SOCIAL SECURITY ACT OF 1997

REPUBLIC ACT NO. 8282

AN ACT FURTHER STRENGTHENING THE SOCIAL SECURITY SYSTEM THEREBY AMENDING FOR THIS
PURPOSE, REPUBLIC ACT NO. 1161, AS AMENDED, OTHERWISE KNOWN AS THE SOCIAL SECURITY LAW.

SECTION 1. Republic Act No. 1161, as amended, otherwise known as the "Social Security Law", is hereby
further amended to read as follows:

"SECTION 1. Short Title. - This Act shall be known as the "Social Security Act of 1997."

"SEC. 2. Declaration of Policy. - It is the policy of the Republic of the Philippines to establish, develop,
promote and perfect a sound and viable tax-exempt social security service suitable to the needs of the
people throughout the Philippines which shall promote social justice and provide meaningful protection
to members and their beneficiaries against the hazards of disability, sickness, maternity, old age, death,
and other contingencies resulting in loss of income or financial burden. Towards this end, the State shall
endeavor to extend social security protection to workers and their beneficiaries.

"SEC. 3. Social Security System. - (a) To carry out the purposes of this Act, the Social Security System,
hereinafter referred to as SSS, a corporate body, with principal place of business in Metro Manila,
Philippines is hereby created. The SSS shall be directed and controlled by a Social Security Commission,
hereinafter referred to as Commission, composed of the Secretary of Labor and Employment or his
duly designated undersecretary, the SSS president and seven (7) appointive members, three (3) of
whom shall represent the workers group, at least one of whom shall be a woman; three (3), the
employers group, at least one (1) of whom shall be a woman; and one (1), the general public whose
representative shall have adequate knowledge and experience regarding social security, to be appointed
by the President of the Philippines. The six (6) members representing workers and employers shall be
chosen from among the nominees of workers and employers organizations, respectively. The Chairman
of the Commission shall be designated by the President of the Philippines from among its members. The
term of the appointive members shall be three (3) years: Provided, That the terms of the first six (6)
appointive members shall be one (1), two (2) and three (3) years for every two members, respectively:
Provided, further, That they shall continue to hold office until their successors shall have been
appointed and duly qualified. All vacancies, prior to the expiration of the term, shall be filled for the
unexpired term only. The appointive members of the Commission shall receive at least two thousand
five hundred pesos (P2,500.00) per diem for each meeting actually attended by them but not to exceed
Ten thousand pesos (P10,000.00) a month:: Provided, That members of the Commission shall also
receive a per diem of at least Two thousand five hundred pesos (P2,500.00) but not to exceed Fifteen
thousand pesos (P15,000.00) a month: Provided , further, That said members of the Commission shall
also receive reasonable transportation and representation allowances as may be fixed by the
Commission, but not to exceed Ten thousand pesos (P10,000.00) a month.
"(b) The general conduct of the operations and management functions of the SSS shall be vested in the
SSS President who shall serve as the chief executive officer immediately responsible for carrying out the
program of the SSS and the policies of the Commission. The SSS President shall be a person who has had
previous experience in the technical and administrative fields related to the purposes of this Act. He
shall be appointed by the President of the Philippines and shall receive salary to be fixed by the
Commission with the approval of the President of the Philippines, payable from the funds of the SSS.

"(c) The Commission, upon the recommendation of the SSS President, shall appoint an actuary, and such
other personnel as may be deemed necessary, fix their reasonable compensation, allowances and other
benefits, prescribe their duties and establish such methods and procedures as may be necessary to
insure the efficient, honest and economical administration of the provisions and purposes of this Act:
Provided, however, That the personnel of the SSS below the rank of Vice-President shall be appointed by
the SSS President: Provided, further, That the personnel appointed by the SSS President, except those
below the rank of assistant manager, shall be subject to the confirmation by the Commission: Provided,
further, That the personnel of the SSS shall be selected only from civil service eligibles and be subject to
civil service rules and regulations: Provided, finally, That the SSS shall be exempt from the provisions of
Republic Act No. 6758 and Republic Act No. 7430.

"SEC. 4. Powers and Duties of the Commission and SSS. - (a) The Commission. - For the attainment of its
main objectives as set forth in Section 2 hereof, the Commission shall have the following powers and
duties:

"(1) To adopt, amend and rescind, subject to the approval of the President of the Philippines, such rules
and regulations as may be necessary to carry out the provisions and purposes of this Act;

"(2) To establish a provident fund for the members which will consist of voluntary contributions of
employers and/or employees, self-employed and voluntary members and their earnings, for the
payment of benefits to such members or their beneficiaries, subject to such rules and regulations as it
may promulgate and approved by the President of the Philippines;

"(3) To maintain a provident fund which consists of contributions made by both the SSS and its officials
and employees and their earnings, for the payment of benefits to such officials and employees or their
heirs under such terms and conditions as it may prescribe;

"(4) To approve restructuring proposals for the payment of due but unremitted contributions and
unpaid loan amortizations under such terms and conditions as it may prescribe;

"(5) To authorize cooperatives registered with the cooperative development authority or associations
registered with the appropriate government agency to act as collecting agents of the SSS with respect to
their members: Provided, That the SSS shall accredit the cooperative or association: Provided, further,
That the persons authorized to collect are bonded;

"(6) To compromise or release, in whole or in part, any interest, penalty or any civil liability to SSS in
connection with the investments authorized under Section 26 hereof, under such terms and conditions
as it may prescribe and approved by the President of the Philippines; and

"(7) To approve, confirm, pass upon or review any and all actions of the SSS in the proper and necessary
exercise of its powers and duties hereinafter enumerated.
"(b) The Social Security System. - Subject to the provision of Section four (4), paragraph seven (7) hereof,
the SSS shall have the following powers and duties:

"(1) To submit annually not later than April 30, a public report to the President of the Philippines and to
the Congress 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;

"(2) To require the actuary to submit a valuation report on the SSS benefit program every four (4) years,
or more frequently as may be necessary, to undertake the necessary actuarial studies and calculations
concerning increases in benefits taking into account inflation and the financial stability of the SSS, and to
provide for feasible increases in benefits every four (4) years, including the addition of new ones, under
such rules and regulations as the Commission may adopt, subject to the approval of the President of the
Philippines: Provided, That the actuarial soundness of the reserve fund shall be guaranteed: Provided,
further, That such increases in benefits shall not require any increase in the rate of contribution;

"(3) To establish offices of the SSS to cover as many provinces, cities and congressional districts,
whenever and wherever it may be expedient, necessary and feasible, and to inspect or cause to be
inspected periodically such offices;

"(4) To enter into agreements or contracts for such service and aid, as may be needed for the proper,
efficient and stable administration of the SSS;

"(5) To adopt, from time to time, a budget of expenditures including salaries of personnel, against all
funds available to the SSS under this Act;

"(6) To set up its accounting system and provide the necessary personnel therefor;

"(7) To require reports, compilations and analyses of statistical and economic data and to make
investigation as may be needed for the proper administration and development of the SSS;

"(8) To acquire and dispose of property, real or personal, which may be necessary or expedient for the
attainment of the purposes of this Act;

"(9) To acquire, receive, or hold, by way of purchase, expropriation or otherwise, public or private
property for the purpose of undertaking housing projects preferably for the benefit of low-income
members and for the maintenance of hospitals and institutions for the sick, aged and disabled, as well as
schools for the members and their immediate families;

"(10) To sue and be sued in court; and

"(11) To perform such other corporate acts as it may deem appropriate for the proper enforcement of
this Act.

"SEC. 5. Settlement of Disputes. - (a) Any dispute arising under this Act with respect to coverage,
benefits, contributions and penalties thereon or any other matter related thereto, shall be cognizable by
the Commission, and any case filed with respect thereto shall be heard by the Commission, or any of its
members, or by hearing officers duly authorized by the Commission and decided within twenty (20) days
after the submission of the evidence. The filing, determination and settlement of disputes shall be
governed by the rules and regulations promulgated by the Commission.
"(b) Appeal to Courts. - Any decision of the Commission, in the absence of an appeal therefrom as herein
provided, shall become final and executory fifteen (15) days after the date of notification, and judicial
review thereof shall be permitted only after any party claiming to be aggrieved thereby has exhausted
his remedies before the Commission. The Commission shall be deemed to be a party to any judicial
action involving any such decision, and may be represented by an attorney employed by the
Commission, or when requested by the Commission, by the Solicitor General or any public prosecutors.

"(c) Court Review. - The decision of the Commission upon any disputed matter may be reviewed both
upon the law and the facts by the Court of Appeals. For the purpose of such review, the procedure
concerning appeals from the Regional Trial Court shall be followed as far as practicable and consistent
with the purposes of this Act. Appeal from a decision of the Commission must be taken within fifteen
(15) days from notification of such decision. If the decision of the Commission involves only questions of
law, the same shall be reviewed by the Supreme Court. No appeal bond shall be required. The case shall
be heard in a summary manner, and shall take precedence over all cases, except that in the Supreme
Court, criminal cases wherein life imprisonment or death has been imposed by the trial court shall take
precedence. No appeal shall act as a supersedeas or a stay of the order of the Commission unless the
Commission itself, or the Court of Appeals or the Supreme Court, shall so order.

"(d) Execution of Decisions. - The Commission may, motu proprio or on motion of any interested party,
issue a writ of execution to enforce any of its decisions or awards, after it has become final and
executory, in the same manner as the decision of the Regional Trial Court by directing the city or
provincial sheriff or the sheriff whom it may appoint to enforce such final decision or execute such writ;
and any person who shall fail or refuse to comply with such decision, award or writ, after being required
to do so shall, upon application by the Commission pursuant to Rule 71 of the Rules of Court, be
punished for contempt.

"SEC. 6. Auditor and Counsel. - (a) The Chairman of the Commission on Audit shall be the ex-officio
Auditor of the SSS. He or his representative shall check and audit all the accounts, funds and properties
of the SSS in the same manner and as frequently as the accounts, funds and properties of the
government are checked and audited under existing laws, and he shall have, as far as practicable, the
same powers and duties as he has with respect to the checking and auditing of public accounts, funds
and properties in general.

"(b) The Secretary of Justice shall be the ex-officio counsel of the SSS. He or his representative shall act
as legal adviser and counsel thereof.

"SEC. 7. Oaths, Witnesses, and Production of Records. - When authorized by the Commission, an official
or employee thereof shall have the power to administer oath and affirmation, take depositions, certify
to official acts, and issue subpoena and subpoena duces tecum to compel the attendance of witnesses
and the production of books, papers, correspondence and other records deemed necessary as evidence
in connection with any question arising under this Act. Any case of contumacy shall be dealt with by the
Commission in accordance with law.

"SEC. 8. Terms Defined. - For purposes of this Act, the following terms shall, unless the context indicates
otherwise, have the following meanings:

"(a) SSS - The Social Security System created by this Act.

"(b) Commission - The Social Security Commission as herein created.

"(c) Employer- Any person, natural or juridical, domestic or foreign, who carries on in the Philippines any
trade, business, industry, undertaking, or activity of any kind and uses the services of another person
who is under his orders as regards the employment, except the Government and any of its political
subdivisions, branches or instrumentalities, including corporations owned or controlled by the
Government: Provided, That a self-employed person shall be both employee and employer at the same
time.

"(d) Employee - 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, where there is an employer-
employee relationship: Provided, That a self-employed person shall be both employee and employer at
the same time.

"(e) Dependents - The dependents shall be the following:

"(1) The legal spouse entitled by law to receive support from the member;

"(2) The legitimate, legitimated or legally adopted, and illegitimate child who is unmarried, not gainfully
employed, and has not reached twenty-one (21) years of age, or if over twenty-one (21) years of age, he
is congenitally or while still a minor has been permanently incapacitated and incapable of self-support,
physically or mentally; and

"(3) The parent who is receiving regular support from the member.

"(f) Compensation - All actual remuneration for employment, including the mandated cost-of-living
allowance, 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 the maximum salary credit as provided under Section
Eighteen of this Act.

"(g) Monthly salary credit - The compensation base for contributions and benefits as indicated in the
schedule in Section Eighteen of this Act.

"(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, daily or weekly basis; if on any
other basis, monthly shall mean a period of one (1) month.

"(i) Contribution - The amount paid to the SSS by and on behalf of the members in accordance with
Section Eighteen of this Act.

"(j) Employment - Any service performed by an employee for his employer except:

"(1) Employment purely casual and not for the purpose of occupation or business of the employer;

"(2) Service performed on or in connection with an alien vessel by an employee if he is employed when
such vessel is outside the Philippines;

"(3) Service performed in the employ of the Philippine Government or instrumentality or agency
thereof;
"(4) Service performed in the employ of a foreign government or international organization, or their
wholly-owned instrumentality: Provided, however, That this exemption notwithstanding, any foreign
government, international organization 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, further, 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, finally, That the provisions of this Act shall be supplementary to any such agreement;
and

"(5) Such other services performed by temporary and other employees which may be excluded by
regulation of the Commission. Employees of bona fide independent contractors shall not be deemed
employees of the employer engaging the service of said contractors.

"(k) Beneficiaries - The dependent spouse until he or she remarries, the dependent legitimate,
legitimated or legally adopted, and illegitimate children, who shall be the primary beneficiaries of the
member: Provided, That the dependent illegitimate children shall be entitled to fifty percent (50%) of
the share of the legitimate, legitimated or legally adopted children: Provided, further, That in the
absence of the dependent legitimate, legitimated children of the member, his/her dependent
illegitimate children shall be entitled to one hundred percent (100%) of the benefits. In their absence,
the dependent parents who shall be the secondary beneficiaries of the member. In the absence of all
the foregoing, any other person designated by the member as his/her secondary beneficiary.

"(l) Contingency - The retirement, death, disability, injury or sickness and maternity of the member.

"(m) Average monthly salary credit - The result obtained by dividing the sum of the last sixty (60)
monthly salary credits immediately preceding the semester of contingency by sixty (60), 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 monthly contributions paid in the same period, whichever is greater: Provided, 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.

"(n) Average daily salary credit- The result obtained by dividing the sum of the six (6) highest monthly
salary credits in the twelve-month period immediately preceding the semester of contingency by one
hundred eighty (180).

"(o) Semester - A period of two (2) consecutive quarters ending in the quarter of contingency.

"(p) Quarter - A period of three (3) consecutive calendar months ending on the last day of March, June,
September and December.

"(q) Credited years of service - For a member covered prior to January nineteen hundred and eighty five
(1985) minus the calendar year of coverage plus the number of calendar years in which six (6) or more
contributions have been paid from January nineteen hundred and eighty five (1985) up to the calendar
year containing the semester prior to the contingency. For a member covered in or after January
nineteen hundred and eighty five (1985), the number of calendar years in which six (6) or more
contributions have been paid from the year of coverage up to the calendar year containing the semester
prior to the contingency: Provided, That the Commission may provide for a different number of
contributions in a calendar year for it to be considered as a credited year of service.

"(r) Member - The worker who is covered under Section Nine and Section Nine-A of this Act.

"(s) Self-employed - Any person whose income is not derived from employment, as defined under this
Act, as well as those workers enumerated in Section Nine-A hereof.

"(t) Net earnings - Net income before income taxes plus non-cash charges such as depreciation and
depletion appearing in the regular financial statement of the issuing or assuming institution.

"(u) Fixed charges - Recurring expense such as amortization of debt discount or rentals for leased
properties, including interest on funded and unfunded debt.

"SEC. 9. Coverage. - (a) Coverage in the SSS shall be compulsory upon all employees not over sixty (60)
years of age and their employers: Provided, That in the case of domestic helpers, their monthly income
shall not be less than One thousand pesos (P1,000.00) a month: Provided, further, That any benefit
already earned by the employees under private benefit plans existing at the time of the approval of this
Act shall not be discontinued, reduced or otherwise impaired: Provided, 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 employers contribution to his private plan is more than 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 employers total
contribution to his benefit plan and to the SSS shall be the same as his contribution to his private benefit
plan before the compulsory coverage: Provided, further, That any changes, adjustments, modifications,
eliminations or improvements in the benefits to be available under the remaining private plan, which
may be necessary to adopt by reason of the reduced contributions thereto as a result of the integration,
shall be subject to agreements between the employers and employees concerned: Provided, further,
That the private benefit plan which the employer shall continue for his employees shall remain under
the employers management and control unless there is an existing agreement to the contrary:
Provided, finally, 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.

"(b) Spouses who devote full time to managing the household and family affairs, unless they are also
engaged in other vocation or employment which is subject to mandatory coverage, may be covered by
the SSS on a voluntary basis.

"(c) Filipinos recruited by foreign-based employers for employment abroad may be covered by the SSS
on a voluntary basis.

"SEC. 9-A. Compulsory Coverage of the Self-Employed. - Coverage in the SSS shall also be compulsory
upon such self-employed persons as may be determined by the Commission under such rules and
regulations as it may prescribe, including but not limited to the following:

"1. All self-employed professionals;

"2. Partners and single proprietors of businesses;

"3. Actors and actresses, directors, scriptwriters and news correspondents who do not fall within the
definition of the term "employee" in Section 8 (d) of this Act;

"4. Professional athletes, coaches, trainers and jockeys; and

"5. Individual farmers and fishermen.

"Unless otherwise specified herein, all provisions of this Act applicable to covered employees shall also
be applicable to the covered self-employed persons.

"SEC. 10. Effective Date of Coverage. - 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, That the
compulsory coverage of the self-employed person shall take effect upon his registration with the SSS.

"SEC. 11. Effect of Separation from Employment. - When an employee under compulsory coverage is
separated from employment, his employers contribution on his account and his obligation to pay
contributions arising from that employment shall cease at the end of the month of separation, but said
employee shall be credited with all contributions paid on his behalf and entitled to benefits according to
the provisions of this Act. He may, however, continue to pay the total contributions to maintain his right
to full benefit.

"SEC. 11-A. Effect of Interruption of Business or Professional Income. - If the self-employed realizes no
income in any given month, he shall not be required to pay contributions for that month. He may,
however, be allowed to continue paying contributions under the same rules and regulations applicable
to a separated employee member: Provided, That no retroactive payment of contributions shall be
allowed other than as prescribed under Section Twenty-two-A hereof.

"SEC. 12. Monthly Pension. - (a) The monthly pension shall be the highest of the following amounts:

"(1) The sum of the following:

"(i) Three hundred pesos (P300.00; plus

"(ii) Twenty percent (20%) of the average monthly salary credit; plus

"(iii) Two percent (2%) of the average monthly salary credit for each credited year of service in excess of
ten (10) years; or

"(2) Forth percent (40%) of the average monthly salary credit; or

"(3) One thousand pesos (P1,000.00): Provided, That the monthly pension shall in no case be paid for an
aggregate amount of less than sixty (60) months.

"(b) Notwithstanding the preceding paragraph, the minimum pension shall be One thousand two
hundred pesos (P1,200.00) for members with at least ten (10) credited years of service and Two
thousand four hundred pesos (P2,400.00) for those with twenty (20) credited years of service.

"SEC. 12-A. Dependents Pension. - Where monthly pension is payable on account of death, permanent
total disability or retirement, dependents pension equivalent to ten percent (10%) of the monthly
pension or Two hundred fifty pesos (P250.00), whichever is higher, shall also be paid for each dependent
child conceived on or before the date of the contingency but not exceeding five (5), beginning with the
youngest and without substitution: Provided, That where there are legitimate or illegitimate children,
the former shall be preferred.

SEC. 12-B. Retirement Benefits. - (a) A member who has paid at least one hundred twenty (120) monthly
contributions prior to the semester of retirement and who: (1) has reached the age of sixty (60) years
and is already separated from employment or has ceased to be self-employed; or (2) has reached the
age of sixty-five (65) years, shall be entitled for as long as he lives to the monthly pension: Provided,
That he shall have the option to receive his first eighteen (18) monthly pensions in lump sum discounted
at a preferential rate of interest to be determined by the SSS.

"(b) A covered member who is sixty (60) years old at retirement and who does not qualify for pension
benefits under paragraph (a) above, shall be entitled to a lump sum benefit equal to the total
contributions paid by him and on his behalf: Provided, That he is separated from employment and is not
continuing payment of contributions to the SSS on his own.

"(c) The monthly pension shall be suspended upon the reemployment or resumption of self-
employment of a retired member who is less than sixty-five (65) years old. He shall again be subject to
Section Eighteen and his employer to Section Nineteen of this Act.

"(d) Upon the death of the retired member, his primary beneficiaries as of the date of his retirement
shall be entitled to receive the monthly pension: Provided, That if he has no primary beneficiaries and
he dies within sixty (60) months from the start of his monthly pension, his secondary beneficiaries shall
be entitled to a lump sum benefit equivalent to the total monthly pensions corresponding to the balance
of the five-year guaranteed period, excluding the dependents pension.

"(e) The monthly pension of a member who retires after reaching age sixty (60) shall be the higher of
either: (1) the monthly pension computed at the earliest time he could have retired had he been
separated from employment or ceased to be self-employed plus all adjustments thereto; or (2) the
monthly pension computed at the time when he actually retires.

"SEC. 13. Death Benefits. - Upon the death of a member who has paid at least thirty-six (36) monthly
contributions prior to the semester of death, his primary beneficiaries shall be entitled to the monthly
pension: Provided, That if he has no primary beneficiaries, his secondary beneficiaries shall be entitled
to a lump sum benefit equivalent to thirty-six (36) times the monthly pension. If he has not paid the
required thirty-six (36) monthly contributions, his primary or secondary beneficiaries shall be entitled to
a lump sum benefit equivalent to the monthly pension times the number of monthly contributions paid
to the SSS or twelve (12) times the monthly pension, whichever is higher.

"SEC. 13-A. Permanent Disability Benefits. - (a) Upon the permanent total disability of a member who
has paid at least thirty-six (36) monthly contributions prior to the semester of disability, he shall be
entitled to the monthly pension: Provided, That if he has not paid the required thirty-six (36) monthly
contributions, he shall be entitled to a lump sum benefit equivalent to the monthly pension times the
number of monthly contributions paid to the SSS or twelve (12) times the monthly pension, whichever is
higher. A member who (1) has received a lump sum benefit; and (2) is reemployed or has resumed self-
employment not earlier than one (1) year from the date of his disability shall again be subject to
compulsory coverage and shall be considered a new member.
"(b) The monthly pension and dependents pension shall be suspended upon the reemployment or
resumption of self-employment or the recovery of the disabled member from his permanent total
disability or his failure to present himself for examination at least once a year upon notice by the SSS.

"(c) Upon the death of the permanent total disability pensioner, his primary beneficiaries as of the date
of disability shall be entitled to receive the monthly pension: Provided, That if he has no primary
beneficiaries and he dies within sixty (60) months from the start of his monthly pension, his secondary
beneficiaries shall be entitled to a lump sum benefit equivalent to the total monthly pensions
corresponding to the balance of the five-year guaranteed period excluding the dependents pension.

"(d) The following disabilities shall be deemed permanent total:

"1. Complete loss of sight of both eyes;

"2. Loss of two limbs at or above the ankle or wrists;

"3. Permanent complete paralysis of two limbs;

"4. Brain injury resulting to incurable imbecility or insanity; and

"5. Such cases as determined and approved by the SSS.

"(e) If the disability is permanent partial, and such disability occurs before thirty-six (36) monthly
contributions have been paid prior to the semester of disability, 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.

"(f) If the disability is permanent total and such disability occurs after thirty-six (36) 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 ring 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 50

Sight of one eye 25

"(g) The percentage degree of disability which is equivalent to the ratio that the designated number of
months of compensability bears to seventy-five (75), rounded to the next higher integer, shall not be
additive for distinct, separate and unrelated permanent partial disabilities, but shall be additive for
deteriorating and related permanent partial disabilities to a maximum of one hundred percent (100%),
in which case, the member shall be deemed as permanently totally disabled.

"(h) In case of permanent partial disability, the monthly pension benefit shall be given in lump sum if it is
payable for less than twelve (12) months.

"(i) For the purpose of adjudicating retirement, death and permanent total disability pension benefits,
contributions shall be deemed paid for the months during which the member received partial disability
pension: Provided, That such contributions shall be based on his last contribution prior to his disability.

"(j) Should a member who is on partial disability pension retire or die, his disability pension shall cease
upon his retirement or death.

"SEC. 13-B. Funeral Benefit. - A funeral grant equivalent to Twelve thousand pesos (P12,000.00) shall be
paid, in cash or in kind, to help defray the cost of funeral expenses upon the death of a member,
including permanently totally disabled member or retiree.

"SEC. 14. Sickness Benefit. - (a) A member who has paid at least three (3) monthly contributions in the
twelve-month period immediately preceding the semester of sickness or injury and is confined therefor
for more than three (3) days in a hospital or elsewhere with the approval of the SSS, shall, for each day
of compensable confinement or a fraction thereof, be paid by his employer, or the SSS, if such person is
unemployed or self-employed, a daily sickness benefit equivalent to ninety percent (90%) of his average
daily salary credit, subject to the following conditions:

"(1) In no case shall the daily sickness benefit be paid longer than one hundred twenty (120) days in one
(1) calendar year, nor shall any unused portion of the one hundred twenty (120) 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;

"(2) The daily sickness benefit shall not be paid for more than two hundred forty (240) days on account
of the same confinement; and

"(3) The employee member shall notify his employer of the fact of his sickness or injury within five (5)
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 necessary: Provided, That if the member is unemployed or self-
employed, he shall directly notify the SSS of his confinement within five (5) calendar days after the start
thereof unless such confinement is in a hospital in which case notification is also not necessary:
Provided, further, That in cases where notification is necessary, the confinement shall be deemed to
have started not earlier than the fifth day immediately preceding the date of notification.

"(b) The compensable confinement shall begin on the first day of sickness, 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, and similarly in the case of direct payment by the SSS, for as long as such allowances
are due and payable: Provided, That such allowance shall begin only after all sick leaves of absence with
full pay to the credit of the employee member shall have been exhausted.

"(c) One hundred percent (100%) 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, That the employer has notified the SSS of the confinement within five (5) calendar
days after receipt of the notification from the employee member: Provided, further, That if the
notification to the SSS is made by the employer beyond five (5) calendar days after receipt of the
notification from the employee member, 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, finally, 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, except confinement in a hospital in which case the claim for
benefit or reimbursement must be filed within one (1) year from the last day of confinement.

"(d) Where the employee member 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 member as required in this
section.

"(e)The claim of reimbursement shall be adjudicated by the SSS within a period of two (2) months from
receipt thereof: Provided, That should no payment be received by the employer within one (1) month
after the period prescribed herein for adjudication, the reimbursement shall thereafter earn simple
interest of one percent (1%) per month until paid.

"(f) The provisions regarding the notification required of the member 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.

"SEC. 14-A. Maternity Leave Benefit. - A female member who has paid at least three (3) monthly
contributions in the twelve-month period immediately preceding the semester of her childbirth or
miscarriage shall be paid a daily maternity benefit equivalent to one hundred percent (100%) of her
average daily salary credit for sixty (60) days or seventy-eight (78) days in case of caesarian delivery,
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;

"(b) The full payment shall be advanced by the employer within thirty (30) days from the filing of the
maternity leave application;

"(c) That payment of daily maternity benefits shall be a bar to the recovery of sickness benefits provided
by this Act for the same period for which daily maternity benefits have been received;

"(d) That the maternity benefits provided under this section shall be paid only for the first four (4)
deliveries or miscarriages;

"(e) That the SSS shall immediately reimburse the employer of one hundred percent (100%) of the
amount of maternity benefits advanced to the employee by the employer upon receipt of satisfactory
proof of such payment and legality thereof; and

"(f) That if an employee member should give birth or suffer miscarriage without the required
contributions having been remitted for her by her employer to the SSS, or without the latter having
been previously notified by the employer of the time of the pregnancy, the employer shall pay to the
SSS damages equivalent to the benefits which said employee member would otherwise have been
entitled to.

"SEC. 15. Non-Transferability of Benefits. - The SSS shall promptly pay the benefits provided in this Act to
such persons as may be entitled thereto in accordance with the provisions of this Act: Provided, That the
SSS shall pay the retirement benefits on the day of contingency to qualified members who have
submitted the necessary documents at least six (6) months before: Provided, further, That the
beneficiary who is a national of a foreign country which does not extend benefits to a Filipino
beneficiary residing in the Philippines, or which is not recognized by the Philippines, shall not be entitled
to receive any benefit under this Act: Provided, further, That notwithstanding the foregoing, where the
best interest of the SSS will be served, the Commission may direct payments without regard to
nationality or country of residence: Provided, further, That if the recipient is a minor or a person
incapable of administering his own affairs, the Commission shall appoint a representative under such
terms and conditions as it may deem proper: Provided, further, 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
member in which case the benefits shall be paid to such parents or spouse, as representative payee of
the recipient. Such benefits are not transferable and no power of attorney or other document executed
by those entitled thereto in favor of any agent, attorney or any other person for the collection thereof
on their behalf shall be recognized, except when they are physically unable to collect personally such
benefits: Provided, further, That in case of death benefits, if no beneficiary qualifies under this Act, said
benefits shall be paid to the legal heirs in accordance with the law of succession.

"SEC. 16. Exemption from Tax, Legal Process and Lien. -- All laws to the contrary notwithstanding, the
SSS and all its assets and properties, all contributions collected and all accruals thereto and income or
investment earnings therefrom as well as all supplies, equipment, papers or documents shall be exempt
from any tax, assessment, fee, charge, or customs or import duty; and all benefit payments made by the
SSS shall likewise be exempt from all kinds of taxes, fees or charges, and shall not liable to attachments,
garnishments, levy or seizure by or under any legal or equitable process whatsoever, either before or
after receipt by the person or persons entitled thereto, except to pay any debt of the member to the
SSS. No tax measure of whatever nature enacted shall apply to the SSS, unless it expressly revokes the
declared policy of the State in Section 2 hereof granting tax-exemption to the SSS. Any tax assessment
imposed against the SSS shall be null and void. (As amended by Sec. 9, P. D. No. 24, S. 1972; and Sec. 14,
P. D. No. 735, S. 1975).

"SEC. 17. Fee of Agents, Attorneys, Etc. - No agent, attorney or other person in charge of the
preparation, filing or pursuing any claim for benefit under this Act shall demand or charge for his
services any fee, and any stipulation to the contrary shall be null and void. The retention or deduction of
any amount from any benefit granted under this Act for the payment of fees for such services is
prohibited: Provided, however, That any member of the Philippine Bar who appears as counsel in any
case heard by the Commission shall be entitled to attorneys fees not exceeding ten percent (10%) of
the benefits awarded by the Commission, which fees shall not be payable before the actual payment of
the benefits, and any stipulation to the contrary shall be null and void.

"Any violation of the provisions of this Section shall be punished by a fine of not less than Five hundred
pesos (P500.00) nor more than Five thousand pesos (P5,000.00), or imprisonment for not less than six
(6) months nor more than one (1) year, or both, at the discretion of the court.

"SEC. 18. Employees Contributions. - (a) Beginning as of the last day of the calendar month when an
employees compulsory coverage takes effect and every month thereafter during his employment, the
employer shall deduct and withhold from such employees monthly salary, wage, compensation or
earnings, the employees contribution in an amount corresponding to his salary, wage, compensation or
earnings during the month in accordance with the following schedule:

SALARY RANGE OF MONTHLY MONTHLY CONTRIBUTION

BRACKET COMPENSATION SALARY

CREDIT EMPLOYER EMPLOYEE TOTAL

I 1,000.00 - 1,249.99 1000 50.70 33.30 84.00

II 1,250.00 - 1,749.99 1500 76.00 50.00 126.00

III 1,750.00 - 2,249.99 2000 101.30 66.70 168.00

IV 2,250.00 - 2,749.99 2500 126.70 83.30 210.00

V 2,750.00 - 3,249.99 3000 152.00 100.00 252.00

VI 3,250.00 - 3,749.99 3500 177.30 116.70 294.00

VII 3,750.00 - 4,249.99 4000 202.70 133.30 336.00

VIII 4,250.00 - 4,749.99 4500 228.00 150.00 378.00

IX 4,750.00 - 5,249.99 5000 253.30 166.70 420.00

X 5,250.00 - 5,749.99 5500 278.70 183.70 462.40

 XI 5,750.00 - 6,249.99 6000 304.00 200.00 504.00

XII 6,250.00 - 6,749.99 6500 329.30 216.78 546.00

XIII 6,750.00 - 7,249.99 7000 354.70 233.30 588.00

XIV 7,250.00 - 7,749.99 7500 380.00 250.00 630.00

XV 7,750.00 - 8.249.99 8000 403.30 266.70 672.00

XVI 8,250.00 - 8,749.99 8500 430.70 283.30 714.00

XVII 8,750.00 - OVER 9000 456.00 300.00 756.00

"The foregoing schedule of contribution shall also apply to self-employed and voluntary members.

"The maximum monthly salary credit shall be Nine thousand pesos (P9,000.00) effective January
Nineteen hundred and ninety six (1996); Provided, That it shall be increased by One thousand pesos
(P1,000.00) every year thereafter until it shall have reached Twelve thousand pesos (P12,000.00) by
Nineteen hundred and ninety nine (1999): Provided, further, That the minimum and maximum monthly
salary credits as well as the rate of contributions may be fixed from time to time by the Commission
through rules and regulations taking into consideration actuarial calculations and rate of benefits,
subject to the approval of the President of the Philippines.

"SEC. 19. Employers Contributions. - (a) Beginning as of the last day of the month when an employees
compulsory coverage takes effect and every month thereafter during his employment, his employer
shall pay, with respect to such covered employee, the employers contribution in accordance with the
schedule indicated in Section Eighteen of this Act. Notwithstanding any contract to the contrary, an
employer shall not deduct, directly or indirectly, from the compensation of his employees covered by
the SSS or otherwise recover from them the employers contributions with respect to such employees.

"(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, the correct names and the SSS numbers of the employees and the total contributions paid
for their account during the quarter.

"SEC. 19-A. Contributions of the Self-Employed Member. - The contributions to the SSS of the self-
employed member shall be determined in accordance with Section Eighteen of this Act: Provided, That
the monthly earnings declared by the self-employed member at the time of his registration with the SSS
shall be considered as his monthly compensation and he shall pay both the employer and the employee
contributions: Provided, further, That the contributions of self-employed persons earning One thousand
pesos (P1,000.00) monthly or below may be reduced by the Commission.

"The monthly earnings declared by the self-employed member at the time of his registration shall
remain the basis of his monthly salary credit, unless he makes another declaration of his monthly
earnings, in which case such latest declaration becomes the new basis of his monthly salary credit.

"SEC. 20. Government Contribution. - As the contribution of the Government to the operation of the
SSS, Congress shall annually appropriate out of any funds in the National Treasury not otherwise
appropriated, the necessary sum or sums to meet the estimated expenses of the SSS for each ensuing
year. In addition to this contribution, 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 SSS as
disclosed by suitable periodic actuarial studies to be made of the operations of the SSS.

"SEC. 21. Government Guarantee. -- 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 SSS.

"SEC. 22. Remittance of Contributions. -- (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. 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, he shall pay besides the contribution a penalty thereon of three
percent (3%) per month from the date the contribution falls due until paid. If deemed expedient and
advisable by the Commission, the collection and remittance of contributions shall be made quarterly or
semi-annually in advance, the contributions payable by the employees to be advanced by their
respective employers: Provided, That upon separation of an employee, any contribution so paid in
advance but not due shall be credited or refunded to his employer.

"(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, as amended. 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.

"The right to institute the necessary action against the employer may be commenced within twenty (20)
years from the time the delinquency is known or the assessment is made by the SSS, or from the time
the benefit accrues, as the case may be.

"(c) Should any person, natural or juridical, default in any payment of contributions, the Commission
may also collect the same in either of the following ways:

"1. By an action in court, which shall hear and dispose of the case in preference to any other civil action;
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. The Sheriffs 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.

"(d) The last complete record of monthly contributions paid by the employer or the average of the
monthly contributions paid during the past three (3) 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, unless contradicted and overcome by other evidence: 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, nor shall the employer be relieved of his
liability under Section Twenty-eight of this Act.

"SEC. 22-A. Remittance of Contributions of Self-Employed Member. - Self-employed members shall

remit their monthly contributions quarterly on such dates and schedules as the Commission may specify
through rules and regulations: Provided, That no retroactive payment of contributions shall be allowed,
except as provided in this Section.

"SEC. 23. Method of Collection and Payment. - The SSS shall require a complete and proper collection
and payment of contributions and proper identification of the employer and the employee. Payment
may be made in cash, checks, stamps, coupons, tickets, or other reasonable devices that the
Commission may adopt.

"SEC. 24. Employment Records and Reports. - (a) Each employer shall immediately report to the SSS the
names, ages, civil status, occupations, salaries and dependents of all his employees who are subject to
compulsory coverage: Provided, That if an employee subject to compulsory coverage should die or
become sick or disabled or reach the age of sixty (60) without the SSS having previously received any
report or written communication about him from his employer, the said employer shall pay to the SSS
damages equivalent to the benefits to which said employee member would have been entitled had his
name been reported on time by the employer to the SSS, except that in case of pension benefits, the
employer shall be liable to pay the SSS damages equivalent to the accumulated pension due as of the
date of settlement of the claim or to the five (5) years pension, including dependents pension:
Provided, further, That if the contingency occurs within thirty (30) days from the date of employment,
the employer shall be relieved of his liability for damages: Provided, further, That any person or entity
engaging the services of an independent contractor shall be subsidiarily liable with such contractor for
any civil liability incurred by the latter under this Act: Provided, finally, That the same person or entity
engaging the services of an independent contractor shall require such contractor to post a surety bond
to guarantee the payment of the workers benefits.

"(b) Should the employer misrepresent the true date of employment of the employee member or remit
to the SSS contributions which are less than those required in this Act or fail to remit any contribution
due prior to the date of contingency, resulting in a reduction of benefits, the employer shall pay to the
SSS damages equivalent to the difference between the amount of benefit to which the employee
member or his beneficiary is entitled had the proper contributions been remitted to the SSS and the
amount payable on the basis of contributions actually remitted: Provided, That if the employee member
or his beneficiary is entitled to pension benefits, damages shall be equivalent to the accumulated
pension due as of the date of settlement of the claim or to the five (5) years pension, whichever is
higher, including dependents pension.

"In addition to the liability mentioned in the preceding paragraphs (a) and (b) hereof, the employer shall
also be liable for the corresponding unremitted contributions and penalties thereon.

"(c) The records and reports duly accomplished and submitted to the SSS by the employer or the
member, as the case may be, shall be kept confidential by the SSS except in compliance with a subpoena
duces tecum issued by the Court, shall not be divulged without the consent of the SSS President or any
official of the SSS duly authorized by him, shall be presumed correct as to the data and other matters
stated therein, 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, and shall be made the
basis for the adjudication of the claim. 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, such payments shall discharge the SSS from liability unless and until such
other beneficiary notifies the SSS of his claim prior to the payments.
"(d) Every employer shall keep true and accurate work records for such period and containing such
information as the Commission may prescribe, in addition to an "Annual Register of New and 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, the names of the persons employed or separated
from employment, their SSS numbers, 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. Such records shall be
open for inspection by the SSS or its authorized representatives quarterly or as often as the SSS may
require.

"The SSS may also require each employer to submit, with respect to the persons in his employ, reports
needed for the effective administration of this Act.

"(e) Each employer shall require, as a condition to employment, 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, That in case of employees who have been assigned registration numbers by
virtue of a previous employment, such numbers originally assigned to them should be used for purposes
of this Section: Provided, further, 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.

"(f) Notwithstanding any law to the contrary, microfilm, or non-erasable optical disk and other similar
archival media copies of original SSS records and reports, duly certified by the official custodian thereof,
shall have the same evidentiary value as the originals and be admissible as evidence in all legal
proceedings.

"(g) Notwithstanding any law to the contrary, local government units shall, prior to issuing any annual
business license or permit, require submission of certificate of SSS coverage and compliance with the
provisions of this Act: Provided, That the certification or clearance shall be issued by the SSS within five
(5) working days from receipt of the request.

"SEC. 24-A. Report and Registration of the Self-Employed Member. - Each covered self-employed person
shall, within thirty (30) days from the first day he started the practice of his profession or business
operations register and report to the SSS his name, age, civil status, and occupation, average monthly
net income and his dependents.

"SEC. 25. Deposits and Disbursements. - All money paid to or collected by the SSS every year under this
Act, and all accruals thereto shall be deposited, administered and disbursed in the same manner and
under the same conditions and requirements as provided by law for other public special funds:
Provided, That not more than twelve percent (12%) of the total yearly contributions plus three percent
(3%) of other revenues shall be disbursed for operational expenses such as salaries and wages, supplies
and materials, depreciation and the maintenance of offices of the SSS: Provided, further, That if the
expenses in any year are less than the maximum amount permissible, the difference shall not be availed
of as additional expenses in the following years.

"SEC. 26. Investment of Reserve Funds. - 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." Such portions of the Reserve Fund as are not needed to
meet the current benefit obligations thereof shall be known as the "Investment Reserve Fund" which
the Commission shall manage and invest with the skill, care, prudence and diligence necessary under the
circumstances then prevailing that a prudent man acting in like capacity and familiar with such matters
would exercise in the conduct of an enterprise of a like character and with similar aims. Pursuant
thereto, and in line with the basic principles of safety, good yield and liquidity, the Commission shall
invest the funds to earn an annual income not less than the average rates of treasury bills or any other
acceptable market yield indicator in any or in all of the following:

"(a) In bonds, securities, promissory notes or other evidence of indebtedness of the Government of the
Philippines, or in bonds, securities, promissory notes or other evidence of indebtedness to which the full
faith, credit and unconditional guarantee of the Government of the Philippines is pledged;

"(b) In bonds, securities, promissory notes or other evidence of indebtedness of the Government of the
Philippines, or any agencies or instrumentalities to finance domestic infrastructure projects such as
roads, bridges, ports, telecommunications, and other similar projects: Provided, That the instruments
issued by an agency or instrumentality of the government shall be guaranteed by the Government of the
Philippines or any government financial institution or acceptable multilateral agency: Provided, further,
That the SSS shall have priority over the revenues of the projects: Provided, finally, That such
investments shall not exceed thirty percent (30%) of the Investment Reserve Fund;

"(c) In bonds, securities, promissory notes or other evidence of indebtedness of government financial
institutions or government corporations with acceptable credit or guarantee: Provided, That such
investments shall not exceed thirty percent (30%) of the Investment Reserve Fund;

"(d) In bonds, securities, promissory notes or other evidence of indebtedness of any bank doing business
in the Philippines and in good standing with the Bangko Sentral ng Pilipinas to finance loans to private
corporations doing business in the Philippines, including schools, hospitals, small-and-medium scale
industries, cooperatives and non-governmental organizations, in which case the collaterals or securities
shall be assigned to the SSS under such terms and conditions as the Commission may prescribe:
Provided, That in the case of bank deposits, they shall not exceed at any time the unimpaired capital and
surplus or total private deposits of the depository bank, whichever is smaller: Provided, further, That
said bank shall first have been designated as a depository for this purpose by the Monetary Board of the
Bangko Sentral ng Pilipinas: Provided, finally, That such investments shall not exceed forty percent (40%)
of the Investment Reserve Fund;

"(e) In bonds, securities, promissory notes or other evidence of indebtedness of shelter agencies of the
National Government or financial intermediaries to finance housing loans of members; and in long-term
direct individual or group housing loans giving priority to the low-income groups, up to a maximum of
ninety percent (90%) of the appraised value of the properties to be mortgaged by the borrowers; and

"In short and medium term loans to members such as salary, educational, livelihood, marital, calamity
and emergency loans: Provided, That not more than thirty five percent (35%) of the Investment Reserve
Fund at any time shall be invested for housing purposes: Provided, further, That not more than ten
percent (10%) of the Investment Reserve Fund shall be invested in short and medium term loans;

"(f) In bonds, securities, promissory notes or other evidence of indebtedness of educational or medical
institutions to finance the construction, improvement and maintenance of schools and hospitals and
their equipment and facilities: Provided, That such investments shall not exceed ten percent (10%) of
the Investment Reserve Fund;

"(g) In real estate property, including shares of stocks involving real estate property, and investment
secured by first mortgages on real estate or other collaterals acceptable to the SSS: Provided, That such
projects and investments shall, in the determination of the Commission, redound to the benefit of the
SSS, its members, as well as the general public: Provided, further, That investment in real estate
property, including shares of stocks involving real estate property shall not exceed five percent (5%) of
the Investment Reserve Fund: Provided, finally, That investments in other income earning projects and
investments secured by first mortgages or other collaterals shall not exceed twenty five percent (25%) of
the Investment Reserve Fund;

"(h) In bonds, debentures, securities, promissory notes or other evidence of indebtedness of any prime
corporation or multilateral institutions to finance domestic projects: Provided, That the issuing or
assuming 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 (3) including the last two (2) of the five (5) fiscal years next
preceding the date of acquisition by the SSS of such bonds, debentures or other evidence of
indebtedness, the net earnings of the issuing or assuming institution available for its fixed charges, as
defined in this Act, shall have been not less than one and one-quarter times the total of its fixed charges
for such year: Provided, further, That such investments shall not exceed thirty percent (30%) of the
Investment Reserve Fund;

"(i) In preferred or common shares of stocks listed or about to be listed in the stock exchange or options
or warrants to such stocks or, subject to prior approval of the Bangko Sentral ng Pilipinas, such other risk
management instruments of any prime or solvent corporation or financial institution created or existing
under the laws of the Philippines with proven track record of profitability over the last three (3) years
and payment of dividends at least once over the same period: Provided, That such investments shall not
exceed thirty percent (30%) of the Investment Reserve Fund;

"(j) In domestic or foreign mutual funds in existence for at least three (3) years; Provided, That such
investments shall not exceed twenty percent (20%) of the Investment Reserve Fund: Provided, further,
That investments in foreign mutual funds shall not exceed one percent (1%) of the Investment Reserve
Fund in the first year which shall be increased by one percent (1%) for each succeeding year, but in no
case shall it exceed seven and one-half percent (7.5%) of the Investment Reserve Fund;

"(k) In foreign currency deposits or triple "A" foreign currency denominated debts, prime and non-
speculative equities, and other Bangko Sentral ng Pilipinas approved financial instruments or other
assets issued in accordance with the existing laws of the countries where such financial instruments are
issued: Provided, That these instruments or assets are listed in bourses of the respective countries
where these instruments or assets are issued: Provided, further, That the issuing company has proven
track of record of profitability over the last three (3) years and a record of regular dividend pay-out over
the same period: Provided, finally, That such investments shall not exceed one percent (1%) of the
Investment Reserve Fund in the first year which shall be increased by one percent (1%) for each
succeeding year, but in no case shall it exceed seven and one-half percent (7.5%) of the Investment
Reserve Fund;
"(l) In loans secured by such collaterals like cash, government securities or guarantees of multilateral
institutions: Provided, That such investments shall not exceed thirty percent (30%) of the Investment
Reserve Fund; and

"(m) In other Bangko Sentral ng Pilipinas approved investment instruments with the same intrinsic
quality as those enumerated in paragraphs (a) to (l) hereof, subject to the policies and guidelines which
the Commission may formulate.

"No portion of the Investment Reserve Fund or income thereof shall accrue to the general fund of the
National Government or to any of its agencies or instrumentalities, including government-owned or
controlled corporations, except as may be allowed under this Act: Provided, That no portion of the
Investment Reserve Fund shall be invested for any purpose or in any instrument, institution or industry
over and above the prescribed cumulative ceilings as follows:

40% in private securities

35% in housing

30% in real estate related investments

10% in short and medium-term member loans

30% in government financial institutions and corporations

30% in infrastructure projects

15% in any particular industry

7.5% in foreign-currency denominated investments

"SEC. 26-A. Fund Managers. - As part of its investment operations, the SSS may appoint local or, in the
absence thereof, foreign fund managers to manage the Investment Reserve Fund, as it may deem
appropriate.

"SEC. 26-B. Mortgagor Insurance Account. - (a) As part of its investment operations, the SSS shall act as
insurer of all or part of its interest on SSS properties mortgaged to the SSS, or lives of mortgagors whose
properties are mortgaged to the SSS. For this purpose, the SSS shall establish a separate account to be
known as the "Mortgagors Insurance Account." All amounts received by the SSS in connection with the
aforesaid insurance operations shall be placed in the Mortgagors Insurance Account. 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. Notwithstanding any
provision of law to the contrary, 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.

"(b) The SSS may insure any of its interest or part thereof with any private company or reinsurer. The
Insurance 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 (2) years, but such
examination shall be limited to the insurance operation of the SSS as authorized under this paragraph
and shall not embrace the other operations of the SSS; 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, That for each
examination, the SSS shall pay to the Insurance Commission an amount equal to the actual expense of
the Insurance Commission in the conduct of 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, further, That the general law on insurance and the rules
and regulations promulgated thereunder shall have suppletory application insofar as it is not in conflict
with this Act and its rules and regulations.

"SEC. 27. Records and Reports. - The SSS President shall keep and cause to keep records of operations of
the funds of the SSS and of disbursements thereof and all accounts of payments made out of said funds.
During the month of January of each year, the SSS President shall prepare for submission to the
President of the Philippines and to Congress of the Philippines a report of operations of the SSS during
the preceding year, including statistical data on the number of persons covered and benefited, their
occupations and employment status, the duration and amount of benefits paid, the finances of the SSS
at the close of the said year, and recommendations. He shall also cause to be published in two (2)
newspapers of general circulation in the Philippines a synopsis of the annual report, showing in
particular the status of the finances of the SSS and the benefits administered.

"SEC. 28. Penal Clause. - (a) Whoever, for the purpose of causing any payment to be made under this
Act, or under an agreement thereunder, where none is authorized to be paid, shall make or cause to be
made 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, or application for loan with the SSS, or whoever makes or causes to be made any false statement,
representation, affidavit or document in connection with such claim or loan, shall suffer the penalties
provided for in Article One hundred seventy-two of the Revised Penal Code.

"(b) Whoever shall obtain or receive any money or check under this Act or any agreement thereunder,
without being entitled thereto with intent to defraud any member, employer or the SSS, shall be fined
not less than Five thousand pesos (P5,000.00) nor more than Twenty thousand pesos (P20,000.00) and
imprisoned for not less than six (6) years and one (1) day nor more than twelve (12) years.

"(c) Whoever buys, sells, offers for sale, uses, transfers or takes or gives in exchange, or pledges or gives
in pledge, except as authorized in this Act or in regulations made pursuant thereto, any stamp, coupon,
ticket, book or other device, prescribed pursuant to Section Twenty-three hereof by the Commission for
the collection or payment of contributions required herein, shall be fined not less than Five thousand
pesos (P5,000.00) nor more than Twenty thousand pesos (P20,000.00), or imprisoned for not less than
six (6) years and one (1) day nor more than twelve (12) years, or both, at the discretion of the court.

"(d) Whoever, with intent to defraud, alters, forges, makes or counterfeits any stamp, coupon, ticket,
book or other device prescribed by the Commission for the collection or payment of any contribution
required herein, or uses, sells, lends, or has in his possession any such altered, forged or counterfeited
materials, or makes, uses, sells or has in his possession any such altered, forged, material in imitation of
the material used in the manufacture of such stamp, coupon, ticket, book or other device, shall be fined
not less than Five thousand pesos (P5,000.00) non more than Twenty thousand pesos (P20,000.00) or
imprisoned for not less than six years (6) and one (1) day nor more than twelve (12) years, or both, at
the discretion of the court.

"(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 punished by a fine of not less than Five thousand pesos
(P5,000.00) nor more than Twenty thousand pesos (P20,000.00), or imprisonment for not less than six
(6) years and one (1) day nor more than twelve (12) years, or both, at the discretion of the court:
Provided, That where the violation consists in failure or refusal to register employees or himself, in case
of the covered self-employed or to deduct contributions from the employees compensation and remit
the same to the SSS, the penalty shall be a fine of not less Five thousand pesos (P5,000.00) nor more
than Twenty thousand pesos (P20,000.00) and imprisonment for not less than six (6) years and one (1)
day nor more than twelve (12) years.

"(f) If the act or omission penalized by this Act be committed by an association, partnership, corporation
or any other institution, its managing head, directors or partners shall be liable for the penalties
provided in this Act for the offense.

"(g) Any employee of the SSS who receives or keeps funds or property belonging, payable or deliverable
to the SSS and who shall appropriate the same, or shall take or misappropriate, or shall consent, or
through abandonment or negligence, shall permit any other person to take such property or funds,
wholly or partially, or shall otherwise be guilty of misappropriation of such funds or property, shall suffer
the penalties provided in Article Two hundred seventeen of the Revised Penal Code.

"(h) Any employer who, after deducting the monthly contributions or loan amortizations from his
employees compensation, fails to remit the said deduction to the SSS within thirty (30) 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 Article Three hundred fifteen of the Revised
Penal Code.

"(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, That such criminal action may be filed by the SSS in the city or municipality where the SSS
office is located, if the violation was committed within its territorial jurisdiction or in Metro Manila, at
the option of the SSS.

"SEC. 29. Government Aid. - The establishment of the SSS shall not disqualify the members and
employers from receiving such government assistance, financial or otherwise, as may be provided.

"SEC. 30. Transitory Clause. - Any employer who is delinquent or has not remitted all contributions due
and payable to the SSS may, within six (6) months from the effectivity of this Act, remit said
contributions or submit a proposal to pay the same in installment within a period of not more than
twelve (12) months from the effectivity of this Act without incurring the prescribed penalty, subject to
the implementing rules and regulations which the Commission may prescribe: Provided, That the
employer submits the corresponding collection lists together with the remittance or proposal to pay in
installments: Provided, further, That in case the employer fails to remit contributions within the six-
month grace period or defaults in the payment of any amortization provided the approved proposal, the
prescribed penalty shall be imposed from the time the contributions first became due as provided in
Section 22 (a) hereof."

SEC. 2. Separability Clause. - If any provision of this Act is declared invalid, the other provisions not
affected thereby shall remain valid.

SEC. 3. Repealing Clause. - All laws, proclamations, executive orders, rules and regulations or parts
thereof inconsistent with this Act are hereby repealed, modified or amended accordingly: Provided, That
no person shall be deemed to be vested with any property or other right by virtue of the enactment or
operation of this Act.

SEC. 4. Effectivity Clause. - 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 whichever comes
earlier.

Approved: May 01, 1997

(Sgd.) FIDEL V. RAMOS

President of the Philippines

---------------------------------------------

REPUBLIC ACT NO. 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.

SECTION 1. 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. Towards this end, 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. chan robles virtual law library

chan robles virtual law library

Sec. 2. Definition of Terms. As used in this Act, unless the context indicates otherwise, 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;

chan robles virtual law library

(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;

(c) "Sector" shall refer to employment either in the public or private sector;

(d) "System" shall refer to either the SSS as created under Republic Act No. 1161, as amended or the
GSIS as created under Presidential Decree No. 1146, as amended; and

(e) "Totalization" shall refer to the process of adding up the periods of creditable services or
contributions under each of the Systems, for purposes of eligibility and computation of benefits. chan
robles virtual law library

Sec. 3. Provisions of any general or special law or rules and regulations to the contrary notwithstanding,
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, disability, survivorship and
other benefits in case the covered member does not qualify for such benefits in either or both Systems
without totalization: Provided, however, That overlapping periods of membership shall be credited only
once for purposes of totalization.

chan robles virtual law library

Sec. 4. All contributions paid by such member personally, 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, however, 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.chanrobles virtual law
library

Sec. 5. Nothing in this Act shall be construed to diminish or reduce the benefits being enjoyed by a
covered worker arising from existing laws, issuances, and company policies or practices or agreements
between the employer and the employees.cralaw
Sec. 6. The Department of Labor and Employment for the private sector and the Civil Service
Commission for the government sector, together with the SSS and the GSIS shall, within ninety (90) days
from the effectivity of this Act, promulgate the rules and regulations necessary to implement the
provisions hereof: Provided, That any conflict in the interpretation of the law and the implementing
rules and regulations shall be resolved in favor of the workers.chan robles virtual law library

Sec. 7. All laws, decrees, orders, rules and regulations, or parts thereof, which are inconsistent with the
provisions of this Act are hereby repealed or modified accordingly.

Sec. 8. 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, whichever comes earlier.

Approved: May 1, 1994

------------------------------

THE

GOVERNMENT SERVICE INSURANCE SYSTEM ACT OF 1997

REPUBLIC ACT NO. 8291

AN ACT AMENDING PRESIDENTIAL DECREE NO. 1146, AS AMENDED, EXPANDING AND INCREASING THE
COVERAGE AND BENEFITS OF THE GOVERNMENT SERVICE INSURANCE SYSTEM, INSTITUTING REFORMS
THEREIN AND FOR OTHER PURPOSES.

SECTION 1. Presidential Decree No. 1146, as amended, otherwise known as the "Revised Government
Service Insurance Act of 1977", is hereby further amended to read as follows:

"SECTION 1. Title. -The title of this Act shall be: "The Government Service Insurance System Act of 1997."

"A. DEFINITIONS

"SEC. 2. Definition of terms.- Unless the context otherwise indicates, the following terms shall mean:

"(a) GSIS- The Government Service Insurance System created by Commonwealth Act No. 186;

"(b) Board- The Board of Trustees of the Government Service Insurance System;
"(c) Employer- The national government, its political subdivisions, branches, agencies or
instrumentalities, including government-owned or controlled corporations, and financial institutions
with original charters, the constitutional commissions and the judiciary;

"(d) Employee or Member- Any person receiving compensation while in the service of an employer as
defined herein, whether by election or appointment, irrespective of status of appointment, including
barangay and Sanggunian officials;

"(e) Active Member- A member who is not separated from the service;

"(f) Dependents- Dependents shall be the following: (a) the legitimate spouse dependent for support
upon the member or pensioner; (b) the legitimate, legitimated, legally adopted child, including the
illegitimate child, who is unmarried, not gainfully employed, not over the age of majority, or is over the
age of majority but incapacitated and incapable of self-support due to a mental or physical defect
acquired prior to age of majority; and (c) the parents dependent upon the member for support;

"(g) Primary beneficiaries- The legal dependent spouse until he/she remarries and the dependent
children;

"(h) Secondary beneficiaries- The dependent parents and, subject to the restrictions on dependent
children, the legitimate descendants;

"(i) Compensation- The basic pay or salary received by an employee, pursuant to his
election/appointment, excluding per diems, bonuses, overtime pay, honoraria, allowances and any
other emoluments received in addition to the basic pay which are not integrated into the basic pay
under existing laws;

"(j) Contribution- The amount payable to the GSIS by the member and the employer in accordance with
Section 5 of this Act;

"(k) Current Daily Compensation- The actual daily compensation or the actual monthly compensation
divided by the number of working days in the month of contingency but not to exceed twenty-two (22)
days;

"(l) Average Monthly Compensation (AMC)- The quotient arrived at after dividing the aggregate
compensation received by the member during his last thirty-six (36) months of service preceding his
separation/retirement/ disability/death by thirty-six (36), or by the number of months he received such
compensation if he has less than thirty-six (36) months of service: Provided, That the average monthly
compensation shall in no case exceed the amount and rate as may be respectively set by the Board
under the rules and regulations implementing this Act as determined by the actuary of the GSIS:
Provided, further, That initially the average monthly compensation shall not exceed Ten thousand pesos
(P10,000.00), and premium shall be nine percent (9%) and twelve percent (12%) for employee and
employer covering the AMC limit and below and two percent (2%) and twelve percent (12%) for
employee and employer covering the compensation above the AMC limit;

"(m) Revalued average monthly compensation- An amount equal to one hundred seventy percent
(170%) of the first One thousand pesos (P1,000.00) of the average monthly compensation plus one
hundred percent (100%) of the average monthly compensation in excess of One thousand pesos
(P1,000.00);
"(n) Lump sum- The basic monthly pension multiplied by sixty (60);

"(o) Pensioner- Any person receiving old-age permanent total disability pension or any person who has
received the lump sum excluding one receiving survivorship pension benefits as defined in Section 20 of
this Act;

"(p) Gainful Occupation- Any productive activity that provided the member with income at least equal to
the minimum compensation of government employees;

"(q) Disability- Any loss or impairment of the normal functions of the physical and/or mental faculty of a
member which reduces or eliminates his/her capacity to continue with his/her current gainful
occupation or engage in any other gainful occupation;

"(r) Total Disability- Complete incapacity to continue with his present employment or engage in any
gainful occupation due to the loss or impairment of the normal functions of the physical and/or mental
faculties of the member;

"(s) Permanent Total Disability- Accrues or arises when recovery from the impairment mentioned in
Section 2 (Q) is medically remote;

"(t) Temporary Total Disability- Accrues or arises when the impaired physical and/or mental faculties can
be rehabilitated and/or restored to their normal functions;

"(u) Permanent Partial Disability- Accrues or arises upon the irrevocable loss or impairment of certain
portion/s of the physical faculties, despite which the member is able to pursue a gainful occupation.

"B. MEMBERSHIP IN THE GSIS

"SEC. 3. Compulsory Membership. - Membership in the GSIS shall be compulsory for all employees
receiving compensation who have not reached the compulsory retirement age, irrespective of
employment status, except members of the Armed Forces of the Philippines and the Philippine National
Police, subject to the condition that they must settle first their financial obligation with the GSIS, and
contractuals who have no employer and employee relationship with the agencies they serve.

"Except for the members of the judiciary and constitutional commissions who shall have life insurance
only, all members of the GSIS shall have life insurance, retirement, and all other social security
protections such as disability, survivorship, separation, and unemployment benefits.

"SEC. 4. Effect of Separation from the Service. - A member separated from the service shall continue to
be a member, and shall be entitled to whatever benefits he has qualified to in the event of any
contingency compensable under this Act.

"C. SOURCES OF FUNDS

"SEC. 5. Contributions. - (a) It shall be mandatory for the member and employer to pay the monthly
contributions specified in the following schedule:
"Monthly Compensation Percentage of Monthly

Compensation

Payable by

Member Employer

I. Maximum Average

Monthly Compensation

(AMC) Limit and Below 9.0% 12.0%

II. Over the Maximum

AMC Limit

-Up to the Maximum

AMC Limit 9.0% 12.0%

-In Excess of the

AMC Limit 2.0% 12.0%

"Members of the judiciary and constitutional commissioners shall pay three percent (3%) of their
monthly compensation as personal share and their employers a corresponding three percent (3%) share
for their life insurance coverage.

"(b) The employer shall include in its annual appropriation the necessary amounts for its share of the
contributions indicated above, plus any additional premiums that may be required on account of the
hazards or risks of its employees occupation.

"(c) It shall be mandatory and compulsory for all employers to include the payment of contributions in
their annual appropriations. Penal sanctions shall be imposed upon employers who fail to include the
payment of contributions in their annual appropriations or otherwise fail to remit the accurate/exact
amount of contributions on time, or delay the remittance of premium contributions to the GSIS. The
heads of offices and agencies shall be administratively liable for non-remittance or delayed remittance
of premium contributions to the GSIS.

"SEC. 6. Collection and Remittance of Contributions. - (a) The employer shall report to the GSIS the
names of all its employees, their corresponding employment status, positions, salaries and such other
pertinent information, including subsequent changes therein, if any, as may be required by the GSIS; the
employer shall deduct each month from the monthly salary or compensation of each employee the
contribution payable by him in accordance with the schedule prescribed in the rules and regulations
implementing this Act.

"(b) Each employer shall remit directly to the GSIS the employees and employers contributions within
the first ten (10) days of the calendar month following the month to which the contributions apply. The
remittance by the employer of the contribution to the GSIS shall take priority over and above the
payment of any and all obligations, except salaries and wages of its employees.
"SEC. 7. Interest on Delayed Remittances. - Agencies which delay the remittance of any and all monies
due the GSIS shall be charged interests as may be prescribed by the Board but not less than two percent
(2%) simple interest per month. Such interest shall be paid by the employers concerned.

"SEC. 8. Government Guarantee. - The government of the Republic of the Philippines hereby guarantees
the fulfillment of the obligations of the GSIS to its members as and when they fall due.

"D. BENEFITS

"SEC. 9. Computation of the Basic Monthly Pension. - (a) The basic monthly pension is equal to:

"1) thirty-seven and one-half percent (37.5%) of the revalued average monthly compensation; plus

"2) two and one-half percent (2.5%) of said revalued average monthly compensation for each year of
service in excess of (15) years: Provided, That the basic monthly pension shall not exceed ninety percent
(90%) of the average monthly compensation.

"(b) The basic monthly pension may be adjusted upon the recommendation of the President and
General Manager of the GSIS and approved by the President of the Philippines in accordance with the
rules and regulations prescribed by the GSIS: Provided, however, that the basic monthly pension shall
not be less than One thousand and three hundred pesos (P1,300.00): Provided, further, that the basic
monthly pension for those who have rendered at least twenty (20) years of service after the effectivity
of this Act shall not be less than Two thousand four hundred pesos (P2,400.00) a month.

"SEC. 10. Computation of Service. - (a) The computation of service for the purpose of determining the
amount of benefits payable under this Act shall be from the date of original appointment/election,
including periods of service at different times under one or more employers, those performed overseas
under the authority of the Republic of the Philippines, and those that may be prescribed by the GSIS in
coordination with the Civil Service Commission.

"(b) All service credited for retirement, resignation or separation for which corresponding benefits have
been awarded under this Act or other laws shall be excluded in the computation of service in case of
reinstatement in the service of an employer and subsequent retirement or separation which is
compensable under this Act.

"For the purpose of this section, the term service shall include full-time service with compensation:
Provided, that part-time and other services with compensation may be included under such rules and
regulations as may be prescribed by the GSIS.

"SEPARATION BENEFITS

"SEC. 11. Separation Benefits. - The separation benefits shall consist of: (a) a cash payment equivalent to
one hundred percent (100%) of his average monthly compensation for each year of service he paid
contributions, but not less than Twelve thousand pesos (P12,000) payable upon reaching sixty (60) years
of age upon separation, whichever comes later: Provided, that the member resigns or separates from
the service after he has rendered at least three (3) years of service but less than fifteen (15) years; or
"(b) a cash payment equivalent to eighteen (18) times his basic monthly pension at the time of
resignation or separation, plus an old-age pension benefit equal to the basic monthly pension payable
monthly for life upon reaching the age of sixty (60): Provided, that the member resigns or separates
from the service after he has rendered at least fifteen (15) years of service and is below sixty (60) years
of age at the time of resignation or separation.

"SEC. 12. Unemployment or Involuntary Separation Benefits. - Unemployment benefits in the form of
monthly cash payments equivalent to fifty percent (50%) of the average monthly compensation shall be
paid to a permanent employee who is involuntarily separated from the service due to the abolition of
his office or position usually resulting from reorganization: Provided, That he has been paying integrated
contributions for at least one (1) year prior to separation. Unemployment benefits shall be paid in
accordance with the following schedules:

"Contributions Made Benefit Duration

1 year but less than 3 years 2 months

3 or more years but less than 6 years 3 months

6 or more years but less than 9 years 4 months

9 or more years but less than 11 years 5 months

11 or more years but less than 15 years 6 months

"The first payment shall be equivalent to two (2) monthly benefits. A seven-day (7) waiting period shall
be imposed on succeeding monthly payments.

"All accumulated unemployment benefits paid to the employee during his entire membership with the
GSIS shall be deducted from voluntary separation benefits.

"The GSIS shall prescribe the detailed guidelines in the operationalization of this section in the rules and
regulations implementing this Act.

"RETIREMENT BENEFITS

"SEC. 13. Retirement Benefits. - (a) Retirement benefits shall be:

"(1) the lump sum payment as defined in this Act payable at the time of retirement plus an old-age
pension benefit equal to the basic monthly pension payable monthly for life, starting upon expiration of
the five-year (5) guaranteed period covered by the lump sum; or

"(2) cash payment equivalent to eighteen (18) months of his basic monthly pension plus monthly
pension for life payable immediately with no five-year (5) guarantee.

"(b) Unless the service is extended by appropriate authorities, retirement shall be compulsory for an
employee of sixty-five (65) years of age with at least fifteen (15) years of service: Provided, That if he has
less than fifteen (15) years of service, he may be allowed to continue in the service in accordance with
existing civil service rules and regulations.
"SEC. 13-A. Conditions for Entitlement. - A member who retires from the service shall be entitled to the
retirement benefits enumerated in paragraph (a) of Section 13 hereof: Provided, That:

(1) he has rendered at least fifteen years of service;

(2) he is at least sixty (60) years of age at the time of retirement; and

(3) he is not receiving a monthly pension benefit from permanent total disability.

"SEC. 14. Periodic Pension Adjustment. - The monthly pension of all pensioners including all those
receiving survivorship pension benefits shall be periodically adjusted as may be recommended by the
GSIS actuary and approved by the Board in accordance with the rules and regulations prescribed by the
GSIS.

"PERMANENT DISABILITY BENEFITS

"SEC. 15. General Conditions for Entitlement. - A member who suffers permanent disability for reasons
not due to his grave misconduct, notorious negligence, habitual intoxication, or willful intention to kill
himself or another, shall be entitled to the benefits provided for under Sections 16 and 17 immediately
following, subject to the corresponding conditions thereof.

"SEC. 16. Permanent Total Disability Benefits. - (a) If the permanent disability is total, he shall receive a
monthly income benefit for life equal to the basic monthly pension effective from the date of disability:
Provided, That:

(1) he is in the service at the time of disability; or

(2) if separated from the service, he has paid at least thirty-six (36) monthly contributions within the five
(5) year period immediately preceding disability, or has paid a total of at least one hundred eighty (180)
monthly contributions, prior to his disability: Provided, further, That if at the time of disability, he was in
the service and has paid a total of at least one hundred eighty (180) monthly contributions, in addition
to the monthly income benefit, he shall receive a cash payment equivalent to eighteen (18) times his
basic monthly pension: Provided, finally, That a member cannot enjoy the monthly income benefit for
permanent disability and the old-age retirement simultaneously.

"(b) If a member who suffers permanent total disability does not satisfy conditions (1) and (2) in
paragraph (a) of this section but has rendered at least three (3) years of service at the time of his
disability, he shall be advanced the cash payment equivalent to one hundred percent (100%) of his
average monthly compensation for each year of service he paid contributions, but not less than Twelve
thousand pesos (P12,000.00) which should have been his separation benefit.

"(c) Unless the member has reached the minimum retirement age, disability benefit shall be suspended
when:

"(1) he is reemployed; or
"(2) he recovers from his disability as determined by the GSIS, whose decision shall be final and binding;
or

"(3) he fails to present himself for medical examination when required by the GSIS.

"(d) The following disabilities shall be deemed total and permanent:

"(1) complete loss of sight of both eyes;chanroblesvirtualawlibrary

"(2) loss of two (2) limbs at or above the ankle or wrist;chanroblesvirtualawlibrary

"(3) permanent complete paralysis of two (2) limbs;chanroblesvirtualawlibrary

"(4) brain injury resulting in incurable imbecility or insanity; and

"(5) such other cases as may be determined by the GSIS.

"SEC. 17. Permanent Partial Disability Benefits. - (a) If the disability is partial, he shall receive a cash
payment in accordance with a schedule of disabilities to be prescribed by the GSIS: Provided, That he
satisfies either conditions (1) or (2) of Section 16 (a);

"(b) The following disabilities shall be deemed permanent partial:

"(1) complete and permanent loss of the use of:

(i) any finger

(ii) any toe

(iii) one arm

(iv) one hand

(v) one foot

(vi) one leg

(vii) one or both ears

(viii) hearing of one or both ears

(ix) sight of both eyes

"(2) such other cases as my be determined by the GSIS.

"TEMPORARY DISABILITY BENEFITS

"SEC. 18. Temporary Total Disability Benefits. - (a) A member who suffers temporary total disability for
reasons not due to any of the conditions enumerated in Section 15 hereof shall be entitled to seventy-
five percent (75%) of his current daily compensation for each day or fraction thereof of temporary
disability benefit not exceeding one hundred twenty (120) days in one calendar year after exhausting all
his sick leave credits and collective bargaining agreement sick leave benefits, if any, but not earlier than
the fourth day of his temporary total disability: Provided, That:

"(1) he is in the service at the time of his disability; or

"(2) if separated, he has rendered at least three (3) years of service and has paid at least six (6) monthly
contributions in the twelve-month period immediately preceding his disability.

"Provided, however, That a member cannot enjoy the temporary total disability benefit and sick leave
pay simultaneously: Provided, further, That if the disability requires more extensive treatment that lasts
beyond one hundred twenty (120) days, the payment of the temporary total disability benefit may be
extended by the GSIS but not to exceed a total of two hundred forty (240) days.

"(b) The temporary total disability benefit shall in no case be less than Seventy pesos (P70.00) a day.

"(c) The notices required of the member and the employer, the mode of payment, and the other
requirements for entitlement to temporary total disability benefits shall be provided in the rules and
regulations to be prescribed by the GSIS.

"SEC. 19. Non-scheduled Disability. - For injuries or illnesses resulting in a disability not listed in the
schedule of partial/total disability provided herein, the GSIS shall determined the nature of the disability
and the corresponding benefits therefor.

"SURVIVORSHIP BENEFITS

"SEC. 20. Survivorship Benefits. - When a member or pensioner dies, the beneficiaries shall be entitled
to survivorship benefits provided in Sections 21 and 22 hereunder subject to the conditions therein
provided for. The survivorship pension shall consist of:

(1) the basic survivorship pension which is fifty percent (50%) of the basic monthly pension; and

(2) the dependent childrens pension not exceeding fifty percent (50%) of the basic monthly pension
"SEC. 21. Death of a Member. - (a) Upon the death of a member, the primary beneficiaries shall be
entitled to:

(1) survivorship pension: Provided, That the deceased:

(i) was in the service at the time of his death; or

(ii) if separated from the service, has at least three (3) years of service at the time of his death and has
paid thirty-six (36) monthly contributions within the five-year period immediately preceding his death;
or has paid a total of at least one hundred eighty (180) monthly contributions prior to his death; or

(2) the survivorship pension plus a cash payment equivalent to one hundred percent (100%) of his
average monthly compensation for every year of service: Provided, That the deceased was in the service
at the time of his death with at least three (3) years of service; or

(3) a cash payment equivalent to one hundred percent (100%) of his average monthly compensation for
each year of service he paid contributions, but not less than Twelve thousand pesos (P12,000.00):
Provided, That the deceased has rendered at least three (3) years of service prior to his death but does
not qualify for the benefits under item (1) or (2) of this paragraph.

(b) The survivorship pension shall be paid as follows:

(1) when the dependent spouse is the only survivor, he/she shall receive the basic survivorship pension
for life or until he/she remarries;chanroblesvirtualawlibrary

(2) when only dependent children are the survivors, they shall be entitled to the basic survivorship
pension for as long as they are qualified, plus the dependent childrens pension equivalent to ten
percent (10%) of the basic monthly pension for every dependent child not exceeding five (5), counted
from the youngest and without substitution;chanroblesvirtualawlibrary

(3) when the survivors are the dependent spouse and the dependent children, the dependent spouse
shall receive the basic survivorship pension for life or until he/she remarries, and the dependent
children shall receive the dependent childrens pension mentioned in the immediately preceding
paragraph (2) hereof.

(c) In the absence of primary beneficiaries, the secondary beneficiaries shall be entitled to:

(1) the cash payment equivalent to one hundred percent (100%) of his average monthly compensation
for each year of service he paid contributions, but not less than Twelve thousand pesos (P12,000.00):
Provided, That the member is in the service at the time of his death and has at least three (3) years of
service; or

(2) in the absence of secondary beneficiaries, the benefits under this paragraph shall be paid to his legal
heirs.

(d) For purposes of the survivorship benefits, legitimate children shall include legally adopted and
legitimated children.

"SEC. 22. Death of a Pensioner. - Upon the death of an old-age pensioner or a member receiving the
monthly income benefit for permanent disability, the qualified beneficiaries shall be entitled to the
survivorship pension defined in Section 20 of this Act, subject to the provisions of paragraph (b) of
Section 21 hereof. When the pensioner dies within the period covered by the lump sum, the
survivorship pension shall be paid only after the expiration of the said period.

"FUNERAL BENEFITS

"SEC. 23. Funeral Benefits. - The amount of the funeral benefits shall be determined and specified by the
GSIS in the rules and regulations but shall not be less than Twelve thousand pesos (P12,000.00):
Provided, That it shall be increased to at least Eighteen thousand pesos (P18,000.00) after five (5) years
and shall be paid upon the death of:

(a) an active member as defined under Section 2 (e) of this Act; or

(b) a member who has been separated from the service, but who may be entitled to future benefit
pursuant to Section 4 of this Act; or

(c) a pensioner, as defined in Section 2 (o) of this Act; or

(d) a retiree who at the time of his retirement was of pensionable age under this Act but who opted to
retire under Republic Act No. 1616.

"LIFE INSURANCE BENEFITS

"SEC. 24. Compulsory Life Insurance. - All employees except for Members of the Armed Forces of the
Philippines (AFP) and the Philippine National Police (PNP) shall, under such terms and conditions as may
be promulgated by the GSIS, be compulsorily covered with life insurance, which shall automatically take
effect as follows:

(1) for those employed after the effectivity of this Act, their insurance shall take effect on the date of
their employment;

(2) for those whose insurance will mature after the effectivity of this Act, their insurance shall be
deemed renewed on the day following the maturity or expiry date of their insurance;
(3) for those without any life insurance as of the effectivity of this Act, their insurance shall take effect
following said effectivity.

"SEC. 25. Dividends. - An annual dividend may be granted to all members of the GSIS whose life
insurance is in force for at least one (1) year in accordance with a dividends allocation formula to be
determined by the GSIS.

"SEC. 26. Optional Insurance. - Subject to the rules and regulations prescribed by the GSIS, a member
may apply for insurance and/or pre-need coverage embracing life, health, hospitalization, education,
memorial plans, and such other plans as may be designed by the GSIS, for himself and/or his
dependents. Any employer may likewise apply for group insurance coverage for its employees. The
payment of the premiums/installments for optional insurance and pre-need products may be made by
the insured or his employer and/or any person acceptable to the GSIS.

"SEC. 27. Reinsurance. - The GSIS may reinsure any of its interests or part thereof with any private
company or reinsurer whether domestic of foreign: Provided, That the GSIS shall submit an annual
report on its reinsurance operations to the Insurance Commission.

"E. ADJUDICATION OF CLAIMS AND DISPUTES

"SEC. 28. Prescription. - Claims for benefits under this Act except for life and retirement shall prescribe
after four (4) years from the date of contingency.

"SEC. 29. Facility of Payment. - The GSIS shall prescribe rules and regulations to facilitate payment of
benefits, proceeds, and claims under this Act and any other laws administered by the GSIS. Payments
made by the GSIS prior to its receipt of an adverse claim, to a beneficiary or claimant subsequently
found not entitled thereto, shall not bar the legal and eligible recipient to his right to demand the
payment of benefits, proceeds, and claims from the GSIS, who shall, however, have a right to institute
the appropriate action in a court of law against the ineligible recipient.

"SEC. 30. Settlement of Disputes. - The GSIS shall have original and exclusive jurisdiction to settle any
disputes arising under this Act and any other laws administered by the GSIS.

The Board may designate any member of the Board, or official of the GSIS who is a lawyer, to act as
hearing officer to receive evidence, make findings of fact and submit recommendations, together with
all documentary and testimonial evidence to the Board within thirty (30) working days from the time the
parties have closed their respective evidence and filed their last pleading. The Board shall decide the
case within thirty (30) days from the receipt of the hearing officers findings and recommendations. The
cases heard directly by the Board shall be decided within thirty (30) working days from the time they are
submitted by the parties for decision.

"SEC. 31. Appeals. - Appeals from any decision or award of the Board shall be governed by Rules 43 and
45 of the 1997 Rules of Civil Procedure adopted by the Supreme Court on April 8, 1997 which will take
effect on July 1, 1997: Provided, That pending cases and those filed prior to July 1, 1997 shall be
governed by the applicable rules of procedure: Provided, further, That the appeal shall take precedence
over all other cases except criminal cases when the penalty of life imprisonment or death or reclusion
perpetua is imposable.

The appeal shall not stay the execution of the order or award unless ordered by the Board, by the Court
of Appeals or by the Supreme Court and the appeal shall be without prejudice to the special civil action
of certiorari when proper.

"SEC. 32. Execution of Decision. - When no appeal is perfected and there is no order to stay by the
Board, by the Court of Appeals or by the Supreme Court, any decision or award of the Board shall be
enforced and executed in the same manner as decisions of the Regional Trial Court. For this purpose,
the Board shall have the power to issue to the city or provincial sheriff or its appointed sheriff 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, award, writ or process after being required to do so
shall, upon application by the GSIS, be punished for contempt.

"SEC. 33. Oaths, Witnesses, and Production of Records. - When authorized by the Board, an official or
employee of the GSIS shall have the power to administer oath and affirmation, take deposition, certify
to official acts, and issue subpoena ad testificandum and subpoena duces tecum to compel the
attendance of witnesses and the production of books, papers, correspondences, and other records
deemed necessary as evidence in connection with any question arising under this Act. Any case of
contumacy shall be dealt with in accordance with the provisions of Section 580 of the Revised
Administrative Code.

"F. FUNDS OF THE GSIS

"SEC. 34. Funds. - All contributions payable under Section 5 of this Act together with the earnings and
accruals thereon shall constitute the GSIS Social Insurance Fund. The said fund shall be used to finance
the benefits administered by the GSIS under this Act. In addition, the GSIS shall administer the optional
insurance fund for the insurance coverage described in Section 26 hereof, the Employees Compensation
Insurance Fund created under P.D. 626, as amended, General Insurance Fund created under Act No.
656, as amended, and such other special funds existing or that may be created for special groups or
persons rendering services to the government. The GSIS shall maintain the required reserves to
guarantee the fulfillment of its obligations under this Act.

The funds of the GSIS shall not be used for purposes other than what are provided for under this Act.
Moreover, no portion of the funds of the GSIS or income thereof shall accrue to the General Fund of the
national government and its political subdivisions, instrumentalities and other agencies including
government-owned and controlled corporations except as may be allowed under this Act.

"SEC. 35. Deposits and Disbursements. - All revenues collected and all accruals thereto shall be
deposited, administered and disbursed in accordance with the law. A maximum expense loading of
twelve percent (12%) of the yearly revenues from all sources may be disbursed for administrative and
operational expenses except as may be otherwise approved by the President of the Philippines on the
basis of actuarial and management studies.
"SEC. 36. Investment of Funds. - The funds of the GSIS which are not needed to meet the current
obligations may be invested under such terms and conditions and rules and regulations as may be
prescribed by the Board: Provided, That investments shall satisfy the requirements of liquidity,
safety/security and yield in order to ensure the actuarial solvency of the funds of the GSIS: Provided,
further, That the GSIS shall submit an annual report on all investments made to both Houses of Congress
of the Philippines, to wit:

(a) in interest-bearing bonds or securities or other evidence of indebtedness of the Government of the
Philippines;chanroblesvirtualawlibrary

(b) in interest-bearing deposits or securities in any domestic bank doing business in the Philippines:
Provided, That in the case of such deposits, there shall not exceed at any time the unimpaired capital
and surplus or total private deposits of the depository bank, whichever is smaller: Provided, further,
That the said bank has prior designation as a depository for the purpose by the Monetary Board of the
Central Monetary Authority;chanroblesvirtualawlibrary

(c) in direct housing loans to members and group housing projects secured by first mortgage, giving
priority to the low income groups and in short and medium term loans to members such as salary,
policy, educational, emergency stock purchase plan and other similar loans: Provided, That no less than
forty percent (40%) of the investible fund of the GSIS Social Insurance Fund shall be invested for these
purposes;chanroblesvirtualawlibrary

(d) in bonds, securities, promissory notes or other evidence of indebtedness of educational or medical
institutions to finance the construction, improvement and maintenance of schools and
hospitals;chanroblesvirtualawlibrary

(e) in real estate property including shares of stocks involving real state property and investments
secured by first mortgages on real estate or other collaterals acceptable to the GSIS: Provided, That such
investment shall, in the determination of the Board, redound to the benefit of the GSIS, its members as
well as the general public;chanroblesvirtualawlibrary

(f) in debt instruments and other securities traded in the secondary markets;chanroblesvirtualawlibrary

(g) in loans to, or in bonds, debentures, promissory notes or other evidence of indebtedness of any
solvent corporation created or existing under the laws of the Philippines;chanroblesvirtualawlibrary
(h) in common and preferred stocks of any solvent corporation or financial institution created or existing
under the laws of the Philippines listed in the stock exchange with proven track record of profitability
over the last three (3) years and payment of dividends at least once over the same
period;chanroblesvirtualawlibrary

(i) in domestic mutual funds including investments related to the operations of mutual funds; and

(j) in foreign mutual funds and in foreign currency deposits or foreign currency-denominated debts, non-
speculative equities and other financial instruments or other assets issued in accordance with existing
laws of the countries where such financial instruments are issued: Provided, That these instruments or
assets are listed in bourses of the respective countries where these instruments or assets are issued:
Provided, further, That the issuing company has proven track record of profitability over the last three
(3) years and payment of dividends at least once over the same period.

"SEC. 37. Records and Reports. - The GSIS shall keep and cause to keep such records as may be
necessary for the purpose of making actuarial studies, calculations and valuations of the funds of the
GSIS including such data needed in the computation of rates of disability, mortality, morbidity,
separation and retirement among the members and any other information useful for the adjustment of
the benefits of the members. The GSIS shall maintain appropriate books of accounts to record its assets,
liabilities, income, expenses, receipts and disbursement of funds and other financial transactions and
operations.

"SEC. 38. Examination and Valuation of the Funds. - The GSIS shall make a periodic actuarial examination
and valuation of its funds in accordance with accepted actuarial principles.

"SEC. 39. Exemption from Tax, Legal Process and Lien. - It is hereby declared to be the policy of the State
that the actuarial solvency of the funds of the GSIS shall be preserved and maintained at all times and
that contribution rates necessary to sustain the benefits under this Act shall be kept as low as possible in
order not to burden the members of the GSIS and their employers. Taxes imposed on the GSIS tend to
impair the actuarial solvency of its funds and increase the contribution rate necessary to sustain the
benefits of this Act. Accordingly, notwithstanding any laws to the contrary, the GSIS, its assets, revenues
including all accruals thereto, and benefits paid, shall be exempt from all taxes, assessments, fees,
charges, or duties of all kinds. These exemptions shall continue unless expressly and specifically revoked
and any assessment against the GSIS as of the approval of this Act are hereby considered paid.
Consequently, all laws, ordinances, regulations, issuances, opinions or jurisprudence contrary to or in
derogation of this provision are hereby deemed repealed, superseded and rendered ineffective and
without legal force and effect.

"Moreover, these exemptions shall not be affected by subsequent laws to the contrary unless this
section is expressly, specifically and categorically revoked or repealed by law and a provision is enacted
to substitute or replace the exemption referred to herein as an essential factor to maintain or protect
the solvency of the fund, notwithstanding and independently of the guaranty of the national
government to secure such solvency or liability.

"The funds and/or the properties referred to herein as well as the benefits, sums or monies
corresponding to the benefits under this Act shall be exempt from attachment, garnishment, execution,
levy or other processes issued by the courts, quasi-judicial agencies or administrative bodies including
Commission on Audit (COA) disallowances and from all financial obligations of the members, including
his pecuniary accountability arising from or caused or occasioned by his exercise or performance of his
official functions or duties, or incurred relative to or in connection with his position or work except when
his monetary liability, contractual or otherwise, is in favor of the GSIS.

"G. ADMINISTRATION

"SEC. 40. Implementing Body. - The Government Service Insurance System as created under
Commonwealth Act No. 186 shall implement the provisions of this Act.

"SEC. 41. Powers and Functions of the GSIS. - The GSIS shall exercise the following powers and functions:

(a) to formulate, adopt, amend and/or rescind such rules and regulations as may be necessary to carry
out the provisions and purposes of this Act, as well as the effective exercise of the powers and functions,
and the discharge of duties and responsibilities of the GSIS, its officers and
employees;chanroblesvirtualawlibrary

(b) to adopt or approve the annual and supplemental budget of receipts and expenditures including
salaries and allowances of the GSIS personnel; to authorize such capital and operating expenditures and
disbursements of the GSIS as may be necessary and proper for the effective management and operation
of the GSIS;chanroblesvirtualawlibrary

(c) to invest the funds of the GSIS, directly or indirectly, in accordance with the provisions of this
Act;chanroblesvirtualawlibrary

(d) to acquire, utilize or dispose of, in any manner recognized by law, real or personal property in the
Philippines or elsewhere necessary to carry out the purposes of this Act;chanroblesvirtualawlibrary

(e) to conduct continuing actuarial and statistical studies and valuations to determine the financial
condition of the GSIS and taking into consideration such studies and valuations and the limitations
herein provided, re-adjust the benefits, contributions, premium rates, interest rates or the allocation or
re-allocation of the funds to the contingencies covered;chanroblesvirtualawlibrary
(f) to have the power of succession;chanroblesvirtualawlibrary

(g) to sue and be sued;chanroblesvirtualawlibrary

(h) to enter into, make, perform and carry out contracts of every kind and description with any person,
firm or association or corporation, domestic or foreign;chanroblesvirtualawlibrary

(i) to carry on any other lawful business whatsoever in pursuance of, or in connection with the
provisions of this Act;chanroblesvirtualawlibrary

(j) to have one or more offices in and outside of the Philippines, and to conduct its business and exercise
its powers throughout and in any part of the Republic of the Philippines and/or in any or all foreign
countries, states and territories: Provided, That the GSIS shall maintain a branch office in every province
where there exists a minimum of fifteen thousand (15,000) membership;chanroblesvirtualawlibrary

(k) to borrow funds from any source, private or government, foreign or domestic, only as an incident in
the securitization of housing mortgages of the GSIS and on account of its receivables from any
government or private entity;chanroblesvirtualawlibrary

(l) to invest, own or otherwise participate in equity in any establishment, firm or

entity;chanroblesvirtualawlibrary

(m) to approve appointments in the GSIS except appointments to positions which are policy
determining, primarily confidential or highly technical in nature according to the Civil Service rules and
regulations: Provided, That all positions in the GSIS shall be governed by the compensation and position
classification system and qualifications standards approved by the GSIS Board of Trustees based on a
comprehensive job analysis and audit of actual duties and responsibilities: Provided, further, That the
compensation plan shall be comparable with the prevailing compensation plans in the private sector and
shall be subject to the periodic review by the Board no more than once every four (4) years without
prejudice to yearly merit reviews or increases based on productivity and
profitability;chanroblesvirtualawlibrary

(n) to design and adopt an Early Retirement Incentives Plan (ERIP) and/or financial assistance for the
purpose of retirement for its own personnel;chanroblesvirtualawlibrary
(o) to fix and periodically review and adjust the rates of interest and other terms and conditions for
loans and credits extended to members or other persons, whether natural or
juridical;chanroblesvirtualawlibrary

(p) to enter into agreement with the Social Security System or any other entity, enterprise, corporation
or partnership for the benefit of members transferring from one system to another subject to the
provisions of Republic Act No. 7699, otherwise known as the Portability Law;chanroblesvirtualawlibrary

(q) to be able to float proper instrument to liquefy long-term maturity by pooling funds for short-term
secondary market;chanroblesvirtualawlibrary

(r) to submit annually, not later than June 30, a public report to the President of the Philippines and the

Congress of the Philippines regarding its activities in the administration and enforcement of this Act
during the preceding year including information and recommendations on board policies for the
development and perfection of the programs of the GSIS;chanroblesvirtualawlibrary

(s) to maintain a provident fund, which consists of contributions made by both the GSIS and its officials
and employees and their earnings, for the payments of benefits to such officials and employees or their
heirs under such terms and conditions as it may prescribe;chanroblesvirtualawlibrary

(t) to approve and adopt guidelines affecting investments, insurance coverage of government
properties, settlement of claims, disposition of acquired assets, privatization or expansion of
subsidiaries, development of housing projects, increased benefit and loan packages to members, and
the enforcement of the provision of this Act;chanroblesvirtualawlibrary

(u) any provision of law to the contrary notwithstanding, to authorize the payment of extra
remuneration to the officials and employees directly involved in the collection and/or remittances of
contributions, loan repayments, and other monies due to the GSIS at such rates and under such
conditions as it may adopt: Provided, That the best interest of the GSIS shall be observed
thereby;chanroblesvirtualawlibrary

(v) to determine, fix and impose interest upon unpaid premiums due from employers and
employees;chanroblesvirtualawlibrary
(w) to ensure the collection or recovery of all indebtedness, liabilities and/or accountabilities, including
unpaid premiums or contributions in favor of the GSIS arising from any cause or source whatsoever, due
from obligors, whether public or private. The Board shall demand payment or settlement of the
obligations referred to herein within thirty (30) days from the date the obligation becomes due, and in
the event of failure or refusal of the obligor or debtor to comply with the demand, to initiate or institute
the necessary or proper actions or suits, criminal, civil or administrative or otherwise, before the courts,
tribunals, commissions, boards, or bodies of proper jurisdiction within thirty (30) days reckoned from
the expiry date of the period fixed in the demand within which to pay or settle the
account;chanroblesvirtualawlibrary

(x) to design and implement programs that will promote and mobilize savings and provide additional
resources for social security expansion and at the same time afford individual members appropriate
returns on their savings/investments. The programs shall be so designed as to spur socio-economic take-
off and maintain continued growth; and

(y) to exercise such powers and perform such other acts as may be necessary, useful, incidental or
auxiliary to carry out the provisions of this Act, or to attain the purposes and objectives of this Act.

"SEC. 42. The Board of Trustees; its Composition; Tenure and Compensation. - The corporate powers
and functions of the GSIS shall be vested in and exercised by the Board of Trustees composed of the
President and General Manager of the GSIS and eight (8) other members to be appointed by the
President of the Philippines, one (1) of whom shall be either the President of the Philippine Public School
Teachers Association (PPSTA) or the President of the Philippine Association of School Superintendents
(PASS), another two (2) shall represent the leading organizations or associations of government
employees/retirees, another four (4) from the banking, finance, investment, and insurance sectors, and
one (1) recognized member of the legal profession who at the time of appointment is also a member of
the GSIS. The Trustees shall elect from among themselves a Chairman while the President and General
Manager of the GSIS shall automatically be the vice-chairman.

The Trustees, except the President and General Manager who shall cease as trustee upon his separation,
shall hold office for six (6) years without reappointment, or until their successors are duly appointed and
qualified. Vacancy, other than through the expiration of the term, shall be filled for the unexpired term
only. The members of the Board shall be entitled to a per diem of Two thousand five hundred pesos
(P2,500.00) for each board meeting actually attended by them, but not to exceed Ten thousand pesos
(P10,000.00) a month and reasonable transportation and representation allowances as may be fixed by
the Board.

"SEC. 43. Powers and Functions of the Board of Trustees. - The Board of Trustees shall have the
following powers and functions:

"(a) to formulate the policies, guidelines and programs to effectively carry out the purposes of this
Act;chanroblesvirtualawlibrary
"(b) to promulgate such rules and regulations as may be necessary or proper for the effective exercise of
the powers and functions as well as the discharge of the duties and responsibilities of the GSIS, its
officers and employees;chanroblesvirtualawlibrary

"(c) upon the recommendation of the President and General Manager, to approve the annual and
supplemental budget of receipts and expenditures of the GSIS, and to authorize such operating and
capital expenditures and disbursements of the GSIS as may be necessary or proper for the effective
management, operation and administration of the GSIS;chanroblesvirtualawlibrary

"(d) upon the recommendation of the President and General Manager, to approve the GSIS
organizational and administrative structure and staffing pattern, and to establish, fix, review, revise and
adjust the appropriate compensation packages for the officers and employees of the GSIS and
reasonable allowances, incentives, bonuses, privileges and other benefits as may be necessary or proper
for the effective management, operation and administration of the GSIS, which shall be exempt from
Republic Act No. 6758, otherwise known as the Attrition Law;chanroblesvirtualawlibrary

"(e) to fix and periodically review and adjust the rates of interest and other terms and conditions for
loans and credits extended to its members or other persons, whether natural or
juridical;chanroblesvirtualawlibrary

"(f) the provision of any law to the contrary notwithstanding, to compromise or release, in whole or in
part, any claim or settle liability to the GSIS, regardless of the amount involved, under such terms and
conditions as it may impose for the best interest of the GSIS;chanroblesvirtualawlibrary

"(g) to approve and adopt guidelines affecting investments, insurance coverage of government
properties, settlement of claims, disposition of acquired assets, development of housing projects,
increased benefit and loan packages to members, and the enforcement of the provisions of this
Act;chanroblesvirtualawlibrary

"(h) to determine, fix, and impose interest upon unpaid or unremitted premiums and/or contributions;
and

"(i) to do and perform any and all acts necessary, proper or incidental to the attainment of the purposes
and objectives of this Act.
"SEC. 44. Appointment, Qualifications, and Compensation of the President and General Manager and of
other Personnel. - The President and General Manager of the GSIS shall be its Chief Executive Officer
and shall be appointed by the President of the Philippines. He shall be a person with management and
investments expertise necessary for the effective performance of his duties and functions under this
Act.

"The GSIS President and General Manager shall be assisted by one or more executive vice-presidents,
senior vice-presidents and managers in addition to the usual supervisory and rank-and-file positions who
shall be appointed and removed by the President and General Manager with the approval of the Board,
in accordance with the existing Civil Service rules and regulations.

"SEC. 45. Powers and Duties of the President and General Manager. - The President and General
Manager of the GSIS shall, among others, execute and administer the policies and resolutions approved
by the Board and direct and supervise the administration and operations of the GSIS. The President and
General Manager, subject to the approval of the Board, shall appoint the personnel of the GSIS, remove,
suspend or otherwise discipline them for cause, in accordance with the existing Civil Service rules and
regulations, and prescribe their duties and qualifications to the end that only competent persons may be
employed.

"SEC. 46. Auditor. - (a) The Chairman of the Commission on Audit shall be the ex officio auditor of the
GSIS, and the necessary personnel to assist said representative in the performance of his duties.

"(b) The Chairman of the Commission on Audit or his authorized representatives, shall submit to the
Board soon after the close of each calendar year, an audited statement showing the financial condition
and progress of the GSIS for the calendar year just ended.

"SEC. 47. Legal Counsel. - The Government Corporate Counsel shall be the legal adviser and consultant
of the GSIS, but the GSIS may assign to the Office of the Government Corporate Counsel (OGCC) cases
for legal action or trial, issues for legal opinions, preparation and review of contracts/agreements and
others, as the GSIS may decide or determine from time to time: Provided, however, That the present
legal services group in the GSIS shall serve as its in-house legal counsel.

"The GSIS may, subject to approval by the proper court, deputize any personnel of the legal service
group to act as special sheriff in the enforcement of writs and processes issued by the court, quasi-
judicial agencies or administrative bodies in cases involving the GSIS.

"SEC. 48. Powers of the Insurance Commission. - The Insurance Commissioner or his authorized
representatives shall make an examination of financial condition and methods of transacting business of
the GSIS at least once every three (3) years and the report of said examination shall be submitted to the
Board of Trustees and copies thereof be furnished the Office of the President of the Philippines and the
two houses of the Congress of the Philippines within five (5) days after the close of examination:
Provided, however, That for each examination, the GSIS shall pay the office of the Insurance
Commissioner an amount equal to the actual expenses incurred by the said office in the conduct of
examination, including the salaries of the examiners and of the actuary of such examination for the
actual time spent.
"H. GENERAL PROVISION

"SEC. 49. Dispensation of Social Insurance Benefits. - (a) The GSIS shall pay the retirement benefits to
the employee on his last day of service in the government: Provided, That all requirements are
submitted to the GSIS within a reasonable period prior to the effective date of the retirement;

"(b) The GSIS shall discontinue the processing and adjudication of retirement claims under R.A. No. 1616
except refund of retirement premium under R. A. No. 910. Instead, all agencies concerned shall process
and pay the gratuities of their employees. The Board shall adopt the proper rules and procedures for the
implementation of this provision.

"SEC. 50. Development and Disposition of Acquired Assets. - The GSIS shall have the right to develop and
dispose of its acquired assets obtained in the ordinary course of its business. To add value to, improve
profitability on, and/or enhance the marketability of an acquired asset, the GSIS may further
develop/renovate the same either with its own capital or through a joint venture arrangement with
private companies or individuals.

"The GSIS may sell its acquired assets in accordance with existing Commission on Audit (COA) rules and
regulations for an amount not lower than the current market value of the property. For this purpose,
the GSIS shall conduct an annual appraisal of its property or acquired assets to determine its current
market value. All notices of sale shall be published in newspapers of general circulation.

"No injunction or restraining order issued by any court, commission, tribunal or office shall bar, impede
or delay the sale and disposition by the GSIS of its acquired assets except on questions of ownership and
national or public interest.

"SEC. 51. Government Assistance to the GSIS. - The GSIS may call upon any employer for such assistance
as may be necessary in the discharge of its duties and functions.

"I. PENAL PROVISIONS

"SEC. 52. Penalty. - (a) Any person found to have participated directly or indirectly in the commission of
fraud, collusion, falsification, or misrepresentation in any transaction with the GSIS, whether for him or
for some other persons, shall suffer the penalties provided for in Article 172 of the Revised Penal Code.

"(b) Whoever shall obtain or receive any money or check invoking any provision of this Act or any
agreement thereunder, without being entitled thereto with the intent to defraud any member, any
employer, the GSIS, or any third party, shall be punished by a fine of not less than Five thousand pesos
(P5,000.00) nor more than Twenty thousand pesos (P20,000.00) or by imprisonment of not less than six
(6) years and one (1) day to twelve (12) years, or both, at the discretion of the court.

"(c) Whoever fails or refuses to comply with the provisions of this Act or with the rules and regulations
adopted by the GSIS, shall be punished by a fine of not less than Five thousand pesos (P5,000.00) nor
more than Twenty thousand pesos (P20,000.00) or imprisonment of not less than six (6) years and one
(1) day to twelve (12) years, or both, at the discretion of the court.
"(d) The treasurer, finance officer, cashier, disbursing officer, budget officer or other official or
employee who fails to include in the annual budget the amount corresponding to the employer and
employee contributions, or who fails or refuses or delays by more than thirty (30) days from the time
such amount becomes due and demandable, or to deduct the monthly contributions of the employee
shall, upon conviction by final judgment, suffer the penalties of imprisonment from six (6) months and
one (1) day to six (6) years, and a fine of not less than Three thousand pesos (P3,000.00) but not more
than Six thousand pesos (P6,000.00), and in addition, shall suffer absolute perpetual disqualification
from holding public office and from practicing any profession or calling licensed by the government.

"(e) Any employee or member who receives or keeps fund or property belonging, payable or deliverable
to the GSIS and appropriates the same, or takes or misappropriates or uses the same for any purpose
other than authorized by this Act, or permits another person to take, misappropriate or use said fund or
property by expressly consenting thereto, or through abandonment or negligence, or is otherwise guilty
of the misappropriation of said fund or property, in whole or in part, shall suffer the penalties provided
in Article 217 of the Revised Penal Code, and in addition, shall suffer absolute perpetual disqualification
from holding public office and from practicing any profession or calling licensed by the government.

"(f) Any employee who, after deducting the monthly contribution or loan amortization from a members
compensation, fails to remit the same to the GSIS within thirty (30) days from the date they should have
been remitted under Section 6(a), shall be presumed to have misappropriated such contribution or loan
amortization and shall suffer the penalties provided in Article 315 of the Revised Penal Code, and in
addition, shall suffer absolute perpetual disqualification from holding public office and from practicing
any profession or calling licensed by the government.

"(g) The heads of the offices of the national government, its political subdivisions, branches, agencies
and instrumentalities, including government-owned or controlled corporations and government
financial institutions, and the personnel of such offices who are involved in the collection of premium
contributions, loan amortization and other accounts due the GSIS who shall fail, refuse or delay the
payment, turnover, remittance or delivery of such accounts to the GSIS within thirty (30) days from the
time that the same shall have been due and demandable shall, upon conviction by final judgment, suffer
the penalties of imprisonment of not less than one (1) year nor more than five (5) years and a fine of not
less than Ten thousand pesos (P10,000.00) nor more than Twenty thousand pesos (P20,000.00), and in
addition, shall suffer absolute perpetual disqualification from holding public office and from practicing
any profession or calling licensed by the government.

"(h) The officers and/or personnel referred to in paragraph (g) of this section shall be liable not only
criminally but also civilly to the GSIS or to the employee or member concerned in the form of damages,
including surcharges and interests.

"(i) For the charges or complaints referred to in paragraph (g) of this section, the liabilities therein set
forth shall be construed as waiver of the State of its immunity from suit, hence, the above-mentioned
officials and/or personnel may not invoke the defense of non-suability of the State.

"(j) Failure of the Members of the GSIS Board, including the chairman and the vice-chairman, to comply
with the provisions of paragraph (w) of Section 41 hereof, shall subject them to imprisonment of not
less than six (6) months nor more than one (1) year or a fine of not less than Five thousand pesos
(P5,000.00) nor more than Ten thousand pesos (P10,000.00) without prejudice to any civil or
administrative liability which may also arise therefrom.

"(k) Criminal actions arising from violations of the provisions of this Act may be commenced by the GSIS
or by the aggrieved member, either under this Act or, in appropriate cases, under the Revised Penal
Code.

"SEC. 53. Implementing Rules and Regulations. - The implementing rules and regulations to carry out the
provisions of this Act shall be adopted and promulgated by the GSIS not later than ninety (90) days after
the approval of this Act.

"SEC. 54. Non-impairment of Benefits, Powers, Jurisdiction, Rights, Privileges, Functions and Activities. -
Nothing in this Act shall be construed to repeal, amend or limit any provision of existing laws,
Presidential Decrees and Letters of Instructions, not otherwise specifically inconsistent with the
provisions of this Act.

"SEC. 55. Exclusiveness of Benefits. - Whenever other laws provide similar benefits for the same
contingencies covered by this Act, the member who qualifies to the benefits shall have the option to
choose which benefits will be paid to him. However, if the benefits provided by the law chosen are less
than the benefits provided under this Act, the GSIS shall pay only the difference.

"SEC. 56. Appropriations. - The amount necessary to carry out the provisions of this Act shall be included
in the respective budgets of the agencies in the national government obligation program of the year
following its enactment into law and thereafter."

SEC. 2. Separability Clause. - Should any provision of this Act or any part thereof be declared invalid, the
other provisions, so far as they are separable from the invalid ones, shall remain in force and effect.

SEC. 3. Repealing Clause. - All laws and any other law or parts of law specifically inconsistent herewith
are hereby repealed or modified accordingly: Provided, That the rights under the existing laws, rules and
regulations vested upon or acquired by an employee who is already in the service as of the effectivity of
this Act shall remain in force and effect: Provided, further, That subsequent to the effectivity of this Act,
a new employee or an employee who has previously retired or separated and is reemployed in the
service shall be covered by the provisions of this Act.

SEC. 4. Effectivity. - This Act shall take effect fifteen (15) days after its publication in the Official Gazette
or in at least two (2) newspapers of general circulation.

This Act, which is a consolidation of Senate Bill No. 2013 and House Bill No. 8561, was finally passed by
the Senate and the House of Representatives on May 29, 1997 and May 28, 1997, respectively.

Approved: May 30, 1997

(Sgd.) FIDEL V. RAMOS

President of the Philippines

--------------------------------

HOME DEVELOPMENT MUTUAL FUND LAW

OF 1980 chanroblesvirtualawlibrary

PRESIDENTIAL DECREE NO. 1752, AS AMENDED

AMENDING THE ACT CREATING THE HOME DEVELOPMENT MUTUAL FUND

(As amended by Executive Order No. 35 and Republic Act No. 7742)

WHEREAS, the Government, in pursuit of the constitutional mandates on the promotion of public
welfare through ample social services, as well as its humanist commitment to the interest of the working
groups, in relation particularly to their need for decent shelter, has established the Home Development
Mutual Fund under Presidential Decree No. 1530, a system of employee-employer contributions for
housing purposes; and

WHEREAS, there is a need to strengthen the Home Development Mutual Fund and make it more
effective both as savings generation and home-building program for the gainfully-employed members of
the Philippine society;

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 the following:

SEC. 1. Title. - This Act shall be known as the "Home Development Mutual Fund Law of 1980."

SEC. 2. Policy. - It is the policy of the Republic of the Philippines to motivate the employed and other
earning groups to better plan and provide for their housing needs by membership in an integrated,
nationwide savings system established for the said purpose, with contributory support of the employers,
in the spirit of social justice and the pursuit of national development.

SEC. 3. Fund-System. - To carry out the purposes of this Act, there is hereby created the Home
Development Mutual Fund of 1980, also referred to herein as the Fund, a provident savings system for
employees, private and public, who shall be the members, supported by matching contributions of their
respective employers, with housing as the primary investment. The system may cover self-employed
and other working groups, as herein provided.

The Fund shall be a body corporate, with principal office in Metro Manila, and shall replace the Home
Development Mutual Fund established under Presidential Decree No. 1530.

SEC. 4. Fund Coverage. - Coverage of the Fund shall be mandatory upon all employees covered by the
Social Security System and the Government Service Insurance System, and their respective employers:
Provided, however, That coverage of the employees whose monthly compensation is less than Four
thousand pesos (P4,000.00) shall be voluntary: Provided, further, That upon membership with the Fund,
their employers shall contribute an amount in accordance with Section 5 of this Act.

Such coverage may be extended to other working groups, with or without employer contributions, as
may be determined by the Board of Trustees. (As amended by R. A. No. 7742).

SEC. 5. Fund Contributions. - Covered employees and employers shall contribute to the Fund based on
the monthly compensation of covered employees as follows:

Employees earning not more than One thousand five hundred pesos (P1,500.00) per month - one
percent (1%).

Employees earning more than One thousand five hundred pesos (1,500.00) per month - two percent
(2%).

All employers - two percent (2%) of the monthly compensation of all covered employees.

For purposes of this Section, "monthly compensation" shall mean the basic monthly salary plus cost-of-
living allowance (COLA): Provided, however, That the maximum monthly compensation to be used in
computing employee and employer contributions shall not be more than Five thousand pesos
(P5,000.00). The employer shall not be entitled to deduct from the wages or renumeration of, or
otherwise to recover from, the employee the employers contribution. (As amended by R. A. No. 7742).

SEC. 6. Membership Term. - Membership in the Fund shall be for a period of twenty (20) years except
when earlier terminated by reason of retirement, disability, insanity, death, departure from the country
or other causes as may be provided for by the Board of Trustees: Provided, That those who become
members of the Fund after the effectivity of this Act may withdraw the total accumulated value of their
contributions to the Fund after the tenth or the fifteenth year of continuous membership: Provided,
further, That said members have no outstanding housing loans with the Fund: Provided, finally, That this
option may be exercised only once and shall not prejudice the members continuing membership in the
Fund.

Resignation, lay-off or suspension from employment may not necessarily constitute a ground for
membership termination, except for suspension of contributions. (As amended by R. A. No. 7742).

SEC. 7. Waiver or Suspension of Coverage. - Coverage of the Fund and/or the payment of monthly
contribution to the same may, by rules or resolutions of the Board of Trustees, be waived or suspended
by reasons of nature of employment, condition of business, ability to make contributions and other
reasonable considerations.

SEC. 8. Provident Character. - The Fund shall be private in character, owned wholly by the members,
administered in trust and applied exclusively for their benefit. All the personal and employer
contributions shall be fully credited to each member, accounted for individually and transferable in case
of change of employment. They shall earn dividends as may be provided for in the implementing rules.
The said amounts shall constitute the provident fund of each member, to be paid to him, his estate or
beneficiaries upon termination of membership, or from which peripheral benefits for the member may
be drawn.
SEC. 9. Housing Features. - A member of good standing shall be eligible to apply for a housing loan,
under such terms as may be authorized by the Board of Trustees, taking into account ability to pay. The
Board of Trustees shall institute policies to ensure that lower-income members obtain such housing
loans.

SEC. 10. Corporate Powers. - The Fund shall have the powers and functions specified in this Act and the
usual corporate powers:

(a) To make policies and guidelines, as well as adopt, amend and rescind such rules and regulations as
may be necessary to carry out the provisions and purposes of this Act;

(b) To submit annually to the President of the Philippines not later than March 15, a report of its
activities and the status of the Fund during the preceding year, including information and
recommendations for the development and improvement thereof, and to furnish each member of the
Fund a Statement of His Accumulated Fund Value at least once a year;

(c) To invest not less than seventy percent (70%) of its investible fund to housing, in accordance with this
Act; (As amended by R. A. No. 7742).

(d) To acquire, utilize, or dispose of, in any manner recognized by law, real or personal properties to
carry out the purposes of this Act;

(e) To set up its own accounting and computer systems; to conduct continuing actuarial and statistical
studies and valuations to determine the financial viability of the Fund and its project; to require reports,
compilations and analysis of statistical and economic data, as well as make such other studies and
surveys as may be needed for the proper administration and development of the Fund;

(f) To have the power of succession; to sue and be sued; to adopt and use a separate seal;

(g) To enter into and carry out contracts of every kind and description with any person, firm or
association or corporations, domestic or foreign;

(h) To borrow funds from any source, private or government, foreign or domestic;

(i) To invest, own or otherwise participate in equity in any establishment, firm or entity; to form,
organize, invest in or establish and maintain a subsidiary or subsidiaries in relation to any of its
purposes;

(j) To exercise such powers and perform such acts as may be necessary, useful, incidental or auxiliary to
carry out the provisions of this Act.

SEC. 11. Board of Trustees. - The powers and functions of the Fund shall be exercised by a Board of
Trustees composed of the Minister of Human Settlements as Chairman, the Minister of Finance as Vice-
Chairman, the Minister of the Budget, the Minister of Labor, the Minister of Industry, the Chief
Executive Officer of the Fund, two representatives of private employees, two representatives of private
employers, and one representative of government employees as members.

The four private sector representatives shall be appointed by the President of the Philippines for a term
of two years: Provided, however, That of the first set to be appointed, one representative of the
employees and one representative of the employers shall have a term of only one year. The
representative of the government employees shall be appointed by the President of the Philippines for a
term of two years.

The members of the Board shall receive a per diem and reasonable transportation and representation
allowance at par with other government financial institutions, as may be provided for by the Board of
Trustees and approved by the President of the Philippines.

Until the appointment of another person by the President of the Philippines upon the recommendation
of the Board of Trustees, the President of the National Home Mortgage Finance Corporation shall be the
Chief Executive Officer of the Fund.

SEC. 12. Powers of the Board. - The Board shall have the following powers:

(a) To formulate policies, rules and regulations to carry out effectively the functions of the Fund under
this Act;

(b) To direct operations and administration of the Fund;

(c) To authorize expenditures of the Fund in the interest of effective administration and operations; to
adopt from time to time the budgets for said purposes;

(d) To approve appointments of personnel; and

(e) To exercise such other powers as may be necessary to carry into effect the powers and accomplish
the purposes for which the Fund is established.

SEC. 13. Rule-Making Power. - The Board of Trustees is hereby authorized to make and change needful
rules and regulations, which shall be published in accordance with law or at least once in a newspaper of
general circulation in the Philippines, to provide for, but not limited to, the following matters:

(a) The effective administration, custody, development, utilization and disposition of the Fund or parts
thereof, including payment of amounts credited to members or to their beneficiaries or estates;

(b) Extension of Fund coverage to other working groups, and waiver or suspension of coverage or its
enforcement for reasons herein stated;

(c) Grounds for and effects or termination of membership other than by completion of term;

(d) Fund earnings and their distribution, investment and/or plowing back for the exclusive benefit of the
members;

(e) Interim disbursements of accumulated values to members of ameliorative and similar purposes;

(f) Housing and other loan assistance programs for members;

(g) Adjudication and settlement of claims and disputes and the procedures for the same on any matters
involving the interests of members in the Fund;

(h) Optimize the effectiveness of the initial coverage drive through phased implementation based on
reasonable classifications of employer and/or employee groups; and
(i) Other matters that, by express or implied provisions of this Act, shall require implementation by
appropriate policies, rules and regulations.

SEC. 14. Powers and Duties of Chief Executive Officer. - The Chief Executive Officer of the Fund shall
execute and administer the policies and resolutions approved by the Board of Trustees, prepare its
agenda and direct and supervise the operations and management of the Fund. Subject to the approval
of the Board, said officer shall appoint and assign the personnel of the Fund, remove, suspend or
otherwise discipline them for cause and prescribe their duties and qualifications.

SEC. 15. Money Investments. - All moneys of the Fund as are not needed to meet current administrative
and operational requirements, shall be invested with due and prudent regard for its safety, growth and
liquidity needs.

SEC. 16. Tax and Guarantee Benefits. - Notwithstanding any provisions of existing law, decree, executive
or administrative order, rule or regulation to the contrary, the Fund and all its assets, collections,
receivables and increments as well as all distributions therefrom, whether of contributions, ratable
income of the Fund, or dividends paid or received by the members thereof, or their heirs/beneficiaries,
shall be exempt from the payment of any and all forms of taxes, assessments and other charges. All such
provident payments shall not be liable to attachment, garnishment, levy or seizure by or under any legal
or equitable process whatsoever, either before or after receipt by the persons entitled thereto, except
to pay any debt of the covered member to the Fund. In addition, the Government of the Republic of the
Philippines hereby guarantees the payment of employees and employers contributions and dividends
to the members when they are due.

SEC. 17. Administration Costs. - The Fund shall bear the costs of its administration and development, in
such amounts and/or limits as the Board of Trustees may deem appropriate, but not exceeding two
percent (2%) of the net Fund assets of the previous year. Expenses for initial operation, however, may
be provided for by the National Home Mortgage Finance Corporation, either as advances subject to
reimbursement, with or without interest, or as subsidy for the development of housing finance.

SEC. 18. Audit. - The Chairman of the Commission on Audit shall act as the ex-officio auditor of the Fund
and, accordingly, is empowered to appoint a representative and other subordinate personnel to
perform and report on such audit duties, responsible to and removable only by the Commission on
Audit Chairman, without prejudice, however, to the power of the Board of Trustees to contract for
another mode of independent audit service, in addition to that provided by the Commission on Audit.

SEC. 19. Existing Provident/Housing Plans. - An employer and/or employee group who, at the time this
Decree becomes effective, have their own provident and/or employee-housing plans, may register with
the Fund, for any of the following purposes:

(a) For annual certification of waiver or suspension from coverage or participation in the Fund, which
shall be granted on the basis of verification that the waiver or suspension does not contravene any
effective collective bargaining agreement and that the features of the plan or plans are superior to the
Fund or continue to be so; or

(b) For integration with the Fund, either fully or partially.

The establishment of a separate provident and/or housing plan after the effectivity of this Decree shall
not be a ground for waiver of coverage in the Fund; nor shall such coverage bar any employer and/or
employee-group from establishing separate provident and/or housing plans.

SEC. 20. Existing Coverage. - Membership under the Fund established under Presidential Decree No.
1530, together with amounts and benefits already accrued to the members, including employers
counterparts, as well as covering records and documents, shall be transferred, continued and/or
integrated into the new Fund hereby established, subject henceforth to policies and rules adopted
thereunder.

SEC. 21. Substitute Retirement Plan. - A private employer shall have the option to treat the coverage by
the Fund as a retirement plan for the employee concerned, within the purview of the Revised Labor
Code of the Philippines, subject, however, to any existing collective bargaining on the matter.

SEC. 22. Remittance of Contributions. - (a) It shall be the duty of every employer to set aside and remit
the contributions required under this Act through the Social Security System and determined by the
Board of Trustees, as may be approved by the President of the Philippines. Every employer required to
set aside and remit such contributions as prescribed under this Act shall be liable for their payment, and
non-payment shall further subject the employer to a penalty of three percent per month of the amounts
payable from the date the contributions fall due until paid.

(b) 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 under this Act.

SEC. 23. Penal Provisions. - Refusal or failure without lawful cause or with fraudulent intent to comply
with the provisions of this Decree, as well as the implementing rules and regulations adopted by the
Board of Trustees, particularly with respect to registration of employees, collection and remittance of
employee-savings as well as the employer counterparts, or the correct amount due, within the time set
in the implementing rules and regulations or specific call or extension made by the Fund Management
shall constitute an offense punishable by a fine of not less, but not more than twice, the amount
involved or imprisonment of not more than six (6) years, or both such fine and imprisonment, in the
discretion of the court, apart from the civil liabilities and/or obligations of the offender or delinquent.
When the offender is a corporation, the penalty shall be imposed upon the members of the governing
board and the President or General Manager, without prejudice to the prosecution of related offenses
under the Revised Penal Code and other laws, revocation and denial of operating rights and privileges in
the Philippines, and deportation when the offender is a foreigner.

SEC. 24. Visitorial and Enforcement Powers. - (a) The Fund or its duly authorized representatives may, at
any time, inspect the premises, books of accounts and records of any person or entity covered by this
Act; require it to submit its reports regularly; and act on violations of any provisions of this Act.

(b) Particular aspects of the Funds administration may be subject to supervision, visitation or
verification by appropriate agencies of the government as may be designated and authorized by the
President of the Philippines.

SEC. 25. Repealing Clause. - Any provisions of law, decree, executive order, rules or regulations as are in
conflict or inconsistent with the provisions and/or purposes of this decree are accordingly repealed,
amended or modified.
SEC. 26. Effectivity. This Decree shall take effect immediately.

Done in the City of Manila, this 14th day of December, in the year of our Lord, nineteen hundred and
eighty.

(SGD.) FERDINAND E. MARCOS

President of the Philippines

--------------------------------------

NATIONAL HEALTH INSURANCE ACT OF 1995

[REPUBLIC ACT NO. 7875]

AN ACT INSTITUTING A NATIONAL HEALTH INSURANCE PROGRAM

FOR ALL FILIPINOS AND ESTABLISHING THE PHILIPPINE HEALTH INSURANCE CORPORATION FOR THE
PURPOSE.

SECTION 1. Short Title. - This Act shall be known as the "National Health Insurance Act of 1995."

ARTICLE I

GUIDING PRINCIPLES

SECTION 2.chanrobles virtual law libraryDeclaration of Principles and Policies. - Section 11, Article XIII of
the 1987 Constitution of the Republic of the Philippines declares that the State shall adopt an integrated
and comprehensive approach to health development which shall endeavor to make essential goods,
health and other social services available to all the people at affordable cost. Priority for the needs of
the underprivileged, sick, elderly, disabled, women, and children shall be recognized. Likewise, it shall be
the policy of the State to provide free medical care to paupers.cralaw

In the pursuit of a National Health Insurance Program, this Act shall adopt the following guiding
principles:
a) Allocation of National Resources for Health - The Program shall underscore the importance for
government to give priority to health as a strategy for bringing about faster economic development and
improving quality of life;

b) Universality - The Program shall provide all citizens with the mechanism to gain financial access to
health services, in combination with other government health programs. The National Health Insurance
Program shall give the highest priority to achieving coverage of the entire population with at least a
basic minimum package of health insurance benefits;

c) Equity - The Program shall provide for uniform basic benefits. Access to care must be a function of a
persons health needs rather than his ability to pay;

d) Responsiveness - The Program shall adequately meet the needs for personal health services at various
stages of a members life;

e) Social Solidarity - The Program shall be guided by community spirit. It must enhance risk-sharing
among income groups, age groups, and persons of differing health status, and residing in different
geographic areas;

f) Effectiveness - The Program shall balance economical use of resources with quality of care;

g) Innovation - The Program shall adopt to changes in medical technology, health service organizations,
health care provider payments systems, scopes of professional practice, and other trends in the health
sector. It must be cognizant of the appropriate roles and respective strengths of the public and private
sectors in health care, including peoples organizations and community-based health care organizations;

h) Devolution - The Program shall be implemented in consultation with the local government units
(LGUs), subject to the over-all policy directions set by the National Government;

i) Fiduciary Responsibility - The Program shall provide effective stewardship, funds management, and
maintenance of reserves;

j) Informed Choice - The Program shall encourage members to choose from among accredited health
care providers. The Corporations local offices shall objectively apprise its members of the full range of
providers involved in the Program and of the services and privileges to which they are entitled as
members. This explanation, which the member may use as a guide in selecting the appropriate and most
suitable provider, shall be given in clear and simple Filipino and in the local language that is
comprehensible to the members;

k) Maximum Community Participation - The Program shall build on existing community initiatives for its
organization and human resource requirements.cralaw

l) Compulsory Coverage - All citizens of the Philippines shall be required to enroll in the National Health
Insurance Program in order to avoid adverse selection and social inequity;

m) Cost Sharing - The Program shall continuously evaluate its cost-sharing schedule to ensure that the
costs borne by the members are fair and equitable and that the charges by health care providers are
reasonable;
n) Professional Responsibility of Health Care Providers - The Program shall assure that all participating
health care providers are responsible and accountable in all their dealings with the Corporation and its
members;

o) Public Health Services - The Government shall be responsible for providing public health services for
all groups such as women, children, indigenous people, displaced communities in environmentally
endangered areas, while the Program shall focus on the provision of personal health services. Preventive
and promotive public health services are essential for reducing the need and spending for personal
health services;

p) Quality of Services - The Program shall promote the improvement in the quality of health services
provided through the institutionalization of programs of quality assurance at all levels of the health
service delivery system. The satisfaction of the community, as well as individual beneficiaries, shall be a
determinant of the quality of service delivery;

q) Cost Containment - The Program shall incorporate features of cost containment in its design and
operations and provide a viable means of helping the people pay for health care services; and

r) Care for the Indigent - The government shall be responsible for providing a basic package of needed
personal health services to indigents through premium subsidy, or through direct service provision until
such time that the program is fully implemented.cralaw

SECTION 3. General Objectives. - This Act seeks to:

a) provide all citizens of the Philippines with the mechanism to gain financial access to health services;

b) create the National Health Insurance Program, hereinafter referred to as the Program, to serve as the
means to help the people pay for health care services;

c) prioritize and accelerate the provisions of health services to all Filipinos, especially that segment of
the population who cannot afford such services; and

d) establish the Philippine Health Insurance Corporation, hereinafter referred to as the Corporation, that
will administer the Program at central and local levels.

ARTICLE II

DEFINITION OF TERMS

SECTION 4. Definition of Terms. - For the purpose of this Act, the following terms shall be defined as
follows:

a) Beneficiary - Any person entitled to health care benefits under this Act.cralaw

b) Benefit Package - Services that the Program offers to its members.cralaw

c) Capitation - A payment mechanism where a fixed rate, whether per person, family, household, or
group, is negotiated with the health care provider who shall be responsible for delivering or arranging
for the delivery of health services required by the covered person under the conditions of a health
provider contract.cralaw

d) Contribution - The amount paid by or in behalf of a member to the Program for coverage, based on
salaries or wages in the case of formal sector employees, and on household earnings and assets, in the
case of the self-employed, or on other criteria as may be defined by the Corporation in accordance with
the guiding principles set forth in Article I of this Act.cralaw

e) Coverage - The entitlement of an individual, as a member or as a dependent, to the benefits of the

Program.cralaw

f) Dependent - The legal dependents of a member are: 1) the legitimate spouse who is not a member; 2)
the unmarried and unemployed legitimate, legitimated, illegitimate, acknowledged children as
appearing in the birth certificate; legally adopted or stepchildren below twenty-one (21) years of age; 3)
children who are twenty-one (21) years old or above but suffering from congenital disability, either
physical or mental, or any disability acquired that renders them totally dependent on the member for
support; 4) the parents who are sixty (60) years old or above whose monthly income is below an amount
to be determined by the Corporation in accordance with the guiding principles set forth in Article I of
this Act.cralaw

g) Diagnostic Procedure - Any procedure to identify a disease or condition through analysis and
examination.cralaw

h) Emergency - An unforeseen combination of circumstances which calls for immediate action to

preserve the life of a person or to preserve the sight of one or both eyes; the hearing of one or both
ears; or one or two limbs at or above the ankle or wrist.cralaw

i) 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, where there is an employer-
employee relationship.cralaw

j) Employer - A natural or juridical person who employs the services of an employee.cralaw

k) Enrollment - The process to be determined by the Corporation in order to enlist individuals as

members or dependents covered by the Program.cralaw

l) Fee for Service - A reasonable and equitable health care payment system under which physicians and
other health care providers receive a payment that does not exceed their billed charge for each unit of
service provided.cralaw

m) Global Budget - An approach to the purchase of medical services by which health care provider
negotiation concerning the costs of providing a specific package of medical benefits is based solely on a
predetermined and fixed budget.cralaw

n) Government Service Insurance System - The Government Service Insurance System created under
Commonwealth Act No. 186, as amended.cralaw

o) Health Care Provider - Refers to:

1) a health care institution, which is duly licensed and accredited and devoted primarily to the
maintenance and operation of facilities for health promotion, prevention, diagnosis, treatment, and care
of individuals suffering from illness, disease, injury, disability or deformity, or in need of obstretical or
other medical and nursing care. It shall also be construed as any institution, building, or place where
there are installed beds, cribs, or bassinets for twenty-four hour use or longer by patients in the
treatment of diseases, injuries, deformities, or abnormal physical and mental states, maternity cases or
sanitarial care; or infirmaries, nurseries, dispensaries, and such other similar names by which they may
be designated; or

2) a health care professional, who is any doctor of medicine, nurse, midwife, dentist, or other health
care professional or practitioner duly licensed to practice in the Philippines and accredited by the
Corporation; or

3) a health maintenance organization, which is an entity that provides, offers, or arranges for coverage
of designated health services needed by plan members for a fixed prepaid premium; or

4) a community-based health care organization, which is an association of indigenous members of the

community organized for the purpose of improving the health status of that community through
preventive, promotive and curative health services.

p) Health Insurance Identification (ID) Card - The document issued by the Corporation to members and
dependents upon their enrollment to serve as the instrument for proper identification, eligibility
verification, and utilization recording.

q) Indigent - A person who has no visible means of income, or whose income is insufficient for the
subsistence of his family, as identified by the Local Health Insurance Office and based on specific criteria
set by the Corporation in accordance with the guiding principles set forth in Article I of this Act.cralaw

r) Inpatient Education Package - A set of informational services made available to an individual who is
confined in a hospital to afford him with knowledge about his illness and its treatment, and of the
means available, particularly lifestyle changes, to prevent the recurrence or aggravation of such illness
and to promote his health in general.cralaw

s) Member - Any person whose premiums have been regularly paid to the National Health Insurance
Program. He may be a paying member, an indigent member, or a pensioner/retiree member.cralaw

t) Means Test - A protocol administered at the barangay level to determine the ability of individuals or
households to pay varying levels of contributions to the Program, ranging from the indigent in the
community whose contributions should be totally subsidized by government, to those who can afford to
subsidize part but not all of the required contributions for the Program.cralaw

u) Medicare - The health insurance program currently being implemented by the Philippine Medical
Care Commission. It consists of:

1) Program I, which covers members of the SSS and GSIS, including their legal dependents; and

2) Program II, which is intended for those not covered under Program I.
v) National Health Insurance Program - The compulsory health insurance program of the government as
established in this Act, which shall provide universal health insurance coverage and ensure affordable,
acceptable, available and accessible health care services for all citizens of the Philippines.

w) Pensioner - An SSS or GSIS member who receives pensions therefrom.cralaw

x) Personal Health Services - Health services in which benefits accrue to the individual person. These are
categorized into in-patient and out-patient services.cralaw

y) Philippine Medical Care Commission - The Philippine Medical Care Commission created under
Republic Act No. 6111, as amended.cralaw

z) Philippine National Drug Formulary - The essential drugs list for the Philippines which is prepared by
the National Drug Committee of the Department of Health in consultations with experts and specialists
from organized professional medical societies, medical academe and pharmaceutical industry, and
which is updated every year.cralaw

aa) Portability - The enablement of a member to avail of Program benefits in an area outside the
jurisdiction of his Local Health Insurance Office.cralaw

bb) Prescription Drug - A drug which has been approved by the Bureau of Food and Drugs and which can
be dispensed only pursuant to a prescription order from a physician who is duly licensed to do so.cralaw

cc) Public Health Services - Services that strengthen preventive and promotive health care through
improving conditions in partnership with the community at large. These include control of
communicable and non-communicable diseases, health promotion, public information and education,
water and sanitation, environmental protection, and health related data collection, surveillance, and
outcome monitoring.cralaw

dd) Quality Assurance - A formal set of activities to review and ensure the quality of services provided.
Quality assurance includes quality assessment and corrective actions to remedy any beneficiaries
identified in the quality of direct patient, administrative, and support services.cralaw

ee) Residence - The place where the member actually lives.cralaw

ff) Retiree - A member of the Program who has reached the age of retirement or who has retired on
account of disability.cralaw

gg) Self-employed - a person who works for himself and is, therefore, both employee and employer at
the same time.cralaw

hh) Social Security System - The Social Security System created under Republic Act No. 1161, as
amended.cralaw

ii) Treatment Procedure - Any method used to remove the symptoms and cause of a disease.cralaw

jj) Utilization Review - A formal review of patient utilization or of the appropriateness of health care
services, on a prospective, concurrent or retrospective basis.
ARTICLE III

THE NATIONAL HEALTH INSURANCE PROGRAM

SEC. 5. Establishment and Purpose. - There is hereby created the National Health Insurance Program
which shall provide health insurance coverage and ensure affordable, acceptable, available and
accessible health care services for all citizens of the Philippines, in accordance with policies and specific
provisions of this Act. This social insurance program shall serve as the means for the healthy to help pay
for the care of the sick and for those who can afford medical care to subsidize those who cannot. It shall
initially consist of Programs I and II of Medicare and be expanded progressively to constitute one
universal health insurance program for the entire population. The Program shall include a sustainable
system of funds constitution, collection, management and disbursement for financing the availment of a
basic minimum package and supplementary packages of health insurance benefits by a progressively
expanding proportion of the population. The Program shall be limited to paying for the utilization of
health services by covered beneficiaries or to purchasing health services in behalf of such beneficiaries.
It shall be prohibited from providing health care directly, from buying and dispensing drugs and
pharmaceuticals, from employing physicians and other professionals for the purpose of directly
rendering care, and from owning or investing in health care facilities.cralaw

SEC. 6. Coverage. - All citizens of the Philippines shall be covered by the National Health Insurance
Program. In accordance with the principles of universality and compulsory coverage enunciated in
Section 2 (b) and 2 (1) hereof, implementation of the Program shall, furthermore, be gradual and phased
in over a period of not more than fifteen (15) years: Provided, That the Program shall not be made
compulsory in certain provinces and cities until the Corporation shall be able to ensure that members in
such localities shall have reasonable access to adequate and acceptable health care services.cralaw

SEC. 7. Enrollment. - The Program shall enroll beneficiaries in order for them to be placed under
coverage that entitles them to avail of benefits with the assistance of the financial arrangements
provided by the Program. The process of enrollment shall include the identification of beneficiaries,
issuance of appropriate documentation specifying eligibility to benefits, and indicating how membership
was obtained or is being maintained. The enrollment shall proceed in accordance with these specific
policies:

a) all persons currently eligible fro benefits under Medicare Program I, including SSS and GSIS members,
retirees, pensioners and their dependents, shall immediately and automatically be made members of
the National Health Insurance Program;

b) all persons eligible for benefits through health insurance plans established by local governments as
part of Program II of Medicare or in accordance with the provisions of this Act, including indigent
members, shall also be enrolled in the Program;

c) all persons eligible for benefits as members of local health insurance plans established by the
Corporation in accordance with the implementing rules and regulations of this Act shall also be deemed
to have enrolled in the Program. Enrollment of persons who have no current health insurance coverage
shall be given priority by the Corporation; and

d) all persons eligible for benefits as members of other government-initiated health insurance programs,
community-based health care organizations, cooperatives, or private non-profit health insurance plans
shall be enrolled in the Program upon accreditation by the Corporation which shall devise and provide
incentives to ensure that such accredited organizations will benefit from their participation in the
program.cralaw

All indigents not enrolled in the Program shall have priority in the use and availment of the services and
facilities of government hospitals, health care personnel, and other health organizations: Provided,
however, That such government health care providers shall ensure that said indigents shall
subsequently be enrolled in the Program.cralaw

SEC. 8. Health Insurance ID Card - In conjunction with the enrollment provided above, the Corporation
through its local office shall issue a health insurance ID which shall be used for purposes of
identification, eligibility verification, and utilization recording. The issuance of this ID card shall be
accompanied by a clear explanation to the enrollee of his rights, privileges and obligations as a member.
A list of health care providers accredited by the Local Health Insurance Office shall likewise be attached
thereto.cralaw

SEC. 9. Change of Residence. - A citizen can be under only one Local Health Insurance Office which shall
be located in the province or city of his place of residence. A person who changes residence, becomes
temporarily employed, or for other justifiable reasons, is transferred to another locality, should inform
said Office of such transfer and subsequently transfer his Program membership.cralaw

SEC. 10. Benefit Package. - Subject to the limitations specified in this Act and as may be determined by
the Corporation, the following categories of personal health services granted to the member or his
dependents as medically necessary or appropriate, shall include:

a) Inpatient hospital care:

1) room and board;

2) services of health care professionals;

3) diagnostic, laboratory, and other medical examination services;

4) use of surgical or medical equipment and facilities;

5) prescription drugs and biologicals; subject to the limitations stated in Section 37 of this Act;

6) inpatient education packages;

b) Outpatient care:

1) services of health care professionals;

2) diagnostic, laboratory, and other medical examination services;

3) personal preventive services; and

4) prescription drugs and biologicals, subject to the limitations described in Section 37 of this Act;

c) Emergency and transfer services; and

d) Such other health care services that the Corporation shall determine to be appropriate and cost-
effective: Provided, That the Program, during its initial phase of implementation, which shall not be
more than five (5) years, shall provide a basic minimum package of benefits which shall be defined
according to the following guidelines:

1) the cost of providing said packages is such that the available national and local government subsidies
for premium payments of indigents are sufficient to extend coverage to the widest possible
population.cralaw

2) the initial set of services shall not be less than half of those provided under the current Medicare
Program I in terms of overall average cost of claims paid per beneficiary household per year.cralaw

3) the services included are prioritized, first, according to its cost-effectiveness and, second, according to
its potential of providing maximum relief from the financial burden on the beneficiary: Provided, That, in
addition to the basic minimum package, the Program shall provide supplemental health benefit
coverage to beneficiaries of contributory funds, taking into consideration the availability of funds for the
purpose from said contributory funds: Provided, further, That the Program progressively expand the
basic minimum benefit package as the proportion of the population covered reaches targeted milestone
so that the same benefits are extended to all members of the Program within five (5) years after the
implementation of this Act. Such expansion will provide for the gradual incorporation of supplementary
health benefits previously extended only to some beneficiaries into the basic minimum package
extended to all beneficiaries: and Provided, finally, That in the phased implementation of this Act, there
should be no reduction or interruption in the benefits currently enjoyed by present members of
Medicare.cralaw

SEC. 11. Excluded Personal Health Service. - The benefits granted under this Act shall not cover expenses
for the services enumerated hereunder except when the Corporation, after actuarial studies,
recommend their inclusion subject to the approval of the Board:

a) non-prescription drugs and devices;

b) out-patient psychotherapy and counseling for mental disorders;

c) drug and alcohol abuse or dependency treatment;

d) cosmetic surgery;

e) home and rehabilitation services;

f) optometric services;

g) normal obstetrical delivery; and

h) cost ineffective procedures which shall be defined by the Corporation.

SEC. 12. Entitlement to Benefits. - A member whose premium contributions for at least three (3) months
have been paid within six (6) months prior to the first day of his or his availment, shall be entitled to the
benefits of the Program: Provided, That such member can show that he contributes thereto with
sufficient regularity, as evidenced in his health insurance ID card: and Provided, further, That he is not
currently subject to legal penalties as provided for in Section 44 of this Act.
The following need not pay the monthly contributions to be entitled to the Programs benefits:

a) Retirees and pensioners of the SSS and GSIS prior to the effectivity of this Act;

b) Members who reach the age of retirement as provided for by law and have paid at least one hundred
twenty (120) contributions; and

c) Enrolled indigents.

SEC. 13. Portability of Benefits. - The Corporation shall develop and enforce mechanisms and procedures
to assure that benefits are portable across Offices.

ARTICLE IV

THE PHILIPPINE HEALTH INSURANCE CORPORATION

SEC. 14. Creation and Nature of the Corporation. - There is hereby created a Philippine Health Insurance
Corporation, which shall have the status of a tax-exempt government corporation attached to the
Department of Health for policy coordination and guidance.cralaw

SEC. 15. Exemptions from Taxes and Duties. - The Corporation shall be exempt from the payment of
taxes on all contributions thereto and all accruals on its income or investment earnings.cralaw

Any donation, contribution, bequest, subsidy or financial aid which may be made to the Corporation
shall constitute as allowable deduction from the income of the donor for income tax purposes and shall
be exempt from donors tax, subject to such conditions as provided in the National Internal Revenue
Code, as amended.cralaw

SEC. 16. Powers and Functions. - The Corporation shall have the following powers and functions:

a) to administer the National Health Insurance Program;

b) to formulate and promulgate policies for the sound administration of the Program;

c) to set standards, rules and regulations necessary to ensure quality of care, appropriate utilization of
services, fund viability, member satisfaction, and over-all accomplishment of Program objectives;

d) to formulate and implement guidelines on contributions and benefits; portability of benefits, cost
containment and quality assurance; and health care provider arrangements, payment methods, and
referral systems;

e) to establish branch offices as mandated in Article V of this Act;

f) to receive and manage grants, donations, and other forms of assistance;

g) to sue and be sued in court;

h) to acquire property, real and personal, which may be necessary or expedient for the attainment of
the purposes of this Act;
i) to collect, deposit, invest, administer, and disburse the National Health Insurance Fund in accordance
with the provisions of this Act;

j) to negotiate and enter into contracts with health care institutions, professionals, and other persons,
juridical or natural, regarding pricing, payment mechanisms, design and implementation of
administrative and operating systems and procedures, financing, and delivery of health services;

k) to authorize Local Health Insurance Offices to negotiate and enter into contracts in the name and on
behalf of the Corporation with any accredited government or private sector health maintenance
organizations, cooperatives and medical foundations, for the provision of at least the minimum package
of personal health services prescribed by the Corporation;

l) to determine requirements and issue guidelines for the accreditation of health care providers for the
Program in accordance with this Act.;

m) to supervise the provision of health benefits with the power to inspect medical and financial records
of health care providers and patients who are participants in or members of the Program, the power to
enter and inspect accredited health care institutions, subject to the rules and regulations to be
promulgated by the Corporation;

n) to organize its office, fix the compensation of and appoint personnel as may be deemed necessary
and upon the recommendation of the president of the Corporation;

o) to submit to the President of the Philippines and to both Houses of Congress its Annual Report which
shall contain the status of the National Health Insurance Fund, its total disbursements, reserves, average
costings to beneficiaries, any request for additional appropriation, and other data pertinent to the
implementation of the Program and publish a synopsis of such report in two (2) newspapers of general
circulation;

p) to keep records of the operation of the Corporation and investments of the National Health Insurance
Fund; and

q) to perform such other acts as it may deem appropriate for the attainment of the objectives of the
Corporation and for the proper enforcement of the provisions of this Act.

SEC. 17. Quasi-Judicial Powers.- The Corporation, to carry out its tasks more effectively, shall be vested
with the following powers:

a) to conduct investigations for the determination of a question, controversy, complaint, or unresolved

grievance brought to its attention, and render decisions, orders, or resolutions thereon. It shall proceed
to hear and determine the case even in the absence of any party who has been properly served with
notice to appear. It shall conduct its proceedings or any part thereof in public or in executive session;
adjourn its hearings to any time and place; refer technical matters or accounts to an expert and to
accept his reports as evidence; direct parties to be joined in or excluded from the proceedings; and give
all such directions as it may deem necessary or expedient in the determination of the dispute before it;

b) to summon the parties to a controversy, issue subpoenas requiring the attendance and testimony of
witnesses or the production of documents and other materials necessary to a just determination of the
case under investigation;
c) to suspend temporarily, revoke permanently, or restore the accreditation of a health care provider or
the right to benefits of a member and/or impose fines after due notice and hearing. The decision shall
immediately be executory, even pending appeal, when the public interest so requires and as may be
provided for in the implementing rules and regulations. Suspension of accreditation shall not exceed
twenty-four (24) months. Suspension of the rights of the members shall not exceed six (6)
months.cralaw

The revocation of a health care providers accreditation shall operate to disqualify him from obtaining
another accreditation in his own name, under a different name, or through another person, whether
natural or juridical.cralaw

The Corporation shall not be bound by the technical rules of evidence.cralaw

SEC. 18. The Board of Directors. - (a) Composition - The Corporation shall be governed by a Board of
Directors hereinafter referred to as the Board, composed of eleven members as follows:

The Secretary of Health;

The Secretary of Labor and Employment or his representative;

The Secretary of Interior and Local Government or his representative;

The Secretary of Social Welfare and Development or his representative;

The President of the Corporation;

A representative of the labor sector;

A representative of employers;

The SSS Administrator or his representative;

The GSIS General Manager or his representative;

A representative of the self-employed sector; and

A representative of health care providers.cralaw

The Secretary of Health shall be the ex-officio Chairperson while the President of the Corporation shall
be the Vice-Chairperson of the Board.cralaw

(b) Appointment and Tenure - The President of the Philippines shall appoint the Members of the Board
upon the recommendation of the Chairman of the Board and in consultation with the sectors
concerned. Members of the Board shall have a term of four (4) years each, renewable for a maximum of
two (2) years, except for members whose terms shall be co-terminous with their respective positions in
government. Any vacancy in the Board shall be filled in the manner in which the original appointment
was made and the appointee shall serve only the unexpired term of his predecessor.cralaw

(c) Meetings and Quorum - The Board shall hold regular meetings at least once a month. Special
meetings may be convened at the call of the Chairperson or by a majority of the members of the Board.
The presence of six (6) voting members shall constitute a quorum. In the absence of the Chairperson and
Vice-Chairperson, a temporary presiding officer shall be designated by the majority of the
quorum.cralaw

(d) Allowance and Per Diems - The members of the Board shall receive a per diem for every meeting
actually attended subject to the pertinent budgetary laws, rules and regulations on compensation,
honoraria and allowances.cralaw

SEC. 19. The President of the Corporation. - (a) Appointment and Tenure - The President of the
Philippines shall appoint for non-renewable term of six (6) years, the President of the Corporation,
hereinafter referred to as the President, upon the recommendation of the Board. The President shall not
be removed from office except in accordance with existing laws.cralaw

(b) Duties and Functions - The President shall have the duty of advising the Board and carrying into
effect its policies and decisions. His functions are as follows:

1) to act as the chief executive officer of the Corporation; and

2) to be responsible for the general conduct of the operations and management functions of the
Corporation and for other duties assigned to him by the Board.

(c) Qualifications - The President must be a Filipino citizen and must possess adequate and appropriate
training and at least five (5) years experience in the field of health care financing and corporate
management.

(d) Salary - The President shall receive a salary to be fixed by the Board, with the approval of the
President of the Philippines, payable from the funds of the Corporation.cralaw

(e) Prohibition - To avoid conflict of interest, the President must not be involved in any health care
institution as owner or member of its board.cralaw

SEC. 20. Health Finance Policy Research. - Among the staff departments that will be established by the
Corporation shall be the Health Finance Policy Research Department, which shall have the following
duties and functions:

a) development of broad conceptual framework for implementation of the Program through a national
health finance master plan to ensure sustained investments in health care, and to provide guidance for
additional appropriations from the National Government;

b) conduct of researches and studies toward the development of policies necessary to ensure the
viability, adequacy and responsiveness of the Program;

c) review, evaluation, and assessment of the Programs impact on the access to, as well as the quality
and cost of, health care in the country;

d) periodic review of fees, charges, compensation rates, capitation rates, medical standards, health
outcomes and satisfaction of members, benefits, and other matters pertinent to the operations of the
Program;

e) comparison in the delivery, quality, use, and cost of health care services of the different Offices;
f) submission for consideration of program of quality assurance, utilization review, and technology
assessment; and

g) submission of recommendations on policy and operational issues that will help the Corporation meet
the objectives of this Act.

SEC. 21. Actuary of the Corporation. - An Office of Actuary shall be created within the Corporation to
conduct the necessary actuarial studies and present recommendations on insurance premium,
investments and other related matters.

ARTICLE V

LOCAL HEALTH INSURANCE OFFICE

SEC. 22. Establishment. - The Corporation shall establish a Local Health Insurance Office, hereinafter
referred to as the Office, in every province or chartered city, or wherever it is deemed practicable, to
bring its services closer to members of the Program. However, one office may serve the needs of more
than one province or city when the merged operations will result in lower administrative cost and
greater cross-subsidy between rich and poor localities.cralaw

Provinces and cities where prospective members are organized shall receive priority in the
establishment of local health insurance offices.cralaw

SEC. 23. Functions. - Each Office shall have the following powers and functions:

a) to consult and coordinate, as needed, with the local government units within its jurisdiction in the
implementation of the Program;

b) to recruit and register members of the Program from all areas within its jurisdiction;

c) to collect and receive premiums and other payment contributions to the Program;

d) to maintain and update the membership eligibility list at community levels;

e) to supervise the conduct of means testing which shall be based on the criteria set by the Corporation
and undertaken by the Barangay Captain in coordination with the social welfare officer and community-
based health care organizations to determine the economic status of all households and individuals,
including those who are indigent;

f) to issue health insurance ID cards to persons whose premiums have been paid according to the
requirements of the Office and the guidelines issued by the Board;

g) to recommend to the Board premium schedules that provide for lower rates to be paid by the
members whose dependents include those with reduced probability of utilization, as in fully immunized
children;

h) to recommend to the Board a contribution schedule which specifies contribution levels by the
individuals and households, and a corresponding uniform package of personal health service benefits
which is at least equal to the minimum package of such benefits prescribed by the Board as applying to
the nation;

i) to grant and deny accreditation to health care providers in their area of jurisdiction, subject to the
rules and regulations to be issued by the Board;

j) to process, review and pay the claims of providers, within a period not exceeding sixty (60) days,
whenever applicable in accordance with the rules and guidelines of the Corporation;

k) to pay fees, as necessary, for claims review and processing when such are conducted by the central
office of the Corporation or by any of its contractors;

l) to establish referral systems and network arrangements with other Offices, as may be necessary, and
following the guidelines set by the Corporation;

m) to establish mechanisms by which private and public sector health facilities and human resources
may be shared in the interest of optimizing the use of health resources;

n) to support the management information system requirements of the Corporation;

o) to serve as the first level for appeals and grievance cases;

p) to tap community-based volunteer health workers and barangay officials, if necessary, for member
recruitment, premium collection and similar activities, and to grant such workers incentives according to
the guidelines set by the Corporation and in accordance with the applicable laws. However, the
incentives for the barangay officials shall accrue to the barangay and not to the said officials;

q) to participate in information and education activities that are consistent with the governments
priority programs on disease prevention and health promotion; and

r) to prepare an annual report according to the guidelines set by the Board and to submit the same to
the central office of the Corporation.

ARTICLE VI

THE NATIONAL HEALTH INSURANCE FUND

SEC. 24. Creation of the National Health Insurance Fund. - There is hereby created a National Health
Insurance Fund, hereinafter referred to as the Fund, that shall consist of:

a) contributions from Program members;

b) current balances of the Health Insurance Fund of the SSS and GSIS collected under the Philippine
Medical Care Act of 1969, as amended, including arrearages of the Government of the Philippines with
the GSIS for the said Fund;

c) other appropriations earmarked by the national and local governments purposely for the
implementation of the Program;

d) subsequent appropriations provided for under Sections 46 and 47 of this Act;

e) donations and grants-in-aid; and

f) all accruals thereof.

SEC. 25. Components of the National Health Insurance Fund. - The National Health Insurance Fund shall
have the following components:

a) The Basic Benefit Fund. - This Fund shall finance the availment of the basic minimum benefit package
by eligible beneficiaries. All liabilities associated with the extension of entitlement to the basic minimum
benefit package to the enrolled population shall be borne by the basic benefit fund. It shall be
constituted and maintained through the following process:

1) upon the determination of the amount of government subsidies and donations available for paying
fully or partially the premium of indigent beneficiaries, a basic minimum package affordable for enrolling
as many of the indigent beneficiaries as possible shall be defined. The government subsidies will then be
constituted as premium payments for enrolled indigents and contributed into the basic benefit fund.

2) for extending coverage of this same minimum benefit package to non-indigents who are not
members of Medicare, premium prices for specific population shall be actuarially determined based on
variations in risk, capacity to pay, and projected costs of services utilized. The amounts corresponding to
the premium required, including costs of direct benefit payments, all costs of administration, and
provision of adequate reserves, for extending the coverage of the basic minimum benefit package for
such population groups shall be contributed into the basic benefit fund.

3) for the population enrolled through Medicare Program I under SSS, the corresponding premium for
the basic minimum benefit package, including costs of direct benefit payments, all costs of
administration, and provision of adequate reserves, shall be charged to the health insurance fund of the
SSS and paid into the basic benefit fund.

4) for the population enrolled through Medicare Program I under GSIS, the corresponding premium for
the basic minimum benefit package, including costs of direct benefit payments, all costs of
administration, and provision of adequate reserves, shall be charged to the health insurance fund of the
GSIS and paid into the basic benefit fund.

5) for groups enrolled through any of the existing or future health insurance schemes and plans,
including those created under Medicare Program II and those organized by local government units,
national agencies, cooperatives, and other similar organizations, the corresponding premium, including
costs of direct benefit payments, all costs of administration, and provision of adequate reserves, for
extending the basic minimum benefit package to their respective enrollees will be charged to their
respective funds and paid into the basic benefit fund.

b) Supplementary Benefit Funds. These are separate and distinct supplementary benefit funds created
by the Corporation as eligible for use to provide supplementary coverage to various groups of the
population enjoying the basic benefit coverage as are affordable by their respective funding sources.
Each supplementary benefit fund shall finance the extension and availment of additional benefits not
included in the basic minimum benefit package but approved by the Board. Such supplementary
benefits shall be financed by whatever amounts are available after deducting the costs of providing the
basic minimum benefit package, including costs of direct benefit payments, all costs of administration,
and provision of adequate reserves. All liabilities associated with the extension of supplementary
benefits to the defined group of enrollees shall be borne exclusively by the respective supplementary
benefit funds. Upon the implementation of this Act, the following supplementary benefit funds shall be
established:

1) supplementary benefit fund for SSS-Medicare members and beneficiaries. After deducting the
amount corresponding to the premium of the basic minimum benefit package, the balance of the SSS-
Health Insurance Fund (HIF) shall be constituted into a supplementary benefit fund to finance the
extension of benefits in addition to the minimum basic package to SSS members and beneficiaries; and

2) supplementary benefit fund for GSIS-Medicare members and beneficiaries. After deducting the
amount corresponding to the premium for the basic minimum benefit package, the balance of the GSIS-
HIF plus the arrearages of the Government of the Philippines with the GSIS for the said HIF shall be
constituted into a supplementary benefit fund to finance the extension of benefits in addition to the
minimum basic package to GSIS members and beneficiaries.

In accordance with the principles of equity and social solidarity, as enunciated in Section 2 of this Act,
the above supplementary benefit funds shall be maintained for not more than five (5) years, after which,
such funds shall be merged into the basic benefit fund.

SEC. 26. Financial Management. - The use, disposition, investment, disbursement, administration and
management of the National Health Insurance Fund, including any subsidy, grant or donation received
for program operations shall be governed by resolution of the Board of Directors of the Corporation,
subject to the following limitations:

a) All funds under the management and control of the Corporation shall be subject to all rules and
regulations applicable to public funds.cralaw

b) The Corporation is authorized to charge the various funds under its control for the costs of
administering the Program. Such costs may include administration, monitoring, marketing and
promotion, research and development, audit and evaluation, information services, and other necessary
activities for the effective management of the Program. The total annual costs for these shall not exceed
twelve percent (12%) of the total contributions, including government contributions to the Program and
not more than three percent (3%) of the investment earnings collected during the immediately
preceding year.cralaw

SEC. 27.chanrobles virtual law libraryReserve Funds. - The Corporation shall set aside a portion of its
accumulated revenues not needed to meet the cost of the current years expenditures as reserve funds:
Provided, That the total amount of reserves shall not exceed a ceiling equivalent to the amount
actuarially estimated for two years projected Program expenditures: Provided, further, That whenever
actual reserves exceed the required ceiling at the end of the Corporations fiscal year, the Programs
benefits shall be increased or member-contributions decreased prospectively in order to adjust
expenditures or revenues to meet the required ceiling for reserve funds. Such portions of the reserve
fund as are not needed to meet the current expenditure obligations shall be invested in short-term
investments to earn an average annual income at prevailing rates of interest and shall be known as the
"Investment Reserve Fund" which shall be invested in any or all of the following:
a) In interest-bearing bonds, securities or other evidences of indebtedness of the Government of the
Philippines, or in bonds, securities, promissory notes and other evidences of indebtedness to which full
faith and credit and unconditional guarantee of the Republic of the Philippines is pledged;

b) In interest-bearing deposits and loans to or securities in any domestic bank doing business in the
Philippines: Provided, That in the case of such deposits, this shall not exceed at any time the unimpaired
capital and surplus or total private deposits of the depository bank, whichever is smaller: Provided,
further, That said bank shall first have been designated as a depository for this purpose by the Monetary
Board of the Bangko Sentral ng Pilipinas; and

c) In preferred stocks of any solvent corporation or institution created or existing under the laws of the
Philippines: Provided, That the issuing, assuming, or guaranteeing entity or its predecessor has paid
regular dividends upon its preferred or guaranteed stocks for a period of at least three (3) years
immediately preceding the date of investment in such preferred guaranteed stocks: Provided, further,
That if the corporation or institution has not paid dividends upon its preferred stocks, the corporation or
institution has sufficient retained earnings to declare dividends for at least two (2) years on such
preferred stocks and in common stocks option or warrants to common stocks of any solvent corporation
or institution created or existing under the laws of the Philippines in the stock exchange with proven
track record of profitability and payment of dividends over the last three (3) years or in common stocks
of a newly organized corporation about to be listed in the stock exchange: Provided, finally, That such
duly organized corporations shall have been rated "A", double "As" or triple "As" by authorized
accredited domestic rating agencies or by the Corporation or in mutual funds including allied
investments.

ARTICLE VII

FINANCING

SEC. 28. Contributions. - All members of the Program shall contribute to the Fund, in accordance with a
reasonable, equitable and progressive contribution schedule to be determined by the Corporation on
the basis of applicable actuarial studies and in accordance with the following guidelines:

a) Formal sector employees and current Medicare members and their employers shall continue paying
the same monthly contributions as provided for by law until such time that the Corporation shall have
determined the contribution schedule mentioned herein: Provided, That their monthly contribution
shall not exceed three percent of their respective monthly salaries.

b) Contributions from self-employed members shall be based primarily on household earnings and
assets; their total contributions for one year shall not, however, exceed three percent (3%) of their
estimated actual net income for the preceding year.

c) Contributions made in behalf of indigent members shall not exceed the minimum contributions set
for employed members.

SEC. 29. Payment for Indigent Contributions. - Contributions for indigent members shall be subsidized
partially by the local government unit where the member resides. The Corporation shall provide
counterpart financing equal to the LGUs subsidy for indigents: Provided, That in the case of fourth, fifth
and sixth class LGUs, the National Government shall provide up to ninety percent (90%) of the subsidy
for indigents for a period not exceeding five (5) years. The share of the LGUs shall be progressively
increased until such time that its share becomes equal to that of the National Government.

ARTICLE VIII

HEALTH CARE PROVIDERS

SEC. 30. Free Choice of Health Facility, Medical or Dental Practitioner. - Beneficiaries requiring treatment
or confinement shall be free to choose from accredited health care providers. Such choice shall,
however, be subject to limitations based on the area of jurisdiction of the concerned Office and on the
appropriateness of treatment in the facility chosen or by the desired provider.cralaw

SEC. 31. Authority to Grant Accreditation. - The Corporation shall have the authority to grant to health
care providers accreditation which confers the privilege of participating in the Program.cralaw

SEC. 32. Accreditation Eligibility. - All health care providers, as enumerated in Sec. 4(o) hereof and
operating for at least three (3) years, may apply for accreditation.cralaw

SEC. 33. Minimum Requirements for Accreditation. - The minimum accreditation requirements for
health care providers are as follows:

a) human resource, equipment and physical structure in conformity with the standards of the relevant
facility, as determined by the Department of Health;

b) acceptance of formal program of quality assurance and utilization review;

c) acceptance of the payment mechanisms specified in the following section;

d) adoption of referral protocols and health resources sharing arrangements;

e) recognition of the rights of the patients; and

f) acceptance of information system requirements and regular transfer of information.

SEC. 34. Provider Payment Mechanisms. - The following mechanisms for public and private providers
shall be allowed in the Program:

a) Fee-for-service based on mechanisms established by the Corporation;

b) Capitation of health care professionals and facilities, or network of the same, including HMOs,
medical cooperatives, and other legally formed health service groups;

c) A combination of both; and

d) Any or all of the above, subject to global budget.

Each Office shall recommend the appropriate payment mechanism within its jurisdiction for approval by
the Corporation. Special consideration shall be given to payment for services rendered by public and
private health care providers serving remote or medically underserved areas.

SEC. 35. Fee-for-service Payments and Payments in General. - Fee-for-service payments may be made
separately for professional fees and hospital charges, or both, based on arrangements with health care
providers. This fee shall be based on a schedule to be established by the Board which shall be reviewed
every three (3) years. Fees paid for professional services rendered by salaried public providers shall be
allowed and be pooled and distributed among health personnel. Charges paid to public facilities shall be
allowed to be retained by the individual facility in which services were rendered and for which payment
was made. Such revenues shall be used to defray operating costs other than salaries, to maintain or
upgrade equipment, plant or facility, and to maintain or improve the quality of service in the public
sector.cralaw

SEC. 36. Capitation Payments. - Capitation payments may be paid to public or private providers
according to rates of capitation payments based on annual capitation rate guidelines to be issued by the
Corporation.cralaw

SEC. 37. Quality Assurance. - Under the guidelines provided by the Corporation and in collaboration with
their respective Offices, health care providers shall take part in programs of quality assurance, utilization
review, and technology assessment that have the following objectives:

a) to ensure that the quality of personal health services delivered, measured in terms of inputs, process,
and outcomes, are of reasonable quality in the context of the Philippines over time;

b) to ensure that the health care standards are uniform within the Offices jurisdiction and eventually
throughout the nation; and

c) to see to it that the acquisition and use of scarce and expensive medical technologies and equipment
are consistent with actual needs and standards of medical practice, and that:

1) the performance of medical procedures and the administration of drugs are appropriate, necessary
and unquestionably consistent with accepted standards of medical practice and ethics. Drugs for which
payments will be made shall be those included in the Philippine National Drug Formulary, unless explicit
exception is granted by the Corporation.

2) the performance of medical procedures and the administration of drugs are appropriate, consistent
with accepted standards of medical practice and ethics, and respectful of the local culture.

SEC. 38. Safeguards Against Over and Under Utilization. - It is incumbent upon the Corporation to set up
a monitoring mechanism to be operationalized through a contract with health care providers to ensure
that there are safeguards against:

a) over-utilization of services;

b) unnecessary diagnostic and therapeutic procedures and intervention;

c) irrational medication and prescriptions;

d) under-utilization of services; and

e) inappropriate referral practices.

The Corporation may deny or reduce the payment for claims when such claims are attended by false or
incorrect information and when the claimant fails, without justifiable cause, to comply with the rules
and regulations of this Act.

ARTICLE IX

GRIEVANCE AND APPEAL

SEC. 39. Grievance System. - A system of grievance is hereby established, wherein members,
dependents, or health care providers of the Program who believe they have been aggrieved by any
decision of the implementors of the Program, may seek redress of the grievance in accordance with the
provisions of this Article.cralaw

SEC. 40.chanrobles virtual law libraryGrounds for Grievances. - The following acts shall constitute valid
grounds for grievance action:

a) any violation of the rights of the patients;

b) a willful neglect of duties of Program implementors that results in the loss or non-enjoyment of
benefits of members or their dependents;

c) unjustifiable delay in actions on claims;

d) delay in processing of claims that extends beyond the period agreed upon; and

e) any other act or neglect that tends to undermine or defeat the purposes of this Act.

SEC. 41. Grievance and Appeal Procedures. - A member, his dependent, or a health care provider, may
file a complaint for grievance based on any of the above grounds, in accordance with the following
procedures:

a) A complaint for grievance must be filed with the Office which shall rule on the complaint within ninety
(90) calendar days from receipt thereof.

b) Appeals from Office decisions must be filed with the Board within thirty (30) days from receipt of
notice of dismissal or disallowance by the Office.

c) The Offices shall have no jurisdiction over any issue involving the suspension or revocation of
accreditation, the imposition of fines, or the imposition of charges on members or their dependents in
case of revocation of their entitlement.

d) All decisions by the Board as to entitlement to benefits of members or to payments of health care
providers shall be considered final and executory.

SEC. 42. Grievance and Appeal Review Committee. - The Board shall create a Grievance Appeal Review
Committee, composed of three (3) to five (5) members, hereinafter referred to as the Committee,
which, subject to the procedures enumerated above, shall receive and recommend appropriate action
on complaints from members and health care providers relative to this Act and its implementing rules
and regulations.

SEC. 43. Hearing Procedures of the Committee. - Upon the filing of the complaint, the Grievance and
Appeal Review Committee, from a consideration of the allegations thereof, may dismiss the case
outright due to lack of verification, failure to state the cause of action, or any valid ground for the
dismissal of the complaint after consultation with the Board; or require the respondent to file a verified
answer within five (5) days from service of summons.cralaw

Should the defendant fail to answer the complaint within the reglementary 5-day period herein
provided, the Committee, motu proprio or upon motion of the complainant, shall render judgment as
may be warranted by the facts alleged in the complaint and limited to what is prayed for therein.cralaw

After an answer is filed and the issues are joined, the Committee shall require the parties to submit,
within ten (10) days from receipt of the order, the affidavits of witnesses and other evidence on the
factual issues defined therein, together with a brief statement of their positions setting forth the law
and the facts relied upon by them. In the event the Committee finds, upon consideration of the
pleadings, the affidavits and other evidence, and position statements submitted by the parties, that a
judgment may be rendered thereon without need of formal hearing, it may proceed to render judgment
not later than ten (10) days from the submission of the position statements of the parties.cralaw

In cases where the Committee deems it necessary to hold a hearing to clarify specific factual matters
before rendering judgment, it shall set the case for hearing for the purpose. At such hearing, witnesses
whose affidavits were previously submitted may be asked clarificatory questions by the proponent and
by the Committee and may be cross-examined by the adverse party. The order setting the case for
hearing shall specify the witnesses who will be called to testify, and the matters on which their
examination will deal. The hearing shall be terminated within fifteen (15) days, and the case decided by
the Committee within fifteen (15) days from such termination.cralaw

The decision of the Committee shall become final and executory fifteen (15) days after notice thereof:
Provided, however, That it is appealable to the Board by filing the appellants memorandum of appeal
within fifteen (15) days from receipt of the copy of the judgment appealed from. The appellee shall be
given fifteen (15) days from notice to file the appellees memorandum after which the Board shall
decide the appeal within thirty (30) days from the submittal of the said pleadings.cralaw

The decision of the Board shall also become final and executory fifteen (15) days after notice thereof:
Provided, however, That it is reviewable by the Supreme Court on purely questions of law in accordance
with the Rules of Court.cralaw

The Committee and the Board, in the exercise of their quasi-judicial function, as specified in Section 17
hereof, can administer oaths, certify to official acts and issue subpoena to compel the attendance and
testimony of the witnesses, and subpoena duces tecum ad testificandum to enjoin the production of
books, papers and other records and to testify therein on any question arising out of this Act. Any case
of contumacy shall be dealt with in accordance with the provisions of the Revised Administrative Code
and the Rules of Court. The Board or the Committee, as the case may be, shall prescribe the necessary
administrative sanctions such as fines, warnings, suspension or revocation of the right to participate in
the Program.cralaw

In all its proceedings, the Committee and the Board shall not be bound by the technical rules of
evidence: Provided, however, That the Rules of Court shall apply with suppletory effect.

ARTICLE X

PENALTIES

SEC. 44. Penal Provisions. - Any violation of the provisions of this Act, after due notice and hearing, shall
suffer the following penalties:

A fine of not less than Ten thousand pesos (P10,000) nor more than Fifty thousand pesos (P50,000) in
case the violation is committed by the hospital management or provider. In addition, its accreditation
shall be suspended or revoked from three months to the whole term of the accreditation: Provided,
however, That recidivists may not anymore be accredited as a participant of the Program;

A fine of not less than Five hundred pesos (P500) nor more than Five thousand pesos (P5,000) and
imprisonment of not less than six (6) months nor more than one (1) year in case the violation is
committed by the member.cralaw

Where the violations consist of failure or refusal to deduct contributions from the employees
compensation or to remit the same to the Corporation, the penalty shall be a fine of not less than Five
hundred pesos (P500) but not more than One thousand pesos (P1,000) multiplied by the total number
of employees employed by the firm and imprisonment of not less than six (6) months but not more than
one (1) year: Provided, further, That in the case of self-employed members, failure to remit ones own
contribution shall be penalized with a fine of not less than Five hundred pesos (P500) but not more than
One thousand pesos (P1,000).cralaw

Any employer or any officer authorized to collect contributions under this Act who, after collecting or
deducting the monthly contributions from his employees compensation, fails to remit the said
contributions to the Corporation within thirty (30) days from the date they become due shall be
presumed to have misappropriated such contributions and shall suffer the penalties provided for in
Article 315 of the Revised Penal Code.cralaw

Any employer who shall deduct directly or indirectly from the compensation of the covered employees
or otherwise recover from them his own contribution on behalf of such employees shall be punished by
a fine not exceeding One thousand pesos (P1,000) multiplied by the total number of employees
employed by the firm, or imprisonment not exceeding one (1) year, or both fine and imprisonment, at
the discretion of the Court.cralaw

If the act or omission penalized by this Act be committed by an association, partnership, corporation or
any other institution, its managing directors or partners or president or general manager, or other
persons responsible for the commission of the said act shall be liable for the penalties provided for in
this Act and other laws for the offense.cralaw
Any employee of the Corporation who receives or keeps funds or property belonging, payable or
deliverable to the Corporation, and who shall appropriate the same, or shall take or misappropriate or
shall consent, or through abandonment or negligence, shall permit any other person to take such
property or funds wholly or partially, shall likewise be liable for misappropriation of funds or property
and shall suffer imprisonment of not less than six (6) years and not more than twelve (12) years and a
fine of not less than Ten thousand pesos (P10,000) nor more than Twenty thousand pesos (P20,000).
Any shortage of the funds or loss of the property upon audit shall be deemed prima facie evidence of
the offense.cralaw

All other violations involving funds of the Corporation shall be governed by the applicable provisions of
the Revised Penal Code or other laws, taking into consideration the rules on collection, remittances, and
investment of funds as may be promulgated by the Corporation.

ARTICLE XI

APPROPRIATIONS

SEC. 45. Initial Appropriation. - The unexpended portion of the budget of the Philippine Medical Care
Commission (PMCC) for the year during which this Act was approved shall be utilized for establishing the
Corporation and initiating its operations, including the formulation of the rules and regulation necessary
for the implementation of this Act. In addition, initial funding shall come from any unappropriated but
available fund of the Government.cralaw

SEC. 46. Subsequent Appropriations. - Starting 1995 and thereafter, twenty-five percent (25%) of the
increment in total revenue collected under Republic Act No. 7654 shall be appropriated in the General
Appropriations Act solely for the National Health Insurance Fund.cralaw

In addition, starting 1996 and thereafter, twenty-five percent (25%) of the incremental revenue from
the increase in the documentary stamp taxes under Republic Act No. 7660 shall likewise be appropriated
solely for the said fund.cralaw

SEC. 47. Additional Appropriations. - The Corporation may request Congress to appropriate
supplemental funding to meet targetted milestones of the Program in accordance with Section 10(d) of
this Act.

ARTICLE XII

TRANSITORY PROVISIONS

SEC. 48. Appointment of Board Members.- Within thirty (30) days from the date of effectivity of this Act,
the President of the Philippines shall appoint the members of the Board and the President of the
Corporation.cralaw
SEC. 49. Implementing Rules and Regulations. - Within thirty (30) days from the completion of such
appointments, the Board shall convene to formulate the rules and regulations necessary for the
implementation of this Act.cralaw

SEC. 50. Promulgation. - Within one year from its initial meeting, the Board shall promulgate the
aforementioned rules and regulations in at least two (2) national newspapers of general circulation. But
until such time that the Corporation shall have promulgated said rules and regulations, the existing rules
and regulations of the PMCC shall be followed. The present Medicare Program shall continue to be so
administered, until the Corporations Board deems the new system as ready for implementation in
accordance with the provisions of this Act.cralaw

SEC. 51. Merger. - Within sixty (60) days from the promulgation of the implementing rules and
regulations, all functions and assets of the Philippine Medical Care Commission shall be merged with
those of the Corporation without need of conveyance, transfer or assignment. The PMCC shall
thereafter cease to exist.cralaw

The liabilities of the PMCC shall be treated in accordance with the existing laws and pertinent rules and
regulations.cralaw

To the greatest extent possible and in accordance with existing laws, all employees of the PMCC shall be
absorbed by the Corporation.cralaw

SEC. 52. Transfer of the Health Insurance Funds of the SSS and GSIS. - The Health Insurance Funds being
administered by the SSS and GSIS shall be transferred to the Corporation within sixty (60) days from the
promulgation of the implementing rules and regulations. The SSS and GSIS shall, however, continue to
perform Medicare functions under contract with the Corporation until such time that such functions are
assumed by the Corporation, in accordance with the following Section.cralaw

SEC. 53. Transfer of the Medicare Functions of the SSS and GSIS. - Within five (5) years from the
promulgation of the implementing rules and regulations, the functions, assets, equipment, records,
operating system, and liabilities, if any, of the Medicare operations of the SSS and GSIS shall be
transferred to the Corporation: Provided, however, That the SSS and GSIS shall continue performing its
Medicare functions beyond the stipulated five-year period if such extension will benefit Program
members, as determined by the Corporation.cralaw

Personnel of the Medicare departments of the SSS and GSIS shall be given priority in the hiring of the
Corporations employees.

ARTICLE XIII

MISCELLANEOUS PROVISIONS

SEC. 54. Oversight Provision. - Congress shall conduct a regular review of the National Health Insurance
Program which shall entail a systematic evaluation of the Programs performance, impact or
accomplishments with respect to its objectives or goals. Such review shall be undertaken by the
Committee of the Senate and the House of Representatives which have legislative jurisdiction over the
Program.cralaw
SEC. 55. Information Campaign. - There shall be provided a substantial period of time to undertake an
intensive public information campaign prior to the implementation of the rules and regulations of this
Act.cralaw

SEC. 56. Separability Clause. - In the event any provision of this Act or the application of such provision
to any person or circumstances is declared invalid, the remainder of this Act or the application of said
provisions to other persons or circumstances shall not be affected by such declaration.cralaw

SEC. 57. Repealing Clause. - Executive Order 119, Presidential Decree 1519 and other laws currently
applying to the administration of Medicare are hereby repealed. All other laws, executive orders,
administrative rules and regulations or parts thereof which are inconsistent with the provisions of this
Act are also hereby amended, modified, or repealed accordingly.cralaw

SEC. 58. Government Guarantee. - The Government of the Philippines guarantees the financial viability
of the Program.

SEC. 59. Effectivity. - This Act shall take effect fifteen (15) days after its publication in at least three (3)
national newspaper of general circulation.

Approved : February 14, 1995

(Sgd.) FIDEL V. RAMOS

President of the Philippines

------------------------------------

REPUBLIC ACT NO. 9241 February 10 2004

AN ACT AMENDING REPUBLIC ACT NO. 7875, OTHERWISE KNOWN AS "AN ACT INSTITUTING A
NATIONAL HEALTH INSURANCE PROGRAM FOR ALL FILIPINOS AND ESTABLISHING THE PHILIPPINE
HEALTH INSURANCE CORPORATION FOR THE PURPOSE"

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

Section 1. Section 4 of Republic Act No. 7875 is hereby amended to read as follows:

"SEC. 4. Definition of Terms.-For the purpose of this Act, the following terms shall be defined as follows:
a) Beneficiary - Any person entitled to health care benefits under this Act.

b) Benefit Package - Services that the Program offers to its members.

c) Capitation - A payment mechanism where a fixed rate, whether per person, family, household or
group, is negotiated with a health care provider who shall be responsible in delivering or arranging for
the delivery of health services required by the covered person under the conditions of a health care
provider contract.

d) Contribution - The amount paid by or in behalf of a member to the Program for coverage, based on
salaries or wages in the case of formal sector employees, and on household earnings and assets, in the
case of self-employed, or on other criteria as may be defined by the Corporation in accordance with the
guiding principles set forth in Article 1 of this Act.

e) Coverage - The entitlement of an individual, as a member or as a dependent, to the benefits of the

program.

f) Dependent - The legal dependents of a member are: 1) the legitimate spouse who is not a member; 2)
the unmarried and unemployed legitimate, legitimated, illegitimate, acknowledged children as
appearing in the birth certificate; legally adopted or step-children below twenty-one (21) years of age;
3)children who are twenty-one (21) years old and above but suffering from congenital disability, either
physical or mental, or any disability acquired that renders them totally dependent on the member of our
support; 4) the parents who are sixty (60) years old or above whose monthly income is below an amount
to be determined by the Corporation in accordance with the guiding principles set forth in Article I of
this Act.

g) Diagnostic Procedure - Any procedure to identify a disease or condition through analysis and
examination.

h) Emergency - An unforeseen combination of circumstances which calls for immediate action to

preserve the life of a person or to preserve the sight of one or both eyes; the hearing of one or both
ears; or one or two limbs at or above the ankle or wrist.
i) 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, where there is an employer-
employee relationship.

j) Employer - A natural or juridical person who employs the services of an employee.

k) Enrollment - The process to be determined by the Corporation in order to enlist individuals as

members or dependents covered by the Program.

l) Fee for Service - A reasonable and equitable health care payment system under which physicians and
other health care providers receive a payment that does not exceed their billed charge for each unit of
service provided.

m) Global Budget - An approach to the purchase of medical services by which health care provider
negotiations concerning the costs of providing a specific package of medical benefits is based solely on a
predetermined and fixed budget.34urchase of medical services by which health care provider
negotiations concerning the costs of providing a specific package of medical benefits is based solely on a
predetermined and fixed budget.

n) Government Service Insurance System - The Government Service Insurance System created under
Commonwealth Act No. 186, as amended.

o) Health Care Provider - Refers to:

(1) a health care institution , which is duly licensed and accredited devoted primarily to the maintenance
and operation of facilities for health promotion, prevention, diagnosis, injury, disability, or deformity,
drug addiction or in need of obstetrical or other medical and nursing care. It shall also be construed as
any institution, building, or place where there are installed beds, cribs, or bassinets for twenty-four hour
use or longer by patients in the treatment of diseases, injuries, deformities, or abnormal physical and
mental states, maternity cases or sanitarial care; or infirmaries, nurseries, dispensaries, rehabilitation
centers and such other similar names by which they may be designated; or

(2) a health care professional, who is any doctor of medicine, nurse, midwife, dentist, or other health
care professional or practitioner duly licensed to practice in the Philippines and accredited by the
Corporation; or
(3) a health maintenance organization, which is entity that provides, offers, or arranges for coverage of
designated health services needed by plan members for a fixed prepaid premium; or

(4) a community-based health organization, which is an association of indigenous members of the

community organized for the purpose of improving the health status of that community through
preventive, promotive and curative health services.

p) Health Insurance Identification (ID) Card - The document issued by the Corporation to members and
dependents upon their enrollment to serve as the instrument for proper identification, eligibility
verification, and utilization recording.

q) Indigent - A person who has no visible means of income, or whose income is insufficient for the
subsistence of his family, as identified by the Local Health Insurance Office and based on specific criteria
set by the Corporation in accordance with the guiding principles set forth in Article I of this Act.

r) Inpatient Education Package - A set of informational services made available to an individual who is
confined in a hospital to afford him with knowledge about his illness and its treatment, and of the
means available, particularly lifestyle changes, to prevent the recurrence or aggravation of such illness
and to promote his health in general.

s) Member - Any person whose premiums have been regularly paid to the National Health Insurance
Program. He may be a paying member, or a pensioner/retiree member.

t) Means Test - A protocol administered at the barangay level to determine the ability of individuals or
households to pay varying levels of contributions to the Program, ranging from the indigent in the
community whose contributions should be totally subsidized by the government, to those who can
afford to subsidize part but not all the required contributions for the Program.

u) Medicare - The health insurance program currently being implemented by the Philippine Medical
Care Commission. It consists of:

(1) Program I, which covers members of the SSS and GSIS including their legal dependents; and
(2) Program II, which is intended for those not covered under Program I.

v) National Health Insurance Program - The compulsory health insurance program of the government as
established in this Act, which shall provide universal health insurance coverage and ensure affordable,
acceptable, available and accessible health care services for all citizens of the Philippines.

w) Pensioner - An SSS or GSIS member who receives pensions therefrom.

x) Personal Health Services - Health Services in which benefits accrue to the individual person. These are
categorized into inpatient and outpatient services.

y) Philippine Medical Care Commission - The Philippine Medical Care Commission created under
Republic Act No. 6111, as amended.

z) Philippine National Drug Formulary - The essential drugs list for the Philippines which is prepared by
the National Drug Committee of the Department of Health in Consultation with experts and specialists
from organized profession medical societies, medical academe and the pharmaceutical industry, and
which is updated every year.

aa) Portability - The enablement of a member to avail of Program benefits in an area outside the
jurisdiction of his Local Health Insurance Office.

bb) Prescription Drug - A drug which has been approved by the Bureau of Food and Drug and which can
be dispensed only pursuant to a prescription order from a physician who is duly licensed to do so.

cc) Public Health Services - Services that strengthen preventive and promotive health care through
improving conditions in partnership with the community at large. These include control of
communicable and non-communicable diseases, health promotion, public information and education,
water and sanitation, environmental protection, and health-related data collection, surveillance, and
outcome monitoring.

dd) Quality Assurance - A formal set of activities to review and ensure the quality of services provided.
Quality assurance includes quality assessment and corrective actions to remedy any deficiencies
identified in the quality of direct patient, administrative, and support services.
ee) Residence - The place where the member actually lives.

ff) Retiree - A member of the Program who has reached the age of retirement or who was retired on
account of disability.

gg) Self-employed - A person who works for himself and is therefore both employee and employer at
the same time.

hh) Social Security System - The Social Security System created under Republic Act No. 1161, as
amended.

ii) Treatment Procedure - Any method used to remove the symptoms and cause of a disease.

jj) Utilization Review - A formal review of a patient utilization or of the appropriateness of health care
services, on a prospective, concurrent or retrospective basis.

kk) Rehabilitation Center - Refers to a facility, which undertakes rehabilitation of drug dependents. It
includes institutions, agencies and the like which have for their purpose, the development of skills, or
which provides counseling, or which seeks to inculcate, social and moral values to clientele who have a
drug problem with the pain of weaning them from drugs and making them drug-free, adapted to their
families and peers, and readjusted into the community as law-abiding, useful and productive citizens.

ll) Home Care and Medical Rehabilitation Services - Refer to skilled nursing care, which members get in
their homes/clinics for the treatment of an illness or injury that severely affects their activities or daily
living. Home care and medical rehabilitation services include hospice or palliative care for people who
are terminally ill but does not include custodial and non-skilled personal care."

Sec. 2. Section 11 of the same Act shall now read as follows:

"SEC. 11. Excluded Personal Health Services.- The benefits granted under this Act shall not cover
expenses for the services enumerated hereunder except when the Corporation, after actuarial studies,
recommends their inclusion subject to the approval of the Board:
(a) non-prescription drugs and devices;

(b) alcohol abuse or dependency treatment;

(c) cosmetic surgery;

(d) optometric services;

(e) fifth and subsequent normal obstetrical deliveries; and

(f) cost-ineffective procedures, which shall be defined by the Corporation.

Provided, That, such actuarial studies must be done within a period of three (3) years, and then
periodically reviewed, to determine the financial sustainability of including the foregoing personal
health services in the benefit package provided for under Section 10 of this Act."

Sec. 3. Section 18 of the Law shall be amended to read as follows:

"SEC. 18. The Board of Directors.

a) Composition - The Corporation shall be governed by a Board of Directors hereinafter referred to as

the Board, composed of the following members:

The Secretary of Health;

The Secretary of Labor and Employment or his representative;

The Secretary of the Interior and Local Government or his Representative;

The Secretary of Social Welfare and Development or his Representative;

The President of the Corporation;

A representative of the labor sector;

A representative of employers;

The SSS Administrator or his representative;

The GSIS General Manager or his representative;

The Vice chairperson for the basic sector of the National Anti-Poverty Commission or his representative;

A representative of Filipino overseas workers;

A representative of the self-employed sector; and

A representative of health care providers to be endorsed by the national associations of health care
institutions and medical health professionals.

The Secretary of Health shall be the ex officio Chairperson while the President of the President of the
Corporation shall be the Vice Chairperson of the Board.

b) Appointment and Tenure - The President of the Philippines shall appoint the Members of the Board
upon the recommendation of the Chairman of the Board and in consultation with the sectors
concerned. Members of the Boards shall have a term of four (4) years each, renewable for a maximum
of two (2) years, except for members whose terms shall be co-terminous with their respective positions
in government. Any vacancy in the Board shall be filled in the manner in which the original appointment
was made and the appointee shall serve only the unexpired term of his predecessor.
c) Meetings and Quorum. - The Board shall hold regular meetings at least once a month. Special
meetings may be convened at the call of the Chairperson or by a majority of the members of the Board.
The presence of a majority of all the members shall constitute a quorum. In the absence of the
Chairperson and Vice Chairperson, a temporary presiding officer shall be designated by the majority of
the quorum.

d) Allowances and Per Diems - The members of the Board shall receive a per diem for every meeting
actually attended subject to the pertinent budgetary laws, rules and regulations on compensation,
honoraria and allowances."

Sec. 4. Section 29 of the Law shall now read as follows:

"SEC. 29. Payment of Indigent Contributions.- Contributions for indigent members shall be subsidized
partially by the local government unit where the member resides. The Corporation shall provide
counterpart financing equal to the LGU's subsidy for indigents: Provided, That in the case of the fourth,
fifth and sixth class municipalities, the National Government shall provide up to ninety percent (90%) of
the subsidy for indigents until such time that they shall have been upgraded to first, second or third
class municipalities. The share of the LGUs shall be progressively increased until such time that its share
becomes equal to that of the National Government."

Sec. 5. Section 32 of the same Act shall now read as follows:

"SEC. 32. Accreditation Eligibility - All health care providers, as enumerated in Section 4(o) hereof and
operating for at least three (3) years may apply for accreditation: Provided, That a health care provider
which has not operated for at least three (3) years may likewise apply and qualify for accreditation if it
complies with all the other accreditation of and further meets any of the following conditions:

a) Its managing health care professional has had a working experience in another accredited health care
institution for at least three (3) years;

b) It operates as a tertiary facility or its equivalent;

c) It operates in a local government unit where the accredited health care provider cannot adequately or
fully service its population; and
d) Other conditions as may be determined by the Corporation."

Sec. 6. The third paragraph of Section 44 (penal Provisions) of the same Act shall amend to read as
follows:

"Where the violations consist of failure or refusal to deduct contributions from the employee's
compensation or to remit the same to the Corporation, the penalty shall be a fine of not less than Five
hundred pesos (P500) but not more than One thousand pesos (P1,000) multiplied by the total number
of employees employed by the firm and imprisonment of not less than six (6) months but not more than
one (1) year."

Sec. 7. Section 54 of the Law shall be amended to read as follows:

"SEC. 54. Oversight Provision.- Congress shall conduct regular review of the National Health Insurance
Program, which shall entail a systematic evaluation of the Program's performance, impact or
accomplishments with respect to its objectives or goals. Such review shall be undertaken by the
Committees of the Senate and the House of Representatives, which have legislative jurisdiction over the
Program.

The National Economic and Development Authority, in coordination with the National Statistics Office
and the National Institutes of Health of the University of the Philippines shall undertake studies to
validate the accomplishments of the Program. The Budget required to undertake such study shall come
from the income of the PhilHealth."

Sec. 8. Separability Clause. - If any part or provision of this Act shall be held unconstitutional or invalid,
other provisions, which are not affected thereby, shall continue to be in full force and effect.

Sec. 9. Repealing Clause. - All laws, presidential decrees, executive orders, rules and regulations or parts
thereof which are inconsistent with the provisions of this Act are hereby repealed, amended or modified
accordingly.

Sec. 10. Effectivity. - This Act shall take effect fifteen (15) days after its publication in at least (3) national
newspapers of general circulation.
Approved:

FRANKLIN DRILON

President of the Senate

JOSE DE VENECIA JR.

Speaker of the House of Representatives

This Act which is a consolidation of House Bill No. 5547 and Senate Bill No. 2630 was finally passed by
the House of Representatives and the Senate on October 15, 2003 and October 14, 2003, respectively.

OSCAR G G. YABES

Secretary of Senate

ROBERTO P. NAZARENO

Secretary General

House of Represenatives

Approved: February 10 2004

GLORIA MACAPAGAL-ARROYO

President of the Philippines

-----------------------------------------------

REVISED PHILIPPINE MEDICAL CARE ACT

PRESIDENTIAL DECREE NO. 1519, AS AMENDED

REVISING THE PHILIPPINE MEDICAL CARE ACT

OF NINETEEN HUNDRED AND SIXTY NINE

(As amended by Executive Orders Nos. 105, 106 and 269)

WHEREAS, Republic Act Number Sixty-One Hundred Eleven entitled "An Act Establishing the Philippine
Medical Care Plan and Creating the Philippine Medical Care Commission, Prescribing Its Duties and
Powers and Functions and Appropriating Funds Therefor" enacted on August 4, 1969 requires revision in
order to be responsive to the situation;

WHEREAS, such revision is a condition to the more effective implementation of the law and the
achievement of its goals;

WHEREAS, the Medical Care Program is one of the vital Projects of the government in the New Society;

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

SECTION 1. Short Title. - This decree shall be known as the "Revised Philippine Medical Care Act."

SECTION 2. Declaration of Policy. - It is hereby declared to be the policy of the government to gradually
provide total medical services to our people by adopting and implementing a comprehensive and
coordinated medical care plan based on the following concepts of health care:

(a) There shall be comprehensive medical care according to the needs of the patient.

(b) The use of government and private medical facilities shall be coordinated as public service
instrumentalities for the people.

(c) Optimum health care shall be achieved by preserving and promoting a proper inter-relationship
among physicians, patients and hospitals.

SECTION 3. Purposes and Objectives. - The main purposes and objectives of this Decree are:

a) To provide medical care to residents of the country in an evolutionary way within our economic
means and capability as a nation.

b) To provide our people with a viable means of helping themselves to pay for adequate medical care.

SECTION 4. Definition of Terms. - For the purpose of this Decree, the following terms shall mean as
follows:

a) Commission - The Philippine Medical Care Commission created under R.A. No. 6111.cralaw

b) Philippine Medical Care Plan - The total Plan consisting of Programs I and II.cralaw

c) SSS - The Social Security System created under Republic Act Number Eleven Hundred Sixty One, as
amended.cralaw
d) GSIS - The Government Service Insurance System created under Commonwealth Act Number One
Hundred Eighty Six, as amended.cralaw

e) Employee - Any person compulsorily covered by either the GSIS or SSS.cralaw

f) Beneficiary - Any person entitled to medical care benefits under this Decree.cralaw

g) Employer - The employer of the employee.cralaw

h) Legal Dependent - Persons other than members and contributors who are entitled to benefits under
this Decree in accordance with such terms and conditions as the Commission may prescribe.cralaw

i) Medical Care Benefits - Services relative to illness or injury, including major dental surgery or
operation which needs hospitalization subject to reasonable limitations as will be imposed by the
technical organization and finances of the Philippine Medical Care Plan.cralaw

j) Hospital - Any medical facility, government or private, accredited in accordance with rules and
regulations promulgated by the Commission.cralaw

k) Medical or Dental Practitioner - Any doctor of medicine or doctor of dental medicine duly licensed to
practice in the Philippines and who is accredited by the Commission in accordance with its rules and
regulations. (As amended by Sec. 1, Executive Order 269)

l) Service Beds - Private and government hospital beds set aside for beneficiaries of the Philippine
Medical Care Plan as may be prescribed by the Commission.cralaw

m) Single Period of Confinement - A single confinement or series of confinements for the same illness,
with intervals of not more than ninety (90) days.cralaw

n) Medical or Dental Attendance - Medical or dental care of a patient by a physician or medical staff or
dentist or dental staff of the hospital.cralaw

SECTION 5. Philippine Medical Care Commission. - To carry out the purposes and objectives of this Act,
the Philippine Medical Care Commission created by Republic Act No. 6111, hereinafter referred to as the
Commission, shall be composed of the Secretary of Health as Chairman; an Undersecretary of Health
designated by the former as Vice-Chairman; the Administrator of the Social Security System; the
President and the General Manager of the Government Service Insurance System; the Secretary of
Finance; the Secretary of Local Government; the Secretary of Labor and Employment; and four other
members, one each representing the beneficiaries, the private employers, the physicians and the
hospitals. The four other members shall be appointed by the President of the Philippines for a term of
six (6) years.cralaw

The ex-officio members may designate their representatives who shall exercise the plenary powers of
their principals as well as enjoy the same benefits available to the latter. (As amended by Sec. 2,
Executive Order No. 269).

SECTION 6. Functions of the Commission. - The Commission shall have the following functions and
powers:

a) To formulate policies, administer and implement the Philippine Medical Care Plan, consistent with the
National Health Plan.cralaw
b) To ensure that medical care is provided to members covered by the Philippine Medical Care
Plan.cralaw

c) To organize its offices, fix the compensation of and appoint its Secretary and such other personnel as
may be deemed necessary, subject to pertinent budget and compensation laws, rules and
regulations.cralaw

d) To accredit medical and dental practitioners, government and private hospitals and other facilities for
participation in the Medical Care Plan under such terms and conditions as the Commission may
set.cralaw

e) To promulgate or prescribe rules and regulations as may be necessary to carry out the provisions and
purposes of this Act.cralaw

f) To recommend to the President from time to time according to sound actuarial procedures the
contributions and benefits under the Philippine Medical Care Plan as well as alternative system in order
to insure adequate financing and effective delivery of medical care to all beneficiaries of the plan.cralaw

g) To ensure a homogenous distribution of adequate hospital accommodations for inpatient care

through national network of government and private medical care facilities; and to coordinate with the
Department of Health in the implementation of the Hospital Licensure Act.cralaw

h) To acquire in behalf of the Republic of the Philippines, real or personal property which may be
necessary or expedient for the attainment of the purposes of the Commission

i) To enter into agreements or contracts in the manner and under such terms and conditions as the
Commission may deem proper for the efficient and effective administration of the Commission.cralaw

j) To adopt control measures to prevent abuses of the Philippine Medical Care Plan.cralaw

k) To render decisions, orders or resolutions on any investigation conducted upon its own initiative or
upon complaint in writing for any violation of this law or its rules and regulations, and after notice and
hearing, impose administrative fines of not less than P5,000 but not more than P10,000 against any
person, natural or juridical, found guilty of such violation: Provided, That should the violation be
committed by a hospital, drugstore, medical or dental practitioner, the accreditation so extended shall,
in addition, be suspended for a period not exceeding six months: Provided, furthermore, That any
decision, order or resolution rendered by the Commission shall be appealable to the Office of the
President in accordance with the procedure established under Administrative Order No. 18, Series of
1987: Provided, finally, That the administrative sanctions provided herein shall be without prejudice to
the penal provisions under Section 28 hereof.cralaw

l) To issue as soon as the decision, order or resolution has become final and executory, writs of
execution enforceable in accordance with the Rules of Court of the Philippines.cralaw

m) To deputize any law enforcement agency or official in the execution of its final decisions, orders or
resolutions and to serve such other processes of the Commission.cralaw

n) To submit to the President of the Philippines annually within the first ten days of each year, a report
covering its activities in the administration of this Act during the preceding fiscal years.cralaw
o) To coordinate with other appropriate government agencies in the development of the medical and
allied manpower based on the needs of the health care delivery system.cralaw

p) To approve rules and regulations to ensure uniform evaluation of claims as may be elevated by the
beneficiary hospitals or practitioners.cralaw

q) Generally to exercise all powers necessary to attain the purposes and objectives of this Act. (As
amended by Sec. 3, Executive Order No. 269).

SECTION 7. Meetings and Hearings of the Commission. - The meetings and hearings of the Commission
shall be held as often as necessary at the discretion of the Chairman or at the request of the majority of
the members of the Commission. The presence of six (6) members of the Commission shall constitute a
quorum. The members of the Commission shall receive a per diem for every meeting and hearing
attended subject to pertinent budget laws, rules and regulations on compensation, honoraria and
allowances. Each member of the Commission shall receive a monthly commutable allowance subject to
the aforementioned laws, rules and regulations, except those who are already receiving the same from
the government offices they are appointed to. (As amended by Sec. 4, Executive Order No. 269).

SECTION 8. Chairman and Vice-Chairman of the Commission. - (a) The Chairman shall preside over the
meetings of the Commission and shall implement its decisions. He shall exercise supervision and control
over all operations of the Commission.cralaw

(b) When the Chairman is temporarily unable to perform his functions or in case of vacancy of the Office
of the Chairman, the Vice-Chairman shall serve as Acting Chairman. He shall perform such other
functions as may be assigned to him by the Chairman. (As amended by Sec. 5, Executive Order No. 269).

SECTION 9. Executive Director of the Commission. - The Commission shall have an Executive Director
who shall be appointed by the President of the Philippines for a term of six (6) years. The Executive
Director shall have at least ten (10) years experience in technical and administrative fields related to the
purposes and objectives of this Act. He shall hold office on a full-time basis and shall not be removed
except for cause. He shall receive such salary and remuneration as may be determined by the
Commission, subject to pertinent laws, rules and regulations on compensation, honoraria and
allowances.cralaw

The Executive Director shall be responsible for the general conduct of the operations and administration
of the Commission. (As amended by Sec. 6, Executive Order No. 269).

SECTION 10. The Philippine Medical Care Plan. - The Philippine Medical Care Plan shall consist of the
following which shall provide medical care benefits:

a) Program I - for members of the SSS and the GSIS including their legal dependents.cralaw

b) Program II - for those not covered under Program I. This shall be in accordance with Section 33
hereof.cralaw

SECTION 11. Program I. - All members of the SSS and GSIS and all their legal dependents as defined
under Section 4 hereof shall be provided with medical care benefits.cralaw
In case a person is covered by both the SSS and the GSIS, he may choose under which system he shall be
covered for Medicare purposes, under such rules as the Commission may prescribe. (As amended by
Sec. 7, Executive Order No. 269).

SECTION 12. Medical Care Benefits. - Under such rules, regulations and/or conditions as the SSS or the
GSIS may prescribe, subject to the approval of the Commission, a beneficiary under Program I who
suffers from sickness or injury requiring hospitalization/surgical operation shall be entitled to the
following benefits:

a) The medical care benefits to Medicare beneficiaries covered by the Social Security System (SSS) shall
not exceed the rates indicated below:

HOSPITAL CATEGORY

BENEFIT PRIMARY SECONDARY TERTIARY

1. Room and Board not exceeding 45 days per year

for each member of Program I and another 45 days

to be shared by his legal dependents: P55/Day P100/Day P145/Day

2. Medical Expense Benefit

(Per Single Period of Confinement)

2.1. Ordinary Cases

2.1.1. Drugs & Medicines 595 790 1,015

2.1.2. X-Ray/Laboratory/Others 150 360 635

2.2. Intensive Care Cases

2.2.1. Drugs & Medicines 350 1,620 2,915

2.2.2X-Ray/Laboratory/Others 325 830 1,260

2.3. Catastrophic Cases

2.3.1. Drugs and Medicines 3,650 4,170

2.3.2. X-Ray/Laboratory/Others 1,620 3,845

3. Medical/Dental Practitioners Fee shall be P55.00

per day for a General Practitioner and P80.00 for a

Specialist but not to exceed:chanroblesvirtuallawlibrary

3.1. For Ordinary Cases

(Per Single Period of Confinement)

 For General Practitioner 300

For Specialist 450

3.2. For Intensive Care/Catastrophic Cases

(Per Single Period of Confinement)

For General Practitioner 450

For Specialist 750

4. Surgeons Fee shall be in accordance with the

Relative Value Scheme prescribed by the

Commission not to exceed P7,080.00.cralaw

5. Anesthesiologists Fee not to exceed 30% of the

allowable Surgeons Fee.cralaw

6. Operating Room Fee for Surgical Procedures

under the following brackets of Relative Unit Value

(RUV):chanroblesvirtuallawlibrary

1. RUV of 5.0 and below - 170 295 470

2. RUV 5.1 to 10.0 units - 505 600

3. RUV above 10 units - 960 1,550

7. Fees for Surgical Family Planning Procedures

(For members and spouses only):chanroblesvirtuallawlibrary

1. Vasectomy - 400

2. Tubal Ligation 500

b) The Medical Care benefits of Medicare beneficiaries covered by Government Service Insurance
System (GSIS) shall not exceed the rates indicated below:chanroblesvirtuallawlibrary

HOSPITAL CATEGORY

BENEFIT PRIMARY SECONDARY TERTIARY

1. Room and Board not exceeding 45 days per year

for each member and another 45 days to be shared

by his dependents: P55/Day P100/Day P120/Day

2. Medical Expense Benefit

(Per Single Period of Confinement)

2.1. Ordinary Cases

2.1.1. Drugs & Medicines 595 790 845

2.1.2. X-Ray/Laboratory/Others 125 300 530

2.2. Intensive Care Cases

2.2.1. Drugs & Medicines 1,125 1,350 2,430

2.2.2. X-Ray/Laboratory/Others 270 690 1,050

2.3. Catastrophic Cases

2.3.1. Drugs & Medicines 3,040 3,475

2.3.2. X-Ray/Laboratory/Others 1,350 3,205

3. Medical/Dental Practitioners Fee shall be P55.00

per day for a General Practitioner and P80.00 for a

Specialist but not to exceed:chanroblesvirtuallawlibrary

3.1. For Ordinary Cases

(Per Single Period of Confinement)

For General Practitioner 300

For Specialist 450

3.2. For Intensive Care/Catastrophic Cases

(Per Single Period of Confinement)

For General Practitioner 450

For Specialist 750

4. Surgeons Fee shall be in accordance with the

Relative Value Scheme prescribed by the

Commission not to exceed P7,080.00.cralaw

5. Anesthesiologists Fee not to exceed 30% of the

allowable Surgeons Fee.cralaw

6. Operating Room Fee for Surgical Procedures

under the following brackets of Relative Unit Value

(RUV):chanroblesvirtuallawlibrary

1. RUV of 5.0 and below - 140 245 390

2. RUV 5.1 to 10.0 units - 420 500

3. RUV above 10 units - 960 1,290

7. Fees for Surgical Family Planning Procedures

(For members and spouses only):chanroblesvirtuallawlibrary

1. Vasectomy - 400

2. Tubal Ligation - 500

The beneficiaries shall have the option to secure the drugs and medicines used for his treatment from
either the hospital pharmacy wherein he is confined or from any retail drugstore of his own choice
subject to the rules and regulations promulgated by the Commission or as provided for in Sections 21
and 22 thereof.

Out-patient and domiciliary care shall be carried out by existing government hospitals, rural health units,
other government clinics and all clinics under the supervision of various government entities.

As soon as feasible, the Commission shall provide expense allowance for ambulatory and domiciliary
care benefits rendered in/by government or private hospitals or clinics to beneficiaries of this Medical
Care Act subject to rules and regulations promulgated by the Commission.

All government hospitals, sanitaria, clinics, dispensaries and rural health units shall provide back-up
services to the medical care plan, especially for patients occupying service beds. (As amended by
Executive Order No. 106).

SECTION 13. Participants in the Delivery of Medical Care Services. - Only the following may participate in
the delivery of medical services in the Philippine Medical Care Plan under such rules and regulations as
the Commission may set:

a) Hospitals duly accredited by the Commission.

b) Medical and dental practitioners duly accredited by the Commission.

c) Drugstores duly accredited by the Commission.

SECTION 14. Free Choice of Hospital, Medical or Dental Attendance. - Any beneficiary who becomes sick
or is injured shall be free to choose the hospital in which he will be confined and the medical or dental
practitioner or medical or dental attendance by whom he will be treated, under such rules and
regulations as may be promulgated by the Commission.

The right of any beneficiary who so desire to arrange privately for medical care at his own expense shall
not be prejudiced by any provision of this Decree.

SECTION 15. Entitlement to Medical Care Benefits. - A member who shall have paid at least three
monthly contributions during the last twelve months prior to the first day of the single period of
confinement, as well as his legal dependents, shall be entitled to medical care benefits: Provided, That
when he commits any violation of this law or its rules and regulations, he and his legal dependents shall
not be allowed to avail of these benefits by the Commission subject to Section 6(K) hereof. The member
shall continue to pay his contributions during the period of suspension of availment of benefits. (As
amended by Sec. 3, Executive Order No. 105).

SECTION 16. Supervision. - The Commission, the SSS and the GSIS shall exercise supervision over the
confined beneficiaries under such rules and regulations as may be promulgated for the purpose. This
authority may be exercised by the Commission through its intermediaries.

SECTION 17. Health Insurance Fund. - Payments for medical care benefits under Program I shall be borne
by the Health Insurance Fund which shall consist of all contributions of Medicare members and all
accruals thereto collected by the SSS and GSIS from the members under the Act. It shall be kept distinct
and separate from all other funds administered by the said agencies.

The Health Insurance Fund shall be deposited, invested, administered, and disbursed in the same
manner and under the same conditions, requirements, and safeguards as provided by Republic Act
Numbered Eleven Hundred Sixty-One, as amended, and Presidential Decree Numbered Eleven Hundred
Forty-Six, as amended, with regard to such other funds as are administered by the SSS and GSIS,
respectively: Provided, That the deposit, investment, administration, and disbursement of the funds
conform with the policies established by the Commission: Provided, further, That the SSS and GSIS may
disburse each for operational expenses not more than twelve percent (12%) of the total contributions
and investment earnings collected during the year. (As amended by Sec. 8, Executive Order No. 269).

SECTION 18. Contributions to the Health Insurance Fund. - The compulsory contributions of members to
the Health Insurance Fund shall be in accordance with the schedule of rates established by the
Commission and approved by the President. (As amended by Sec. 9, Executive Order No. 269).

Salary Monthly Salary

Bracket Wages or Contribution Employers Employees

Number Earnings Base Contributions Contributions

1. Below - P 49.99 P 25.00 P 0.30 P 0.30

2. 50.00 - 99.99 75.00 0.95 0.95

3. 100.00 - 149.99 125.00 1.55 1.55

4. 150.00 - 199.99 175.00 2.20 2.20

5. 200.00 - 249.99 255.00 2.80 2.80

6. 250.00 - 349.99 300.00 3.75 3.75

7. 350.00 - 499.99 425.00 5.35 5.35

8. 500.00 - 599.99 600.00 7.50 7.50

9. 700.00 - 899.99 800.00 10.00 10.00

10. 900.00 - over 1,000.00 12.50 12.50

SECTION 19. Collection of Contributions to the Health Insurance Fund. - The employer shall deduct from
his employees monthly compensation the employees contribution. The employees contribution and
the employers counterpart thereof shall be remitted by the employer directly to the GSIS and SSS, as
the case may be, in the same manner as other SSS and GSIS contributions and shall be subject to the
same penalties for late payment. The employers counterpart contribution shall not in any manner be
recovered from the employee. Failure of employer to remit to the GSIS or SSS the corresponding
employees and employers contributions shall not be a reason for depriving the employee of the
benefits of this Decree. (As amended by Sec. 10, Executive Order No. 269).

SECTION 20. Effects of Separation from Employment. - An employee who is no longer obliged under
Section 19 hereof by separation from employment may continue to enjoy medical care benefits, subject
to such rules and regulations and/or conditions as the Commission may prescribe.

SECTION 21. Payment of Medical Care Benefits. - Payment of medical care services shall be made
directly to the hospital, the medical or dental practitioner, and the retail drug store according to rules,
regulations and/or conditions which the Commission may set: Provided, that when the charges and fees
agreed upon between the beneficiary, who choose to occupy a bed more expensive than a service bed,
and the provider of the service, exceed the amount of benefits provided under this Decree, the
difference shall be borne personally by the patient. Medical care expense incurred while outside the
country may be reimbursed to the beneficiary under such rules, regulations and/or conditions as the
Commission may prescribe and research to improve the program. (As amended by Sec. 11, Executive
Order No. 269).

SECTION 22. Limitation to Payment of Benefits. - Claims for payment of services rendered under this
Decree which are filed beyond sixty (60) days after the discharge of the patient from the hospital or
from the time a patient has been declared well, shall be barred from payment.

Payment for services rendered may be reduced or denied when the claimant:

(a) Furnishes false of incorrect information concerning any matter required by this Decree or the rules
and regulations promulgated by the Commission.

(b) Fails without good cause or legal ground to comply with any provision of this Decree or the
implementing rules and regulations of the Commission.

The cost of medical care benefits of patients confined in service beds shall be limited to the prescribed
medical care benefit allowances.

When a claim is reduced or denied, the amount thus reduced or denied shall not be charged directly or
indirectly to the beneficiary involved unless the latter is directly responsible for the cause of such
reduction or denial.

SECTION 23. Exclusion. - The benefits granted under the Medical Care Plan shall not cover any expenses
for:

(a) Cosmetic surgery or treatment;

(b) Optometric services;

(c) Psychiatric illness;

(d) Normal obstetrical delivery; and

(e) Services which are purely diagnostic.

SECTION 24. Records and Reports. - The Commission, the SSS and GSIS, shall keep records of all
operations relative to the Program.

SECTION 25. Program Monitoring, Study and Research. - The Commission shall undertake a continuing
monitoring study and research to improve the Program. (As amended by Sec. 11, Executive Order No.
269).

SECTION 26. Hearing Procedures. - There is hereby created a Hearing Committee composed of nine (9)
members who shall be designated by the Commission for the purpose of conducting inquiries and
investigations into reported violations of this law or its implementing rules and regulations. The
Committee may sit in three (3) divisions, each division composed of three (3) members. The Committee
shall not be bound by the technical rules of evidence. The Committee may administer oaths, certify to
official acts, and issue subpoena and subpoena duces tecum to compel the attendance of witnesses, and
the production of books, papers and other records deemed necessary in connection with any question
arising under this law. The Commission shall have the same powers to punish direct and indirect
contempts granted to superior courts under Rule 71 of the Rules of Court. (As amended by Sec. 4,
Executive Order No. 105).

SECTION 27. Preventive Suspension. - The Hearing Committee may preventively suspend any
beneficiary, duly accredited practitioner, hospital or other facility from participation in the Program if
any of the following circumstances is present:

a. When the respondent has been found guilty of a violation of this Act or of its rules and regulations at
least twice and there is reasonable ground to believe that the respondent is guilty of the present charge.

b. When the respondent, at the time of the inspection, has committed or is committing a violation.

The preventive suspension order shall be for a period of not exceeding three (3) months from the date
of its issuance. The order: (a) shall specify the violation charged, supported by the evidence of the
violation; (b) shall require the respondent to answer the charges within a period of ten (10) days from
receipt thereof; and (c) shall require the respondent to appear on the date set for hearing the case. (As
amended by Sec. 12, Executive Order No. 269).

SECTION 28. Penal Provisions. - Any person who, for the purpose of securing entitlement to any benefit
or payment under this Decree or the issuance of any certificate or document for any purpose connected
with this Decree, whether for himself or for some other person, shall commit fraud, collusion,
falsification, misrepresentation or any similar anomaly, shall suffer the penalties provided for in Article
172 of the Revised Penal Code.

Whoever fails or refuses to comply with the provisions of this law or with the rules and regulations
promulgated by the Commission, including failure or refusal to deduct contributions from the
employees compensation and to remit the same to the Social Security System (SSS) or the Government
Service Insurance System (GSIS), shall be punished by a fine of not less than Ten thousand pesos
(P10,000.00) but not more than Forty thousand pesos (P40,000.00) or imprisonment for not less than six
(6) months nor more than six (6) years, or both, at the discretion of the court. (As amended by Par. 1,
Sec. 5, Executive Order No. 105).

Any employer who, after deducting the monthly contributions from his employees compensation, fails
to remit the said deductions to the SSS and GSIS within thirty days from the date they become due shall
be presumed to have misappropriated such contributions and shall suffer the penalties provided in
Article 315 of the Revised Penal Code.

Any employer who shall deduct, directly or indirectly, from the compensation of the covered employees
or otherwise recover from them his own contribution on behalf of such employees shall be punished by
a fine of not less than Ten thousand pesos (P10,000.00) but not more than Forty thousand pesos
(P40,000.00) or imprisonment of not less than six (6) months nor more than six (6) years, or both, at the
discretion of the court. (As amended by Par. 2, Sec. 5, Executive Order No. 105).

Any employee of the SSS or GSIS who receives or keeps funds or property belonging, payable or
deliverable to the SSS or GSIS and who shall appropriate the same, or shall take or misappropriate or
shall consent, or through abandonment or negligence, shall permit any other person to take such
property or funds, wholly or partially, or shall otherwise be guilty of misappropriation of such funds or
property, shall suffer the penalties provided in Article 217 of the Revised Penal Code.

If the act or omission, penalized by this Decree, be committed by an association, partnership,

corporation or any other institution, its managing head, directors or partners shall be liable to the
penalties provided in this Decree for the offense.

Criminal actions arising from violation of the provisions of this Decree may be commenced by the SSS,
the GSIS or the Commission, or the employees concerned either under this Decree or, in appropriate
cases, under the Revised Penal Code: Provided, That criminal actions may be filed by the SSS, the GSIS or
the Commission in the city or municipality where the violation was committed or in Metro Manila, at
their option.

SECTION 29. Appropriation. - Funds as may be necessary to finance the operations, programs, and
projects of the Commission in carrying out this Decree are hereby authorized to be included in the
Annual Appropriation Law. (As amended by Sec. 13, Executive Order No. 269).

SECTION 30. Government Guarantee. - The Republic of the Philippines guarantees the benefits under
this Decree and the solvency of the Community Health Insurance Funds.

SECTION 31. Program II. - As soon as feasible, medical care benefits under Program II will be provided
either through a social insurance medical care service similar to that of Program I or through the public
medical care service under the rules and regulations to be promulgated by the Commission. All
provisions of this Decree as may be applicable to Program II shall so apply. Those not covered at present
by Program I may seek medical attention from existing government hospitals.

Program II shall be implemented upon its approval by the President.

SECTION 32. Separability Clause. - In the event any provision of this Decree or the application of such
provision to any person or circumstances is declared invalid, the remainder of the Decree or the
application of said provision to other persons or circumstances shall not be affected by such declaration.
SECTION 33. Repealing Clause. - Republic Act No. 6111, and all laws, executive orders, administrative
rules and regulations or parts thereof which are inconsistent with the provisions of this Decree are
hereby repealed or modified accordingly.

SECTION 34. Effectivity. - The Revised Medical Care Act shall be implemented 90 days after its approval.

Done in the City of Manila, this 11th of June in the year of our Lord, nineteen hundred and seventy-
eight.

(Sgd.) FERDINAND E. MARCOS

President

By the President:cralaw

(Sgd.) JUAN C. TUVERA

Presidential Assistant

-----------------------------------------------

REPUBLIC ACT NO. 8187

AN ACT GRANTING PATERNITY LEAVE OF SEVEN (7) DAYS WITH FULL PAY TO ALL MARRIED MALE
EMPLOYEES IN THE PRIVATE AND PUBLIC SECTORS FOR THE FIRST FOUR (4) DELIVERIES OF THE
LEGITIMATE SPOUSE WITH WHOM HE IS COHABITING AND FOR OTHER PURPOSES.

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

SECTION 1. Short Title. - This Act shall be known as the "Paternity Leave Act of 1996".
 SECTION 2. Notwithstanding any law, rules and regulations to the contrary, every married male
employee in the private and public sectors shall be entitled to a paternity leave of seven (7) days with
full pay for the first four (4) deliveries of the legitimate spouse with whom he is cohabiting. The male
employee applying for paternity leave shall notify his employer of the pregnancy of his legitimate
spouse and the expected date of such delivery.

For purposes, of this Act, delivery shall include childbirth or any miscarriage.

SECTION 3. Definition of Term. - For purposes of this Act, Paternity Leave refers to the benefits
granted to a married male employee allowing him not to report for work for seven (7)

days but continues to earn the compensation therefor, on the condition that his spouse has delivered a
child or suffered a miscarriage for purposes of enabling him to effectively lend

support to his wife in her period of recovery and/or in the nursing of the newly-born child.

SECTION 4. The Secretary of Labor and Employment, the Chairman of the Civil Service Commission
and the Secretary of Health shall, within thirty (30) days from the effectivity of

this Act, issue such rules and regulations necessary for the proper implementation of the provisions
hereof.

SECTION 5. Any person, corporation, trust, firm, partnership, association or entity found violating this
Act or the rules and regulations promulgated thereunder shall be punished by a fine not exceeding
Twenty-five thousand pesos (P25,000) or imprisonment of not less than thirty (30)days nor more than
six (6) months.

If the violation is committed by a corporation, trust or firm, partnership, association or any other
entity, the penalty of imprisonment shall be imposed on the entity's responsible officers, including, but
not limited to, the president, vice-president, chief executive officer, general manager, managing
director or partner directly responsible therefor.

SECTION 6. Nondiminution Clause. - Nothing in this Act shall be construed to reduce any existing
benefits of any form granted under existing laws, decrees, executive orders, or any

contract agreement or policy between employer and employee.

 SECTION 7. Repealing Clause. - All laws, ordinances, rules, regulations, issuances, or parts thereof
which are inconsistent with this Act are hereby repealed or modified accordingly.

SECTION 8. Effectivity. - This Act shall take effect (15) days from its publication in the Official Gazette
or in at least two (2) newspapers of national circulation.

Approved:

(SGD.) NEPTALI A. GONZALES

President of the Senate

(SGD.) JOSE DE VENECIA, JR.

Speaker of the House of Representatives

This Act, which is a consolidation of Senate Bill No. 1032 and House Bill No. 7134 was finally passed
by the Senate and the House of Representatives on June 8, 1996.

(SGD.)HEZEL P.GACUTAN

Secretary of the Senate

(SGD.) CAMILO L. SABIO

Secretary General

House of Representatives

Approved: June 11, 1996

(SGD.) FIDEL V. RAMOS

President of the Philippines

------------------------------------------
REPUBLIC ACT NO. 7641

December 9, 1992

RETIREMENT PAY LAW

AN ACT AMENDING ARTICLE 287 OF PRESIDENTIAL DECREE NO. 442, AS AMENDED, OTHERWISE KNOWN
AS THE LABOR CODE OF THE PHILIPPINES, BY PROVIDING FOR RETIREMENT PAY TO QUALIFIED PRIVATE
SECTOR EMPLOYEES IN THE ABSENCE OF ANY RETIREMENT PLAN IN THE ESTABLISHMENT

Section 1. Article 287 of Presidential Decree No. 442, as amended, otherwise known as the Labor Code
of the Philippines, is hereby amended to read as follows:

"Art. 287. Retirement. - Any employee may be retired upon reaching the retirement age established in
the collective bargaining agreement or other applicable employment contract.

"In case of retirement, the employee shall be entitled to receive such retirement benefits as he may
have earned under existing laws and any collective bargaining agreement and other agreements:
Provided, however, That an employee's retirement benefits under any collective bargaining and other
agreements shall not be less than those provided herein.

"In the absence of a retirement plan or agreement providing for retirement benefits of employees in the
establishment, an employee upon reaching the age of sixty (60) years or more, but not beyond sixty-five
(65) years which is hereby declared the compulsory retirement age, who has served at least five (5)
years in the said establishment, may retire and shall be entitled to retirement pay equivalent to at least
one-half (1/2) month salary for every year of service, a fraction of at least six (6) months being
considered as one whole year.

"Unless the parties provide for broader inclusions, the term one-half (1/2) month salary shall mean
fifteen (15) days plus one-twelfth (1/12) of the 13th month pay and the cash equivalent of not more
than five (5) days of service incentive leaves.

"Retail, service and agricultural establishments or operations employing not more than (10) employees
or workers are exempted from the coverage of this provision.
"Violation of this provision is hereby declared unlawful and subject to the penal provisions provided
under Article 288 of this Code."

Sec. 2. Nothing in this Act shall deprive any employee of benefits to which he may be entitled under
existing laws or company policies or practices.

Sec. 3. 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, whichever comes earlier.

Approved: December 9, 1992

-------------------------------------------

REPUBLIC ACT NO. 7277

AN ACT PROVIDING FOR THE REHABILITATION, SELF-DEVELOPMENT AND SELF-RELIANCE OF DISABLED

PERSONS AND THEIR INTEGRATION INTO THE MAINSTREAM OF SOCIETY AND FOR OTHER PURPOSES.

TITLE I

GENERAL PROVISIONS

CHAPTER I

BASIC PRINCIPLE

Section 1. Title. This Act shall be known and cited as the "Magna Carta for Disabled Persons."

chan robles virtual law library

Sec. 2. Declaration of Policy The grant of the rights and privileges for disabled persons shall be guided
by the following principles:chanroblesvirtualawlibrary

(a) Disabled persons are part of Philippine society, thus the State shall give full support to the
improvement of the total well-being of disabled persons and their integration into the mainstream of
society. Toward this end, the State shall adopt policies ensuring the rehabilitation, self-development and
self-reliance of disabled persons. It shall develop their skills and potentials to enable them to compete
favorably for available opportunities.

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(b) Disabled persons have the same rights as other people to take their proper place in society. They
should be able to live freely and as independently as possible. This must be the concern of everyone
the family, community and all government and nongovernment organizations. Disabled persons' rights
must never be perceived as welfare services by the Government.

(c) The rehabilitation of the disabled persons shall be the concern of the Government in order to foster
their capacity to attain a more meaningful, productive and satisfying life. To reach out to a greater
number of disabled persons, the rehabilitation services and benefits shall be expanded beyond the
traditional urban-based centers to community based programs, that will ensure full participation of
different sectors as supported by national and local government agencies. chan robles virtual law library

(d) The State also recognizes the role of the private sector in promoting the welfare of disabled persons
and shall encourage partnership in programs that address their needs and concerns.

(e) To facilitate integration of disabled persons into the mainstream of society, the State shall advocate
for and encourage respect for disabled persons. The State shall exert all efforts to remove all social,
cultural, economic, environmental and attitudinal barriers that are prejudicial to disabled persons.

Sec. 3. Coverage. This Act shall cover all disabled persons and, to the extent herein provided,
departments, offices and agencies of the National Government or nongovernment organizations
involved in the attainment of the objectives of this Act.chanrobles virtual law library

Sec. 4. Definition of Terms. For purposes of this Act, these terms are defined as
follows:chanroblesvirtualawlibrary

(a) Disabled persons are those suffering from restriction or different abilities, as a result of a mental,
physical or sensory impairment, to perform an activity in the manner or within the range considered
normal for a human being;

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(b) Impairment is any loss, diminution or aberration of psychological, physiological, or anatomical

structure or function;

(c) Disability shall mean 1) a physical or mental impairment that substantially limits one or more
psychological, physiological or anatomical function of an individual or activities of such individual; 2) a
record of such an impairment; or 3) being regarded as having such an impairment; chan robles virtual
law library
(d) Handicap refers to a disadvantage for a given individual, resulting from an impairment or a disability,
that limits or prevents the function or activity, that is considered normal given the age and sex of the
individual;

(e) Rehabilitation is an integrated approach to physical, social, cultural, spiritual, educational and
vocational measures that create conditions for the individual to attain the highest possible level of
functional ability;

(f) Social Barriers refer to the characteristics of institutions, whether legal, economic, cultural,
recreational or other, any human group, community, or society which limit the fullest possible
participation of disabled persons in the life of the group. Social barriers include negative attitudes which
tend to single out and exclude disabled persons and which distort roles and inter-personal relationships;

(g) Auxiliary Aids and Services include:

(1) qualified interpreters or other effective methods of delivering materials to individuals with hearing
impairments;

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(2) qualified readers, taped tests, or other effective methods of delivering materials to individuals with
visual impairments;

(3) acquisition or modification of equipment or devices; and chan robles virtual law library

(4) other similar services and actions or all types of aids and services that facilitate the learning process
of people with mental disability.

(h) Reasonable Accommodation include 1) improvement of existing facilities used by employees in order
to render these readily accessible to and usable by disabled persons; and 2) modification of work
schedules, reassignment to a vacant position, acquisition or modification of equipment or devices,
appropriate adjustments or modifications of examinations, training materials or company policies, rules
and regulations, the provision of auxiliary aids and services, and other similar accommodations for
disabled persons;

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(i) Sheltered Employment refers to the provision of productive work for disabled persons through
workshops providing special facilities, income-producing projects or homework schemes with a view to
giving them the opportunity to earn a living thus enabling them to acquire a working capacity required
in open industry;

(j) Auxiliary Social Services are the supportive activities in the delivery of social services to the
marginalized sectors of society;

(k) Marginalized Disabled Persons refer to disabled persons who lack access to rehabilitative services
and opportunities to be able to participate fully in socioeconomic activities and who have no means of
livelihood and whose incomes fall below the poverty threshold; chan robles virtual law library

(l) Qualified Individual with a Disability shall mean an individual with a disability who, with or without
reasonable accommodations, can perform the essential functions of the employment position that such
individual holds or desires. However, consideration shall be given to the employer's judgment as to what
functions of a job are essential, and if an employer has prepared a written description before advertising
or interviewing applicants for the job, this description shall be considered evidence of the essential
functions of the job;

(m) Readily Achievable means a goal can be easily attained and carried out without much difficulty or
expense. In determining whether an action is readily achievable, factors to be considered include

(1) the nature and cost of the action;

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(2) the overall financial resources of the facility or facilities involved in the action; the number of persons
employed at such facility; the effect on expenses and resources, or the impact otherwise of such action
upon the operation of the facility;

(3) the overall financial resources of the covered entity with respect to the number of its employees; the
number, type and location of its facilities; and chan robles virtual law library

(4) the type of operation or operations of the covered entity, including the composition, structure and
functions of the work force of such entity; the geographic separateness, administrative or fiscal
relationship of the facility or facilities in question to the covered entity.

(n) Public Transportation means transportation by air, land and sea that provides the public with general
or special service on a regular and continuing basis;

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(o) Covered Entity means an employer, employment agency, labor organization or joint-labor
management committee; and

(p) Commerce shall be taken to mean as travel, trade, traffic, commerce, transportation, or
communication among the provinces or between any foreign country or any territory or possession and
any province.

TITLE II

RIGHTS AND PRIVILEGES OF DISABLED PERSONS

CHAPTER I

EMPLOYMENT

Sec. 5. Equal Opportunity for Employment. No disable person shall be denied access to opportunities
for suitable employment. A qualified disabled employee shall be subject to the same terms and
conditions of employment and the same compensation, privileges, benefits, fringe benefits, incentives
or allowances as a qualified able bodied person. chan robles virtual law library
Five percent (5%) of all casual emergency and contractual positions in the Departments of Social
Welfare and Development; Health; Education, Culture and Sports; and other government agencies,
offices or corporations engaged in social development shall be reserved for disabled persons.

Sec. 6. Sheltered Employment If suitable employment for disabled persons cannot be found through
open employment as provided in the immediately preceding Section, the State shall endeavor to provide
it by means of sheltered employment. In the placement of disabled persons in sheltered employment, it
shall accord due regard to the individual qualities, vocational goals and inclinations to ensure a good
working atmosphere and efficient production.cralaw

Sec. 7. Apprenticeship. Subject to the provisions of the Labor Code as amended, disabled persons
shall be eligible as apprentices or learners: Provided, That their handicap is not as much as to effectively
impede the performance of job operations in the particular occupation for which they are hired;
Provided, further, That after the lapse of the period of apprenticeship, if found satisfactory in the job
performance, they shall be eligible for employment.cralaw

Sec. 8. Incentives for Employers. (a) To encourage the active participation of the private sector in
promoting the welfare of disabled persons and to ensure gainful employment for qualified disabled
persons, adequate incentives shall be provided to private entities which employ disabled persons.cralaw

(b) Private entities that employ disabled persons who meet the required skills or qualifications, either as
regular employee, apprentice or learner, shall be entitled to an additional deduction, from their gross
income, equivalent to twenty-five percent (25%) of the total amount paid as salaries and wages to
disabled persons: Provided, however, That such entities present proof as certified by the Department of
Labor and Employment that disabled persons are under their employ: Provided, further, That the
disabled employee is accredited with the Department of Labor and Employment and the Department of
Health as to his disability, skills and qualifications.

(c) Private entities that improve or modify their physical facilities in order to provide reasonable
accommodation for disabled persons shall also be entitled to an additional deduction from their net
taxable income, equivalent to fifty percent (50%) of the direct costs of the improvements or
modifications. This Section, however, does not apply to improvements or modifications of facilities
required under Batas Pambansa Bilang 344. chan robles virtual law library

Sec. 9. Vocational Rehabilitation. Consistent with the principle of equal opportunity for disabled
workers and workers in general, the State shall take appropriate vocational rehabilitation measures that
shall serve to develop the skills and potentials of disabled persons and enable them to compete
favorably for available productive and remunerative employment opportunities in the labor
market.cralaw

The State shall also take measures to ensure the provision of vocational rehabilitation and livelihood
services for disabled persons in the rural areas. In addition, it shall promote cooperation and
coordination between the government and nongovernmental organizations and other private entities
engaged in vocational rehabilitation activities.

The Department of Social Welfare and Development shall design and implement training programs that
will provide disabled persons with vocational skills to enable them to engage in livelihood activities or
obtain gainful employment. The Department of Labor and Employment shall likewise design and
conduct training programs geared towards providing disabled persons with skills for livelihood.cralaw

Sec. 10. Vocational Guidance and Counseling. The Department of Social and Welfare and
Development, shall implement measures providing and evaluating vocational guidance and counseling
to enable disabled persons to secure, retain and advance in employment. It shall ensure the availability
and training of counselors and other suitably qualified staff responsible for the vocational guidance and
counseling of disabled persons.chan robles virtual law library

Sec. 11. Implementing Rules and Regulations. The Department of Labor and Employment shall in
coordination with the Department of Social Welfare and Development (DSWD) and National Council for
the Welfare of the Disabled Persons (NCWDP) shall promulgate the rules and regulations necessary to
implement the provisions under this Chapter.cralaw

CHAPTER II

EDUCATION

Sec. 12. Access to Quality Education. The State shall ensure that disabled persons are provided with
access to quality education and ample opportunities to develop their skills. It shall take appropriate
steps to make such education accessible to all disabled persons. It shall be unlawful for any learning
institution to deny a disabled person admission to any course it offers by reason of handicap or
disability.chanrobles virtual law library

The State shall take into consideration the special requirements of disabled persons in the formulation
of educational policies and programs. It shall encourage learning institutions to take into account the
special needs of disabled persons with respect to the use of school facilities, class schedules, physical
education requirements, and other pertinent consideration.chanrobles virtual law library

The State shall also promote the provision by learning institutions, especially higher learning institutions
of auxiliary services that will facilitate the learning process for disabled persons. chan robles virtual law
library

Sec. 13. Assistance to Disabled Students. The State shall provide financial assistance to economically
marginalized but deserving disabled students pursuing post secondary or tertiary education. Such
assistance may be in the form of scholarship grants, student loan programs, subsidies, and other
incentives to qualified disabled students in both public and private schools. At least five percent (5%) of
the allocation for the Private Education Student Financial Assistance Program created by virtue of R.A.
6725 shall be set aside for disabled students pursuing vocational or technical and degree courses.

Sec. 14. Special Education. The State shall establish, maintain and support complete, adequate and
integrated system of special education for the visually impaired, hearing impaired, mentally retarded
persons and other types of exceptional children in all regions of the country. Toward this end, the
Department of Education, Culture and Sports shall establish, special education classes in public schools
in cities, or municipalities. It shall also establish, where viable, Braille and Record Libraries in provinces,
cities or municipalities.cralaw

The National Government shall allocate funds necessary for the effective implementation of the special
education program nationwide. Local government units may likewise appropriate counterpart funds to
supplement national funds.

Sec. 15. Vocational or Technical and Other Training Programs. The State shall provide disabled
persons with training in civics, vocational efficiency, sports and physical fitness, and other skills. The
Department of Education, Culture and Sports shall establish in at least one government-owned
vocational and technical school in every province a special vocational and technical training program for
disabled persons. It shall develop and implement sports and physical fitness programs specifically
designed for disabled persons taking into consideration the nature of their handicap.cralaw

Sec. 16. Non-Formal Education. The State shall develop non-formal education programs intended for
the total human development of disabled persons. It shall provide adequate resources for non-formal
education programs and projects that cater to the special needs of disabled persons.cralaw

Sec. 17. State Universities and Colleges. If viable and needed, the State University or State College in
each region or province shall be responsible for (a) the development of material appliances and
technical aids for disabled persons; (b) the development of training materials for vocational
rehabilitation and special education instructions; (c) the research on special problems, particularly of the
visually-impaired, hearing-impaired, speech-impaired, and orthopedically-impaired students, mentally
retarded, and multi-handicapped and others, and the elimination of social barriers and discrimination
against disabled persons; and (d) inclusion of the Special Education for Disabled (SPED) course in the
curriculum.cralaw

The National Government shall provide these state universities and colleges with necessary special
facilities for visually-impaired, hearing-impaired, speech-impaired, and orthopedically-impaired
students. It shall likewise allocate the necessary funds in support of the above.

CHAPTER III

HEALTH

Sec. 18. National Health Program. The Department of Health in coordination with the National
Council for the Welfare of Disabled Persons, shall institute a national health program which shall aim to
attain the following:chanroblesvirtualawlibrary

(a) prevention of disability, whether occurring prenatally or postnatally;

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(b) recognition and early diagnosis of disability; and

(c) early rehabilitation of the disabled.

Sec. 19. Rehabilitation Centers. The Department of Health shall establish medical rehabilitation
centers in government provincial hospitals, and shall include in its annual appropriation the necessary
funds for the operation of such centers. chan robles virtual law library

The Department of Health shall formulate and implement a program to enable marginalized disabled
persons to avail of free rehabilitation services in government hospitals.

Sec. 20. Health Services. The State shall protect and promote the right to health of disabled persons
and shall adopt an integrated and comprehensive approach to their health development which shall
make essential health services available to them at affordable cost.cralaw

The National Government shall provide an integrated health service for disabled persons which shall
include, but not limited to, the following:

(a) prevention of disability through immunization, nutrition, environmental protection and preservation,
and genetic counseling; and early detection of disability and timely intervention to arrest disabling
condition; and

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(b) medical treatment and rehabilitation.chan robles virtual law library

The Department of Health shall field medical personnel specializing in the treatment and rehabilitation
of disabled persons to provincial hospitals and, when viable, to municipal health centers. It shall also
train its field health personnel in the provision of medical attention to disabled persons. It shall further
ensure that its field health units have the necessary capabilities to fit prosthetic and orthotic appliances
on disabled persons.chanrobles virtual law library

CHAPTER IV

AUXILIARY SOCIAL SERVICES

Sec. 21. Auxiliary Social Services. The State shall ensure that marginalized persons are provided with
the necessary auxiliary services that will restore their social functioning and participation in community
affairs. Towards this end, the Department of Social Welfare and Development shall develop and
implement programs on auxiliary social services that respond to the needs of marginalized disabled
persons. The components of such a program shall be as follows:

(a) assistance in the acquisition of prosthetic devices and medical intervention of specialty services;
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(b) provision of specialized training activities designed to improve functional limitations of disabled
persons related to communication skills;

(c) development among disabled persons of a positive self-image through the provision of counseling,
orientation and mobility and strengthening daily living capability;

(d) provision of family care services geared towards developing the capability of families to respond to
the needs of the disabled members of the family;

(e) provision of substitute family care services and the facilities therefor for abandoned, neglected,
abused and unattached disabled persons who need custodial care; chan robles virtual law library

(f) provision of after care and follow-up services for the continued rehabilitation in a community-based
setting of disabled persons who were released from residential care or rehabilitation centers; and

(g) provision of day care services for disabled children of pre-school age.

CHAPTER V

TELECOMMUNICATIONS

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Sec. 22. Broadcast Media. Television stations shall be encouraged to provide a signlanguage inset
or subtitles in at least one (1) newscast program a day and special programs covering events of national
significance.chanrobles virtual law library

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Sec. 23. Telephone Services. All telephone companies shall be encouraged to install special
telephone devices or units for the hearing-impaired and ensure that they are commercially available to
enable them to communicate through the telephone system.chanrobles virtual law library

Sec. 24. Free Postal Charges for the Disabled. Postal charges shall be free on the following:

(a) articles and literatures like books and periodicals, orthopedic and other devices, and teaching aids for
the use of the disabled sent by mail within the Philippines and abroad; and

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(b) aids and orthopedic devices for the disabled sent by abroad by mail for
repair:chanroblesvirtualawlibrary
Provided, That the aforesaid items are for personal purposes only: Provided, further, That the disabled
person is a marginalized disabled as certified by the Social Welfare and Development Office of the local
government unit concerned or the Department of Social Welfare and Development.chanrobles virtual
law library

CHAPTER VI

ACCESSIBILITY

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Sec. 25. Barrier-Free Environment. The State shall ensure the attainment of a barrier-free
environment that will enable disabled persons to have access in public and private buildings and
establishments and such other places mentioned in Batas Pambansa Bilang 344, otherwise known as the
"Accessibility Law".chanrobles virtual law library

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The national and local governments shall allocate funds for the provision of architectural facilities or
structural features for disabled persons in government buildings and facilities.

Sec. 26. Mobility. The State shall promote the mobility of disabled persons. Disabled persons shall be
allowed to drive motor vehicles, subject to the rules and regulations issued by the Land Transportation
Office pertinent to the nature of their disability and the appropriate adaptations or modifications made
on such vehicles.

Sec. 27. Access to Public Transport Facilities. The Department of Social Welfare and Development
shall develop a program to assist marginalized disabled persons gain access in the use of public transport
facilities. Such assistance may be in the form of subsidized transportation fare.

The said department shall also allocate such funds as may be necessary for the effective implementation
of the public transport program for the disabled persons. chan robles virtual law library

The "Accessibility Law", as amended, shall be made suppletory to this Act.

Sec. 28. Implementing Rules and Regulations. The Department of Transportation and
Communications shall formulate the rules and regulations necessary to implement the provisions of this
Chapter.

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CHAPTER VII

POLITICAL AND CIVIL RIGHTS

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Sec. 29. System of Voting. Disabled persons shall be allowed to be assisted by a person of his choice
in voting in the national or local elections. The person thus chosen shall prepare the ballot for the
disabled voter inside the voting booth. The person assisting shall bind himself in a formal document
under oath to fill out the ballot strictly in accordance with the instructions of the voter and not to reveal
the contents of the ballot prepared by him. Violation of this provision shall constitute an election
offense.

Polling places should be made accessible to disabled persons during national or local
elections.chanrobles virtual law library

Sec. 30. Right to Assemble. Consistent with the provisions of the Constitution, the State shall
recognize the right of disabled persons to participate in processions, rallies, parades, demonstrations,
public meetings, and assemblages or other forms of mass or concerned action held in public.

Sec. 31. Right to Organize. The State recognizes the right of disabled persons to form organizations or
associations that promote their welfare and advance or safeguard their interests. The National
Government, through its agencies, instrumentalities and subdivisions, shall assist disabled persons in
establishing self-help organizations by providing them with necessary technical and financial
assistance.cralaw

Concerned government agencies and offices shall establish close linkages with organizations of the
disabled persons in order to respond expeditiously to the needs of disabled persons. National line
agencies and local government units shall assist disabled persons in setting up specific projects that will
be managed like business propositions.

To ensure the active participation of disabled persons in the social and economic development of the
country, their organizations shall be encouraged to participate in the planning, organization and
management of government programs and projects for disabled persons.cralaw

Organizations of disabled persons shall participate in the identification and preparation of programs that
shall serve to develop employment opportunities for the disabled persons.cralaw

TITLE III

PROHIBITION ON DISCRIMINATION AGAINST DISABLED PERSONS

chan robles virtual law library

CHAPTER I

DISCRIMINATION ON EMPLOYMENT

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Sec. 32. Discrimination on Employment. No entity, whether public or private, shall discriminate
against a qualified disabled person by reason of disability in regard to job application procedures, the
hiring, promotion, or discharge of employees, employee compensation, job training, and other terms,
conditions, and privileges of employment. The following constitute acts of discrimination:

(a) Limiting, segregating or classifying a disabled job applicant in such a manner that adversely affects his
work opportunities;

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(b) Using qualification standards, employment tests or other selection criteria that screen out or tend to
screen out a disabled person unless such standards, tests or other selection criteria are shown to be job-
related for the position in question and are consistent with business necessity;

(c) Utilizing standards, criteria, or methods of administration that:

(1) have the effect of discrimination on the basis of disability; or chan robles virtual law library

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(2) perpetuate the discrimination of others who are subject to common administrative control.

(d) Providing less compensation, such as salary, wage or other forms of remuneration and fringe
benefits, to a qualified disabled employee, by reason of his disability, than the amount to which a non-
disabled person performing the same work is entitled;

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(e) Favoring a non-disabled employee over a qualified disabled employee with respect to promotion,
training opportunities, study and scholarship grants, solely on account of the latter's disability;

(f) Re-assigning or transferring a disabled employee to a job or position he cannot perform by reason of
his disability;

(g) Dismissing or terminating the services of a disabled employee by reason of his disability unless the
employer can prove that he impairs the satisfactory performance of the work involved to the prejudice
of the business entity: Provided, however, That the employer first sought to provide reasonable
accommodations for disabled persons;

(h) Failing to select or administer in the most effective manner employment tests which accurately
reflect the skills, aptitude or other factor of the disabled applicant or employee that such tests purports
to measure, rather than the impaired sensory, manual or speaking skills of such applicant or employee,
if any; and

(i) Excluding disabled persons from membership in labor unions or similar organizations.

Sec. 33. Employment Entrance Examination. Upon an offer of employment, a disabled applicant may
be subjected to medical examination, on the following occasions:chanroblesvirtualawlibrary
(a) all entering employees are subjected to such an examination regardless of disability;

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(b) information obtained during the medical condition or history of the applicant is collected and
maintained on separate forms and in separate medical files and is treated as a confidential medical
record; Provided, however, That:chanroblesvirtualawlibrary

(1) supervisors and managers may be informed regarding necessary restrictions on the work or duties of
the employees and necessary accommodations;chan robles virtual law library

chan robles virtual law library

(2) first aid and safety personnel may be informed, when appropriate, if the disability may require
emergency treatment;

(3) government officials investigating compliance with this Act shall be provided relevant information on
request; and

(4) the results of such examination are used only in accordance with this Act.

CHAPTER II

DISCRIMINATION ON TRANSPORTATION

chan robles virtual law library

Sec. 34. Public Transportation. It shall be considered discrimination for the franchisees or operators
and personnel of sea, land, and air transportation facilities to charge higher fare or to refuse to convey a
passenger, his orthopedic devices, personal effects, and merchandise by reason of his disability.

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CHAPTER III

DISCRIMINATION ON THE USE OF PUBLIC ACCOMMODATIONS AND SERVICES

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Sec. 35. Public Accommodations and Services. For purposes of this Chapter, public accommodations
and services shall include the following:chanroblesvirtualawlibrary
(a) an inn, hotel, motel, or other place of lodging, except for an establishment located within a building
that contains not more than five (5) rooms for rent or hire and that is actually occupied by the
proprietor of such establishment as the residence of such proprietor;

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(b) a restaurant, bar, or other establishment serving food or drink;

(c) a motion picture, theater, concert hall, stadium, or other place of exhibition or entertainment;

(d) an auditorium, convention center, lecture hall, or other place of public gathering;chan robles virtual
law library

(e) a bakery, grocery store, hardware store, shopping center, or other sales or rental establishment;

(f) a bank, barber shop, beauty shop, travel service, funeral parlor, gas station, office of a lawyer,
pharmacy, insurance office, professional office of a health care provider, hospital or other service
establishment;

(g) a terminal, depot, or other station used for specified public transportation;

(h) a museum, gallery, library or other place of public display or collection;

(i) a park, zoo, amusement park, or other place of recreation;

(j) a nursery, elementary, secondary, undergraduate, or post-graduate private school, or other place of
education;

(k) a gymnasium, health spa, bowling alley, golf course; or chan robles virtual law library

(l) other place of exercise or recreation.

Sec. 36. Discrimination on the Use of Public Accommodations. (a) No disabled person shall be
discriminated on the basis of disability in the full and equal enjoyment of the goods, services, facilities,
privileges, advantages or accommodations of any place of public accommodation by any person who
owns, leases, or operates a place of public accommodation. The following constitute acts of
discrimination:chanroblesvirtualawlibrary

(1) denying a disabled person, directly or through contractual, licensing, or other arrangement, the
opportunity to participate in or benefit from the goods, services, facilities, privileges, advantages, or
accommodations of an entity by reason of his disability;

chan robles virtual law library

(2) affording a disabled person, on the basis of his disability, directly or through contractual, licensing, or
other arrangement, with the opportunity to participate in or benefit from a good service, facility,
privilege, advantage, or accommodation that is not equal to that afforded to other able-bodied persons;
and
(3) providing a disabled person, on the basis of his disability, directly or through contractual, licensing, or
other arrangement, with a good, service, facility, advantage, privilege, or accommodation that is
different or separate form that provided to other able-bodied persons unless such action is necessary to
provide the disabled person with a good, service, facility, advantage, privilege, or accommodation, or
other opportunity that is as effective as that provided to others;

For purposes of this Section, the term "individuals or class of individuals" refers to the clients or
customers of the covered public accommodation that enters into the contractual, licensing or other
arrangement.

chan robles virtual law library

(b) Integrated Settings Goods, services, facilities, privileges, advantages, and accommodations shall
be afforded to individual with a disability in the most integrated setting appropriate to the needs of the
individual.chan robles virtual law library

(c) Opportunity to Participate Notwithstanding the existence of separate or different programs or

activities provided in accordance with this Section, an individual with a disability shall not be denied the
opportunity to participate in such programs or activities that are not separate or different.

(d) Association It shall be discriminatory to exclude or otherwise deny equal goods, services, facilities,
advantages, privileges, accommodations or other opportunities to an individual or entity because of the
known disability of an individual with whom the individual or entity is known to have a relationship or
association.

(e) Prohibitions For purposes of this Section, the following shall be considered as discriminatory:

(1) the imposition or application of eligibility criteria that screen out or tend to screen out an individual
with a disability or any class or individuals with disabilities from fully and equally enjoying any goods,
services, facilities, privileges, advantages, or accommodations, unless such criteria can be shown to be
necessary for the provision of the goods, services, facilities, privileges, or accommodations being
offered;chan robles virtual law library

chan robles virtual law library

(2) a failure to make reasonable modifications in policies, practices, or procedures, when such
modifications are necessary to afford such goods, services, facilities, privileges, advantages, or
accommodations to individuals with disabilities, unless the entity can demonstrate that making such
modifications would fundamentally alter the nature of the goods, facilities, services, privileges,
advantages, or accommodations;

(3) failure to take such steps as may be necessary to ensure that no individual with a disability is
excluded, denied services, segregated or otherwise treated differently than other individuals because of
the absence of auxiliary aids and services, unless the entity can demonstrate that taking such steps
would fundamentally alter the nature of the good, service, facility, privilege, advantage or
accommodation being offered or would result in undue burden;

(4) a failure to remove architectural barriers, and communication barriers that are structural in nature,
in existing facilities, where such removal is readily achievable; and

(5) where an entity can demonstrate that the removal of a barrier under clause (4) is not readily
achievable, a failure to make such goods, services, facilities, privileges, advantages, or accommodations
available through alternative methods if such methods are readily achievable.chan robles virtual law
library

Sec. 37. Use of Government Recreational or Sports Centers Free of Charge. Recreational or sports
centers owned or operated by the Government shall be used, free of charge, by marginalized disabled
persons during their social, sports or recreational activities.

chan robles virtual law library

Sec. 38. Implementing Rules and Regulations. The Department of Public Works and Highways shall
formulate the rules and regulations necessary to implement the provisions of this Chapter.chanrobles
virtual law library

TITLE IV

FINAL PROVISIONS

Sec. 39. Housing Program. The National Government shall take into consideration in its national
shelter program the special housing requirements of disabled persons.

chan robles virtual law library

Sec. 40. Role of National Agencies and Local Government Units. Local government units shall
promote the establishment of organizations of disabled persons in their respective territorial
jurisdictions. National agencies and local government units may enter into joint ventures with
organizations or associations of disabled persons to explore livelihood opportunities and other
undertakings that shall enhance the health, physical fitness and the economic and social well-being of
disabled persons.chanrobles virtual law library
Sec. 41. Support From Nongovernment Organizations. Nongovernment organizations or private
volunteer organizations dedicated to the purpose of promoting and enhancing the welfare of disabled
persons shall, as they, are hereby encouraged, become partners of the Government in the
implementation of vocational rehabilitation measures and other related programs and projects.
Accordingly, their participation in the implementation of said measures, programs and projects is to be
extended all possible support by the Government.cralaw

The Government shall sponsor a volunteer service program which shall harness the involvement of
private individuals in the provision of assistance to disabled persons. chan robles virtual law library

Sec. 42. Tax Incentives. (a) Any donation, bequest, subsidy or financial aid which may be made to
government agencies engaged in the rehabilitation of disabled persons and organizations of disabled
persons shall be exempt from the donor's tax subject to the provisions of Section 94 of the National
Internal Revenue Code (NIRC), as amended and shall be allowed as deductions from the donor's gross
income for purposes of computing the taxable income subject to the provisions of Section 29 (h) of the
Code.

(b) Donations from foreign countries shall be exempt from taxes and duties on importation subject to
the provisions of Section 105 of the Tariff and Customs Code of the Philippines, as amended, Section 103
of the NIRC, as amended and other relevant laws and international agreements.cralaw

(c) Local manufacturing or technical aids and appliances used by disabled persons shall be considered as
a preferred area of investment subject to the provisions of Executive Order No. 226 otherwise known as
the "Omnibus Investments Code of 1987" and, as such, shall enjoy the rights, privileges and incentives as
provided in said Code such as, but not limited, to the following:

(1) repatriation of investments;

chan robles virtual law library

(2) remittance of earnings;

(3) remittance of payments on foreign contracts;

(4) freedom from expropriations;

(5) freedom from requisition of investment; chan robles virtual law library

(6) income tax holiday;

(7) additional deduction for labor expense;

(8) tax and duty exemption on imported capital equipment;

(9) tax credit on domestic capital equipment;

(10) exemption from contractor's tax;

(11) simplification of customs procedures; chan robles virtual law library

(12) unrestricted use of consigned equipment;

(13) employment of foreign nationals;

(14) tax credit for taxes and duties on raw materials;

(15) access to bonded manufacturing/traded warehouse system;

(16) exemption from taxes and duties on imported spare parts; and

(17) exemption from wharfage dues and any export tax, duty, impost and fee.

Sec. 43. Continuity Clause. Should any department or agency tasked with the enforcement or
formulation of rules and regulations and guidelines for implementation of any provision of this Act is
abolished, merged with another department or agency or modified, such shall not affect the
enforcement or formulation of rules, regulations and guidelines for implementation of this Act to the
effect that

(a) In case of abolition, the department or agency established to replace the abolished department or
agency shall take-over the functions under this Act of the abolished department or agency. chan robles
virtual law library

chan robles virtual law library

(b) In case the department or agency tasked with the enforcement or formulation of rules, regulations
and guidelines for implementation of this Act is merged with another department or agency, the former
shall continue the functions under this Act of the merged department or agency.chanrobles virtual law
library

(c) In case of modification, the department or agency modified shall continue the functions under this
Act of the department or agency that has undergone the modification.

Sec. 44. Enforcement by the Secretary of Justice.

(a) Denial of Right

(1) Duty to Investigate the Secretary of Justice shall investigate alleged violations of this Act, and shall
undertake periodic reviews of compliance of covered entities under this Act.

(b) Potential Violations If the Secretary of Justice has reasonable cause to believe that

(1) any person or group of persons is engaged in a pattern or practice of discrimination under this Act; or

chan robles virtual law library

(2) any person or group or persons has been discriminated against under this Act and such
discrimination raises an issue of general public importance, the Secretary of Justice may commence a
legal action in any appropriate court.chanrobles virtual law library

Sec. 45. Authority of Court. The court may grant any equitable relief that such court considers to be
appropriate, including, to the extent required by this Act:chanroblesvirtualawlibrary

(a) granting temporary, preliminary or permanent relief; chan robles virtual law library

chan robles virtual law library

(b) providing an auxiliary aid or service, modification of policy, practice or procedure, or alternative
method; and

(c) making facilities readily accessible to and usable by individuals with disabilities.

Sec. 46. Penal Clause. (a) Any person who violates any provision of this Act shall suffer the following
penalties:chanroblesvirtualawlibrary

(1) for the first violation, a fine of not less than Fifty thousand pesos (P50,000.00) but not exceeding One
hundred thousand pesos (P100,000.00) or imprisonment of not less than six (6) months but not more
than two (2) years, or both at the discretion of the court; and

chan robles virtual law library

(2) for any subsequent violation, a fine of not less than One hundred thousand pesos (P100,000.00) but
not exceeding Two hundred thousand pesos (P200,000.00) or imprisonment for not less than two (2)
years but not more than six (6) years, or both at the discretion of the court.chanrobles virtual law library

(b) Any person who abuses the privileges granted herein shall be punished with imprisonment of not
less than six (6) months or a fine of not less than Five thousand pesos (P5,000.00), but not more than
Fifty thousand pesos (P50,000.00), or both, at the discretion of the court.

chan robles virtual law library

(c) If the violator is a corporation, organization or any similar entity, the officials thereof directly
involved shall be liable therefor.chanrobles virtual law library
(d) If the violator is an alien or a foreigner, he shall be deported immediately after service of sentence
without further deportation proceedings. chan robles virtual law library

Sec. 47. Appropriations. The amount necessary to carry out the provisions of this Act shall be
included in the General Appropriations Act of the year following its enactment into law and thereafter.

Sec. 48. Separability Clause. Should any provisions of this Act be found unconstitutional by a court of
law, such provisions shall be severed from the remainder of the Act, and such action shall not affect the
enforceability of the remaining provisions of this Act.cralaw

Sec. 49. Repealing Clause. All laws, presidential decrees, executive orders and rules and regulations
inconsistent with the provisions of this Act are hereby repealed or modified accordingly. chan robles
virtual law library

Sec. 50. Effectivity. This Act shall take effect fifteen (15) days after its publication in any two (2)
newspapers of general circulation.

Approved: March 24, 1992

------------------------------------------

REPUBLIC ACT NO. 7322

AN ACT INCREASING MATERNITY BENEFITS IN FAVOR OF WOMEN WORKERS IN THE PRIVATE SECTOR,
AMENDING FOR THE PURPOSE SECTION 14-A OF REPUBLIC ACT NO. 1161, AS AMENDED, AND FOR
OTHER PURPOSES

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

SECTION 1. Section 14-A of Republic Act No. 1161, as amended, is further amended to read as
follows:

"SEC. 14-A. Maternity Leave Benefit. - A covered female employee who has paid at least three
monthly maternity contributions in the twelve-month period preceding the semester of her childbirth,
abortion or miscarriage and who is currently employed shall be paid a daily maternity benefit
equivalent to one hundred percent (100%) of her present basic salary, allowances and other benefits or
the cash equivalent of such benefits for sixty (60) 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;

"(b) That the payment shall be advanced by the employer in two equal installments within thirty (30)
days from the filing of the maternity leave application:

"(c) That in case of caesarian delivery, the employee shall be paid the daily maternity benefit for
seventy-eight (78) days;

"(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 (60) days for the same childbirth,
abortion, or miscarriage;

"(e) That the maternity benefits provided under this Section shall be paid only for the first four
deliveries after March 13, 1973;

"(f) That the SSS shall immediately reimburse the employer of one hundred percent (100%) of the
amount of maternity benefits advanced to the employee by the employer upon receipt of satisfactory
proof of such payment and legality thereof; 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, or without the latter having
been previously notified by the employer of the time of the pregnancy, the employer shall pay to the
SSS damages equivalent to the benefits which said employee would otherwise have been entitled to,
and the SSS shall in turn pay such amount to the employee concerned."

SEC. 2. Nothing in this Act shall be construed as to diminish existing maternity benefits under present
laws and collective bargaining agreements.

SEC. 3. All laws, executive orders, prodamations,.presidential decrees, rules and regulations, and
other issuances, or parts hereof, inconsistent with the provisions of this Act are hereby repealed or
modified accordingly.

SEC. 4. This Act shall take effect fifteen (15) days after its publication in the Official Gazette or in at
least two (2) national newspapers of general circulation, whichever comes earlier.
 Approved:

(SGD.)RAMON V. MITRA

Speaker of the House of Representatives

(SGD.)NEPTALI A. GONZALES

President of the Senate

This bill which is a consolidation of Senate Bill No. 380 and House Bill No. 34814, was finally passed
by the Senate and the House of Representatives on February 5, 1992.

(SGD.)CAMILO L. SABIO (SGD.)ANACLETOD.BADOY, JR.

Secretary General Secretary of the Senate

House of Representatives

Approved: March 3, 1992

(SGD.) CORAZON C. AQUINO

President of the Philippines

-------------------------------------

REPUBLIC ACT NO. 7877

AN ACT DECLARING SEXUAL HARASSMENT UNLAWFUL IN THE EMPLOYMENT, EDUCATION OR

TRAINING ENVIRONMENT, AND FOR OTHER PURPOSES.

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

SECTION 1. Title. - This Act shall be known as the "Anti-Sexual Harassment Act of 1995."

SECTION 2. Declaration of Policy. - The State shall value the dignity of every individual, enhance the
development of its human resources, guarantee full respect for human rights, and uphold the dignity of
workers, employees, applicants for employment, students or those undergoing training, instruction or
education. Towards this end, all forms of sexual harassment in the employment, education or training
environment are hereby declared unlawful.

SECTION 3. Work, Education or Training -Related, Sexual Harassment Defined. - Work, education or
training-related sexual harassment is committed by an employer, employee, manager, supervisor, agent
of the employer, teacher, instructor, professor, coach, trainor, or any other person who, having
authority, influence or moral ascendancy over another in a work or training or education environment,
demands, requests or otherwise requires any sexual favor from the other, regardless of whether the
demand, request or requirement for submission is accepted by the object of said Act.

(a) In a work-related or employment environment, sexual harassment is committed when:

(1) The sexual favor is made as a condition in the hiring or in the employment, re-employment or
continued employment of said individual, or in granting said individual favorable compensation, terms
of conditions, promotions, or privileges; or the refusal to grant the sexual favor results in limiting,
segregating or classifying the employee which in any way would discriminate, deprive ordiminish
employment opportunities or otherwise adversely affect said employee;

(2) The above acts would impair the employee's rights or privileges under existing labor laws; or

(3) The above acts would result in an intimidating, hostile, or offensive environment for the
employee.

(b) In an education or training environment, sexual harassment is committed:

(1) Against one who is under the care, custody or supervision of the offender;

(2) Against one whose education, training, apprenticeship or tutorship is entrusted to the offender;

(3) When the sexual favor is made a condition to the giving of a passing grade, or the granting of
honors and scholarships, or the payment of a stipend, allowance or other benefits, privileges, or
consideration; or

(4) When the sexual advances result in an intimidating, hostile or offensive environment for the
student, trainee or apprentice.

Any person who directs or induces another to commit any act of sexual harassment as herein
defined, or who cooperates in the commission thereof by another without which it would not have
been committed, shall also be held liable under this Act.
 SECTION 4. Duty of the Employer or Head of Office in a Work-related, Education or Training
Environment. - It shall be the duty of the employer or the head of the work-related, educational or
training environment or institution, to prevent or deter the commission of acts of sexual harassment
and to provide the procedures for the resolution, settlement or prosecution of acts of sexual
harassment. Towards this end, the employer or head of office shall:

(a) Promulgate appropriate rules and regulations in consultation with and joint1y approved by the
employees or students or trainees, through their duly designated representatives, prescribing the
procedure for the investigation of sexual harassment cases and the administrative sanctions therefor.

Administrative sanctions shall not be a bar to prosecution in the proper courts for unlawful acts of
sexual harassment.

The said rules and regulations issued pursuant to this subsection (a) shall include, among others,
guidelines on proper decorum in the workplace and educational or training institutions.

(b) Create a committee on decorum and investigation of cases on sexual harassment. The committee
shall conduct meetings, as the case may be, with officers and employees, teachers, instructors,
professors, coaches, trainors, and students or trainees to increase understanding and prevent incidents
of sexual harassment. It shall also conduct the investigation of alleged cases constituting sexual
harassment.

In the case of a work-related environment, the committee shall be composed of at least one (1)
representative each from the management, the union, if any, the employees from the supervisory rank,
and from the rank and file employees.

In the case of the educational or training institution, the committee shall be composed of at least one
(1) representative from the administration, the trainors, instructors, professors or coaches and
students or trainees, as the case may be.

The employer or head of office, educational or training institution shall disseminate or post a copy of
this Act for the information of all concerned.

SECTION 5. Liability of the Employer, Head of Office, Educational or Training Institution. - The
employer or head of office, educational or training institution shall be solidarily liable for damages
arising from the acts of sexual harassment committed in the employment, education or training
environment if the employer or head of office, educational or training institution is informed of such
acts by the offended party and no immediate action is taken.

SECTION 6. Independent Action for Damages. - Nothing in this Act shall preclude the victim of work,
education or training-related sexual harassment from instituting a separate and independent action for
damages and other affirmative relief.

SECTION 7. Penalties. - Any person who violates the provisions of this Act shall, upon conviction, be
penalized by imprisonment of not less than one (1) month nor more than six (6) months, or a fine of
not less than Ten thousand pesos (P10,000) nor more than Twenty thousand pesos (P20,000), or both
such fine and imprisonment at the discretion of the court.

Any action arising from the violation of the provisions of this Act shall prescribe in three (3) years.

SECTION 8. Separability Clause. - If any portion or provision of this Act is declared void or
unconstitutional, the remaining portions or provisions hereof shall not be affected by such declaration.

SECTION 9. Repealing Clause. - All laws, decrees, orders, rules and regulations, other issuances, or
parts thereof inconsistent with the provisions of this Act are hereby repealed or modified accordingly.

SECTION 10. Effectivity Clause.- This Act shall take effect fifteen (15) days after its complete
publication in at least two (2) national newspapers of general circulation.

Approved:

(Sgd.) EDGARDO J. ANGARA

President of the Senate

(Sgd.) JOSE DE VENECIA, JR

Speaker of the House of Representatives

This Act is a consolidation of House Bill No. 9425 and Senate Bill No. 1632 was finally passed by the
House of Representatives and the Senate on February 8, 1995.
 (Sgd.) EDGARDO E. TUMANGAN

Secretary of the Senate

(Sgd.) CAMILO L. SABIO

Secretary General

House of Representatives

Approved: February 14, 1995

(Sgd.) FIDEL V. RAMOS

President of the Philippines

--------------------------------------------

RESOLUTION NO. 01-0940

ADMINISTRATIVE DISCIPLINARY RULES ON SEXUAL HARASSMENT CASES

WHEREAS, Section 11, Article II of the 1987 Philippine Constitution provides that the State values the
dignity of every human person and guarantees full respect for human rights.

WHEREAS, the Vienna Declaration and Programme of Action of the World Conference on Human Rights
(June 1993) and the Beijing Declaration and Platform for Action of the Fourth World Conference on
Women (September 1995) reaffirm the equal rights and inherent human dignity of women and men,
and particularly the human rights of women as an inalienable, integral and indivisible part of all human
rights and fundamental freedoms.

WHEREAS, the Philippines, with other States of the World, has reaffirmed, through the Vienna
Declaration and Programme of Action and the Beijing Declaration and Platform for Action, its solemn
commitment to fulfill its obligations to promote universal respect for, and observance and protection of
all human rights and fundamental freedoms for all in accordance with the Charter of the United Nations,
other instruments relating to human rights, and international law;

WHEREAS, the Vienna Declaration and Programme of Action stresses that all forms of sexual harassment
are incomparable with the dignity and worth of the human person and must be eliminated by legal
measures and through national action, while the Beijing Platform for Action specifically mandates
Governments to enact and/or reinforce penal, civil, labour and administrative sanctions in domestic
legislation to punish and redress violence against women including sexual harassment and develop
programmes and procedures to eliminate sexual harassment and other forms of violence against
women in all educational institutions, workplaces and elsewhere;

WHEREAS, the Philippine Congress enacted on February 14, 1995, Republic Act No. 7877, otherwise
known as the Anti-Sexual Harassment Act of 1995, which took effect on March 5, 1995 and declares
unlawful sexual harassment against women and men in the employment, education and training
environment.

WHEREAS, Section 4 (a) of Republic Act No. 7877 mandates every employer or head of agency in the
public and private sectors to promulgate rules and regulations prescribing the procedure for the
investigation of sexual harassment cases and the administrative sanctions therefor;

WHEREAS, there is a need to devise uniform rules and regulations particularly in the definition of the
administrative offense of sexual harassment and the sanctions therefor, and the procedures for the
administrative investigation, prosecution and adjudication of sexual harassment cases.

WHEREAS, Section 3, Article IX (B) of the 1987 Constitution, Section 1 and Section 12 (19), Subtitle A,
Title I of Book V of the Administrative Code of 1987 (Executive Order No. 292) and Section 4 (B),
Republic Act No. 6713, otherwise known as the Code of Conduct and Ethical Standards for Public
Officials and Employees, empower the Civil Service Commission, as the central personnel agency of the
Government, to adopt positive measures for the observance of substantive and procedural
administrative standards, including standards for the personal conduct of government officials and
employees, in order to promote morale, efficiency, integrity, responsiveness and progressiveness in the
entire government bureaucracy;

WHEREAS, Section 4 of Republic Act NO. 6713 provides norms of personal conduct for public officials
and employees to observe in the performance of official duties, and specifically directs that they shall
act without discrimination against anyone, and shall at all times respect the rights of others and refrain
from doing acts contrary to law, good morals, good customs, public policy, public order, public safety
and public interest;

WHEREAS, sexual harassment violates the dignity of workers and their right to humane, just and safe
work environment, defeats and impairs morale and efficiency in the workplace, and violates the merit
and fitness principle in the civil service.

NOW, THEREFORE, this Commission hereby promulgates these Rules and Regulations defining the
administrative offense of sexual harassment and prescribing the standard procedure for the
administrative investigation and resolution of sexual harassment cases in the public sector.

RULE I.

TITLE
Section I. These Rules shall be known as the "Administrative Disciplinary Rules on Sexual Harassment
Cases."

RULE II.

COVERAGE

Section 2. These Rules shall apply to all officials and employees in government, whether in the career or
non-career service and holding any level of position, including Presidential appointees and elective
officials, regardless of status, in the national or local government, state colleges and universities,
including government-owned or controlled corporations, with original charters.

RULE III.

DEFINITION

Section 3. For the purpose of these Rules, the administrative offense of sexual harassment is an act, or a
series of acts, involving any unwelcome sexual advance, request or demand for a sexual favor, or other
verbal or physical behavior of a sexual nature, committed by a government employee or official in a
work-related, training or education related environment of the person complained of.

(a) Work related sexual harassment is committed under the following

circumstances:chanroblesvirtuallawlibrary

(1) submission to or rejection of the act or series of acts is used as a basis for any employment decision
(including, but not limited to, matters related to hiring, promotion, raise in salary, job security, benefits
and any other personnel action) affecting the applicant/employee; or

(2) the act or series of acts have the purpose or effect of interfering with the complainants work
performance, or creating an intimidating, hostile or offensive work environment; or

(3) the act or series of acts might reasonably be expected to cause discrimination, insecurity, discomfort,
offense or humiliation to a complainant who may be a co-employee, applicant, customer, or word of the
person complained of.

(b) Education or training-related sexual harassment is committed against one who is under the actual or
constructive care, custody or supervision of the offender, or against one whose education, training,
apprenticeship, internship or tutorship is directly or constructively entrusted to, or is provided by, the
offender, when:chanroblesvirtuallawlibrary
(1) submission to or rejection of the act or series of acts as a basis for any decision affecting the
complainant, including, but not limited to, the giving of a grade, the granting of honors or a scholarship,
the payment of a stipend or allowance, or the giving of any benefit, privilege or consideration.

(2) the act or series of acts have the purpose or effect of interfering with the performance, or creating
an intimidating, hostile or offensive academic environment of the complainant; or

(3) the act or series of acts might reasonably expected to cause discrimination, insecurity, discomfort,
offense or humiliation to a complainant who may be a trainee, apprentice, intern, tutee or ward of the
person complained of.

Section 4. Sexual harassment may take place:chanroblesvirtuallawlibrary

1. in the premises of the workplace or office or of the school or training institution;

2. in any place where the parties were found as a result of work or education or training responsibilities
or relations;

3. at work or education or training-related social functions;

4. while on official business outside the office or school or training institution or during work or school
or training-related travel;

5. at official conferences, fora, symposia or training sessions; or

6. by telephone, cellular phone, fax machine or electronic mail.

RULE IV.

FORMS OR SEXUAL HARASSMENT

Section 5. The following are illustrative forms of sexual harassment:chanroblesvirtuallawlibrary

(a) Physical

i. Malicious Touching;

ii. Overt sexual advances;

iii. Gestures with lewd insinuation.

(b) Verbal, such as but not limited to, requests or demands for sexual favors, and lurid remarks;

(c) Use of objects, pictures or graphics, letters or writing notes with sexual underpinnings;

(d) Other forms analogous to the forgoing.

RULE V.

PERSONS LIABLE FOR SEXUAL HARASSMENT

Section 6. Any government official or employee, regardless of sex, is liable for sexual harassment when
he/she:chanroblesvirtuallawlibrary

(a) directly participates in the execution of any act of sexual harassment as defined by these Rules;

(b) induces or directs another or others to commit sexual harassment as defined by these Rules;

(c) cooperates in the commission of sexual harassment by another through an act without which the
sexual harassment would not have been accomplished;

(d) cooperates in the commission of sexual harassment by another through previous or simultaneous
acts.

RULE VI.

COMMITTEE ON DECORUM AND INVESTIGATION OF SEXUAL HARASSMENT CASES

Section 7. A Committee on Decorum and Investigation shall be created in all national or local agencies of
the government, state colleges and universities, including government-owned or controlled
corporations with original charter. The Committee shall perform the following
functions:chanroblesvirtuallawlibrary

(a) Receive complaints of sexual harassment;

(b) Investigate sexual harassment complaints in accordance with the prescribed procedure;

(c) Submit a report of its findings with the corresponding recommendation to the disciplining authority
for decision;

(d) Lead in the conduct of discussions about sexual harassment within the agency or institution to
increase understanding and prevent incidents of sexual harassment;

Localized Committees on Decorum and Investigation established in the regional or field offices, as the
case may be, of the agency or institution shall have the same functions as stated above and shall submit
the report of investigation with its recommendation directly to the disciplining authority.

When a member of the Committee is the complainant or the person complained of in a sexual
harassment case, he/she shall be disqualified from being a member of the Committee.

Section 8. Composition. - In a work-related environment, a Committee on Decorum and Investigation

shall be composed of at least one (1) representative each from the management, the accredited union,
if any, the second level employees, and from the first level employees, duly selected by the unit
concerned.

In an educational or training institution, the Committee shall be composed of at least one (1)
representative from the administration, the trainers, teachers, instructors, professors or coaches, and
students or trainees, as the case may be, duly selected by the level concerned.
Section 9. The agency may formulate its own rules governing the term of office of its members which
should be more than two years, and other matters pertaining to the functions of the Committee not
otherwise provided in these Rules.

RULE VII.

PRE-FILING STANDARD OPERATING PROCEDURES IN ATTENDING TO VICTIMS OF SEXUAL HARASSMENT

Section 10. The Pre-filing Stage. The agency may adopt mechanisms to provide assistance to an alleged
victim of sexual harassment which may include counseling, referral to an agency offering professional
help, and advice on options available before the filing of the complaint.

RULE VIII.

STANDARD PROCEDURAL REQUIREMENTS

Section 11. The procedural rules provided hereunder are the standard requirements in handling a sexual
harassment case.

Section 12. Complaint.

(a) The complaint may be filed at any time with the disciplining authority of the office or agency, or with
the Committee on Decorum and Investigation. Upon receipt of the complaint by the disciplining
authority of the office or agency, the same shall be transmitted to the Committee on Decorum and
Investigation, if there is any. In the absence of a Committee on Decorum and Investigation, the head
office or agency shall immediately cause the creation of Committee on Decorum and Investigation in
accordance with the law and rules, and transmit the complaint to the Committee.

(b) The complaint must be in writing, signed and sworn to by the complainant. It shall contain the
following:chanroblesvirtuallawlibrary

1. the full name and address of the complainant;

2. the full name, address, and position of the respondent;

3. a brief statement of the relevant facts;

4. evidence, in support of the complainant, if any;

5. a certification of non-forum shopping.

In the absence of any one of the aforementioned requirements, the complaint shall be dismissed
without prejudice to its refiling.

Where the complaint is not under oath, the complainant shall be summoned by the Committee to swear
to the truth of the allegations in the complaint.

(c) Complaints sent by telegram, radiogram, electronic mail or similar means of communication shall be
considered non-filed unless the complainant shall comply with the requirements provided in Section
12(b) within ten (10) days from receipt of the notice for compliance.

(d) Withdrawal of the complaint at any stage of the proceedings shall not preclude the Committee from
proceeding with the investigation where there is obvious truth or merit to the allegations in the
complaint or where there is documentary or direct evidence that can prove the guilt of the person
complained of.

Section 13. Action on the Complaint. Upon receipt of a complaint that is sufficient in form and
substance, the Committee on Decorum and Investigation shall require the person complained of to
submit a Counter-Affidavit/Comment under oath within three (3) days from receipt of the notice,
furnishing a copy thereof to the complainant, otherwise the Counter-Affidavit/Comment shall be
considered as not filed.

Section 14. Preliminary Investigation. A preliminary investigation shall be conducted by the Committee
on Decorum and Investigation. The investigation involves the ex parte examination of documents
submitted by the complainant and the person complained of, as well as documents readily available
from other government offices.

During the preliminary investigation, the parties may submit affidavits and counter-affidavits.

Upon receipt of the counter-affidavit or comment under oath, the Committee on Decorum and
Investigation may now recommend whether a prima facie case exists to warrant the issuance of a formal
charge.

During preliminary investigation, proceedings before the Committee on Decorum and Investigation shall
be held under strict confidentiality.

Section 15. Duration of the Investigation. A preliminary investigation shall commence not later than
five (5) days from receipt of the complaint by the Committee on Decorum and Investigation and shall be
terminated within fifteen (15) working days thereafter.

Section 16. Investigation Report. Within five (5) working days from the termination of the preliminary
investigation, the Committee on Decorum and Investigation shall submit the Investigation Report and
the complete records of the case to the disciplining authority.

Section 17. Decision or Resolution After Preliminary Investigation. If a prima facie case is established
during the investigation, a formal charge shall be issued by the disciplining authority within three (3)
working days from receipt of the Investigation Report.

In the absence of a prima facie case, the complaint shall be dismissed within the same period.
Section 18. Formal Charge. After finding a prima facie case, the disciplining authority shall formally
charge the person complained of. The formal charge shall contain a specification of the charge(s), a
brief statement of material or relevant facts, accompanied by certified true copies of the documentary
evidence, if any, sworn statements covering the testimony of witnesses, a directive to answer the
charge(s) in writing under oath in not less than seventy-two hours from receipt thereof, an advice for
the respondent to indicate in his/her answer whether or not he/she elects a formal investigation of the
charge(s), and a notice that he/she is entitled to be assisted by a counsel of his/her choice.

If the respondent has submitted his/her comment and counter-affidavits during the preliminary
investigation, he/she shall be given the opportunity to submit additional evidence.

The Committee on Decorum and Investigation shall not entertain requests for clarification, bills of
particulars or motions to dismiss which are obviously designed to delay the administrative proceeding. If
any of these pleadings is filed by the respondent, the same shall be considered as part of his/her answer
which he/she may file within the remaining period for filing the answer.

Section 19. Answer. The answer which must be in writing and under oath, shall be specific and shall
contain material facts and applicable laws, if any, including documentary evidence, sworn statements
covering testimonies of witnesses, if there be any, in support of respondents case. If shall also include a
statement indicating whether he/she elects a formal investigation.

Section 20. Failure to File an Answer. If the respondent fails or refuses to file his/her answer to the
formal charge within seventy-two (72) hours from receipt thereof without justifiable cause, he/she shall
be considered to have waived his right thereto and formal investigation may commence.

Section 21. Preventive Suspension. Upon petition of the complainant or motu proprio upon the
recommendation of the Committee on Decorum and Investigation, at any time after the service of the
Formal Charge to the respondent, the proper disciplining authority may order the preventive suspension
of the respondent during the formal investigation, if there are reasons to believe that he/she is probably
guilty of the charges which would warrant his/her removal from the service.

An order of preventive suspension may be issued to temporarily remove the respondent from the scene
of his/her misfeasance or malfeasance and to preclude the possibility of his/her exerting undue
influence or pressure on the witnesses against him/her or tampering of documentary evidence on file
with this office.

Section 22. Duration of Preventive Suspension. - When the administrative case against the respondent
under preventive suspension is not finally decided by the disciplining authority within the period of
ninety (90) days after the date of his/her preventive suspension, unless otherwise provided by special
law, he/she shall be automatically reinstated into the service: Provided, that when the delay in the
disposition of the case is due to the fault, negligence or petition of the respondent, the period of delay
should not be included in the counting of the ninety (90) calendar days period of preventive suspension:
Provided, further, That should the respondent be on paternity/maternity leave, said preventive
suspension shall be deferred or interrupted until such time that said leave has been fully enjoyed.

Section 23. Remedies from the Order of Prevention Suspension. The respondent may file a motion for
reconsideration with the disciplining authority or may elevate the same to the Civil Service Commission
by way of an appeal within fifteen (15) days from receipt thereof.
Section 24. Conduct of Formal Investigation. Although the respondent does not request a formal
investigation, one shall nevertheless be conducted by the Committee on Decorum and Investigation if it
deems such investigation as necessary to decide the case judiciously.

The investigation shall be held not earlier than five (5) days nor later than ten (10) days from receipt of
the respondents answer. Said investigation shall be finished within thirty (30) days from the issuance of
the formal charge or the receipt of the answer unless the period is extended by the disciplining authority
in meritorious cases.

Section 25. Pre-hearing Conference. At the commencement of the formal investigation, the
Committee on Decorum and Investigation may conduct a pre-hearing conference for the parties to
appear, consider and agree on any of the following:chanroblesvirtuallawlibrary

a. stipulation of facts;

b. simplification of issues;

c. identification and marking of evidence of the parties;

d. waiver of objections to admissibility of evidence;

e. limiting the number of witnesses, and their names;

f. dates of subsequent hearings; and

g. such other matters as may aid in the prompt and just resolution of the case.

The parties may submit position paper/memoranda and submit the case for resolution based on the
result of the pre-hearing conference without any need for further hearing.

Section 26. Continuous Hearing Until Terminated; Postponement. Hearings hall be conducted on the
hearing dates set by the Committee on Decorum and investigation or as agreed upon during a pre-
hearing conference.

Where no pre-hearing conference is conducted, the parties, their counsels and witnesses, if any, shall be
given a notice of at least five (5) days before the first scheduled hearing specifying the time, date and
place of the said hearing and subsequent hearings. Thereafter, the schedule of hearings previously set
shall be strictly followed without further notice. A party shall be granted only three (3) postponements
upon oral or written requests. A further postponement may be granted only upon written request and
subject tot the discretion of the Committee on Decorum and investigation.

If the respondent fails to appear during the scheduled hearings despite due notice, the investigation
shall proceed ex-parte and the respondent is deemed to have waived his right to be present and to
submit evidence in his favor during those hearings.

Section 27. Preliminary Matters. At the start of the hearing, the Committee on Decorum and
Investigation shall note the appearances of the parties and shall proceed with the reception of evidence
for the complainant.

If the respondent appears without the aid of a counsel, he/she shall be deemed to have waived his/her
right to counsel.
Before taking the testimony of a witness, the Committee on Decorum and Investigation shall place
him/her under oath and then take his/her name, address, civil status, age, and place of employment.

Section 28. Appearance of Parties. Any person representing any of the parties before any hearing or
investigation shall manifest orally or in writing his/her appearance for either the respondent or
complainant, stating his/her full name and exact address where he/she can be served with notices and
other documents. Any pleading or appearance made without complying with the above stated
requirements shall not be recognized.

Section 29. Order of Hearing. Unless the Committee on Decorum and Investigation directs otherwise,
the order of hearing shall be as follows:chanroblesvirtuallawlibrary

a. The complainant shall present evidence in support of the charge;

b. The respondent shall then offer evidence in support of his/her defense;

c. The complainant may then offer rebuttal evidence, and the respondent, sur-rebuttal evidence.

Every witness may be examined in the following order:chanroblesvirtuallawlibrary

a. Direct examination by the proponent;

b. Cross-examination by the opponent;

c. Re-direct examination by the opponent;

d. Re-cross examination by the opponent.

A sworn statement of a witnesses, properly identified and affirmed by the witness before the
Committee on Decorum and Investigation shall constitute his/her direct testimony.

When the presentation of evidence has been concluded, the parties shall formally offer their evidence
either orally or in writing and thereafter objections thereto may also be made either orally or in writing.
Thereafter, both parties may be given time to submit their respective memorandum which in no case
shall be beyond five (5) days after the termination of the investigation. Failure to submit the
memorandum within the given period shall be considered a waiver thereof.

Section 30. Objections. All objections raised during the hearing shall be resolved by the Committee on
Decorum and Investigation. However, objections that cannot be ruled upon by the Committee shall be
noted with the information that the same shall be included in the memorandum of the concerned party
to be ruled upon by the proper disciplining authority.

The Committee on Decorum and Investigation shall accept all evidence deemed material and relevant to
the case. In case of doubt, the Committee on Decorum and Investigation shall allow the admission of
evidence subject to the objection interposed against its admission.

Section 31. Markings. All documentary evidence or exhibits shall be properly marked by letters (A, B, C,
etc.) if presented by the respondent. These shall form part of the complete records of the case.
Section 32. Request for Subpoena. If a party desires the attendance of a witness or the production of
documents of things, he/she shall make a request for the issuance of the necessary subpoena, at least
three (3) days before the scheduled hearing.

Section 33. Issuance of Subpoena. The Committee on Decorum and Investigation may issue subpoena
ad testificandum to compel the attendance of witnesses and subpoena duces tecum for the production
of documents or objects.

Section 34. Records of Proceedings. The proceedings of the formal investigation must be recorded
either through shorthand or stenotype or by any other method.

Section 35. Effect of the Pendency of an Administrative Case. The pendency of any administrative case
shall not disqualify the respondent for promotion or from claming maternity/paternity benefits. For this
purpose, an administrative case shall be construed as pending when the disciplining authority has issued
a formal charge.

Section 36. Formal Investigation Report. Within fifteen (15) days after the conclusion of the formal
investigation, a report containing a narration of the material facts established during the investigation,
the findings and the evidence supporting said findings, as well as the recommendations, shall be
submitted by the Committee on Decorum and Investigation to the disciplining authority. The complete
records of the case shall be attached to the Report of Investigation.

The complete records shall be systematically and chronologically arranged, paged, and securely bound
to prevent loss. A table of contents shall be prepared. Whoever is in-charge of the transmittal of the
complete records shall be held responsible for any loss or suppression of pages thereof.

Section 37. When Case is Decided. The disciplining authority shall render his decision on the case
within thirty (30) days from receipt of the Report on Investigation.

Section 38. Finality of Decisions. A decision rendered by heads of agencies where a penalty of
suspension for not more than thirty (30) days or a fine in an amount not exceeding thirty (30) days
salary is imposed, shall be final and executory. However, if the penalty imposed is suspension exceeding
thirty (30) days or a fine exceeding thirty (30) days salary, the same shall be final and executory after the
lapse of the reglementary period for filing a motion for reconsideration or an appeal and no such
pleading has been filed.

RULE IX.

REMEDIES AFTER A DECISION

Section 39. Filing of Motion for Reconsideration. The party adversely affected by the decision may file
a motion for reconsideration with the disciplining authority who rendered the decision within fifteen
(15) days from receipt thereof.
Section 40. When Deemed Filed. A motion for reconsideration shall be deemed filed on the date
stamped on the official copy by the proper receiving authority, and in case it was sent by mail, on the
date shown by the postmark on the envelope which shall be attached to the records of the case.

Section 41. Grounds for Motion for Reconsideration. The motion for reconsideration shall be based on
any of the following:chanroblesvirtuallawlibrary

a. New evidence has been discovered which materially affects the decision rendered; or

b. The decision is not supported by the evidence on record; or

c. Errors of law irregularities have been committed prejudicial to the interest of the movant.

Section 42. Limitation. Only one motion for reconsideration shall be entertained.

Section 43. Effect of Filing. The filing of a motion for reconsideration within the reglementary period of
fifteen (15) days shall stay the execution of the decision sought to be reconsidered.

Section 44. Filing of Appeals. Decisions of heads of departments, agencies, provinces, cities,
municipalities and other instrumentalities imposing a penalty exceeding thirty (30) days suspension or
fine in an amount exceeding thirty (30) days salary, may be appealed to the Commission Proper within a
period of fifteen (15) days from receipt thereof.

In case the decision rendered by a bureau or office head is appealable to the Commission, the same may
be initially appealed to the department head and finally to the Commission Proper. Pending appeal, the
same shall be executory except where the penalty is removal, in which case the same shall be executory
only after confirmation by the Secretary concerned.

A notice of appeal including the appeal memorandum shall be filed with the appellate authority, copy
furnished the disciplining office. The latter shall submit the records of the case, which shall be
systematically and chronologically arranged, paged and securely bound to prevent loss with its
comment, within fifteen (15) days, to the appellate authority.

Section 45. When Deemed Filed. An appeal sent by mail shall be deemed filed on the date shown by
the postmark on the envelope which shall be attached to the records of the case and in the case of
personal delivery, the date stamped thereon by the proper office.

Section 46. Appeal Fee. The appellant shall pay an appeal fee of Three Hundred Pesos (P300.00) and a
copy of the receipt thereof shall be attached to the appeal.

Section 47. Perfection of an Appeal. To perfect an appeal, the appellant shall within fifteen (15) days
from receipt of the decision submit the following:chanroblesvirtuallawlibrary

a. Notice of appeal which shall specifically state the date of the decision appealed from and the date of
receipt thereof;

b. Three (3) copies of appeal containing the grounds relied upon for the appeal, together with the
certified true copy of the decision, resolution or order appealed from, and certified copies of the
documents or evidence;

c. Proof of service of a copy of the appeal memorandum to the disciplining office;

d. Proof of payment of the appeal fee; and

e. A statement or certification of non-forum shopping.

Failure to comply with any of the above requirements within the reglementary period shall be construed
as failure to perfect an appeal and shall cause its dismissal.

Section 48. Effect of Filing. An appeal shall not stop the decision from being executory, and in case the
penalty is suspension or removal, the respondent shall considered as having been under preventive
suspension during the pendency of the appeal, in the event he wins the appeal.

Section 49. When Case is Remanded for Violation of Respondents Right to Due Process. If the case on
appeal with the Commission Proper is remanded to the proper disciplining authority for further
investigation, the said disciplining authority through the Committee on Decorum and Investigation shall
finish the investigation within three (3) calendar months from the date of receipt of the records from
the Commission, unless the investigation is delayed due to the fault, negligence or petition of the person
complained of, or an extension is granted by the Commission Proper in meritorious cases. The period of
delay shall not be included in the computation of the prescribed period.

Within fifteen (15) days from the submission of the investigation report to the disciplining authority, it
shall render its decision. If, at the end of said period, the disciplining authority fails to decide the case,
the Commission Proper shall vacate and set aside the appealed decision and declare the person
complained of exonerated of the charge. If the person complained of is under preventive suspension, he
shall be immediately reinstated.

The Civil Service Regional Office or the Office for Legal Affairs of the Civil Service Commission shall
evaluate requests for the extension of formal investigations and grant the same on meritorious grounds.
In disposing the requests, said office shall be guided by the principles of justice and fair play, provided,
that the extension shall not be for more than twenty (20) days.

For this purpose, the Regional Director shall monitor the implementation of the CSC Resolution
remanding the case to the proper disciplining authority for further investigation and submit a report to
the Commission Proper.

Section 50. Petition for Review. - A complainant may elevate the decision of the disciplining authority
dismissing a complaint for lack of a prima facie case before the Commission Proper through a Petition
for Review within fifteen (15) days from the receipt of said decision.

Section 51. Petition for Review with the Court of Appeals. A party may elevate a decision of the
Commission before the Court of Appeals by way of Petition for Review under Rule 43 of the 1997
Revised Rules of Court.

Section 52. Petition for Certiorari. When the disciplining authority has acted without or in excess of
jurisdiction, or with grave abuse of discretion amounting to lack or excess of jurisdiction and there is no
appeal, nor any plain, speedy and adequate remedy in the ordinary course of law, a person aggrieved
thereby may file a verified petition for certiorari in the proper court under Rule 65 of the Rules of Court.

RULE X.
CLASSIFICATION OF ACTS OF SEXUAL HARASSMENT

Section 53. Sexual harassment is classified as grave, less grave and light offenses.

A. Grave Offenses shall include, but are not limited to:chanroblesvirtuallawlibrary

1. unwanted touching of private parts of the body (genitalia, buttocks and breast);

2. sexual assault;

3. malicious touching;

4. requesting for sexual favor in exchange for employment, promotion, local or foreign travels, favorable
working conditions or assignments, a passing grade, the granting of honors or scholarship, or the grant
of benefits or payment of a stipend or allowance, and

5. other analogous cases.

B. Less Grave Offenses shall include, but are not limited to:chanroblesvirtuallawlibrary

1. unwanted touching or brushing against a victims body;

2. pinching not falling under grave offenses;

3. derogatory or degrading remarks or innuendoes directed toward the members of one sex, or ones
sexual orientation or used to describe a person;

4. verbal abuse with sexual overtones; and

5. other analogous cases.

C. The following shall be considered Light Offenses;

1. surreptitiously looking or staring a look of a persons private part or worn undergarments;

2. telling sexist/smutty jokes or sending these through text, electronic mail or other similar means,
causing embarrassment or offense and carried out after the offender has been advised that they are
offensive or embarrassing or, even without such advise, when they are by their nature clearly
embarrassing, offensive or vulgar;

3. malicious leering or ogling;

4. the display of sexually offensive pictures, materials or graffiti;

5. unwelcome inquiries or comments about a persons sex life;

6. unwelcome sexual flirtation, advances, propositions;

7. making offensive hand or body gestures at an employee;

8. persistent unwanted attention with sexual overtones;

9. unwelcome phone calls with sexual overtones causing discomfort, embarrassment, offense or insult
to the receiver; and

10. other analogous cases.

RULE XI.

ADMINISTRATIVE LIABILITIES

Section 54. The head of office who fails to act within fifteen (15) days from receipt of any complaint for
sexual harassment properly filed against any employee in that office shall be charged with Neglect of
Duty.

Section 55. Any person who is found guilty of sexual harassment shall, after the investigation, be meted
the penalty corresponding to the gravity and seriousness of the offense.

Section 56. The penalties for light, less grave, and grave offenses are as
follows:chanroblesvirtuallawlibrary

A. For light offenses:chanroblesvirtuallawlibrary

1st offense Reprimand

2nd offense Fine or suspension not exceeding thirty (30) days

3rd offense Dismissal

B. For less grave offenses:chanroblesvirtuallawlibrary

1st offense Fine or suspension of not less than thirty (30) days and not exceeding six (6) months

2nd offense Dismissal

C. For grave offenses: Dismissal

Section 57. If the respondent is found guilty of two or more charges or counts, the penalty to be
imposed should be that corresponding to the most serious charge or count and the rest shall be
considered as aggravating circumstances.

RULE XII.

DUTY OF THE AGENCIES OF THE GOVERNMENT

Section 58. All national and local government agencies, state colleges and universities, including
government-owned or controlled corporations with original charter, shall promulgate or modify their
own rules and regulations in conformity with these Rules, in consultation with their employees, within
six (6) months from the effectivity of this Resolution.

Section 59. All agencies of the government shall submit an authenticated copy of their rules and
regulations on sexual harassment to the Commission for approval within one (1) month from the date of
their promulgation. They shall likewise submit to the Commission a list of the members of their
Committee on Decorum and investigation immediately after its composition.

Section 60. All agencies of the government shall develop an education and training program for their
officials and employees and the members of their Committee on Decorum and Investigation to increase
understanding about sexual harassment, prevent its occurrence, and ensure proper investigation,
prosecution and resolution of sexual harassment cases.

Section 61. The head of office who after six (6) months from the effectivity of this Resolution, fails to
cause the promulgation or modification of the agencys rules and regulations on sexual harassment in
conformity with these Rules, shall be charged with Neglect of Duty.

RULE XIII.

DUTY OF THE COMMISSION

Section 62. The Commission, through its Field Offices, shall monitor the implementation of the directive
to all government agencies to promulgate or modify, as the case may be, their rules and regulations on
sexual harassment, as well as the conduct of the training programs as provided in Sections 59 and 60.

Section 63. In case a complaint alleging acts constituting sexual harassment as defined herein is filed
with the Commission, the same shall be remanded to the agency where the alleged offender is
employed for appropriate action in accordance with their own rules and regulations on sexual
harassment.

Section 64. The Civil Service Commission shall render technical assistance to agencies in the formulation
of their rules and regulations on sexual harassment and the development and implementation of an
intervention and prevention program on sexual harassment.

RULE XIV.

CASES DURING THE INTERVENING PERIOD

Section 65. During the period when the agency is still in the process of promulgating or modifying its
own rules and regulations on sexual harassment, a complaint alleging acts constituting sexual
harassment shall be administratively prosecuted, resolved and adjudicated based on these Rules.

RULE XV.

FORUM SHOPPING

Section 66. Under the same set of ultimate facts, the filing of a complaint based on an agencys rules and
regulations on sexual harassment shall preclude the filing of another administrative complaint under any
other law.

RULE XVI.

REPEALING CLAUSE

Section 67. Rules and regulations and other issuances or parts thereof inconsistent with the provisions
of these Rules are hereby repealed or modified accordingly.

RULE XVII.

EFFECTIVITY CLAUSE

Section 68. These Rules shall take effect fifteen (15) days after its publication in a newspaper of general
circulation.

Quezon City, May 21, 2001.

(Sgd.) KARINA CONSTATINO-DAVID

Chairman

(Sgd.) JOSE F. ERESTAIN, JR.

Commissioner

(Sgd.) J. VLADEMAR V. VALMORES

Commissioner
Attested by:chanroblesvirtuallawlibrary

(Sgd.) ARIEL G. RONQUILLO

Director III

----------------------------------

REPUBLIC ACT NO. 7796

AN ACT CREATING THE TECHNICAL EDUCATION AND SKILLS DEVELOPMENT AUTHORITY, PROVIDING FOR
ITS POWERS, STRUCTURE AND FOR OTHER PURPOSES.

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

SECTION 1. Title. - This Act shall be known as the "Technical Education and Skills Development Act of
1994" or the "TESDA Act of 1994".

SEC. 2. Declaration of Policy. - I t is hereby declared the policy of the State to provide relevant,
accessible, high quality and efficient technical education and skills development in support of the
development of high quality Filipino middle-level manpower responsive to and in accordance with
Philippine development goals and priorities.cralaw

The State shall encourage active participation of various concerned sectors, particularly private

enterprises, being direct participants in and immediate beneficiaries of a trained and skilled workforce,
in providing technical education and skills development opportunities.cralaw

SEC. 3. Statement of Goals and Objectives. - It is the goal and objective of this Act to:

Promote and strengthen the quality of technical education and skills development programs to attain
international competitiveness;

Focus technical education and skills development on meeting the changing demands for quality
middle-level manpower;

Encourage critical and creative thinking by disseminating the scientific and technical knowledge base
of middle-level manpower development programs;

Recognize and encourage the complementary roles of public and private institutions in technical
education and skills development and training systems; and
 Inculcate desirable values through the development of moral character with emphasis on work ethic,
self-discipline, self-reliance and nationalism.

SEC. 4. Definition of Terms. - As used in this Act:

"Skill" shall mean the acquired and practiced ability to carry out a task or job;

"Skills Development" shall mean the process through which learners and workers are systematically
provided with learning opportunities to acquire or upgrade, or both, their ability, knowledge and
behavior pattern required as qualifications for a job or range of jobs in a given occupational area;

"Technical Education" shall refer to the education process designed at post-secondary and lower
tertiary levels, officially recognized as non-degree programs aimed at preparing technicians, para-
professionals and other categories of middle-level workers by providing them with a broad range of
general education, theoretical, scientific and technological studies, and related job skills training;

"Trade" shall mean any group of interrelated jobs or any occupation which is traditionally or officially
recognized as craft or artisan in nature requiring specific qualifications that can be acquired through
work experience and/or training;

"Middle-Level Manpower" refers to those:

1.who have acquired practical skills and knowledge through formal or non-formal education and
training equivalent to at least a secondary education but preferably at post-secondary education with a
corresponding degree of diploma; or

2.skilled workers who have become highly competent in their trade or craft as attested by industry;

"Private Enterprises" refers to an economic system under which property of all kinds can be privately
owned and in which individuals, alone or in association with another, can embark on a business activity.
This includes industrial, agricultural, or agro-industrial establishments engaged in the production,
manufacturing, processing, repacking or assembly of goods including service-oriented enterprises;
 "Trainers" shall mean persons who direct the practice of skills towards immediate improvement in
some task;

"Trainors/trainers" shall mean persons who provide training to trainers aimed at developing the
latter's capacities for imparting attitudes, knowledge, skills and behavior patters required for specific
jobs, tasks, occupations or group of related occupations.

"Trainees" shall mean persons who are participants in a vocational, administrative or technical training
program for the purpose of acquiring and developing job-related skills;

"Apprenticeship" training within employment with compulsory related theoretical instruction involving
a contract between an apprentice and an employer on an approved apprenticeable occupation;

"Apprentice" is a person undergoing training for an approved apprenticeable occupation during an

apprenticeship agreement;

"Apprenticeship Agreement" is a contract wherein a prospective employer binds himself to train the
apprentice who in turn accepts the terms of training for a recognized apprenticeable occupation
emphasizing the rights, duties and responsibilities of each party;

"Apprenticeable Occupation" is an occupation officially endorsed by a tripartite body and approved for
apprenticeable by the Authority;

"Learners" refers to persons hired as trainees in semi-skilled and other industrial occupations which
are non-apprenticeable. Learnership programs must be approved by the Authority;

"User-Led" or "Market-Driven Strategy" refers to a strategy which promotes strengthened linkages

between educational/training institutions and industry to ensure that appropriate skills and knowledge
are provided by the educational system;

"Dual System/Training" refers to a delivery system of quality technical and vocational education which
requires training to be carried out alternately in two venues: in-school and in the production plant. In-
school training provides the trainee the theoretical foundation, basic training, guidance and human
formation, while in-plant training develops his skills and proficiency in actual work conditions as it
continues to inculcate personal discipline and work values;

"Levy Grant System" refers to a legal contribution from participating employers who would be
beneficiaries of the program (often as a percentage of the payroll) which is subsequently turned over or
rebated to enterprises offering employee training programs.cralaw

SEC. 5. Technical Education and Skills Development Authority; Creation. - To implement the policy

declared in this Act, there is hereby created a Technical Education and Skills Development Authority
(TESDA), hereinafter referred to as the Authority, which shall replace and absorb the National
Manpower and Youth Council (NMYC), the Bureau of Technical and Vocational Education (BTVE) and
the personnel and functions pertaining to technical-vocational education in the regional offices of the
Department of Education, Culture and Sports (DECS) and the apprenticeship program of the Bureau of
Local Employment of the Department of Labor and Employment.cralaw

SEC. 6. Composition of the Authority. - The Authority shall be composed of the TESDA Board and the
TESDA Secretariat.cralaw

SEC. 7. Composition of the TESDA Board. - The TESDA Board shall be composed of the following:

The Secretary of Labor and Employment

Chairperson

Secretary of Education, Culture and Sports

Co-Chairperson

Secretary of Trade and Industry

Co-Chairperson

Secretary of Agriculture Member

Secretary of Interior and Local Government

Member

Director-General of the TESDA Secretariat

Member

In addition, the President of the Philippines shall appoint the following members from the private
sector:

two (2) representatives, from the employer/industry organization, one of whom shall be a woman; three
(3) representatives, from the labor sector, one of whom shall be a woman; and two (2) representatives
of the national associations of private technical-vocational education and training institutions, one of
whom shall be a women. As soon as all the members of the private sector are appointed, they shall so
organized themselves that the term of office of one-third (1/3) of their number shall expire every year.
The member from the private sector appointed thereafter to fill vacancies caused by expiration of terms
shall hold office for three (3) years.cralaw

The President of the Philippines may, however, revise the membership of the TESDA Board, whenever
the President deems it necessary for the effective performance of the Board's functions through an

administrative order.cralaw

The TESDA Board shall meet at least twice a year, or as frequently as may be deemed necessary by

its Chairperson. In the absence of the Chairperson, a Co-Chairperson shall preside. In case any member
of the Board representing the Government cannot attend the meeting, he or she shall be regularly
represented by an undersecretary or deputy-director general, as the case may be, to be designated by
such member for the purpose.cralaw

The benefits, privileges and emoluments of the Board shall be consistent with existing laws and
rules.cralaw

SEC. 8. Powers and Functions of the Board. - The Authority shall primarily be responsible for

formulating, continuing, coordinated and fully integrated technical education and skills development
policies, plans and programs taking into consideration the following:

The State policy declared herein of giving new direction and thrusts to efforts in developing the quality
of Filipino human resource through technical education and skills development;

The implementation of the above-mentioned policy requires the coordination and operation of
policies, plans, and programs of different concerned sectors of Philippine society;

Equal participation of representatives of industry groups, trade associations, employers, workers and
government shall be made the rule in order to ensure that urgent needs and recommendations are
readily addressed; and

Improved linkages between industry, labor and government shall be given priority in the formulation
of any national-level plan.

The Board, shall have the following powers:

 1. promulgate, after due consultation with industry groups, trade associations, employers, workers,
policies, plans, programs and guidelines as may be necessary for the effective implementation of this
Act;

2. organize and constitute various standing committees, subsidiary groups, or technical working
groups for efficient integration, coordination and monitoring technical education and skills development
programs at the national, regional, and local levels;

3. enter into, make, execute, perform and carry-out domestic and foreign contracts subject to
existing laws, rules and regulations.

4. restructure the entire sub-sector consisting of all institutions and programs involved in the
promotion and development of middle-level manpower through upgrading, merger and/or phase-out
following a user-led strategy;

5. approve trade skills standards and trade tests as established and conducted by private industries;

6. establish and administer a system of accreditation of both public and private institutions;

7. establish, develop and support institutions' trainors' training and/or programs;

8. lend support and encourage increasing utilization of the dual training system as provided for by
Republic Act. No. 7686;

9. exact reasonable fees and charges for such tests and trainings conducted and retain such earnings
for its own use, subject to guidelines promulgated by the Authority;

10. allocate resources, based on the Secretariat's recommendations for the programs and subjects it
shall undertake pursuant to approved National Technical Education and Skills Development Plan;

11. determine and approve systematic funding schemes such as the Levy and Grant scheme for
technical education and skills development purposes;
 12. create, when deemed necessary, an Advisory Committee which shall provide expert and technical
advice to the Board to be chosen from the academe and the private sector: Provided, That in case the
Advisory Committee is created, the Board is hereby authorized to set aside a portion of its appropriation
for its operation; and

13. perform such other duties and functions necessary to carry out the provisions of this Act
consistent with the purposes of the creation of TESDA.cralaw

SEC. 9. Power to Review and Recommend Action. - The Authority shall review and recommend action

to concerned authorities on proposed technical assistance programs and grants-in-aid for technical
education or skills development, or both, including those which may be entered into between the
Government of the Philippines and other nations, including international and foreign organizations, both
here and abroad.cralaw

SEC. 10. The TESDA Secretariat. - There is hereby created a Technical Education and Skills

Development Authority Secretariat which shall have the following functions and responsibilities:

To establish and maintain a planning process and formulate a national technical education and skills
development plan in which the member-agencies and other concerned entities of the Authority at
various levels participate;

To provide analytical inputs to policy decision-making of the Authority on allocation of resources and
institutional roles and responsibilities as shall be embodied in annual agencies technical education and
skills development plans, in accordance with the manpower plan for middle-level skilled worker as
approved by the Authority;

To recommend measures, and implement the same upon approval by the Authority, for the effective
and efficient implementation of the national technical education and skills development plan;

To propose to the Authority the specific allocation of resources for the programs and projects it shall
undertake pursuant to approved national technical education and skills development plan;

To submit to the Authority periodic reports on the progress and accomplishment of work programs of
implementation of plans and policies for technical education and skills development;

To prepare for approval by the Authority an annual report to the President on technical education and
skills development;
 To implement and administer the apprenticeship program as provided for in Section 18 of his Act;

To prepare and implement upon approval by the Authority a program for the training of trainers,
supervisors, planners and managers as provided for in Section 23 of this Act;

To enter into agreement to implement approved plans and programs and perform activities as shall
implement the declared policy of this Act; and to perform such other functions and duties as may be
assigned by the Board.cralaw

SEC. 11. Director-General. - The TESDA Secretariat shall be headed by a Director-General, who shall

likewise be a member of the TESDA Board. The Director-General shall be appointed by the President of
the Philippines and shall enjoy the benefits, privileges and emoluments equivalent to the rank of
Undersecretary.cralaw

As Chief Executive Officer of the TESDA Secretariat, the Director-General shall exercise general
supervision and control over its technical and administrative personnel.cralaw

SEC. 12. Deputy Directors-General. - The Director-General shall be assisted by two (2) Deputy Directors-
General to be appointed by the President of the Philippines on recommendation of the TESDA Board.
One to be responsible for Vocational and Technical Education and Training and one to be responsible
for Policies and Planning.cralaw

The Deputy Directors-General shall enjoy the benefits, privileges and emoluments equivalent to the rank
of Assistant Secretary.cralaw

SEC. 13. Chief of Services for Administration. - The Director-General shall also be assisted by a Chief of
Services for Administration who shall be a Career Civil Service Official to be appointed by the TESDA
Board.cralaw

SEC. 14. Structural Organization and Personnel. - The TESDA Secretariat, in addition to the offices of the
Director-General, Deputy Director-General and Chief of Services for Administration shall be

composed of the following offices to be headed by an Executive Director to be appointed by the

Director-General and shall have the rank and emoluments of Director IV.cralaw

Planning Office (PO) - The Planning Office shall be under the Office of the Deputy Director-General
and shall have the following functions:

1. To design and establish planning processes and methodologies which will particularly enhance the
efficiency of resource allocation decisions within the technical education and skills development sector;
 2. To lead in the preparation and periodic updating of a national plan for technical education and
skills development which shall become the basis for resource allocation decisions within the sector;

3. To conduct researchers, studies and develop information systems for effective and efficient
planning and policy making within the sector;

4. To develop and implement programs and projects aimed at building up planning capabilities of
various institutions within the sector; and

5. To perform such other powers and functions as may be authorized by the Authority.

Skills Standards and Certification Office (SSCO) - The Skills Standards and Certification Office shall be
under the office of the Deputy Director-General and shall have the following functions:

1. To develop and establish a national system of skills standardization, testing and certification in the
country;

2. To design, innovate and adopt processes and methodologies whereby industry groups and
workers' guilds take note on progressively the responsibility of setting skills standards for identified
occupational areas, and the local government units actively participate in promoting skills standards,
testing and certification;

3. To establish and implement a system of accrediting private enterprises, workers' associations and
guilds and public institutions to serve as skills testing venues;

4. To conduct research and development on various occupational areas in order to recommend

policies, rules and regulations for effective and efficient skills standardization, testing and certification
system in the country; and

5. To perform such other duties and functions as may be authorized.

 National Institute for Technical Vocational and Education Training (NITVET) - The National Institute for
Technical Vocational and Education Training to be under the office of the Deputy Director-General and
shall have the following functions:

1. To serve as the research and development arm of the government in the field of the technical-
vocational education and training;

2. To develop curricula and program standards for various technical-vocational education and training
areas;

3. To develop and implement an integrated program for continuing development of trainors,

teachers and instructors within the technical education and skills development sector;

4. To develop programs and project which will build up institutional capabilities within the sector; and

5. To perform such other powers and functions as may be authorized.

Office of Formal Technical Vocational Education and Training (OFTVET) - The Office of Formal Technical
Vocational Education and Training to be under the office of the Deputy Director-General and shall have
the following functions:

1. To provide policies, measures and guidelines for effective and efficient administration of formal
technical-vocational education and training programs implemented by various institutions in the
country;

2. To establish and maintain a system for accrediting, coordinating, integrating, monitoring and
evaluating the different formal technical-vocational education and training programs vis--vis the
approved national technical education and skills development plan;

3. To establish and maintain a network of institutions engaged in institutionalized technical-

vocational education and training, particularly with local government units; and

4. To perform such other duties and functions as may be authorized.

 Office of the Non-Formal Technical-Vocational Education and Training (ONFTVET) - The Office of the
Non-Formal Technical-Vocational Education and Training to be under the office of the Deputy Director-
General and shall have the following functions:

1. To provide direction, policies and guidelines for effective implementation of non-formal

community-based technical-vocational education and training;

2. To accredit, coordinate, monitor and evaluate various non-formal technical-vocational education

and training programs implemented by various institutions particularly, by local government units;

3. To establish and maintain a network of institutions including local government units, non-
government organizations implementing non-formal, community-based technical-vocational education
and training;

4. To perform such other powers and functions as may be authorized.

Office of Apprenticeship (OA) - The Office of Apprenticeship shall be under the office of the Deputy
Director-General and shall have the following functions:

1. To provide direction, policies and guidelines on the implementation of the apprenticeship system;

2. To accredit, coordinate, monitor and evaluate all apprenticeship schemes and program
implemented by various institutions and enterprises;

3. To establish a network of institutions and enterprises conducting apprenticeship schemes and

programs;

4. To perform such other powers and functions as may be authorized.

Regional TESDA Offices - The Regional TESDA Offices shall be headed by Regional Directors with the
rank and emoluments of Director IV to be appointed by the President. The Regional TESDA Offices shall
be under the direct control of the Director-General and shall have the following functions:
 1. To serve as Secretariat to Regional Technical Education Skills Development (TESDA) Committee;

2. To provide effective supervision, coordination and integration of technical education and skills
development programs, projects and related activities in their respective jurisdictions;

3. To develop and recommend TESDA programs for regional and local-level implementation within
the policies set by the Authority.

4. To perform such other duties and functions as may be deemed necessary.cralaw

SEC. 15. The Provincial TESDA Offices. - The Provincial Offices shall be headed by Skill Development
Officers who shall have the rank and emoluments of a Director III.cralaw

The Provincial TESDA Offices shall be under the direct control of the Director-General and shall have the
following functions:

1. To serve as Secretariat to Provincial TESDA Committees;

2. To provide technical assistance particularly to local government units for effective supervisions,
coordination, integration and monitoring of technical-vocational education and training programs
within their localities;

3. To review and recommend TESDA Programs for implementation within their localities; and

4. To perform such other duties and functions as may be authorized. Furthermore, the TESDA
Secretariat maybe further composed by such offices as may be deemed necessary by the Authority. The
Director-General shall appoint such personnel necessary to carry out the objectives, policies and
functions of the Authority subject to civil service laws, rules and regulations.cralaw

SEC. 16. Compliance with the Salaries Standardization Law. - The compensation and emoluments of the
officials and employees of the Authority shall be in accordance with the salary standardization law and
other applicable laws under the national compensation and classification plan.cralaw

SEC. 17. Consultants and Technical Assistance, Publication and Research. - In pursuing its objectives, the
Authority is hereby authorized to set aside a portion of its appropriation for the hiring of services of
qualified consultants, and private organizations for research work and publication in the field of
technical education and skills development. It shall avail itself of the services of other agencies of the
Government as may be required.cralaw
SEC. 18. Transfer of the Apprenticeship Program. - The Apprenticeship Program of the Bureau of Local

Employment of the Department of Labor and Employment shall be transferred to the Authority which
shall implement and administer said program in accordance with existing laws, rules and
regulations.cralaw

SEC. 19. Technical Education and Skills Development Committees. - The Authority shall establish
Technical Education and Skills Development Committees at the regional and local levels to coordinate
and monitor the delivery of all skills development activities by the public and private sectors. These
committees shall likewise serve as the Technical Education and Skills Development Committees of the
Regional and local development councils. The compositions of the Technical Education and Skills
development Committees shall be determined by the Director-General subject to the guidelines to be

promulgated by the Authority.cralaw

SEC. 20. Skills Development Centers. - The Authority shall strengthen the network of national, regional
and local skills training centers for the purpose of promoting skills development. This network shall
include skills training centers in vocational and technical schools, technical institutes, polytechnic
colleges, and all other duly accredited public and private dual system educational institutions. The
technical education and skills development centers shall be administered and operated under such rules
and regulations as may be established by the Authority in accordance with the National Technical
Education and Skills Development Plan.cralaw

SEC. 21. Formulation of a Comprehensive Development Plan for Middle-Level Manpower. - The
Authority shall formulate a comprehensive development plan for middle-level manpower based on a
national employment plan or policies for the optimum allocation, development and utilization of skilled
workers for employment entrepreneurship and technology development for economic and social
growth. This plan shall after adoption by the Authority be updated periodically and submitted to the
President of the Philippines for approval. Thereafter, it shall be the plan for the technical education and
skills development for the entire country within the framework of the National Development Plan. The
Authority shall direct the TESDA Secretariat to call on its member-agencies, the private sector and the
academe to assist in this effort. The comprehensive plan shall provide for a reformed industry-based
training program including apprenticeship, dual training system and other similar schemes intended to:

Promote maximum protection and welfare of the worker-trainee;

Improve the quality and relevance and social accountability of technical education and skills
development;

Accelerate the employment-generation effort of the government; and

Expand the range of opportunities for upward social mobility of the school-going population beyond
the traditional higher levels of formal education. All government and non-government agencies
receiving financial and technical assistance from the government shall be required to formulate their
respective annual agency technical education and skills development plan in line with the national
technical education and skills development plan. The budget to support such plans shall be subject to
review and endorsement by the Authority to the Department of Budget and Management. The
Authority shall evaluate the efficiency and effectiveness of agencies skills development program and
schemes to make them conform with the quantitative and qualitative objectives of the national
technical education and skills development plan.cralaw

SEC. 22. Establishment and Administration of National Trade Skills Standards. - There shall be national
occupational skills standards to be established by TESDA-accredited industry committees. The Authority
shall develop and implement a certification and accreditation program in which private industry groups

and trade associations are accredited to conduct approved trade tests, and the local government units
to promote such trade testing activities in their respective areas in accordance with the guidelines to be
set by the Authority. The Secretary of Labor and Employment shall determine the occupational trades
for mandatory certification. All certificates relating to the national trade skills testing and certification
system shall be issued by the Authority through the TESDA Secretariat.cralaw

SEC. 23. Administration of Training Programs. - The Authority shall design and administer training
programs and schemes the will develop the capabilities of public and private institutions to provide
quality and cost-effective technical education and skills development and related opportunities. Such
training programs and schemes shall include teacher's trainors' training, skills training for entrepreneur
development and technology development, cost-effective training in occupational trades and related
fields of employment, and value development as an integral component of all skills training
programs.cralaw

SEC. 24. Assistance to Employers and Organizations. - The Authority shall assist any employer or
organization engaged in skills training schemes designed to attain its objectives under rules and
regulations which the Authority shall establish for this purpose.cralaw

SEC. 25. Coordination of All Skills Training Schemes. - In order to integrate the national skills
development efforts, all technical education and skills training schemes as provided for in this Act shall
be coordinated with the Authority particularly those having to do with the setting of trade skills
standards. For this purpose, existing technical education and skills training programs in the Government
and in the private sector, specifically those wholly or partly financed with government funds, shall be
reported to the Authority which shall assess and evaluate such programs to ensure their efficiency and
effectiveness.cralaw

SEC. 26. Industry Boards. - The Authority shall establish effective and efficient institutional

arrangements with industry boards and such other bodies or associations to provide direct participation
of employers and workers in the design and implementation of skills development schemes, trade skills
standardization and certification and such other functions in the fulfillment of the Authority's
objectives.cralaw

SEC. 27. Incentives Schemes. - The Authority shall develop and administer appropriate incentive

schemes to encourage government and private industries and institutions to provide high-quality
technical education and skills development opportunities.cralaw
SEC. 28. Skills Development Opportunities. - The Authority shall design and implement an effective and
efficient delivery system for quality technical education and skills development opportunities
particularly in disadvantaged sectors, with new tools of wealth creation and with the capability to take
on higher value-added gainful activities and to share equitably in productivity gains.cralaw

SEC. 29. Devolution of TESDA's Training Function to Local Governments. - In establishing the delivery
system provided for in the preceding Section, the Authority shall formulate, implement and finance a
specific plan to develop the capability of local government units to assume ultimately the responsibility
for effectively providing community-based technical education and skills development opportunities:
Provided, however, That there shall be formulated and implemented, an effective and timely retraining
of TESDA personnel that would be affected by the devolution to ensure their being retained if the
concerned local government units would not be able to absorb them.cralaw

SEC. 30. Skills Olympics. - To promote quality skills development in the country and with the view of
participating in international skills competitions, the Authority, with the active participation of private
industries, shall organize and conduct annual National Skills Olympics. The Authority, through the

TESDA Secretariat, shall promulgate the necessary rules and guidelines for the effective and efficient
conduct of Annual National Skills Olympics and for the country's participation in internationals skills

olympics.cralaw

SEC. 31. The TESDA Development Fund. - A TESDA Development Fund is hereby established, to be

managed/administered by the Authority, the income from which shall be utilized exclusively in awarding
of grants and providing assistance to training institutions, industries, local government units for
upgrading their capabilities and to develop and implement training and training-related activities. The
contribution to the fund shall be the following:

A one-time lump sum appropriation from the National Government;

An annual contribution from the Overseas Workers Welfare Administration Fund, the amount of which
should be part of the study on financing in conjunction with letter (D) of Section 34;

Donations, grants, endowments, and other bequests or gifts, and any other income generated by the
Authority.

The TESDA Board shall be the administrator of the fund, and as such, shall formulate the
necessary implementing guidelines for the management of the fund, subject to the following:

a) unless otherwise stipulated by the private donor, only earnings of private contributions shall be
used; and b) no part of the seed capital of the fund, including earnings, thereof, shall be used to
underwrite expenses for administration.
 The Board shall appoint a reputable government-accredited investment institutions as fund
manager, subject to guidelines promulgated by the Board.

SEC 32. Scholarship Grants. - The authority shall adopt a system of allocation and funding of

scholarship grants which shall be responsive to the technical education and skills development needs of
the different regions in the country.cralaw

SEC 33. TESDA Budget. - The amount necessary to finance the initial implementation of this Act shall be
charged against the existing appropriations of the NMYC and the BTVE. Thereafter, such funds as may
be necessary for the continued implementation of this Act shall be included in the annual General
Appropriations Act.cralaw

SEC 34. Transitory Provisions. - a) Within two (2) months after the approval of this Act, the President
shall, in consultation with the Secretary of Labor and Employment and the Secretary of Education,
Culture and Sports, appoint the private sector representatives of the TESDA Board.cralaw

Within (3) months after the appointment of the private sector representatives, the President shall,
upon the recommendation of the Board, appoint the General-Director.

Within (4) months after the appointment of the Director General, the Board shall convene to
determine the organizational structure and staffing pattern of the Authority.

Within (1) year after the organization of the Authority, the Board shall commission an expert group on
funding schemes for the TESDA Development Fund, as provided in Section 31, the results of which shall
be used as the basis for appropriate action by the Board.

The personnel of the existing National Manpower and Youth Council (NMYC) of the Department of
Labor and Employment and the Bureau of Technical and Vocational Education (BTVE) of the Department
of Education, Culture and Sports, shall, in a holdover capacity, continue to perform their respective
duties and responsibilities and receive their corresponding salaries and benefits until such time when
the organizational structure and staffing pattern of the Authority shall have been approved by the
Board: Provide, That the preparation and approval of the said new organizational structure and staffing
pattern shall, as far as practicable, respect and ensure the security of tenure and seniority rights
affected government employees. Those personnel whose positions are not included in the new staffing
pattern approved by the Board or who are not reappointed or who choose to be separated as a result of
the reorganization shall be paid their separation or retirement benefits under existing laws.cralaw

SEC 35. Automatic review. - Every five (5) years, after the affectivity of this Act, an independent review
panel composed of three (3) persons appointed by the President shall review the performance of the
authority and shall make recommendations, based on its findings to the President shall review the
performance of the Authority and shall make the recommendations, based on the findings to the
President and to both Houses of Congress.cralaw

SEC. 36. Implementing Rules and Guidelines. - The TESDA board shall issue, within a period of ninety
(90) days after the affectivity of this Act, the rules and regulations for the effective implementation of
this Act. The TESDA Board shall submit tot he committees on Education, Arts and Culture of both Houses
of Congress copies of the implementing rules and guidelines within (30) days after its promulgation. Any
violation of this Section shall render the official/s concerned liable under R. A. No. 6713, otherwise
knownas the "Code of Conduct and Ethical Standards for Public Officials and Employees" and other
existing administrative and/or criminal laws.cralaw

SEC. 37. Repealing Clause. - All laws, presidential decrees, executive orders, presidential proclamations,
rules and regulations or part thereof contrary to or inconsistent with this Act are hereby repealed or
modified accordingly.cralaw

SEC. 38. Separability Clause. - If any provision of this Act is declared unconstitutional, the same shall not
affect the validity and effectivity of the other provisions hereof.

SEC. 39. Effectivity. - This Act shall take effect fifteen (15) days after its complete publication in two
(2)newspapers of general circulation.

Approved:

(SGD.) JOSE DE VENECIA, JR.

Speaker of the HouseOf Representatives

(SGD.) EDGARDO J. ANGARA

President of the Senate

This Act, which is a consolidation of Senate Bill No. 1283 and House Bill No. 12194, was finally passed by
the Senate and the House of Representatives on August 23, 1994.

(SGD.) CAMILO L. SABIO

Secretary General

House of Representatives
(SGD.) EDGARDO E. TUMANGAN

Secretary of the Senate

Approved: August 25, 1994

FIDEL V. RAMOS

President of the Philippines

--------------------------------------

RULES AND REGULATIONS IMPLEMENTING

THE TESDA ACT OF 1994

Republic Act No. 7796

Pursuant to Section 36 of the TESDA Act of 1994, the TESDA Board hereby promulgates the
Implementing Rules and Regulations of the Act, as follows:

RULE I

POLICIES AND OBJECTIVES

SECTION 1. Title. - These Rules shall be known and cited as the Rules and Regulations Implementing

the TESDA Act of 1994.

SEC. 2. Declaration of Policy. - It is the declared policy of the State to provide relevant, accessible, high
quality and efficient technical education and skills development in support of the development of high
quality Filipino middle-level manpower responsive to and in accordance with Philippine development
goals and priorities.

Private Sector Participation. - The State shall encourage the active participation of various concerned
sectors, particularly private enterprises, being direct participants in and immediate beneficiaries of a
trained and skilled workforce, in providing technical education and skills development opportunities.

SEC. 3. Statement of Goals and Objectives. - The goals and objectives of TESDA Act of 1994 (hereinafter
cited as Act) are as follows:

International Competitiveness. - To promote and strengthen the quality of technical education and
skills development programs to attain international competitiveness;

Quality Middle-Level Manpower. - To focus technical education and skills development on meeting the
changing demands for quality middle-level manpower.

Scientific and Technical Knowledge Base. - To encourage critical and creative thinking by disseminating
the scientific and technical knowledge base of middle-level manpower development programs;

Roles of Public and Private Institutions. - To recognize and encourage the complementary roles of
public and private institutions in technical education and skills development and training systems; and

Desirable Values. - To inculcate desirable values through the development of moral character, with
emphasis on work ethic, self-discipline, self-reliance and nationalism.

RULE II

TECHNICAL EDUCATION AND SKILLS DEVELOPMENT PLAN

SEC. 1. Formulation of a Comprehensive Development Plan for Middle-Level Manpower. - The Technical
Education and Skills Development Authority (TESDA) shall formulate a comprehensive development plan
for middle-level manpower based on a national employment plan or policies for the optimum allocation,
development and utilization of skilled workers for employment, entrepreneurship and technology
development for economic and social growth, to be known as the National Technical Education and
Skills Development Plan.

SEC. 2. President's Approval. - This plan, after adoption by the TESDA Board, shall be updated
periodically and submitted to the President of the Philippines for approval. Thereafter, it shall be the
plan for technical education and skills development for the entire country within the framework of the
National Development Plan.

SEC. 3. Assistance of Private Sector and the Academe. - The TESDA Board shall direct the TESDA
Secretariat to call on its member-agencies, the private sector and the academe to assist in the
formulation of the plan.

SEC. 4. Reformed Industry-Based Training Program. - The comprehensive plan shall provide for a
reformed industry-based training program including apprenticeship, dual training system and other
similar schemes intended to:

provide maximum protection and welfare of the worker-trainee;

improve the quality and relevance and social accountability of technical education and skills
development;

accelerate the employment-generation efforts of the government; and

expand the range of opportunities for upward social mobility of the school-going population beyond
the traditional higher levels of formal education.

SEC. 5. Review and Endorsement of Agencies' Budgets. - All government and non-government agencies
receiving financial and technical assistance from the government shall be required to formulate their
respective annual agency technical education and skills development plans in line with the national
technical education and skills development plan. The budget to support such plans shall be subject to
review and endorsement to the Department of Budget and Management by the TESDA.

SEC. 6. TESDA's Evaluation of Agencies' Programs. - The TESDA shall evaluate the efficiency and
effectiveness of the agencies' skills development programs and schemes to make them conform with
the quantitative and qualitative objectives of the national technical education and skills development
plan.

SEC. 7. Submission of Reports of TESDA. - In such form as the TESDA may prescribe, the agencies
mentioned in Section 5 hereof shall submit reports on how they have implemented their technical
education and skills development plans annually to the TESDA or as often as it may require.

RULE III

TESDA BOARD

SEC. 1. Creation of the Technical Education and Skills Development Authority. - To implement the policy
declared in the Act, a Technical Education and Skills Development Authority is created, (hereinafter
referred to as the Authority or TESDA). The Authority shall be composed of the TESDA Board as its
governing body, and the TESDA Secretariat as its executive arm. The TESDA shall replace and absorb the
National Manpower and Youth Council (NMYC), the Bureau of Technical and Vocational Education
(BTVE) and the personnel and functions pertaining to technical- vocational education in the regional
offices of the Department of Education, Culture and Sports (DECS), and the apprenticeship program of
the Bureau of Local Employment of the Department of Labor and Employment.

SEC. 2. Composition of the TESDA Board.- The TESDA Board is composed of the following:

The Secretary of Labor and Employment

Chairperson

Secretary of Education, Culture and Sports

Co-Chairperson

Secretary of Trade and Industry

Co-Chairperson

Secretary of Agriculture Member

Secretary of Interior and Local Government

Member

Director General of the TESDA Secretariat

Member

Private sector representatives appointed by the President:

Two (2) representatives from the employer/industry organization, one of whom shall be a woman;

Three (3) representatives from the labor sector, one of whom shall be a woman; and

To (2) representatives of national associations of private technical-vocational education and training

institutions, one of whom shall be a woman.

SEC. 3. Term of Office. - As soon as all the members of the private sector are appointed, they shall so
organize themselves that the term of office of one-third (1/3) of their number shall expire every year.
The members from the private sector appointed thereafter to fill vacancies caused by expiration of
terms shall hold office for three (3) years.

SEC. 4. Change of Membership. - The President of the Philippines may revise the membership of the
TESDA Board through an administrative order whenever the President deems it necessary for the
effective performance of the Board's functions.

SEC. 5. Meetings, Emoluments. - The TESDA Board shall meet at least twice a year, or as frequently as
may be deemed necessary by its Chairperson. In the absence of the Chairperson, a Co-Chairperson shall
preside. In case any member of the Board representing the Government cannot attend the meeting, he
or she shall be regularly represented by an undersecretary or deputy-director general, as the case may
be, to be designated by such member for the purpose.

The benefits, privileges and emoluments of the Board shall be consistent with existing laws and rules.

SEC. 6. Functions and Powers of the Board. -

Function. - The TESDA Board shall be primarily responsible for the formulation of continuing,
coordinated and fully integrated technical education and skills development policies, plans and
programs taking into consideration the following:

1. The State policy declared in the Act of giving new direction and thrusts to efforts in developing the
quality of Filipino human resources through technical education and skills development.

2. The implementation of the above-mentioned policy requires the coordination and cooperation of
policies, plans and programs of different concerned sectors of Philippine society;

3. Equal participation of representatives of industry groups, trade associations, employers,

association of technical-vocational schools workers and government shall be made the rule in order to
ensure that urgent needs and recommendations are readily addressed; and

4. Improved linkages between industry, labor and government shall be given priority in the
formulation of any national-level plan.

Powers. - The TESDA Board shall have the following powers:

1. Approve and promulgate, after due consultation with industry groups, trade associations,
associations of technical-vocational schools, employers and workers, the National Technical Education
and Skills Development Plan for middle-level manpower and the policies, programs and guidelines as
may be necessary for the effective implementation of the plan and of the Act;
 2. Organize and constitute various standing committees, subsidiary groups, or technical working
groups for efficient integration, coordination and monitoring technical education and skills
development programs at the national, regional, and local levels;

3. Enter into, make, execute, perform and carry out domestic and foreign contracts subject to existing
laws, rules and regulations;

4. Restructure the entire sub-sector consisting of all institutions and programs involved in the
promotion and development of middle-level manpower through upgrading, merger and/or phase-out
following a user-led strategy;

5. Approve trade skills standards and trade tests as established and conducted by private industries;

6. Establish and administer a system of accreditation of both public and private institutions;

7. Establish, develop and support trainors' training and/or programs;

8. Lend support and encourage increasing utilization of the dual training system as provided for by
republic Act No. 7686;

9. Exact reasonable fees and charges for such tests and trainings conducted and retain such earnings
for the use of the TESDA, subject to guidelines promulgated by the TESDA Board;

10. Allocate resources, based on the TESDA Secretariat's recommendations, for the programs and
projects it shall undertake pursuant to an approved National Technical Education and Skills
Development Plan;

11. Determine and approve systematic funding schemes such as the Levy-and-Grant scheme for
technical education and skills development purposes;

12. Create, when deemed necessary, an Advisory Committee which shall provide expert and technical
advice to the Board to be chosen from the academe and the private sector: Provided, that in case the
Advisory Committee is created, the Board is hereby authorized to set aside a portion of its appropriation
for its operation;

13. Create such offices as it may deem necessary to carry out objectives, policies and functions of the
TESDA;

14. Review and approve annual and other reports to the President on technical education and skills
development;

15. Manage and administer the TESDA Development Fund and formulate is implementing guidelines;
and

16. Perform such other duties and functions necessary to carry out the provisions of the Act.

RULE IV

TESDA SECRETARIAT

SEC. 1. TESDA Secretariat. - The TESDA Secretariat, created under Sec. 10 of the Act, is composed of the
Offices mentioned in this Rule.

SEC. 2. Functions and Responsibilities of the TESDA Secretariat. - The Secretariat shall have the
following functions and responsibilities:

To establish and maintain a planning process and formulate a national technical education and skills
development plan in consultation with the member agencies and other concerned of the TESDA at
various levels;

To provide analytical inputs to policy and decision-making of the TESDA on allocation of resources and
on institutional roles and responsibilities as shall be embodied with the agencies annual technical
education and skills development plans, in accordance with the manpower plan for middle-level skilled
workers as approved by the TESDA Board;

To recommend measures and implement the same upon approval by the TESDA Board, for the
effective and efficient implementation of the national technical education and skills development plan;
 To propose to the TESDA Board the specific allocation of resource for the programs and projects it
shall undertake pursuant to the approved national technical education and skills development plan;

To submit the TESDA Board periodic reports on the progress and accomplishment of work programs
and on the implementation of plans and policies for technical education and skills development;

To prepare for approval by the TESDA Board an annual report to the president on technical education
and skills development;

To implement and administer the apprenticeship program;

To prepare and implement, upon approval by the TESDA Board, programs for the training of trainers,
supervisors, planners and managers;

To enter into agreements to implement plans and programs approved by the TESDA Board and
perform activities as shall implement the declared policy of the Act;

To propose to the TESDA Board the policies and guidelines for the organization and constitution of the
regional and local Technical Education and Skills Development Committees, industry boards and
technical working groups, as may be deemed necessary, and after their approval, to implement such
policies and guidelines; Provided, that the Director-General, shall determine the composition of these
bodies subject to the guidelines adopted by the TESDA Board for the purpose;

To review and endorse to the Department of Budget and Management in accordance with the
guidelines approved by the TESDA Board the annual agency technical education and skills development
plans of all government and non-government agencies receiving financial technical assistance from the
government;

Upon proper delegation of authority from the TESDA Board, the TESDA Secretariat, thru the Director-
General, shall also:

1. Review and recommend action to concerned authorities proposed technical assistance programs
and grants-in-aid-programs for the technical education and skills development, or both, including those
which may be entered into between the Government of the Philippines and other nations, including
international and foreign organizations both here and abroad.

2. Develop and administer appropriate incentive schemes to government and private industries and
institutions to provide high quality technical education and skills development opportunities;

3. Set policies for technical education and skills development programs for regional and local-level
implementations.

4. Direct and approve institutional arrangements with industry boards and such other bodies or
associations for the direct participation of employers and workers in technical education and skills
evelopment including trade skills standardization and testing, apprenticeship and dual training system.

5. Hire the services of qualified consultants and private organizations for research work and
publication in the field of technical education and skills development and also avail itself of the services
of other agencies of the Government as maybe required.

To perform such other functions and duties as maybe assigned by the TESDA Board.

DIRECTOR GENERAL

SEC. 3. Director-General. - The TESDA Secretariat shall be headed by a Director-General, who shall

likewise be a member of the TESDA Board. The Director-General shall enjoy the benefits, privileges and
emoluments equivalent to the rank of Undersecretary. As chief Executive Officer of the TESDA
Secretariat, the Director-General shall exercise general supervision and control over its technical and
administrative personnel.

SEC. 4. Deputy Directors-General. - The Director-General shall be assisted by two (2) Deputy Directors-
General, one to be responsible for Vocational and Technical Education and Training and one to be
responsible for Policies and Planning.

The Deputy Directors-General shall enjoy the benefits, privileges and emoluments equivalent to the rank
of Assistant Secretary.

SEC. 5. Chief of Services for Administration. - The Director-General shall also be assisted by a Chief of
Services for Administration who shall be a Career Civil Service Official.
SEC. 6. Appointment of TESDA Officials and Personnel. - The President shall appoint the Director-
General, and the two Deputy Directors-General, upon recommendation of the TESDA Board. The
President shall also appoint the heads of the regional offices. The Chief of Services for Administration
shall be appointed by the TESDA Board. The Director-General shall appoint an Executive-Director for
each of the Offices under the two Deputy Directors-General who shall have the rank and emoluments of
Director IV. The Director-General shall also appoint such personnel as may be necessary to carry out the
objectives, policies and functions of the TESDA subject to Civil Service laws, rules and regulations.

SEC. 7. Compliance with the Salaries Standardization Law. - The composition and emoluments of the
officials and employees of the TESDA shall be in accordance with the salary standardization law and
other applicable laws under the national compensation and classification plan.

SEC. 8. Continuous Assessment and Study. - The TESDA Secretariat shall conduct continuous assessment
and study of the nature, behavior and the use of the country's stock of human resources and study areas
directly or indirectly related to technical education and skills development. This, it shall do by:

engaging directly in studies, researches and surveys; and

engaging the services of duly recognized and competent individuals, groups of individuals, schools,
universities or research institutions, through contracts, grants or any appropriate arrangement.

Documents, materials or whatever output or results obtained from the activities above shall form part
of the property of the TESDA.

SEC. 9. Automatic Review; Recommendations to the President and Congress. - Every five (5) years,

after the effectivity of the Act, an independent review panel composed of three (3) persons appointed
by the President shall review the performance of the TESDA and shall make recommendations based on

its findings to the President and to both Houses of Congress.

OFFICES OF THE TESDA SECRETARIAT

SEC. 10. The Planning Office (PO). - The PO shall:

design and establish planning processes and methodologies which will particularly enhance the
efficiency of resource allocation decisions within the technical education and skills development sector;

lead in the preparation and periodic updating of a national plan for technical education and skills
development which shall become the basis for resource allocation decisions within the sector;
 conduct researches, studies and develop information systems for effective and efficient planning and
policy making within the sector;

develop and implement programs and projects aimed at building up planning capabilities of various
institutions within the sector; and

perform such other powers and functions as may be authorized.

SEC. 11. Skills Standards and Certification Office (SSCO). - The SSCO shall:

develop and establish a national system of skills standardization, testing and certification in the
country;

design, innovate and adopt processes and methodologies whereby industry groups and workers'
guilds take on progressively the responsibility of setting skills standards for identified occupational
areas, and the local government units actively participate in promoting skills standards, testing and
certification;

establish and implement a system of accrediting private enterprises, workers' associations and guilds
and public institutions to serve as skills testing venues;

conduct research and development on various occupational areas in order to recommend policies,
rules and regulations for effective and efficient skills standardization, testing and certification system in
the country; and

perform such other duties and functions as may be authorized.

SEC. 12. National Institute for Technical Vocational Education and Training (NITVET). - The NITVET shall:

serve as the research and development arm of the government in the field of technical-vocational
education and training;

develop curricula and program standards for various technical-vocational education and training
areas;
 develop and implement an integrated program for continuing development of trainors, teachers and
instructors within the technical education and skills development sector;

develop programs and projects which will build up institutional capabilities within the sector; and

perform such other powers and functions as may be authorized.

SEC. 13. Office of Formal Technical Vocational Education and Training (OFTVET). - The OFTVET shall:

provide policies, measures and guidelines for effective and efficient administration of formal technical-
vocational education and training programs implemented by various institutions in the country;

establish and maintain a system for accrediting, coordinating, integrating, monitoring and evaluating
the different formal technical-vocational education and training programs vis--vis the approved
national technical education and skills development plan;

establish and maintain a network of institutions engaged in institutionalized technical-vocational

education and training, particularly with local government units; and

perform such other powers and functions as may be authorized.

SEC. 14. Office of the Non-formal Technical Vocational Education and Training (ONFTVET). - The
ONFTVET shall:

provide direction, policies and guidelines for effective implementation of non-formal community-
based technical-vocational education and training;

accredit, coordinate, monitor and evaluate various non-formal technical-vocational education and
training programs implemented by various institutions, particularly by local government units;

establish and maintain a network of institutions including local government units, non-government
organizations implementing non-formal community-based technical-vocational education and training;
and

perform such other powers and functions as may be authorized.

SEC. 15. Office of Apprenticeship (OA). - The OA shall:

 provide direction, policies and guidelines on the implementation of the apprenticeship system;

accredit, coordinate, monitor and evaluate all apprenticeship schemes and programs implemented by
various institutions and enterprises;

establish a network of institutions and enterprises conducting apprenticeship schemes and programs;
and

perform such other powers and functions as may be authorized.

REGIONAL AND PROVINCIAL TESDA OFFICES

SEC. 16. Regional TESDA Offices. - The TESDA shall establish regional offices headed by Regional

Directors with the rank and emoluments of Director IV. The offices shall be under the direct control of
the

Director-General and shall:

serve as Secretariat to Regional TESDA Committees;

supervise, coordinate and integrate, thru its Provincial TESDA Offices, all technical education and skills
development programs, projects and related activities in their respective jurisdiction;

develop and recommend TESDA programs for regional and local level implementation within the
policies set by the TESDA; and

perform other duties and functions as may be authorized.

SEC. 17. Provincial TESDA Offices. - The TESDA shall also establish Provincial Offices headed by Skill
Development Offices with the rank and emoluments of a Director III. These offices shall be under the
direct control of the Director-General and shall:

serve as Secretariat to Provincial TESDA Committees;

 provide technical assistance particularly to local government units for effective supervision,
coordination, integration and monitoring of technical-vocational education and training programs within
their localities; and

review and recommend TESDA programs for implementation within their localities; and

perform such other duties and function as may be authorized.

SEC. 18. Additional Offices. - The TESDA Secretariat may be further composed by such offices as may be
deemed necessary by the TESDA Board.

RULE V

TESDA COMMITTEES

SEC. 1. Technical Education and Skills Development Committees. - The TESDA shall establish

Technical Education and Skills Development Committees at the regional and local levels to coordinate
and monitor the delivery of all technical education and skills development activities of the public and
private sectors. The TESDA Board is authorized to set aside a portion of the appropriation of the TESDA
for the operation of the TESDA Committees.

SEC. 2. TESDA Committees' Relations to Local Development Councils. - The TESDA Committees shall
establish linkages with the appropriate regional and local development councils in order that they may
likewise serve as the Technical Education and Skills Development Committees of the said development
councils.

SEC. 3. Composition of TESDA Committees. - The composition of the Technical Education and Skills

Development Committees shall be determined by the Director-General subject to the guidelines

promulgated by the TESDA Board.

RULE VI

PROGRAMS AND ACTIVITIES

SEC. 1. Programs and Activities in Technical Education and skills Development. - The TESDA shall
accredit, coordinate, integrate, monitor and evaluate all the different formal and non-formal
technical-vocational education and training programs pursuant to the goals and objectives of the Act.
Encouraging the active participation of the private sector, including industry groups, trade associations,
employers and workers, and particularly private enterprises, the TESDA shall promote and strengthen
the quality of these technical education and skills development programs:

middle-level manpower development programs;

vocational, administrative or training programs for the purpose of acquiring and developing job-
related skills;

programs and projects which will build up institutional capabilities within the sector;

technical education and skills development programs at national, regional and local levels;

formal technical-vocational education and training programs implemented by various institutions in

the country;

non-formal community based technical-vocation education and training programs;

training programs and schemes focused on skills training for entrepreneur development and
technology development, cost-effective training in occupational trades and related fields of employment
and value development as an integral component of all skills training programs;

training programs and schemes that include teacher's trainors' training and for the continuing
development of trainors, teachers and instructors within the technical education and skills development
sector; and

programs for the training of supervisors, planners and managers.

SEC. 2. User-Led or Market-Driven Strategy. - adopting a user-led or market driven strategy, the TESDA
shall promote stengthened linkages between educational/training institutions and industry to ensure
that appropriate skills and knowledge are provided by the educational system.

SEC. 3. Apprenticeship and Learnership Prorgrams. - Using the above-mentioned strategy, in

accordance with existing laws, rules and regulations, the TESDA shall implement and administer
reformed industry-based apprenticeship and learneship programs which have been transferred from the
Department of Labor and Employment to the TESDA by the Act.

SEC. 4. Dual Training System. - Also using the strategy mentioned in Section 2 hereof, the TESDA shall
implement Republic Act No. 7686 otherwise known as the "Dual Training System Act. Of 1994" and lend
support and encourage increasing utilization of the dual training system as provided for in the
aforementioned Act.

SEC. 5. Administration of Training Programs. - The TESDA shall design and administer training

programs and schemes that will develop the capabilities of public and private institutions to provide
quality and cost-effective technical education and skills development and related opportunities.

SEC. 6. Establishment and Administration of National Trade Skills Standards. - There shall be national
occupational skills standards to be established by TESDA - accredited industry committees. The TESDA
shall develop and implement a certification and accreditation program in which private groups and trade
associations are accredited to conduct approved trade tests, and the local government units to promote
such trade testing activities in their respective areas in accordance with the guidelines to be set by the
TESDA. The Secretary of Labor and Employment shall determine the occupational trades for mandatory

certification. All certificates relating to the national skills testing and certification system shall be issued
by the TESDA through its Secretariat.

SEC. 7. Industry Boards. - The TESDA shall establish effective and efficient institutional arrangements
with industry boards and such other bodies or associations to provide direct participation of employers
and workers in the design and implementation of skills development schemes, trade skills
standardization and certification and such other functions in the fulfillment of the TESDA's objectives.

SEC. 8. Skills Development Centers. - The TESDA shall strengthen the network of national, regional and
local skills training centers for the purpose of promoting skills development.

This network shall include skills training centers in vocational and technical schools, technical
institutions, polytechnic colleges, and all other duly accredited public and private dual system
educational institutions. The technical education and skills development centers shall be administered
and operated under such rules and regulations as may be established by the TESDA in accordance with
the National Technical

Education and Skills Development Plan.

SEC. 9. Coordination of All Skills Training Schemes. - In order to integrate the national skills development
efforts, all technical education and skills training schemes as provided for in the Act shall be
coordinated with the TESDA particularly those having to do with the setting of trade skills standards. For
this purpose, existing technical education and skills training programs in the Government and in the
private sector, specifically those wholly or partly financed with government funds, shall be reported to
the TESDA which shall assess and evaluate such programs to ensure their efficiency and effectiveness.

SEC. 10. Skills Development Opportunities. - The TESDA shall design and implement an effective and
efficient delivery system for quality technical education and skills development opportunities
particularly in disadvantaged sectors, with new tools of wealth creation and with the capability to take
on higher value-added gainful activities and to share equitably in productivity gains.

SEC. 11. Devolution of TESDA's Training Function to Local Governments. - In establishing the delivery
system provided for in the preceding Section, the TESDA shall formulate, implement and finance a
specific plan to develop the capability of local government units to assume ultimately the responsibility
for effectively providing community-based technical education and skills development opportunities:
Provided, however, that there shall be formulated and implemented an effective and timely retraining
of TESDA personnel that would be affected by the devolution to ensure their being retained if the
concerned local government units would not be able to absorb them.

RULE VII

TECHNICAL AND VOCATIONAL SCHOOLS

AND TRAINING CENTERS

SEC. 1. Public Technical and Vocational Schools. - The public technical and vocational schools whose

budgets are included in the TESDA budget per the annual General Appropriations Act, including those
funded by local governments, shall be under the supervision of the TESDA. The pertinent DECS Orders
and Memoranda shall continue to apply to said schools until they are modified or revoked by the TESDA
Board.

SEC. 2. Private Technical and Vocational Schools. - The private technical and vocational schools shall be
subject to reasonable supervision of the TESDA, in accordance with the 1992 Manual of Regulations for
Private Schools, particularly its Article IV, Supervision and Regulation of Private Schools and Article V.
Accreditation, until the aforementioned regulations are modified or revoked by the TESDA Board.

SEC. 3. Training Center. - In its supervision of public and private training centers, the TESDA shall ensure
that appropriate skills and knowledge are provided to industry by these training centers.

RULE VIII

PROMOTION, ASSISTANCE, SCHOLARSHIP GRANTS

AND INCENTIVES

SEC. 1. Skills Olympics. - To promote quality skills development in the country and with the view of
participating in international skills competitions, the TESDA, with the active participation of private
industries, shall organize and conduct annual National Skills Olympics. The TESDA, through its
Secretariat, shall promulgate the necessary rules and guidelines for the effective and efficient conduct of
Annual National Skills Olympics and for the country's participation in international skills olympics.

SEC. 2. Assistance to Employers and Organizations. - The TESDA shall assist any employer or

organization engaged in skills training schemes designed to attain its objectives under rules and

regulations which the TESDA shall establish for this purpose.

SEC. 3. Scholarship Grants. - The TESDA shall adopt a system of allocation and funding of scholarship
grants which shall be responsive to the technical education and skills development needs of the
different regions in the country.

SEC. 4. Incentives Schemes. - The TESDA shall develop and administer appropriate incentive schemes to
encourage government and private industries and institutions to provide high-quality technical
education and skills development opportunities.

RULE IX

FINANCING FOR TECHNICAL EDUCATION

AND SKILLS DEVELOPMENT

SEC. 1. TESDA Budget. - The amount necessary to finance the initial implementation of the Act shall be
charged against the existing appropriations of the NMYC and the BTVE. Thereafter, such funds as may
be necessary for the continued implementation of the Act shall be included in the annual General
Appropriations Act.

SEC. 2. The TESDA Development Fund. - A TESDA Development Fund is established, to be

managed/administered by the TESDA, the income from which shall be utilized exclusively in awarding of
grants and providing assistance to schools, training institutions, industries, local government units for
upgrading their capabilities, and to develop and implement technical education and skills development
programs. The Fund shall be set up through:

a one-time lump sum appropriation from the National Government;

an annual contribution from the Overseas Workers Welfare Administration Fund, the amount of which
should be part of the study on financing provided for in Section 4 of this Rule;

donations, grants, endowments, and other bequests or gifts; and

 any other income generated by the TESDA.

SEC. 3. Administrator and Fund Manager. - The TESDA Board shall be the administrator of the Fund, and
as such, shall formulate the necessary implementing guidelines for the management of the Fund,
subject to the following: a) unless otherwise stipulated by the private donor, only earnings of private
contributions shall be used; and b) no part of the seed capital of the Fund, including earnings, thereof,
shall be used to underwrite expenses for administration. The Board shall appoint a reputable
government-accredited investment institution as Fund manager, subject to guidelines promulgated by
the Board.

SEC. 4. Expert Group on Funding Scheme. - Within one (1) year after the organization of the TESDA,

the TESDA Board shall commission an expert group on funding schemes for the TESDA Development
Fund, the results of which shall be used as the basis for appropriate action by the Board.

SEC. 5. Levy and Grant Scheme. - The TESDA may determine and approve systematic funding schemes
for technical education and skills development purposes such as a levy and grant scheme whereby there
shall be legal contributions from participating employers who would be beneficiaries of the employee
training programs (often as a percentage of the payroll) which contributions are subsequently turned
over or rebated to enterprise offering such program.

SEC. 6. Fees and Charges. - The TESDA may exact reasonable fees and charges for such tests and

trainings it may conduct and retain such earnings for its own use, subject to guidelines promulgated by
the TESDA Board.

SEC. 7. Instructional Improvement Fund. - The instructional improvement fund in public

technical-vocational schools and institutions shall be used for the expansion, upgrading or maintenance
of school facilities, particularly machinery, equipment and other learning resources.

RULE X

DEFINITION OF TERMS

SEC. 1. Definition of Terms Under the Act. -

"Apprentice" is a person undergoing training for an approved apprenticeable occupation during an

established period assured by an apprenticeship agreement.
 "Apprenticeship" is training within employment with compulsory related theoretical instructions
involving a contract between an apprentice and an employer on an approved apprenticeable
occupation.

"Apprenticeship Agreement" is a contract wherein a prospective employer binds himself to train the
apprentice who in turn accepts the terms of training for a recognized apprenticable occupation,
emphasizing the rights, duties and responsibilities of each party.

"Apprenticeable Occupation" is an occupation officially endorsed by a tripartite body and approved

for apprenticeship by the Authority.

"Dual System/Training" refers to a delivery system of quality technical and vocational education which
requires training to be carried out alternately in two venues: In school and in the production plant. In
school training provides the trainee the theoretical foundation, basic training, guidance and human
formation, while in-plant develops his skills and proficiency in actual work conditions as it continues to
inculcate personal discipline and work values.

"Learners" refer to persons hired as trainees in semi-skilled and other industrial occupations which are
non-apprenticeable. Learnership programs must be approved by the Authority;

"Levy-and-Grand System" refers to a legal contribution (often a percentage of the payroll) from
participating employers who would be beneficiaries of a vocational or technical education or training
program which is subsequently turned over or rebated to enterprises offering employee training
programs;

"Middle-Level Manpower" refers to those:

1. who have acquired practical skills and knowledge through formal or non-formal education and
training equivalent to at least a secondary education but preferably a post-secondary education with a
corresponding degree or diploma; or

2. skilled workers who have become highly competent in their trade or craft as attested by industry;

"Private Enterprise" refers to an economic system under which property of all kinds can be privately
owned and in which individuals, alone or in association with another, can embark on a business activity.
This includes industrial, agricultural, agro-industrial or service establishments engaged in the production,
manufacturing, processing, repacking, assembly, or production of goods.

" Skill" means the acquired and developed ability to carry out a task of job;

"Skills Development" means the process through which learner and workers are systematically
provided with learning opportunities to acquire or upgrade, or both, their ability, knowledge and
behavior pattern required as qualifications for a job or range of jobs in a given occupational area.

"Technical Education" refers to the education process designed at post-secondary and lower tertiary
levels, officially recognized as non-degree programs aimed at preparing technicians, para-professionals
and other categories of middle-level workers by providing them with a board range of general
education, theoretical, scientific and technological studies, and related job skills training.

"Trade" means any group of interrelated jobs or nay occupation which is traditionally or officially
recognized as craft or artisan in nature requiring specific qualifications that can be acquired through
work experience and/or training.

"Trainees" are participants in a vocational, administrative or technical training program for the
purpose of acquiring and developing job-related skills;

"Trainers" are persons who direct the practice of skills towards immediate improvement in some task.

"Trainor/Trainers" are persons who provide training to trainers aimed at developing the latter's
capacities for imparting attitudes, knowledge, skills and behavior patterns required for specific jobs,
tasks, occupations or group of related occupations.

"User-Led" or "Market-Driven Strategy" refers to a strategy which promotes stengthened linkages

between educational/training institutions and industry to ensure that appropriate skills and knowledge
are provided by the educational system. Market-Driven Strategy relies principally on market forces to
determine supply/demand ratios including the pricing of training and education.

RULE XI

TRANSITORY AND FINAL PROVISIONS

SEC. 1. Private Sector Representatives. - Within two (20 months after the approval of the Act, the

President shall, in consultation with the Secretary of labor and Employment and the Secretary of
Education, Culture and sports, appoint the private sector representatives of the TESDA Board.

SEC. 2. Appointment of the Director-General. - Within three (3) months after the appointment of the
private sector representatives, the President shall, upon the recommendation of the Board, appoint the
Director- General.

SEC. 3. Organizational Structure and Staffing Pattern. - Within four (4) months after the appointment of
the Director-General, the Board shall convene to determine the organizational structure and staffing
pattern of the TESDA.

SEC. 4. Personnel of Absorbed Agencies. - The personnel of the existing National Manpower and Youth
Council (NMYC) of the Department of Labor and Employment and the Bureau of Technical and
Vocational Education (BTVE) of the Department of Education, Culture and Sports, shall, in a holdover
capacity continue to perform their respective duties and responsibilities and receive their corresponding
salaries and benefits until such time when the organizational structure and staffing pattern of the TESDA
shall have been approved by the Board: Provided, That the preparation and approval of the said new
organizational structure and staffing pattern shall, as far as practicable, respect and ensure the security
of tenure and seniority rights of affected government employees, as clarified in Sections 5, 6, and 7 of
this Rule.

SEC. 5. Holdover Capacity in Respective Duties and Responsibilities. - A position is composed of a set of
duties and responsibilities. Thus even if the title of said position is changed or the salary therefor is
upgraded, the absorbed personnel who is performing the duties and responsibilities shall continue to
hold such position and receive the appropriate upgraded salary of said retitled position, in a holdover
capacity.

SEC. 6. Respecting and Insuring Security of Tenure. - As long as the duties and responsibilities of his
position are needed by the TESDA, the absorbed personnel concerned shall not be forced to resign and
be dismissed without just cause and without due process. If new and higher positions are created, the
absorbed personnel who meets the qualification standards of the new position shall be given preference
in the filling up of said position.

SEC. 7. Respecting Seniority Rights. - In filling up new positions, there shall be an open competition
among the absorbed personnel taking into consideration their qualifications, performance and eligibility.
If the absorbed personnel has to be retired under the provision of the next succeeding section, it is
understood that his other previous service in the government shall be included or considered in the
computation of his retirement benefits.

SEC. 8. Separation or Retirement Benefits. - Those personnel whose positions are not included in the
new staffing pattern approved by the TESDA Board or who are not reappointed or who choose to be
separated as a result of the reorganization shall be paid their separation or retirement benefits under
existing laws.
SEC. 9. Consultation with Commission on Higher Education and the Appropriate Department of Basic
Education. - Upon the consultation of the TESDA Board, the TESDA may work out with the Commission
on Higher Education and the appropriate Department for Basic Education a system of cooperation and
program management with respect to educational institutions offering basic tertiary and post secondary
programs paying special attention to delineation of programs, functions, responsibilities, personnel and
facilities.

SEC. 10. Existing Policies and Projects in Force Until Revoked. - All policies and projects of the agencies
replaced and absorbed by the TESDA involving technical education and skills development programs
shall remain in force unless or until modified or revoked by these Rules or by the TESDA.

SEC.11. Permits and Certificates. - All permits and certificates of recognition issued by the agencies
replaced and absorbed by the TESDA prior to these Rules affecting technical education and skills
development shall continue to be in force and in effect. However, further action on such permits and
certificates shall henceforth be undertaken by the TESDA.

SEC.12. Separability Clause. - If any provision of these Rules is held invalid or unconstitutional, any other
provision not so affected shall continue to be valid and effective.

SEC. 13. Repealing Clause. - Any law, presidential decree, executive order, letter of instruction, and its
rules and regulations, or any part thereof, which is inconsistent with any of the provisions of the Act and
these Rules is hereby repealed or amended accordingly.

SEC.14. Effectivity Clause. - These Rules shall take effect fifteen (15) days after its publication in the
Official Gazette or in a newspaper of general circulation.

SEC.15. Issuances on Policies and Guidelines After Effectivity of the Rules. - The TESDA Board shall, after
due consultations are required by Section8, paragraph 1 of the Act, promulgate from time to time
issuances on policies and guidelines for the effective implementation of these Rules and Regulations.

Done in Manila, Republic of the Philippines, this 18th day of January 1995.

GOVERNMENT SECTOR
(SGD.) MA. NIEVES R. CONFESOR

Chairperson

Secretary of Labor and Employment

Secretary of Education, Culture and

Sports

(SGD.) ROBERTO S. SEBASTIAN

Member

Secretary of Agriculture

Secretary of Interior & LocalGovernment

(SGD.) RICARDO T. GLORIA

Co-Chairperson

(SGD.) RAFAEL M. ALUNAN

Member

(SGD.) RIZALINO S. NAVARRO

Co-Chairperson

Secretary of Trade and Industry

EMPLOYER/INDUSTRY SECTOR

(SGD.) JOSELITO S. SANDEJAS, JR.

Member

(SGD.) ZENAIDA G. GORDON

Member

LABOR SECTOR
(SGD.) ISIDRO ANTONIO C. ASPER

Member

(SGD.) CONCEPCION G. FLORES-DODD

Member

IBARRA A. MALONZO

Member

TECHNICAL EDUCATION AND TRAINING SECTOR

(SGD.) FR. PRECIOSIO D. CANTILLAS

Member

(SGD.) DR. TERESITA U. QUIRINO

Member

The foregoing Implementing Rules and Regulations of the TESDA Act of 1994 was published on February
13, 1995 in The Philippine Star.
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