Chapter I : POLICY AND DEFINITIONS

ART. 166. Policy. - The State shall promote and develop a tax-exempt employees’ compensation program whereby employees and their dependents, in the event of work-connected disability or death, may promptly secure adequate income benefit and medical related benefits.

ART. 167. Definition of terms. - As used in this Title, unless the context indicates otherwise:

(a) "Code" means the Labor Code of the Philippines instituted under Presidential Decree Numbered four hundred forty-two, as amended.

(b) "Commission" means the Employees’ Compensation Commission created under this Title.

(c) "SSS" means the Social Security System created under Republic Act Numbered Eleven hundred sixty-one, as amended.

(d) "GSIS" means the Government Service Insurance System created under Commonwealth Act Numbered One hundred eighty-six, as amended.

(e) "System" means the SSS or GSIS, as the case may be.

(f) "Employer" means any person, natural or juridical, employing the services of the employee.

(g) "Employee" means any person compulsorily covered by the GSIS under Commonwealth Act Numbered One hundred eighty-six, as amended, including the members of the Armed Forces of the Philippines, and any person employed as casual, emergency, temporary, substitute or contractual, or any person compulsorily covered by the SSS under Republic Act Numbered Eleven hundred sixty-one, as amended.

(h) "Person" means any individual, partnership, firm, association, trust, corporation or legal representative thereof.

(i) "Dependent" means the 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; the legitimate spouse living with the employee and the parents of said employee wholly dependent upon him for regular support.

(j) "Beneficiaries" means the dependent spouse until he/she remarries and dependent children, who are the primary beneficiaries. In their absence, the dependent parents and subject to the restrictions imposed on dependent children, the illegitimate children and legitimate descendants, who are the secondary beneficiaries: Provided, That the dependent acknowledged natural child shall be considered as a primary beneficiary when there are no other dependent children who are qualified and eligible for monthly income benefit.

(k) "Injury" means any harmful change in the human organism from any accident arising out of and in the course of the employment.

(l) "Sickness" means any illness definitely accepted as an occupational disease listed by the Commission, or any illness caused by employment subject to proof that the risk of contracting the same is increased by working conditions. For this purpose, the Commission is empowered to determine and approve occupational diseases and work-related illnesses that may be considered compensable based on peculiar hazards of employment.

(m) "Death" means loss of life resulting from injury or sickness.

(n) "Disability" means loss or impairment of a physical or mental function resulting from injury or sickness.

(o) "Compensation" means all payments made under this Title for income benefits and medical or related benefits.

(p) "Income benefit" means all payments made under this Title to the providers of medical care, rehabilitation services and hospital care.

(q) "Medical benefit" means all payments made under this Title to the providers of medical care, rehabilitation services and hospital care.

(r) "Related benefit" means all payments made under this Title for appliances and supplies.

(s) "Appliances" means crutches, artificial aids and other similar devices.

(t) "Supplies" means medicine and other medical, dental or surgical items.

(u) "Hospital" means any medical facility, government or private, authorized by law, an active member in good standing of the Philippine Hospital Association and accredited by the Commission.

(v) "Physician" means any doctor of medicine duly licensed to practice in the Philippines, an active member in good standing of the Philippine Medical Association and accredited by the Commission.

(w) "Wages" or "Salary", insofar as they refer to the computation of benefits defined in Republic Act No. 1161, as amended, for SSS and Presidential Decree No. 1146, as amended, for GSIS, respectively, except that part in excess of Three Thousand Pesos.

(x) "Monthly salary credit" means the wage or salary base for contributions as provided in Republic Act Numbered Eleven hundred sixty-one, as amended, or the wages or salary.

(y) "Average monthly salary credit" in the case of the SSS means the result obtained by dividing the sum of the monthly salary credits in the sixty-month period immediately following the semester of death or permanent disability by sixty (60), except where the month of death or permanent disability falls within eighteen (18) calendar months from the month of coverage, in which case, it is the result obtained by dividing the sum of all monthly salary credits paid prior to the month of contingency by the total number of calendar months of coverage in the same period.

(z) "Average daily salary credit" in the case of the SSS means 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 sickness or injury by one hundred eighty (180), except where the month of injury falls within twelve (12) calendar months from the first month of coverage, in which case it is the result obtained by dividing the sum of all monthly salary credits by thirty (30) times the number of calendar months of coverage in the period.

In the case of the GSIS, the average daily salary credit shall be the actual daily salary or wage, or the monthly salary or wage divided by the actual number of working days of the month of contingency.

(aa) "Quarter" means a period of three (3) consecutive months ending on the last days of March, June, September and December.

(bb) "Semester" means a period of two consecutive quarters ending in the quarter of death, permanent disability, injury or sickness.

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

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

(ee) "Monthly income benefit" means the amount equivalent to one hundred fifteen percent of the sum of the average monthly salary credit multiplied by the replacement ratio, and one and a half percent of the average monthly salary credit for each credited year of service in excess of ten years: Provided, That the monthly income benefit shall in no case be less than two hundred fifty pesos.