensation under this Act shall not 
11 


bar the recovery of benefits which the worker may be entitled to under 
other laws. 
(c) When the disability or death is caused by circumstances creating a 
legal liability against a Third Party, the worker or the dependents in case 
of his/her death shall be paid by the Authority under this Act. In case 
benefit is paid under this Act, the Authority shall be subrogated to the 
rights of the worker or the dependents in case of his/her death in 
accordance with the law. 
Where the Authority recovers from such Third Party damages in excess 
of those paid or allowed under this Act, such excess shall be delivered to 
the worker or his/her dependents, after deducting the cost of 
proceedings and expenses of the Authority. 
B. CONTRIBUTION 
SEC.. 23. 
EMPLOYER’S 
CONTRIBUTION.- 
Under such 
regulations as the Authority may prescribe, beginning as of the last day 
of the month when a worker’s compulsory coverage takes effect and every 
month thereafter during his/her employment, the employer shall remit to 
the Authority a contribution equivalent to one percent (1%) of the 
worker’s monthly salaries or wages, or such amount as may be fixed by 
the Authority after due consideration of the liquidity of the Fund. 
Remittance of employers’ contributions to the Authority shall be 
made within the first five (5) days of each month following the month for 
which they are applicable. If deemed expedient and advisable by the 
Authority, the collection and remittance of contribution may be made 
quarterly or semi-annually in advance; Pmuided that, upon separation of 
a worker, any contribution paid in advance but not due shall be credited 
or refunded to his/ her employer. 
12 


The rate of contribution shall be reviewed periodically subject to 
the limitations herein provided and may be revised based on actuarial 
studies. 
Contributions under this Act shall be paid in their entirety by the 
employer and any contract or device for the deduction of any portion 
thereof from the wages or salaries of the workers shall be null and void. 
I 
I 
When a covered worker dies during employment, or is separated 
from employment, his/ her employer’s obligation to pay the monthly 
contribution arising from that employment shall cease on the last day of 
the month of contingency. 
When a covered employee becomes disabled during employment 
and is unable to work, his/her employer’s obligation to pay the monthly 
contribution arising from that employment shall be suspended during 
such months that he/she is not receiving salary or wages. 
SEC. 24. DEFAULT.- 
(a)Any employer who defaults in the 
payment of such contributions or refuses or neglects to pay the same 
after they become due and payable shall be liable to a surcharge of three 
percent (3%) for every month of default in addition to the contributions, 
both of which shall be collected by the Authority or its duly authorized 
representative in the same manner as taxes are made collectible under 
the National Internal Revenue Code, as amended. 
The remittance by the employer of the contributions to the 
Authority shall take priority over and above the payment of any and all 
obligations, except salaries and wages of its employees. 
(b) Failure or refusal of the employer to pay or remit the contributions 
herein prescribed shall not prejudice the right of the employee or his 
dependents to the benefits under this Act. If the sickness, injury, 
disability or death occurs before the Authority receives any report of the 
13 


name of his employee, the employer shall be liable to the Authority for 
the lump sum equivalent to the benefits to which such employee or his 
dependents may be entitled. 
CHAPTER V 
THE PHILIPPINB WORKERS’ COMPENSATION AUTHORITY 
SEC. 
25. THE PHILIPPINE 
WORKERS’ 
COMPENSATION 
AUTHORITY.- The Philippine Workers’ Compensation Authority (PWCA) 
is hereby established to implement the Workers’ Compensation Program. 
The Authority shall have the status and category of a government 
financial institution. 
The Authority shall be exempted from the payment of taxes, fees, 
charges, levy, customs or import duty, and no law hereafter enacted shall 
apply to the Authority unless it is provided therein that the same is 
applicable by expressly stating its name. 
Any donation, bequest, subsidy or financial aid which may be 
made to the Authority shall constitute as allowable deduction from the 
income of the donor for income tax purposes and shall be exempted from 
donor’s tax, subject to such conditions as provided in the National 
Internal Revenue Code, as amended. 
SEC. 26. POWERS AND FUNCTIONS.- The Authority, as the 
implementing agency for the Workers Compensation Program, shall have 
the following powers and functions: 
1. To issue rules and regulations necessary for the effective 
implementation of the Program; 
To assess, review from time to time, fix and adjust the rate of 
contributions from all 
employers, collect the same and 
manage the Fund; Provided, that the Authority may assess 
2. 
14 


higher rates of contributions for employers whose records 
show a high frequency of work accidents or occupational 
diseases; 
To settle any claim or dispute arising from this Act with 
respect to coverage, entitlement to benefits, collection and 
payment of contributions and penalties thereon, or any other 
matter related thereto including the power to administer oath 
and affirmation and to issue subpoena; 
To undertake the necessary actuarial studies and calculations 
concerning increases in benefits and the financial stability of 
the Fund, the rationalization of the loss-of-income benefits 
and other benefits for occupational diseases, injury or death; 
Provided, that the Authority may upgrade the benefits and add 
new ones so long as the actuarial stability of the Fund shall at 
all times be ensured; 
To organize its office, fix the compensation of and appoint its 
personnel who shall be exempted from the provisions of R.A. 
6758, develop and implement programs as may be necessary 
to promote the welfare and interest of its employees; and 
adopt its annual budget of expenditures chargeable against 
the twelve percent (12%) operational expenses provided for in 
Article 20 (a) (2) hereof; 
To sue and be sued in Court; 
3. 
4. 
5. 
6. 
7. To acquire, utilize, dispose of property which may be 
necessary or expedient for the attainment of the purposes of 
this Act; 
To enter into agreements or contracts for the proper, efficient 
and stable administration of the Program; 
8. 
15 


9. To receive and accept grants, donations and other forms of 
financial assistance from any natural or juridical person, 
whether domestic or foreign, or from any international 
organization; 
10. To submit annually a report to the President of the Philippines 
covering its operations, particularly the status of the finances 
and other activities in the administration and enforcement of 
the Program during the preceding year, including information 
and recommendations on policies for the improvement of the 
Program; 
11. To perform such other acts as it may deem appropriate for the 
attainment of the purposes and proper enforcement of the 
provisions of this Act. 
SEC. 27. THE BOARD' OF TRUSTEES.- 
The corporate powers 
and functions of the Authority shall be vested in and exercised by the 
Board of Trustees composed of the Secretary of Labor and Employment 
as Ex-Officio Chairperson, the President of the Authority as Ex-Officio 
Vice-Chairperson and the Insurance Commissioner as ex-officio members 
and four (4) other members to be appointed by the President of the 
Philippines, two (2) of whom shall represent the labor sector, one (1) 
coming from the public sector and another one (1) from the private 
sector, and two (2) representing the employers' group. 
The four (4) appointive members shall be chosen from among the 
nominees of workers and employers organizations. 
The appointed members shall hold office for six (6) years or until 
their successors are duly appointed and qualified. Any vacancy in the 
Board other than through the expiration of the term shall be filled in the 
manner in which the original appointment was made and the appointee 
16 


shall serve only the unexpired term of his/her predecessor. The members 
of the Board shall receive a per diem of at least Two Thousand five 
hundred pesos (Php 2, 500.00) for each board meeting actually attended 
by them but not to exceed Ten thousand pesos (Php 10, 000.00) a 
month and reasonable transportation and representation allowances as 
may be fixed by the Board. 
SEC. 28. POWERS AND FUNCTIONS OF THE BOARD OF 
TRUSTEES.- The Board of Trustees shall have the following powers and 
functions: 
1. To formulate the policies and guidelines and develop programs 
to effectively carry out the purposes of this Act; 
To adopt, amend and rescind such rules and regulations as 
may be necessary to carry out the provisions and purposes of 
this Act; 
2. 
3. To approve the annual operating budget of the Authority 
as recommended by its President; 
To approve the organizational and administrative structures 
and the compensation schedule of the personnel of the 
Authority and to appoint its senior officials; 
4. 
5. To approve and adopt guidelines affecting investments, 
settlement of claims, disposition of acquired assets and 
increased benefits to workers; 
The provision of any law to the contrary notwithstanding, to 
compromise or release, in whole or in part, any claim or to 
settle any liability to the Authority, regardless of the amount 
involved, under such terms and conditions as it may impose 
for the best interest of the Authority; 
6. 
17 


7. To review on appeal any dispute arising under this Act with 
respect to coverage, benefits, contributions and penalties 
thereon or any matter related thereto; and 
To do and perform any and all acts necessary, proper and 
incidental to the attainment of the purposes and objectives of 
this Act. 
8. 
SEC. 29. THE PRESIDENT AND OTHER SENIOR OFFICIALS OF 
THE AUTHORITY. 
1. The President of the Authority.- The President of the Philippines 
shall appoint the President of the Authority, hereinafter referred to as the 
President. The President shall be a career official and shall not be 
removed from office except for cause in accordance with existing laws. 
The President shall advise the Board and shall carry out its policies and 
decisions. In addition, he/she shall have the following duties and 
functions: 
a) To act as the Chief Executive Officer of the Authority; 
b) To appoint the lower level personnel of the Authority; 
c) To remove, suspend or otherwise discipline the officials and 
employees of the Authority in accordance with existing Civil 
Service rules and regulations; and 
d) To perform other duties as may be assigned to him/her by the 
Board. 
2. Other Senior Officials of the Authority.- The President shall be 
assisted by two (2) Senior Vice-presidents who shall be appointed by the 
Board: one (1) for operations; and one (1) for fund management. The 
Senior Vice-president for fund management must have actuarial 
experience. 
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SEC. 30. REGIONAL AND FIELD OFFICES.- The Authority shall 
establish regional and field offices in provinces or chartered cities, or 
wherever it is deemed necessary, to bring its services closer to the 
workers. 
The field offices shall have original and exclusive jurisdiction to 
settle any dispute arising from this Act with respect to coverage, 
entitlement to benefits, collection and payment of contributions and 
penalties thereon, or any other matter related thereto, subject to appeal 
to the Board. 
CHAPTER VI 
RECORDS, REPORTS AND PENAL PROVISIONS 
SEC. 31. RECORD OF DISEASE, INJURY OR DEATH.- All 
employers shall maintain a record of their employees’ sickness, injuries 
or death and upon the request of the Authority shall provide the same to 
support any or all claims for benefits under this Act which may be filed 
by the workers. 
Any employer who unreasonably withholds material information 
relative to sickness, injury or death of a worker shall be held liable for 
fifty percent (50%) of the benefits to which the worker may be found to be 
entitled, the payment of which shall accrue to the Fund. 
In case of payment of benefits for any claim which is later 
determined to be fraudulent and the employer is found to be a party to 
the fraud, such employer shall reimburse to the Authority the full 
amount of the compensation paid. 
SEC. 32. PENAL PROVISIONS.- (eJ Where the violations consist of 
failure or refusal to remit contribution to the Authority, the penalty shall 
be a fine of not less than Five Hundred (PhP500.00) but not more than 
19 


One Thousand (PhP1,OOO.OO) Pesos multiplied by the total number of 
employees employed by the firm and imprisonment of not less than one 
(1) year. If the offender is a head of a government agency, political 
subdivision, government owned or controlled corporation, or state college 
or university, he/she shall suffer the additional penalty of absolute 
perpetual disqualification from holding public office and from holding 
any profession or calling licensed by the government. 
(b) Any person found to have participated directly or indirectly in the 
commission of fraud, collusion, falsification, or misrepresentation in any 
transaction with the Authority whether for him/her or for some other 
persons, shall suffer the penalties provided for in the Revised Penal Code 
or in other special penal laws. 
CHAPTER VI1 
TRANSITORY PROVISIONS 
SEC. 33. SETTLEMENT OF EC CLAIMS.- All employees’ 
compensation claims which accrued prior to the effectivity of this Act, 
shall be filed with the Social Security System (SSS) and the Government 
Service Insurance System (GSIS) for claims in the private and 
government sectors, respectively, and shall be processed, determined and 
settled in accordance with the implementing rules and regulations 
provided for in P.D. 626, as amended, and such laws, rules and 
regulations existing at the time 
of 
their accrual. Claims pending 
before the Systems as of 
the effectivity date of this Act shall be 
processed and settled in accordance with laws, rules and regulations 
existing at the time their cause of action accrued. Claims for 
contingencies that accrued upon the effectivity of this Act shall be 
processed in accordance with this Act. 
20 


All 
cases 
pending 
before 
the 
Employees’ Compensation 
Commission established under P.D. 626, as amended, on the date of 
effectivity of this Act shall be transferred to and processed by the 
Authority. On employees’ compensation cases on appeal with the Court 
of Appeals and the Supreme Court as of the date of effectivity of this Act, 
the Authority shall continue as respondent thereof until its final 
resolution. 
All 
cases 
pending 
before 
the 
Employees’ Compensation 
Commission, which accrued before the effectivity of this Aci, shall be 
processed and adjudicated by the Authority in accordance with the law, 
rules and procedure existing prior to the effectivity of this Act. 
SEC. 34. TRANSFER OF THE STATE INSURANCE FUND 
~ 
ADMINISTERED BY THE SSS AND THE GSIS.- The State (Insurance 
~ 
Fund being administered by the SSS and the GSIS shall be trdsferred to 
the Authority within three (3) years from the effectivity of  this^ Act. The 
SSS and the GSIS shall, however, continue to perform the pro,cessing of 
EC claims until such time that such functions are assumed by the 
Authority in accordance with Article 51 of this Act. 
I 
I 
~ 
~ 
I 
The Authority shall, by appropriate Memorandum of Agreements, 
entrust to the GSIS and the SSS payment of benefits under this Act while 
the Authority is in the process of organizing and instituting its operations. 
During the same period and for such period of time it may fix, the 
Authority may likewise continue the arrangement with the SS8S and the 
GSIS for the collection and recording of its contributions, projided such 
collections and accruals thereto are deposited in the name and account 
of the Authority. 
SEC. 35. SUPPLEMENTAL APPROPRIATIONS FOR THE STATE 
INSURANCE FUND.- Considering the negative status of the present 
^. 


public sector State Insurance Fund and to achieve equity in the 
assignment of benefits payment, the amount of Three Billion Pesos (PhP3 
Billion) is hereby appropriated from the funds not otherwise appropriated 
and added to the present private sector State Insurance Fund to 
constitute the single Work Contingency Insurance Fund that shall be 
under the administration of the Authority upon the effectivity of this Act. 
SEC. 36. TRANSFER OF THE EMPLOYEES’ COMPENSATION 
FUNCTIONS OF THE GSIS AND THE SSS TO THE AUTHORITY.- The 
functions, assets, equipment, records, and operating procedures of the 
Employees’ Compensation operations of the GSIS and the SSS shall be 
transferred to the Authority within one (1) year from the effectivity of this 
Act. The personnel of the Systems who are performing Employees’ 
Compensation functions shall be given preference in the hiring of the 
Authority’s personnel especially in the field offices. 
SEC. 
37. 
TERMINATION 
OF 
THE 
EMPLOYEES’ 
COMPENSATION 
COMMISSION AND STATE INSURANCE FUND 
UNDER P.D. 626.- The Employees’ Compensation Commission (ECC) 
shall be, as is hereby, abolished and all officials and personnel thereof 
shall be transferred to and mandatorily absorbed by the Authority 
without demotion in rank, and/or diminution of salaries and fringe 
benefits; Provided that the Authority may develop an attractive 
retirement package for ECC employees who may wish to avail of early 
retirement with benefits comparable or similar to those granted to 
employees of other government financial institutions which undertook 
similar reorganization. 
The functions, assets, equipment, records, and operating 
procedures of the ECC are likewise transferred to the Authority. 
22 


However, the term of office of incumbent members of the Board of 
Commissioners of the ECC shall be deemed expired upon effectivity of 
this Act. 
SEC. 
38. THE OCCUPATIONAL 
SAFETY 
AND 
HEALTH 
CENTER.- The Occupational Safety and Health Center (OSHC) created 
under Executive Order No. 307, dated November 4, 1987, as the research 
arm of the ECC on occupational safety and health shall be, as is hereby, 
abolished and its officials and personnel transferred to and absorbed by 
the Authority without demotion in rank, and/or diminution of salaries 
and fringe benefits; Provided, that the Authority may develop an 
attractive retirement package for OSHC employees who may wish to avail 
of early retirement with benefits comparable or similar to those granted 
to employees of other government financial institutions which undertook 
similar reorganization. 
The functions, assets, equipment, records, and operating 
procedures of the OSHC are likewise transferred to the Authority. 
SEC. 39. FUNDING REQUIREMENTS.- Such amount as may be 
necessary to cover the initial operational expenses of the Authority, 
including the salaries of incumbent personnel for the current budget 
year, shall be taken from the remaining unexpended appropriations of 
the ECC, OSHC and the employees’ compensation operations of the SSS 
and GSIS for the calendar year, as duly approved by the Department of 
Budget and Management (DBM), which shall be advanced in their 
remaining entirety by the SSS and the GSIS; Provided, that where the 
remaining unexpended appropriations of the ECC, the OSHC and the 
employees’ compensation operations of the SSS and GSIS for the 
calendar year would not be sufficient to finance the operations of the 
Authority for the remaining months of the fiscal year, the Authority may 
23 


appropriate such amount as may be necessary to meet expected 
expenditures out of the twelve percent (12%) annual loading fund of the 
State Insurance Fund. 
SEC. 40. IMPLEMENTING RULES AND REGULATIONS.- Within 
one hundred and twenty (120) days from the completion of the 
appointments of its members, the Board of Trustees shall formulate, 
approve and publish in the official gazette or in at 
least two (2) 
national newspapers of general circulation the implementing rules and 
regulations of this Act. 
SEC. 41. AMENDATORY CLAUSE.- Title 11, Book IV of Presidential 
Decree No. 442, as amended by P. D. 626, as amended, is hereby 
amended. All other laws, 
executive 
orders, administrative rules 
and regulations or parts thereof which are inconsistent 
with 
the 
provisions of this Act are accordingly amended, modified or repealed. 
SEC. 42. SEPARABILITY CLAUSE.- If any provision of this Act is 
declared invalid, the other provisions not affected thereby shall remain 
valid. 
SEC. 43. EFFECTIVITY.- This Act shall take effect fifteen (15) 
days after its publication in the official gazette or in at least two (2) 
national newspapers of general circulation whichever comes earlier. 
Approved, 
24