SOME NOTES ON

EMPLOYEES’ COMPENSATION
[Updated: November 2019]

I. CONCEPT OF EMPLOYEES’ COMPENSATION

The program extends assistance to private and public sector employees, or their dependents in the
event of work-related sickness, injury, or death. Employees’ compensation is a type of insurance and is
based on social security principles (Raro vs. ECC, G.R. No. 58445, 27 April 1989). It is not a litigation
between the employer and the employee, but an application for benefits with the EC system.

Rationale for employees’ compensation:

“In return for the near certainty of receiving a sum of money fixed by law, the injured worker
gives up the right to subject the employer to a tort suit for huge amounts of damages. Thus,
liability not only disregards the element of fault but it is also a pre- determined amount based on
the wages of the injured worker and in certain cases, the actual cost of rehabilitation. The worker
does not receive the total damages for his pain and suffering which he could otherwise claim in a
civil suit. The employer is required to act swiftly on compensation claims. An administrative
agency supervises the program. And because the overwhelming mass of workingmen are
benefited by the compensation system, individual workers who may want to sue for big amounts
of damages must yield to the interests of their entire working class.” (Floresca vs. Philex Mining,
G.R. No. L-30642, 30 April 1985)

Compensation is predicated on sickness or injury. What is compensated is not the sickness or injury
itself, but the resulting loss or impairment of earning capacity or opportunity.

DEFINITIONS

Sickness is any illness definitely accepted as an occupational disease listed by the Employees
Compensation Commission (ECC), or any illness caused by employment subject to proof that the risk of
contracting the same is increased by working conditions.

The ECC is empowered to determine and approve occupational diseases and work-related illnesses that
may be considered compensable based on peculiar hazards of employment (Art. 173 [167], par. i, Labor
Code).

For the sickness and the resulting disability or death to be compensable, the sickness must be the
result of an occupational disease listed under Annex “A” of the Amended Rules on Employees’
Compensation with the conditions set therein satisfied; otherwise, proof must be shown that the risk
of contracting the disease is increased by the working conditions. The burden of proof would be on the
claimant. Probability, not the ultimate degree of certainty, is the test of proof in compensation
proceedings, What the law requires is reasonable work connection, not direct causal connection (GSIS
vs. Calumpiao, G.R. No. 196102, 26 November 2014).

Occupational Disease
For an occupational disease and the resulting disability or death to be compensable, all of the following
conditions must be satisfied:
1. the employee’s work and/or the working conditions must involve risk/s that caused the
development of the illness;
2. the disease was contracted as a result of the employee’s exposure to described risks;
3. the disease was contracted within a period of exposure and under such factors necessary to
contract it; and
4. there was no deliberate act on the part of the employee to disregard the safety measures or
ignore established warning or precaution.
(Employers’ Guide on ECP)

The Increased Risk Theory

There is an increased risk if the illness is caused or precipitated by factors inherent in the employees’
nature of work and working conditions. It does not include aggravation of a pre-existing illness. To
establish compensability of the claim under the Increased Risk Theory, the claimant must show proof of
work-connection. The degree of proof required varies on a case to case basis. (Employers’ Guide on ECP)

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ATTY. PACIANO F. FALLAR JR. 1
Some examples of work-connected sickness compensable under ECC are as follows:
1. Occupational hearing loss (deafness)
2. Musculoskeletal disorders (Osteoarthritis)
3. Pneumonia
4. Tuberculosis
5. Byssinosis (Lung disease caused by prolonged inhalation of textile fiber dust)

Injury is “any harmful change in the human organism from any accident arising out of and in connection
with the employment”

“Accident,” in its commonly accepted meaning, or in its ordinary sense, has been defined as:
[A] fortuitous circumstance, event, or happening, an event happening without any human
agency, or if happening wholly or partly through human agency, an event which under the
circumstances is unusual and unexpected by the person to whom it happens x x x.

The word may be employed as denoting a calamity, casualty, catastrophe, disaster, an

undesirable or unfortunate happening; any unexpected personal injury resulting from any
unlooked for mishap or occurrence; any unpleasant or unfortunate occurrence, that causes
injury, loss, suffering or death; some untoward occurrence aside from the usual course of
events.” (NFD Int’l Manning Agents, Inc. vs. Illescas, G.R. No. 183054, 29 September 2010)

For the injury and the resulting disability or death to be compensable, the injury must be the result of
an accident arising out of and in the course of employment. The injury or the resulting disability or
death sustained by reason of employment are compensable regardless of the place where the incident
occurred, if it can be proven that, at the time of the contingency, the employee was acting within the
scope of employment and performing an act reasonably necessary or incidental to it. Injuries or death
resulting from any of the following shall also be compensable:

1. Injuries resulting from an accident which happened at the workplace. This would include
extension of the office premises (like company shuttle bus).
2. Injuries resulting from an accident which happened while the employee is performing his
official function. This may include company-sponsored or company-mandated activities (e.g.,
seminars, team building activities, sportsfests, Christmas parties).
3. Injuries resulting from an accident which happened outside of the workplace but while the
employee is performing an order of his employer. An injury sustained by an employee outside
the company premises is compensable if it is covered by an office order, locator slip, or a pass
for official business. The injury is likewise compensable where the employee was performing
official functions outside regular working hours and beyond the place of work.
4. Injuries resulting from an accident which happened while going to or coming from the place of
work. An injury or death of a covered employee in an accident while he is going to, or coming
from, the workplace shall be considered compensable under the ECP provided that: (a) the act
of the employee in going to, or coming from, the workplace must have been a continuing act;
(b) that he had not been diverted therefrom by any other activity, and, (c) he had not departed
from his usual route to, or from, his workplace.
5. Injuries resulting from an accident which happened while ministering to personal comfort. Acts
performed by an employee within the time and space limits of his employment, to minister to
personal comfort such as satisfaction of his thirst, hunger, or other physical demands, or to
protect himself from excessive cold, are deemed incidental to his employment.

An assault on an employee, if work-connected, will be considered an “accident” for purposes of

compensability.

II. COVERED EMPLOYERS AND EMPLOYEES

1. Private sector workers who are compulsory members of the Social Security System (SSS) and sea-
based Overseas Filipino Workers (OFWs), and kasambahays

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2. Government sector employees who are members of the Government Service Insurance System
(GSIS), including members of the Armed Forces of the Philippines, elective government officials who
are receiving regular salary, and all casual, emergency, temporary and substitute or contractual
employees

Question: Are self-employed persons covered by the EC?

No. Compulsory coverage is for the SSS-registered employees and employers. The ECC has interpreted
this to mean exclusion of self-employed persons (who have no employers) and voluntary members. The
FAQs of ECC specifically mention the exclusion of self-employed person.

III. DATE OF COVERAGE

Employees shall be covered starting on the first day of their employment.

IV. IMPLEMENTING AGENCY

The Employees’ Compensation Commission (ECC) is the policy-determining government body. Its
functions include the authority to assess and fix a rate of contributions from all employers; to make the
necessary actuarial studies; and to approve rules and regulations governing the processing of claims and
the settlement of disputes.

The program is implemented by the SSS and the GSIS:

(a) SSS – private sector
All SSS-registered employers and their employees are compulsorily covered under the program.

(b) GSIS - government sector

V. WHO MAKES THE CONTRIBUTIONS?

Employers only.

VI. WHAT BENEFITS ARE GIVEN

1. Medical services, appliances and supplies provided to the afflicted member beginning on the first
day of injury or sickness, during the subsequent period of disability, and as the progress of recovery
may require. These benefits, however, are limited to the ward services only of an accredited hospital
and physician.

2. Rehabilitation services, consisting of medical, surgical and hospital treatment.

The SSS also provides, as soon as practicable, a balanced program of remedial treatment for
handicapped members.

3. Income cash benefit

The benefits are the following:
a. Loss-of-income benefits;
b. Medical services, appliances and supplies;
c. Carers’ allowance;
d. Rehabilitation services;
e. Death benefits; and
f. Funeral benefits

VII. QUALIFICATIONS FOR BENEFITS

• Employees should be duly reported to the SSS;

• Employees’ sickness, injury or death is work- connected; and

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ATTY. PACIANO F. FALLAR JR. 3
• The SSS has been duly notified of such sickness, injury or death.

Exception (Art. 172, Labor Code)

The claim for compensation will be denied if the employee’s disability or disability is occasioned by:

(a) Intoxication
“Intoxication”, or drunkenness” refers to being under the influence of liquor that the person’s
judgment is impaired, and his acts, words, or conduct is visibly impaired (99 CJS 908).

(b) Willful intention to injure or kill himself, or another

“Suicide” would constitute “willful intention to injure” oneself, as well as death due to unprovoked
assault on another person. But suicide, or provoked death, would still be compensable if the
employee was suffering from mental disorder at the time of the accident (Interorient Maritime
Enterprises, Inc. vs. Pineda, G.R. No. 115497, 16 September 1996).

(c) Notorious negligence

“Notorious negligence” is something more than simple or contributory negligence. It signifies a
deliberate act of the employee to disregard his own personal safety. Decided cases include a soldier
pointing the muzzle of a rifle to himself and after saying “bahala na” squeezed the trigger causing
his death (ECC case cited in Azucena I, 2004 ed, p.409).

VIII. SIMULTANEOUS RECOVERY

(a) EC and SSS

The benefits under the EC program may be enjoyed simultaneously with benefits under the social
security program.

For private sector employees, the payment of benefits under the social security program does not
bar the employee/beneficiaries from receiving benefits under the EC program, provided that the
disability or death is work-related.

(b) EC and Civil Code

If the claimant seeks compensation under ECC (the liability of which is borne by the State Insurance
Fund), and is duly compensated, another action against the employer under the Civil Code is not
allowed (Ysmael Maritime Corporation vs. Avelino, G.R. No 43674, 30 June 1987). Once EC is elected
and until the EC claim is denied, recourse against the employer under the Civil Code is prohibited.

But the heirs have the option to elect instituting an action for damages under Art. 1711 of the Civil
Code which allows recourse for death of employee in the course of employment, including
fortuitous event (Candano Shipping vs. Sugala-on, G.R. No. 163212, 13 March 2007).

IX. LIABILITY OF AN EMPLOYER FOR NON-COMPLIANCE/REMEDY OF THE EMPLOYEE

Failure of the employer to keep a logbook or to give false information or withhold material information
already in possession shall make the employer liable for fifty percent (50%) of the lump sum equivalent
of the income benefit to which the employee may be found to be entitled, the payment of which shall
accrue to the State Insurance Fund.

In case of payment of benefit for any claim which is later determined to be fraudulent and the employer
is found to be a party to the fraud, such employer shall reimburse the System the full amount of the
compensation paid.

PD 626 also has a penal provision (Art. 2015).

X. FILING OF CLAIMS

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ATTY. PACIANO F. FALLAR JR. 4
Forum/Venue
All EC claims may be filed by the claimant at his option in the GSIS Regional Office (for the public sector)
or SSS Branch (for the private sector) nearest to his place of work or residence.

If the claim is initially denied, the party may file a request for reconsideration with the GSIS or SSS main
office. If reconsideration is denied, the claimant can write a letter of appeal to the Employees’
Compensation Commission.

Prescription
EC claims must be filed within a period of three (3) years from:
 In case of sickness, from the time the employee was unable to report for work;
 In case of injury, from the time of the incident;
 In case of death, from the date of death.

The filing of disability or death benefits either under the SSS law or the GSIS law within three years from
the time the cause of action accrued would stop the running of the prescriptive period.

XI. SOME ISSUES ON DECIDED CASES

Case of Two Lawful Spouses as Competing Beneficiaries

AZUCENA (Labor Code with Comments & Cases, Vol. I 5th ed, pp. 439-440) cites an ECC case in which it
was ruled that the two (2) lawful spouses of a Muslim soldier are equally entitled to the same shares as
beneficiaries.

Proof of Insanity: Is a psychiatric exam and result a prerequisite?

No. Only substantial evidence is necessary. This is implied in the finding of the SC in Interorient Maritime
Enterprises, Inc. vs. Pineda (G.R. No. 115497, 16 September 1996):

This Court agrees with the POEA Administrator that seaman Pineda was no longer acting sanely
when he attacked the Thai policeman. The report of the Philippine Embassy in Thailand dated
October 9, 1990 depicting the deceased’s strange behavior shortly before he was shot dead,
after having wandered around Bangkok for four days, clearly shows that the man was not in
full control of his own self:

(CAD) IN REPLY TO TELEX SENT TO EMBASSY BY ADM. SARMIENTO/DELA ROSA

OF OWWA/DOLE RE CAUSE OF DEATH OF DECEASED SEAMAN JEREMIAS
PINEDA, KINDLY ADVISE HIS OFFICE THAT SUBJECT ARRIVED BANGKOK 1515H
ON BOARD XC903 ON A STOP OVER FLIGHT FROM DUBAI ON HIS WAY TO
HONGKONG PROCEEDING TO MANILA. UNFORTUNATELY PINEDA FAILED TO
TAKE THE SAME FLIGHT OUT AT 1630H, CHECKED OUT OF IMMIGRATION,
WENT OUT OF AIRPORT AND WANDERED OUT AND FEW DAYS LATER MET HIS
UNTIMELY DEMISE. PLS. REFER TO OURAD DATED 5 OCT 89 QUOTING FULL
TEXT OF POLICE REPORT ADDRESSED TO THIS EMBASSY RECOUNTING
INCIDENT LEADING TO FATAL SHOOTING OF PINEDA. KINDLY FURNISH
OWWA/DOLE FULL TEXT OF SAID REPORT FOR THEIR INFO.

PER REPORT RECEIVED FROM AIRPORT PERSONNEL PINEDA WAS ACTING

STRANGELY, REFUSED TO BOARD HIS SCHEDULED FLIGHT AND DISAPPEARED
FROM AIRPORT. POLICE REPORT ALSO CONFIRMED HIS STRANGE BEHAVIOR
LEADING TO HIS ARREST, THEN RUNNING AMOK AND CAUSING TROUBLE TO
PASSERS AND ATTEMPT TO STAB THE DUTY POLICEMAN WHO TRIED TO PACIFY
HIM.

PINEDA SEEMED TO HAVE BEEN SUFFERING FROM SOME MENTAL DISORDER

AS CAN BE GLEANED FROM HIS PERSONAL LETTERS DISCOVERED AMONG HIS
PERSONAL EFFECTS. HE COMPLAINED OF SUFFERING FROM SEVERE HEAD
PAINS AND EVEN REPORTED TO CAPTAIN OF A SHIP ABOUT THREATS ON HIS
LIFE BY FELLOW SEAMAN WHICH INVARIABLY LEAD (sic) TO HIS BEING
REPATRIATED HOME WHICH GREATLY AFFECTED HIS DISPOSITION.

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ATTY. PACIANO F. FALLAR JR. 5
 SUGGEST DOLE CONTACT CAPTAIN OF M/V AMAZSON (sic) AND ASCERTAIN AS
TO WHY PINEDA HAVE (sic) TO DISEMBARK AND SUBSEQUENTLY REPATRIATED.
IF PINEDA WAS ALREADY SUFFERING FROM MENTAL DISORDER AS FEARED, HE
SHOULD HAVE NOT BEEN ALLOWED TO TRAVEL HOME ALONE AND SHOULD
HAVE BEEN ACCOMPANIED BY A PHYSICIAN. (underscoring supplied)

The POEA Administrator ruled, and this Court agrees, that since Pineda attacked the Thai
policeman when he was no longer in complete control of his mental faculties , the aforequoted
provision of the Standard Format Contract of Employment exempting the employer from liability
should not apply in the instant case.

Employees’ Compensation and Quasi-delict under Art. 1771 of the Civil Code
(Candano Shipping vs. Sugata-on, G.R. No. 163212, 13 March 2007)

 The employees may invoke either the provisions of the Workmen’s Compensation Act or the
provisions of the Civil Code (Arts. 1711 & 1712), subject to the consequence that the choice of one
remedy will exclude the other and that the acceptance of the compensation under the remedy
chosen will exclude the other remedy.

 The exception is where the claimant who had already been paid under the Workmen’s
Compensation Act may still sue for damages under the Civil Code on the basis of supervening facts
or developments occurring after he opted for the first remedy.

Article 1711 (Civil Code). Owners of enterprises and other employers are obliged to pay compensation for the
death of or injuries to their laborers, workmen, mechanics or other employees, even though the event may have
been purely accidental or entirely due to a fortuitous cause, if the death or personal injury arose out of and in the
course of employment. The employer is also liable for compensation if the employee contracts any illness or
diseases caused by such employment or as the result of the nature of employment. If the mishap was due to the
employee’s own notorious negligence, or voluntary act, or drunkenness, the employer shall not be liable for
compensation. When the employee’s lack of due care contributed to his death or injury, the compensation shall
be equitably reduced.

 The rationale in awarding compensation under the Workmen’s Compensation Act differs from that
in giving damages under the Civil Code. The compensation acts are based on a theory of
compensation distinct from the existing theories of damages, payments under the acts being made
as compensation and not as damages (99 C.J.S. 53). Compensation is given to mitigate harshness
and insecurity of industrial life for the workman and his family. Hence, an employer is liable
whether negligence exists or not since liability is created by law. Recovery under the Act is not
based on any theory of actionable wrong on the part of the employer (99 D.J.S. 36).Under
compensation acts, the employer is liable to pay compensation benefits for loss of income, as long
as the death, sickness or injury is work-connected or work-aggravated, even if the death or injury is
not due to the fault of the employer (Murillo v. Mendoza, 66 Phil. 689). On the other hand, damages
are awarded to one as a vindication of the wrongful invasion of his rights. It is the indemnity
recoverable by a person who has sustained injury either in his person, property or relative rights,
through the act or default of another (25 C.J.S. 452).

 The party’s choice of remedy will have to be guided by several factors. A civil case is adversarial
against the employer, while an employees’ compensation is a claim against the fund. A successful
civil case will likely yield a higher judgment award (including damages) than employees’
compensation which have a set limit, but at the same time the former would also entail higher
expenses (court docket fees, lawyer’s fees, cost of suit) and may take longer to resolve. Civil cases
also require preponderance of evidence, which is a higher quantum of proof than the substantial
evidence applicable in administrative cases. The defenses available (e.g., prescription) and venue
may also be different, and these may have bearing on the choice of remedy.

Policemen and Soldiers: 24-hour Duty

(Tansinco vs. GSIS, G.R. No. 132916, 16 November 2001)

 Members of the national police, the armed forces, and firemen, are by the nature of their functions
technically on duty 24 hours a day. Except when they are on vacation leave, they are subject to call

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 at any time and may be asked by their superiors or by any distressed citizen to assist in maintaining
the peace and security of the community. But not all deaths of policemen and soldiers are
compensable; there must always be work-relation.

 I don’t think there should be a strict distinction between being “off duty” (i.e., on ‘rest’ shift) and
being on “official leave”. If a policeman or soldier is presented with a situation requiring them to act
and discharge their duties as peace officers, then any injury should be deemed compensable.

 “To be compensable, an injury must have resulted from an accident arising out of and in the course
of employment. It must be shown that it was sustained within the scope of employment while the
claimant was performing an act reasonably necessary or incidental thereto or while following the
orders of a superior. Indeed, the standard of ‘work connection’ must be satisfied even by one who
invokes the 24-hour-duty doctrine; otherwise, the claim for compensability must be denied”.
(Valeriano vs ECC, GR No. 136200, 08 June 2000)

 “Taking together jurisprudence and the pertinent guidelines of the ECC with respect to claims for
death benefits, namely: (a) that the employee must be at the place where his work requires him to
be; (b) that the employee must have been performing his official functions; and (c) that if the
injury is sustained elsewhere, the employee must have been executing an order for the employer ,
it is not difficult to understand then why SPO2 Alegres widow should be denied the claims otherwise
due her. Obviously, the matter SPO2 Alegre was attending to at the time he met his death, that of
ferrying passengers for a fee, was intrinsically private and unofficial in nature proceeding as it did
from no particular directive or permission of his superior officer. In the absence of such prior
authority as in the cases of Hinoguin and Nitura, or peacekeeping nature of the act attended to by
the policeman at the time he died even without the explicit permission or directive of a superior
officer, as in the case of P/Sgt. Alvaran, there is no justification for holding that SPO2 Alegre met the
requisites set forth in the ECC guidelines. That he may be called upon at any time to render police
work as he is considered to be on a round-the-clock duty and was not on an approved vacation leave
will not change the conclusion arrived at considering that he was not placed in a situation where he
was required to exercise his authority and duty as a policeman. In fact, he was refusing to render
one pointing out that he already complied with the duty detail. At any rate, the 24-hour duty
doctrine, as applied to policemen and soldiers, serves more as an after-the-fact validation of their
acts to place them within the scope of the guidelines rather than a blanket license to benefit them in
all situations that may give rise to their deaths. In other words, the 24-hour duty doctrine should not
be sweepingly applied to all acts and circumstances causing the death of a police officer but only
to those which, although not on official line of duty, are nonetheless basically police service in
character.” [italics supplied]

Sex Workers and Employee Compensability for Sexually-Tran smitted Diseases/AIDS

 Should these workers be covered?

 Female sex workers (how about male sex workers?) are implicitly recognized in Art. 136 (138) of the
Labor Code):
Art. 138. Classification of certain women workers. Any woman who is permitted or suffered to work, with or
without compensation, in any night club, cocktail lounge, massage clinic, bar or similar establishments
under the effective control or supervision of the employer for a substantial period of time as determined by
the Secretary of Labor and Employment, shall be considered as an employee of such establishment for
purposes of labor and social legislation .

 Judicial notice may be taken that, as part of the condition for issuance of business /mayor’s permits,
these establishments are mandated to require their female attendants to undergo medical
clearance on periodic basis.

 Assuming the female attendants are covered by the EC, and premiums are being paid by the
employer, I see no compelling reason why they cannot claim compensation so long as they prove
work-connection and that the risk of contracting the disease is increased by the working conditions .
P F F A L L A R J R. SSCR

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