Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City, Metro Manila

THIRTEENTH CONGRESS
First Regular Session

House BillNo.__3848

Introduced by

HON. LEOVIGILDO B. BANAAG (1* District, Agusan del Norte)

EXPLANATORY NOTE

The Employees Compensation Program (ECP) had been in place for the past 25
years. It has awarded a total of P15.52 Billion in benefits to 2,778,944 workers and their
‘dependents for work-connected sickness or injury. There are important benefits that
could have been enjoyed by workers more meaningfully had the program
implementation not been fragmented as it presently is.

The fragmented implementation of the ECP by three agencies namely: the
Employees’ Compensation Commission (ECC) for policy formation and-appealed cases
disposition, and the Social Security System (SSS) and Government Service Insurance
System (GSIS) for service delivery and State Insurance Fund (SIF) administration, has
resulted into the following

1, The disparity and inequity in the employment of ECP benefits between the public
and private sector employees owing from the fact that ECP policy implementation
is supplemented by the individual policies of both Systems which at most times
are not in harmony with each other. For example, government workers are
entitled to pay only P90.00 daily income benefits for temporary total disability
whereas private sector employees enjoy a maximum of P200.00 per day. In
case of death, a beneficiary of a government employee is entitled to only P3,000
funeral benefits as compared to P10,000 enjoyed by private sector employees.
This is notwithstanding the fact that government sector contribution is higher at
thirty pesos per employee compared to ten pesos per employee for the private
sector;

2. The contrasting performance between the public sector State Insurance Fund
managed by the GSIS and the private sector SIF managed by the SSS. It might
interest the members of Congress to know that while the SSS-managed SIF has
grown to its present level of P18.5 Billion, the public sector SIF managed by
GSIS is on the red by about P2.5 Billion

3. The delay in the processing of Employees’ Compensation (EC) claims to the
detriment of the poor suffering claimants. For instance, within the Systems, there
are two, sometimes three levels of decision-making before the claim of the


worker is finally decided. Where the Systems’ decision is adverse to the
claimant, an appeal to the ECC which has no direct access to the records of the
claimants can further prolong the decision-making. This undue delay in the
processing of claims in not in consonance with the social legislation objectives of
PD 626. More often than not, benefits, if granted, come at a time when it is no
longer needed very much.

4. High administrative costs arising from the maintenance of three different and
independent but duplicating bureaucratic structures diverting much needed
resources to unnecessary operational concems instead of to benefits payment or
to increasing the benefit structures for work-connected sickness or injury.

5. 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.

thas also been observed that the present ECP as defined by PD 626 is focused
mainly on benefits payment. It has overlooked the importance of work contingency
prevention and the rehabilitation of occupationally disabled workers. The absence of
meaningful work-contingency prevention initiatives has resulted into the increasing
number of claims filed with both Systems over the years and consequently the
increasing amount of benefits payment that eventually has overtaken the amount of
contributions collected annually. This situation should not be allowed to continue
because the absence of work contingency prevention initiatives can eventually
compromise the integrity of the SIF no matter how much increases in employers’
contributions the program may impose. The bill is proposing a comprehensive and
integrated implementation of the ECP that will focus not only on benefits payment but
more so on work contingency prevention and, in situations where workers would
eventually suffer from work-connected sickness or injury, their rehabilitation into
productive members of society.

Finally, this bill will put into action the overwhe
Macapagal Arroyo and this Congress on the welfare
This bill is but recognition that a healthy workforce

ming concern of President Gloria
the ordinary Filipino workingman.
psult into a healthy economy.

LEDVIGILDO ony



Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City, Metro Manila

THIRTEENTH CONGRESS
First Regular Session

House BillNo,__ 38.48

Introduced by
HON. LEOVIGILDO B. BANAAG (1* District, Agusan del Norte)

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 TITLE 2
BOOK IV OF PRESIDENTIAL DECREE NO. 442, AS AMENDED OTHERWISE
KNOWN AS THE LABOR CODE OF THE PHILIPPINES AND APPROPRIATING
FUNDS THEREFOR.

Be it enacted by the Senate and House of Representatives in Congress
assembled:

SECTION 1. Short Title. This Act shall be known as the “Workers’
Compensation Act of 2005"

CHAPTER!
DECLARATION OF PRINCIPLES

SECTION 2. Basic Principles. The State affirms labor as 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;

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

SECTION 3. Definition of Terms. The Authority shall have the following
powers and functions:

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
illegitimate descendants who are secondary beneficiaries.

3. ‘Board’ means the Board of Trustees of the Philippine Workers’
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 (21) years of age, or over twenty-one (21) years of age
provided he/she is incapacitated and incapable of self-support due to
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.

7. “Disability” means loss of 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 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 and Controlled Corporations.

9. “Fund” means the Work Contingency Insurance Fund

10. "GSIS” means the Government Service Insurance System

11. “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.

12. "SSS" means the Social Security System


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

14. “Work Contingency’ refers to any disease, injury, or death arising out of
employment.

15. ‘Worker’ refers to any person employed by a private or government entity
and who is a member of the System.

16. “Working Life” means the normal productive life of the worker, until the
compulsory age of retirement.

CHAPTER III
THE WORKERS’ COMPENSATION PROGRAM

A. COVERAGE
SECTION 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.

©) The Authority may consider coverage of Overseas Filipino Workers (OFWs)
and workers in the informal sector subject to regulations as it may prescribe

SECTION 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

SECTION 6. Loss-Of-income Benefit. Under such regulations as the
Authority may approve, any worker who sustains a work-related injury or contracts a
work-connected disease resulting into loss of income due to his/her inability to work
shall, for each day of inability to work, be paid a loss-of-income benefit. The amount
for 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

SECTION 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:

‘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.

ahora

B.3 MEDICAL AND ALLIED BENEFITS

SECTION 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; 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

SECTION 9. Career’s Allowance. In cases where the worker's 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

SECTION 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 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 is she/he has no primary
beneficiary, the Authority shall pay to his/her 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

SECTION 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 js 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 proof 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.

SECTION 12. Second Injuries/ Disease. If a worker receiving 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.

SECTION 13. Earned Benefits.

a) Aworker who is receiving loss-of-income benefits shall not be deprived of his/
her right to receive eared 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
operate to deprive the worker or his/her dependents of any pait 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.

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.

SECTION 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.

SECTION 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 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
‘SECTION 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.

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

SECTION 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.

SECTION 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 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

SECTION 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 PD 626, as amended, including arrearages

of the government with the GSIS and of private employers with SSS for the

said Fund;

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

Donations and grants-in-aide; and

All accruals thereof including investment earnings.

wae

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.

‘SECTION 20. Management and Investment of Fund.

a) The use, disposition, 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.

SECTION 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 any case of deficiency, the same shall be covered by
supplemental appropriations from the national government.


SECTION 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 for 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 bar the recovery of
benefits, which the worker may be entitled to under other laws.

) When the disability or death is caused by circumstances creating a legal
liability against a Third Party, the worker or the dependents in this case or
his/her death shall be paid by the Authority under this Act. In case the 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

SECTION 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 employer's 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 or wages.

SECTION 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 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

SECTION 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.

SECTION 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
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
thereon, 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
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;

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;

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.

2 No

SECTION 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 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 (Php2,500.00) for each Board Meeting actually
attended by them but not to exceed Ten Thousand Pesos (Php10,000.00) a month
and reasonable transportation and representation allowances as may be fixed by the

Board.

‘SECTION 28. Powers and Functions of the Board of Trustees. The Board

of Trustees shall have the following power and functions:

1

2.

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;

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;

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;

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.

SECTION 29. The President and Other Senior Officials of the Authority.
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:

2.

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

4) To perform other duties as may be assigned to him/her by the Board.

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.


SECTION 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

SECTION 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 alll 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.

SECTION 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 Pesos (Php500.00) but not more than One Thousand Pesos
(Php1,000.00) 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 VII
TRANSITORY PROVISIONS

SECTION 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.

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.

SECTION 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 and 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.

The Authority shall, by appropriate Memorandum of Agreements, entrust to
the SSS and the GSIS 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 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.

SECTION 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 effective of this Act.

SECTION 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 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
personnel especially in the field offices.


SECTION 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 for incumbent members of the Board of
Commissioners of the ECC shall be deemed expired upon effectivity of this Act.

SECTION 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.

SECTION 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 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.

SECTION 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.

SECTION 41. Amendatory Clause. Title II, Book IV of P.D.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.

SECTION 42. Separability Clause. If any portion of this Act is declared
unconstitutional, the same shall not affect the validity and effectivity of the other
provisions not affected thereby

SECTION 43. Effectivity Clause. This Act shall take effect upon its approval
and publication in at least two (2) national newspapers of general circulation.

Approved,