DEFINITIONS

Section 8: Terms Defined

1. Social Security System (SSS)- administers social
security protection to
workers in the private sector. Social security provides replacement
income for workers in times of death, disability, sickness, maternity
and old age. On September 1, 1957, the Social Security Act of 1954
was implemented.

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 it

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 and 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 dependent 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 21 of age, or if over
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 received
during the month 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 1 month.

i) Contribution－The amount paid to the SSS by and on behalf of the member 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 services 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 50%
of the share of the legitimate, legitimated or legally adopted children:
⚫ Provided, further, that in the absence of the dependent legitimate,
legitimated or legally adopted children of the member, his/her dependent
illegitimate children shall be entitled to 100% of the benefits.
➢ In their absence, the dependent parents who shall be the secondary
beneficiaries of the member.
➢ In the absence of all of 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 60 monthly salary credits
immediately preceding the semester of contingency by 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) － The result obtained by dividing the sum of

Average daily salary credit
the 6 highest monthly salary credits in the 12-month period
immediately preceding the semester of contingency by 180.

o) Semester － A period of 2 consecutive quarters ending in the quarter of

contingency.
p) Quarter － A period of 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 1985 minus the calendar year of
coverage plus the number of calendar years in which 6 or more contributions
have been paid from January 1985 up to the calendar year containing the
semester prior to the contingency.
⚫ For a member covered in or after January 1985, the number of calendar
years in which 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 9-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 and

rentals for leased properties, including interest on funded and unfunded de bt.