P.D. No. 735

MALACAÑANG
M a n i l a

PRESIDENTIAL DECREE No. 735 June 27, 1975

FURTHER AMENDING CERTAIN SECTIONS OF REPUBLIC ACT NUMBERED ELEVEN HUNDRED SIXTY-ONE, AS AMENDED, OTHERWISE KNOWN AS THE "SOCIAL SECURITY LAW"

WHEREAS, on the 22nd day of December, 1973, Presidential Decree No. 347 amended certain sections of Republic Act No. 1161, as amended, otherwise known as the "Social Security Law";

WHEREAS, Article 178(d) of Presidential Decree No. 442, otherwise known as the "Labor Code of the Philippines," provides for the integration of the benefits under Title II of Book IV of the Code with other benefits administered by the SSS and GSIS;

WHEREAS, increases in social security benefits should now be provided to meet the additional needs of SSS members arising from the price increase of prime commodities and other effects of the combined inflation and recession; and

WHEREAS, in order to bring about a more effective implementation of social security legislation and enable the SSS to be even more responsive to the needs of its members, it is found necessary to further amend certain sections of the Social Security Law;

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

Section 1. Section three of Republic Act No. 1161, as amended, otherwise known as the Social Security Law, is further amended to read as follows:

"Sec. 3. Social Security System.

(a) To carry out the purposes of this Act, the Social Security System with principal place of business in Manila or Quezon City, Philippines, is hereby created. The SSS shall be under the general supervision of a Social Security Commission composed of the Secretary of Labor, the SSS Administrator and six appointive members, two of whom shall represent the labor group, two, the management group and two, the general public, to be appointed by the President of the Philippines. The Chairman of the Commission shall be designated by the President from among its members. The term of the appointive members shall be three years: Provided, That the terms of the first six appointive members shall be one, two, and three years for every two members, respectively. All vacancies, except through the expiration of the term, shall be filled for the unexpired term only. The appointive members of the Commission shall receive one hundred pesos per diem for each meeting actually attended by them: Provided, That no compensation shall be paid for more than eight meetings a month.

(b) The general conduct of the operations and management functions of the SSS shall be vested in the Administrator 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 Administrator shall be a person who has had previous experience in technical and administrative fields related to the purposes of this Act. He shall be appointed by the President of the Philippines and shall receive a salary to be fixed by the Commission with the approval of the President, payable from the funds of the SSS.

(c) The Commission, upon the recommendation of the Administrator, shall appoint an actuary and such other personnel as may be deemed necessary; fix their compensation; prescribe their duties and establish such methods and procedures as may insure the efficient, honest and economical administration of the provisions and purposes of this Act: Provided, however, That the personnel of the SSS shall be selected only from civil service eligibles certified by the Commissioner of Civil Service and subject to civil service rules and regulations."

Section 2. Paragraphs (b) and (j) of Section four of the same Act are amended to read as follows:

"Sec. 4. Powers and duties of the Commissions.

(a) …

(b) To submit annually not later than March 31 a public report to the President of the Philippines covering its activities in the administration and enforcement of this Act during the preceding year, including information and recommendation on broad policies for the development and perfection of the program of the SSS.

x x x x x x x x x

(j) 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-salaried employees and for the maintenance of hospitals and institutions for the sick, aged and infirm employees and immediate members of their families."

Section 3. Paragraph (a) of Section five of the same Act is further amended to read as follows:

"Sec. 5. (a) Settlement of Disputes. 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 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."

Section 4. Section six of the same Act is further amended to read as follows:

"Sec. 6. Auditor and Counsel.

(a) The Commissioner 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."

Section 5. Paragraphs (e), (j), (k), (l), (m), (n), and (o) of Section eight of the same Act are amended to read as follows:

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

x x x x x x x x x

(e) Dependent. The legitimate, legitimated or legally adopted child who is unmarried, not gainfully employed, and not cover twenty-one years of age provided that he is congenitally incapacitated and incapable of self-support physically or mentally; the legitimate spouse dependent for support upon the employee; and the legitimate parents wholly dependent upon the covered employee for regular support.

(j) Employment. Any service performed by an employee for his employer, except

1. Agricultural labor when performed by a share or leasehold tenant or worker who is not paid any regular daily wage or base pay and who does not work for an uninterrupted period of at least six months in a year;

2. Domestic service in a private home;

3. Employment purely casual and not for the purpose of occupation or business of the employer;

4. Service performed by an individual in the employ of his son, daughter, or spouse, and service performed by a child under the age of twenty-one years in the employ of his parents;

5. Service performed on or in connection with an alien vessel by an employee if he is employed when such vessel is outside the Philippines;

6. Service performed in the employ of the Philippine Government or instrumentality or agency thereof;

7. Service performed in the employ of a foreign government or international organization, or their wholly-owned instrumentality; Provided, however, That his 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;

8. Such other services performed by temporary 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 services of said contractors.

(k) Beneficiaries. The dependent spouse until he remarries and dependent children, who shall be the primary beneficiaries. In their absence, the dependent parents and, subject to the restrictions imposed on dependent children, the legitimate descendants and illegitimate children who shall be the secondary beneficiaries. In the absence of any of the foregoing, any other person designated by the covered employee as secondary beneficiary.

(l) Contingency. The retirement, death, permanent disability, injury or sickness of the covered employee.

(m) Average monthly credit. The result obtained by dividing the sum of the monthly salary credits in the six-month period immediately preceding the semester of contingency by the number of months of coverage in the same period, 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 calendar months of coverage in the same period, whichever is greater: except where the month of contingency falls within eighteen 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: Provided, That the injury or sickness which caused the disability for 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 highest monthly salary credits in the twelve-month period immediately preceding the semester of sickness by one hundred eighty.

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

Section 6. Paragraph (b) of Section nine of the same Act is further amended to read as follows:

"Sec. 9. Compulsory coverage.

x x x x x x x x x

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

Section 7. Section eleven of the same Act is further amended to read as follows:

"Sec. 11. Effect of separation from employment. When an employee under compulsory coverage is separated from employment, his employer's 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.

Section 8. Section twelve of the same Act is further amended to read as follows:

"Sec. 12. Basic monthly pension. A covered employee who (1) has paid at least one hundred twenty monthly contributions to the SSS, has reached the age of sixty years and is separated from employment or, if still employed, is receiving less than two hundred fifty pesos monthly compensation, or; (2) has paid at least one hundred twenty monthly contributions and has reached the age of sixty-five years, or; (3) has paid at least thirty-six monthly contributions and has become permanently totally disabled, shall be entitled for as long as he lives but in no case for less than five years to the basic monthly pension shall be computed as follows:

Forty-five per cent of the first three hundred pesos of the average monthly salary credit or fraction thereof; plus

Twenty-five per cent of the next three hundred pesos of the average monthly salary credit or fraction thereof; plus

Nine per cent of each succeeding one hundred pesos average monthly salary credit or fraction thereof; plus

One tenth of one per cent of the average monthly salary credit for each monthly contribution in excess of one hundred twenty and paid prior to the semester of retirement: Provided, That the basic monthly pension shall in no case be less than forty-five pesos nor paid for less than five years."

"Sec. 12-A. Dependents' pension. The dependent's pension shall be equivalent to ten per cent to the basic monthly pension for each dependent child not exceeding five, beginning with the youngest and without substitution."

"Sec. 12-B. Retirement benefits.

(a) A covered employee who has paid at least one hundred twenty monthly contributions prior to the semester of retirement, and who (1) has reached the age of sixty years and is not receiving two hundred fifty pesos or more monthly compensation, or (2) has reached the age of sixty-five years, shall be entitled for as long as he lives to one hundred fifteen per cent of the basic monthly pension: Provided, That his dependents born before his retirement of a marriage subsisting when he was fifty-seven years old shall be entitled to the dependents' pension: Provided, further, That the foregoing benefits shall take effect on July 1, 1975: Provided, finally, That the monthly pension of a surviving pensioner retired due to old age before July 1, 1975 shall be increased by fifteen percent and the amount shall be his new monthly pension beginning with said date.

(b) A covered member who is sixty 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 and dependents' pension shall be suspended:

1. Upon the re-employment of a retired employee who is less than sixty-five years old if he receives from his employment a monthly compensation of two hundred fifty pesos or more.

2. Upon the recovery of an employee retired due to permanent total disability, or his failure to present himself for examination at least once a year upon notice by the SSS.

Section 9. Section 13 of the same Act is further amended to read as follows:

"Sec. 13. Death benefits. Effectively July 1, 1975, upon the covered employee's death, (a) his primary beneficiaries shall be entitled to the basic monthly pension, and his dependents to the dependent's pension: Provided, That he has paid at least thirty-six monthly contributions prior to the semester of death: Provided, further, That if the foregoing condition is not satisfied, or if he has no primary beneficiaries, his secondary beneficiaries shall be entitled to a lump sum benefit equivalent to thirty times the basic monthly pension: Provided, however, That the death benefit shall not be less than the total contributions paid by him and his employer on his behalf nor less than five hundred pesos: Provided, finally, That the covered employee who dies in the month of coverage shall be entitled to the minimum benefit.

Section 10. Section thirteen-A of the same Act is further amended to read as follows:

"Sec. 13-A. Permanent disability benefits.

(a) Upon the covered employee's permanent total disability, if such disability occurs after he has paid at least thirty-six monthly contributions prior to the semester of disability, he shall be entitled to the basic monthly pension and, upon his death, his dependents shall be entitled to the dependents' pension: Provided, That if such disability occurs before he has paid thirty-six monthly contributions prior to the semester of disability, he shall be entitled to a lump sum benefit equivalent to thirty five times the basic monthly pension: Provided, further, That the benefit shall not less than the total contributions paid by him and his employer on his behalf nor less than five hundred pesos: Provided, however, That a covered employee who becomes permanently totally disabled in the month of coverage shall be entitled to the minimum benefit.

(b) The monthly pension shall be suspended upon his re-employment if he receives a monthly compensation of two hundred fifty pesos or more, or his recovery from the permanent total disability, or his failure to present himself for examination at least once a year upon notice by the SSS.

(c) 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 in incurable imbecility or insanity; and

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

(d) If the disability is permanent partial, and such disability occurs before thirty-six monthly contributions have been paid preceding 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 decree of disability as the Commission may determine.

(e) If the disability is permanent partial, and such disability occurs after thirty-six contributions have been paid preceding the semester of disability, the benefit shall be the basic monthly pension for permanent total disability payable not longer than the period designated in the following schedule:

COMPLETE AND PERMANENT LOSS OF THE USE OF NUMBER OF MONTHS

One thumb 8

One index finger 6

One middle finger 5

One ring finger 4

One little finger 2

One big toe 5

Any toe 2

One hand 31

One arm 40

One foot 25

One leg 37

One ear 8

Both ears 16

Hearing of one ear 8

Hearing of both ears 40

Sight of one eye 20

(f) The percentage degree of disability, which is equivalent to the ratio that the designated number of months of compensability bears to sixty, 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 per cent, in which case the employee shall be deemed as permanently totally disabled."

Section 11. A new section is added to the same Act designated as Section thirteen-B to read as follows:

"Sec. 13-B. Funeral benefit. A funeral grant of seven hundred fifty pesos shall be paid to help defray the cost of funeral expenses upon the death of a covered member, permanently totally disabled employee or retiree."

Section 12. Section fourteen of the same Act is further amended by amending the first part of paragraph (a), item (1) of paragraph (a), paragraph (b) and paragraph (d), to read as follows:

"Sec. 14. Sickness benefit. (a) Beginning July 1, 1975, any covered employee under this Act who has paid at least three monthly contributions in the twelve month period immediately preceding the semester of sickness and is confined for more than three days in a hospital or elsewhere with the Commission's approval, shall for each day of compensable confinement or fraction thereof be paid by his employer, or by the SSS if such person is unemployed, an allowance equivalent to eighty five per cent of his average daily salary credit, subject to the following conditions:

1. In no case shall the total amount of such daily allowance be less than two pesos and fifty centavos nor exceed sixteen pesos nor paid longer than one hundred twenty days in one calendar year; nor shall any unused portion of the one hundred twenty 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 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 shall have been exhausted.

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

Section 13. Section fifteen of the same Act is further amended to read as follows:

"Sec. 15. Non-transferability of benefits The SSS shall pay the benefits provided for in this Act to such persons as may be entitled thereto in accordance with the provisions of this Act: Provided, 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 employee 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: Provided, finally, That notwithstanding any law to the contrary, the payment of benefits under this Act shall bar the recovery of similar benefits under Title II of Book IV of the Labor Code of the Philippines, as amended, during the period of such payment for the same contingency, and conversely."

Section 14. Section sixteen of the same Act is further amended to read as follows:

"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 which may be required in connection with the operation or execution of this Act 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 be liable to attachment, garnishment, 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 covered employee to the SSS. No tax measure hereafter 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 against, and still unpaid by the SSS shall be null and void."

Section 15. Section twenty-three of the same Act is further amended to read as follows:

"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, stamp, coupons, tickets, or other reasonable devices that the Commission may adopt."

Section 16. Section twenty-four of the same Act is further amended by amending paragraphs (a), (b) and (c), and adding paragraph (f), to read as follows:

"Sec. 24. Employment records and reports Each employer shall immediately report to the SSS the names, ages, civil statutes, 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 without the SSS having previously received any report or written communication about him from his employer or a contribution paid in his name by his employer, the said employer shall pay to the SSS damages equivalent to the benefits to which said employee 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 for the actuarial lump sum equivalent of both the basic and dependents' monthly pensions: Provided, further, That if the contingency occurs within thirty days from the date of employment, the employer shall be relieved of his liability for damages.

(b) Should the employer misrepresent the true date of employment of his employees, fail to remit contributions or remit to the SSS contributions which are less than those required in this Act, resulting in a reduction of benefits, the employer shall pay to the SSS damages to the extent of such reduction, but said employer shall be relieved of his civil liability for the corresponding unremitted contributions and penalties thereon.

(c) The records and reports duly accomplished and submitted to the SSS by the employee or the employer as the case may be, shall be kept confidential by the SSS except in compliance with a subpoena duces tecum issued by the Courts, shall not be divulged without the consent of the Administrator 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.

(f) Notwithstanding any law to the contrary, microfilm 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."

Section 17. Section twenty-five of the same Act is further amended to read as follows:

"Sec. 25. Deposit 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 of the total yearly collection of contributions and gross income from investments, not more than twelve per cent shall be disbursed for salaries and wages, purchases of office equipment and materials, operational expenses and the maintenance of regional offices of the SSS; Provided, further, That if the expenses in any year are less than the maximum amount permissible, the difference shall be availed of as additional expenses in the following years.

Section 18. Section twenty-six of the same Act is further amended by amending paragraphs (d) and (g) to read as follows:

"Sec. 26. Investment or reserve funds.

(d) In direct housing loans to covered employees and housing projects giving priority to the low-income groups, up to a maximum of ninety per cent of the appraised value of the properties to be mortgaged by the borrowers and maintenance of hospitals and institutions for the sick, aged and infirmed members and their families, referred to in section four (j) of this Act.

(g) As part of its investment operations, the SSS shall act as insurer of all or part of its interests on SSS properties, 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.

(h) The SSS may insure any of its interests 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 years but such examination shall be limited to the insurance operation of the SSS as authorized under this section 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 expenses of the Insurance Commission in the conduct of the 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 promulgated thereunder shall have suppletory application insofar as it is not in conflict with the SSS Law and rules and regulations."

Section 19. Section twenty-eight of the same Act is further amended by amending paragraph (i) to read as follows:

"Sec. 28. Penal clause

(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 shall be filed by the SSS in the city or municipality where the SSS Regional Office is located if the violation was committed in its territorial jurisdiction or, at the option of the SSS, in Greater Manila."

Section 20. Section thirty-one of the same Act is further amended to read as follows:

"Sec. 31. Saving clause. The Assembly hereby reserves the right to amend, alter, or repeal any provision of this Act, and no person shall be or shall be deemed to be vested with any property or other right by virtue of the enactment or operation of this Act.

Section 21. Section thirty-two of the same Act is hereby deleted.

Section 22. The word "System" and the term "Social Security System" as used in Republic Act No. 1161, as amended, for purposes of uniformity, are hereby replaced by "SSS", except in provisions wherein the use of such word or term, as the case may be, are considered necessary.

Section 23. This Decree shall take effect immediately.

Done in the City of Manila, this 27th day of June, in the year of Our Lord, nineteen hundred and seventy-five.

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