Labor Law: Book IV; Title II; Chapter VIII Provisions Common to Income Benefits (Arts. 201 - 210)

Book IV

Health, Safety and Social Welfare

Title II

Employees’ Compensation and State Insurance Fund

Chapter VIII

Provisions Common to Income Benefits

Arts. 201 - 210 

Q: May an employee recover from the fund even though the employer has failed to remit the required contributions?

If there are rival claimants to a benefit, how and by whom is the dispute resolved?

Art. 201 [195]. Relationship and dependency. 

All questions of relationship and dependency shall be determined as of the time of death.

Notes:

• Article 173(i) enumerates the persons considered as "dependents." 
• “Dependent” means the 
1. legitimate, legitimated or legally adopted or acknowledged natural child who is unmarried, not gainfully employed, and not over twenty-one (21) years of age or over twenty-one (21) years of age provided he is incapacitated and incapable of self-support due to a physical or mental defect which is congenital or acquired during minority; 
2. the legitimate spouse living with the employee and 
3. the parents of said employee wholly dependent upon him for regular support.
• The test of dependency is not whether the claimants could support life without contributions, but whether they depend on such contributions as part of their income or means of living. 
• The law empowers the ECC to resolve disputes in compensation claims.
• If there are two women claiming as lawful wives of the deceased, the Commission must resolve the dispute
• The Commission may act as referee and arbitrator between the two claimants and help them reach a mutually acceptable compromise settlement of allotting the compensation among themselves and their dependent children, if any, in order to avoid unnecessary expense, delay, and litigation between them.

RULE XV - BENEFICIARIES

SECTION 1. Definition. 

(a) Beneficiaries shall be either primary or secondary, and determined at the time of employee’s death.

(b) The following beneficiaries shall be considered primary:

1. The legitimate spouse living with the employee at the time of the employee’s death until he remarries; and
2. Legitimate, legitimated, legally adopted or acknowledged natural children, who are unmarried not gainfully employed, not over 21 years of age, or over 21 years of age provided that he is incapacitated and incapable of self - support due to physical or mental defect which is congenital or acquired during minority; Provided, further, that a dependent acknowledged natural child shall be considered as a primary beneficiary only when there are no other dependent children who are qualified and eligible for monthly income benefit; provided finally, that if there are two or more acknowledged natural children, they shall be counted from the youngest and without substitution, but not exceeding five. (ECC Resolution No. 2799, July 25, 1984).

(c) The following beneficiaries shall be considered secondary:

1. The legitimate parents wholly dependent upon the employee for regular support;
2. The legitimate descendants and illegitimate children who are unmarried, not gainfully employed, and not over 21 years of age, or over 21 years of age provided that he is incapacitated and incapable of self-support due to physical or mental defect which is congenital or acquired during minority.

SECTION 2. Priority.

(a) Primary beneficiaries shall have priority claim to death benefit over secondary beneficiaries. Whenever there are primary beneficiaries, no death benefit shall be paid to his secondary beneficiaries.

(b) If the deceased employee has no primary beneficiaries at the time of his death, the death benefit shall be paid to his secondary beneficiaries.

(c) If the deceased employee has no beneficiaries at the time of his death, the death benefit shall accrue to the Employees’ Compensation fund.

SECTION 3.

Primary beneficiaries shall be entitled to a monthly income benefit. In their absence, the secondary beneficiaries shall be entitled to a monthly income benefit not to exceed 60 months and the death benefit shall not be less than P15,000.00. (ECC Resolution No. 2799 dated July 25, 1984). 

Art. 202 [196]. Delinquent contributions.

An employer who is delinquent in his contributions shall be liable to the System for the benefits which may have been paid by the System to his employees or their dependents, and any benefit and expenses to which such employer is liable shall constitute a lien on all his property, real or personal, which is hereby declared to be preferred to any credit, except taxes. The payment by the employer of the lump sum equivalent of such liability shall absolve him from the payment of the delinquent contribution and penalty thereon with respect to the employee concerned.

Failure or refusal of the employer to pay or remit the contribution herein prescribed shall not prejudice the right of the employee or his dependents to the benefits under this Title. If the sickness, injury, disability or death occurs before the System receives any report of the name of his employee, the employer shall be liable to the System for the lump sum equivalent to the benefits to which such employee or his dependents may be entitled.

Art. 203 [197]. Second injuries. 

If any employee under permanent partial disability suffers another injury which results in a compensable disability greater than the previous injury, the State Insurance Fund shall be liable for the income benefit of the new disability: Provided, That if the new disability is related to the previous disability, the System shall be liable only for the difference in income benefits.

Art. 204 [198]. Assignment of benefits. 

No claim for compensation under this Title is transferable or liable to tax, attachment, garnishment, levy or seizure by or under any legal process whatsoever, either before or after receipt by the person or persons entitled thereto, except to pay any debt of the employee to the System.

Art. 205 [199]. Earned benefits. 

Income benefits shall, with respect to any period of disability, be payable in accordance with this Title to an employee who is entitled to receive wages, salaries or allowances for holidays, vacation or sick leaves and any other award of benefit under a collective bargaining or other agreement.

Art. 206 [200]. Safety devices. 

In case the employee’s injury or death was due to the failure of the employer to comply with any law or to install and maintain safety devices or to take other precautions for the prevention of injury, said employer shall pay the State Insurance Fund a penalty of twenty-five percent (25%) of the lump sum equivalent of the income benefit payable by the System to the employee. All employers, specially those who should have been paying a rate of contribution higher than required of them under this Title, are enjoined to undertake and strengthen measures for the occupational health and safety of their employees.

Art. 207 [201]. Prescriptive period. No claim for compensation shall be given due course unless said claim is filed with the System within three (3) years from the time the cause of action accrued. (As amended by Section 5, Presidential Decree No. 1921)

Art. 208 [202]. Erroneous payment.

If the System in good faith pays income benefit to a dependent who is inferior in right to another dependent or with whom another dependent is entitled to share, such payments shall discharge the System from liability, unless and until such other dependent notifies the System of his claim prior to the payments.

 

In case of doubt as to the respective rights of rival claimants, the System is hereby empowered to determine as to whom payments should be made in accordance with such regulations as the Commission may approve. If the money is payable to a minor or incompetent, payment shall be made by the System to such person or persons as it may consider to be best qualified to take care and dispose of the minor’s or incompetent’s property for his benefit.

Art. 209 [203]. Prohibition. 

No agent, attorney or other person pursuing or in charge of the preparation or filing of any claim for benefit under this Title 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 Title for the payment of fees for such services is prohibited. Violation of any provision of this Article shall be punished by a fine of not less than five hundred pesos nor more than five thousand pesos, or imprisonment for not less than six months nor more than one year, or both, at the discretion of the court.

Art. 210 [204]. Exemption from levy, tax, etc. 

All laws to the contrary notwithstanding, the State Insurance Fund and all its assets shall be exempt from any tax, fee, charge, levy, or customs or import duty and no law hereafter enacted shall apply to the State Insurance Fund unless it is provided therein that the same is applicable by expressly stating its name.

Notes:

• Article 202 [196]: Delinquent Contributions
• Employers delinquent in contributions owe System for benefits paid to employees or dependents.
• Employer's property is a lien, preferred over credits (except taxes), for unpaid benefits.
• Payment of lump sum absolves employer from delinquent contribution and penalty for concerned employee.
• Article 203 [197]: Second Injuries
• If a permanently partially disabled employee suffers a new injury with greater disability, State Insurance Fund covers income benefit for the new disability.
• System liable for the difference if new disability is related to the previous one.
• Article 204 [198]: Assignment of Benefits
• Compensation claims are non-transferable, exempt from legal processes, except for paying employee's debt to the System.
• Article 205 [199]: Earned Benefits
• Income benefits paid during disability period as per the Title. 
• Applies to employees receiving wages, allowances, or benefits under agreements.
• Article 206 [200]: Safety Devices
• Employer pays 25% penalty to State Insurance Fund if injury/death is due to non-compliance with safety laws.
• Employers must ensure occupational health and safety measures, especially those with higher contribution rates.
• Article 207 [201]: Prescriptive Period
• Claims must be filed within 3 years of cause of action. Amendment by Presidential Decree No. 1921.
• Article 208 [202]: Erroneous Payment
• Good faith payments to dependents discharge System's liability, unless rival dependent claims prior.
• System empowered to resolve disputes about payments and may pay minors or incompetents to qualified individuals.
• Article 209 [203]: Prohibition
• No fees for agents assisting with benefit claims. 
• Violation leads to fines or imprisonment at court's discretion.
• Article 210 [204]: Exemption from Levy, Tax, etc.
• State Insurance Fund and assets exempt from taxes, fees, charges, levies, duties. Laws applicable only if expressly stated.

Notes:

• The three years have to be counted from the time the employee lost his earning capacity, not from the time the illness was discovered.

Employees’ Compensation Commission v. Sanico, G.R. No. 134028, December 17, 1999

• Edmund Sanico, a former employee of John Gotamco and Sons, was diagnosed with pulmonary tuberculosis (PTB) during his employment.
• Sanico was separated from employment on December 31, 1991, due to his illness.
• He filed a claim for compensation benefits under Presidential Decree No. 626, as amended, with the Social Security System (SSS) on November 9, 1994.
• SSS: Denied Sanico's claim, stating it was filed beyond the three-year prescriptive period from the time the PTB first became manifest on September 21, 1991.

WoN Sanico's claim for compensation benefits had prescribed when he filed it on November 9, 1994. YES

This Court has consistently ruled that "disability should not be understood more on its medical significance but on the loss of earning capacity. In disability compensation, it is not the injury which is compensated, but rather it is the incapacity to work resulting in the impairment of one's earning capacity. 

The prescriptive period for filing compensation claims should be reckoned from the time the employee lost his earning capacity, i.e., terminated from employment, due to his illness and not when the same first became manifest. Indeed, a person's disability might not emerge at one precise moment in time but rather over a period of time. In this case, private respondent's employment was terminated on 31 December 1991 due to his illness, he filed his claim for compensation benefits on 9 November 1994. Accordingly, private respondent's claim was filed within the three-year prescriptive period under Article 201 of the Labor Code.

Central Azucarera Don Pedro v. Workmen's  Compensation Commission, G.R. No. L-27870, October 23, 1974

• Victor de las Alas, a laborer employed by Central Azucarera Don Pedro since 1946, was diagnosed with pulmonary tuberculosis in 1960.
• He stopped working on October 11, 1960, due to his illness.
• The employer filed a letter of controversion on October 17, 1960, contesting de las Alas's claim for compensation benefits, which was received by the employer on December 29, 1960.
• Workmen's Compensation Commission: Ruled in favor of de las Alas, awarding him disability benefits and medical services, despite the claim being filed after the prescribed two-month period, the 

WoN de las Alas's failure to file the compensation claim within the two-month period, as per Section 24 of the Workmen's Compensation Act, is fatal to his claim. NO

It is now settled in this jurisdiction that failure on the part of an employee to comply with the requirement of the aforecited section concerning the giving of notice and the filing of the claim within the prescribed period is non-jurisdictional in nature and does not constitute a bar to the proceeding if it is shown that the employer, his agent or representative had knowledge of the injury, sickness or death, or that the employer did not suffer by such delay or failure.

... Considering the record of claimant's work as a railway laborer for many years, exposed to the inclemencies of the weather which finally overcame his power of resistance against the said disease, and considering further that the said sickness was acquired by him in the course of his employment, there being no evidence to show that he contracted it from other sources or causes, the presumption is that his said illness was caused by his employment, or either aggravated by or the result of the nature of his said employment with the respondent.