G.R. No.
L-24883 October 31, 1969 On appeal, petitioner in its lone assignment of error contends
MACHUCA TILE CO., INC., petitioner,
vs.
SOCIAL SECURITY SYSTEM, respondent.
Ramon J. Dizon for petitioner.
Office of the Solicitor General Antonio P. Barredo, Assistant
Solicitor General Antonio A. Torres, Solicitor Camito D.
Quiason, Social Security System Legal Counsel Filemon Q.
Almazan and Social Security System Trial Attorney Gelacio L.
Bayani for respondent.
TEEHANKEE, J.:
We affirm, in this appeal, the Resolution of the Social Security
Commission holding petitioner-appellant Machuca Tiles
Company, Inc. liable under Section 24(a) of the Social Security
Act for the payment of damages in the form of death benefits
to the legal heirs of its deceased employee, Eduardo Jungay,
in the sum of P810.00 by virtue of its failure to make a timely
report to the System during the lifetime of said deceased that
the latter was in its employ and had qualified for compulsory
coverage in the System.
The undisputed facts of the case are thus related in the
appealed Resolution: "The deceased, Eduardo Jungay, was a
former employee of the petitioner and as such, qualified for
compulsory coverage in December 1961. He died on June 17,
1962, whereupon a claim for death benefits was filed with the
System by Prudencio Jungay, a brother of the deceased, as
one of the legal heirs. The claim was duly processed by the
System's Claims Department, and in the course thereof, it
discovered that the deceased was reported by the petitioner
for coverage in the System only on September 5, 1962, when
the premiums on this account were remitted to the System.
After processing of the claim, the Claims Department
adjudicated the sum of P810.00 as death benefits payable to
the deceased's legal heirs, namely: Prudencio, Rogelio,
Tranquilino and Patricio, all surnamed Jungay, but in view of
the failure of the petitioner to report his coverage prior to his
death on June 17, 1962, the Acting Administrator of the Social
Security System declared the petitioner liable to pay to the
said heirs the amount of P810.00 as adjudicated by the Claims
Department. Taking exception to this ruling, the petitioner
filed the instant petition."1
The Social Security Commission, after due hearing rendered
its Resolution of May 18, 1965 affirming the Administrator's
ruling declaring the petitioner, rather than the System, legally
liable for the payment of death benefits to the deceased
employee's legal heirs, as follows:
WHEREFORE, PREMISES CONSIDERED, the petition
should be, as it is hereby, denied. Within fifteen (15)
days from its receipt hereof, the petitioner is directed
to pay to the legal heirs of the deceased, Eduardo
Jungay, whose names are set out hereinabove, the
sum of EIGHT HUNDRED TEN PESOS (P810.00) as
damages equivalent to the death benefits which the
legal heirs would have received had the name of the
deceased been reported to the System on time,
pursuant to Section 24 (a) of the law, conformably
with the Administrator's ruling which is hereby
affirmed, and to submit to the System proof of such
payment.2
that since some months after the death on June 17, 1962 of
its employee, Eduardo Jungay, it had submitted on September
5, 1962 to the System its report on its Employees and
remitted the corresponding premiums, including the sum of
P28.80 representing the deceased Jungay's premiums from
December, 1961 to June, 1962, it would not be just for
respondent-appellee to receive and keep the premiums paid
for the deceased Jungay and still hold petitioner liable for
payment of the death benefits. Petitioner further contends
that since respondent was aware that Jungay's premiums
were paid only after his death but did not return nor even
offer to return the same, respondent should be held in
estoppel and liable for the payment of the death benefits.
The fallacy of petitioner's contentions lies in its failure to
realize that it has two distinct obligations under the Social
Security Act, to wit, the obligation of making a
timely remittance of premiums under Section 22 (a) and the
obligation of making a timely report of its employees' names
and other personal data, including the social security number
assigned to each employee, for coverage, under Section 24
(a).
Section 22 (a) thus requires the employer to make a timely
remittance of the premium contributions of both employer
and employee, under pain of being subject to payment of a
3% monthly penalty:
Sec. 22. Remittance of Premiums. — (a) The
contributions imposed in the preceding sections shall
be remitted to the System within the first seven days
of each calendar month following the month for
which they are applicable to within such time as the
Commission may prescribe. Every employer required
to deduct and to remit such contributions shall be
liable for their payment, and if any contribution is
not paid to the System, as herein prescribed, he shall
pay beside the contribution a penalty thereon of
three per centum per month from the date the
contribution falls due until paid. If deemed expedient
and advisable by the Commission, the collection and
remittance of contributions shall be made quarterly
or semi-annually in advance, the contributions
payable by the employees to be advanced by their
respective employers: Provided, That upon
separation of an employee, any premium so paid in
advance but not due shall be credited or refunded to
his employer.3
On the other hand, Section 24 (a) requires the timely report
of employees' names and personal data for coverage under
the System, under penalty of being liable for damages
equivalent to the benefits the employee or his heirs would
have been entitled to receive from the System had his name
been reported on time by the employer:
SEC. 24. Employment records and reports. — (a) Each
employer shall report immediately to the System the
names, ages, civil status, occupations, salaries and
dependents of all his employees, who are in his
employ and who are or may, later be subject to
compulsory coverage: Provided, That if an employee
subject to compulsory coverage should die or
become sick or disabled without the System having
previously received a report about him from his
Page 1 of 21
 employer, the said employer shall pay to the
employee or his legal heirs 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 System.4
The posthumous remittance of the deceased employee's
premiums served but to extinguish petitioner's liability
therefor and to free it from the imposition of the 3% monthly
penalty from the date the contribution falls due until actually
paid. These accrued premiums were legally due to the System
as the contribution of both employer and employee under
Sections 18 and 19 of the Act and the death of the employee
did not extinguish petitioner's liability to remit the same.
There is no justification, consequently, for petitioner's claim
that respondent should be held in estoppel for having
retained them. As this Court has held in upholding the
amendment on January 14, 1958 of the System's Rules,
eliminating the provision for rebate of a proportionate
amount of the premiums paid on behalf of temporarily
employed alien technicians upon their departure from the
Philippines and allowing such rebate only if they have been
members for at least two years, "membership in this
institution is not the result of a bilateral, consensual
agreement where the rights and obligations of the parties are
defined by and subject to their will. Republic Act 1161
requires compulsory coverage of employers and employees
under the System. It is actually a legal imposition, on said
employers and employees, designed to provide social security
to the workingmen. Membership in the SSS is, therefore, in
compliance with a lawful exercise of the police power of the
State, to which the principle of non-impairment of the
obligation of contract is not a proper defense."5
Petitioner's separate mandatory liability under Section 24 (a)
of the Act for failure to make a timely report of the
employee's name and personal data for coverage under the
system therefore remains and must be enforced. It is obvious
that the Act attaches greater importance to this requirement
and obligation of the employer than that of timely remittance
of the premiums. For failure to make such report in
fact excludes the employee from the System's coverage and
the Act therefore shifts to the erring employer the
responsibility of paying the social security benefits "to which
the employee or his heirs would have been entitled had his
name been reported on time by the employer to the System."
Where the employer has, however, timely and properly
reported the employee's name for coverage but has failed or
refused to pay or remit the premiums, such failure or refusal,
by express provision of the Act in Section 22 (b) "shall not
prejudice the right of the covered employee to the benefits of
the coverage." The Act, in such cases as above stated, exacts
the lesser liability of payment of the delinquent premiums
with a 3% monthly penalty. Thus, in a similar case, 6 this Court
brushed aside the employer's contention that its failure to
make such a report was due to the deceased employee's
refusal to have his share of the monthly premiums deducted
from his salary and upheld the Social Security Commission's
jurisdiction to enforce the mandatory provisions of Section 24
(a) against the employer.
Petitioner's invoking of the ruling of this Court in a
commercial insurance case7 that acceptance by the insurer of
insurance premiums with full knowledge of the facts entitling
it to treat the policy as no longer in force estops it from
claiming forfeiture, has no application to the case at bar. In
said case, liability of the insurer had not yet attached when it
collected premiums for a policy that it had issued under
circumstances which it knew rendered the policy void, and
therefore it could not invoke in bad faith the policy's nullity
against a subsequent claim of loss under the policy. Here, the
mandatory liability of the employer in place of the System for
the social security benefits due to the deceased employee
had already been incurred, and its posthumous payment of
the accrued premiums was but in discharge of a separate and
distinct liability therefor. Petitioner's solace lies in that its
contributions to the System and its discharging of its liabilities
under the Act, will have helped subsidize the cause of social
security to protect not only its own employees but the
general membership of the System against the hazards of
disability, sickness, old age and death in line with the
Constitutional mandate to promote social justice and to
insure the well-being and economic security of all the
people.8
One last item. Payment by petitioner of the death benefits in
the sum of P810.00 awarded to the legal heirs of the
deceased employee under the Social Security Commission's
Resolution of May 18, 1965 has been delayed pending this
unjustified appeal. It is only just and in accordance with
law9 that the sum due said heirs bear legal interest of six (6%)
per cent per annum from June 4, 1965, date of receipt of said
Resolution by petitioner.10
ACCORDINGLY, the Resolution appealed from is hereby
affirmed, with the modification that petitioner shall pay the
legal heirs of the deceased Eduardo Jungay six (6%) per cent
interest per annum on the sum of P810.00 from June 4, 1965
until the date of actual payment.
FIRST DIVISION
G.R. No. L-39949 October 31, 1984
MANUEL H. SANTIAGO, ET AL., petitioners,
vs.
COURT OF APPEALS and SOCIAL SECURITY
SYSTEM, respondents.
MELENCIO-HERRERA, J.:ñé+.£ªwph!1
A Petition to review the Decision of the then Court of Appeals
(in CA-G.R. No. SP-01897-R), which affirmed the Resolution of
the Social Security Commission (in Case No. 1073-SSC),
denying the petition of Manuel H. Santiago, et als., to credit in
their favor the salary deductions, by way of premium
contributions and salary loan installment payments, made by
their former employer, I-Feng Enamelling Company (Phil.) Inc.,
(the Employer, for brevity), but which the latter failed to remit
to the Social Security System (the System, for short).
There is no dispute as to the facts, as found by the then Court
of Appeals. têñ.£îhqwâ£
There is no dispute that petitioners were
employees of I-Feng Enamelling Company
(Phil.) Inc. for several years, some from 1950
up to the time the company closed its
business on May 1, 1965, and that since the
enactment of the Social Security Act,
Republic Act No. 1161, as amended, said
employees have been paying, through
salary deductions, their personal
Page 2 of 21
 contributions to the System There is
likewise no dispute that appellants, during
their employment, also enjoyed salary loan
benefits, their installment payments thereto
were likewise deducted and collected by
their employer, and that said employer
failed to remit to the System not only the
installment payments to their salary loans in
the amount of P7,940.13 but also the back
premiums in the amount of P137,787.90 as
of July 1966, excluding of course the
penalties therefor in the amount of
P63,734.97 as of August 9,1966 (Exhibit
"B" ). 1
Petitioners sought to have the amounts credited in their favor
but the Commission denied their petition, stating: têñ.
£îhqwâ£
WHEREFORE, in the light of the foregoing
discussion, the stand taken by petitioners in
its case is untenable, hence their petition is
hereby dismissed. If it is the claim of
petitioner that there are deductions made
on their salaries which were not remitted to
the System then petitioners should have
proceeded against the I-Feng Enamelling
Company (Phil.) Inc., their alleged employer.
The System is likewise directed to study and
determine what action to take under the
premises in order to protect the interest of
the System.
Petitioners appealed to the then Court of Appeals, which, in
its Decision promulgated on December 23, 1974, upheld the
findings of the Commission and affirmed the challenged
Resolution. Petitioners are now before us assailing the
foregoing Resolution and Decision on the following grounds:
I têñ.£îhqwâ£
The respondents erred in holding that there
exists no contract Of agency between the
Social Security System and I-Feng
Enamelling
Company (Phil.) Inc. in the collection of the salary loan
installment payments from the petitioners and, therefore, the
said unremitted salary loan installment payments may not be
credited to petitioners. têñ.£îhqwâ£
II
The Respondents likewise erred in holding
that the collections of premium
contributions by the I-Feng Enamelling
Company (Phil.) Inc. is not a collection by
the System and, therefore, such unremitted
premium contributions collected thru salary
deductions from the salaries of the
petitioners by the I-Feng Enamelling
Company (Phil.) Inc. and which the latter
failed to remit to the System may not be
credited to the petitioners.
The sole issue for consideration is whether or not the
premium contributions and payments of salary loans by
petitioners, which were deducted and collected from their
salaries by their Employer, but hot remitted to the System,
should be credited in their favor by the System.
Petitioners argue that they are entitled to full credit for the
unremitted premium contributions and salary loan
installment payments deducted from their wages because, by
law, a contract of agency exists between the SSS and the
Employer in the collection of the salary loan installment
payments, and therefore, as such agent, payment to the
Employer is payment to the principal, which is the System.
On the matter of payments of salary loans, SSS Circular No. 52
provides: têñ.£îhqwâ£
(2) in case the borrower is in active
employment, payment shall be made thru
this employer by means of salary
deductions. For this purpose, he shall
expressly authorize in the application form
his employer and the subsequent employers
to whom he may later on transfer to deduct
from his salaries the installments due. The
employer, in turn shall remit to the System
these installments in accordance with the
procedure laid down in heading VII hereof.
lt should be noted from the abovequoted rule that it is the
borrower who expressly authorizes his employer and
subsequent employers to deduct from his salary the
installments due on his salary loan. The employer then remits
the installments due to the System in accordance with rules
that the System has laid down. The employer, in so deducting
the installment payments from the borrower, does so upon
the latter's authorization. The employer is merely the conduit
for remitting the premiums for reasons of administrative
convenience and expediency iii order that SSS members may
be served efficiently and expeditiously. No contract of agency,
in the legal sense, therefore may be said to exist between the
employer and the System. But petitioners also rely on the
"Current Employer's Certification/Agreement" (Exhibits "N-1
", "U-1 ", "V1" and "WI ") providing that the employer is
empowered: têñ.£îhqwâ£
1. To deduct monthly from the salaries of
said employee the installments due on the
loan that may be granted by virtue of this
application and to remit the same to the
System not later than the 20th day of the
month following the end of each calendar
quarter, the employer being entitled to
deduct from the total quarterly collections
P.07 for every P10.00 thereof as his
collection fee.
The foregoing reiterates the proviso in SSS Circular No. 52,
reading: têñ.£îhqwâ£
V. Service and Collection Fee. -The System
shall charge a service fee of P3.50 for every
approved application deductible in advance
from the proceeds of the loan.
However, the employer shall be entitled to deduct from the
total quarterly collections that he remits to the System a
Page 3 of 21
collection fee of seven centavos (P.07) for every ten pesos
(P10.00) or fraction thereof.
The entitlement to the collection fee by the employer neither
makes the latter the agent of the System. The fee was devised
to encourage employers to be prompt in the remittance of
their collections to the System. As held by respondent
Appellate Court:
To us, this negligible collection fee is only an incentive granted
to all employers throughout the country covered by the Social
Security Act for their efforts in helping the System collect the
necessary contributions and payments made to the latter by
the innumerable individual members. This incentive is for
administrative policy, efficiency and expediency with the end
in view that the purposes for which the System has been
created by law shall be effectively carried out. ... .
To rule otherwise would be to open the door for unscrupulous
employers to circumvent the law by not remitting their
collections of salary loans installment payments from
employees since, anyway, the System would credit them with
what they had paid to the Employer even though the latter
fails to remit them to the System.
There is a difference, however, in respect of premium
contributions, by reason of the explicit provision of Section
22(b) of the Social Security Act, reading: têñ.£îhqwâ£
(b) The contributions payable under this Act
in cases where an employer refuses or
neglects to pay the same shall be collected
by the System in the same manner as taxes
are made collectible under the National
Internal Revenue Code, as amended, Failure
or refusal of the employer to pay or remit
the contributions herein prescribed shall
not prejudice the right of the covered
employee to the benefits of the coverage.
Clearly, if the employer neglects to pay the premium
contributions, the System may proceed with the collection in
the same manner as the Bureau of Internal Revenue in case of
unpaid taxes. Plainly, too, notwithstanding non-remittance by
employers of the premium contributions, covered employees
are entitled to the benefits of the coverage, such as death
sickness, retirement, and permanent disability
benefits. 2 These benefits continue to be enjoyed by the
employees by operation of law and not, as petitioners allege,
because the premium contributions and salary loan
installment payments have already became the money of the
System upon payment by the employees to the employer. It
should be remembered that funds contributed to the System
by compulsion of law are funds belonging to the members,
which are merely held in trust by the government.3 The
mentioned benefits, however, do not include the salary loan
privileges that member-employees apply for. The System may
or may not grant those loans pursuant to its rules and
regulations. The salary loans are not covered by law but by
contract between the System as lender, and the private
employee, as borrower.
Contrary to petitioners' contention, the penalty of 3% per
month imposed on the employer, if any premium contribution
is not paid to the System, prescribed by Section 22 of the Act
from the date the contribution falls due until paid, does not
necessarily make the employer the agent of the System. The
prescribed penalty is intended to exact compliance by the
employer. It is evidently of a punitive character to assure that
employers do not take lightly the State's exercise of the police
power in the implementation of the Republic's declared policy
to develop, establish gradually, and perfect a Social Security
System which shag be suitable to the needs of the people
throughout the Philippines and to provide protection to
employees against the hazards of disability, sickness, old age,
and death.'
WHEREFORE, the judgment under review is hereby modified
in that only the premium contributions paid by petitioners to
its employer, the I-Feng Enamelling Company (Phil.) Inc., shall
be credited in petitioners' favor so that they may continue to
enjoy the benefits of the coverage as provided by law. No
costs.
SO ORDERED.1äwphï1.ñët
EN BANC
G.R. No. L-26712-16 December 27, 1969
UNITED CHRISTIAN MISSIONARY SOCIETY, UNITED CHURCH
BOARD FOR WORLD MINISTERS, BOARD OF FOREIGN
MISSION OF THE REFORMED CHURCH IN AMERICA, BOARD
OF MISSION OF THE EVANGELICAL UNITED PRESBYTERIAN
CHURCH, COMMISSION OF ECUMENICAL MISSION ON
RELATIONS OF THE UNITED PRESBYTERIAN
CHURCH, petitioners,
vs.
SOCIAL SECURITY COMMISSION and SOCIAL SECURITY
SYSTEM, respondents.
Sedfrey A. Ordoñez for petitioners.
Office of the Solicitor General Antonio P. Barredo, Assistant
Solicitor General Felicisimo R. Rosete and Solicitor
Buenaventura J. Guerrero for respondents.
TEEHANKEE, J.:
In this appeal from an order of the Social Security
Commission, we uphold the Commission's Order dismissing
the petition before it, on the ground that in the absence of an
express provision in the Social Security Act 1 vesting in the
Commission the power to condone penalties, it has no legal
authority to condone, waive or relinquish the penalty for late
premium remittances mandatorily imposed under the Social
Security Act.
The five petitioners originally filed on November 20, 1964
separate petitions with respondent Commission, contesting
the social security coverage of American missionaries who
perform religious missionary work in the Philippines under
specific employment contracts with petitioners. After several
hearings, however, petitioners commendably desisted from
further contesting said coverage, manifesting that they had
adopted a policy of cooperation with the Philippine
authorities in its program of social amelioration, with which
they are in complete accord. They instead filed their
consolidated amended petition dated May 7, 1966, praying
for condonation of assessed penalties against them for
delayed social security premium remittances in the aggregate
amount of P69,446.42 for the period from September, 1958
to September, 1963.
Page 4 of 21
In support of their request for condonation, petitioners
alleged that they had labored under the impression that as
international organizations, they were not subject to coverage Board of Mission of the 7,891.74
under the Philippine Social Security System, but upon advice Evangelical United Brothers
by certain Social Security System officials, they paid to the Church
System in October, 1963, the total amount of P81,341.80,
representing their back premiums for the period from
September, 1958 to September, 1963. They further claimed
that the penalties assessed against them appear to be
inequitable, citing several resolutions of respondent
Commission which in the past allegedly permitted
condonation of such penalties.
United Church Board for World 12,353.75
On May 25, 1966, respondent System filed a Motion to
Ministers
Dismiss on the ground that "the Social Security Commission
has no power or authority to condone penalties for late
premium remittance, to which petitioners filed their
opposition of June 15, 1966, and in turn, respondent filed its
reply thereto of June 22, 1966. Commission on Ecumenical 33,019.36
Mission & Relations
Respondent Commission set the Motion to Dismiss for
hearing and oral argument on July 20, 1966. At the hearing,
petitioners' counsel made no appearance but submitted their
Memorandum in lieu of oral argument. Upon petition of the Board of Foreign Mission of the 10,928.04
System's Counsel, the Commission gave the parties a further Reformed Church in America
period of fifteen days to submit their Memorandum
consolidating their arguments, after which the motion would
be deemed submitted for decision. Petitioners stood on their
original memorandum, and respondent System filed its
memorandum on August 4, 1966. TOTAL P 69,446.42

On September 22, 1966, respondent Commission issued its

Order dismissing the petition, as follows:
Considering all of the foregoing, this Commission
finds, and so holds, that in the absence of an express
provision in the Social Security Act vesting in the
Commission the power to condone penalties, it
cannot legally do so. The policy enunciated in
Commission Resolution No. 536, series of 1964, cited
by the parties, in their respective pleadings, has been
reiterated in Commission Resolution No. 878, dated
August 18, 1966, wherein the Commission adopting
the recommendation of the Committee on Legal
Matters and Legislation of the Social Security
Commission ruled that it "has no power to condone,
waive or relinquish the penalties for late premium
remittances which may be imposed under the Social
Security Act."
WHEREFORE, the petition is hereby dismissed and
petitioners are directed to pay the respondent
System, within thirty (30) days from receipt of this
Order, the amount of P69,446.42 representing the
penalties payable by them, broken down as follows:
Upon failure of the petitioners to comply with this
Order within the period specified herein, a warrant
shall be issued to the Sheriff of the Province of Rizal
to levy and sell so much of the property of the
petitioners as may be necessary to satisfy the
aforestated liability of the petitioners to the System.
This Court is thus confronted on appeal with this question of
first impression as to whether or not respondent Commission
erred in ruling that it has no authority under the Social
Security Act to condone the penalty prescribed by law for late
premium remittances.
We find no error in the Commission's action.
1. The plain text and intent of the pertinent provisions of the
Social Security Act clearly rule out petitioners' posture that
the respondent Commission should assume, as against the
mandatory imposition of the 3% penalty per month for late
payment of premium remittances, the discretionary authority
of condoning, waiving or relinquishing such penalty.
The pertinent portion of Section 22 (a) of the Social Security
Act peremptorily provides that:

United Christian Missionary P5,253.53 SEC 22. Remittance of premiums. — (a) The
Society contributions imposed in the preceding sections shall
be remitted to the System within the first seven days
of each calendar month following the month for
which they are applicable or within such time as the
Commission may prescribe. "Every employer
required to deduct and to remit such contribution
shall be liable for their payment and if any
contribution is not paid to the system, as herein

Page 5 of 21
 prescribed, he shall pay besides the contribution a
penalty thereon of three per centum per month from
the date the contribution falls due until paid . . .2
No discretion or alternative is granted respondent
Commission in the enforcement of the law's mandate that the
employer who fails to comply with his legal obligation to remit
the premiums to the System within the prescribed period
shall pay a penalty of three 3% per month. The prescribed
penalty is evidently of a punitive character, provided by the
legislature to assure that employers do not take lightly the
State's exercise of the police power in the implementation of
the Republic's declared policy "to develop, establish gradually
and perfect a social security system which shall be suitable to
the needs of the people throughout the Philippines and (to)
provide protection to employers against the hazards of
disability, sickness, old age and death." 3 In this concept, good
faith or bad faith is rendered irrelevant, since the law makes
no distinction between an employer who professes good
reasons for delaying the remittance of premiums and another
who deliberately disregards the legal duty imposed upon him
to make such remittance. From the moment the remittance of
premiums due is delayed, the penalty immediately attaches to
the delayed premium payments by force of law.
2. Petitioners contend that in the exercise of the respondent
Commission's power of direction and control over the system,
as provided in Section 3 of the Act, it does have the authority
to condone the penalty for late payment under Section 4 (1),
whereby it is empowered to "perform such other acts as it
may deem appropriate for the proper enforcement of this
Act." The law does not bear out this contention. Section 4 of
the Social Security Act precisely enumerates the powers of
the Commission. Nowhere from said powers of the
Commission may it be shown that the Commission is granted
expressly or by implication the authority to condone penalties
imposed by the Act.
3. Moreover, the funds contributed to the System by
compulsion of law have already been held by us to be "funds
belonging to the members which are merely held in trust by
the Government."4 Being a mere trustee of the funds of the
System which actually belong to the members, respondent
Commission cannot legally perform any acts affecting the
same, including condonation of penalties, that would diminish
the property rights of the owners and beneficiaries of such
funds without an express or specific authority therefor.
4. Where the language of the law is clear and the intent of the
legislature is equally plain, there is no room for interpretation
and construction of the statute. The Court is therefore bound
to uphold respondent Commission's refusal to arrogate unto
itself the authority to condone penalties for late payment of
social security premiums, for otherwise we would be
sanctioning the Commission's reading into the law
discretionary powers that are not actually provided therein,
and hindering and defeating the plain purpose and intent of
the legislature.
5. Petitioners cite fourteen instances in the past wherein
respondent Commission had granted condonation of
penalties on delayed premium payments. They charge the
Commission with grave abuse of discretion in not having
uniformly applied to their cases its former policy of granting
condonation of penalties. They invoke more compelling
considerations of equity in their cases, in that they are non-
profit religious organizations who minister to the spiritual
needs of the Filipino people, and that their delay in the
payment of their premiums was not of a contumacious or
deliberate defiance of the law but was prompted by a well-
founded belief that the Social Security Act did not apply to
their missionaries.
The past instances of alleged condonation granted by the
Commission are not, however, before the Court, and the
unilateral conclusion asserted by petitioners that the
Commission had granted such condonations would be of no
avail, without a review of the pertinent records of said cases.
Nevertheless, assuming such conclusion to be correct, the
Commission, in its appealed Order of September 22, 1966
makes of record that since its Resolution No. 536, series of
1964, which it reiterated in another resolution dated August
18, 1966, it had definitely taken the legal stand, pursuant to
the recommendation of its Committee on Legal Matters and
Legislation, that in the absence of an express provision in the
Social Security Act vesting in the Commission the power to
condone penalties, it "has no power to condone, waive or
relinquish the penalties for late premium remittances which
may be imposed under the Social Security Act."
6. The Commission cannot be faulted for this correct legal
position. Granting that it had erred in the past in granting
condonation of penalties without legal authority, the Court
has held time and again that "it is a well-known rule that
erroneous application and enforcement of the law by public
officers do not block subsequent correct application of the
statute and that the Government is never estopped by
mistake or error on the part of its agents." 5 Petitioners' lack of
intent to deliberately violate the law may be conceded, and
was borne out by their later withdrawal in May, 1966 of their
original petitions in November, 1964 contesting their social
security coverage. The point, however, is that they followed
the wrong procedure in questioning the applicability of the
Social Security Act to them, in that they failed for five years to
pay the premiums prescribed by law and thus incurred the 3%
penalty thereon per month mandatorily imposed by law for
late payment. The proper procedure would have been to pay
the premiums and then contest their liability therefor, thereby
preventing the penalty from attaching. This would have been
the prudent course, considering that the Act provides in
Section 22 (b) thereof that the premiums which the employer
refuses or neglects to pay may be collected by the System in
the same manner as taxes under the National Internal
Revenue Code, and that at the time they instituted their
petitions in 1964 contesting their coverage, the Court had
already ruled in effect against their contest three years earlier,
when it held in Roman Catholic Archbishop vs. Social Security
Commission6 that the legislature had clearly intended to
include charitable and religious institutions and other non-
profit institutions, such as petitioners, within the scope and
coverage of the Social Security Act.
7. No grave abuse of discretion was committed, therefore, by
the Commission in issuing its Order dismissing the petition for
condonation of penalties for late payment of premiums, as
claimed by petitioners in their second and last error assigned.
Petitioners were duly heard by the Commission and were
given due opportunity to adduce all their arguments, as in
fact they filed their Memorandum in lieu of oral argument
and waived the presentation of an additional memorandum.
The mere fact that there was a pending appeal in the Court of
Appeals from an identical ruling of the Commission in an
earlier case as to its lack of authority to condone penalties
does not mean, as petitioners contend, that the Commission
was thereby shorn of its authority and discretion to dismiss
Page 6 of 21
their petition on the same legal ground. 7 The Commission's
action has thus paved the way for a final ruling of the Court
on the matter.
ACCORDINGLY, the order appealed from is hereby affirmed,
without pronouncement as to costs.
EN BANC
A.M. No. 1037-CJ October 28, 1981
MARTIN LANTACO, SR., ESTEBAN DEL BARRIO, ROSALITO
ALAMAG and BORROMEO VITALIANO, complainants,
vs.
CITY JUDGE FRANCISCO R. LLAMAS, respondent.
MAKASIAR, J.:
This is a verified letter-complaint dated August 7, 1975
addressed to the President of the Philippines (by lst
Indorsement, dated August 25, 1975, this case was referred
by the Office of the President to this Court, pursuant to
Section 7, Article X of the Constitution), by jeepney drivers
Martin Lantaco, Sr., Esteban del Barrio, Rosalito Alamag and
Borromeo Vitaliano, all residents of Pasay City, against City
Judge Francisco R. Llamas of the Pasay City Court for
"Backsliding and Grave Abuse of Discretion."
On January 8, 1975, an investigating special counsel of the
City Fiscal's Office of Pasay City, filed Criminal Cases Nos.
95647, 95648, 95649 and 95650, all for estafa against Ricardo
Paredes, an officer of the PASCAMASCON, an association of
jeepney operators, for "non-remittance of SSS contribution
premiums." These cases were assigned to respondent. After
the prosecution had rested its case, the defense moved to
dismiss all the criminal cases on the ground that the evidence
presented by the prosecution is insufficient to convict the
accused beyond reasonable doubt. The prosecution opposed
the motion. According to the complainants, the respondent
set the promulgation of his decision on July 22, 1975,
postponed to July 30, 1975 and again to July 31, 1975, when
at about 9:45 in the morning, upon respondent's instruction,
his clerk of court read the dispositive portion thereof
acquitting the accused of all four estafa cases on the ground
of reasonable doubt.
According to the herein complainants:
After the reading of (the) Decision a recess
was made by Judge Llamas and we
requested Judge Llamas to furnish us a copy
of said Decision. Judge Llamas told us that
there are no more copy and we told Judge
Llamas if there is no more copy we would
like to xerox the original and Judge Llamas
told us that xerox copy are not permitted
and Judge Llamas instructed one of the
employees in his office – a- steno-typist to
type another copy for us and that the typist
told us to come back on Monday, August 4,
which we did, but, the steno-typist failed to
furnish us the copy as agreed by us and told
us again to come back next day, August 5.
The next morning we went back of the
office of Judge Llamas, same we failed to get
copy of the Decision.
On August 6, 1975 at 11:00 A.M. one of the
complainants, Esteban del Barrio and
Ceferino F. Ginete, the President or our
labor union went to Judge Llamas to secure
copy of said decision to (sic) the same
person – the steno-typist. The steno-typist
went inside the room of Judge Llamas and a
few minutes the typist went back to us and
informed us that he could not type the
Decision because the folder is at the house
of Judge Llamas and when Mr. Ginete
inquire why the said folder of the
complainants are at the house of Judge
Llamas, the typist reply the Judge making
"CORRECTION." Mr. Ginete wonder why a
correction is being made when the decision
has already been rendered anti why the
delay in furnishing us copy, WHY?
This Court required the respondent to comment on the
complaint by 2nd Indorsement dated September 16, 1975.
This Court also sent by registered mails a follow-up letter
dated October 23, 1975 and a tracer letter dated November
25, 1975. The Bureau of Posts in a certification dated
November 26, 1975 certified that these follow-up letters were
delivered to and received by the office of the respondent.
Finally, on March 8, 1976 this Court received respondent's
comment dated December 3, 1975. His brief comment:
The four related criminal accusations
against Mr. Ricardo Paredes, were validly
and properly decided by this Court. The
motion to dismiss after the prosecution's
case was rested, was resolved and said
resolution of acquittal is the very decision in
this case which was validly promulgated in
the presence of the accused, the
prosecuting fiscal and Mr. Severino Ginete
and all the complaining parties. The records
of the decision show that the accused
assisted by counsel signed the same on said
date and copies thereafter furnished
counsel for the accused and the prosecuting
fiscal.
Respondent also averred:
It is respectfully submitted that on the
details of the proceedings and the evidence
presented, no better answer could be made
by the undersigned except by submitting a
copy of said decision promulgated July 31,
1975 and marked as Annex "A" of this
comment. In the same breath, the matter of
the advisability as suggested that this
finding by this Court be reviewed by the
Military may best be answered by a
thorough reading of the decision.
After a careful examination of the records before this Court,
We found that respondent committed grave abuse of
authority in refusing to give the complainants a copy of his
Page 7 of 21
decision in Criminal Cases Nos. 95647-95650. The
complainants were understandably interested in securing a
copy of the decision as they were the complaining witnesses
in these four criminal cases. The request was made during
office hours. It was relayed personally to the respondent. The
decision in question was already promulgated. Copies were
already furnished the counsel for the prosecution and the
defense. It was already part of the public record which the
citizen has a right to scrutinize. And if there was "no more
copy," the complainants were amenable to have a xerox copy
of the original on file, copies of which, as part of court
records, are allowed to be given to interested parties upon
request, duly certified as a true copy of the original on file.
What aggravates the situation, as seen from the sequence of
events narrated by the complainants which were never
denied or rebutted by the respondent, is that respondent,
without just cause, denied complainants access to public
records and gave the complainants the run-around, which is
oppressive as it is arbitrary. In Baldoza vs. Honorable Judge
Rodolfo B. Dimaano (A.M. No. 112-MJ, May 5, 1976), WE
emphasized the importance of access to public records.
predicated as it is on the right of the people to acquire
information on matters of public concern in which the public
has a legitimate interest. While the public officers in custody
or control of public records have the discretion to regulate the
manner in which such records may be inspected, examined or
copied by interested persons, such discretion does not carry
with it the authority to prohibit such access, inspection,
examination or copying.
Continuing, said this Court:
The New Constitution now expressly
recognizes that the people are entitled to
information on matters of public concern
and thus are expressly granted access to
official records, as well as documents of
official acts, or transactions, or decisions,
subject to such limitations imposed by law
(Article IV, Section 6, New Constitution). The
incorporation of this right in the
Constitution is a recognition of the
fundamental role of free exchange of
information in a democracy. There can be
no realistic perception by the public of the
nation's problems, nor a meaningful
democratic decision- making if they are
denied access to information of general
interest. Information is needed to enable
the members of society to cope with the
exigencies of the times. As has been aptly
observed: Maintaining the flow of such
information depends on protection for both
its acquisition and its dissemination since, if
either process is interrupted, the flow
inevitably ceases. (87 Harvard Law Review
1505) [Baldoza vs. Hon. Judge Rodolfo B.
Dimaano, A.M. No. 112-MJ, May 5, 1976].
The herein complainants prayed that respondent's decision
be reviewed "to obviate any miscarriage of justice considering
the adverse effects to the thousands of jeepney drivers and to
prevent the other jeepney operators in using (sic) the
Decision ... for their own benefits." The respondent
commented that "no better answer could be made ... except
by submitting a copy of the decision" and the complaint "may
best be answered by a thorough reading of the decision."
OUR "review" in administrative cases of this nature as defined
in Vda. de Zabala vs. Pamaran (A.C. No. 200-J, June 10, 1971,
39 SCRA 430, 433), is limited to the text of the decision and
respondent's articulations on the law and the evidence
submitted. WE do not review the decision to reverse it or to
set it aside as if it were brought to this Court on regular
appeal; for this is beyond the objective of an administrative
proceedings to protect the public service, to secure the
faithful and efficient performance of official functions, and to
rid the public service of incompetent, corrupt and unworthy
public servants.
WE have carefully read, examined and analyzed the decision
submitted by the respondent. WE found that in sustaining the
motion to dismiss on the ground of insufficiency of evidence
after the prosecution rested its case, respondent committed
several errors bordering on gross ignorance of the law.
1. Respondent erred in concluding that the prosecution failed
to prove that the accused, despite repeated demands, refused
and still refuses to remit the alleged collected premium
contributions and that "if no demand was ever made ... then a
criminal prosecution for estafa ... could not prosper."
The uniform allegation in all the four informations for estafa
that "the accused, despite repeated demands, refused and
still refuses to remit ...," need not anymore be proved by the
prosecution; because the Social Security Act of 1954 (R.A. No.
1161, as amended by R.A. No. 1792, No. 2658 and No. 3839,
and further amended by Presidential Decrees Nos. 24, 65 and
177), makes it the duty of the employer to remit the
contributions without need of any demand therefor by the
employee. Section 22(a), (b), (c) and (d) of said Act, governing
"Remittance of Contributions" requires as a legal obligation of
every employer to remit within the first seven (7) days of the
month the contributions of the employee and the employer
to the Social Security System, failing which invites the
imposition of a penalty of three percent (3%). With this
mandate of the law, demand on the part of the employee
before the employer remits these contributions to the SSS is
not a condition precedent for such remittance. The Social
Security System can collect such contributions in the same
manner as taxes are made collectible under the National
Internal Revenue Code (Sec. 22[b], Social Security Act). Thus:
SEC. 22. Remittance of contributions — The
contributions imposed in the proceeding
sections shall be remitted to the SSS within
the first seven days of each calendar month
following the month for which they are
applicable or within such time as the
Commission may prescribe. Every employer
required to deduct and to remit such
contributions shall be liable for their
payment, and if any contribution is not paid
to the SSS, as herein prescribed, he shall pay
besides the contribution a penalty
thereon of three per cent per month from
the date the contribution fans due until
paid. If deemed expedient and advisable by
the Commission, the collection and
remittance of contributions shall be made
quarterly or semi-annually in advance, the
contributions payable by the employees to
be advanced by their respective employers:
Provided, That upon separation of an
employee, any contributions so paid in
Page 8 of 21
 advance but not due shall be credited or
refunded to his employer.
(b) The contributions payable under this Act
in cases where an employer refuses or
neglects to pay the same shall be collected
by the System in the same manner as taxes
are made collectible under the National
Internal Revenue Code, as amended Failure
or refusal of the employer to pay or remit
the contributions herein prescribed shall not
prejudice the right of the covered employee
to the benefits of the coverage.
xxx xxx xxx
(e) For purposes of this section, any
employer who is delinquent or has not
remitted all the monthly contributions due
and payable may within six (6) months from
approval of this amendatory act remit said
contributions to the SSS and submit the
corresponding collection lists therefor
without incurring the prescribed three per
cent penalty. In case the employer fails to
remit to the SSS the said contributions
within the six months grace period, the
penalty of three per cent shall be imposed
from the time the contributions first became
due as provided in paragraph (a) of this
section. Provided, however, That the
Administrator, may in meritorious cases,
allow employers who have submitted a
payment plan, on or before April 19 1973,
to pay their contributions due and payable
up to December 31, 1973 without incurring
the prescribed three per cent penalty. As
amended by Rep. Act No. 2658, and by Pres.
Decrees Nos. 24 and 177).
To prove remittance, the employer can submit his records
thereon or a certification from the SSS as to the fact of
remittance of the contributions.
II. Respondent likewise erred in concluding that, in connection
with the daily deductions of P 0.50 as SSS premium
contributions, "this Court is not convinced and could not
reasonably believe that there was a forced daily deductions or
exaction of P0. 50."
Section 18 of the Social Security Act governing employees'
contribution, provides that ... the employer shall deduct and
withhold from such employee's monthly salary, wage,
compensation or earnings the employee's contribution in an
amount corresponding to his salary, wage, compensation or
earnings during the month in accordance with the following
schedule effective on January 1, 1973 ... ." With this legal
obligation placed on the employer's shoulder, respondent's
reasonable belief that "there was or could be no forced daily
deductions or exaction of P 0.50" would have no legal basis
and support.
III. Respondent again cried in finding "that from the existing
relationship between the accused as owner of the utility
jeepneys and all the complainants, there is categorically
demonstrated no employer-employee relationship in
contemplation of the Social Security Act of 1954, as amended
by Presidential Decrees Nos. 24, 65 and 177. In other words, if
by law there exists no such relationship, then the herein
accused truly is not even obligated to collect such amounts;
neither is he under obligation to make remittance payments."
For, as early as March 23, 1956, in National Labor Union vs.
Benedicto Dinglasan (L-7945), this Court already ruled that
there is employer-employee relation between jeepney
owners/operators and jeepney drivers under the boundary
system arrangement, and enunciated:
The main question to determine is whether
there exists a relationship of employer-
employee between the drivers of the jeeps
and the owner thereof. The findings
contained in the first order are not disputed
by both parties except the last to which the
respondent took exception. But in the
resolution setting aside the order of 16
February 1954 the Court of Industrial
Relations in banc did not state that such
finding is not supported by evidence. It
merely declares that there is no employer-
employee relation between respondent,
Benedicto Dinglasan, and the driver
complainants in this case. If the findings to
which the respondent took exception is
unsupported by the evidence, a
pronouncement to that effect would have
been made by the Court in banc. In the
absence of such pronouncement we are not
at liberty to ignore or disregard said finding.
The findings of the Court of Industrial
Relations with respect to question of fact, if
supported by substantial evidence on the
record shall be conclusive. Taking into
consideration the findings of fact made by
the Court of Industrial Relations we find it
difficult to uphold the conclusion of the
Court set forth in its resolution of 23 June
1954. The drivers did not invest a single
centavo in the business and the respondent
is the exclusive owner of the jeeps. The
management of the business is in the
respondent's hands. For even if the drivers
of the jeeps take material possession of the
jeeps, still the respondent as owner thereof
and holder of a certificate of public
convenience is entitled to exercise, as he
does and under the law he must,
supervision over the drivers by seeing to it
that they follow the route prescribed by the
Public Service Commission and the rules
and regulations promulgated by it as
regards their operation. And when they pass
by the gasoline station of the respondent
checking by his employees on the water
tank, oil and tire pressure is done. The only
features that would make the relationship
of lessor and lessee between the
respondent and the drivers, members of the
union, as contended by the respondent, are
the fact that he does not pay them any fixed
wage but their compensation is the excess
of the total amount of P7.50 which they
agreed to pay to the respondent, the owner
of the jeeps, and the fact that the gasoline
burned by the jeeps is for the account of the
Page 9 of 21
 drivers. These two features are not,
however, sufficient to withdraw the
relationship between them from that of
employer-employee, because the estimated
earnings for fares must be over and above
the amount they agreed to pay to the
respondent for a ten-hour shift or ten-hour
a day operation of the jeeps. Not having any
interest in the business because they did
not invest anything in the acquisition of the
jeeps and did not participate in the
management thereof, their service as
drivers of the jeeps being their only
contribution to the business, the
relationship of lessor and lessee cannot be
sustained [In the matter of the Park Floral
Company, etc., 19 NLRB 403; Radley et al.
vs. Commonwealth, 161 SW (2d) 417; Jones
vs. Goodson et al., 121 Fed. Rep. (2d) 176;
Mitchel vs. Gibbson et al., 172 Fed. Rep.
(2d) 970]. In the lease of chattels the lessor
loses complete control over the chattel
leased although the lessee cannot make bad
use thereof, for he would be responsible for
damages to the lessor should he do so. In
this case there is a supervision and a sort of
control that the owner of the jeeps
exercises over the drivers. It is an attempt
by ingenious scheme to withdraw the
relationship between the owner of the
jeeps and the drivers thereof from the
operation of the labor laws enacted to
promote industrial peace. (98 Phil. 650, 651-
53).
On April 30, 1963, this Court reiterated this doctrine
in Magboo, et al. vs. Bernardo (L-16790, 7 SCRA 952) and
stated:
Appellant assails said decision, assigning
three errors which boil down to the
question of whether or not an employer-
employee relationship exists between a
jeepney-owner and a driver under a
"boundary system" arrangement. Appellant
contends that the relationship is essentially
that of lessor and lessee.
A similar contention has been rejected by
this Court in several cases. In National
Labor Union v. Dinglasan, 52 O.B., No. 4,
1933, it was held that the features which
characterize the boundary – system namely,
the fact that the driver does not receive a
fixed wage but gets only the excess of the
receipt of fares collected by him over the
amount he pays to the jeep-owner and that
the gasoline consumed by the jeep is for the
account of the driver – are not sufficient to
withdraw the relationship between them
from that of employer and employee. The
ruling was subsequently cited and applied
in Doce v. Workmen's Compensation
Commission, L-9417, December 22, 1958,
which involved the liability of a bus owner
for injury compensation to a conductor
working under the boundary system. (7
SCRA 953-54).
Indeed, considering that about nineteen (19) years before July
31, 1975, when respondent rendered his decision in the four
estafa cases, it was a settled doctrine that an employer-
employee relationship exists between jeepney
owners/operators and jeepney drivers under the boundary
system arrangement, of which rule respondent was obviously
ignorant (Section 1, Rule 129, Rules of Court, and in line with
Municipal Board of Manila vs. Agustin, 65 Phil. 144).
Respondent mistakenly relied on the cases of Social Security
System vs. Court of Appeals and Shriro (37 SCRA 579)
and Social Security System vs. Court of Appeals and Manila
Jockey Club (30 SCRA 210), which have no bearing on or
relevance to the issue posed in the estafa cases filed by the
complainants and heard by him. The Shriro and the Manila
Jockey Club cases did not involve or resolve the relationship
between jeepney owners/operators and jeepney drivers in
any manner whatsoever. The Shriro case concerned the
relationship of "commission sales agents" and Shriro
(Philippines) Inc., the exclusive distributor of "Regal" sewing
machine. The Manila Jockey Club, Inc. case concerned jockeys
who are connected with the Manila Jockey Club, Inc. and the
Philippine Racing Club, Inc.
Since an employer-employee relationship subsists between
the jeepney owners/operators and jeepney drivers under the
boundary system arrangement, SSS coverage "shall be
compulsory" (Sec. 9, Social Security Act), the SSS's deduction
would follow as a matter of law (Sec. 18, supra), and the
accused in the four estafa cases, without previous demand by
the jeepney drivers, is under legal obligation to remit the
driver's contribution to the SSS.
Decisions of the Supreme Court need not be proved as they
are matters of judicial notice (Sec. 1, Rule 129, Rev. Rules of
Court; V Moran, Rules of Court, 1970 ed., pp. 38-39).
Ignorance of the law excuses no one (Art. 3, New Civil Code)
and judicial decisions applying or interpreting the law or the
Constitution are part of the legal system (Art. 8, New Civil
Code).
In the light of the above discussion, respondent gravely erred
in sustaining the motion to dismiss the estafa cases by
conveniently relying on the accepted axiom that the
prosecution cannot rely on the weakness of the defense to
gain conviction, for conviction can only rest upon the strength
of the prosecution evidence (Duran vs. Court of Appeals, L-
39758, May 7, 1976, citing People vs. Barrera, 82 Phil. 391),
and, as a consequence, material and moral damages had
been inflicted on the numerous complaining drivers whose
rights to refile the criminal cases for estafa against the
accused are now foreclosed by the rule on double jeopardy.
In recapitulation, We find that respondent exhibited gross
ignorance of the Social Security Act of 1954, as amended,
particularly the sections governing SSS compulsory coverage,
employer-employee contributions, deduction of SSS's
contributions, and remittance of SSS contributions; and of the
settled jurisprudence that the relationship between jeepney
owners/operators and jeepney drivers under the boundary
system arrangement is that of employer and employee. Or, if
respondent was aware of them, he deliberately refrained
from applying them, which can never be excused (Quizon, et
al. vs. Judge Jose G. Baltazar, Jr., A.C. No. 532-MJ, July 25,
1975) and "is hardly to be condoned" (Fernando, J.,
concurring opinion, Quizon, et al. vs. Judge Baltazar,
Jr., supra).
Page 10 of 21
WE, moreover, find that respondent repeatedly ignored this
Court's directive to file his comment on the instant complaint
within ten (10) days from receipt of our 2nd Indorsement of
September 16, 1975, necessitating the sending of two tracer
letters dated October 23, 1975 and November 25, 1975. His
comment came only on March 8, 1976. His failure to submit
the required comment within the period fixed is disrespect to
the Court as well as aggravated the delay in the speedy and
orderly disposition of this administrative complaint. (cf.
Medina, etc., et al. vs. Hon. Valdellon; etc., et al., L- 38810,
March 25, 1975; Atienza vs. Perez, etc., A.M. No. P- 216, July
9, 1974)
WHEREFORE, RESPONDENT FRANCISCO R. LLAMAS IS HEREBY
DISMISSED AS CITY JUDGE OF PASAY CITY WITH FORFEITURE
OF ALL RETIREMENT PRIVILEGES AND WITH PREJUDICE TO
REINSTATEMENT TO ANY POSITION IN THE NATIONAL OR
LOCAL GOVERNMENT, INCLUDING GOVERNMENT-OWNED OR
CONTROLLED CORPORATIONS, AGENCIES OR
INSTRUMENTALITIES.
SO ORDERED.
EN BANC
G.R. No. L-20445 February 25, 1967
ANICIA V. MERCED, CANDELARIO V. MERCED, CONCEPCION
V. MERCED,
ATILANO V. MERCED, JR., and JOSEFINA V.
MERCED, petitioners,
vs.
COLOMBINA VDA. DE MERCED, BRICCIO MERCED, JR., and
the SOCIAL SECURITY SYSTEM, respondents.
J. S. Ancheta, Jr. for petitioners.
Office of the Solicitor General for respondents.
CONCEPCION, C.J.:
EN BANC
Appeal from a resolution of the Social Security Commission —
hereinafter referred to as the Commission — dismissing the
petition of Anicia Candelario, Concepcion, Atlanto and
Josefina, all surnamed, Merced, to be declared the
beneficiaries of their deceased brother Briccio V. Merced —
hereinafter referred to as Briccio — and, as such, entitled to
the corresponding death benefits under Republic Act No.
5181, as amended, otherwise known as the Social Security
Act of 1954.
As an employee of the Community Export and Import
Corporation, in Dumaguete City, Negros Oriental Briccio
became, sometime in 1957, a member of the Social Security
System — hereinafter referred to as the System. As such, he
had designated as his beneficiaries his aforementioned
brothers and sisters, the petitioners herein. Subsequently, or
on May 29, 1960, Briccio contracted marriage with Columbina
Merced, who bore him a child, Briccio Jr., hereinafter referred
to as Columbia and Junior, respectively, Briccio died on
February 22, 1961.
Soon later, or on April 5, 1961, petitioners filed with the
Commission their claim for the benefits accruing under
Briccio's social security insurance. However, on April 27, 1961,
petitioners were advised by the System that their designation
as beneficiaries of Briccio was null and void, pursuant to
Resolution No. 1620, series of 1960, of the Commission, and
that a claim for the aforementioned benefits had been filed
by Colombina. Still later, or in September, 1961, petitioners
were informed that the Administrator of the System had
declared Colombina and Junior as the legal heirs of Briccio
and approved payment to them of said benefits, amounting
to P3,388.34. This prompted the petitioners to file with the
Commission their present petition, which, after appropriate
proceedings, was, by resolution dated July 20, 1962,
dismissed. The Commission, likewise, affirmed the action
taken by the Administrator and ordered that the
corresponding death benefits be paid to Colombina and
Junior. Hence, this appeal by petitioners herein.
They maintain that the designation made in their favor, as
beneficiaries of Briccio remained valid and effective, despite
his subsequent marriage and the birth of Junior, in view of his
(Briccio's) failure to change said designation, and that the
choice of beneficiaries expressly made by Briccio should be
respected.
The validity and force of the last part of petitioners' theory is,
however, impaired by the fact that said choice had been made
when Briccio was still single, and that, accordingly, his failure
to change the designation of his beneficiaries may have been,
and was probably, due to an oversight on his part, especially
considering that he died less than a year after his wedding.
At any rate, the benefits accruing under Republic Act No. 1161
could not have vested until the death of the decedent, on
February 22, 1961, not only because, prior thereto, the rights
of the designated beneficiaries were purely inchoate, but,
also, because Section 30 of said Act — which became Section
31 thereof, as amended by Republic Act No. 1792, which was
in force when Briccio became a member of the System —
expressly reserved to Congress the right to amend, alter or
repeal any provision thereof, and explicitly declares that "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."
In pursuance of said reserved power, Congress enacted
Republic Act No. 2658 (approved on June 18, 1960), which
was in force at the time of Briccio's death, amending Section 8
of Republic Act No. 1161 (as amended by Republic Act No.
1792) pursuant to subdivision (k) of which the beneficiaries
shall be "those designated as such by the covered
employee from among the following:
(1) The legitimate spouse, the legitimate,
legitimated, acknowledged natural children and
natural children by legal fiction and the legitimate
descendants; .
(2) In default of such spouse and children, the
legitimate parents of the covered employee;
(3) In the absence of any. of the foregoing, any other
person designated by him.1äwphï1.ñët
In other words, the right of choice of the insured is subject to
the foregoing limitations, pursuant to which brothers and
sisters may not be designated as beneficiaries except
in default, not only of surviving spouse and children, but, also,
of "legitimate parents of the covered employee."
Page 11 of 21
It is, accordingly, clear that the Commission was fully justified
in holding that the designation in favor of the brothers and
sisters of the decedent as his beneficiaries was null and void
and that Colombina and Junior are, under the law, the
persons entitled to the corresponding benefits.
Wherefore, the resolution appealed from is hereby affirmed,
with costs against herein petitioners-appellants. It is so
ordered.
G.R. No. L-41299 February 21, 1983
SOCIAL SECURITY SYSTEM, petitioner,
vs.
COURT OF APPEALS, DAVID B. CRUZ, SOCORRO CONCIO
CRUZ, and LORNA C. CRUZ, respondents.
The Solicitor General for petitioner.
Eribert D. Ignacio for respondents David Cruz, Socorro Concio
Cruz and Lorna Cruz.
MELENCIO-HERRERA, J.:
This Petition for Review on certiorari of the Decision of the
Court of Appeals 1 stems from the following facts, as narrated
by the Trial Court, adopted by the Court of Appeals, and
quoted by both petitioner 2 and private respondents 3 :
Sometime in March, 1963 the spouses David B. Cruz and
Socorro Concio Cruz applied for and were granted a real
estate loan by the SSS with their residential lot located at
Lozada Street, Sto. Rosario, Pateros, Rizal covered by Transfer
Certificate of Title No. 2000 of the Register of Deeds of Rizal
as collateral. Pursuant to this real estate ban said spouses
executed on March 26, 1963 the corresponding real estate
mortgage originally in the amount of P39,500.00 which was
later increased to P48,000.00 covering the aforementioned
property as shown in their mortgage contract, Exhibit A and 1.
From the proceeds of the real estate loan the mortgagors
constructed their residential house on the mortgaged
property and were furnished by the SSS with a passbook to
record the monthly payments of their amortizations (Exhibits
B and B-1). The mortgagors, plaintiffs herein, complied with
their monthly payments although there were times when
delays were incurred in their monthly payments which were
due every first five (5) days of the month (Exhibits 3-A to 3-N).
On July 9, 1968, defendant SSS filed an application with the
Provincial Sheriff of Rizal for the foreclosure of the real estate
mortgage executed by the plaintiffs on the ground, among
others:
That the conditions of the mortgage have been broken
since October, 1967 with the default on the part of the
mortgagor to pay in full the installments then due and
payable on the principal debt and the interest thereon,
and, all of the monthly installments due and payable
thereafter up to the present date; ...
That by the terms of the contract herein above referred
to, the indebtedness to the mortgagee as of June, 1968
amounts to Ten Thousand Seven Hundred Two Pesos &
58/100 (P10,702.58), Philippine Currency, excluding
interests thereon, plus 20% of the total amount of the
indebtedness as attorney's fees, also secured by the said
mortgage. (Exhibit "C ")
Pursuant to this application for foreclosure, the notice of
the Sheriff's Sale of the mortgaged property was initially
published in the Sunday Chronicle in its issue of July 14,
1968 announcing the sale at public auction of the said
mortgaged property. After this first publication of the
notice, and before the second publication of the notice,
plaintiff herein thru counsel formally wrote defendant
SSS, a letter dated July 19, 1968 and received on the
same date by said entity demanding, among others, for
said defendant SSS to withdraw the foreclosure and
discontinue the publication of the notice of sale of their
property claiming that plaintiffs were up-to-date in the
payment of their monthly amortizations (Exhibits "E"
and "E-1"). In answer to this letter defendant SSS sent a
telegram to Atty. Eriberto Ignacio requesting him to
come to their office for a conference. This telegram was
received by said counsel on July 23, 1968 (Exhibit "G "
and "G-1 "). To this telegraphic answer, Atty. Ignacio sent
a telegraphic reply suggesting instead that a
representative of the SSS be sent to him because his
clients were the aggrieved parties (Exhibit-. "G-2").
Nothing came out of the telegraphic communications
between the parties and the second and third
publications of the notice of foreclosure were published
successively in the Sunday Chronicle in its issues of July
21 and 28, 1968 (Exhibits "N-1 " and "O-1"). 4
On July 24, 1968, the Cruz spouses, together with their
daughter Lorna C. Cruz, instituted before the Court of First
Instance of Rizal an action for damages and attorney's fees
against the Social Security System (SSS) and the Provincial
Sheriff of Rizal alleging, among other things, that they had
fully and religiously paid their monthly amortizations and had
not defaulted in any payment.
In its Answer, with counterclaim, the SSS stressed its right to
foreclose the mortgage executed in its favor by private
respondents by virtue of the automatic acceleration clause
provided in the mortgage contract, even after private
respondents had paid their amortization installments. In its
counterclaim, the SSS prayed for actual and other damages,
as well as attorney's fees, for malicious and baseless
statements made by private respondents and published in the
Manila Chronicle.
On September 23, 1968, the Trial Court enjoined the SSS from
holding the sale at public auction of private respondent's
property upon their posting of a P2,000.00 bond executed in
favor of the SSS.
The Trial Court rendered judgment on March 5, 1971, the
dispositive portion of which reads:
WHEREFORE, judgment is rendered against
defendant SSS, directing it to pay plaintiffs
the following amounts:
(a) P2,500.00 as actual damage;
(b) P35,000.00 as moral damage;
(c) P10,000.00 as exemplary or corrective damages; and
(d) P5,000.00 as attorney's fees.
Defendant SSS shall further pay the costs. 5
Page 12 of 21
In respect of the moral and temperate damages awarded, the
Trial Court stated:
With respect to moral and temperate damages, the
Court holds that the first publication of the notice
was made in good faith but committed by defendant
SSS in gross negligence considering the personnel at
its command and the ease with which verifications of
the actual defaulting mortgagors may be made. On
this initial publication of the notice of foreclosure
(Exhibits "M" and "M-1"), the Court believes
plaintiffs are entitled to the amount of P5,000.00.
The second publication of the notice of foreclosure is
another matter. There was already notice by plaintiffs
to defendant SSS that there was no reason for the
foreclosure of their mortgaged property as they were
never in default. Instead of taking any corrective
measure to rectify its error, defendant SSS adopted a
position of righteousness and followed the same
course of action contending that no error has open
committed. This act of defendant indeed was
deliberate, calculated to cow plaintiffs into
submission, and made obviously with malice. On this
score, the Court believes defendant SSS should pay
and indemnify plaintiffs jointly in the sum of
P10,000.00. Lastly, on the third publication of the
notice of foreclosure, the Court finds this continued
publication an outright disregard for the reputation
and standing of plaintiffs. The publication having
reached a bigger segment of society and also done
with malice and callous disregard for the rights of its
clients, defendant SSS should compensate plaintiffs
jointly in the sum of P20,000.00. All in all, plaintiffs
are entitled to P35,000.00 by way of moral
damages. 6
On appeal, the Court of Appeals affirmed the lower Court
judgment in a Decision promulgated on March 14, 1975, but
upon SSS's Motion for Reconsideration, modified the
judgment by the elimination of the P5,000.00 moral damages
awarded on account of the initial publication of the
foreclosure notice. To quote:
xxx xxx xxx
After a re-examination of the evidence, we find that
the negligence of the appellant is not so gross as to
warrant moral and temperate damages. The amount of
P5,000.00 should be deducted from the total damages
awarded to the plaintiffs.
WHEREFORE, the decision promulgated on March 14,
1975 is hereby maintained with the sole modification
that the amount of P5,000.00 awarded on account of
the initial publication is eliminated so that the said
amount should be deducted from the total damages
awarded to the plaintiffs.
SO ORDERED. 7
In so far as exemplary and corrective damages are
concerned, the Court of Appeals had this to say.
The Court finds no extenuating circumstances to
mitigate the irresponsible action of defendant SSS and
for this reason, said defendant should pay exemplary
and corrective damages in the sum of P10,000.00 ...
Upon denial of its Motion for Reconsideration by
respondent Court, the SSS filed this Petition alleging —.
I. Respondent Court of Appeals erred in not finding
that under Condition No. 10 of the Mortgage contract,
which is a self-executing, automatic acceleration
clause, all amortizations and obligations of the
mortgagors become ipso jure due and demandable if
they at any time fail to pay any of the amortizations or
interest when due;
II. Respondent Court of Appeals erred in holding that a
previous notice to the mortgagor was necessary before
the mortgage could be foreclosed;
III. Respondent Court of Appeals erred in not holding
that, assuming that there was negligence committed by
subordinate employees of the SSS in staking 'Socorro C.
Cruz' for 'Socorro J. Cruz' as the defaulting borrower,
the fault cannot be attributed to the SSS, much less
should the SSS be made liable for their acts done
without its knowledge and authority;
IV. Respondent Court of Appeals erred in holding that
there is no extenuating circumstance to mitigate the
liability of petitioner;
V. Respondent Court of Appeals erred in not holding
that petitioner is not liable for damages not being a
profit-oriented governmental institution but one
performing governmental functions petitions. 8
For failure of the First Division to obtain concurrence of the
five remaining members (Justices Plana and Gutierrez, Jr.
could take no part), the case was referred to the Court en
banc.
The pivotal issues raised are: (1) whether the Cruz spouses
had, in fact, violated their real estate mortgage contract with
the SSS as would have warranted the publications of the
notices of foreclosure; and (2) whether or not the SSS can be
held liable for damages.
The first issue revolves around the question of appreciation of
the evidence by the lower Court as concurred in by the Court
of Appeals. The appraisal should be left undisturbed following
the general rule that factual findings of the Court of Appeals
are not subject to review by this Court, the present case not
being one of the recognized exceptions to that
rule. 9 Accordingly, we are upholding the finding of the Court
of Appeals that the SSS application for foreclosure was not
justified, particularly considering that the real estate loan of
P48,000.00 obtained by the Cruzes in March, 1963, was
payable in 15 years with a monthly amortization of P425.18,
and that as of July 14, 1968, the date of the first notice of
foreclosure and sale, the outstanding obligation was still
P38,875.06 and not P10,701.58, as published.
The appellant was not justified in applying
for the extrajudicial foreclosure of the
mortgage contract executed in its favor by
the spouses, David B. Cruz and Socorro
Concio-Cruz, Exh. 'A'. While it is true that
the payments of the monthly installments
were previously not regular, it is a fact that
as of June 30, 1968 the appellee, David B.
Cruz and Socorro Concio-Cruz were up-to-
Page 13 of 21
 date and current in the payment of their
monthly installments. Having accepted the
prior late payments of the monthly
installments, the appellant could no longer
suddenly and without prior notice to the
mortgagors apply for the extra-judicial
foreclosure of the mortgage in July 1968. 10
A similar conclusion was reached by the trial Court.
Defendant's contention that there was
clerical error in the amount of the mortgage
loan due as of June, 1968 as per their
application for foreclosure of real estate
mortgage is a naive attempt to justify an
untenable position. As a matter of fact
plaintiffs were able to establish that the
mortgagor who actually committed the
violation of her mortgage loan was a certain
'Socorro J. Cruz' who was in arrears in the
amount of P10,702.58 at the time the
application for foreclosure of real estate
mortgage was filed Exhibits "BB" and "EE").
Defendant mortgagee must have committed
an error in picking the record of plaintiff
'Socorro C. Cruz' instead of the record of
'Socorro J. Cruz'. Defendant SSS, however,
denied having committed any error and
insists that their motion for foreclosure
covers the real estate mortgage of spouses
David E. Cruz and Socorro C. Cruz. This
Court is nonetheless convinced that the
foreclosure proceedings should have been
on the real estate mortgage of 'Socorro J.
Cruz' who was in arrears as of June, 1968 in
the amount of P10,701.58, the exact
amount mentioned in the application for
foreclosure of real estate mortgage by
defendant SSS. 11
We come now to the amendability of the SSS to judicial action
and legal responsibility for its acts. To our minds, there should
be no question on this score considering that the SSS is a
juridical entity with a personality of its own. 12 It has corporate
powers separate and distinct from the Government. 13 SSS'
own organic act specifically provides that it can sue and be
sued in Court. 14 These words "sue and be sued" embrace all
civil process incident to a legal action. 15 So that, even
assuming that the SSS, as it claims, enjoys immunity from suit
as an entity performing governmental functions, by virtue of
the explicit provision of the aforecited enabling law, the
Government must be deemed to have waived immunity in
respect of the SSS, although it does not thereby concede its
liability. That statutoy law has given to the private-citizen a
remedy for the enforcement and protection of his rights. The
SSS thereby has been required to submit to the jurisdiction of
the Courts, subject to its right to interpose any lawful
defense. Whether the SSS performs governmental or
proprietary functions thus becomes unnecessary to belabor.
For by that waiver, a private citizen may bring a suit against it
for varied objectives, such as, in this case, to obtain
compensation in damages arising from contract 16 and even
for tort.
A recent case squarely in point anent the principle, involving
the National Power Corporation, is that of Rayo vs. Court of
First Instance of Bulacan, 110 SCRA 457 (1981), wherein this
Court, speaking through Mr. Justice Vicente Abad Santos,
ruled:
It is not necessary to write an extended
dissertation on whether or not the NPC
performs a governmental function with
respect to the management and operation
of the Angat Dam. It is sufficient to say that
the government has organized a private
corporation, put money in it and has
snowed it to sue and be sued in any court
under its charter. (R.A. No. 6395, Sec. 3[d]).
As a government owned and controlled
corporation, it has a personality of its own,
distinct and separate from that of the
Government. (See National Shipyards and
Steel Corp. vs. CIR, et al., L-17874, August
31, 1963, 8 SCRA 78 1). Moreover, the
charter provision that the NPC can 'sue and
be sued in any court' is without qualification
on the cause of action and accordingly it can
include a tort claim such as the one
instituted by the petitioners.
The proposition that the SSS is not profit-oriented was
rejected in the case of SSS Employees' Association vs. Hon.
Soriano. 17 But even conceding that the SSS is not, in the main,
operated for profit, it cannot be denied that, in so far as
contractual loan agreements with private parties are
concerned, the SSS enters into them for profit considering
that the borrowers pay interest, which is money paid for the
use of money, plus other charges.
In so far as it is argued that to hold the SSS liable for damages
would be to deplete the benefit funds available for its covered
members, suffice it to say, that expenditures of the System
are not confined to the payment of social security benefits.
For example, the System also has to pay the salaries of its
personnel. Moreover, drawing a parallel with the NASSCO and
the Virginia Tobacco Administration, whose funds are in the
nature of public funds, it has been held that those funds may
even be made the object of a notice of garnishment. 18
What is of paramount importance in this controversy is that
an injustice is not perpetrated and that when damage is
caused a citizen, the latter should have a right of redress
particularly when it arises from a purely private and
contractual relationship between said individual and the
System.
We find, however, that under the circumstances of the case,
the SSS cannot be held liable for the damages as awarded by
the Trial Court and the Appellate Tribunal.
As basis for the award of actual damages, the Trial Court
relied on the alleged expenses incurred by private
respondents for the wardrobe they were supposed to use
during their trip abroad, which was allegedly aborted because
of the filing of the foreclosure application by the SSS. We find
the foregoing too speculative. There could have been other
reasons why the trip did not materialize. Moreover, it appears
that private respondents' passports had already expired but
that they made no effort to secure new passports. 19 Nor did
they secure the necessary visas from the local consulates of
foreign countries they intended to visit for their trip abroad. 20
Page 14 of 21
Nor can the SSS be held liable for moral and temperate
damages. As concluded by the Court of Appeals "the
negligence of the appellant is not so gross as to warrant moral
and temperate damages", 21 except that, said Court reduced
those damages by only P5,000.00 instead of eliminating them.
Neither can we agree with the findings of both the Trial Court
and respondent Court that the SSS had acted maliciously or in
bad faith. The SSS was of the belief that it was acting in the
legitimate exercise of its right under the mortgage contract in
the face of irregular payments made by private respondents,
and placed reliance on the automatic acceleration clause in
the contract. The filing alone of the foreclosure application
should not be a ground for an award of moral damages in the
same way that a clearly unfounded civil action is not among
the grounds for moral damages. 22
With the ruling out of compensatory, moral and temperate
damages, the grant of exemplary or corrective damages
should also be set aside. 23 Moreover, no proof has been
submitted that the SSS had acted in a wanton, reckless and
oppressive manner. 24
However, as found by both the Trial and Appellate Courts,
there was clear negligence on the part of SSS when they
mistook the loan account of Socorro J. Cruz for that of private
respondent Socorro C. Cruz. Its attention was called to the
error, but it adamantly refused to acknowledge its mistake.
The SSS can be held liable for nominal damages. This type of
damages is not for the purpose of indemnifying private
respondents for any loss suffered by them but to vindicate or
recognize their rights which have been violated or invaded by
petitioner SSS. 25
The circumstances of the case also justify the award of
attorney's fees, as granted by the Trial and Appellate Courts,
particularly considering that private respondents were
compelled to litigate for the prosecution of their interests. 26
WHEREFORE, the judgment sought to be reviewed is hereby
modified in that petitioner SSS shall pay private respondents:
P3,000.00 as nominal damages; and P5,000.00 as attorney's
fees.
Costs against petitioner Social Security System.
SO ORDERED.
EN BANC
G.R. No. L-17605 January 22, 1964
POBLETE CONSTRUCTION COMPANY and DOMINGO
POBLETE, plaintiffs-appellants,
vs.
SOCIAL SECURITY COMMISSION and JUDITH
ASIAIN, defendants-appellees.
Placido C. Ramos for plaintiffs-appellants.
Alano and Calsado for defendant-appellee, Judith Asiain.
Luis A Javellana and the Solicitor General for defendant-
appellee Social Security Commission.
DIZON, J.:
Poblete Construction Co. and Domingo Poblete, its president
and general manager, appeal from the order of the Court of
First Instance of Rizal dated May 19, 1960 dismissing Civil
Case No. 2049 — an action for certiorari against the Social
Security Commission — hereinafter referred to as the
Commission — and Judith Asiain — and dissolving the writ of
preliminary injunction issued therein.
In a petition filed with the Social Security Commission on
January 27, 1960 (Case No. 78) Judith Asiain sought to recover
from appellants the death benefits she would have been
entitled to receive from the Social Security System had
appellants — the employers of her husband reported him to
the System for coverage prior to his death, as required by law.
Appellants' motion to dismiss the petition on the ground that
the Commission had no jurisdiction over the case, as
appellee's husband was not covered by the System, was
denied and the Commission required appellants to answer
the claim. Not having done so, the Commission upon motion
of appellee entered an order of default and set the date for
the reception of appellees' evidence. In view thereof,
appellants filed with the Court of First Instance of Rizal a
petition for certiorari with injunction (Civil Case No. 2049-P)
to enjoin the Commission from further proceedings in said
case. The Court issued a writ of preliminary injunction
restraining the Commission from proceeding with the case
pending final determination of the action for certiorari.
Instead of filing an answer to the petition for certiorari,
appellees moved to dismiss the case on the ground of lack of
jurisdiction and improper venue. Over appellants' opposition,
the lower court issued the order appealed from. Appellants
now claim that the lower court erred in dismissing the case
and in not ruling, after trial, that the Social Security
Commission has no jurisdiction to try and decide the petition
filed with it by Judith Asiain and her minor children, the
subject matter of which should have been submitted in an
ordinary civil action before the regular courts.
We find the present appeal to be without merit.1äwphï1.ñët
In taking cognizance of the petition filed by Judith Asiain (Case
No. 78), the Social Security Commission was exercising its
quasi-judicial powers granted by Section 5 (a) of Republic Act
No. 1161, as amended. Even assuming, for the sake of
argument, that the claim aforementioned was not within the
jurisdiction of the Commission, and that it would be proper to
issue a writ of certiorari or injunction to restrain it from
hearing and deciding the same, a Court of First Instance has
no jurisdiction to issue either of said writs against the
Commission. It must be observed that in accordance with the
provisions of Section 5, paragraphs (a) and (c) of Republic Act
No. 1161, as amended, the decisions of said Commission are
reviewable both upon law and facts by the Court of Appeals,
and that if the appeal from its decision is only on questions of
law, the review shall be made by Us. It is clear from these
provisions that the Commission, in exercising its quasi-judicial
powers, ranks with the Public Service Commission and the
Courts of First Instance. As the writs of
Injunction, Certiorari and Prohibition may be issued only by a
superior court against an inferior court, board or officer
exercising judicial functions, it necessarily follows that the
Court of First Instance of Rizal, where appellants filed their
petition for certiorari, had no jurisdiction to entertain the
same.
WHEREFORE, the order appealed from is hereby affirmed
with costs.
Page 15 of 21
EN BANC
G.R. No. L-20383 May 24, 1967
THE PHILIPPINE AMERICAN LIFE INSURANCE
COMPANY, petitioner-appellee,
vs.
SOCIAL SECURITY COMMISSION, respondent-appellant.
Office of the Solicitor General Arturo A. Alafriz, Solicitor
Camilo D. Quiason, L.L. Javellana and L.B. Topacio for
respondent appellant.
Manuel Lim, Manuel Macias, Ricardo T. Bacod and Associates
for petitioner-appellee.
CONCEPCION, C.J.:
Appeal, taken by the Social Security Commission, from a
decision of the Court of First Instance of Manila, the
dispositive part of which reads:
IN VIEW OF THE FOREGOING, judgment is hereby
rendered (1) holding that plaintiff's agents, solicitors
or underwriters are not employees of plaintiff, the
Philippine American Life Insurance Company, and
that plaintiff is not their employer so that plaintiff's
said insurance agents, solicitors or underwriters do
not fall under the compulsory coverage of the Social
Security System; (2) commanding defendant Social
Security Commission to desist absolutely from taking
criminal action against plaintiff's officers under the
provisions of Section 28 (e) and (f) of the Social
Security Act, and from requiring plaintiff to remit
contributions to the defendant Social Security
Commission or its administrative arm, the Social
Security System, to be applied to the coverage of
plaintiff's said agents, solicitors or underwriters
under the Social Security Act, without
pronouncement as to costs.
On November 6, 1960, the Social Security System —
hereinafter referred to as the System — issued, with the
approval of the Chairman of the Social Security Commission
— hereinafter referred to as the Commission — Circular No.
34 (Exhibit A), requiring all insurance firms to submit
immediately the names of their agents, solicitors or
underwriters, who, pursuant to the Social Security Act 1 —
hereinafter referred to as the Act — are employees of said
firms, subject to compulsory coverage of the System, and to
pay the corresponding, premiums, based on the actual
commissions received by each agent during each month.
Sometime later, the System, through the manager of the
Production Department, sent to the Philippine American Life
Insurance Company — hereinafter referred to as the plaintiff
— the communication Exhibit B, dated February 11, 1961,
enclosing therewith SSS Form R-1-A-1, advising plaintiff that
pursuant to said Circular No. 34, the insurance agents thereof
are considered its employees, subject to compulsory coverage
under said Act, and urging plaintiff to accomplish said SSS
Form (for the purpose of supplying the necessary data
concerning said agents, solicitors and underwriters) and to
submit the same, within ten (10) days, to avoid the penalties
provided for by law. This "advise" was reiterated in another
letter (Exhibit B-1) of the same officer dated March 3, 1961.
Plaintiff replied to these letters with a communication (Exhibit
C), dated March 7, 1961, objecting to the aforementioned
compulsory coverage upon the ground that plaintiff's
insurance agent, solicitors or underwriters are not its
employees. Still on May 14, 1961, the System sent to plaintiff
another letter (Exhibit D), with several copies of SSS Form R-1-
A-1, with the request that these forms be accomplished and
submitted, as soon as possible, to facilitate early adjudication
of the coverage of its insurance agents under the System.
Instead of complying with this request, on May 30, 1961,
plaintiff commenced, in the Court of First Instance of Manila,
the present action, for prohibition with preliminary
injunction, against the Commission — to restrain the latter 1)
from compelling plaintiff to remit contributions to the
administrative branch of the System, as an incident of the
alleged inclusion of plaintiff's agents, solicitors or
underwriters in the compulsory coverage of the System, and
2) from prosecuting plaintiff and its officers for their refusal to
make the aforementioned contributions — upon the theory
that said agents of the plaintiff are not employees thereof.
After appropriate proceedings, the lower court rendered the
aforementioned decision. Hence, the present appeal to this
Court, since questions purely of law are involved therein,
namely: 1) whether or not the trial court had jurisdiction to
hear and decide this case; 2) whether plaintiff has a cause of
action against the Commission; and 3) whether insurance
agents of a life insurance company, like plaintiff herein, are its
employees, for purposes of the compulsory coverage under
the System.
The System maintains that the first two issues should be
resolved in the negative, upon the ground, inter alia, that
decisions of the Commission may not be reviewed by courts
of first instance, not only because the two have the same
rank, but, also, because said decisions are, pursuant to the
Acts2 reviewable by the Court of Appeals on questions of law
and fact, or by the Supreme Court, on questions purely of law;
that plaintiff has no cause of action against the Commission,
inasmuch as the former has not appealed to the latter from
the action taken by the System upon the question of
coverage, under the Act; and that plaintiff has not exhausted
the administrative remedies available thereto under the
same.3
Upon the other hand, plaintiff urges an affirmative answer,
upon the theory that the Commission is, at least, a board
within the meaning of Rule 67 of the Rules of Court of
1940;4 that being empowered by law to sue and be sued, the
Commission may sue and be sued in any court of the
Philippines; that Section 5 of Republic Act No. 1161 is
inapplicable to the case at bar, because the question of
coverage herein involved, is not a "claim" within the purview
of said section; that the issue whether a given person is an
employee of a particular firm and subject to coverage under
said Act, is not one that plaintiff is hound to submit to the
Commission in the first instance; that where the employer-
employee relationship is contested, the ruling of the
Commission to the effect that such relationship exists
presents a legal dispute, which may not be decided
unilaterally by the Commission; that the theory of the
Commission to the effect that it has the same rank as courts
of first instance may be true insofar only as the settlement of
"claims," but not as regards the question of compulsory
coverage; that an appeal from the System to the Commission
would have been an empty gesture, for all actions of and
proceedings in the System are under the direction and control
of the Commission, and Circular No. 34 (Exhibit A) bears the
Page 16 of 21
approval of the Commission, through its chairman, apart from
the fact that the Commission was poised to take criminal
action against the plaintiff and its officers to compel them to
obey the ruling complained of; and that the insistence of the
Commission on enforcing its ruling regarding said coverage
amounts to an act performed without or in excess of
jurisdiction or with grave abuse of discretion.
We find that the appeal taken by the Commission is well-
founded for the present action is one for a writ of prohibition,
which may be issued only by a superior court to
an inferior court, corporation, board or person, to prevent the
latter from usurping or exercising a jurisdiction or power it
does not have (3 Moran on Rules of Court, 1963 ed., p. 157).
Section 5 (a) of the Act acknowledges in the Commission the
power to determine and settle claims which partakes of a
quasi-judicial function, in the exercise of which, the
Commission is not inferior to courts of first instance, in much
the same way as the Public Service Commission, as a board
performing quasi-judicial functions, is not inferior to said
courts.5 The quasi-judicial nature of the functions of the
Commission is emphasized by its authority, expressly granted
by said Section 5 (a), to promulgate rules and regulations
governing "the filing, determination and settlement of
claims." Hence, the lower court had no jurisdiction to issue
the writ of prohibition prayed for.
Besides, the Commission performs administrative, as well as
quasi-judicial, functions. Although it can sue and be sued in
courts of first instance, either as regards its administrative
functions, or in the enforcement and protection of its private
rights, the rule is otherwise when the act complained of
forms part of its quasi-judicial functions. For this reason,
Section 5 (c) of said Act, explicitly provides, in connection with
"decisions" of the Commission, or the determinations thereof
in the exercise of said functions, that the same "may be
reviewed both upon the law and the facts by the Court of
Appeals," or, "if the decision of the Commission involves only
questions of law, . . . by the Supreme Court."
What is more, pursuant to Section 5(b) of said Act, the judicial
review of "any decision of the Commission . . . shall be
permitted only after any party claiming to be aggrieved
thereby has exhausted his remedies before the Commission."
In the case at bar, plaintiff has not exhausted its remedies
before the Commission. The Commission has not even been
given a chance to render a decision on the issue raised by
plaintiff herein, because the latter has not appealed to the
Commission from the action taken by the in insisting upon the
enforcement of Circular No. 34. (Exh. A.)
It is true that the same bears the approval of the Chairman of
the Commission. Even if this fact were construed an approval
of the Circular by the Commission itself, such approval would
not constitute a "decision" thereof, as the term is used in said
section 5, which regulates the judicial review of such decision.
Indeed, a "decision" connotes the adjudication or settlement
of a controversy, and the same did not exist between the
System and the plaintiff when the Chairman of the
Commission affixed his signature to said Circular No. 34, on or
before November 6, 1960. The issue did not arise until March
7, 1961, when plaintiff expressed its objection to the circular
upon the ground that the agents, solicitors and underwriters
thereof are not its employees. It is only fair and just,
therefore, as well as administratively expedient, that before a
judicial review could be sought, said issue be previously
submitted to and passed upon by the Commission, on appeal
from the action taken or contemplated to be taken by the
System, since, prior to such submission to and determination
by the Commission, the same had no occasion to consider the
specific reasons adduced by the plaintiff in support of its
objection to said Circular No. 34.
But, even if the approval of the circular by the Chairman of
the Commission were hypothetically regarded as a decision or
proof of a decision of the Commission itself, still section 5(b)
ordains positively that a judicial review of said decision "shall
he permitted only after any party claiming to be aggrieved
thereby has exhausted his remedy dies before the
Commission." In other words, he must first seek therefrom a
reconsideration of the decision complained of. This, be the
way, is the general rule applicable to actions for certiorari and
prohibition against a tribunal, board or officer, who must first
be given, through a motion for reconsideration, an
opportunity to correct the error or mistake complained of. No
such reconsideration has been asked by plaintiff herein.
Hence, it has no cause of action for prohibition, which does
not lie except in the absence of appeal or any other plain,
speedy and adequate remedy in the ordinary course of law.
It is urged that the Commission had already made clear its
intention to prosecute criminally the plaintiff and its officers.
This is not true. The one which no more than intimated such
intention was not the Commission, but the System. Precisely,
an appeal from the latter to the former, which admittedly has
control over the System, would have been a plain, speedy and
adequate remedy in the ordinary course of law. Moreover, it
appeared from the acts of the System that the danger of
prosecution was not imminent or even approximate. Indeed,
the letter Exhibit B, urging plaintiff to " please accomplish and
submit the enclosed SSS Form R-1-A-1, . . . within ten (10)
days . . . to avoid the penalties provided by law," was written
by the "Manager, Production Department" of the System,
which is not in charge of the prosecution of violators of the
Act. Then, again, over two (2) months after plaintiff had
objected to the compulsory coverage of its agents, solicitors
and underwriters, or on May 14, 1961, the System wrote to
the plaintiff the letter Exhibit D, enclosing therewith several
copies of SSS Form R-1-A-1, with the entreatment that the
same be " please" accomplished and submitted to facilitate
early adjudication of the compulsory coverage of its
agents "under the system," and winding up with the "hope" of
receiving the "form properly accomplished as soon as
possible." The System thus implied that plaintiff could then
seek an adjudication or decision on said coverage by the
Commission. At any rate, had plaintiff appealed to the
Commission, the latter could have restrained the System from
causing the plaintiff and its officers from being prosecuted
criminally, during the pendency of the appeal. In short, once
again, the same was a plain, speedy and adequate remedy in
the ordinary course of law.
Inasmuch as the lower court had no jurisdiction to hear and
decide this case, and, at any rate, plaintiff has no cause of
action against the Commission, it is unnecessary to pass upon
the third issue raised by plaintiff herein. In fact, said issue has
become moot on account of the approval of Republic Act No.
4857, on September 1, 1966, section 2 of which amended
section 5(a) of Republic Act No. 1161, to read as follows:
Any dispute arising under this Act with respect
to coverage, entitlement to benefits, collection and
settlement of premium contributions and penalties
thereon, or any other matter related thereto, shall
Page 17 of 21
 be cognizable by the Commission, and any case filed
with the Commission 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 claims shall be
governed by the rules and regulations promulgated
by the Commission. (Emphasis supplied).
Hence, there can be no question now that any dispute with
respect to coverage is cognizable by the Commission.
Wherefore, the decision appealed from is hereby reversed
and another one shall be entered, dismissing the complaint
herein, with costs against plaintiff-appellee the Philippine
American Life Insurance Company. It is so ordered.
EN BANC
G.R. No. L-14833 April 28, 1962
OROMECA LUMBER CO., INC., petitioner-appellant,
vs.
SOCIAL SECURITY COMMISSION and SOCIAL SECURITY
SYSTEM, respondents-appellees.
Navarra and Layosa for petitioner-appellant.
Office of the Solicitor General for respondents-appellees.
DIZON, J.:
On December 18, 1967 appellant Oromeca Lumber Co., Inc.
filed a petition with appellee Social Security Commission —
hereafter referred to as the Commission — for the refund of
the premiums it had remitted to the System on November 20
and December 9, both of the year 1957, upon the ground that
they correspond to a period when it was not yet subject to
the compulsory coverage provided for by the Social Security
Act of 1954 (Republic Act 1161, as amended by Republic Act
1792). On December 27 of the same year the Social Security
System objected to the petition claiming that appellant was
already subject to compulsory coverage during the period
material to the petition, because it merely took over the
business of the partnership Ortega, Roman & Lacson De Leon
Company doing business under the name and style of
Oromeca Lumber Company since 1947, its business
operations, therefore, being mere continuation of those of
the latter. On March 10, 1958 the Commission denied
appellant's petition. After the denial the latter's motion for
reconsideration, it took the present appeal.
The petition was submitted for resolution upon the following
stipulation of facts:.
1. That this action is directed against the Social
Security System and not to the Social Security
Commission as inadvertently shown in the caption of
the petition dated December 13, 1957 and,
therefore, the said petition of the OROMECA
LUMBER COMPANY, INC. is considered and deemed
amended in this respect;
2. That the partnership ORTEGA, ROMAN & LACSON
DE LEON COMPANY, which did business in the name
style of OROMECA LUMBER COMPANY, was
registered with the Securities and Exchange
Commission on June 18, 1947, Annex "B" of the
petition and which is incorporated hereto and made
part and parcel of this stipulation by reference;
parties admitting the existence and authenticity of
said Annex "B";
3. That sometime in 1951, the articles of co-
partnership of ORTEGA, ROMAN & LACSON DE LEON
COMPANY, which did business in the name and style
of OROMECA LUMBER COMPANY, was amended, said
amendment was accordingly registered with the
Securities and Exchange Commission, Annex "A" of
the petition, incorporated hereto and made integral
part hereof by reference, the parties also admitting
the existence and authenticity of said Annex "A";
4. That the partnership ORTEGA, ROMAN & LACSON
DE LEON COMPANY, mentioned in the preceding
paragraphs 2 and 3 hereof, was dissolved on April 6,
1956; the articles of dissolution having been duly
recorded with the Securities and Exchange
Commission;
5. That the OROMECA LUMBER COMPANY, INC. is a
corporation duly organized under and by virtue of
the laws the Philippines, the same having been duly
incorporated on April 11, 1956, per Annex "C" of the
petition which is incorporated hereto by reference;
the existence and authenticity of said Annex "C" are
likewise admitted;
6. That Mr. Simeon Lim is the duly elected Vice-
President and General Manager of the OROMECA
LUMBER COMPANY INC. since April 11, 1956 to the
present, per Resolution of the Board, photostatic
copy of which is attached hereto and made integral
part hereof as Annex "F", the existence and
authenticity of said resolution is also admitted;
7. That the petitioner OROMECA LUMBER COMPANY,
INC. never voluntarily registered with the Social
Security System as shown by Annexes "D" and "E" of
the petition and incorporated hereto by reference;
the existence and authenticity said annexes are
admitted by the parties;
8. That it is the honest belief of the petitioner that it
did not fall under the compulsory coverage provided
for by law on September 1, 1957;
9. That the OROMECA LUMBER COMPANY, INC. was
formed and organized on April 4, 1956, two days
before the articles of dissolution of the partnership
ORTEGA, ROMAN & LACSON DE LEON COMPANY
which did business under the name and style
OROMECA LUMBER COMPANY, was registered with
the Securities and Exchange Commission;
10. That the Articles of Incorporation of the
OROMECA LUMBER COMPANY, INC. was filed with
the Securities and Exchange Commission, on April 6,
1956, the same date when the Articles of Dissolution
of the partnership ORTEGA, ROMAN & LACSON DE
Page 18 of 21
 LEON COMPANY was recorded with the Securities
and Exchange Commission and which articles of
incorporation was registered with the said
Commission on April 11, 1956;
11. That the primary business of the OROMECA
LUMBER COMPANY, INC. as indicated in the purpose
clause of the articles of incorporation Annex "B", is
the lumber business and allied business, a business
in which the partnership ORTEGA, ROMAN &
LACSON DE LEON COMPANY was also engaged
before its dissolution on April 6, 1956. (pp. 9-11,
record on appeal).
The documents referred to in the above stipulation as
Annexes A, B, C, D, E and F were attached thereto.
In deciding appellant's petition, the Commission took official
notice of the Articles of Dissolution of the partnership Ortega,
Roman and Lacson De Leon Company — Oromeca Lumber
Company — whereby the partners agreed "to wind up the
affairs of the partnership and dissolve it", obviously to carry
out what in their own words was "the desire and express will
of the partners to have it (partnership) organized into a
corporation for the purpose of expanding its business in the
exploitation and development of the lumber industry in the
Philippines". The resolutory part of the Articles of Dissolution
provided that the dissolution and winding up of the affairs of
the partnership shall be "effective upon the date of
registration of the new corporation which shall assume all the
assets and liabilities" of the partnership.
Appellant now contends (first assignment of error) that the
Commission erred in taking cognizance of and in taking into
account the contents of said Articles of Dissolution, in spite of
the fact that they were not made part of the stipulation of
facts. We find no merit in this contention.
The proceedings commenced by appellant before the
Commission are not judicial but administrative in character. It
is a well-settled rule that in proceedings of this kind the
technical rules of procedure — particularly of evidence —
applied in judicial trials, do not strictly apply. Moreover, said
Articles of Dissolution having been expressly mentioned and
referred to in paragraph 4 of the stipulation of facts, the same
must be deemed to be, for all legal purposes, part and parcel
thereof.
To the above must be added the circumstance that the
Articles of Dissolution aforesaid are part of the public records
under the custody of the Securities and Exchange
Commission, and appellant does not deny the correctness of
the references or statements made in the appealed resolution
concerning their contents. The technical point raised by
appellant is, therefore, one that should find no favor in the
consideration of the issue involved herein.
The remaining assignments of error made in appellant's brief
are interrelated and should be taken up jointly. 1äwphï1.ñët
It is the claim of appellant that having been incorporated only
on April 11, 1956, it did not come under the provisions of the
law concerning compulsory coverage until April 11, 1958;
that, consequently, it is entitled to the refund of the
remittances it made to the Social Security System from
September 1, 1957 to April 11, 1958. This contention is
likewise untenable.
Appellant's theory is made to rest on the doctrine of separate
corporate personality in accordance with which, upon due
incorporation of an association of persons, there is created,
by operation of law, a new juridical personality, distinct and
separate from that of its members or of the association it had
succeeded. Hence, appellant's claim that it only came into
being and became an employer upon its incorporation on
April 11, 1956.
Were we to consider nothing else but the fact and date of
appellant's incorporation, its contention in this appeal would
have to be sustained. In resolving the issue before Us,
however, we cannot disregard facts and circumstances of
record which clearly show that appellant corporation merely
absorbed and continued the business of its predecessor, the
partnership Oromeca Lumber Company. In this connection,
the Stipulation of Facts shows that said partnership was
registered with the Securities and Exchange Commission since
June 18, 1947; that it was engaged in the lumber business and
other allied businesses; that its Articles of Dissolution
mentioned heretofore were approved on April 6, 1956 and
recorded with the Securities and Exchange Commission on
the same date; that appellant corporation was, in fact, formed
and organized on April 4, 1956, that is, two days before the
approval of the aforementioned Articles of Dissolution,
although it was actually incorporated only on April 11, of the
same year, and that appellant's business is exactly the same
as that of the partnership Oromeca Lumber Company. Lastly,
as we have already adverted to, the Articles of Dissolution of
said partnership expressly stated that the reason for its
dissolution was the desire and express will of the partners to
have it organized into a corporation for the purpose of
expanding its business, and that, as a matter of fact, the
dissolution was made effective only upon incorporation of the
new corporation which was to take over or assume all the
assets and liabilities of the partnership. This makes it clear
that, as held in the appealed resolution, appellant merely
absorbed and continued the business of its predecessor. The
conclusion is, therefore, inescapable that appellant must be
deemed to have been an employer and engaged in business
since June 18, 1947 when the partnership it had succeeded
started its business and activities.
WHEREFORE, the resolution appealed from is affirmed, with
costs.
EN BANC
G.R. No. L-19587 May 31, 1965
RAFAEL JALOTJOT, petitioner,
vs.
MARINDUQUE IRON MINES AGENTS, INC., ELIZALDE ROPE
COMPANY, and the SOCIAL SECURITY SYSTEM, respondents.
Juan V. Reyes for petitioner.
Francisco C. Catral and Santiago de los Reyes for respondent
Marinduque Iron Mines Agents, Inc.
Vedasto J. Hernandez for respondent Elizalde Rope Company.
Office of the Solicitor General for respondent Social Security
System.
REYES, J.B.L.,J.:
Page 19 of 21
Appeal from the resolution of the Social Security Commission
ordering the respondent-appellant, Marinduque Iron Mines
Agents, Inc., to pay sickness benefits to the petitioner
appellee, Rafael Jalotjot.
On 1 September 1954, the said Rafael Jalotjot, then an
employee of the appellant, became an employee-member of
the Social Security System. Within a short time thereafter, he
contracted pulmonary tuberculosis and was confined at the
mine hospital of his employer in the province of Marinduque
in October, 1957. Later on, he was transferred to the Quezon
Institute in Quezon City, where he was still confined at the
time he filed his petition for sickness benefits on 12 July 1961.
On 6 November 1958, the employer company separated
Jalotjot from its employ. It remitted to the System premium
contributions corresponding to the month of September 1957
only and refused Jalotjot's demand for sickness benefits up to
his separation in November 1958. Because of such refusal, the
said employee filed a petition with the Social Security
Commission impleading as alternative respondents the
Marinduque Iron Mines Agents, Inc., Elizalde Rope Company,
and the Social Security System. The Commission held
Marinduque liable for Jalotjot's sickness benefits, and
Marinduque resorted to this Court.
The appellant's first assignment of error contests the
authority of the Commission in motu proprio ordering the
appellant to remit to the System its 3-½ share in the premium
contributions on account of Jalotjot's membership therein.
The order, according to the appellant, created a cause of
action between it and the System, despite the lack of any
cross-claim by the System against the alternative respondent
Marinduque.
The foregoing position of the appellant is untenable, because
the hearings before the Commission are administrative and
are not strictly governed by the technical rules of procedure
that are applied to judicial trials (Oromega Lumber Co. vs.
SSC, L-14833, 28 April 1962); and since the Commission had
discovered, in the case before it, that the appellant had not
complied with its statutory duty of remitting to the System its
share in the premium contributions, the Commission acted
well within its authority in ordering the remittance since it has
been vested with the direction and control of the System (Sec.
3, Social Security Act, as amended). At any rate, respondent
has interposed its defense that it did not remit the premium
due from Jalotjot because the latter was not receiving any
compensation after he became sick; and it is not shown that
respondent could offer any other excuses if the System had
filed a cross-claim against it. Hence, it was in no way
prejudiced.
In its second assignment of error, the appellant holds that the
claimant-employee is not entitled to sickness benefits
because at the time of his confinement he has not been a
member of the System for at least one (1) year, and that he
has not paid premiums for at least six (6) months,
conformably with the rules and regulations of the
Commission and Section 14 of the Act.
This argument has no merit.
From 1 September 1957 until his employment was terminated
in early November 1958, Jalotjot was a member of the
System. His membership was not ended by his sickness.
Hence appellant Marinduque Iron Mines Agents, Inc. was
responsible for remitting the employee's share of the
premiums throughout that period of more than one year
(Social Security Act, sec. 22). The preferred excuse that
appellant-employer had no obligation to remit the premium
contributions because the employee earned no compensation
is not entirely true: for the employee was entitled to receive,
and was concededly paid, under the Workmen's
Compensation Act, and his contribution could have been
deducted from such payments.
However, even without the compensation payments, the
appellant's argument must be rejected in view of our rulings
in the analogous case of Franklin Baker Company of the
Philippines vs. Social Security System, L-17361, 29 April 1963,
and the cases cited therein, the rationale being that as long as
the employment is not terminated the payment of
contributions by the employer is compulsory.
... payment of contributions by an employer is
compulsory during its coverage, and in accordance
with the provisions of Section 9 of the Social Security
Act, coverage is determined solely by the existence
of an employer-employee relationship. While an
employee is on leave, even without pay, he is still an
employee of his employer, their contract of
employment has not yet terminated. So much so
that the employee may still return to work and the
employer is still bound to accept him. His
responsibility as an employee still exists. He is still
entitled to the benefits of the System when he
returns. Consequently, his employer is still liable to
pay his contributions to the Commission on account
of its employee who is on leave without
pay.1äwphï1.ñët
And in the same case, this Court specifically ruled "the time
when an employee may not be actually receiving
compensation as when he is on sick leave without pay, is not
excepted (Franklin Baker Co. vs. SSS, supra).
The last assignment of error disputes the authority of the
Commission to order the deduction from the employee's
sickness benefits of his 2-½ share in the premium. The
premises laid by the appellant in this assignment of error are
the same as those which it stated in the second assignment of
error. Perforce, this assignment, must similarly fail.
IN VIEW OF THE FOREGOING, the appealed resolution is
hereby affirmed, with costs against the appellant Marinduque
Iron Mines Agents, Inc.
EN BANC
G.R. No. L-21448 August 30, 1967
POBLETE CONSTRUCTION CO., petitioner,
vs.
JUDITH ASIAIN, SOCIAL SECURITY COMMISSION and BENITO
MACRHON, in his capacity as Sheriff of Rizal, respondents.
Fernando B. Duque and Yolanda F. Bustamante for petitioner.
Orlando V. Calsado for respondent Asiain.
Office of the Solicitor General Arturo A. Alafriz, Solicitor C. D.
Quiason, L. A. L. Javellana and E. T. Duran for Social Security
Commission.
MAKALINTAL, J.:
Page 20 of 21
Miguel Asiain was an employee of the Poblete Construction
Company from 1956 until his death on November 22, 1959,
with a monthly salary of P300. Upon his death his widow,
Judith Asiain, for herself and her minor children, filed a
petition before the Social Security Commission against the
company and its manager, Domingo Poblete (Case No. 78), to
recover the following sum: (1) P3,600.00 equivalent to one
year's salary of the deceased; (2) P600.00 representing his
unpaid salary for two months; (3) P288.00 "representing the
cash received by respondents from their laborers as
contribution to the family of the deceased;" and (4) P2,000.00
by way of attorney's fees.
The respondents below moved to dismiss the petition on the
grounds that the Social Security Commission had no
jurisdiction over the subject-matter and that the petitioner
Judith Asiain had no capacity to sue. The Commission denied
the motion to dismiss in its order of February 25, 1960 and
ordered the respondents to file their answer. When no
answer was forthcoming, the respondents were declared in
default in an order dated March 9, 1960, and the petitioners
were allowed to present their evidence.
In its resolution of September 15, 1960 the Commission
declared itself without jurisdiction to entertain the claims in
the petition except the one for the sum of P3,600, which it
awarded on the basis of the evidence adduced at the hearing
and pursuant to Section 24 of Republic Act No. 1161, as
amended. A subsequent motion for reconsideration filed by
the respondents was denied, and they elevated the case for
review by the Court of Appeals, which upon proper
application issued a writ of preliminary injunction to stop all
further proceedings below, including execution of the award.
The case was afterwards certified to the Court for the reason
that when the respondents below were declared in default
they lost their standing before the Commission, and not
having regained the same by a motion to set aside or petition
for relief, they had no right to appeal from the default
judgment; and that in any event no questions of fact are
involved and hence, if at all appealable, the appeal should be
directly to this Court.
The procedural issues, we believe, need not concern us. The
main point raised here by the Poblete Construction Company,
which it raised also in its motion to dismiss before the
Commission, is that the said body had no jurisdiction to
entertain the claim of P3,600, which should have been
presented before the ordinary courts. This claim was filed
under Section 24 of the Social Security Act (R.A. 1191 as
amended), which provides:
Sec. 24. Employment records and reports.—(a) Each
employer shall report immediately to the System the
names, ages, civil status, occupations, salaries and
dependents of all his employees who are in his
employ and who are or may later be subject to
compulsory coverage: Provided, That if an employee
subject to compulsory coverage should die or
become sick or disabled without the System having
previously received a report about him from his
employer, the said employer shall pay to the
employee or his legal heirs 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 System.
It appears that although the deceased Miguel Asiain had been
employed in the Poblete Construction Company since 1956
and had accomplished SSS Form E-1 (Employees' Date Record)
and transmitted the same to the said company's Manila
Office, it was never filed with the Social Security System for
the reason, according to the company, that he refused to have
his share of the corresponding monthly contributions
deducted from his salary. Upon these facts the company
maintains that the deceased was not a member of the System
when he died and hence the adjudication of the claim for
damages under Section 24, supra, does not pertain to the
Commission but to the courts of justice.
We find the argument untenable. There is no question that
the deceased Miguel Asiain was subject to compulsory
coverage in the Social Security System.1 It was the duty of the
employer to "report immediately to the System" his name,
age, civil status, occupation, salary and dependents.
Compliance with this duty did not depend upon the
employee's willingness to give his share of the contribution.
Section 24 is mandatory, to such an extent that if the
employee should die or become sick or disabled without the
report having been made by the employer, the latter is liable
for an amount equivalent to the benefits to which the
employee would have been entitled had such report been
made. It is true that the provision uses the word "damages" in
referring to the amount that may be claimed. But this fact
alone does not mean that the Social Security Commission
lacks jurisdiction to award the same. Section 5(a) of the Social
Security Act provides that "the filing, determination and
settlement of claims shall be governed by the rules and
regulations promulgated by the Commission;" and the rules
and regulations thus promulgated state that "the effectivity of
membership in the System, as well as the final determination
and settlement of claims, shall be vested in the Commission."
The term "claims" is broad enough to include a claim for
"damages" under Section 24. Otherwise an employer could
nullify the jurisdiction of the Commission by the simple
expedient of not making a report as required by said Section.
The collection of the employee's share is a duty imposed by
law, and his unwillingness to have it deducted from his salary
does not excuse the employer's failure to make the report
aforesaid. It is precisely in this situation that the employer is
liable, and there is no question as to the amount of such
liability in this case.
The decision of the Social Security Commission is affirmed,
and the writ of preliminary injunction is dissolved, with costs
against herein petitioner. 1äwphï1.ñët
Page 21 of 21