Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

THIRTEENTH CONGRESS
First Regular Session

3735

House Bill No..

EXPLANATORY NOTE

‘The Employees’ Compensation Law, which has given life and spirit to. the
Employees’ Compensation Program for almost twenty eight (28) years, had been
amended by eight (8) Presidential Decrees and Executive Orders. Despite these
amendments, the public and private sector employees and their beneficiaries clamor for
the revamp of the program.

Aware of the overriding need to improve the present law, the Employees’
Compensation Commission (ECC) conducted a s¢ries of consultations and discussions
with some multi-sectoral groups such as labor organizations, employers, concerned
government agencies, non-government organizations and the general public. It has
been established that the fragmented implementation of the Employees’ Compensation
Program (ECP) by four (4) independent agencies (ECC, GSIS, SSS and the Occupational
Safety and Health Center) has resulted to, among others:

(1) the contra
(SIFs);

(2) the disparity and inequity in the benefits enjoyed by the public vis
private sector workers who are both beneficiaries of the same program;

(8) the delay in the processing of Employees’ Compensation (EC) claims due to
the involvement of three agencies separately operating under their respective

systems, procedures and policies;

(4) the high administrative cost; and

(5) the over-emphasis on the compensatory aspect of the program to the
detriment ot the equall
(CPP) and the rehabilita

ing, performance and status of the two State Insurance Funds

-vis

important work contingency prevention program
(on of ocettpationally-disabled workers (ODWs)

Considering that it has becomé necessary to introduce a new law to make it more
responsive to the urgent demands of the Filipino workforce and the dynamic changes in
socio- economic development, the bill as drafted provides:

stablishment of

1. A clear declaration of state policy which serves as basis for the
the Workers Compensation Program (WCP);


2. Aclear description of the Program and its component namely, coverage, benefits,
rehabilitation of occupationally disabled workers and the work contingency
prevention;

3. 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 State Insurance
Funds (SIF);

4. 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
beneficiaries may be entitled to enjoy the loss-of-income benefits;

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 minimization, if not the complete prevention of the occurrence of
work accidents and occupational diseases;

6. The provision for the possible coverage of informal sector workers and the
overseas Filipino workers under the program; and.

7. The unified administration of the program through the proposed Philippine
Workers Compensation Authority (PCWA). .

This Bill, therefore, will put into action President Gloria Macapagal-Arroyo's and
this Congress’ overwhelming’ concern on the welfare of the working, men and women of
our country, recognizing that a healthy workforce will surely result into a healthy
economy.

Early passage of this Bill is strongly recommended.



Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

THIRTEENTH CONGRESS:
First Regular Session

House Bill No. 3795

Introduced by HON. MAURICIO G. DOMOGAN

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 ARTICLES 166 TO 208-A OF
OF PRESIDENTIAL DECREE FOUR HUNDRED FORTY TWO (PD 442), AS
AMENDED, OTHERWISE KNOWN AS THE LABOR CODE OF THE PHILIPPINES
AND APPROPRIATING FUNDS THEREFOR

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 “Workers’ 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 weifare. 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;
2. Ensure prompt and adequate compensation for workers and 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

For this purpose, the Workers’ Compensation Program is hereby established



CHAPTER IL
DEFINITIONS

SEC. 3. Definition of Terms - As used in this Act unless the context indicates

otherwise, the following definition of terms shall be adopted:

a) “Authority” means the Philippine Workers’ Compensation Authority

b) “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.

©) “Board” means the Board of Trustees of the Philippine Workers’
Compensation Authority.

d) “Compensation” means all benefit payments made under this Act.

e) “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.

f) “Dependent” means the legitimate, legitimated, legally adopted or
illegitimate child who is unmarried, not gainfully employed, and not over
twenty-one years (21) of age or over twenty-one years (21) of age provided
he/she is incapacitated and incapable of self-support due to a physical or
mental defect which is congenital or acquired during minority; the legitimate
spouse living with the worker; and the parents of said worker wholly
dependent upon him/her for regular support.

8) “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

h) “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
his/her orders as regards the employment, including the national
government, its political subdivisions, agencies or instrumentalities and
government-owned or controlled corporations.

i) “Fund” means the Work Contingency Insurance Fund.

i) “GSIS” means the Government Service Insurance System.

k) “Occupationally Disabled Worker” or ODW refers to a worker whose usual
work capability and earning capacity has been affected by his/her work-
connected disease or injury:

1) “SSS” means the Social Security System,

m) “System” means the SSS or GSIS, as the case may be.

n) “Work Contingency” refers to any disease, injury or death arising out of
employment.

©) “Worker” means any person employed in a private or government entity and
who is a member of the System.



p) “Working Life” means the normal productive life of a worker until the
compulsory age of retirement.

CHAPTER IIL
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

3. Gets 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

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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:

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

Such other cases as may be determined by the Authority.

enon

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 shall be suspended if the
worker unreasonably refuses to submit himself/herself to the medical examination.

B. 4 CAREER’S ALLOWANCE

SEC. 9. Career’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
Career’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 his/her 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 covered worker's contingency. If the
Authority in good faith pays loss-of-income benefit to a dependent who is inferior in

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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 shail 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 otherwise 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 the workers.

(©) 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-dlisabled 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.

(b) Arrangements for placement of vocationally/ technically trained occupationally-
disabled workers shall be an integral part of the rehabilitation program. As 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, 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 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. THE FUND

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;

Subsequent appropriations pursuant to Articles 20 (b) and 34 of this Act;

Donations and grants-in-aids; and

All accruals thereof including investment earnings.

Op

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 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

2. The Authority may disburse each year not more than twelve percent (12%) of

the contributions and investment earnings collected for its operational expenses

(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 himself/herself 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

9.


dependents with respect to work-connected disease, injury or death. The payment of
compensation under this Act shall not 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; Provided that, upon
separation of a worker, any contribution paid in advance but not due shall be credited
or refunded to his/her employer.

‘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

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

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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
privrity 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 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 PHILIPPINE 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;
2. To assess, review from time to time, fix and adjust the rate of contributions

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from all employers, collect the same and manage the Fund; Provided, that the
Authority may assess higher rates of contributions for employers whose
records show a high frequency of work accidents or occupational diseases;

3. To settle any claim or dispute arising from this Act with respect to coverage,
entitlement to benefits, collection and payment of contributions and penalties
thercon, or any other matter related thereto including the power to administer
oath and affirmation and to issue subpoena;

4. 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;

5. 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
employces; and adopt its annual budget of expenditures chargeable against the
twelve percent (12%) operational expenses provided for in Article 20 (a) (2)
hereof;

6. To sue and be sued in Court; .

7. To acquire, utilize, dispose of property which may be necessary or expedient
for the attainment of the purposes of this Act;

8. To enter into agreements or contracts for the proper,-efficient and stable
administration of the Program;

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.

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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 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 Fuuctions 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;

3. To approve the annual operating budget of the Authority as recommended by
its President; -

4. To approve the organizational and administrative structures and the
compensation schedule of the personnel of the Authority and to appoint its
senior officials;

5. To approve and adopt guidelines affecting investments, settlement of claims,
disposition of acquired assets and increased benefits to workers;

6. 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;

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

8. To do and perform any and all acts-necessary, proper and incidental to the
attainment of the purposes and objectives of this Act.

i

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

“Be


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) Toactas the Chief Executive Officer of the Authority;

b) To appoint the lower level personnel of the Authority;

©) 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 tha 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.

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 - (a) 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 noi more than One Thousand (PhP1,000.00) Pesos multiplied

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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 VIL
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
(68S) 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.

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 Act, 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
transferred to the Authority within three (3) years from the effectivity of this Act. ‘The
SSS an the GSIS shall, however, continue to perform the processing of EC claims until
such time that such functions’are assumed by the Authority in accordance with Article
51 of this Act.

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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 SSS and the GSIS for the collection and
recording, of its contributions, provided 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.

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

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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
S55 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 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 II, 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,

217.