Social Legislation 2nd Batch Cases

G.R. No.
L-24883 October 31, 1969

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
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filed the instant petition."
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
2
payment.
On appeal, petitioner in its lone assignment of error contends 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
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employee, any premium so paid in advance but not due shall be credited or refunded to his employer.
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 employer, the said employer shall pay to
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the employee or his legal heirs damages equivalent to the benefits to which said employee would have been entitled had his
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name been reported on time by the employer to the System.
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
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State, to which the principle of non-impairment of the obligation of contract is not a proper defense."
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
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stated, exacts the lesser liability of payment of the delinquent premiums with a 3% monthly penalty. Thus, in a similar case, 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.
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Petitioner's invoking of the ruling of this Court in a commercial insurance case 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
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Constitutional mandate to promote social justice and to insure the well-being and economic security of all the people.
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
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and in accordance with law that the sum due said heirs bear legal interest of six (6%) per cent per annum from June 4, 1965, date of
10
receipt of said Resolution by petitioner.
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 contributions to the System There is likewise no dispute that appellants, during their

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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 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

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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
2
disability benefits. 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,
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on the ground 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 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.
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 under the Philippine Social Security System, but upon advice by certain Social
Security System officials, they paid to the 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.
On May 25, 1966, respondent System filed a Motion to 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.
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 System's Counsel, the
Commission gave the parties a further period of fifteen days to submit their Memorandum consolidating their arguments, after which

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the motion would be deemed submitted for decision. Petitioners stood on their original memorandum, and respondent System filed its
memorandum on August 4, 1966.
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:
United Christian Missionary Society P5,253.53
Board of Mission of the Evangelical 7,891.74

United Brothers Church
United Church Board for World 12,353.75

Ministers
Commission on Ecumenical Mission 33,019.36

& Relations
Board of Foreign Mission of the 10,928.04

Reformed Church in America
TOTAL P 69,446.42
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:
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 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 prescribed, he shall pay besides the contribution a
2
penalty thereon of three per centum per month from the date the contribution falls due until paid . . .
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
3
protection to employers against the hazards of disability, sickness, old age and death." 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
4
members which are merely held in trust by the Government." Being a mere trustee of the funds of the System which actually belong

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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
5
estopped by mistake or error on the part of its agents." 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
6
Archbishop vs. Social Security Commission 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
7
dismiss their petition on the same legal ground. 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

Page 6 of 20
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 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

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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 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

Page 8 of 20
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 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

Page 9 of 20
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).
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;

Page 10 of 20
(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."
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.:
1
This Petition for Review on certiorari of the Decision of the Court of Appeals stems from the following facts, as narrated by the Trial
2 3
Court, adopted by the Court of Appeals, and quoted by both petitioner and private respondents :
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
4
"N-1 " and "O-1").
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;

Page 11 of 20
(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.
5
Defendant SSS shall further pay the costs.
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
6
jointly in the sum of P20,000.00. All in all, plaintiffs are entitled to P35,000.00 by way of moral damages.
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.
7
SO ORDERED.
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
8
governmental institution but one performing governmental functions petitions.
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
9
subject to review by this Court, the present case not being one of the recognized exceptions to that rule. 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-date and current in the payment of their monthly installments. Having

Page 12 of 20
accepted the prior late payments of the monthly installments, the appellant could no longer suddenly and without
10
prior notice to the mortgagors apply for the extra-judicial foreclosure of the mortgage in July 1968.
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
11
mortgage by defendant SSS.
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
12
question on this score considering that the SSS is a juridical entity with a personality of its own. It has corporate powers separate
13 14
and distinct from the Government. SSS' own organic act specifically provides that it can sue and be sued in Court. These words
15
"sue and be sued" embrace all civil process incident to a legal action. 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
16
against it for varied objectives, such as, in this case, to obtain compensation in damages arising from contract 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.
17
The proposition that the SSS is not profit-oriented was rejected in the case of SSS Employees' Association vs. Hon. Soriano. 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
18
notice of garnishment.
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
19
passports. Nor did they secure the necessary visas from the local consulates of foreign countries they intended to visit for their trip
20
abroad.
Nor can the SSS be held liable for moral and temperate damages. As concluded by the Court of Appeals "the negligence of the
21
appellant is not so gross as to warrant moral and temperate damages", 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
22
same way that a clearly unfounded civil action is not among the grounds for moral damages.

Page 13 of 20
With the ruling out of compensatory, moral and temperate damages, the grant of exemplary or corrective damages should also be set
23 24
aside. Moreover, no proof has been submitted that the SSS had acted in a wanton, reckless and oppressive manner.
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
25
invaded by petitioner SSS.
The circumstances of the case also justify the award of attorney's fees, as granted by the Trial and Appellate Courts, particularly
26
considering that private respondents were compelled to litigate for the prosecution of their interests.
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.
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.

Page 14 of 20
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
1
Act — 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
2
decisions are, pursuant to the Acts 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
3
administrative remedies available thereto under the same.
Upon the other hand, plaintiff urges an affirmative answer, upon the theory that the Commission is, at least, a board within the
4
meaning of Rule 67 of the Rules of Court of 1940; 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 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
5
quasi-judicial functions, is not inferior to said courts. The quasi-judicial nature of the functions of the Commission is emphasized by

Page 15 of 20
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 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,

Page 16 of 20
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 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

Page 17 of 20
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.:
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.

Page 18 of 20
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.:
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.

Page 19 of 20
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
1
Social Security System. 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 2 of 2

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G.R. No.

L-24883 October 31, 1969

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United Christian Missionary Society P5,253.53

Board of Mission of the Evangelical 7,891.74

United Church Board for World 12,353.75

Commission on Ecumenical Mission 33,019.36

Board of Foreign Mission of the 10,928.04

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