PRESIDENTIAL DECREE No.

1641

FURTHER AMENDING TITLE II, BOOK FOUR OF THE LABOR CODE OF THE PHILIPPINES (PD
442, as amended)

WHEREAS, Provisions of the Employees' Compensation and Status Insurance Fund of the Labor
Code of the Philippines must respond to dynamic changes in social-economic development in light
of aspiraling cost of living; and that adjustments must be made to align such provisions with changes
in social security of the country; and

WHEREAS, the judicious management of the State Insurance Fund that the Social Security System
and the Government Service Insurance System administer for the private sector and the public
service, respectively has resulted in accumulation of sufficient reserves to enable the Employees'
Compensation Commission to further upgrade the benefit structure for covered employees, without
requiring additional premium contributions from employers;

NOW, THEREFORE, I, FERDINAND E. MARCOS, President of the Republic of the Philippines, by
virtue of the powers vested in me by the Constitution do hereby order and decree:

Section 1. Paragraphs (cc) and (dd) of Article 167 of Presidential Decree No. 442, as amended, are
hereby revised, to read as follows:

"(cc) 'Replacement ration'. The sum of twenty percent and the quotient obtained by dividing three
hundred by the sum of three hundred forty and the average monthly salary credit.

"(dd) 'Credit years of service'. For a member covered prior to January 1979, nineteen hundred
seventy-five minus the calendar years of coverage, plus the number of calendar years in which six
more contributions have been paid from January 1975 up to the calendar years containing the
semester prior to the contingency. For a member covered in or after January 1975, the number of
calendar years in which six or more contributions have been paid from the years of coverage up to
the calendar year containing the semester prior to the contingency."

Section 2. Paragraph (ee) of Article 167 of PD 442, as amended, is hereby further amended to read
as follows:

"(ee) 'Monthly income benefit. Means the amount equivalent to one hundred fifteen percent of the
sum of:

"The average monthly salary credit multiplied by the replacement ratio; and

"One and a half percent of the average monthly salary credit for each year credited year of service in
excess of ten years;

"Provided, However, That the monthly pension of surviving pensioners shall be increased by twenty
percent."

Section 3. Paragraph (e) of Article 177 of PD 442, as amended, is hereby further amended to read
as follows:

"(e) To make the necessary actuarial studies and calculations concerning the grant of constant help
and income benefits for permanent disability or death, and the rationalization of the benefits for

permanent disability and death under the Title with benefits payable by the System for similar
contingencies; Provided; That the Commission may upgrade benefits and new ones, subject to
approval of the President; and Provided, further, that the actuarial stability of the State Insurance
Fund shall be guaranteed; Provided, Finally, That such increases in benefits shall not require any
increases in contribution, except as provided for in paragraph (b) hereof."

Section 4. Paragraph (a = of Article 191 of PD 442 as amended, is hereby further amended to read
as follows:

"Art. 191. Temporary total disability. (a) Under such regulations as the Commission may approve,
any employee under this Title who sustains an injury or contracts sickness resulting in temporary
total disability shall for each day of such a disability or fraction thereof be paid by the system an
income benefit equivalent to ninety percent of his average daily salary credit, subject to the following
conditions the daily income benefit shall not be less than Four pesos, nor more than TWENTY FIVE
pesos, nor paid for a continuous period longer than one hundred twenty days, and the System shall
be notified of the injury or sickness."

Section 5. Paragraph (b) of Article 192 of PD 442, as amended, is hereby further amended to read
as follows:

"(b) the monthly income benefit shall be guaranteed for five years, and shall be suspended if the
employee is gainfully employed, or recovers from his permanent total disability, or fails to present
himself for examination at least once a year upon notice by the System, except as otherwise
provided for in other laws, decrees, orders or Letters of Instructions."

Section 6. Paragraph (b) of Article 194 of PD 442, as amended is hereby further amended, and
paragraph (d) is added thereto, to read as follows:

"(b) Under such regulations as the Commission may approve, the System shall pay to the primary
beneficiaries upon the death of a covered employee who is under permanent total disability under
this Title, eighty percent of the monthly income benefit and his dependents to the dependents
pension: Provided, That the marriage must have been validly subsisting at the time of disability;
Provided, Further, That if he has no primary beneficiary, the System shall pay to his secondary
beneficiaries a lump sum benefit equivalent to the smaller of (1) thirty-five times the monthly
pension, or (2) the difference of sixty times the monthly pension, and the total monthly pensions paid
by the System, excluding the dependent's pension.

"(d) Funeral benefits. A funeral benefit of one thousand pesos shall be paid upon the death of a
covered employee or permanently totally disabled pensioner."

Section 7. Article 208-A of PD 442, as amended, is hereby further amended to read as follows:

"Art. 108-A. Repeal of Laws. All existing laws, Presidential Decrees and Letters of Instructions which
are inconsistent with or contrary to this Decree, are hereby repealed: Provided, That in the case of
the GSIS, conditions for entitlement to benefits shall be covered by the Labor Code, as amended:
Provided, However, That the formulas for computation of benefits, as well as the contribution base,
shall be those provided for under Commonwealth Act numbered one hundred eighty-six, as
amended by the Presidential Decree No. 1146, plus twenty percent thereof."

Section 8. Effectivity. This Decree shall take effect on January 1, 1980.

Done in the City of Manila, this 21st day of September, in the year of Our Lord, nineteen hundred
and seventy-nine.

EXECUTIVE ORDER NO. 402

EXECUTIVE ORDER NO. 402 - GRANTING MEDICAL CARE BENEFITS TO SOCIAL SECURITY
SYSTEM OLD-AGE PENSIONERS AND THEIR DEPENDENTS

WHEREAS, it is the avowed policy of the government to provide adequate medical care
services to the people;

WHEREAS, under the present policy of the Social Security System (SSS) only active
members and their dependents enjoy Medical Care benefits;

WHEREAS, SSS old-age pensioners and their dependents must likewise be assisted in their
medical care expenses consistent with the policy for their counterpart old-age pensioners in
the Government Service Insurance System (GSIS);

WHEREAS, actuarial studies show that the Health Insurance Fund administered by the SSS
for the Medicare beneficiaries in the private sector can finance the benefits of SSS old-age
pensioners and their dependents without impairing the said Fund’s viability;

NOW, THEREFORE, I, CORAZON C. AQUINO, President of the Philippines, by virtue of the
powers vested in me by law, do hereby order:

Section 1. Effective May 1, 1990, Social Security System old-age pensioners and their
dependents shall be entitled to Medical Care benefits presently prescribed in Executive
Order No. 365, without need of any additional contribution.

Sec. 2. This Executive Order shall take effect immediately.

Done in the City of Manila, this 27th day of April, in the year of Our Lord, nineteen hundred
and ninety.

EXECUTIVE ORDER NO. 441

EXECUTIVE ORDER NO. 441 - INCREASING MEDICARE BENEFITS UNDER THE PHILIPPINE
MEDICAL CARE PLAN

WHEREAS, in the light of present economic conditions with increase in prices of practically
all commodities, including the cost of medicines and hospitalization, it is deemed necessary
and timely to further increase and enhance the medicare benefits granted to SSS and GSIS
members, to take them more meaningful and responsive to the times;

the government desires to increase medicare benefits to a meaningful level.1125 2670 3. retiree-pensioners are granted free medicare benefits. by virtue of the powers vested in me by law. and a 25% increase in all other Medicare benefits which will result to a 585 overall increase and the inclusion under the medical care program of SSS death and disability pensioners and their dependents. THEREFORE. NOW. SSS death and total disability pensioners and their dependents must likewise be assisted in the medical care expenses similar to the old age pensioners and their dependents. do hereby order: Section 1. Operating Room .50 P1700 P2900 Drugs & Medicines 937.3 Catastrophic Cases .WHEREAS. CORAZON C. I. the Philippine Medical Care Commission has recommended further enhancement of the benefits under Medicare program. under the present policy of the SSS. only active members and retiree-pensioners and their dependents enjoy medicare benefits. Medical Expenses Benefits (Per Single) Period of confinement 2.1 Ordinary Cases P600 P910 P1145 Drugs & Medicines 495 660 705 X-Ray/Lab/Other 105 250 440 2. WHEREAS. Hospital Charges 1. and 875 increase in drugs and medicines. under the policy of the GSIS adopted since 1974. The Medicare benefits for both GSIS and SSS Medicare beneficiaries are increased as follows: Benefit Limit Items of Hospitalization (By Hospital Category) Primary Secondary Tertiary A. actuarial studies show that the Health Insurance Fund administered by the SSS for medicare beneficiaries in the private sectors and by the GSIS for medicare beneficiaries in the government sector can further finance an 80% across-the-board rates. Room and Board not exceeding 45 days per year for each member of program 1 and another 45 days per year to be shared by all his dependents P45/Day P80/Day P100/Day 2.3660 5565 Drugs & Medicines . AQUINO. WHEREAS. WHEREAS. WHEREAS. President of the Philippines.50 1125 2025 X-Ray/Lab/Other 225 575 875 2. and dependents of GSIS pensioners without the need for increase in contributions.2 Intensive Cases P1162. WHEREAS.2535 2895 X-Ray/Lab/Other .

3. Medical/Dental Practitioner’s Fee per day of P45 for General Practitioner’s and P65 for Specialists not to exceed per single period of confinement. 2. Juego CITATION: GR No. 5. 1 & Above . Sec. chan robles virtual law li brary D. and P375 for General Practitioner and P625 for Specialist in Intensive Care/Catastrophic Cases. Consunji Inc. 137873. fell 14 floors from the Renaissance Tower. thereof inconsistent with this Executive Order are hereby repealed or modified accordingly.M. 2. Errol de Yzo. 1991. 350 415 3. pronounce Jose dead on arrival (DOA) at around 2:15PM. 2001 | 357 SCRA 249 FACTS: Around 1:30PM of November 2. Death and total disability pensioners of SSS. issuances. DONE in the City of Manila. Sec. 4. 1 to 10 .1 RUV 5 & Below 115 205 325 3.770. CA and Juego TITLE: D. Surgeon’s Fee in accordance with the Relative Unit Value Scheme prescribed by the Commission not to exceed P5. This Order shall take effect on the 1st day of January.2 RUV 5. . Professional Fees 1. v Court of Appeals and Maria J.3 RUV 10. Consunji vs.Fee based on Commission’s Relative Unit Value (RUV) Scheme 3. Consunji Inc. He was immediately rushed to Rizal Medical Center in Pasig City. Anesthesiologist’s Fee (30% of allowed Surgeon’s Fee) not to exceed P1. Pasig City.900.800 1075 B. Dependents of GSIS retiree-pensioners shall also be covered with Medicare benefits. a construction worker of D. All orders. Dr. as well as their dependents shall be entitled to Medical Care benefits without need for any additional contribution. P250 for General Practitioner and P375 for Specialist in Ordinary Cases.M. 3. rules and regulations or parts. Sec. this 21st of December in the year of Our Lord. The attending physician. April 20. nineteen hundred and ninety. 4. Jose Juergo. 1990. Fees for Surgical Family Planning Procedure as may be determined by the Commission.M. Sec.

Jose’s widow filed a complaint on May 9.Jose Juergo. Jessie and Delso jumped out of safety. Renaissance Tower Building were on board a platform.. INC. Should the award decreed by the trial court be greater than that awarded by the ECC. Supreme Court remanded to the RTC of Pasig City to determine whether the award decreed in its decision is more than that of the Employees Compensation Commission (ECC). Luckily. . which was merely inserted to the connecting points of the chain block and platform but without a safety lock. respondents. 1990. She filed the civil complaint for damages after she received a copy of the police investigation report and the Prosecutor’s Memorandum dismissing the criminal complaint against petitioner’s personnel. ISSUE: Whether Maria Juergo can still claim damages with D. together with Jessie Jaluag and Delso Destajo. PO3 Rogelio Villanueva of the Eastern Police District investigated the tragedy and filed report dated Nov. Jose was crushed to death when the platform fell due to removal or looseness of the pin. payments already made to private respondent pursuant to the Labor Code shall be deducted therefrom. vs. 1991 for damages in the RTC and was rendered a favorable decision to receive support from DM Consunji amounting to P644. and CARLOS NIETES.000. HELD: The respondent is not precluded from recovering damages under the civil code. 25. NATIONAL LABOR RELATIONS COMMISSION. PHILIPPINE OVERSEAS EMPLOYMENT ADMINISTRATION. Consunji apart from the death benefits she claimed in the State Insurance Fund. Maria Juergo. PHILIPPINE TRANSMARINE CARRIERS. Maria Juergo was unaware of petitioner’s negligence when she filed her claim for death benefits from the State Insurance Fund. petitioner. DM Consunji seeks reversal of the CA decision. performing their work as carpenter at the elevator core of the 14th floor of Tower D.M.

(PTC) for payment of disability benefit. Her diagnosis showed he was unfit to work as Master of the vessel. he was forced to secure medical treatment at the Sto. When he was refused admission at the Seamen’s Hospital. he was informed by Atty. Arreza. the NLRC also denied petitioner’s motion for reconsideration. 1995 of the National Labor Relations Commission (NLRC) in NLRC-NCR Case No. DECISION QUISUMBING. sickness wages. 1992. Upon his arrival in the Philippines. until he was declared unfit to . he was instructed by PTC and AMOSUP to report to the Seamen’s Hospital. insurance premiums. From May 10. 1993. 1990 up to May 17. He last boarded M/V MA. Emperador. ordering the herein petitioner and Pioneer Insurance and Surety Corporation to pay private respondent jointly and severally the sum of US$21. Being a member of AMOSUP from 1985 to 1990. The facts in this case are as follows: On January 23. he referred his claims to Atty. private respondent.500. refund of medical expenses and attorney’s fees. 1990. he was employed by PTC. Augusto Arreza. 1995.00 as reimbursement for medical expenses plus 10% of the total award as attorney’s fees in favor of the private respondent.00 per month. etc. Japan. George Matti of the Seamen’s Hospital issued a medical certification that he was unfit for work and was instructed to continue treatment/medication. In its Resolution dated December 29. As Master on board. Private respondent alleged that he was a licensed Captain and/or Master Mariner. On May 25. 1990. at the instance of the vessel’s owners. Oscar Torres who repeatedly informed PTC of the claim for benefits and refund. a hospital owned and operated by AMOSUP. His attending physician was Dra. Matti of the Seamen’s Hospital which certificate states that he was not fit to work. Torres allegedly had not talked to Atty. 1990. he was hospitalized at the Moji Hospital in Moji. 1990 to May 17. 1995 of the Philippine Overseas Employment Administration (POEA). J.000 or its peso equivalent at the time of actual payment and P34.114. Jr. On May 19. For the period March 1985 to May 17. 009101-95. Said decision affirmed with modification the judgment dated March 16.. Geraldine B. PTC’s legal consultant and that they had submitted all the required documents to Atty.: This petition seeks to annul and set aside the decision dated September 25. was impleaded as surety of respondent PTC. From November 1992 up to the filing of this petition. He paid his union dues. including the carbon original of the Medical Certificate issued by Dr. Torres that his claim was being handled by Atty. Atty. ROSARIO where he served as Master from April 11. Arreza. At that time he was a member of good standing of the Associated Marine Officers and Seamen’s Union of the Philippines (AMOSUP). Niño Medical Specialist and Emergency Clinic as an out-patient. the date he was repatriated. Carlos Nietes filed a complaint against Philippine Transmarine Carriers Inc. an affiliate of the International Transport Federation (ITF) of London. which were checked-off from his salaries. 1990.. Pioneer Insurance and Surety Corp. he received US$1. Dr. Sometime in July 1992.

00 as per Section C.00 representing reimbursement of medical expenses plus ten percent (10%) thereof of the total award by way of and/as attorney’s fees.000. B …ARBITRARILY DISREGARDING THE WELL-ESTABLISHED FACT THAT THE ABSENCE OF A DETERMINATION OF PRIVATE RESPONDENT’S PERMANENT DISABILITY AND THE DEGREE THEREOF WAS DUE SOLELY TO HIS FAULT. Petitioner appealed said decision to the NLRC which affirmed it except for the award of attorney’s fees which is deleted for lack of factual and legal basis.00 plus professional fee of P4. and Pioneer Insurance and Surety Corp. sickness wage benefit in the sum of US$6.00) or its peso equivalent at the time of actual payment and P34.00. Receipts covering these payments were submitted as Annexes “I” and “II.114.” On March 16. It held that WHEREFORE. 1995. Subsection (c) of the POEA Standard Format. Petitioner now contends that the NLRC acted with grave abuse of discretion amounting to lack or excess of jurisdiction in: A …AWARDING DISABILITY BENEFIT TO PRIVATE RESPONDENT DESPITE THE ABSENCE OF PROOF OF HIS PERMANENT DISABILITY AND THE DEGREE THEREOF. SO ORDERED. judgment is hereby rendered.00.00 or a total of P34. to pay complainant jointly and severally the sum of TWENTY ONE THOUSAND US DOLLARS (US$21. the POEA Adjudication Office issued its decision in favor of the private respondent. NLRC later denied petitioner’s motion for reconsideration. petitioner claimed he was entitled to “permanent total disability” benefit in the amount equivalent to 86% of the US$18.411. C …AWARDING SICK WAGES TO PRIVATE RESPONDENT FOR THE FULL PERIOD OF 120 DAYS NOTWITHSTANDING THE ABSENCE OF A .000.000. private respondent further asked for refund of medical expenses incurred in the amount of P30.work. ordering respondents Philippine Transmarine Carriers Inc.000. In his supplemental complaint. All other causes or actions are dismissed for lack of merit.411. plus ten percent (10%) of the total judgment award and attorney’s fee.

DECLARATION OF HIS UNFITNESS TO WORK OR A DETERMINATION OF THE DEGREE OF HIS PERMANENT DISABILITY. On record. declared him unfit to work.[4] Petitioner was well aware of the private respondent’s hospitalization at Moji. D …GRANTING THE REIMBURSEMENTS OF PRIVATE RESPONDENT’S MEDICAL EXPENSES DESPITE THE FACT THAT THE LATTER’S TREATMENT WAS DONE BY A PHYSICIAN NOT DESIGNATED OR ACCREDITED BY PETITIONER IN VIOLATION OF THE POEA STANDARD CONTRACT. George Matti. which is essential in determining the correct amount of disability benefit. upon the instructions of the petitioner and AMOSUP. petitioner avers private respondent’s claim for refund of the medical expenses should have not been granted by the public respondents on the ground that the physician who treated private respondent was not accredited in violation of the POEA Standard Contract for Seamen. The main issue is whether the NLRC gravely abused its discretion in affirming with modification. Petitioner could not now feign ignorance of this information. We note that private respondent submitted himself. 1990. which is owned and operated by AMOSUP. George Matti. petitioner argues that the NLRC gravely abused its discretion when it affirmed the findings of the POEA. Petitioner also contends that public respondents erred in awarding sick wages for 120 days in favor of the private respondent without evidence on record establishing the extent of his disability. Petitioner admits that private respondent suffered illness which rendered him unfit for work. the complainant has substantially complied with the POEA Standard of Employment Contract for Seamen when he submitted himself to the Seamen’s Hospital three days after his repatriation from Japan. three days after his May 17. 1990 repatriation from Japan.[3] of the POEA Standard Employment Contract for Seamen. However. so that he was declared unfit to work by no less than a company accredited physician in the person of Dr. petitioner’s own accredited physician.” [2] They also found that private respondent had in fact substantially complied with the post-employment requirements under paragraph 4 [b] and [c] of Section c. private respondent was examined and diagnosed at the Seamen’s Hospital and was found to be suffering from congestive heart failure and cardiomyopathy. Further. for medical assistance under the care of Dr. Japan. Two licensed physicians examined and diagnosed private respondent and both of . it points out that private respondent did not submit proof of the extent of his disability as required by Section C (4) [b] and [c] of the POEA Standard Contract for Seamen. the judgment of the POEA Adjudication Office.[1] Without this proof. a company accredited physician. Public respondents held that “in effect. as well as his repatriation on May 17. George Matti. It was upon the advice of petitioner that he was examined and diagnosed at the Seamen’s Hospital. to the Seamen’s Hospital. There Dr.

it must be remembered. Permanent total disability means disablement of an employee to earn wages in the same kind of work. Inc. therefore. Consistently the Court has ruled that “disability should not be understood more on its medical significance but on the loss of earning capacity. It does not mean absolute helplessness. the petition is DISMISSED. that private respondent was afflicted with congestive heart failure and cardiomyopathy making him unfit to work. His life and health being at stake. Strict rules of evidence are not applicable in claims for compensation.[7] WHEREFORE. 494 (1997). or any kind of work which a person of [his] mentality and attainment could do. The assailed decision of public respondent National Labor Relations Commission dated September 25. a company accredited physician. Its provisions must. Only then can its beneficent provisions be fully carried into effect. plus the costs of suit.000. . In NFD International Manning Agents. George Matti. 1995 is AFFIRMED. we said: Strict rules of evidence. records of the case show that private respondent had initially sought treatment at Seamen’s Hospital under the care of Dr.them had issued similar findings.00 representing reimbursement of medical expenses. it is not the injury which is compensated. we find the NLRC to have acted in the exercise of its sound discretion in awarding permanent total disability benefits to private respondent. be construed and applied fairly. However. 269 SCRA 486. are not applicable in claims for compensation and disability benefits. [6] Finally. petitioner faults public respondent for allowing the reimbursements of private respondent’s medical expenses despite the fact that the latter’s treatment was done by a physician not designated or accredited by the petitioner in violation of the POEA Standard Contract for Seamen. reasonably and liberally in their favor.114. Petitioner and Pioneer Insurance and Surety Corporation are ordered to pay jointly and severally the following amounts to private respondent Carlos Nietes: Twenty One Thousand US Dollars (US$21. we likewise held. SO ORDERED. Probability and not the ultimate degree of certainty is the test of proof in compensation proceedings. The POEA Standard Employment Contract for Seamen is designed primarily for the protection and benefit of Filipino seamen in the pursuit of their employment on board ocean- going vessels. as disability benefits and P34. Private respondent having substantially established the causative circumstances leading to his permanent total disability to have transpired during his employment. vs. NLRC. but rather it is the incapacity to work resulting in the impairment of one’s earning capacity. Only after he was refused admission thereat was he compelled to seek medical assistance elsewhere. private respondent did not have the luxury to scout for a company-accredited physician nor was it fair at this late stage for his employer to deny him such refund for medical services that previously he was admittedly entitled to.00) or its peso equivalent at the time of actual payment. or work of similar nature that [he] was trained for or accustomed to perform.” [5] In disability compensation.

Upon arrival in Manila. 1995. paragraph 4(c) and paragraph 5. while the vessel was docked at the port of New Zealand.A. the master of the vessel proceeded to Manila. COMPENSATION BENEFIT x x x “4. NATIONAL LABOR RELATIONS COMMISSION and FROILAN S. a voyage of ten days. Private respondent was confined in the Manila Doctors Hospital. wherein he was treated by a team of medical specialists from 24 June 1995 to 26 July 1995.: On 17 October 1994. On 31 July 1997. DECISION GONZAGA-REYES. However. What complainant is pursuing is limited to compensation benefits due a seaman pursuant to POEA Standard Employment Contract. vs. DE LARA. and LUBECA MARINE MANAGEMENT HK LTD. INC. Having been assured by petitioners that all his benefits would be paid in time. the labor arbiter rendered a decision. The liabilities of the employer when the seaman suffers injury or illness during the term of his contract are as follows: x x x . petitioners told private respondent that. J.GERMAN MARINE AGENCIES.. private respondent was not immediately disembarked but was made to wait for several hours until a vacant slot in the Manila pier was available for the vessel to dock. VOYAGER. Sometime in June. during which time the health of private respondent rapidly deteriorated. no other compensation or benefit was forthcoming.[1] Private respondent filed a complaint with the National Labor Relations Commission (NLRC) for payment of disability benefits and the balance of his sickness wages. which reads: “SECTION C. Part II. private respondent was taken ill. he demanded from petitioners the payment of his disability benefits and the unpaid balance of his sickness wages. aside from the sickness wages that he had already received. Eventually. private respondent waited for almost a year. Section C. there is no issue on the propriety or illegality of complainant’s discharge or release from employment as Radio Operator. pursuant to the Standard Employment Contract of the parties. After private respondent was discharged from the hospital. private respondent was hired by petitioners to work as a radio officer on board its vessel.[2] the pertinent parts of which are quoted hereunder – In the case at bar. respondents. His worsening health condition was brought by his crewmates to the attention of the master of the vessel. petitioners. the M/V T. instead of disembarking private respondent so that he may receive immediate medical attention at a hospital in New Zealand. to no avail.

1996. accredited with the Philippine Overseas Employment Administration” where it is stated that “Nothing [sic] his job description as a radio operator.” (Annex D & E). the seamen [sic] shall be compensated in accordance with the schedule of benefits enumerated in Appendix 1 of this Contract. We have gone into a judicious study and analysis of the arguments and exhibits particularly the ones relied upon by the parties and find that of the complainant worthy of consideration. After discharge from the vessel. Thus. allegedly “the officially accredited and designated physician of respondents. For this purpose. but is [sic] no case shall this period exceed one hundred twenty (120) days. Victoria Forendo [sic] Cayabyab. “5. FPMA where it appears that after submitting himself to another medical examination by his attending physicians at the Manila Doctors Hospital on December 4. 1996. it could mean that he is not entitled to disability compensation which respondents vigorously disputed. Computation of his benefits arising from an illness or disease shall be governed by the rates and the rules of compensation applicable at the time of [sic] the illness or disease was contracted. de Lara may be allowed to go back to work. except when he is physically incapacitated to do so. Complainant on the other hand disputes respondent’s above posture contending that the more persuasive and authentic evidence for purposes of deciding his fitness or lack of fitness to work is the certificate issued by Ms. In case of permanent total or partial disability of the seamen [sic] [during] the term of employment caused by either injury or illness.” The aforecited provisions of the POEA Standards [sic] Employment Contract is clear and unmistakable that its literal meaning should be preserved. which is likewise. complainant’s reply to respondent’s position paper). in which case the written notice to the agency within the same period is deemed as compliance x x x.c. firmly “was classified under partial permanent disability and is not fit to go back to his previous work due to mental state. citing in support the certification made by Dra. the seaman shall submit himself to a post-employment medical examination by the company-designated physician within three working days upon his return. Mr. MD.” (Annex “C”. to verify possible mistake in his post treatment examination on March 25. Naneth [sic] Domingo-Reyes. If this is so. Looking closely at Annexes “D” and “E” of respondents’ position paper. there is hardly any clear affirmation that complainant was fully fit to . the only question at which the liability of respondents is anchored is whether complainant was really fit to work in his position as radio operator. the seaman is entitled to one hundred percent (100%) of his basic wages until he is declared fit to work or the degree of permanent disability has been assessed by the company-designated physician. The employer shall pay the seaman his basic wages from the time he leaves the vessel for medical treatment.

1995 was catastropic. that it is absurd to require an ailing seaman in high seas or in a foreign land to still wait until the ship where he is working land in the country to secure treatment in a duly accredited hospital or doctor. unlike the message of annexes D to E of respondents. behavioral change and off and on fever” and different procedures were resorted along his case. there is no evidence that the same has been paid except the payment to the complainant of P49.546. Neither would a close look on the applicable provision for seamen show – that a duly accredited hospital or doctor is needed for purposes of the grant of compensation benefits to a such [sic] or ailing seamen. Concerning the sickness wage. he is entitled to disability benefit in accordance with the schedule of benefits enumerated in Appendix 1 of the Contract. respondents averred that the same had already been paid. However. the maximum of which is US $50.resume his work as radio operator. Otherwise stated.546. annex “C” of complainant is clear and unmistakable and confirm complainant’s partial permanent disability and his definite unfitness to go back to his previous work due to his mental health.00 (US$1.00 which we presume has a more realistic basis. respondents contend that the annexes issued by Dr. On the basis of the above therefore. and convinced that complainant’s “partial permanent disability” which was contracted in the course or on account of his employment as radio operator in foreign principal’s vessel.000. the same is hereby granted. We are more persuaded based on the arguments of the complainant among others.00. declares that complainant may be allowed to go back to work. the words “may be” can not be taken as overriding that coming from the Manila Doctor Hospital which in the beginning handled the medical case of complainant and to which respondents unconditionally referred him and by reason of which six or seven medical especialists [sic] of the hospital took turn[s] studying and reviewing his uncertain ailment after release by respondents. and that assuming that such was the message. the tenor of the same seems uncertain that complainant is fit to resume his work. his “sickness wages would rest to a total sum of US$3. Finally.000.943). like emergency CT scan on the brain and his admission in June 24. On this. thereby leaving for complainant a balance of US$1. Domingo-Reyes of the Manila Doctors Hospital should not be given weight because it is not issued by the hospital or doctor duly accredited by the POEA. Some pronouncements in this exhibit mentions also that when complainant was admitted an emerging basis for drowsiness. more could be said in three document[s] issued by Dra. Although the document alluded to.480 or its peso equivalent. Victoria Florendo Cayabyab. Finally.537. it is also argued that as regards the . whereas. Since complainant’s salary as US$870 and a seaman’s sick wage entitlement is fixed to a maximum of 120 days. But since the amount prayed for is US$25. complainant has been paid only [P]49.

..00 (b) Sickness wage balance .. On 29 July 1998. [4] After its motion for reconsideration was denied by the NLRC on 20 May 1999.. the same is granted..137. The appellate court reasoned out its decision. to pay complainant the following sums: (a) Disability benefit .00.. plus ten (10%) percent attorney’s fees..546. SO ORDERED.000. no.. 4 (c)..US$25. Considering that there is no proof on record that this balance of US$1..137. and par. on the other hand denied this. particularly PART II. premises above-considered.. par. which states as follows: “SECTION C. and whether or not there was abuse of discretion on the part of the NLRC in affirming such decision on appeal? To resolve this issue....US$1. The liabilities of the employer when the seaman suffers injury or illness during the term of his contract are as follows: “x x x x . WHEREFORE... petitioners repaired to the Court of Appeals. Complainant. the NLRC[3] affirmed the labor arbiter’s decision in toto and declared that the latter’s findings and conclusions were supported by substantial evidence.000..[5] The appellate court’s assailed decision was promulgated on 1 December 1999.. and contended that the quitclaim and release is invalid. with the modification that petitioners were ordered to pay private respondent exemplary damages in the amount of P50.balance. upholding the decision of the NLRC.00. 5.. no.00 all in the aggregate of Twenty Six Thousand One Hundred Thirty Seven Dollars (US$26. a decision is hereby issued ordering respondent German Marine Agencies Inc. this Court took time in looking closely at the pertinent provision of the Standard Employment Contract Governing the Employment of Filipino Seafarers on Board Ocean-Going Vessels. SECTION C. the claim for damages being hereby dismissed for lack of merit.537 was paid. unlike the P49... COMPENSATION AND BENEFITS “4.00) or its peso equivalent. the same has been paid citing as proof the Sickness Release and Quitclaim signed by complainant (Annexes “C” & “C-1”)..[6] thus - The basic issue here is: Whether or not petitioner is liable to pay private respondent’s claim as awarded by the NLRC.

it is the competence of the attending physician. x x x . To our mind. The designation of the Manila Doctors Hospital by petitioners as the company doctor for private respondent cannot be denied. The employer shall pay the seaman his basic wages from the time he leaves the vessel for medical treatment. that . Computation of his benefits arising from an illness or disease shall be governed by the rates and the rules of compensation applicable at the time the illness or disease was contracted. not the POEA accreditation. Domingo-Reyes is not company designated is far from the truth. petitioners cannot resort to the convenience of denying this fact just to evade their obligation to pay private respondent of his claims for disability benefit. this would be absurd and contrary to public policy as its effect will deny and deprive the ailing seaman of his basic right to seek immediate medical attention from any competent physician. Hence. but in no case shall this period exceed one hundred twenty (120) days. and even if there is. The award of disability compensation has a clear and valid basis in the Standard Employment Contract and the facts as supported by the medical certificate issued by Dr. Their very act of committing private respondent for treatment at the Manila Doctors Hospital under the care of its physician is tantamount to company designation.“c.” A cursory reading of these applicable contractual provisions and a thorough evaluation of the supporting evidence presented by both parties. The lack of POEA accreditation of a physician who actually treated the ailing seaman does not render the findings of such physician (declaring the seaman permanently disabled) less authoritative or credible. Nannette Domingo-Reyes of the Manila Doctors Hospital. This Court also finds no basis on (sic) the petitioners’ contention that the company- designated [physician] must also be accredited with the POEA before he can engage in the medical treatment of a sick seaman. x x xx “5. The very act of paying the hospital bills by the petitioners constitutes their confirmation of such designation. . lends strong credence to the contentions and arguments presented by private respondent. After discharge from the vessel the seaman is entitled to hundred percent (100%) of his basic wages until he is declared fit to work or his degree of permanent disability has been assessed by the company-designated physician. Petitioners’ contention. . In case of permanent total or partial disability of the seaman during the term of his employment caused by either injury or illness the seaman shall be compensated in accordance with the schedule of benefits enumerated in Appendix 1 of his Contract. that Dr. There is nothing in the Standard Employment Contract that provides this accreditation requirement.

is [sic] the attending physicians from the Manila Doctors Hospital. As to the award of the balance of wages.determines the true health status of the patient-seaman.803.” By petitioners’ own statement. which resulted to the serious deterioration of his health that caused his permanent partial disability. the doubt is resolved in favor of labor” applies. To our mind. The failure of the petitioners to present a strong and credible evidence supporting the fact of alleged payment of the balance of sickness justifies the award of such claim. It further appears that negligence not only exists but was deliberately perpetrated by petitioners by its arbitrary refusal to commit the ailing private respondent to a hospital in New Zealand or at any nearest port deprived of his right to immediate medical attention by petitioners. if only to show that the life of a . which allegedly shows the payment of the balance of his sickness wages. This motion was vehemently opposed by petitioners. “the proposition of the complainant that respondents should have taken the complainant to the nearest port of New Zealand is easier said than done. With respect to private respondent’s claim for damages. Had it not been for the arbitrary denial of petitioners. As to the award of attorney’s fees. Such deprivation of immediate medical attention appears deliberate by the clear manifestation from petitioners’ own words which states that. this Court is inclined not to disturb the factual findings of the NLRC. The long standing doctrine in labor cases that “in case of doubt. such opposition only created more doubts and eroded the veracity and credence of petitioners’ documentary evidence.30. which in this instant case. For there are indications that the evidence presented by petitioners appears to be of dubious origin as private respondent challenged the petitioners to present the original copy of the quitclaim and the vouchers in a motion demanding from petitioners to produce the original copy of those documents purporting to show that he had received the alleged sum of P39. private respondent could not have been compelled to hire the services of a lawyer to pursue his claims in court. they reveal their utter lack of concern for their Filipino crew. This kind of attitude cannot be taken to pass by this Court without appropriate sanction by way of payment of exemplary damages. the same is justified by the fact that private respondent actually hired the services of a lawyer to vindicate his right to claim for his disability benefit which is being arbitrarily denied to him by petitioners. It is worthy to note that deviation from the route of the vessel will definitely result to loss of a fortune in dollars not only to the respondents but likewise to the owners of the cargoes being shipped by the said vessel. for which he is presumed to have incurred costs. this Court finds that the NLRC overlooked the attendance of negligence on the part of petitioners in their failure to provide immediate medical attention to private respondent.

00).” In affirming the decision of the Labor Arbiter. [8] Meanwhile. this Court finds no valid basis to disturb the findings of the NLRC. an ailing seaman need not have his condition assessed by a doctor or hospital accredited with the POEA. [7] Disagreeing with petitioners’ stand. Nanette Domingo-Reyes of the Manila Doctors Hospital describing private respondent as suffering from a partial permanent disability should be construed as decisive in the matter of private respondent’s entitlement to disability benefits. For after all. which provides that – xxx xxx xxx . this Court finds that the NLRC never abused its discretion nor exceeded its jurisdiction. SO ORDERED. for purposes of determining compensation benefits under the Standard Employment Contract. had it not been for the toils of this crew. the Court of Appeals held that petitioners’ act of committing private respondent for treatment at the Manila Doctors Hospital and of paying his hospital bills therein is tantamount to “company-designation.Filipino crew must be accorded due attention and respect by the petitioners.000. Consequently. the labor arbiter gave more weight to the opinion of the specialists from the Manila Doctors Hospital who treated private respondent and declared him as having sustained a partial permanent disability and unfit to go back to his previous work. the certificate issued by Dr. Petitioners’ motion for reconsideration was denied by the Court of Appeals in its Resolution of 11 February 2000. Hence. are hereby AFFIRMED. the labor arbiter ruled that. Hence. the designated physician of petitioners. petitioners are ordered to pay exemplary damages to private respondent in the sum of Fifty Thousand Pesos (P50. Disability Benefits Petitioners contend that the existence and degree of a seaman’s disability must be declared by a “company-designated physician” who must be accredited with the POEA. who is also accredited with the POEA. particularly Part II. the decision of the NLRC dated 29 July 1998. Victoria Florendo Cayabyab. [9] In the case at bar. petitioners would not be doing as good in their business and making “fortunes in dollars. the present appeal. petitioners claim that private respondent is not entitled to disability benefits because he was found fit to return to work by Dr.” and therefore. Section C thereof. the parties are at odds as to the proper interpretation of the POEA Standard Employment Contract Governing the Employment of All Filipino Seamen On Board Ocean-Going Vessels (Standard Employment Contract). and in addition thereto. The appellate court also declared that nothing in the Standard Employment Contract requires the company- designated physician or hospital to also be accredited with the POEA. and the Order dated 20 May 1999. Following this line of reasoning. among others. WHEREFORE.

if after repatriation the seaman still requires medical attention arising from said injury or illness.4. nor in any other portion of the Standard Employment Contract. in which case a written notice to the agency within the same period is deemed as compliance. b. the employer shall be liable for the full cost of such medical. dental. If the injury or illness requires medical and/or dental treatment in a foreign port. The employer shall pay the seaman his basic wages from the time he leaves the vessel for medical treatment. The employer shall continue to pay the seaman his basic wages during the time he is on board the vessel. However. but in no case shall this period exceed one hundred twenty (120) days. xxx xxx xxx Petitioners’ contention that the existence and grade of a seaman’s disability must be pronounced by a physician accredited by the POEA does not find any support in the abovecited provision. For this purpose. Computation of his benefits arising from an illness or disease shall be governed by the rates and the rules of compensation applicable at the time the illness or disease was contracted. The liabilities of the employer when the seaman suffers injury or illness during the term of his contract are as follows: a. c. In order to claim disability benefits under the Standard Employment Contract. In case of permanent total or partial disability of the seaman during the term of employment caused by either injury or illness the seaman shall be compensated in accordance with the schedule of benefits enumerated in Appendix 1 of his Contract. surgical and hospital treatment as well as board and lodging until the seaman is declared fit to work or to be repatriated. After discharge from the vessel the seaman is entitled to one hundred percent (100%) of his basic wages until he is declared fit to work or the degree of permanent disability has been assessed by the company-designated physician. xxx xxx xxx 5. he shall be so provided at cost to the employer until such time he is declared fit or the degree of his disability has been established by the company- designated physician. it is the “company-designated” . Failure of the seaman to comply with the mandatory reporting requirement shall result in his forfeiture of the right to claim the above benefits. the seaman shall submit himself to a post-employment medical examination by the company-designated physician within three working days upon his return except when he is physically incapacitated to do so.

neurological surgical drainage for brain abscess. as compared to another physician not privy to private respondent’s case from the very beginning. due to either injury or illness. bilateral thalamic area S/P craniotomy (Burr Hole). petitioners are unable to cite a single provision in the said contract in support of their assertions or to offer any credible evidence to substantiate their claim. than to the one issued by Dr. petitioners clearly set apart and distinguished the Manila Doctors Hospital. If accreditation of the company-designated physician was contemplated by the POEA. to denote its intention.” When the language of the contract is explicit. to identify by name. The extensive medical attention given to private respondent enabled the Manila Doctors Hospital specialists to acquire a detailed knowledge and familiarity with private respondent’s medical condition. which award was upheld by the NLRC and the appellate court. [11] There is no ambiguity in the wording of the Standard Employment Contract – the only qualification prescribed for the physician entrusted with the task of assessing the seaman’s disability is that he be “company-designated. including the degree of any disability which he might have sustained. Petitioners insist that there is no factual basis for the award of $25. it was the physicians from the Manila Doctors Hospital who examined and treated private respondent for a little more than one month. the courts may not read into it any other intention that would contradict its plain import. it would have expressly provided for such a qualification. the appellate court was not mistaken in giving more weight to the certificate issued by Dr. during the term of the latter’s employment. Thus.00 since there is no finding as to the grade of . subjecting the latter to a series of medical procedures. There is no provision requiring accreditation by the POEA of such physician. aside from their own gratuitous allegations. such as medical therapy. to show.000. the literal meaning of its stipulation shall control. whether total or partial.00 as disability benefits. to indicate. to distinguish by mark or description. In addition to their having been effectively designated by petitioners. by specifically using the term “accreditation” in the Standard Employment Contract.physician who must proclaim that the seaman suffered a permanent disability. as the ones qualified to assess the existence and degree of private respondent’s disability and thereby resolve the question of the latter’s entitlement to disability benefits under the Standard Employment Contract.[13] The Court agrees with the appellate court’s ruling that petitioners’ act of committing private respondent for treatment at the Manila Doctors Hospital and paying the hospital bills therein is tantamount to “company-designation. On the strength of Dr. [10] It is a cardinal rule in the interpretation of contracts that if the terms of a contract are clear and leave no doubt upon the intention of the contracting parties. or to set apart for a purpose or duty.[12] The word “designate” means to specify. together with its team of specialists.” the labor arbiter awarded $25. Nanette Domingo-Reyes of the Manila Doctors Hospital dated December 4.” By such unequivocal acts. to mark out and make known. and opthalmological (orbit) surgery for socket revision and reconstruction of his left eye. In fact. leaving no doubt as to the intention of the drafters thereof. Domingo-Reyes’s medical certificate which stated that private respondent “can be classified under partial permanent disability and is not fit to go back to his previous work due to his mental state. as in the case at bar.[14] No doubt such specialized knowledge enabled these physicians to arrive at a much more accurate appraisal of private respondent’s condition. 1996. Victoria Florendo Cayabyab.000. For instance. under the Labor Code it is expressly provided that physicians and hospitals providing medical care to an injured or sick employee covered by the Social Security System or Government Service Insurance System must be accredited by the Employees Compensation Commission.

. . . . .permanent partial disability sustained by private respondent. . . . . . . . Apperture unfilled with bone not over three (3) inches without brain injury . .. . . Gr.. . . and therefore. Severe mental disorder or Severe Complex Cerebral function disturbance or post – traumatic psychoneurosis which require regular aid and attendance as to render worker permanently unable to perform any work . . 3 3. . . . . . . . . . . . . . .. . . . .. which is partially reproduced herein - Appendix 1 SCHEDULE OF DISABILITY OR IMPEDIMENT FOR INJURIES SUFFERED AND OR ILLNESS CONTRACTED HEAD Traumatic head injuries that result to: 1. . . Gr... . . . . Moderate mental disorder or moderate brain . . . Apperture unfilled with bone over three (3) inches without brain injury . . no means of determining the exact amount of compensation to which private respondent may be entitled. [15] The Court does not agree with petitioners’ position. . Gr. . . . . . Severe paralysis of both upper or lower extremities or one upper and one lower extremity ... 6 5. . ... 10 6. .. 9 2. . Gr. .. . . . .. . . .. . . in accordance with Appendix 1 of the Standard Employment Contract (Schedule of Disability or Impediment For Injuries Suffered and Diseases or Illness Contracted). . Under the Standard Employment Contract the grade of disability suffered by the seaman must be ascertained in accordance with Appendix 1 of such contract. . . . . Slight paralysis affecting one extremity producing slight difficulty with self-care activities . .. 1 7. Gr. Moderate paralysis of two (2) extremities producing moderate difficulty in movements with self care activities . . .. 1 4. . . Gr. .

66% 5 “ x 58....15% 11 “ x 14... 1 Each grade under Appendix 1 has an equivalent disability allowance or benefit expressed in terms of a percentage of the maximum amount of $50. Incurable imbecility .. This is specified in Appendix 1-A of the Standard Employment Contract - APPENDIX 1-A SCHEDULE OF DISABILITY ALLOWANCES Impediment Grace Impediment 1 Maximum Rate x 120.. Gr...00% 7 “ x 41......93% 12 “ x 10.. 10 9....000.00% 2 “ x 88.. Gr..96% 6 “ x 50....45% .81% 3 “ x 78.....36% 4 “ x 68......80% 8 “ x 33.. Gr.........00. functional disturbance which limits worker to the activities of daily living with some directed care or attendance ..12% 10 “ x 20... Slight mental disorder or disturbance that requires little attendance or aid and which interferes to a slight degree with the working capacity of the claimant .... 6 8.59% 9 “ x 26..

which. Burr hole at the right parietal and drainage of the right thalamic abscess was done on June 26. as follows - xxx xxx xxx Work-ups and Management: Patient was admitted on an emergency bases for drowsiness.000.000.00. Domingo-Reyes is more than sufficient basis for the award of disability benefits in the amount of $25. He became ambulant on mid-August 1996 but his cerebral functions (cognitive and behavioral) remain impaired. One of the grade 6 head injuries listed in Appendix 1. specifically number seven (7). is awarded when the seaman sustains a grade 6 disability.74% Maximum Rate: US$50. His admission last June 24. 1995. behavioral change and on and off fever. or fifty percent (50%) of the maximum rate of $50.” This coincides with Dr. (emphasis supplied) Emergency CT Scan of the brain revealed rounded masses in both thalamus on the brain. De Lara stayed in the hospital for 33 days and was still in bedridden state when discharge.000.[16] (emphasis supplied) xxx xxx xxx Thus. Private respondent asked petitioner for disability benefits in the amount of $25. under Appendix 1-A. the medical certificate of Dr. Repair of shallow fornix of left eye and biopsy was done for culture studies thereafter. the larger mass was situated at the right. Mr. To be paid in Philippine Currency equivalent at the exchange rate prevailing during the time of payment. .13 “ x 6. This started with headaches since the first week of June 1995 while on duty (on voyage). This is his 18th month of illness. Domingo-Reyes’ diagnosis of private respondent’s condition.72% 14 “ x 3. He now can be classified under partial permanent disability and is not fit to go back to his previous work due to his mental state.00.00 in favor of private respondent. Patient progressively deteriorated and arrived here already dehydrated with high grade fever. is described as a “moderate mental disorder or moderate brain functional disturbance which limits worker to the activities of daily living with some directed care or attendance.000. 1995 is considered catastrophic.

particularly the three check vouchers in the total amount of P89.[17] The NLRC and the Court of Appeals concurred with the labor arbiter on this issue. is erroneous and in absolute disregard of their documentary evidence . VOYAGER was docked at the port of New Zealand. or $3. while the M/V T. and the “Sickwages Release & Quitclaim” . petitioners failed to directly disembark private respondent for immediate hospitalization. when the vessel finally arrived in Manila. According to the labor arbiter. which was not given credence. Private respondent was kept on board without any medical attention whatsoever for the entire duration of the trip from New Zealand to the Philippines. Contrary to petitioners’ assertions. private respondent was taken ill.80. corresponding to the 120 days sickness wages as required under the Standard Employment Contract.00. It has been sufficiently established that. Private respondent was made to suffer a wait of several more hours until a vacant slot was available at the pier for the vessel to dock. all issued in 1995 in favor of either private respondent or his wife. It was only upon the insistence of private respondent’s relatives that petitioners were compelled to disembark private respondent and finally commit him to a . particularly if they coincide with those of the Labor Arbiter. In the absence of proof that the labor arbiter or the NLRC had gravely abused their discretion.which. the master of the vessel proceeded with the voyage.137. taken together would prove that they had paid private respondent the total amount of P89. notwithstanding the document entitled “Sickness Release & Quitclaim” introduced by petitioners in evidence.480. in total disregard of the urgency of private respondent’s condition.546.Sickness wages Petitioners assert that the award of $1. To make matters worse.00) was paid by petitioners and that private respondent is still entitled to the balance of the sickness wages in the amount of $1. causing him to lose his memory and rendering him incapable of performing his work as radio officer of the vessel. The appellate court held that the documentary evidence of petitioners was insufficient to support their contentions. However.00. instead of disembarking private respondent so that he may receive immediate medical attention at a hospital in New Zealand or at a nearby port. the Court shall deem conclusive and cannot be compelled to overturn this particular factual finding. petitioners failed to prove that they had paid this amount to private respondent.80. a voyage of ten days. The crew immediately notified the master of the vessel of private respondent’s worsening condition.354.00. when supported by substantial evidence.A.354. The reason for this is that a quasi-judicial agency like the NLRC has acquired a unique expertise because its jurisdiction is confined to specific matters.943. representing the balance of the sickness wages owed to private respondent.[18] The Supreme Court has always accorded respect and finality to the findings of fact of the NLRC.[20] Damages We affirm the appellate court’s finding that petitioners are guilty of negligence in failing to provide immediate medical attention to private respondent.537. the labor arbiter held that only P49. according to petitioners. [19] Whether or not petitioners actually paid the balance of the sickness wages to private respondent is a factual question.00 ($1.

the basis for the same was not discussed in his decision nor borne out by the records of this case. There must always be a factual basis for the award of attorney’s fees.00 as exemplary damages is adequate.[24] Meanwhile.[25] In quasi-delicts. and should therefore be deleted. although plaintiff must show that he is entitled to moral. exemplary damages may be granted if the defendant acted with gross negligence. In light of the foregoing. [22] There is no hard and fast rule in the determination of what would be a fair amount of moral damages.[26] Coming now to the case at bar. It is worthy to note that deviation from the route of the vessel will definitely result to loss of a fortune in dollars not only to the respondents [petitioners herein] but likewise to the owners of the cargoes being shipped by the said vessel. [29] WHEREFORE. “the proposition of the complainant that respondents should have taken the complainant to the nearest port of New Zealand is easier said than done. since each case must be governed by its own peculiar circumstances. Such deprivation of immediate medical attention appears deliberate by the clear manifestation from petitioners’ own words which states that. temperate. exemplary damages are imposed by way of example or correction for the public good. fair. SO ORDERED. pursuant to Article 2229 of the Civil Code. which eventually resulted in his sustaining a permanent disability. they need not be proved. Given the prevailing circumstances. and reasonable. which award was subsequently affirmed by the NLRC and the Court of Appeals. While exemplary damages cannot be recovered as a matter of right. [23] In the present case. . petitioners are liable for moral damages for the physical suffering and mental anguish caused to private respondent.00 in moral damages as proper.[21] There is no doubt that the failure of petitioners to provide private respondent with the necessary medical care caused the rapid deterioration and inevitable worsening of the latter’s condition.00 as moral damages and the award of attorney’s fees is deleted.hospital. or compensatory damages before the court may consider the question of whether or not exemplary damages should be awarded.000. the Court considers the amount of P50.” Petitioners never denied making this statement. They are imposed not to enrich one party or impoverish another but to serve as a deterrent against or as a negative incentive to curb socially deleterious actions. the 1 December 1999 Decision and 11 February 2000 Resolution of the Court of Appeals are AFFIRMED.[28] This is consistent with the policy that no premium should be placed on the right to litigate.000. with the modification that petitioners must also pay private respondent P50. the appellate court found that – … negligence not only exists but was deliberately perpetrated by petitioners by its arbitrary refusal to commit the ailing private respondent to a hospital in New Zealand or at any nearest port … which resulted to the serious deterioration of his health that caused his permanent partial disability.000. the appellate court’s award of P50.[27] Although the labor arbiter awarded attorney’s fees.

further. That for reason of equity.That upon approval and payment in full or in installments of contributions due and payable to the SSS. Effectivity of Condonation. Condonation of Penalty. Installment Proposal. Short Title. courts or Office of the Prosecutor involving collection of contributions and/or penalties. may within six (6) months from the effectivity of this Act: (a) remit said contributions. further.eight (48) months from the date of approval of the proposal: Provided.This Act shall be known as the "Social Security Condonation Law of 2009". Section 4. all such pending cases filed against the employer shall be withdrawn without prejudice to the refiling of the case in the event the employer fails to remit in full the required delinquent contributions or defaults in the payment of any installment under the approved proposal. . Section 3. the Social Security Commission shall issue the necessary rules and regulations for the effective implementation of this Act. .The penalty provided under Section 22(a) of Republic Act No. including those with pending cases either before the Social Security Commission. the penalties are deemed reimposed from the time the contributions first become due.TIME AUTHORITY TO CONDONE PENALTIES ON UNREMITTED OR DELINQUENT CONTRIBUTIONS BY EMPLOYERS Be it enacted by the Senate and House of Representatives of the Philippines in Congress assembled: Section 1.Any employer who is delinquent or has not remitted all contributions due and payable to the Social Security System (SSS). subject to the implementing rules and regulations as the Social Security Commission shall prescribe: Provided. subject to the implementing rules and regulations which the Social Security Commission may prescribe: Provided. finally.Within thirty (30) days after the effectivity of this Act. Implementing Rules and Regulations. 8282 shall be condoned by virtue of this Act when and until all the delinquent contributions are remitted by the employer to the SSS: Provided. employers who settled arrears in contributions before the effectivity of this Act shall likewise have their accrued penalties waived. or (b) submit a proposal to pay the same in installments. That the delinquent employer submits the corresponding collection lists together with the remittance or proposal to pay installments: Provided. the SSS shall give due course to approve and grant the same. . That the employer shall remit. within the availment period provided in this Act. a down payment of not less than five percent (5%) of its total contribution delinquency: Provided. 9903 AN ACT GRANTING THE SOCIAL SECURITY SYSTEM A ONE . That the installment payments shall bear an interest of three percent (3%) per annum.Republic Act No. . to accrue until the delinquent account is paid in full: Provided.In the event that a delinquent employer chooses to submit an installment proposal. upon submission of the installment proposal. or defaults in the payment of any installment under the approved proposal. in case the employer fails to remit in full the required delinquent contributions.lawphil Section 5. further. That. . . Section 2. That the employer shall remit the balance thereof in equal monthly installments within a period not exceeding forty .

This Act shall take effect fifteen (15) days following its publication in the Official Gazette or in at least two (2) newspapers of general circulation. Section 8. 2454 was finally passed by the House of Representatives and the Senate on October 14. EMMA LIRIO-REYES MARILYN B. Section 7. 2009 and November 9.All Jaws. Approved. 2009. 07. JUAN PONCE ENRILE PROSPERO C. . Repealing Clause. 5922 and Senate Bill No. Effectivity. . rules and regulations and other issuances or parts thereof which are inconsistent with the provisions of this Act are hereby repealed or modified accordingly. BARUA-YAP Secretary of the Senate Secretary General House of Representatives Approved: JAN. NOGRALES President of the Senate Speaker of the House of Representatives This Act which is a consolidation of House Bill No. 2010 GLORIA MACAPAGAL-ARROYO President of the Philippines . Separability Clause.In the event that any provision of this Act is declared unconstitutional. the validity of the other provisions shall not be affected by such declaration. orders. .Section 6. decrees.

the following terms shall mean: (a) "Contributions" shall refer to the contributions paid by the employee or worker to either the Government Service Insurance System (GSIS) or the Social Security System (SSS) on account of the worker's membership. (c) "Sector" shall refer to employment either in the public or private sector. Nothing in this Act shall be construed to diminish or reduce the benefits being enjoyed by a covered worker arising from existing laws. 6. 4. as amended or the GSIS as created under Presidential Decree No. That any conflict in the interpretation of the law and the implementing rules and regulations shall be resolved in favor of the workers. promulgate the rules and regulations necessary to implement the provisions hereof: Provided. All contributions paid by such member personally. Towards this end. unless the context indicates otherwise. It is hereby declared the policy of the State to promote the welfare of our workers by recognizing their efforts in productive endeavors and to further improve their conditions by providing benefits for their long years of contribution to the national economy. issuances. Definition of Terms. SECTION 1. . That overlapping periods of membership shall be credited only once for purposes of totalization. Sec. (b) "Portability" shall refer to the transfer of funds for the account and benefit of a worker who transfers from one system to the other. as amended. 1146. 5. The Department of Labor and Employment for the private sector and the Civil Service Commission for the government sector. however. or parts thereof. Sec. 2. All laws. and company policies or practices or agreements between the employer and the employees. and those that were paid by his employers to both Systems shall be considered in the processing of benefits which he can claim from either or both Systems: Provided. rules and regulations. Provisions of any general or special law or rules and regulations to the contrary notwithstanding. the State shall institute a scheme for totalization and portability of social security benefits with the view of establishing within a reasonable period a unitary social security system. 1161. 3. decrees. (d) "System" shall refer to either the SSS as created under Republic Act No. orders. survivorship and other benefits in case the covered member does not qualify for such benefits in either or both Systems without totalization: Provided. for purposes of eligibility and computation of benefits. Sec. disability. Sec. together with the SSS and the GSIS shall. — As used in this Act. 7699 AN ACT INSTITUTING LIMITED PORTABILITY SCHEME IN THE SOCIAL SECURITY INSURANCE SYSTEMS BY TOTALIZING THE WORKERS' CREDITABLE SERVICES OR CONTRIBUTIONS IN EACH OF THE SYSTEMS. which are inconsistent with the provisions of this Act are hereby repealed or modified accordingly. Sec. 7. a covered worker who transfers employment from one sector to another or is employed in both sectors shall have his credible services or contributions in both Systems credited to his service or contribution record in each of the Systems and shall be totalized for purposes of old-age. REPUBLIC ACT NO. That the amount of benefits to be paid by one System shall be in proportion to the number of contributions actually remitted to that System. and (e) "Totalization" shall refer to the process of adding up the periods of creditable services or contributions under each of the Systems. Sec. within ninety (90) days from the effectivity of this Act. however.

whichever comes earlier. . This Act shall take effect fifteen (15) days after its complete publication in the Official Gazette or in at least two (2) national newspapers of general circulation.Sec. 8.

P. payable from the funds of the SSS. R. S-1975) . The term of the appointive members shall be three years: Provided. (As amended by Sec. Sec. the Social Security System with principal place of business in Metro Manila. S-1972. 1. develop. 1. 1161 June 18. 24. P. He shall be appointed by the President of the Philippines and shall receive a salary to be fixed by the Commission with the approval of the President. S-1972) A. fix their compensation. 2658.D. No. one of whom shall be a woman.D. 2658 and Sec. No. however.A. 1.D. 2658. S-1972). the general public. Sec. one of whom shall be a woman.A. P.A." Section 2. 24. honest and economical administration of the provisions and purposes of this Act. Sec. No.A. That the terms of the first six appointive members shall be one. P.D. R.D. The apppointive members of the Commission shall receive one thousand five hundred pesos per diem for each meeting actually attended by them: Provided. E. 1954 AN ACT TO CREATE A SOCIAL SECURITY SYSTEM PROVIDING SICKNESS.D. R. 1.1975) (c) The Commission. except through the expiration of the term. 1. upon the recommendation of the Administrator shall appoint an actuary. Short Title. prescribe their duties and establish such methods and procedures as may insure the efficient.O. 2.A.A. 7688) (b) The general conduct of the operations and management functions of the SSS shall be vested in the Administrator who shall serve as the chief executive officer immediately responsible for carrying out the program of the SSS and the policies of the Commission. S-1973. P. S- 1986. one. old age and death. P.A. 24. Members of the Commission who hear cases pending before the Commission. the SSS Administrator and seven appointive members: three of whom shall represent the labor group. P. S-1975. No. Sec. No. 735. R. No.D. (As amended by Sec. UNEMPLOYMENT. The Chairman of the Commission shall be designated by the President from among its members. Provided. and R. The administrator shall be a person who has had previous experience in technical and administrative fields related to the purposes of this Act. 735. 1.D. No. 102. 3. R. No. Administration SECTION 3. promote and perfect a sound and viable tax-exempt social security service suitable to the needs of the people throughout the Philippines which shall provide to covered employees and their families protection against the hazards of disability. 1. respectively. two and three years for every two members. the management group. Philippines is hereby created. and such other personnel as may be deemed necessary. 1792. P. 3. — (a) To carry out the purposes of this Act. All vacancies. 347. P. and. S-1977. Declaration of Policy. 1. with a view to promoting their well-being in the spirit of social justice. Sec. RETIREMENT. 1. to be appointed by the President of the Philippines. 24. 2. sickness. 4857. 1202. shall be filled for the unexpired term only. (As amended by Sec. That the personnel of the SSS shall be selected only from civil service eligibles certified by the commissioner of civil service and be subject to civil service rules and regulations. Sec. That no compensation shall be paid for more than eight meetings a month. DISABILITY AND DEATH BENEFITS FOR EMPLOYEES SECTION 1. Sec. S-1972. Sec.D. 1. 735. — It is the policy of the Republic of the Philippines to establish. Social Security System. 1792 and Sec. R. and Sec. 1. — This Act shall be known as the "Social Security Law" (As amended by Sec. three. 1. shall also receive a per diem of one thousand five hundred pesos. No.Republic Act No. S. (As amended by Sec. The SSS shall be directed and controlled by a Social Security Commission composed of the Secretary of Labor and Employment.

That such increases in benefits shall not require any increase in the rate of contribution. S-1975) (k) To sue and be sued in court. S- 1986) (d) To establish branches of the System whenever and wherever it may be expedient or necessary. or more frequently as may be necessary. the Commission shall have the following powers and duties: (a) To adopt. against all funds available to the System under this Act.Section 4. That the actuarial soundness of the reserve fund shall be guaranteed: Provided. as may be needed for the proper. (j) To acquire..A. P. amend and rescind. No. aged and infirm employees and immediate members of their families. R.D. and to undertake the necessary actuarial studies and calculations concerning increases in benefits and the financial stability of the SSS and to provide for the feasible increases in benefits and the addition of new ones under such rules and regulations as the Commission may adopt subject to the approval of the President: President. (i) To acquire property. No. E. (l) To perform such other acts as it may deem appropriate for the proper enforcement of this Act. 2. (As amended by Sec. S-1975) (c) To require the Actuary to submit a valuation report on the SSS benefit program every five years. 735. (f) To adopt from time to time a budget of expenditures including salaries of personnel. further. R. such rules and regulations as may be necessary to carry out the provisions and purposes of this Act. 2. 1. 3. a public report to the President of the Philippines covering its activities in the administration and enforcement of this Act during the preceding year including information and recommendations on broad policies for the development and perfection of the program of the SSS. 1792) (g) To set up its accounting system and provide the necessary personnel therefor. (b) To submit annually not later than March 31. P. by way of purchase. . subject to the approval of the President. which may be necessary or expedient for the attainment of the purposes of this Act. (As amended by Sec. No. 735. (e) To enter into agreements or contracts for such service and aid. (As amended by Sec. Powers and Duties of the Commission. — For the attainment of its main objectives as set forth in section two hereof. 2658 and Sec. (As amended by Sec. compilations and analyses of statistical and economic data and to make investigations as may be needed for the proper administration and development of the System. receive. P. and to inspect or cause to be inspected periodically such branches. or hold. 102.O. public or private property for the purpose of undertaking housing projects preferably for the benefit of low-salaried employees and for the maintenance of hospitals and institutions for the sick. S-1979 and Sec. expropriation or otherwise. R. (As amended by Sec. real or personal. 1792) (h) To require reports. No.D.A. 1636.D. 2. 3. 2. efficient and stable administration of the System.A.

The filing. and he shall have. Sec. Oaths. — When authorized by the Commission. S-1972) Section 6. as far as practicable. an official or employee thereof shall have the power to administer oath and affirmation. 24. Auditor and Counsel. — Any decision of the Commission.Section 5. and Sec. after being required to do so shall. R.D. S- 1975) (b) Appeal to Courts. determination and settlement of disputes shall be governed by the rules and regulations promulgated by the Commission. correspondence and other records deemed necessary as evidence in connection with any question arising under this Act. If the decision of the Commission involves only questions of law. 2. the same shall be reviewed by the Supreme Court. in the absence of an appeal therefrom as herein provided. The Commission shall be deemed to be a party to any judicial action involving any such decision. criminal cases wherein life imprisonment or death has been imposed by the trial court shall take precedence. 4857. The case shall be heard in a summary manner. (d) Execution of decisions — Any decision or award of the Commission after the same has become final and executory shall be enforced and executed in the same manner as decisions of Courts of First Instance and the Commission shall have the power to issue to the City or provincial sheriff or the sheriff whom it may appoint such writs of execution as may be necessary for the enforcement of such decision or award and any person who shall fail or refuse to comply with such decision. shall so order. No. and any case filed with respect thereto shall be heard by the Commission. (As amended by Sec. funds and properties of the SSS in the same manner and as frequently as the accounts. Appeal from a decision of the Commission must be taken within fifteen days from notification of such decision. funds and properties in general. contributions and penalties thereon or any other matter related thereto. and shall take precedence over all cases. award. and judicial review thereof shall be permitted only after any party claiming to be aggrieved thereby has exhausted his remedies before the Commission. papers. For the purpose of such review the procedure concerning appeals from the Court of First Instance shall be followed as far as practicable and consistent with the purposes of this Act. and Production of Records. He or his representative shall check and audit all the accounts.D. P. Any case of . 735. benefits. He or his representative shall act as legal adviser and counsel thereof. unless the Commission itself. or by hearing officers duly authorized by the Commission and decided within twenty days after the submission of the evidence. No appeal bond shall be required. or any of its members. (b) The Secretary of Justice shall be the ex-officio counsel of the SSS. S-1975) Section 7. 3. (As amended by Sec. 735. 4. and issue subpoena and subpoena duces tecum to compel the attendance of witnesses and the production of books. be punished by the proper court for contempt. Witnesses. or writ. 3. R. upon application by the Commission. funds and properties of the government are checked and audited under existing laws. P. 4.A. — (a) Any dispute arising under this Act with respect to coverage. by the Solicitor General or any fiscal. No. shall become final fifteen days after the date of notification. except that in the Supreme Court. or the Court of Appeals or the Supreme Court. — (a) The Commissioner on Auditor shall be the ex-officio Auditor of the SSS. (As amended by Sec. No appeal shall act as a supersedeas or a stay of the order of the Commission. the same powers and duties as he has with respect to the checking and auditing of public accounts. (c) Court Review.D. and may be represented by an attorney employed by the Commission.A. P. 2658. No. certify to official acts. shall be cognizable by the Commission. or when requested by the Commission. — The decision of the Commission upon any disputed matter may be received both upon the law and the facts by the Court of Appeals. take depositions. Settlement of Disputes.

(As amended by Sec. 2658. who carries on in the Philippines any trade. P. S-1972. S-1979) (d) Employee — Any person who performs services for an employer in which either or both mental and physical efforts are used and who receives compensation for such services. "monthly" shall mean a period of one month. R. R. 102. E. domestic or foreign. branches or instrumentalities. 5. 1792. 3. 3. Sec. R. 2658 and Sec. if on any other basis. where there is an employer-employee relationship: Provided. 735. 2. as well as the cash value of any remuneration paid in any medium other than cash except that part of the remuneration in excess of three thousand pesos received during the month. 1636. 2658 and Sec. physically or mentally. S-1972) . 2. Sec. 24. S-1979) (b) Commission — The Social Security Commission as herein created.A. (c) Employer — Any person. industry. S-1975) (f) Compensation — All actual remuneration for employment. (i) Contribution — The amount paid to the SSS by the employee and by his employer in accordance with section eighteen of this Act. Sec.A. (As amended by Sec. R. business. 4857. daily or weekly basis. 2. provided that he is congenitally incapacitated and incapable of self-support.A. S-1972) (h) Monthly — The period from one end of the last payroll period of the preceding month to the end of the last payroll period of the current month if compensation is on hourly. That a self-employed professional shall be both employee and employer at the same time. Terms Defined. (As amended by Sec. No. 1636. and the legitimate parents wholly dependent upon the covered employee for regular support. No. Definitions SECTION 8. (As amended by Sec. including corporations owned or controlled by the Government: Provided. 1636. No. 2658. No.contumacy shall be dealt with in accordance with the provisions of section five hundred eighty of the Administrative Code. B. 5 P.A. P. P. except the Government and any of its political subdivisions.D. S-1979) (e) Dependent — The legitimate. — For the purposes of this Act. P. S-1986) (g) Monthly salary credit — The compensation base for contributions and benefits as indicated in the schedule in section eighteen of this Act.D. (As amended by Sec.A.O.D. That a self-employed professional shall be both employee and employer at the same time. including the mandated cost of living allowance.D. 5. No. and not over twenty-one years of age. and Sec. 4. 5. 4. 4. not gainfully employed. the following terms shall. undertaking.D. the legitimate spouse dependent for support upon the employee. No. and Sec. (As amended by Sec. 24. 24.D. No. or over twenty-one years of age. R.A. 4 R. (As amended by Sec. No. natural or juridical. unless the context indicates otherwise. legitimated or legally adopted child who is unmarried. P. have the following meanings: (a) SSS — The Social Security System created by this Act. P. 4.D. or activity of any kind and uses the services of another person who is under his orders as regards the employment.

No. R. Service performed on or in connection with an alien vessel by an employee if he is employed when such vessel is outside the Philippines. international organization. (As amended by Sec. 2658) 2.D. 735. Domestic service in a private home. Sec. 4. That his exemption notwithstanding. No. 3. R. 177. 6. Service performed in the employ of a foreign government or international organization. permanent disability. and Sec. (As amended by Sec. injury or sickness of the covered employee. except — 1.D. or their wholly-owned instrumentality employing workers in the Philippines or employing Filipinos outside of the Philippines may enter into an agreement with the Philippine Government for the inclusion of such employees in the SSS except those already covered by their respective civil service retirement systems: Provided. finally. any foreign government. (As amended by Sec. daughter. (As amended by Sec. Such other services performed by temporary employees who may be excluded by regulation of the Commission. In the absence of any of the foregoing. 2658. P. S-1975) 8. 735. P. Employees of bona fide independent contractors shall not be deemed employees of the employer engaging the services of said contractors. who shall be the primary beneficiaries. 735.D.A. or spouse. R. 3.(j) Employment. 3839. further. RA 4857. 1. No. 1. P. Employment purely casual and not for the purposes of occupation or business of the employer. 3. S-1975) (l) Contingency — The retirement. however. S-1975) . 7.D. That the terms of such agreement shall conform with the provisions of this Act on coverage and amount of payment of contributions and benefits: Provided. the legitimate descendents and illegitimate children who shall be the secondary beneficiaries. S-1975) (k) Beneficiaries — The dependent spouse until he remarries and dependent children. Sec. subject to the restrictions imposed on dependent children. 4857. 5. 4. 4. death. 5.A. In their absence. the dependent parents and. 5. 5. or their wholly-owned instrumentality: Provided. No. 5. Service performed by an individual in the employ of his son. (As amended by Sec. 735. No. S-1973.D. R. P. Sec. — Any service performed by an employee for his employer.A. and service performed by a child under the age of twenty-one years in the employ of his parents. P. any other person designated by the covered employee as secondary beneficiary. That the provisions of this Act shall be supplementary to any such agreement. and Sec. Agricultural labor when performed by a share or leasehold tenant or worker who is not paid any regular daily wage or base pay and who does not work for an uninterrupted period of at least six months in a year. Service performed in the employ of the Philippine Government or an instrumentality or agency thereof.A.

Scope of the System SECTION 9. 4857) (q) Replacement ratio — The sum of twenty per cent and the quotient obtained by dividing three hundred by the sum of three hundred forty and the average monthly salary credit. eliminations or improvements in the benefits to be available under the remaining private plan. S-1975) (n) Average daily salary credit — The result obtained by dividing the sum of the six highest monthly salary credits in the twelve-month period immediately preceding the semester of contingency by one hundred eighty. or the result obtained by dividing the sum of all the monthly salary credits paid prior to the semester of contingency by the number of calendar months of coverage in the same period. 5. S-1975. in which case it is the result obtained by dividing the sum of all monthly salary credits paid prior to the month of contingency by the total number of calendar months of coverage in the same period: Provided. S-1979) (r) Credited years of service — For a member covered prior to January 1975. shall be subject to agreements between the employers and employees concerned: Provided. nineteen hundred seventy five minus the calendar year of coverage plus the number of calendar years in which six or more contributions have been paid from January 1975 up to the calendar year containing the semester prior to the contingency.A. 1636. S-1975) (p) Quarter — A period of three consecutive calendar months ending on the last day of March. 2. 735. P. 3. (As amended by Sec. (As amended by Sec. 4857. further. For a member covered in or after January 1975. 5. That any benefit already earned by employees under private benefit plans existing at the time of the approval of this Act shall not be discontinued. No. No. No. R. June. Sec.D. — (a) Coverage in the SSS shall be compulsory upon all employees not over sixty years of age and their employers: Provided.D. and Sec. That the injury or sickness which caused the disability shall be deemed as the permanent disability for the purpose of computing the average monthly salary credit. modifications.A. further. That private plans which are existing and in force at the time of compulsory coverage shall be integrated with the plan of the SSS in such a way where the employer's contribution to his private plan is more that that required of him in this Act he shall pay to the SSS only the contribution required of him and he shall continue his contribution to such private plan less his contribution to the SSS so that the employer's total contribution to his private benefit plan and to the Social Security System shall be the same as his contribution to his private benefit plan before the compulsory coverage: Provided. 3. the number of calendar years in which six or more contributions have been paid from the year of coverage up to the calendar year containing the semester prior to the contingency. September and December. E. S-1986) (o) Semester — A period of two consecutive quarters ending in the quarter of contingency.D. R. (As amended by Sec. (As amended by Sec. 1636. S-1979) C. further. R. 735. That any changes. 2. That the private benefit plan which the employer shall continue for his employees shall remain under the employer's management and . No. 735. P. No.O.D.A. 4857 and Sec. 102. No. Compulsory coverage. adjustments. P. (m) Average monthly salary credit — The result obtained by dividing the sum of the monthly salary credits in the sixty-month period immediately preceding the semester of contingency by the number of months of coverage in the same period. P. which may be necessary to adopt by reason of the reduced contribution thereto as a result of the integration. 5. (As amended by Sec. 3. 3.D. reduced or otherwise impaired: Provided. (As amended by Sec. P. whichever is greater: except where the month of contingency falls within eighteen months from the month of coverage.

R. S-1979) . R. 1636.A. 5. P. R. R. but said employee shall be credited with all contributions paid on his behalf and entitled to benefits according to the provisions of this Act. 177.A. He may. (As amended by Sec. 735. 5. P. P.800 or more per annum: Provided. trainers licensed by the Games and Amusement Board as well as jockeys and trainers licensed by the Philippine Racing Commission.A. 7. Sec. No. (As amended by Sec.control unless there is an existing agreement to the contrary: Provided. 6.A. — If the self-employed realizes no net professional or business income in any calendar year.A. — Compulsory coverage of the employer shall take effect on the first day of his operation and that of the employee on the day of his employment: Provided. No. directors. No.D. he shall not be required to pay contributions for the succeeding year. Effective Date of Coverage. S-1975) Section 9-A. Compulsory Coverage of the Self-employed. That nothing in this Act shall be construed as a limitation on the right of employers and employees to agree on and adopt benefits which are over and above those provided under this Act. coaches.D. R.D. Effect of Separation from Employment. No. 4857 and Sec. (As amended by Sec. Partners and single proprietors of businesses. S-1979) Section 10. No. S-1979) Section 11. 6. 2. 3. 2658. (As amended by Sec. S-1975) Section 11-A. (As amended by Sec. 1972. 6. P. — Coverage in the SSS shall also be compulsory upon all self-employed persons earning P1. P. P. further. 1636.A. 2. He may. 3.D. finally. Effect of Interruption of Business or Professional Income. 5. S-1973 and Sec. 2658. scriptwriters and news correspondents who do not fall within the definition of the term "employee" in section eight (d) of this Act. 4. 4. however. Actors and actresses. 2. however.D. All self-employed professionals licensed by the Professional Regulations Commission or those licensed to practice law. — When an employee under compulsory coverage is separated from employment. No. 735. Sec. continue to pay the total contributions to maintain his right to full benefit. 1972. 3839) (b) Filipinos recruited in the Philippines by foreign-based employers for employment abroad may be covered by the SSS on a voluntary basis. That the effectivity of coverage of certain groups of self-employed shall be determined by the Commission under such rules and regulations it may prescribe: Provided. (As amended by Sec. all provisions of the SSS Law applicable to covered employees shall also be applicable to the covered self-employed persons. 1980. and Sec. be allowed to continue paying contributions under the same rules and regulations applicable to separated covered employees. That the effectivity of the coverage of the following self-employed persons shall be in accordance with section ten (b) hereof: 1. Professionals athletes. 1636. his employer's contribution on his account and his obligation to pay contributions arising from that employment shall cease at the end of the month of separation. 4. and Sec. Unless otherwise specified herein.D. R. That the compulsory coverage of self-employed persons referred to in paragraphs (1) to (4) shall take effect on the first day of January following the calendar year they started the practice of their profession or business operations but in no case earlier than January 1.

1202.A. S-1977) (b) A covered member who is sixty years old at retirement and who does not qualify for pension benefits under paragraph (a) above. — (a) A covered employee who has paid at least one hundred twenty monthly contributions prior to the semester of retirement. Retirement Benefits. shall be entitled for as long as he lives to the monthly pension: Provided. He shall again be subject to section eighteen and his employer to section nineteen of this Act. 1202. shall be entitled to a lump sum benefit equal to the total contributions paid by him and on his behalf: Provided.D.O. his primary beneficiaries as of the date of his retirement shall be entitled to eighty per cent of the monthly pension and his dependents to the dependents' pension: Provided. E. Benefits SECTION 12. S-1977. S-1979 and E. 1792. S-1986. further.D. Sec. No. P. 102. 7. 2658. No. 4.D. 2658. 102. 8. R. No. S-1986) Section 13.O.D. S-1979) (d) Upon the death of the retired employee pensioner. Sec. his secondary beneficiaries shall be entitled to a lump sum benefit equivalent to the bigger of (1) twenty times the monthly pension or (2) the difference of sixty times the monthly pension and the total monthly pensions paid by the SSS excluding the dependents' pension. That he is separated from employment and is not continuing payment of contributions to the SSS on his own. (As amended by Sec. 7. 3. 4. S-1973. P. P. 1. Sec. 24. beginning with the youngest and without substitution. 5.D. — The dependents' pension shall be equivalent to ten per cent of the monthly pension for each dependent child but not exceeding five. No. 1202. S-1977. and Sec. No. S-1979. P. S-1975. No.D. 6. P.A. 2. and One and a half per cent of the average monthly salary credit for each credited year of service in excess of ten years. 6. P. 1202. 177. R. Sec. 735. No. 7. Sec.D. R. No. Sec. S-1975. No. P. 3. No.A. (c) The monthly pension shall be reduced upon the re-employment of a retired employee who is less than sixty-five years old by an amount equivalent to one-half his earnings over three hundred pesos. No. That the monthly pension of surviving pensioners as of December 31. 1792. S-1972.D. R. 7. 8. Dependents' Pension. D. Sec. . 1986 shall be increased by twenty per cent. No. 1636.D. (b) The monthly pension shall in no case be less than two hundred pesos nor paid in an aggregate amount of less than sixty times the monthly pension except to a secondary beneficiary: Provided. No. his primary beneficiaries shall be entitled to the monthly pension and his dependents to the dependents' pension: Provided. 177. That his dependents born before his retirement of a marriage subsisting when he was fifty- seven years old shall be entitled to the dependents' pension. (As amended by Sec.O. P. S-1986) Section 12-A. Sec. Monthly Pension. R. P. Death Benefits. Sec. 1636. S-1977) Section 12-B. 735. (As amended by Sec. S-1973. 7. No. 4857.D. 7. Sec.D.D. No. S-1972. Sec. 28. 4. — (a) The monthly pension shall be the sum of the following: The average monthly salary credit multiplied by the replacement ratio. 24. Sec. 6. P. (As amended by Sec. 3. P.A.A. Sec. That he has paid at least thirty-six monthly contributions prior to the semester of death: Provided. No.D. 1636. E. P. P. and Sec. (As amended by Sec. and who (1) has reached the age of sixty years and is not receiving monthly compensation of at least three hundred pesos or (2) has reached the age of sixty-five years. — Upon the covered employee's death. That if he has no primary beneficiaries and he dies within sixty months from the start of his monthly pension.

9.O. — (a) Upon the covered employee's permanent total disability. No. Permanent complete paralysis of two limbs. P. 4. Complete loss of sight of both eyes. No. 3. finally. No.D. The monthly pension and dependents' pension shall be suspended upon his recovery from the permanent total disability. No. P. S-1979) Section 13-A. 1202. he shall be entitled to a lump sum benefit equivalent to thirty-five times the monthly pension: Provided. 8. S-1977 and Sec. his secondary beneficiaries shall be entitled to a lump sum benefit equivalent to twenty times the monthly pension: Provided. 1636. E. further.D. P. S-1977) (b) The monthly pension shall be reduced upon his re-employment by an amount equivalent to one- half of his earnings over three hundred pesos.D. Permanent disability benefits.D. P. That a covered employee who becomes permanently totally disabled without having paid at least three monthly contributions shall be entitled to the minimum benefit: Provided. 1636. 9. 6. (As amended by Sec. (As amended by Sec.D. (As amended by Sec. 1636.D. (As amended by Sec. 6. if such disability occurs after he had paid at least thirty-six monthly contributions prior to the semester of disability. 9. P. his secondary beneficiaries shall be entitled to a lump sum benefit equivalent to the bigger of (1) twenty times the monthly pension or (2) the difference of sixty times the monthly pension and the total monthly pensions paid by the SSS excluding the dependents' pension.D. S-1979) . No. That if he has no primary beneficiaries and he dies within sixty months from the start of his monthly pension. 2. P. he shall be entitled to the monthly pension and his dependents to the dependents' Pension: Provided. S-1979) (c) Upon the death of the permanent total disability pensioner. 102. That the beneficiaries of the covered employee who dies without having paid at least three monthly contributions shall be entitled to the minimum benefit. S-1979 and Sec. That if he has no primary beneficiaries. 1202. That the minimum disability benefit shall not be less than the total contributions paid by him and his employer on his behalf nor less than one thousand pesos: Provided. Brain injury resulting to incurable imbecility or insanity. Loss of two limbs at or above the ankle or wrists. No. 5. That a member who (1) received a lump sum benefit and (2) is re- employed not earlier than one year from date of his disability shall again be subject to compulsory coverage and considered a new member. 1202. S-1977 and Sec. further. his primary beneficiaries as of the date of disability shall be entitled to eighty per cent of the monthly pension and his dependents to the dependents' pension: Provided.That if the foregoing condition is not satisfied his primary beneficiaries shall be entitled to a lump sum benefit equivalent to thirty-five times the monthly pension: Provided. No. 6. 5. 1636. Such cases as determined and approved by the SSS. and. S- 1986) (d) The following disabilities shall be deemed permanent total: 1. That if the disability occurs before he has paid thirty-six monthly contributions prior to the semester of disability. (As amended by Sec. however. That the minimum death benefit shall not be less than the total contributions paid by him and his employer on his behalf nor less than one thousand pesos: Provided. P. No. further. finally. or his failure to present himself for examination at least once a year upon notice by the SSS.

separate and unrelated permanent partial disabilities. 9. (As amended by Sec. 1636. S-1975 and Sec. 9. S-1979) (g) The percentage degree of disability. shall not be additive for distinct.D. Funeral Benefit. but shall be additive for deteriorating and related permanent partial disabilities. P. the benefit shall be such percentage of the lump sum benefit described in the preceding paragraph with due regard to the degree of disability as the Commission may determine.(e) If the disability is permanent partial. 735. to a maximum of one hundred per cent. No. No. P. in which case the employee shall be deemed as permanently totally disabled.D. — A funeral grant of two thousand pesos shall be paid to help defray the cost of funeral expenses upon the death of a covered member.D. 10. 1636. P. rounded to the next higher integer. P. 1636.D. which is equivalent to the ratio that the designated number of months of compensability bears to seventy-five. No. 9. and such disability occurs before thirty-six monthly contributions have been paid prior to the semester of disability. No. S-1979) Section 13-B. permanently totally . S-1979) (f) If the disability is permanent partial and such disability occurs after thirty-six monthly contributions have been paid prior to the semester of disability. the benefit shall be the monthly pension for permanent total disability payable not longer than the period designated in the following schedule: Complete and permanent Number of loss of use of Months One thumb 10 One index finger 8 One middle finger 6 One right finger 5 One little finger 3 One big toe 6 One hand 39 One arm 50 One foot 31 One leg 46 One ear 10 Both ears 20 Hearing of one ear 10 Hearing of both ears 20 Sight of one eye 25 (As amended by Sec. (As amended by Sec.

Sec. P. further. 9. 3. 2. That in cases where notification is necessary. No. 9.D. — (a) A covered employee who has paid at least three monthly contributions in the twelve-month period immediately preceding the semester of sickness and is confined for more than three days in a hospital or elsewhere with the Commission's approval. subject to the following conditions: (As amended by Sec. P. (As amended by Sec. S-1975) (c) One hundred per cent of the daily benefits provided in the preceding paragraph shall be reimbursed by the SSS to said employer upon receipt of satisfactory proof of such payment and legality thereof: Provided. R. 28. Sec. 8. for as long as such allowances are due and payable: Provided. (As amended by Sec. No. P. P. said employer shall be reimbursed only for each day of confinement starting from the tenth calendar day immediately preceding the date of notification to the SSS: Provided.D. Sec. (As amended by Sec. P. 4857.O. No.A.D. S-1986 and Sec. 2658. 14.D.D. Sec. S-1986) (1) In no case shall the total amount of such daily allowance be less than seven pesos and fifty centavos nor exceed seventy-five pesos nor paid longer than one hundred twenty days in one calendar year. No. 8. Sec. 8. That if the notification to the SSS is made by the employer beyond five calendar days after receipt of the notification from the employee. E. an allowance equivalent to ninety per cent of his average daily salary credit. No. No.A. E. and similarly in the case of direct payment by the SSS. the confinement shall be deemed to have started not earlier than the fifth day immediately preceding the date of notification. S-1972. E. S-1972.O. E. Sec. be paid by his employer. 4857.A. S-1986) (2) No employee shall be paid any sickness benefit for more than two hundred forty days on account of the same confinement. 28.O. P. (As amended by Sec. and Sec. That if the member is unemployed he shall directly notify the SSS of his confinement within five calendar days after the start thereof unless such confinement is in a hospital in which case notification is also not necessary: Provided. further. S-1975. No. 735. shall. and (3) The employee shall notify his employer of the fact of his sickness or injury within five calendar days after the start of his confinement unless such confinement is in a hospital or the employee became sick or was injured while working or within the premises of the employer in which case notification to the employer is not necessary: Provided. 7. 102. S-1986) Section 14. or the SSS. That the SSS shall reimburse the employer or pay the unemployed member only for confinement within the one year period immediately preceding the date the claim for benefit or reimbursement is received by the SSS. 3. 177. R.disabled employee or retiree. finally. 7. Sec. nor shall any unused portion of the one hundred twenty days of sickness benefit granted under this section be carried forward and added to the total number of compensable days allowable in the subsequent year. E. (As . No. S-1973. and Sec. 735. 24. That the employer has notified the SSS of the confinement within five calendar days after receipt of the notification from the employee: Provided. 1636. 11.D. 5. No. if such person is unemployed. 12.O. 102. 28. except confinement in a hospital in which case the claim for benefit or reimbursement must be filed within one year from the last day of confinement. 10. Sickness Benefit. 24.O. S-1975. R. No. S-1986. P. No. That such allowance shall begin only after all sick leaves of absence with full pay to the credit of the employee shall have been exhausted. and Sec. 2658.D. 7. No.A. R. for each day of compensable confinement or fraction thereof. and the payment of such allowances shall be promptly made by the employer every regular payday or on the fifteenth and last day of each month. S-1979) (b) The compensable confinement shall begin on the first day of sickness. 735.

abortion. No. P. P. S-1972) (e) The claim of reimbursement shall be adjudicated by the SSS within a period of two months from receipt thereof. No. 1. 1973. (As amended by Sec.A. the employer shall pay to the SSS damages equivalent to the benefits which said employee would otherwise have been entitled to. S-1972) (f) The provisions regarding the notification required of the covered employee and the employer as well as the period within which the claim for benefit or reimbursement may be filed shall apply to all claims filed with the SSS beginning January 1. (e) That the maternity benefits provided under this section shall be paid only for the first four deliveries after March 13. 9. 8. No. P. and Sec. S-1972 and Sec.D. (f) That the SSS shall immediately reimburse the employer of one hundred per cent of the amount of maternity benefits advanced to the employee by the employer upon receipt of satisfactory proof of such payment and legality thereof. 12. 24. (c) That in case of caesarian delivery. 8. No. — A covered female employee who has paid at least three monthly maternity contributions in the twelve-month period preceding the semester of her childbirth. or without the latter having been previously notified by the employer of time of the pregnancy. S- 1972) (d) Where the employee has given the required notification but the employer fails to notify the SSS of the confinement or to file the claim for reimbursement within the period prescribed in this section resulting in the reduction of the benefit or denial of the claim such employer shall have no right to recover the corresponding daily allowance he advanced to the employee as required in this section. (As amended by Sec. or miscarriage and who is currently employed shall be paid a daily maternity benefit equivalent to one hundred per cent of her present basic salary. P. Maternity Leave Benefit. S-1972) Section 14-A. No. 24. P. allowances and other benefits or the cash equivalents of such benefits for sixty days subject to the following conditions: (a) That the employee shall have notified her employer of her pregnancy and the probable date of her childbirth which notice shall be transmitted to the SSS in accordance with the rules and regulations it may provide. 4482. Sec. Sec. 24. That should no payment be received by the employer within one month after the period prescribed herein for adjudication the reimbursement shall thereafter earn simple interest of one per cent per month until paid.D. 8. (As amended by Sec.D. R. the employees shall be paid the daily maternity benefit for seventy-eight days. R.D. and (g) That if an employee should give birth or suffer abortion or miscarriage without the required contributions having been remitted for her by her employer to the SSS.A. 24. and the SSS shall in turn pay such amount to the . 1973. 7.D. (b) That the payment shall be advanced by the employer in two equal installments within thirty days from the filing of the maternity leave application. Provided. 4857. (d) That payment of daily maternity benefits shall be a bar to the recovery of sickness benefits provided by this Act for the same compensable period of sixty days for the same childbirth. 735. 8. R. 2658.A. abortion. or miscarriage.amended by Sec.

which fees shall not be payable before the actual payment of the benefits. levy or seizure by or under any legal or equitable process whatsoever. 347.D. at the discretion of the court. Non-transferability of Benefits.D. or customs or import duty. P.D. Sec. Sec. as amended.D. 8. No. Attorneys. except to pay any debt of the covered employee to the SSS. Any violation of the provisions of this Section shall be punished by a fine of not less than five hundred pesos nor more than five thousand pesos. attorney or other person in charge of the preparation. 8. 1202. equipment. No. That if the recipient is a minor or a person incapable of administering his own affairs. No. during the period of such payment for the same contingency. 7322) Section 15. 11. S- 1973 and Sec. P. No. papers or documents which may be required in connection with the operation or execution of this Act shall be exempt from any tax. — The SSS shall pay the benefits provided for in this Act to such persons as may be entitled thereto in accordance with the provisions of this Act: Provided. the Commission may direct payments without regard to nationality or country of residence: Provided. S-1979. further. P. R. Sec. That such appointment shall not be necessary in case the recipient is under the custody of or living with the parents or spouse of the employee in which case the benefits shall be paid to such parents or spouse. P. S-1975) Section 16. however. Any tax assessment against. No. P. 13. etc. charge. 4857. as representative payee of the recipient. (As amended by Sec. 3839. all contributions collected and all accruals thereto and income or investment earnings therefrom as well as all supplies. and still unpaid by the SSS shall be null and void. the Commission shall appoint a representative under such terms and conditions as it may deem proper: Provided. Sec. (As amended by Sec. 8-A. That notwithstanding the foregoing. P. 4. further. either before or after receipt by the person or persons entitled thereto. 9. if no beneficiary qualifies under this Act. — No agent. 14. and any stipulation to the contrary shall be null and void. S-1975) Section 17. said benefits shall be paid to the legal heirs in accordance with the law of succession: Provided. the payment of benefits under this Act shall bar the recovery of similar benefits under Title II of Book IV of the Labor Code of the Philippines. 1202. S-1977.A. garnishments. P. except when they are physically unable to collect personally such benefits: Provided. S-1972.A. No. employee concerned. P. 24. That any member of the Philippine Bar who appears as counsel in any case heard by the Social Security Commission shall be entitled to attorney's fees not exceeding ten per cent of the benefits awarded by the Commission. That in case of death benefits. 735. attorney. 1636. S-1977) . 735.D. Such benefits are not transferrable and no power of attorney or other document executed by those entitled thereto. finally.A. (As amended by Sec. R. shall not be entitled to receive any benefit under this Act: Provided. and R. and shall not be liable to attachments. No. or both. S-1972 and Sec.D. further. 4. and any stipulation to the contrary shall be null and void. Fee of Agents. and conversely.A. further. unless it expressly revokes the declared policy of the State in section two hereof granting tax- exemption to the SSS. Exemption from Tax. fees or charges. or any other person for the collection thereof on their behalf shall be recognized. R. where the best interest of the SSS will be served. fee. assessment. and all benefit payments made by the SSS shall likewise be exempt from all kinds of taxes.D. filing or pursuing any claim for benefit under this Act shall demand or charge for his services any fee. 10. That the beneficiary who is a national of a foreign country which does not extend benefits to a Filipino beneficiary residing in the Philippines. (As amended by Sec. Legal Process and Lien. and Sec. No tax measure hereafter enacted shall apply to the SSS. The retention or deduction of any amount from any benefit granted under this Act for the payment of fees for such services is prohibited: Provided. That notwithstanding any law to the contrary. 7. or which is not recognized by the Philippines.D. — All laws to the contrary notwithstanding the SSS and all its assets and properties. or imprisonment for not less than six months nor more than one year. 2658. in favor of any agent. No. 24.

00 II 150 .4 VII 700 .000.4 7.OVER 3. wage.00 120 XI 1.2249.100 . wage.99 600 48 VII 700 .2. the employer shall deduct and withhold from such employee's monthly salary.40 P 4.749. 1987 shall be as follows: Salary Range of Monthly Monthly Bracket compensation Salary Credit Contribution Number I P 1 .99 2.7 33.2.00 63.000.7 67.349.00 152 100 252 The tabulated schedule for the monthly contribution of the self-employed and voluntary members effective January 1.5 26.399.00 100 X 1.99 1.00 P 10.99 300 24 V 350 . — (a) Beginning as of the last day of the calendar month when an employee's compulsory coverage takes effect and every month thereafter during his employment. E.699.99 P 125.99 1.50 II 150 . compensation or earnings during the month in accordance with the following schedule effective on January 1.1.7 VI 500 .7 III 200 .250.1749.2 VIII 900 .7 14.250 .249.3 41.2 10 25.749.149. Employee's Contribution. the employee's contribution in an amount corresponding to his salary.99 1.6 14.7 105 X 1400 .99 300 15.5 18.500.00 240 .99 225 11.199.00 200 XIII 2.99 2.99 175 9 5.750 .99 425 21.400 .1 35. Sources of Funds — Employment Records and Reports SECTION 18.899.3 84 IX 1100 .99 1.OVER 3.9 IV 250 .1.000. compensation or earnings.000.249.199.99 800 64 VIII 900 .099.00 80 IX 1.000.1099.000.99 2.99 425 34 VI 500 .2749.250.99 800 40.1399.00 126.2 V 350 .99 225 18 IV 250 .750 .7 83.3 210 XIII 2750 .699.00 50.149.00 P 6.500.10 P 10.499.500.00 160 XII 2. 1987: Salary Range of Monthly Monthly Contribution Bracket Compensation Salary Employer Employee Total Number Credit I P 1 .7 168 XII 2250 .3 66.99 1.899.00 101.99 600 30.249.99 P 125.349.00 76 50 126 XI 1750 .99 1.99 175 14 III 200 .4 20 50.1.99 2.499.500.

Employer's Contributions. — As the contribution of the Government to the operation of the System. 1792) . P. Sec. his employer shall pay.D. S-1979) Section 20. the correct names and SS numbers of the employees and the total contributions paid for their account during the quarter.A. 1636.D. 9. S-1979) Section 19. 10. 11. (As amended by Sec. interest investments and the like or all types of incomes which are not derived from his business registered with the SSS or from the practice of his profession. No.D. P. (As amended by Sec. S-1986) (b) Every employer shall issue a receipt for all contributions deducted from the employee's compensation or shall indicate such deductions on the employee's pay envelopes. 1202. R. Contributions of the Self-employed.D. P. the Congress shall appropriate from time to time such sum or sums as may be needed to assure the maintenance of an adequate working balance of the funds of the System as disclosed by suitable periodic actuarial studies to be made of the operations of the System. 24.The maximum covered earnings or compensation of all SSS members shall be limited to three thousand pesos per month as provided in the foregoing schedules unless otherwise provided by the Social Security Commission through rules and regulations taking into consideration actual calculations and rate of benefits. Section 21. 1636. 1636. 14. Sec. S-1979) Section 19-A. No. and Sec. 1792. directly or indirectly. P. Net earnings as understood under this section shall be the net income from his business or profession as reflected in the income tax return for the immediately preceding year. No. — The contributions to the SSS of the self- employed shall be determined in accordance with section eighteen of this Act: Provided. R. (As amended by Sec. an employer shall not deduct. the employer's contribution in accordance with the schedule indicated in section eighteen of this Act. at the start of the year. R. excluding rental income. In addition to this contribution. 13. unless he makes. 2658. — The benefits prescribed in this Act shall not be diminished and to guarantee said benefits the Government of the Republic of the Philippines accepts general responsibility for the solvency of the System. in which case such latest declaration becomes the new basis of his monthly salary credit. The average monthly net earnings declared by the self-employed member at the time of his registration shall remain the basis of his monthly salary credit. Government Guarantee. dividend. P. 13. Notwithstanding any contract to the contrary. the Congress shall annually appropriate out of any funds in the National Treasury not otherwise appropriated.A. with respect to such covered employee. S-1972.D. 10. Government Contribution. No. from the compensation of his employees covered by the SSS or otherwise recover from them the employer's contributions with respect to such employees. (As amended by Sec. No. — (a) Beginning as of the last day of the month when an employee's compulsory coverage takes effect and every month thereafter during his employment.A. That the average monthly net earnings declared by the self-employed at the time of his registration with the SSS shall be considered as his monthly compensation and he shall pay both the employer and employee contributions. 12. (As amended by Sec. another declaration of his average monthly net earnings based on his income tax returns for the immediately preceding year. the necessary sum or sums to meet the estimated expenses of the System for each ensuing year. (b) The remittance of such contributions by the employer shall be supported by a quarterly collection list to be submitted to the SSS at the end of each calendar quarter indicating the correct ID number of the employer.

24. S-1986) . P. (As amended by Sec. No. P. 15. the contributions payable by the employees to be advanced by their respective employers: Provided. That the SSS shall not be barred from determining and collecting the true and correct contributions due the SSS even after full payment pursuant to this paragraph. No. 6. 12. P. No. Failure or refusal of the employer to pay or remit the contributions herein prescribed shall not prejudice the right of the covered employee to the benefits of the coverage. any contribution so paid in advance but not due shall be credited or refunded to his employer.D. 1202. (As amended by Sec. No. — (a) The contribution imposed in the preceding section shall be remitted to the SSS within the first seven days of each calendar month following the month for which they are applicable or within such time as the Commission may prescribe. If deemed expedient and advisable by the Commission. the collection and remittance of contributions shall be made quarterly or semi-annually in advance. Sec. S-1973. E. which shall hear and dispose of the case in preference to any other civil action. S-1972) (b) The contributions payable under this Act in cases where an employer refuses or neglects to pay the same shall be collected by the SSS in the same manner as taxes are made collectible under the National Internal Revenue Code. any employer who is delinquent or has not remitted all the monthly contributions due and payable may within six months from the issuance of this Executive Order remit said contributions to the SSS and submit the corresponding collection lists herefore without incurring the prescribed three per cent penalty. That upon separation of an employee. P. he shall pay besides the contribution a penalty thereon of three per cent per month from the date the contribution falls due until paid. (d) The last complete record of monthly contributions paid by the employer or the average of the monthly contributions paid during the past three years as of the date of filing of the action for collection shall be presumed to be the monthly contributions payable by and due from the employer to the SSS for each of the unpaid month. 1636. P. or from the time the benefit accrues. the penalty of three per cent shall be imposed from the time the contributions first became due as provided in paragraph (a) of this section.O. as the case may be. natural or juridical. P. 24. The Sheriff's sale by virtue of said warrant shall be governed by the same procedure prescribed for executions against property upon judgments by a court of record. 11. 28. S-1979) (c) Should any person. S-1972.D.D. nor shall the employer be relieved of his liability under section twenty-eight of this Act. S-1972 and Sec. and Sec. No.D.D. Remittance of Contributions. Every employer required to deduct and to remit such contributions shall be liable for their payment and if any contribution is not paid to the SSS as herein prescribed. No. S-1977) (e) For purposes of this Section. unless contradicted and overcome by other evidence: Provided. 24. default in any payment of contributions. (As amended by Sec. 4. The right to institute the necessary action against the employer may be commenced within twenty years from the time the delinquency is known or the assessment is made by the SSS. or (2) By issuing a warrant to the Sheriff of any province or city commanding him to levy upon and sell any real and personal property of the debtor. 12.D. 177.Section 22. the Commission may also collect the same in either of the following ways: (1) By an action in court. as amended. 12. No. (As amended by Sec. In case the employer fails to remit to the SSS the said contributions within the six months grace period.

Sec. S-1975. (As amended by Sec. No. 17. P. the employer shall be liable to pay the SSS damages equivalent to five year's monthly pension. No. as the Commission may specify through rules and regulations. If as a result of such adjudication the SSS in good faith pays a monthly pension to a beneficiary who is inferior in right to another beneficiary or with whom another beneficiary is entitled to share.A. the employer shall also be liable for the payment of the corresponding unremitted contributions and penalties thereon. 16. resulting in a reduction of benefits. 1636. such payments shall discharge the SSS from liability. or other reasonable devices that the Commission may adopt.D.Section 22-A. (As amended by Sec. 16. 24. S-1975) Section 24. P. — (a) Each employer shall immediately report to the SSS the names. P. No. in addition to an "Annual Register of New and . P. S-1972. Sec. Remittance of Contributions of Self-employed. S-1972 and Sec. 735.D. S-1977) (b) Should the employer misrepresent the true date of employment of his employees or remit to the SSS contributions which are less than those required in this Act. coupons. No. (As amended by Sec. 12. (As amended by Sec. The penalty of three per cent per month for late payments provided for in paragraph (a) of section twenty-two of this Act and the manner of collection of contributions specified in paragraphs (b). 15. S-1979) (c) The records and reports duly accomplished and submitted to the SSS by the employee or the employer. (As amended by Sec. ages. That if an employee subject to compulsory coverage should die or become sick or disabled or reach the age of sixty without the SSS having previously received any report or written communication about him from his employer or a contribution paid in his name by his employer. shall not be divulged without the consent of the Administrator or any official of the SSS duly authorized by him. S-1975. S-1979) Section 23. except that in case of pension benefits.D.D. the employer shall pay to the SSS damages to the extent of such reduction. R. No.D. 16. the said employer shall pay to the SSS the damages equivalent to the benefits to which said employee would have been entitled had his name been reported on time by the employer to the SSS. S-1972. Sec. No. 13. tickets. 4857. the employer shall be relieved of his liability for damages. (c) and (d) of section twenty-two of this Act are also applicable to the collection of penalties and contributions of the covered self-employed. further. 15. 735.D. P. salaries and dependents of all his employees who are subject to compulsory coverage: Provided. 735. and Sec.D. 24. That if the contingency occurs within thirty days from the date of employment. 1636. P. checks. and shall be made the basis for the adjudication of the claim. P. P. S- 1975) (d) Every employer shall keep true and accurate work records for such period and containing such information as the Commission may prescribe. P. Sec. 13. No. 9. P. (As amended by Sec. shall be kept confidential by the SSS except in compliance with a subpoena duces tecum issued by the Courts. 13. No.D.D.D.D. No. R. unless the necessary corrections to such records and reports have been properly made by the parties concerned before the right to the benefit being claimed accrues. 735. Employment Records and Reports. as the case may be. stamp. — Self-employed members shall remit their monthly contributions quarterly on such dates and schedules. No. civil status. 1792. 1202. 16. — The SSS shall require a complete and proper collection and payment of contributions and proper identification of the employer and the employee. P. S-1979) In addition to the liability mentioned in the preceding paragraphs (a) and (b) hereof. 1636. 17. No. including dependents' pension: Provided. unless and until such other beneficiary notifies the SSS of his claim prior to the payments. occupations. 24. shall be presumed correct as to the data and other matters stated therein. and Sec.A. Method of Collection and Payment. Payment may be made in cash.

D. each employer shall require as a condition to employment. and Sec. P. Such records shall be open for inspection by the SSS or its authorized representatives quarterly or as often as the SSS may require. R. P. age. microfilm copies of original SSS records and reports. S-1975. or disabled or reach the age of sixty without the SSS having previously received such report.A. 18. P. — Each covered self-employed person shall. and occupation. 4857. P. No. 735. 19. Sec. (As amended by Sec. 13. No. 16. No. 16. S-1986) .A.D. within thirty days from the effective date of coverage.A. Sec. further.D. report to the SSS his name. That if after said period of thirty days. P. Sec. civil status. (As amended by Sec. the difference shall not be availed of as additional expenses in the following years. such numbers originally assigned to them should be used for purposes of this section: Provided. The SSS may also require each employer to submit. 102. 5. S-1979. and all accruals thereto shall be deposited. — All moneys paid to or collected by the SSS every year under this Act. 13-A. further. duly certified by the official custodian thereof. Sec. No. E. 735. P. operational expenses and the maintenance of regional offices of the SSS: Provided. Report and Registration of the Self-employed. That the issuance of such registration numbers by the SSS shall not exempt the employer from complying with the provisions of paragraph (a) of this section. No. 1973. with respect to the persons in his employ. 17. the names of the persons employed or separated from employment. the SSS shall not pay him the corresponding benefit. That not more than twelve per cent of the total yearly contributions plus three per cent of other revenues shall be disbursed for salaries and wages. 10. the presentation of a registration number secured by the prospective employee from the SSS in accordance with such procedure as the SSS may adopt: Provided.Separated Employees" which shall be secured from the SSS wherein the employer shall enter on the first day of employment or on the effective date of separation. 102.D. E. That if the expenses in any year are less than the maximum amount permissible. 24. 3839.D. (As amended by Sec. he should die or become sick. Deposit and Disbursements. purchases of office equipment and materials. Investment of Reserve Funds. No. reports needed for the effective administration of this Act. S-1975) Section 24-A.O. 10. 24.O. S-1972) (f) Notwithstanding any law to the contrary. their SSS numbers.D. shall have evidentiary value as the originals and be admissible as evidence in all legal proceedings. S-1979) F. P. P. 1636. 24. Such portions of the Reserve Fund as are not needed to meet the current benefit obligations thereof shall be invested to earn an average annual income of at least nine per cent and shall be known as the 'Investment Reserve Fund' which shall be invested in any or all of the following: (As amended by Sec. average monthly net income and his dependents: Provided. S- 1972) (e) Effective July 1. No. S-1972. R. Funds of the System Section 25. 14.D. (As amended by Sec. 13. 11. That in case of employees who have earlier been assigned registration numbers by virtue of a previous employment. No. S-1972. 1636. — All revenues of the SSS that are not needed to meet the current administrative and operational expenses incidental to the carrying out of this Act shall be accumulated in a fund to be known as the 'Reserve Fund'. and such other data that the Commission may require and said annual register shall be submitted to the SSS in the month of January of each year. No. R. and Sec. 24.D. Sec. S-1986) Section 26. administered and disbursed in the same manner and under the same conditions and requirements as provided by law for other public special funds: Provided. No. (As amended by Sec. 2658.

That not more than ten per cent of the Investment Reserve Fund at any time shall be invested for this purpose. No. S-1972) (g) As part of its investment operations. S-1972) (c) In loans or interest-bearing advances to the National Government for the construction of permanent toll bridges. 11. (As amended by Sec. No. . R. That such deposits shall not exceed at any time the unimpaired capital and surplus or total private deposits of the depository bank. 102. S-1972. 1792.D. 11. That said bank shall first have been designated as the depository for this purpose by the Monetary Board of the Bangko Sentral ng Pilipinas: Provided. Sec. (As amended by Sec. S-1975. (As amended by Sec. No.D.A. 14. 15. finally. The assets and liabilities of the Mortgagors' Insurance Account shall at all times be clearly identifiable and distinguishable from the assets and liabilities in all other accounts of the SSS. and Sec. 24. 735. or bonds or securities for the payment of the interest and principal to which the faith and credit of the Republic of the Philippines is pledged. That any such investment shall be made with due diligence and prudence to earn the highest possible interest consistent with safety. No. educational. E. 24. R. S- 1986) (e) In short and medium term loans to covered employees such as salary. 15. 24. P. calamity and emergency loans: Provided. P. S-1972. P. the assets held in the Mortgagors' Insurance Account shall not be chargeable with the liabilities arising out of any other business the SSS may conduct but shall be held and applied exclusively for the benefit of the owners or beneficiaries of the insurance contracts issued by the SSS under this paragraph. No. whichever is smaller: Provided. and Sec. 14. P. 4857. 24. P. and Sec. (b) In interest-bearing deposits or securities in any domestic bank doing business in the Philippines: Provided. That the tolls shall be collected by the SSS for a reasonable fee.(a) In interest-bearing bonds or securities of the Government of the Philippines. in the determination of the Commission. No. Notwithstanding any provision of law to the contrary. the SSS shall act as insurer of all or part of its interests on SSS properties mortgaged to the SSS.D. 14. or lives of mortgagors whose properties are mortgaged to the SSS. 2658. shall redound to the benefit of the SSS.D. (As amended by Sec. E.A. For this purpose.A. Sec. up to a maximum of ninety per cent of the appraised value of the properties to be mortgaged by the borrowers and in loans for the construction and the maintenance of hospitals and institutions for the sick. P. 102. R. 11. its members.D. That such investment in deposits or securities shall be equitably distributed to all designated banks. That such investment shall not exceed thirty per cent of the Investment Reserve Fund. 24." All amounts received by the SSS in connection with the aforesaid insurance operations shall be placed in the Mortgagors' Insurance Account.A. (As amended by Sec.O. 14. No.D. 2658. 14. as well as the public welfare: Provided. referred to in section 4 (j) of this Act: Provided. 17. S-1986) (f) In other income earning projects and investments secured by first mortgages on real estate collaterals which. Sec. aged and infirmed members and their families. No. R. further. 18.O. Sec. the SSS shall establish a separate account to be known as the "Mortgagors' Insurance Account. toll roads or government office buildings in accordance with actuarial considerations and the conditions prescribed by law in such cases: Provided. S- 1972) (d) In direct housing loans to covered employees and group housing projects giving priority to the low-income groups.

That such investment shall not exceed 10 per cent of the Investment Reserve Fund. (As amended by Sec. 735. assuming or guaranteeing institution available for its fixed charges. taxes other than income taxes. S-1973. or other evidences of indebtedness. amortization of debt discount and rentals for leased properties. 12. That such investment shall not exceed ten per cent of the Investment Reserve Fund. E. The Term 'fixed charges' shall include interest on funded and unfunded debt. That the issuing.O. That if the stocks are guaranteed. assuming or guaranteeing entity or its predecessors shall not have defaulted in the payment of interest on any of its securities and that during each of any three including the last two of the five fiscal years next preceding the date of acquisition by the SSS of such bonds. S-1986) (k) In common stocks of any solvent corporation or institution created or existing under the laws of the Philippines listed in the stock exchange with proven track record of profitability and payment of dividends over the last three years: Provided. Sec. 1. Sec. 14. the corporation or institution has sufficient retained earnings to declare dividends for at least two years on such preferred stock: Provided. (As amended by Sec.D. or guaranteeing entity or its predecessors has paid regular dividends upon its preferred or guaranteed stocks for a period of at least three years next preceding the date of investment in such preferred or guaranteed stocks: Provided. The Insurer Commission or its authorized representatives shall make an examination into the financial condition and methods of transacting business of the SSS at least once in two years. (As amended by Sec. (As amended by Sec. S-1986) (j) In preferred stocks of any solvent corporation or institution created or existing under the laws of the Philippines: Provided. That the issuing. further. but such examination shall be limited to the insurance operation of the SSS as authorized under this section and shall not embrace the other operations of the SSS. as hereinafter defined. No. P. That the general law on insurance promulgated thereunder shall have suppletory application insofar as it is not in conflict with the SS Law and its rules and regulations. debentures or other evidences of indebtedness of any solvent corporation or institution created or existing under the laws of the Philippines: Provided. 12.(h) The SSS may insure any of its interests or part thereof with any private company or reinsurer. 12. debentures. further. but excluding extraordinary non-recurring items of income or expense appearing in the regular financial statement of the issuing. assuming or guaranteeing institution. further. the SSS shall pay to the Insurance Commission an amount equal to the actual expenses of the Insurance Commission in the conduct of the examination including the salaries of the examiners and of the actuary of the Insurance Commission who have been assigned to make such examination for the actual time spent in said examination: Provided. E. depreciation and depletion. the amount of stocks so guaranteed is not in excess of fifty percentum of the amount of the preferred or common stocks. P. 7. No. No. As used in this section. 18.D. 24. assuming. and the report of said examination shall be submitted to the Commission and a copy thereof shall be furnished the office of the President of the Philippines within a reasonable time after the close of the examination: Provided.D. That for each examination. the net earnings of the issuing. and Sec. 102. No. shall have been not less than one and one-quarter times the total of its fixed charges for such year: Provided. the term 'net earnings available for fixed charges' shall mean net income after deducting operating and maintenance expenses. S-1986) . S-1972. furthermore.O.D. 177. S-1975) (i) In bonds. That if the corporation or institution has not paid dividends upon its preferred stocks. finally. 102. 102. No. No.O. That such investment shall not exceed 10 per cent of the Investment Reserve Fund. P. as the case may be. E. of the issuing corporations: Provided. P. No. 65.

or counterfeited materials or makes. or under an agreement thereunder. shall be fined not less than five hundred pesos nor more than five thousand pesos and imprisoned for not less than six months nor more than one year. shall suffer the penalties provided for in Art. takes or gives in exchange. or uses. (e) Whoever fails or refuses to comply with the provisions of this Act or with the rules and regulations promulgated by the Commission. shall be fined not less than one thousand pesos nor more than ten thousand pesos or imprisoned for not less than one year nor more than five years. except as authorized in this Act or in regulations made pursuant thereto. for the purpose of causing any payment to be made under this Act. (d) Whoever. forged. R. or other device. shall be fined not less than five hundred pesos nor more than five thousand pesos.Section 27. imprisonment for not less than six months nor more than one year. No. without being entitled thereto with intent to defraud any covered employee. Sec. No. 8. 20. or both. forges. at the discretion of the court. sells. S-1973. book. sells. No. the duration and amount of benefits paid. Sec. 8. or imprisoned for not less than six months nor more than one year. or document in connection with such claim or loan. or has in his possession any such altered.D. During the month of January of each year. P. P. 347. and recommendations. makes or counterfeits any stamp. ticket. 177. Records and Reports. Section 28. 24. S-1979) . or has in his possession any such altered. coupon. and Sec. prescribed pursuant to section twenty-three hereof by the Commission for the collection or payment of contributions required herein. 1636. 19.D. No. or both. S-1973) (b) Whoever shall obtain or receive any money or check under this Act or any agreement thereunder. Sec. affidavit. (As amended by Sec. P. where none is authorized to be paid.D. (As amended by Sec. S-1972. coupon. 1792. shall be punished by a fine of not less than five hundred pesos nor more than five thousand pesos. R. at the discretion of the court: Provided. or whoever makes or causes to be made any false statement. of the funds of the System and of disbursements thereof and all accounts of payments made out of said funds. or application for loan with the SSS. the Administrator shall prepare for submission to the President and to the Congress of the Philippines a report of operations of the System during the preceding year including statistical data on the number of persons covered and benefited. transfers.D.A. the finances of the System at the close of the said year. representation. or both. lends. 177. forged material in imitation of the material used in the manufacture of such stamp. sells. 16. or pledges or gives in pledge. ticket. P. at the discretion of the court. Penal Clause. That where the violation consists in failure or refusal to register employees or himself. shall make or cause to be made any false statement or representation as to any compensation paid or received or whoever makes or causes to be made any false statement of a material fact in any claim for any benefit payable under this Act. alters. P. uses. and Sec. employer or the SSS. coupon.D. with intent to defraud. No. book or other device. 15. in case of the covered self-employed or to deduct contributions from employee's compensation and remit the same to the SSS. — The administrator shall keep and cause to be keep records of operations. 5. He shall also cause to be published in two newspapers of general circulation in the Philippines a synopsis of the annual report. one hundred seventy-two of the Revised Penal Code.D. 2658. the penalty shall be a fine of not less than five hundred pesos nor more than five thousand pesos and imprisonment for not less than six months nor more than one year. offers for sale. ticket. (As amended by Sec. 24. No. showing in particular the status of the finances of the System and the benefits administered. book or other device prescribed by the Commission for the collection or payment of any contribution required herein. their occupations and employment status. — (a) Whoever.A. any stamp. S-1972) (c) Whoever buys. 15. P. S-1973. uses.

No.D. (As amended by Sec. 2658) (h) Any employer who after deducting the monthly contributions or loan amortizations from his employee's compensation. or through abandonment or negligence shall permit any other person to take such property or funds. Saving Clause. P. 15. Effectivity. S-1972) (i) Criminal action arising from a violation of the provisions of this Act may be commenced by the SSS or the employee concerned either under this Act or in appropriate cases under the Revised Penal Code: Provided. — The establishment of the Social Security System shall not disqualify the covered employees and employers from receiving such government assistance. 19. 15.D.(f) If the act or omission penalized by this Act be committed by an association. Section 30. Section 31. (As amended by Sec. alter. 20.A. 1954 1awphil@alf . partnership. and no person shall be or shall be deemed to be vested with any property or other right by virtue of the enactment or operation of this Act. or repeal any provision of this Act. as may be provided. No. S-1975. 13. 16. corporation or any other institution. Sec. (g) Any employee of the System who receives or keeps funds or property belonging.D. 24. No. Separability Clause. — In the event any provision of this Act or the application of such provision to any person or circumstance is declared invalid. Approved: June 18. directors or partners shall be liable to the penalties provided in this Act for the offense. S-1972. R.D. 21. at the option of the SSS. (As amended by Sec. and Sec. its managing head. P. That such criminal action may be filed by the SSS in the city or municipality where the SSS provincial or regional office is located if the violation was committed within its territorial jurisdiction or in Metro Manila. 735. R. 1792 and Sec.D. the remainder of this Act or the application of said provision to other persons or circumstances shall not be affected by such declaration. P. S-1975) Section 32. — The Assembly hereby reserves the right to amend. (As amended by Sec. or shall otherwise be guilty of misappropriation of such funds or property. financial or otherwise. payable or deliverable to the System and who shall appropriate the same. No. P. — This Act shall take effect upon its approval. P. 1202. 735. 24.A. No. S-1977) Section 29. wholly or partially. shall suffer the penalties provided in Art. or shall take or misappropriate or shall consent. fails to remit the said deductions to the SSS within thirty days from the date they became due shall be presumed to have misappropriated such contributions or loan amortizations and shall suffer the penalties provided in Art. Government Aid. three hundred fifteen of the Revised Penal Code. two hundred seventeen of the Revised Penal Code.

NOW. THEREFORE.FURTHER AMENDING CERTAIN PROVISIONS OF TITLE II. legally adopted or acknowledged natural child who is unmarried. WHEREAS. I. and the changing patterns of social and economic development. the Fund has accumulated enough reserves to enlarge the benefit structure of covered employees without the need for additional premium contributions from employers. that the dependent acknowledged natural child shall be considered as a primary beneficiary when there are no other dependent children who are qualified and eligible for monthly income benefit. the Employees' Compensation Commission. to help mitigate the harsh effects of inflation on their living expenses. MARCOS. Amended) are hereby amended further to read as follows: "Art. 167. the legitimate spouse living with the employee and the parents of said employee wholly dependent upon him for regular support. Definition of Terms. as a result of discussions and consultations with the SSS. the present economic crisis requires the Government to institute emergency and extraordinary measures toward providing forth protection and financial relief to workers and their families. not gainfully employed." "(j) "Beneficiaries" means the dependent spouse until he/she remarries and dependent children. by virtue of the powers vested in me by law and the Constitution. (k). BOOK FOUR OF THE LABOR CODE OF THE PHILIPPINES WHEREAS. and social security in general. In their absence. through judicious management of the State Insurance Fund that the Social Security System and the Government Service Insurance System administer for the private sector and the public service. and (ee) of Article 167 of the Labor Code of the Philippines (PD 442. (j). who are the primary beneficiaries. and WHEREAS. do hereby order and decree: Section 1. the dependent parents and subject to the restrictions imposed on dependent children and legitimate descendents who are the secondary beneficiaries. Paragraphs (i). GSIS and PMCC. respectively. in pursuance of its objectives to achieve labor justice for victims of employment-related contingencies. unless the context indicates otherwise: "(i) "Dependents" means the legitimate. PRESIDENTIAL DECREE NO. legitimated." "(ee) "Monthly income benefit" means the amount equivalent to one hundred fifteen percent of the sum of: "The average monthly salary credit multiplied by the replacement ratio. WHEREAS. 1921 . President of the Republic of the Philippines. it is necessary to harmonize. Provided." "(k) "Injury" means any harmful change in the human organism from any accident arising out of and in the course of the employment. and not over twenty-one years of age or over twenty-one years of age provided he is incapable of self-support due to a physical or mental defect which is congenital or acquired during minority. FERDINAND E. decrees and issuances administered and implemented by administering agencies the Employees' Compensation Program. must constantly keep pace with and remain responsive to challenges of emerging concepts of employees' compensation in particular. — As used in this Title. and . simplify and correlate provisions of the Labor Code of the Philippines with other laws. 1921 PRESIDENTIAL DECREE NO.

3. Prescriptive Period. but not exceeding five beginning with the youngest and without substitution except of provided for in paragraph (j) of Article 167 hereof: Provided. (b). Further. 177 of PD 442. eighty percent of the monthly income benefit and his dependents to the dependents' pension: Provided. Art. is hereby amended further to read as follows: "Art. 6. as Amended. That the minimum death benefit shall not be less than Fifteen thousand Pesos. plus (10%) percent thereof for each dependent child. Death. — A funeral benefit of One Thousand Five Hundred Pesos shall be paid upon the death of a covered employee or permanently totally disabled pensioner. — Unless otherwise provided. as amended. . as Amended is hereby amended further to read as follows: "Art. as amended. that the SSS and GSIS shall advance on a quarter basis the remittances of allotment of the loading fund for the commission's operational expenses based on its annual budget duly approved by the Ministry of the Budget and Management. 4. Sec. 699 of the Revised Administrative Code. Extent of liability. The payment of compensation under this Title shall not bar the recovery of benefits as provided for in Sec. decrees. letters of instructions and executive orders inconsistent with. That if he has no primary beneficiaries. Sec. and other laws whose benefits are administered by the System or by other agencies of the government. 201 of PD 442." Sec. Article 173 of PD 442. 2." Sec. Powers and duties. and (d) of Arts. the liability of the State Insurance Fund under this Title shall be exclusive and in place of all other liabilities of the employer to the employee or his dependents or anyone otherwise entitled to recover damages on behalf of the employee of his dependents. hereby amended further to read as follows: "Art. 177. That if he has no primary beneficiary. or contrary to this Decree are hereby repealed. 7. — This Decree shall take effect June 1. 5. Further. . 194. — All laws. 194 of PD 442. . Repeal of laws. Finally. Paragraphs (a)."One and a half percent of the average monthly salary credit for each credited year of service in excess of ten years. 173. of the remaining balance of the five-year guaranteed period: Provided. as amended. That the monthly income benefit shall in no case be less than Two Hundred Fifty pesos. are hereby amended further to read as follows: "Art. That the monthly income benefit shall be guaranteed for five years: Provided. the System shall pay to the primary beneficiaries upon the death of the covered employee under this Title an amount equivalent to his monthly income benefit. the System shall pay to the primary beneficiaries upon the death of a covered employee who is under permanent total disability under this Title." Sec. Sec. "(g) To adopt annually a budget of expenditures of the Commission and its staff chargeable against the State Insurance Fund: Provided. — No claim for Compensation shall be given due course unless said claim is filed with the System within three years from the time the cause of action accrued. Finally. as Amended. "Provided. Amended. That the marriage must have been validly subsisting at the time of disability: Provided. Effectivity. Provided. 1984. Paragraph (g) of Art. 210. — . however. "(b) Under such regulations as the Commission may approve. — Under such regulations as the Commission may approve. Republic Act numbered eleven hundred sixty-one." "(d) Funeral Benefit. Republic Act numbered forty-eight hundred sixty-four. Republic Act numbered six hundred ten. the System shall pay to his secondary beneficiaries the monthly pensions excluding the dependents' pension. the System shall pay to his secondary beneficiaries the monthly income benefit but not to exceed sixty months. That the minimum death benefit shall be less than fifteen thousand pesos.

2011 x ----------------------------------------------------------------------------------------x DECISION PEREZ. LEONARDO-DE CASTRO.R.. Inc. No. -versus.: This petition for certiorari challenges the Decision[1] dated 20 September 2004 and Resolution[2] dated 9 February 2005 of the Court of Appeals. in the Year of Our Lord.* and PEREZ. C. The instant case stemmed from a petition filed by Alberto Angeles (Angeles) before the Social Security Commission (SSC) to compel respondents Rizal Poultry and Livestock Association. Present: CORONA. RIZAL POULTRY and LIVESTOCK ASSOCIATION. Respondents countered with a Motion to Dismiss[3] citing rulings of the National Labor Relations Commission (NLRC) and Court of Appeals regarding the absence of employer-employee relationship between Angeles and the respondents. J. JR. .J. BSD AGRO INDUSTRIAL DEVELOPMENT CORPORATION and BENJAMIN SAN Promulgated: DIEGO.Done in the City of Manila. INC. (Rizal Poultry) or BSD Agro Industrial Development Corporation (BSD Agro) to remit to the Social Security System (SSS) all contributions due for and in his behalf. Chairperson VELASCO.. Respondents. SOCIAL SECURITY G. Petitioner. JJ. 167050 COMMISSION. this 1st day of May. PERALTA.. June 1. Nineteen Hundred and Eighty- Four.

[8] . it must be observed that the petitioner very categorically set forth in his Petition. The Labor Arbiter initially found that Angeles was an employee and that he was illegally dismissed. As a brief backgrounder. that he was employed by the respondent(s) from 1985 to 1997. At most. such finding has only a persuasive effect and does not constitute res judicata as a ground for dismissal of an action pending before Us. Benjamin San Diego (San Diego). the NLRC reversed the Labor Arbiter’s Decision and held that no employer-employee relationship existed between Angeles and respondents. the petitioner’s fact of employment and entitlement to SS[S] coverage. the issues and subject matter are entirely different. It denied respondents’ motion to dismiss in an Order dated 19 February 2002. The ruling was anchored on the finding that the duties performed by Angeles. In other words. while the present action is for remittance of unpaid SS[S] contributions. thus: Decisions of the NLRC and other tribunals on the issue of existence of employer-employee relationship between parties are not binding on the Commission. the same does not proceed from identical causes of action as one is for violation of the Labor Code while the instant case is for violation of the SS[S] Law. plumbing. Moreover. painting and electrical works. such as carpentry.[7] At any rate. the respondents’ arguments raising the absence of employer- employee relationship as a defense already traverse the very issues of the case at bar. however. the SSC did not take into consideration the decision of the NLRC. While it is true that the parties before the NLRC and in this case are the same. i. [4] Angeles elevated the case to the Court of Appeals via petition for certiorari. hence. which is engaged in the poultry business. The SSC ratiocinated. merely the sufficiency or insufficienciy of the allegations in the complaint. Generally. but rather.. Angeles had earlier filed a complaint for illegal dismissal against BSD Agro and/or its owner.e. Angeles moved for reconsideration but it was denied by the Court of Appeals. although in both suits the respondents invoke lack of employer-employee relationship. On appeal. were not independent and integral steps in the essential operations of the company.[6] No further appeal was undertaken. The appellate court affirmed the NLRC ruling and upheld the absence of employer-employee [5] relationship. In this respect. x x x. an entry of judgment was made on 26 May 2001. factual matters should not weigh in resolving a motion to dismiss when it is based on the ground of failure to state a cause of action. The labor case is for illegal dismissal with demand for backwages and other monetary claims.

2000 and the Resolution dated June 11. to wit: WHETHER OR NOT THE DECISION OF THE NLRC AND THE COURT OF APPEALS. Court of Appeals. 9-15225-01.[11] After the denial of their motion for reconsideration in a Resolution [12] dated 9 February 2005. For our consideration are the issues raised by petitioner. that no employer-employee relationship existed between the parties. A subsequent motion for reconsideration filed by respondents was likewise denied on 11 June 2002. respondents sought recourse before the Court of Appeals by way of a petition for certiorari. petitioner filed the instant petition. The Court of Appeals reversed the rulings of the SSC and held that there is a common issue between the cases before the SSC and in the NLRC. does not have the force of res judicata by prior judgment or as a rule on the .[10] The Court of Appeals disposed. CONSTITUTES RES JUDICATA AS A RULE ON CONCLUSIVENESS OF JUDGMENT AS TO PRECLUDE THE RELITIGATION OF THE ISSUE OF EMPLOYER-EMPLOYEE RELATIONSHIP IN A SUBSEQUENT CASE FILED BEFORE THE PETITIONER. FINDING NO EMPLOYER-EMPLOYEE RELATIONSHIP. and it is whether there existed an employer-employee relationship between Angeles and respondents. particularly under the rule on conclusiveness of judgment. 2002 rendered by public respondent Social Security Commissoin in SSC Case No. The Order dated February 19.[13] SSC maintains that the prior judgment rendered by the NLRC and Court of Appeals. WHETHER OR NOT RESPONDENT COURT OF APPEALS MAY ORDER OUTRIGHT THE DISMISSAL OF THE SSC CASE IN THE CERTIORARI PROCEEDINGS BEFORE IT. the case falls squarely under the principle of res judicata. Thus. as enunciated in Smith Bell and Co. thus: WHEREFORE. The SSC reiterated that the principle of res judicata does not apply in this case because of the “absence of the indispensable element of ‘identity of cause of action. 9-15225-01 are hereby REVERSED and SET ASIDE and the respondent commission is ordered to DISMISS Social Security Commission Case No.’”[9] Unfazed. the petition is GRANTED. v.

Respondents assert that the findings of the NLRC are conclusive upon the SSC under the principle of res judicata and in line with the ruling in Smith Bell v. Res judicata embraces two concepts: (1) bar by prior judgment as enunciated in Rule 39. SSC assails the order of dismissal of the case lodged before it. according to SSC. which issue was previously determined in the NLRC case. the finding of absence of employer-employee relationship between BSD Agro and Angeles could not automatically extend to Rizal Poultry.[14] There is “bar by prior judgment” when. In essence. BSD Agro and San Diego as one and the same entity. treated Rizal Poultry. in his Petition. Rather than ordering the dismissal of the SSC case. There is no showing that BSD Agro and Rizal Poultry refer to the same juridical entity. SSC also claims that the evidence submitted in the SSC case is different from that adduced in the NLRC case. Section 47(b) of the Rules of Civil Procedure. Respondents opine that the definition of an employee always proceeds from the existence of an employer-employee relationship. Thus. It contends that the labor dispute and the SSC claim do not proceed from the same cause of action in that the action before SSC is for non-remittance of SSS contributions while the NLRC case was for illegal dismissal. and (2) conclusiveness of judgment in Rule 39. Respondents oppose the view proffered by SSC that the evidence to prove the existence of employer-employee relationship obtaining before the NLRC and SSS are entirely different. Rizal Poultry. Consequently. another employer. Aside from SSS intervening. as between the first case where the judgment was rendered and the second case that is sought to be barred. the main issue to be resolved is whether res judicata applies so as to preclude the SSC from resolving anew the existence of employer-employee relationship. there is . the Court of Appeals should have allowed SSC to resolve the case on its merits by applying the Social Security Act of 1997. The element of identity of parties is likewise unavailing in this case. Respondents argue that there is substantially an identity of parties in the NLRC and SSC cases because Angeles himself. Court of Appeals. was added as respondent in the case lodged before the SSC. Section 47(c).conclusiveness of judgment.

purpose. [15] But where there is identity of parties in the first and second cases. which . If as between the two cases. subject matter. Identity of cause of action is not required but merely identity of issue. and causes of action be shown in the two cases. or subject matter of the two actions is the same. In this instance. the principle of res judicata in the mode of “conclusiveness of judgment” applies in this case.[16] Thus. whether or not the claim. subject matter.any right.[17] The elements of res judicata are: (1) the judgment sought to bar the new action must be final. This is the concept of res judicata known as “conclusiveness of judgment. and the judgment will depend on the determination of that particular point or question. then res judicata in its aspect as a “bar by prior judgment” would apply. fact or matter in issue directly adjudicated or necessarily involved in the determination of an action before a competent court in which judgment is rendered on the merits is conclusively settled by the judgment therein and cannot again be litigated between the parties and their privies. but no identity of causes of action. only identity of parties can be shown. demand. the first judgment is conclusive only as to those matters actually and directly controverted and determined and not as to matters merely involved therein. The NLRC ruling was affirmed by the Court of Appeals. It was a judicial affirmation through a decision duly promulgated and rendered final and executory when no appeal was undertaken within the reglementary period.[18] Verily.” Stated differently. identity of parties. and causes of action. (2) the decision must have been rendered by a court having jurisdiction over the subject matter and the parties.identity of parties. but not identical causes of action. Should identity of parties. the judgment in the first case constitutes an absolute bar to the second action. a former judgment between the same parties or their privies will be final and conclusive in the second if that same point or question was in issue and adjudicated in the first suit. subject matter. and (4) there must be as between the first and second action. (3) the disposition of the case must be a judgment on the merits. then res judicata as “conclusiveness of judgment” applies. if a particular point or question is in issue in the second action. The first element is present in this case. and causes of action. The jurisdiction of the NLRC.

Rizal Poultry and San Diego. was undisputed. Angeles admitted before the NLRC that he was employed by BSD Agro and San Diego from 1985 until 1997. Although Rizal Poultry is not a party in the NLRC case. we hold that there is substantial compliance.is a quasi-judicial body. The parties in SSC and NLRC cases are not strictly identical. Jurisprudence however does not dictate absolute identity but only substantial identity. likewise on the merits was the affirmance of the NLRC by the Court of Appeals. Rizal Poultry was also an employer of Angeles together with BSD Agro and San Diego.[20] BSD Agro. the three respondents.[21] He made a similar claim in his Petition before the SSC including as employer Rizal Poultry as respondent. The NLRC case was clearly decided on its merits. an identity in the cause of action need not obtain in order to apply res judicata by “conclusiveness of judgment. [19] There is substantial identity of parties when there is a community of interest between a party in the first case and a party in the second case. BSD Agro. He clarified in his Opposition to the Motion to Dismiss[23] filed before SSC that he failed to adduce these as evidence before the NLRC even if it would have proven his employment with BSD Agro. Rizal Poultry was impleaded as additional respondent in the SSC case. a community of interest exists among them. With respect to the fourth element of identity of parties. Most significantly. . even if the latter was not impleaded in the first case. Certainly. They were represented by one counsel and they submitted their pleadings as such one entity. there are numerous indications that all the while. [22] Angeles presented as evidence before the SSC his Identification Card and a Job Order to prove his employment in Rizal Poultry. Rizal Poultry and San Diego were litigating under one and the same entity both before the NLRC and the SSC. As previously stated. We therefore rule that there is substantial if not actual identity of parties both in the NLRC and SSC cases. Neither can the jurisdiction of the Court of Appeals over the NLRC decision be the subject of a dispute.” An identity of issues would suffice. and at the very least. litigated as one entity before the SSC.

x x x. The illegal dismissal case before the NLRC involved an inquiry into the existence or non-existence of an employer-employee relationship. Coverage. .000.[24] This is evident from Section 9(a) which provides: SEC. That in the case of domestic helpers. Remittance of Contributions. Cases .(a) The contributions imposed in the preceding Section shall be remitted to the SSS within the first ten (10) days of each calendar month following the month for which they are applicable or within such time as the Commission may prescribe. contrary to SSC. . 22. Court of Appeals[25] which. 9. The mandatory coverage under the Social Security Act is premised on the existence of an employer-employee relationship. is apt and proper reference. And there was no indication therein that there is an essential conceptual difference between the definition of “employee” under the Labor Code and the Social Security Act.00) a month x x x. The remittance of SSS contributions is mandated by Section 22(a) of the Social Security Act of 1997. The very same inquiry is needed in the SSC case. their monthly income shall not be less than One thousand pesos (P1. where there is an employer-employee relationship. therefore. res judicata in the concept of “conclusiveness of judgment” applies. Every employer required to deduct and to remit such contributions shall be liable for their payment and if any contribution is not paid to the SSS as herein prescribed.(a) Coverage in the SSS shall be compulsory upon all employees not over sixty (60) years of age and their employers: Provided. A case in point is Smith Bell and Co. Smith Bell availed of the services of private respondents to transport cargoes from the pier to the company's warehouse. he shall pay besides the contribution a penalty thereon of three percent (3%) per month from the date the contribution falls due until paid. The judgment in the NLRC case pertaining to a finding of an absence of employer-employee relationship between Angeles and respondents is conclusive on the SSC case. Section 8(d) of the same law defines an employee as any person who performs services for an employer in which either or both mental or physical efforts are used and who receives compensation for such services. viz: SEC. In the instant case. v.

Co then filed a motion to quash the information. to direct Smith Bell to report all private respondents to the SSS for coverage. 9-15225-01.” Therefore. In SSC .R. While the SSC case was pending before the Court of Appeals. to constitute as bar to the SSC case. Smith Bell presented the resolution of the Supreme Court in G. L-44620 bars the SSC case. L-44620. L- 44620 to the effect that private respondents are not employees of Smith Bell.R. In support of her motion. private respondent Angeles is seeking to compel herein petitioners to remit to the Social Security System (SSS) all contributions due for and in his behalf. No. The Court further stated that the doctrine of “conclusiveness of judgment” also applies in criminal cases. one for illegal dismissal before the NLRC and the other one with the SSC. We granted the petition of Smith Bell and ordered the dismissal of the case. We held that the controversy is squarely covered by the principle of res judicata. respondent spouses had filed a labor case for illegal dismissal.[26] likewise applies to the present case. The NLRC finally ruled that there was no employer-employee relationship between her and respondent spouses. specifically for non-remittance of SSS contributions. Earlier. This Court applied Smith Bell and declared that the final and executory NLRC decision to the effect that respondent spouses were not the employees of petitioner is a ruling binding in the case for violation of the Social Security Act. No. People. An information was filed against Co by private respondent spouses who claim to be employees of the former for violation of the Social Security Act. and Court of Appeals’ finding that no employer-employee relationship existed between the parties. No. thus: In SSC Case No. particularly under the rule on “conclusiveness of judgment.[27] Applying the rule on res judicata by “conclusiveness of judgment” in conjunction with the aforecited cases. arguing that the facts alleged in the Information did not constitute an offense because respondent spouses were not her employees. the Court of Appeals aptly ruled. Secretary of Labor. as the relief sought in the latter case is inextricably related to the ruling in G.R. the judgment in G. The fairly recent case of Co v. she cited the NLRC ruling. which affirmed the NLRC. whereas in NLRC NCR CA 018066-99 (NLRC RAB-IV-5-9028-97 RI) private respondent prayed for the declaration of his dismissal illegal.were filed against Smith Bell.

particularly. private respondent. Simply stated. is AFFIRMED. in seeking to enforce his alleged right to compulsory SSS coverage. whereas to support his position in the labor case that he was illegally dismissed by petitioners BSD Agro and/or Benjamin San Diego. he asserted that there was an employer-employee relationship existing between him and petitioners at the time of his dismissal in 1997. G. 9-15225-01. 2000 which has long attained finality. under the rule on conclusiveness of judgment.R. The issue of employer-employee relationship was laid to rest in CA GR. 2011 . 9-15225-01 and NLRC NCR CA 018066-99 (NLRC RAB-IV-5-9028-977-RI). SO ORDERED. 55383. Considering the foregoing circumstances. SP. No. the instant case falls squarely under the umbrage of res judicata. through this Court’s Decision dated October 27. We hold that the relief sought in SSC Case No. alleged that he had been an employee of petitioners. Following this rule. The Court of Appeals Decision dated 20 September 2004. as enunciated in Smith Bell and Co. the petition is DENIED.[28] The NLRC decision on the absence of employer-employee relationship being binding in the SSC case. No. 1999 was an adjudication on the merits of the case. Our affirmation of the NLRC decision of May 18. 9-15225-01 is inextricably related to Our ruling in CA GR SP No. 170195 March 28. as well as its Resolution dated 9 February 2005. and Carriaga. cases. Jr. No. the issue common to both cases is whether there existed an employer-employee relationship between private respondent and petitioners at the time of the acts complaint of were committed both in SSC Case No. premises considered. WHEREFORE. 55383 to the effect that private respondent was not an employee of petitioners. we affirm the dismissal by Court of Appeals of the SSC case.

SSS claimed that Teresa was not entitled o SSS answered that Teresa as guardian was paid a total periodof 57 months and that sister of Florante wrote that Teresa hasbeen separated from Florante because former had an affair witha married man. Petitioner. 1970 . Florante II. and (2) that he/she isdependent upon the member for support. TERESA G. A person separated de facto fromher husband is not a dependent. unless the contrary is shown. his pension benefits under the SSS weregiven to their only minor child at that time.Florante died. but only until hisemancipation at age 21 Teresa then filed claim to the benefits as the surviving legal spouse butwas denied by the SSS. to wit: (1) that he/she is the legitimate spouse. Topic: Joint obligation to support DOCTRINE: A spouse who claims entitlement to death benefits as a primarybeneficiary under the Social Security Law must establish two qualifyingfactors.vs. 1970 . 1997 .Florante designated Teresita to be his sole beneficiary inSSS o He likewise named their common children as beneficiaries whenthey later had children Feb 1. have sex 4 times a week and the couple livedtogether for 10 years only o . FAVILA.Teresa married Florante Favila June 30.SOCIAL SECURITY COMMISSION and SOCIAL SECURITYSYSTEM. FACTS: January 17. Respondent.

ISSUE: Is Teresa a primary beneficiary in contemplation of the SocialSecurity Law as to be entitled to death benefits accruing from the death of Florante? HELD: NO.Teresa did not live with anybody but rumoredto have an affair Ruling of SSS Commission : death benefits dependent on 2 factors(1)legality of the marital relationship. SSC ruled that she is disqualified from claimingbenefits because she is not dependent for support from Florante due toher marital infidelity. and (2) dependency for support. the legitimate spouse dependent for support upon theemployee . There was no legal separation or annulment of marriage thatcould have disqualified her from claiming the death benefits as her designation as beneficiary had not been invalidated by any court of law. the term “dependent” is defined as“xxx. which. CA order set aside. She only contested her non- entitlement of benefitswhen the pension was stopped CA Ruling: found Teresa's petition impressed with merit. Also. marital infidelity and such other grounds sufficient to disinherit aspouse under the law. she has been separated from Florante for 17years before his death. Teresa is not dependent spouse within thecontemplation of the SSL U nder the SSS Law (RA 1161). in SSC’s opinioin. It gave weight tothe fact that she is a primary beneficiary because she is the lawful survivingspouse of Florante and in addition. is affected by factors such as separation de facto of thespouses. xxx” .Interview of SSS . she was designated by Florante as suchbeneficiary.

In Re: Application for Survivor’s Benefits of Manlavi. SC agreed with Teresa that her alleged affair with another man was notsufficiently established and Florante was actually the one who has acommon wife." Likewise under the same law. is defined as : the dependent spouse until he remarries and dependent children. a dependen t is "onewho derives his or her main support from another [or] relying on.or to perform anything without the will. or subject to. however. power or aid of someone else. someone else for support. xxx For a spouse to qualify as a primary beneficiary the SSS Law he/shemust not only be a legitimate spouse but also a dependent asdefined. one who is dependent upon the member for support . not able to exist or sustain oneself. whoshall be the primary beneficiaries. “ beneficiaries ”. that is. Teresa is still not entitled as she has beenseparated in fact from Florante for 17 years prior to his death .

From prevailing jurisprudence

: a wife who is already separated

de facto

from her husband cannot be said

to be ‘dependent for support’ upon the husband, absent any showing to the contrary

.

"[w]hoever claims entitlement to the benefits provided by law should

establish his or her right thereto by substantial evidence” In this case, as

held in

Aguas,

the wife-claimant had the burden to prove that all thestatutory requirements have been complied with,
particularly her dependency on her husband at the time of his death

Aside from Teresa’s bare allegation that she was dependent upon her

husband for support and her misplaced reliance on the presumption of dependency by reason of her
valid and then subsisting marriage withFlorante, Teresa has not presented sufficient evidence to
discharge her burden of proving that she was dependent upon her husband for supportat the time of his
death. She could have done this by submitting affidavitsof reputable and disinterested persons who
have knowledge that during her separation with Florante, she does not have a known trade,business,
profession or lawful occupation from which she derives incomesufficient for her support and such other
evidence tending to prove her claim of dependency.

Hence, for Teresa’s failure to show that despite their separation she was

dependent upon Florante for support at the time of his death, Teresacannot qualify as a primary
beneficiary. Hence, she is not entitled to the

death benefits accruing on account of Florante’s death.

MERCURY DRUG G.R. No. 164050
CORPORATION,
Petitioner, Present:

CARPIO, J.,
Chairperson,
-versus- LEONARDO DE CASTRO,*
BRION,
PERALTA,** and
PEREZ, JJ.

COMMISSIONER OF INTERNAL Promulgated:
REVENUE,
Respondent. July 20, 2011
x ----------------------------------------------------------------------------------------x
DECISION

PEREZ, J.:

This petition for review on certiorari calls for an interpretation of the term
“cost” as used in Section 4(a) of Republic Act No. 7432, otherwise known as “An
Act to Maximize the Contribution of Senior Citizens to Nation Building, Grant
Benefits and Special Privileges and For Other Purposes.”

A rundown of the pertinent facts is presented below.

Pursuant to Republic Act No. 7432, petitioner Mercury Drug Corporation
(petitioner), a retailer of pharmaceutical products, granted a 20% sales discount to
qualified senior citizens on their purchases of medicines. For the taxable year
April to December 1993 and January to December 1994, the amounts representing
the 20% sales discount

totalledP3,719,287.68[1] and P35,500,593.44,[2] respectively, which petitioner
claimed as deductions from its gross income.

Realizing that Republic Act No. 7432 allows a tax credit for sales discounts
granted to senior citizens, petitioner filed with the Commissioner of Internal
Revenue (CIR) claims for refund in the amount of P2,417,536.00 for the year 1993
and P23,075,386.00 for the year 1994. Petitioner presented a computation[3] of its
overpayment of income tax, thus:

TAXABLE YEAR 1993

SALES, Net P10,228,518,335.00
Add: Cost of 20% Discount to Senior Citizens 3,719,288.00

SALES, Gross P10,232,237,623.00

COST OF SALES
Merchandise Inventory, Beg. P2,427,972,150.00
Purchases 8,717,393,710.00
Goods Available for Sales P11,145,365,860.00
Merchandise Inventory, End 2,458,743,127.00 8,686,622,733.00

GROSS PROFIT P1,545,614,890.00
Add: Miscellaneous Income 58,247,973.00

TOTAL INCOME P1,603,862,863.00

OPERATING EXPENSES 1,226,816,343.00

NET INCOME BEFORE TAX P 377,046,520.00
Less: Income subjected to final income tax 20,966,602.00

NET TAXABLE INCOME P 356,079,918.00

INCOME TAX PAYABLE P 124,627,972.00

LESS: TAX CREDIT (20% Sales
Discount to Senior Citizens) P 3,719,288.00
TAX ACTUALLY PAID 123,326,220.00 127,045,508.00

TAX REFUNDABLE P 2,417,536.00

xxxx

TAXABLE YEAR 1994

SALES. the claim for refund for taxable year 1994 is denied for lack of merit.645.00 LESS: TAX CREDIT (Cost of 20% Discount to Senior Citizens) P 35.996. However.928.402.653. 2-94 of the Respondent is declared null and void insofar as it treats the 20% discount given by private establishments as a deduction from gross sales.789. On 6 September 2000.586.458. the Court of Tax Appeals rendered the following judgment:[4] WHEREFORE.008.688. in view of the foregoing.743.941. Beg.864.00 TAX REFUNDABLE P 23.00 GROSS PROFIT P1.181.00 INCOME TAX PAYABLE P 141.190.500. End 2.178.00 to Senior Citizens SALES.386.928.591.256.[5] .00 Less: Income subjected to final Income tax 25. the instant Petition for Review is hereby PARTIALLY GRANTED.809.435.00 164. Accordingly.207.075.499.00 COST OF SALES Merchandise Inventory.287.579.775.00 NET INCOME BEFORE TAX 428.00 TAX ACTUALLY PAID 128.671.308.00 Less: Merchandise Inventory.866.00 NET TAXABLE INCOME P 403.847.422.706.228.594.398.397.594.00 OPERATING EXPENSES 1.859.00 When the CIR failed to act upon petitioner’s claims. Gross P11.684. Net P 11.43 representing the latter’s overpaid income tax for the taxable year 1993.366.500.127.389.00 Add: Miscellaneous Income 68.00 Add: Cost of 20% Sales Discount 35.756.316.967.422.00 9. P2.784.00 TOTAL INCOME P1. the latter filed a petition for review with the Court of Tax Appeals. Respondent is hereby ORDERED to GRANT A REFUND OR ISSUE A TAX CREDIT CERTIFICATE to Petitioner in the reduced amount of P1.00 Goods Available for Sales P12.00 Purchases 10. 375. Revenue Regulations No.

393. it could not have been the intention of the lawmakers to grant these companies the full amount of the 20% discount as this could be extending to them more than what they actually sacrificed when they gave the 20% discount to senior citizens.27 were properly substantiated.00 for taxable year 1994. Elmas Drug Corporation. The Court of Tax Appeals however found some discrepancies and irregularities in the cash slips submitted by petitioner as basis for the tax refund.11% . These reductions are illustrated as follows: TAXABLE YEAR 1993 Cost of Sales P 8.719.89% Allowable Tax Credit P 2.123.522.989.789.00 Divided by Gross Sales 10.00 Cost of Sales Percentage 84.” (Underscoring supplied).25 corresponding to 1993 will be further reduced to P2.232.989.25 Multiply by 84. Similarly the amount of P8.733.207.28 based on the aforequoted Court of Appeals decision. where it ruled: “Thus the cost of the 20% discount represents the actual amount spent by drug corporations in complying with the mandate of RA 7432.792.094.123. CA-SP No. Working on this premise.789.500.00 Divided by Gross Sales 11.522. the amount of P8. viz: So.847. The Court of Tax Appeals favored petitioner by declaring that the 20% sales discount should be treated as tax credit rather than a mere deduction from gross income. Hence. contrary to the allegation of Petitioner that it granted 20% sales discounts to senior citizens in the total amount of P3.888.792.43 as this Court’s computation is based on the cost of the 20% discount and not on the total amount of the 20% discount based on the decision of the Court of Appeals in Commissioner of Internal Revenue v.27 corresponding to taxable year 1994 will be reduced to P7. The amount of P3. this Court’s study and evaluation of the evidence show that for taxable year 1993 only the amounts of P3.866.522.686. 1999.706.237.89% Adjusted Amount of 20% Discount given to Senior Citizens 3.930.25 and for 1994.622.623.930.554.996. 49946 promulgated on October 19.123.43 TAXABLE YEAR 1994 Cost of Sales P9.00 Cost of Sales Percentage 84. it disallowed the claim for taxable year 1994 and some portion of the amount claimed for 1993 by petitioner.00 for taxable year 1993 and P35.287.

862.393.43 TAX ACTUALLY PAID 123.427. P2.00 Total goods available for sale P1.00 Add: Miscellaneous Income 58.972.150.622.00 INCOME TAX PAYABLE P 124.094.00 NET INCOME BEFORE TAX P 377.890.43 for taxable year 1993 detailed as follows: TAXABLE YEAR 1993 Sales.973.972.27 Multiply by 84.00 126.545.43 TAX REFUNDABLE P 1.688.458.00 Add: Purchases 8.00 COST OF SALES Merchandise Inventory.365.Adjusted Amount of 20% Discount given to Senior Citizens P 8. This Court’s conclusion is that Petitioner is only entitled to a tax credit of P1.863.00 GROSS PROFIT P 1.00 TOTAL INCOME P 1.393.228.150.518.930.710.860.00 Less: Merchandise Inventory.792. Net P10.288.789.335.00 8.733.520.247.627. it necessarily follows that adjustments have to be made in the computation of the refundable amount which is entirely different from the computation presented by the Petitioner.11% Allowable Tax Credit P 7.343.688.220.00 OPERATING EXPENSES 1.178.918.686. Gross P10.226. End 2.00 Less: Income subjected to final income tax 20.00 SALES.603.046.743.43 .602.127.719.178.00 LESS: TAX CREDIT (20% Sales Discount given to Senior Citizens) P 2.079.237.623. Beg.28 With the foregoing changes in the amount of discounts granted by Petitioner in 1993 and 1994.232.989.00 Add: Cost of 20% Discount given to Senior Citizens 3.145.326.614.00 NET TAXABLE INCOME P 356.816.316.966.717.

28 TAX ACTUALLY PAID 128.928.684.397.775.00 136.743.996.284.00 Add: Cost of 20% Sales Discount given to Senior Citizens 35.00 COST OF SALES Merchandise Inventory.72.859. Net P11.809.928. End 2.499.190.008.032.032.00 LESS: TAX CREDIT (Cost of 20% Discount given to Senior Citizens) P7.00 Total goods available for sale P12.435.579.393.594.591. instead to tax credit.316.00 TOTAL INCOME P 1.149. Gross 11. hence the refund for the period must fail.00 GROSS PROFIT P 1.00 NET INCOME BEFORE TAX P 428.032.00 SALES.075.847.00 as claimed in the Petition. Under the circumstances.422.653.500.671.[6] Moreover.00 Less: Income subjected to final income 25.228.72 detailed as follows: TAXABLE YEAR 1994 SALES.398.864. the Court of Tax Appeals stated that the claim for tax credit must be based on the actual cost of the medicine and not the whole amount of the 20% senior citizens discount.00 Less: Merchandise Inventory.113.366.00 OPERATING EXPENSES 1.28 TAX STILL DUE P 5.207.706. P2. It applied the formula: cost of sales/gross sales x amount of 20% sales discount.402.127.308.00 Add: Purchases 10.00 Add: Miscellaneous Income 68.386.422. Petitioner has a tax liability of P5.756. instead of having a tax credit of P23. . Beg.375.645.181.866.094.287.113.389.586. still has a tax due of P5.00 9.458. and no refund or tax credit for taxable year 1994 as the computation below shows that Petitioner.00 INCOME TAX PAYABLE P 141.789.941.113.967.72 The conclusion of tax liability instead of tax overpayment pertaining to taxable year 1994 has the effect of negating the tax refund of Petitioner because the basis of such refund is the fact that there is tax credit.00 Tax NET TAXABLE INCOME P 403.

The Court of Tax Appeals finally granted the claim for refund for the taxable year 1994 on the basis of the cash slips submitted by petitioner. Petitioner moved for partial reconsideration.207. Net P11.988.211.671.389.769.211.350.28. In a Resolution dated 20 December 2000.789.00 Divided by Gross Sales 11. the Court of Tax Appeals modified its earlier ruling by increasing the creditable tax amount to P18.207.706.00 Add: Miscellaneous Income 68.11% Adjusted Amount of 20% discount given to Senior Citizens P34.45 b) Computation of the allowable tax credit on the 20% sales discount: Cost of Sales P9.720.287.00 TOTAL INCOME P 1.996.038.519.809.366.489.928.706.45 Multiply by 84.287.09 Adjusted amount of 20% sales discount P34.00 .594.402.211.414.15 b) Sales discounts twice recorded 7.00 Add: Cost of 20% Sales discount given to Senior Citizens 35. thus: TAXABLE YEAR 1994 a) Computation of adjusted amount of 20% discount given to senior citizens: Sales discount to be considered as basis for disallowance P35.864. Gross P11.579.00 COST OF SALES 9. in the sum of P16.11% P28.269.866.462.28 c) Computation of the refundable amount: SALES. inclusive of the taxable years 1993 and 1994.769.996.847.28 880.859.311.00 SALES.500.866.68 Less: Disallowances a) Sales discount without supporting documents P224.847.00 GROSS PROFIT P 1.00 Cost of Sales Percentage 84.71.775.66 c) Overstatement of sales discount 648.653.

350.375.591.422. Petitioner sought a partial modification of the above resolution raising as legal issue the basis of the computation of tax credit.190. On 20 October 2003. the Court of Appeals rendered a Decision [8] sustaining the Court of Tax Appeals and dismissing the petition.499. Citing the Court of Appeals cases ofCommissioner of Internal Revenue v.519.00 157. Commissioner of Internal Revenue. Petitioner contended that the actual discount granted to the senior citizens.967. Petitioner filed a motion for partial reconsideration which the Court of Appeals denied in a Resolution[9] dated 23 June 2004. Petitioner raises the following legal grounds for the allowance of its petition: I. Therefore. LIMITING THE TAX CREDIT ON THE ACQUISITION COST OF THE MEDICINES SOLD AMOUNTS TO A TAKING OF PROPERTY FOR PUBLIC USE WITHOUT JUST COMPENSATION.28[7] Petitioner elevated the case to the Court of Appeals via a Petition for Review under Rule 43.645.586.00 LESS: TAX CREDIT (Cost of 20% Discount given to Senior Citizens) P28. v. .00 Less: Income subjected to final income tax 25.00 NET TAXABLE INCOME P 403. the appellate court interpreted the term “cost” as used in Section 4(a) of Republic Act No.709.00 INCOME TAX PAYABLE P 141.28 AMOUNT REFUNDABLE FOR TAXABLE YEAR 1994 P 16. 7432 to mean the acquisition cost of the medicines sold to senior citizens.531.00 NET INCOME BEFORE TAX 428.008. it upheld the computation provided by the Court of Tax Appeals in its 20 December 2000 Resolution.422. OPERATING EXPENSES 1.311. rather than the acquisition cost of the item availed by senior citizens.28 TAX ACTUALLY PAID 128.181. This prompted petitioner to file the instant petition for review. should be the basis for computation of tax credit.756.775. Elmas Drug Corporation and Trinity Franchising and Management Corp.398.

petitioner explains that in addition to the direct expenses incurred in acquiring the medicine intended for re-sale to senior citizens. operating expenses or administrative overhead are likewise incurred. petitioner argues. unreasonable. III. II. THE COURT OF APPEALS AFFIRMED IN TOTO THE COURT OF TAX APPEALS’ DECISION. Limiting the tax credit on the acquisition cost of the medicines sold amounts to a taking of property for public use without just compensation. V. IV. confiscatory and an undue restraint of trade. THE COURT MAY CONSIDER THE SPIRIT AND REASON OF THE LAW WHERE A LITERAL MEANING WOULD LEAD TO INJUSTICE OR DEFEAT THE CLEAR INTENT OF THE LAWMAKERS. Petitioner alleges that while the Court of Appeals subscribes to the above interpretation. RESPONDENT MUST ACCORD PETITIONER THE SAME TREATMENT AS MAR-TESS DRUG IN ACCORDANCE WITH THE PRINCIPLE OF EQUAL PROTECTION OF LAWS. AND BROADER THAN THE INTERPRETATION OF THE COURT OF TAX APPEALS. In the second tier. the Office of the Solicitor General (OSG) filed a Manifestation and Motion supporting petitioner’s theory that the amount of tax credit should be computed based on sales discounts properly substantiated by . [10] Petitioner adopts a two-tiered approach towards defending its thesis. First. it nevertheless affirmed in toto the Court of Tax Appeals’ erroneous decision. CONFISCATORY. petitioner contends that to compel it to grant 20% discount on sale of medicine to senior citizens without fully reimbursing it for the amount of discount granted violates the due process clause for being oppressive. Moreover. In lieu of its Comment. petitioner maintains that the term “cost” should at least include all business expenses directly incurred to produce the merchandise and to bring them to their present location and use. AND AN UNDUE RESTRAINT OF TRADE. FORCING PETITIONER TO GRANT 20% DISCOUNT ON SALE OF MEDICINE TO SENIOR CITIZENS WITHOUT FULLY REIMBURSING IT FOR THE AMOUNT OF DISCOUNT GRANTED VIOLATES THE DUE PROCESS CLAUSE FOR BEING OPPRESSIVE. UNREASONABLE. EVEN THE COURT OF APPEALS HAD AN INTERPRETATION OF THE TERM “COST” THAT IS DIFFERENT FROM. YET.

restaurants and recreation centers and purchase of medicines anywhere in the country: Provided. The OSG adverted to the case of Bicolandia Drug Corporation (Formerly Elmas Drug Corporation) v. Commissioner of Internal Revenue[11] wherein we held that the term “cost” refers to the amount of the 20% discount extended by a private establishment to senior citizens in their purchase of medicines. there is nothing novel in the issues raised in this petition. Indeed. Our rulings in Bicolandia Drug Corporation (Formerly Elmas Drug Corporation) v. That private establishments may claim the cost as tax credit. hotels and similar lodging establishments. 7432 reads: SEC. Court of Appeals[15] operate as stare decisis[16] with respect to this legal question. [14] and M. [12] The foregoing proviso specifically allows the 20% senior citizens' discount to be claimed by the private establishment as a tax credit and not merely as a tax deduction from gross sales or gross income. . Privileges for the Senior Citizens. Commissioner of Internal Revenue. Republic Act No. — The senior citizens shall be entitled to the following: a) the grant of twenty percent (20%) discount from all establishments relative to the utilization of transportation services.[13] Cagayan Valley Drug Corporation v. The law however is silent as to how the “cost of the discount” as tax credit should be construed. Preliminarily.petitioner. which amount should be applied as a tax credit. 4. The burden imposed on private establishments amounts to the taking of private property for public use with just compensation in the form of a tax credit. Among the highlights of this Act is the grant of sales discounts on the purchase of medicines to senior citizens. Holding Corporation v. Section 4(a) of Republic Act No.E. Commissioner of Internal Revenue. 7432 is a piece of social legislation aimed to grant benefits and privileges to senior citizens. The OSG opines that the allowance of claim for additional tax credits should be based on sales discounts properly substantiated before the Court of Appeals. The main thrust of the petition is to determine whether the claim for tax credit should be based on the full amount of the 20% senior citizens’ discount or the acquisition cost of the merchandise sold.

Holding Corporation which bears a strikingly similar set of facts and issues with the case at bar. The 20% sales discount granted by establishments to qualified senior citizens is now treated as tax deduction and not as tax credit. The Bureau of Internal Revenue on both occasions failed to act timely on the claims. Central Luzon Drug Corporation. We reiterated this ruling in the 2008 case of Cagayan Valley Drug by holding that petitioner therein is entitled to a tax credit for the full 20% sales discounts it extended to qualified senior citizens.E. [18] The most recent case in point is M. 9257 and most recently in 2010 by Republic Act No. When advised that the discount should be treated as tax credit.E. they both filed a claim for overpayment. Elmas Drug Corporation where the term “cost of the discount” was interpreted to mean only the direct acquisition cost. 7432 applies.[17] The Court of Appeals’ decision in Commissioner of Internal Revenue v. Republic Act No. Commissioner of Internal Revenue. Holding concedes that the 20% sales discount granted to qualified senior citizens should be treated as tax credit but it placed reliance on the Court of Appeals’ decision in Commissioner of Internal Revenue v. Both petitioners filed their respective income tax return initially treating the 20% sales discount to senior citizens as deductions from its gross income.[19] this case covers the taxable years 1993 and 1994. 9994. Elmas Drug Corporation dated 19 October 1999 was relied upon by the Court of Appeals as basis for its interpretation of the term “cost” when it decided the instant case in 20 October 2003. This holds true despite the fact that petitioner suffered a net loss for that taxable year. The Court of Tax Appeals in M. We finally affirmed in M. As correctly pointed out by the OSG. excluding administrative and other incremental costs. It is worthy to mention that Republic Act No. 7432 had undergone two (2) amendments. As we have likewise declared inCommissioner of Internal Revenue v. said case had been elevated to this Court and had been eventually resolved with finality on 22 June 2006 in the case entitled Bicolandia Drug Corporation v. This was the very same case relied upon by the Court of Appeals in the present case. . In Bicolandia. hence they appealed before the Court of Tax Appeals. we construed the term “cost” as referring to the amount of the 20% discount extended by a private establishment to senior citizens in their purchase of medicines. first in 2003 by Republic Act No. thus.E. Holding that the tax credit should be equivalent to the actual 20% sales discount granted to qualified senior citizens.

686.522. to wit: TAXABLE YEAR 1993 SALES.25 COST OF SALES Merchandise Inventory.603. P2.040.343.. the sum of P3.00 NET TAXABLE INCOME P 355.972.211.522.458.816. petitioner is entitled to a tax credit equivalent to the actual amounts of the 20% sales discount as determined by the Court of Tax Appeals.25 Add: Miscellaneous Income 58.150. Net P10.393.769. Gross P10.00 Merchandise Inventory.961.123.25 Less: Income subjected to final income tax 20. we sustain petitioner’s argument that the cost of discount should be computed on the actual amount of the discount extended to senior citizens.743.00 Add: Cost of 20% Discount to Senior Citizens 3. Therefore.123.381.558.427. Based on the foregoing.966.00 Goods Available for Sales P11.326.145.247.25 TAX REFUNDABLE P 2.71 TAXABLE YEAR 1994 .417.622.545.733. End 2.25.848.228.220.00 TOTAL INCOME P1.45 for the year 1994.860.665.343.232.123.365.458.717.349.25 INCOME TAX PAYABLE P 124. A new computation for tax refund is in order.602.522.00 NET INCOME BEFORE TAX P 376.00 126.226.e. we give full accord to the factual findings of the Court of Tax Appeals with respect to the actual amount of the 20% sales discount.973. for the year 1993 and P34.00 Purchases 8.518.25 TAX ACTUALLY PAID 123. Beg.127.747.882.698.725.25 SALES.00 8.25 OPERATING EXPENSES 1. However.00 GROSS PROFIT P1.289.54 LESS: TAX CREDIT (20% Sales Discount to Senior Citizens) P 3.335.710. i.849.

127.458. P2.45 TAX REFUNDABLE P 22. SO ORDERED.71 and P22.45 Less: Income subjected to final Income tax 25.00 162.45 SALES.650.775.769. SALES.287.228.959.45 COST OF SALES Merchandise Inventory.597.237. End 2.308.927.183.397.964.00 Add: Cost of 20% Sales Discount to Senior Citizens 34.00 GROSS PROFIT P1.705.289.309.435.00 9.586.207.45 OPERATING EXPENSES 1.578.366.00 NET TAXABLE INCOME P 402.237. The assailed Decision and Resolution of the Court of Appeals are REVERSED and SET ASIDE.678.45 TAX ACTUALLY PAID 128.100.650.967.00 Less: Merchandise Inventory.34 WHEREFORE.769. the petition is GRANTED.730.809.11 LESS: TAX CREDIT (Cost of 20% Discount to Senior Citizens) P 34.743. Beg.684.828.499.381.858.756.00 NET INCOME BEFORE TAX 427.422.645.211.928.402.34.086.171. Gross P11.00 Purchases 10.316.864.671. Net P 11.591.00 Goods Available for Sales P12.45 INCOME TAX PAYABLE P 140.00 TOTAL INCOME P1.847.190.941.211.290. Respondent Commissioner of Internal Revenue is ORDERED to issue tax credit certificates in favor of petitioner in the amounts of P2.45 Add: Miscellaneous Income 68. .

JOSE PORTUGAL PEREZ Associate Justice WE CONCUR: .