\I 
>:r<Ar: 
-** * - 6 ~  
OF THE S E E  
I* 
THIRTEENTH CONGRESS OF THE REPUBLIC ) 
OF THE PHILIPPINES 
Second Regular Session 
5 
RUG 31 P3 :U2 
I 
c 
IIECEIVED BY: 
2105 
SENATE 
S.B. No. 
.. 
~. 
~~ 
I 
- 
Introduced-by Senator Miriam Defensor Santiago 
- - 
~ -~ 
- 
~ 
~ 
~ 
EXPLANATORY NOTE 
The Employees’ Compensation Law, which gives life and spin1 to the Employees’ 
Compensation Program (ECP) for almost twenty eight (28) years, lias been mended by eight (8) 
Presidential Decrees and Exccutivc Orders. Despitc these amcndmcnts, the public and private 
sector employees and their beneficiaries clamored for the revamp of the program. 
Aware of the overriding need to improve the presenl law, the Employees’ Compensation 
Commission (ECC) has conducted a series of consultations and discussions with some multi- 
sectoral groups such as labor organizations, cniployers, concerned government agencies, lion- 
government orgahizations and the general public. It has been established that the fragmented 
implenientalion of the ECP by four (4) independent agencies [ECC, Government Service 
Insmance System (GSIS), Social Security System (SSS) and the Occnpational Safety and Health 
Center] has resulted to, among others: 
! 
; 
(1) the contrasting perfoimance and status of the GSIS and SSS State Insurance Funds 
(2) the disparity and inequity in the benefits cnjoyed by the public vis-&vis private 
sector workers who are both beneficiaries of the same program; 
(3) lhe delay in the processing of employees’ compensation claims due lo the 
involvement or three agencies separately operating under their respective systems, 
proccdures and policies; 
(4) the high administrative cost; and 
( 5 )  the over-emphasis on the compensatoiy aspect of the program to lhe detrimenl of the 
equally important work contingency prevention program and the rehabilitation of 
occupationally-disabled workers (ODWs). 
(SW; 
Considering that it has become necessary to introduce a new law to make it more responsive 
to the urgent demands of the Filipino workforce and the dynamic changes in social economic 
dcvelopmcnt, thc bill as draRed provides: 
1. A clear declaration of state policy which ?.ewes as basis for the es~db1ishment of the 
Workers Compensation Program; 
2. A clear description of the Program and its components namely, coverage, benefits, 
rehabilitation of occupationally disablcd workers-and the work contingency prcvention; 
3. The setting up of a single fiuid from which payment of benefits shall he sourced which is 
now aptly and more accurately and descriptively called the Work Contingency Insurance 
Fund. Provisions for a more systematic collection of contributions have been included lo 
minimi% dcfaults in paymkt which partly was-Ee r5asoiifor fhe prescnthte o k h e  
public sector SIF; 
4. The simplication of the benefils system Lo avoid confusion parlicularly in the grant of the 
primary and basic benefits nnder the Workers Conipensatioii 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 he entitled to enjoy 
the loss-of-income benefits; 
~ 
.- 
-- .- 
~ 
~- 
I 
~~ 
.. 
- .  


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 the 
minimization, if not the complete prevention of the occurrence of work accidents and 
occupational diseases; 
6. The provision for the possible coverage of infonnal sector workers and the overseas 
Filipino workers under the program; and 
7. The nnified administration of the program through the proposed Philippine Workers 
’ ,  
Compensation Authority. 
This Bill, therefore, will put into action Congress’s oveiwhelming concern 011 the welfare of 
t e working men and woinen of our country, recognizing that a healthy workforce will surely 
result into a heakhy economy. 
.- 
~~ 
~ 
.
~
-. - -  
~ 
~~ 
~ 
- 
~- 
-~ 
~ 
.- 
‘r 
.
’
 
~~ 


THIRTEENTH CONGIZESS OF THE REPUBLIC ) 
OF THE PHILIPPINES 
) 
Second Regular Session 
1 
5 RUG 31 P3:02 
I’ 
RECEIVED BY: 0 
Introduced by Senator Miriam Defensor Santiago 
AN ACT 
ESTABLISHING THE WORKERS’ COMPENSATION PROGRAM, THE WORK 
CONTINGENCY INSURANCE FUND, THE PHILIPPINE WORKERS’ COMPENSATION 
AUTHORITY AND DEFINING ITS POWERS AND FUNCTIONS AND M E W I N G  FOR 
THIS PURPOSE ARTICLES 166 TO 208-A 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 Sen& and the House of R2pve;rentafives $%e 
Philippinerin. 
Congress assembled: 
ARTICLE 1. Short Title. - This act shall be known as the “Workers’ Compensation Act 
of 2005.” 
~ 
- 
CHAPTER I 
DECLARATION OF PRINCIPLES 
ARTICLE 2. Basic Pvinciples. - 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: 
(a) Build and sustain among workers and employers a culture of safe and healthy work 
environment in order to minimize the incidence of work contingencies; 
(b) Ensure prompt and adequate compensation, secure adequate benefits, medical or 
related benefits for workers and their dependents in the event of work contingencies; and 
(c) Provide occupationally-disabled workers with rehabilitation services to enable them to 
become productive members of society. 
CHAPTER II 
DEFINITIONS 
ARTICLE 3. Definition of Tevms. - 
(a) “Authority” refers to the Philippine Workers’ Compensation Authority. 


(b) “Beneficiary” refers to the legitimate spouse, the legitimate, legitimated, 
legally adopted children, and illegitimate children, who shall be the primaw 
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. 
(c) “Board” refers to the Board of Trustees of the Philippine Workers’ 
Compensation Authority. 
(d) “Compensation” refers to all benefit payments made under this Act, 
(e) “Contribution.” refers to the amount remitted or to be remitted by an employer 
to the Work Contingency Insurance Fund for each employee under hisker employ. 
(f) “Dependent” refers to 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 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 patents of 
said worker wholly dependent upon him for regular support. 
._ 
(g) “Disability” refers to the 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” refers to 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 orders as regards the 
employment, including the national government, its political subdivisions, agencies or 
instrumentalities and government-owned br controlled corporations 
.
.
 
(i) “Fund” refers to the Work Contingency Insurance Fund. 
0) “GSIS” refers to the Government Servicehsurance System. 
(k) “Occupationally Disabled Worker” or “ODW refers to a worker whose usual 
work capability and earning capacity has been affected by his work-connected disease or 
injury. 
(1) “SSS” refers to the Social Security System. 


(m) “System”refers to the SSS or GSIS, as the case may be. 
(n)“Work Contingency” refers to any disease, injury or death arising out of 
employment. 
(0) “Worker” refers to any person employed in a private or government entity and 
who is a member of the System. 
(p) “Working Life” refers to the normal productive life of a worker until the 
compulsory age of retirement. 
CHAPTER 111 
THE’ WORKERS’ COMPENSATION PROGRAM 
A. COVEMGE 
ARTICLE 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 shall ensure adequate coverage of overseas Filipino workers 
~ 
and workers in the infoimaksector subject to regulations as it-may p38SCnbe.:::- 
- 
. 
I 
ARTICLE 5. Registvation. - The registration of an employer and his 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.fhat wil1:be used under this Act. 
B. BENEFITS 
1. LOSS-OF-INCOME BENEFIT 
ARTICLE 6. Loss-of-lncome Benefit. - 
(a) 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 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. 


(b) 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: 
. - 
(I) Fails to present himself for periodic medical and physical examination 
as may be required by the Authority; 
(2) Recovers from his disease or injury; or 
(3) Gets gainfully employed, 
2. BENEFIT FOR LOSS OR LOSS OF USE OF BODY PART 
ARTICLE 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 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 working life: 
(a) Complete loss of sight of both eyes; 
(b) Loss of two limbs at or above the ankle or wrist; 
(c) Permanent complete paralysis of two limbs; 
(d) Brain injury resulting in incurable imbecility or insanity; and 
(e) Such-other cases as mG&e determined by the Authority. 
-_ 
~- - 
-~ - 
~. 
I 
3. MEDICAL AND ALLIED BENEFITS 
ARTICLE 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 disease or injury may require subject to the expense 
~. 
- .  
limitation as may be prescribed by the Authority; Provided, that the worker submits himself 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 to the 
medical examination. 


4. CAREER’S ALLOWANCE 
ARTICLE 9. Career’s Allowance. - In cases where the worker’%-ineapacity resulting 
from a work-connected injury or disease is of such magnitude as determined by the Authority 
that he must have the constant help of another person, the worker shall for the duration of his 
disability but not to exceed his working life, be entitled to a Career’s Allowance. 
._ 
I 
. - 
5. DEATH BENEFITS 
ARTICLE 10. Death. - 
(a)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 loss-of-income 
benefit for the remainder of his 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 has no primary beneficiary, the Authority shall pay to his 
secondary beneficiaries the loss-of-income benefit. 
(h) 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. 
6. PROVISIONS COMMON TO ALL BENEFITS 
ARTICLE 11. Relationship and Dependency. - 
(a) 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 right to another dependent or with whom another 
dependent is entitled to share, such payment shall discharge the Authority from 1iabiTty; 
unless and until such other dependent notifies the Authority of his claim prior to the 
payments. 
. 
- _ - _  
. 
. ~. 
- 
.~ - 
~~ 
- 
~~ 
- 
I 
(b) In case of doubt as to the respective rights-of nval: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. Kthe money is payable to a minor 


or incompetent, payment shall be made by the Authority to the surviving parent or legal 
guardian. 
ARTICLE 12. Second ZajuriedDisease. - If a worker receiving a loss-of-income benefit 
suffers another work-connected disease, the worker shall he entitled to an additional medical and 
bther allied benefits necessary for-the treatment of the semnd work-connectecf disease 
.- suhj-eg t_o 
the cost limitation as may he prescribed by the Authority. 
ARTICLE 13. Earned Benefits. - 
(a) A worker who is receiving loss-of-income-benefits shall not he deprived of his 
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 is enjoying loss-of-income benefit. 
. 
(h) Except as otherwise provided, no contract, regulation or device whatsoever 
shall operate to deprive the worker or his dependents of any part of the income benefits 
and medical or related services granted. Existing medical services being provided by the 
employer shall he maintained and continued to he enjoyed by his workers. 
(c) 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. 
ARTICLE 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. 
ARTICLE 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 services any fee 
and any stipulatioit to the contrary shall be null and void. The retention or deduction of any 
pount 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 (Php 500.00) nor 
_. - 
- 
~. 
- 
.. 
~ 
- 
more than five thousand pesos (Php 5,000.00), or imprisonment for not less than six (6) months 
but not more than one (1) year, or both, at the discretion of the court. 
.~ 
.~ 
L 


C. REHABILITATION OF OCCUPATIONALLY -DISABLED WORKERS 
ARTICLE 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 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. 
~ 
~ -.._ 
~ . ~. 
- 
~~ 
- 
- 
~. 
~ 
~- 
-~ 
0) 
Arrangements 
for 
placement 
of 
vocationa~~y/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 
ARTICLE 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. 
ARTICLE 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 percent (50%) 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 
ARTICLE 19. Work Contingency Insurance Fund. - 
(a) 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: 
- 
Authority pukuant to Chapter V of this Act; 
(1) Contributions remitted by . employers at: rates -prescribed 
.- b y t h e  
(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 pursu'ant 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. 
ARTICLE 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 cunent obligations may 
be invested under such terms and conditions and rules and regulations as may he 
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. 
ARTICLE 21. Government Guavuntee. - The Republic of the Philippines guarantees the 
benefits under @is Act and accepts-general responsibilityfor the solvencysftke Fund. 
.- 
In case of 
any deficiency, the same shall be covered by supplemental appropriations from the national 
government. 
- .. 
.~ 
ARTICLE 22. Liabilities. - 
(a) The Fund shall be liable for the compensation due to the worker or his 
dependents, except when the disability or death is occasioned by the worker's 
intoxication, willfnl intent to injure or kill himself 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 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 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 death in 
accordance with the law. 
(d) 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 
dependents, after deducting the cost of proceedings and expenses of the Authority. 
B. CONTRIBUTION 
ARTICLE 23. Employer’s Contribution. - 
(a) Under such regulations as the Authority may prescribe, beginning as of the last 
day of the month when a worker’s compulsory coveraga. takes effect and every month 
thereafter during his 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. 
(b) 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 &isable by the AuthoZi, €he Collection and remittance& 
---_ 
:.. 
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 employer. 
.~ 
(c) The rate of contrihution shall be reviewed periodically subject to the 
limitations herein provided and may he revised based on actuarial studies. 
(d) 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. 
(e) When a covered worker dies during employment, or is separated from 
employment, his employer’s obligation to pay the monthly contribution arising from that 
employment shall cease on the last day of the month of contingency. 


Q When a covered employee becomes disabled during employment and is unable 
to work, his employer’s obligation to pay the monthly contribution arising from that 
employment shall be suspended during such month thai3ie is not receiving salary or 
wages. 
ARTICLE 24. Default. - 
.. 
. 
k 
(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 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 
ARTICLE 25. The Philippine Worlcers ’ Compensation Authority. - 
(a) The Philippine Worlcers’ 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. 
- 
(b) The Authority shall be exempted from the payment of taxes, fees, charges, 
levies, customs or import duties, 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. 


(c) 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. 
ARTICLE 26. Powers and Functions. - The Authority, as the implementing agency for 
- .. 
.~ 
the Workers Compensation Program, shall have the following powers and functions: 
(a) To issue rules and regulations necessary for the effective implementation of 
the Program; 
(b) 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 higher rates of contributions for employers whose records show a high 
frequency of work accidents or occupational diseases; 
(c) 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; 
(d) 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; 
(e) To organize its office, fix the compensation of and appoint its personnel who 
shall be exempted from thepFovisions of R.A. 675gdevelop and impiement pyogamsas - 
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; 
~ 
~. 
(f) To sue and be sued in Court; 


(g)To acquire, utilize, and dispose of property which may be necessary or 
expedient for the attainment of the purposes of this Act; 
(h) To enter 'into agreements or contracts for the proper, efficient and stable 
administration of the Program; 
(i) To receive and accept grants, donations and other forms of financial assistance 
-_ .- 
- 
_ _  
I- 
_ _  . - 
- 
- 
- 
from any natural- or juridical person, whether domestic or foreign, or from any 
international organization; 
6) 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; and 
- 
Q 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. 
ARTlCLE 27. The Board of Trustees. - 
(a) 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 member and ,four (4) other 
memders to be appointed by the President of the Philippines, two (2) of whom shall 
,
.
 
~ ! 
1 
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. 
,
.
 
(b) The four (4) appointive members shall be chosen from among the nominees of 
workers and employers organizations. 
(c) 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 t h e ~ m m r  
in which the-original appointment 
_ _  
was made and the appointee shall serve only the unexpired term of his 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 attendedby them but not to exceed 
L~ 
~.~ 


ten thousand pesos (Php10,OOO.OO) a month and reasonable transportation and 
representation allowances as may be fixed by the Board. 
ARTICLE 28. Powers and Functions of the Board of Trustees. - The Board of Trustees 
shall have the following powers and functions: 
(a) To formulate the policies and guidelines and develop programs to effectively 
cany out the purposes of this Act; 
(b) To adopt, amend and rescind such tules and regulations as may be necessary 
---- 
:.~. 
to carry out the provisions and purposes of this Act; - 
.~~ 
. 
- 
. 
~- 
._ 
(c) To approve the annual operating budget of the Authority as recommended by 
its President; 
(d) To approve the organizational and administrative structures and the 
compensation schedule of the personnel of the Authone-and to appoint its senior 
officials; 
~. 
(e) To approve and adopt guidelines affecting investments, settlement of claims, 
disposition of acquired assets and incrbased benefits to workers; 
(0 The provision of any law to the contrary notwithstanding, to compromise or 
release, in whole or in paxt, 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; 
(g)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 
(h) To do and perform any and all acts necessary, proper and incidental to the 
attainment of the purposes and objectives of this Act. 
ARTICLE 29. The President and other Senior Officials of the Authority. - 
(a) 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. Inaddition, he shall havethe following dutiesand-functions: 
._ -- 


(1) To act as the Chief Executive Officer of the Authority; 
(2) To appoint the lower level personnel ofthe Authority; 
(3) To remove, suspend or otherwise discipline the officials and 
employees of the Authority in accordance with existing Civil Service rules and 
regulations; and 
(4) To perform other duties as may be assigned to himher by the Board. 
(b) Other Senior Oficials 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. 
~ 
~~ 
-_._ 
- 
- 
ARTICLE 30. Regional and-Field 0flcc.s. - . . _ -  . - .  
~ 
._ 
~. 
(a)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. 
- ., 
.~ 
(b) 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 
ARTICLE 3 1. Record of Disease, Injury or Death. - 
(a) 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. 
(b) 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. 


(c) 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. 
ARTSCLE 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) hut not 
more than 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 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 or for some other persons, shall suffer the penalties provided 
for in the Revised Penal Code or in other special penal laws. 
- 
.- 
~ 
.~ 
CHAPTER VII 
- .  
TRANSITORY PROVISIONS 
ARTICLE 33. Settlement ofEC Claims. - 
(a) All employees’ compensation claims which accrued prior to the effectivity of 
this Act, shall he filed with the SSS and the GSIS for claims in the private,and 
government sectors, respectively, and shall he 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 he processed in accordance with this Act. 
~ 


@) All cases pending before the Employees’ Compensation Commission (ECC) 
established under P.D. 626, as amended, on the date Df 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. 
(c) All cases pending before the ECC, which accrued before the effectivity o f  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. 
ARTICLE 34. Transfer of the State lnsurance Fund Administered by the SSS and the 
GSIS. - 
(a) The State Insurance Fund being administered by the SSS and the GSIS shall 
be hansferred to the Authority within three (3) years from the effectivity of this Act. The 
SSS and 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 33 
of this Act. 
,
I
 
(b) The Authority shall, by appropriate Memorandum of Agreements, entrust to 
the SSS and the GSE? payment of benefits underJhis Att while~khe AuthQnty is in the 
process of organizing and instituting its operations. 
- 
_ _  
- 
.~ 
. - 
- 
.~ 
(c) 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. 
ARTICLE 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 (PhF’3 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. 
.. 
- . 
. 


ARTICLE 36. Transfer of the einployees‘ compensation finctions of the SSS and the 
GSIS to the Authority. - The functions, assets, equipment, records, and operating procedures of 
the employees’ compensation operations of the SSS and the GSIS 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 persomiel especially in the field offices. 
ARTICLE 37. Termination of the ECC and Stute Insurance Fund under P.D. 626. - 
(a) The ECC shall be, as is hereby, abolished and all officials and personnel 
thereof shall he 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. 
(b) The functions, assets, equipment, records, and operating procedures of the 
ECC are likewise transferred to the Authority. 
(c) The term of office of incumbent members of the Board of Commissioners of 
the ECC shall be deemed expired upon effectivity of this Act. 
ARTICLE 38. The Occupational Safety and Health Center. - 
<a) The Occupational .Safety and Health Center. (OSHC) created under 
.- 
Executivz 
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, andlor 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. 
- 
. 


(h) The functions, assets, equipment, records, and operating procedures of the 
OSHC are likewise transferred to the Authority. 
ARTICLE 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 o? 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 
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. 
' 
k 
ARTICLE 40. Implementing Rules and Regulations. - Within one hm&ed 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 d e s  and regulations of this Act. 
ARTICLE 41. Ainendatovy Clause. - Title II, Book lV 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. 
ARTICLE 42. Separability Clause. - If any provision of this Act is declared invalid, the 
~. 
-_ 
- - 
:... 
- 
._ 
_. . 
~ 
~~ 
~ 
\ 
other provisionsnot affected thereb? shall remain valid. 
ARTICLE 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, 
L