Labor Law: Book IV; Title II; Chapter II Coverage and Liability (Arts. 174 - 181)
Health, Safety and Social Welfare
Employees’ Compensation and State Insurance Fund
Chapter II
Coverage and Liability
Arts. 174 - 181
Q: When does coverage by the State Insurance Fund begin? Is
it optional?
Q: If the injury or death is caused by a third party, will State
Insurance Fund pay benefits to the victim?
Art. 174 [168]. Compulsory coverage.
Coverage in the State Insurance Fund shall be compulsory upon all employers and their employees not over sixty (60) years of age: Provided, That an employee who is over (60) years of age and paying contributions to qualify for the retirement or life insurance benefit administered by the System shall be subject to compulsory coverage.
Art. 175 [169]. Foreign employment.
The Commission shall ensure adequate coverage of Filipino employees employed abroad, subject to regulations as it may prescribe.
Art. 176 [170]. Effective date of coverage.
Compulsory coverage of the employer during the effectivity of this Title shall take effect on the first day of his operation, and that of the employee, on the date of his employment.
Notes:
- The employee's compensation law applies to all employers, public or private, and to all employees, public or private, including casual, emergency, temporary or substitute employees.
- The term "employee" includes a "member of the Armed Forces of the Philippines"
- Filipinos working abroad for employers doing business in the Philippines are covered by the employees compensation law. They are entitled to the same benefits as for those working in the Philippines.
ECC Rules
RULE I - COVERAGE
SECTION 1. Nature. - Coverage shall be compulsory.
SECTION 2. Scope.
(a) Every employer shall be covered.
(b) Every employee not over 60 years of age shall be covered.
(c) An employee over 60 years of age shall be covered if he had been paying contributions to the System prior to age 60 and has not been compulsorily retired.
(d) An employee who is coverable by both the GSIS and SSS shall be compulsorily covered by both Systems.
SECTION 3. Employer.
(a) The term shall mean 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.
(b) An employer shall belong to either:
(1) The public sector covered by the GSIS, comprising the National Government, including government-owned or controlled corporations, the Philippine Tuberculosis Society, the Philippine National Red Cross and the Philippine Veterans Bank; or
(2) The private sector covered by the SSS, comprising all employers other than those defined in the immediately preceding paragraph.
SECTION 4. Employee.
(a) The term shall mean any person who performs services for an employer as defined in Section 3 hereof.
(b) employee shall belong to either:
(1) The public sectors comprising the employed workers who are covered by the GSIS, including the members of the Armed Forces of the Philippines (see Circular No. 06-709, p. 105), elective officials who are receiving regular salary, and any person employed as casual, emergency, temporary, substitute or contractual.
(2) The private sector comprising the employed workers who are covered by the SSS.
SECTION 5. Foreign employment.
(a) Filipinos working abroad in the service of an employer as defined in Section 3 hereof shall be covered by the System, and entitled to the same benefits as are provided for employees working in the Philippines.
(b) Medical services, including appliances and supplies for Filipinos employed abroad rendered or provided in such place of employment, shall be paid in accordance with, and subject to the limitations fixed in, these Rules; provided that the Rules on Accreditation shall not apply in these cases.
(c) The notice requirement under these Rules shall not be strictly applied.
(d) Medical certifications of physicians, and statement of accounts of hospitals, when duly authenticated, are acceptable as basis for payment, provided that the standard and rates payable by the System shall be those provided for under these Rules.
SECTION 6. Effectivity.
(a) Coverage of employers shall take effect on the first day of operation but not earlier than January 1, 1975.
(b) Coverage of employees shall take effect on the first day of employment.
Art. 177 [171]. Registration.
Each employer and his employees shall register with the System in accordance with its regulations.
RULE II - REGISTRATION
SECTION 1. Requirement.
(a) Every employer shall register with the System by accomplishing the prescribed forms.
(b) Every employee shall be registered with the System through his employer by accomplishing the prescribed forms.
SECTION 2. GSIS.
The following guidelines shall apply to the public sector.
(1) Every employer operating before January 1, 1975 shall register not later than March 31, 1975;
(2) Every employer operating on or after January 1, 1975 shall register within one month from the first day of operation, and
(3) Every employee shall be registered through his employer within one month from the date of employment.
SECTION 3. SSS.
(a) The following guidelines shall apply to the private sector:
(1) Every employer already registered need not register again, for he is automatically registered;
(2) Every employer not yet registered shall register not later than the first day of operation;
(3) Every employee already registered need not register again, for he is automatically registered.
(4) Every employee not yet registered shall register not later than the date of employment; and
(5) Only one registration is needed for SSS, Medicare and Employees’ Compensation.
(b) In case the employee has not yet been registered, he shall be reported by his employer according to the following guidelines:
(1) Every employer already registered need not register again, for he is automatically registered.
(2) Every newly hired employee shall be reported by his employer not later than 30 days from the date of employment; and
(3) Every employee shall be deemed as having been duly reported for coverage if the System has received a written communication about him from his employer or an EC contribution paid in his name by his employer, before a compensable contingency occurs.
SECTION 4. Penalty.
Any violation under this Rule shall be penalized as follows:
(1) In case of failure or refusal to register employees, the employer or responsible official who committed the violation shall be punished with a fine of not less than P1,000 nor more than P10,000 and/or imprisonment for the duration of the violation or non-compliance or until such time that rectification of the violation has been made, at the discretion of the Court.
(2) In case a compensable contingency occurs after 30 days from employment and before the System receives any report for coverage about the employee or EC contribution on his behalf, his employer shall be liable to the System for the lump sum equivalent of the benefits to which he or his dependents may be entitled.
Art. 178 [172]. Limitation of liability.
The State Insurance Fund shall be liable for compensation to the employee or his dependents, except when the disability or death was occasioned by the employee’s intoxication, willful intention to injure or kill himself or another, notorious negligence, or otherwise provided under this Title.
Notes:
- This Article does not allow compensation for any of the four reasons enumerated:
- intoxication
- willful intention to injure or kill himself
- willful intention to injure or kill another
- notorious negligence
- The "intoxication" which will disallow compensation consist in being under the influence of intoxicating liquor to the extent that:
- one is not entirely himself or
- that his judgment is impaired, and his act, words, or conduct is visibly impaired.
Willful intention to injure or kill himself or another
- When death resulted from a deliberate or willful act of his own life, and it is directly attributable to the employee such death is not compensable.
- Suicide is not compensable.
- When the worker is in a state of intoxication run amuck, or committed an unlawful aggression against another, inflicting injury on the latter, who, however, fought back and in the process killed the aggressor, the circumstances of the death of the aggressor could be categorized as a deliberate and willful act on his own life directly attributable to him; thus it is not compensable. (Mabuhay Shipping Services, Inc. v. NLRC, G.R. No. 94167, January 21, 1991)
- Where an employer unqualifiedly agrees to pay compensation for "loss of life" of his employee, the agreement is binding and the death is compensable even when it circumstances indicate suicide. (NAESS Shipping Phils v. NLRC, GR No. 73441, September 4, 1987)
- Romulo Sentina, a 4th Engineer employed by Mabuhay Shipping Services, Inc. (MSSI) for Skippers Maritime Co., Ltd., was involved in a fight while drunk aboard the M/V Harmony I while it was docked in Piraeus, Greece.
- Sentina, visibly drunk, created a disturbance in the messhall, challenged others with an axe, and later got into a fight with an oiler named Emmanuel Ero.
- During the fight, Ero defended himself, injuring Sentina.
- Sentina was taken to the hospital and later died on January 17, 1988. Ero was arrested and jailed in Piraeus.
The mere death of the seaman during the term of his employment does not automatically give rise to compensation. There are limitations to the liability to pay death benefits.
When the death of the seaman resulted from a deliberate or willful act on his own life, and it is directly attributable to the seaman, such death is not compensable. No doubt a case of suicide is covered by this provision.
By the same token, when as in this case the seaman, in a state of intoxication, ran amuck, or committed an unlawful aggression against another, inflicting injury on the latter, so that in his own defense the latter fought back and in the process killed the seaman, the circumstances of the death of the seaman could be categorized as a deliberate and willful act on his own life directly attributable to him. First he challenged everyone to a fight with an axe. Thereafter, he returned to the messhall picked up and broke a cup and hurled it at an oiler Ero who suffered injury. Thus provoked, the oiler fought back The death of seaman Sentina is attributable to his unlawful aggression and thus is not compensable.
- Pablo Dublin, the chief steward of the vessel M/V DYVI PACIFIC, fatally stabbed the second cook, Rodolfo Fernandez, during a quarrel, then jumped or fell overboard and disappeared.
- Dublin was employed by NAESS Shipping, Philippines, Inc. under an employment contract that provided for compensation benefits for the loss of life.
- Dublin's widow, Zenaida Dublin, filed a complaint with the Philippine Overseas Employment Administration (POEA) against NAESS for payment of death benefits under the employment contract.
- The employment contract, which incorporated a Special Agreement between the International Workers Federation (ITF) and NAESS, provided for cash benefits to the immediate next of kin in case of death of the crewman.
There is no question that NAESS freely bound itself to a contract which on its face makes it unqualifiedly liable to pay compensation benefits for Dublin's death while in its service, regardless of whether or not it intended to make itself the insurer, in the legal sense, of Dublin's life. No law or rule has been cited which would make it illegal for an employer to assume such obligation in favor of his or its employee in their contract of employment.
In view of what has already been stated, it makes no difference whether Dublin intentionally took his own life, or he killed himself in a moment of temporary aberration triggered by remorse over the killing of the second cook, or he accidentally fell overboard while trying to flee from imagined pursuit, which last possibility cannot be ruled out considering the state of the evidence.
On Dublin's part, entitlement to death benefits resulted from his death while serving out his contract of employment; it was not a consequence of his killing of the second cook, Rodolfo Fernandez. If the latter's death is also compensable, that is due to the solitary fact of his death while covered by a similar contract, not precisely to the fact that he met death at the hands of Dublin That both deaths may be related by cause and effect and NAESS is the single obligor liable for compensation in both cases must, insofar as the factual and legal bases of such liability is concerned, be regarded as purely accidental circumstances.
- Notorious negligence is something more than simple or contributory negligence.
- It signifies a deliberate act of employee to disregard His own personal safety.
- Disobedience to rules and/or prohibition does not in itself constitute notorious negligence if no intention can be attributed to the insured to end his life when the action is elective in the employee or his ears, have a choice of the benefits under the Workmen's Compensation Law. (Paez vs. Workmen's Compensation Commission, No. L-18438, March 30, 1963)
- Conrado Paez and his wife were in the business of buying palay.
- Palay purchased by agents needed to be transported from Isabela to Nueva Ecija or Tarlac. To do this, the palay had to be ferried across the Magat River in Aurora, Isabela, from the Cabatuan side to Guimba.
- Valentin Lagman regularly drove a truck on the Guimba side, while Primitivo Apolonio was the truck driver on the Aurora side.
- On August 1, 1953, Lagman, the regular driver, could not perform his duties because his child became seriously ill. Marciano Barawid substituted for Lagman, with an understanding to receive Lagman's pay during his absence.
- On August 2, 1953, instead of waiting on the Cabatuan side, Barawid crossed the Magat River and joined Apolonio on the Aurora side to help haul palay.
- Apolonio advised Barawid not to board the fully loaded third banca but to take another to Guimba. While in the Magat River, the overloaded banca capsized, leading to Barawid's drowning.
- The heirs of Marciano Barawid, presented with the Department of Labor, Regional Office No. 3, a complaint for compensation.
- Workmen's Compensation Commission: Ordered Paez to pay compensation to the heirs of Marciano Barawid.
WoN the death arose out of and in the course of employment. YES
Notorious negligence is something more than mere or simple negligence, or contributory negligence; it signifies a deliberate act of the employee to disregard his own personal safety. In the case at bar, there is no showing at all that deceased Barawid had deliberately disregarded his safety; no intention was attributed to him to end his life or that he wantonly courted death. The deceased wanted to return home as it was getting late, and even helped in the loading and unloading of the palay to the banca and truck, to finish the work that day. It is claimed that the deceased wanted to return home, because he was to drive the new truck of his brother-in-law, and he was in such a hurry that he unheeded the suggestion of his companion not to embark any more, as it was dark and the banca was fully loaded. Conceding this to be true, for the purpose of argument, (Barawid can no longer contradict it, his lips having been sealed by death), still the disregard of the warning, can not be considered as a notorious negligence.
Disobedience to rules, orders and/or prohibition, does not in itself constitute notorious negligence, if no intention can be attributed to the injured to end his life. And if in the case at bar, there was any negligence at all, the same can not be considered notorious or evident. The deceased did not act with the full knowledge of the existence of a danger that ordinary prudence would counsel him to avoid such a case. That a banca loaded with palay and 3 persons, at night time, would sink if one person more was added to its weight, constituted merely a miscalculation on the part of such person, if he thought it would be safe for him to embark, the alleged overloading notwithstanding Barawid's promptness in accomplishing his duties, to enable him to attend his personal interest thereafter, cannot be a valid reason to deny him the right to be compensated.
- Solidum was an enlisted man of the Philippine Marines, assigned to the 10th Marine Battalion, stationed at Zamboanga City.
- One morning in March 1987, Solidum, who was then resting after a patrol mission, jokingly challenged his comrades to a duel, but they all ignored him.
- Pointing the muzzle of his loaded rifle at his temple and, saying “Bahala na,” Solidum squeezed the trigger. He died instantly.
- His father filed a claim for death benefits under P.D. No. 626.
- GSIS: Denied the claim because the contingency did not arise out of and in the course of employment. The System pointed out that the deceased was not performing his duties as a soldier when the accident occurred. Moreover, it said, the deceased’s death was caused by his notorious negligence and not by an accident or by “an act of God.”
WoN the death of Solidum is compensable under P.D. No. 626. NO
The ECC sustained the System’s decision. The ECC noted that the deceased pointed the muzzle of his rifle to himself and squeezed its trigger causing his death. “Such an act, we believe, constitutes notorious negligence. The employees’ compensation program under which the appellant seeks relief is designed to compensate only the working men who are victims of work-connected injuries and other contingencies. In the case before us, the contingency did not arise out of and in the course of employment, and therefore is not compensable.”- A Philippine Army soldier died in December 1980 due to dynamite blast at Tumalutab detachment in Ipil, Zamboanga City.
- Investigation showed that after lunch that day, he asked permission from his unit to test the dynamite they had earlier confiscated.
- He took a civilian pumpboat and proceeded towards nearby Sinonog Island. Along the way, however, he accidentally ignited the fuse of the dynamite, causing it to explode prematurely. The soldier died on the spot.
- His father filed a claim for compensation benefits for his death.
- GSIS: Denied the claim because the deceased at the time of accident was not performing his duties aside from being notoriously negligent.
- Appellant: Averred that his son belonged to the Ranger Training Group whose primary mission is to develop selected soldiers in the field of specialized small unit tactics, particularly on weapons, explosives, and hand-to-hand combat, among others. Thus, testing a dynamite was part of the deceased’s training as a ranger.
WoN the death of the soldier is compensable. YES
The ECC reversed the respondent System’s decision and ordered payment of the claim. There was indeed negligence on the part of the deceased soldier. However, his negligence was not notorious as perceived by the respondent. Notorious negligence is something more than simple or contributory negligence. It signifies a deliberate act of the employee to disregard his own personal safety. Disobedience to rules does not in itself constitute notorious negligence, if no intention can be attributed to the injured to end his life.
Thus, in line with the principle of liberally construing compensation law, to attain its purpose for which it was enacted, the correct view to be followed is that no man in his right senses would deliberately court death. The presumption then to be adopted is that any person by his instinct of self preservation wants to avoid such danger unless an intention is attributed to him to end his life.
Considering the soldier’s training on explosives as a ranger, his desire to test the confiscated dynamite is but a natural reaction on his part to the extent that he even ignored the advice of his colleague against his plan. Unfortunately, the dynamite exploded prematurely causing his instant death.
Art. 179 [173]. Extent of liability.
Unless otherwise provided, the liability of the State Insurance Fund under this Title shall be exclusive and in place of all other liabilities of the employer to the employee, his dependents or anyone otherwise entitled to receive damages on behalf of the employee or his dependents. The payment of compensation under this Title shall not bar the recovery of benefits as provided for in Section 699 of the Revised Administrative Code, Republic Act Numbered Eleven hundred sixty-one, as amended, Republic Act Numbered Forty-eight hundred sixty-four as amended, and other laws whose benefits are administered by the System or by other agencies of the government. (As amended by Presidential Decree No. 1921).
Notes:
- Where the action is selective and the employee or his heirs have a choice of the benefits under the workmen's compensation Jaw, or of damages under the Civil Code, the employee or the heirs have the option to elect.
- But once the election is done, the claimants are no longer free to opt for the other remedy. They cannot pursue both actions simultaneously, at least until the prior claim is rejected by the compensation commission. (Ysmael Maritime Corporation v. Avelino, No. L-43674, June 30, 1987)
- Simultaneous recovery of benefits under the employees' compensation program of the Labor Code and under the Social Security law is allowed, in view of the amendment of Article 179 by P.D. No. 1921 in 1984. This is the advisory opinion given by the Secretary of Justice to the SSS in opinions dated May 23, 1989 and January 12, 1990.
- Rolando G. Lim was on board the vessel M/S Rajah, owned by petitioner Ysmael Maritime Corporation, when the same ran aground and sank near Sabtan Island, Batanes.
- Rolando perished at the age of 25 as a result of that incident.
- Lim's parents, Felix Lim and Consorcia Geveia, sued the corporation for damages in Civil Case No. R-12861, alleging negligence.
- Ysmael Maritime Corporation argued that:
- the complaint lacked cause of action,
- the parents had received compensation from them, and
- the Workmen’s Compensation Commission (WCC) had already compensated them.
WoN the compensation remedy under the Workmen’s Compensation Act [WCA], and now under the Labor Code, for work-connected death or injuries sustained by an employee, is exclusive of the other remedies available under the Civil Code. YES
The employee or his heirs have a choice of availing themselves of the benefits under the WCA or of suing in the regular courts under the Civil Code for higher damages from the employer by reason of his negligence. But once the election has been exercised, the employee or his heirs are no longer free to opt for the other remedy. In other words, the employee cannot pursue both actions simultaneously.
As thus applied to the case at bar, respondent Lim spouses cannot be allowed to maintain their present action to recover additional damages against petitioner under the Civil Code. In open court, respondent Consorcia Geveia admitted that they had previously filed a claim for death benefits with the WCC and had received the compensation payable to them under the WCA. It is therefore clear that respondents had not only opted to recover under the Act but they had also been duly paid. At the very least, a sense of fair play would demand that if a person entitled to a choice of remedies made a first election and accepted the benefits thereof, he should no longer be allowed to exercise the second option.
Art. 174. Liability of third party/ies.
(a) When the disability or death is caused by circumstances creating a legal liability against a third party, the disabled employee or the dependents, in case of his death, shall be paid by the System under this Title. In case benefit is paid under this Title, the System shall be subrogated to the rights of the disabled employee or the dependents, in case of his death, in accordance with the general law.
(b) Where the System recovers from such third party damages in excess of those paid or allowed under this Title, such excess shall be delivered to the disabled employee or other persons entitled thereto, after deducting the cost of proceedings and expenses of the System.
Notes:
- If an employee is injured or killed by a third party, the employee or the dependents may file compensation claim with the System.
- The System, after paying the claim, shall proceed against the liable third party.
- If it recovers more than what is paid, it can deduct its expenses, then deliver the remainder to the employee or whoever is entitled to it in his behalf.
RULE IV - LIABILITY
SECTION 1. Limitation.
No compensation shall be allowed to the employee or his dependents when the injury, sickness, disability or death was occasioned by any of the following:
(1) his intoxication;
(2) his willful intention to injure or kill himself or another; or
(3) his notorious negligence.
SECTION 2. Extent of Liability.
(a) Unless otherwise provided, the liability of the State Insurance Fund, shall be exclusive and in place of all other liabilities of the employer to the employee or his dependents or anyone otherwise entitled to receive damages on behalf of the employee or his dependents.
(b) The payment of compensation under this Title shall not bar the recovery of benefits as provided for in Section 699 of the Revised Administrative Code, Commonwealth Act numbered 186, as amended, Republic Act numbered eleven hundred sixty one, as amended, Republic Act numbered six hundred ten, as amended, Republic Act numbered forty-eight hundred sixty-four, as amended, and other laws whose benefits are administered by the System or by other agencies of the government. (ECC Resolution No. 2799, July 25, 1984).
SECTION 3. Third parties.
When disability or death is caused by circumstances creating a legal liability against a third party, the disabled employee or the dependents in case of his death shall be paid benefit from the System under these Rules.
In case benefit is claimed and allowed under these Rules, the System shall be subrogated to the rights of the disabled employee or the dependents in case of his death in accordance with existing laws.
SECTION 4. Unauthorized changes.
The System shall not be liable for compensation for unauthorized changes in medical services, appliances, supplies, hospitals, rehabilitation services or physicians.
Should there be any reason for such changes, the employee or his dependents shall notify the System and secure its prior consent before the change may be effected.
SECTION 5. Medical reports.
(a) An employee enjoying temporary total disability benefits shall submit to the System a monthly medical report on his disability certified by his attending physician, otherwise his benefit shall be suspended until such time that he complies with this requirement.
(b) An employee enjoying permanent disability benefit where the disability resulted from a disease shall submit to the System a quarterly medical report on his disability certified by his physician, otherwise his benefit shall be suspended until such time that he complies with his requirement.
Art. 181 [175]. Deprivation of the benefits.
Except as otherwise provided under this Title, no contract, regulation or device whatsoever shall operate to deprive the employee or his dependents of any part of the income benefits and medical or related services granted under this Title. Existing medical services being provided by the employer shall be maintained and continued to be enjoyed by their employees.
Notes:
- This Article, in other words, protects the employee's right to benefits given by this law.
- No agreement or contract is allowed whose effect is to deprive the employee of those benefits.
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