CASE 1

G.R. No. L-15045             January 20, 1961

IN RE: PETITION FOR EXEMPTION FROM COVERAGE BY THE SOCIAL SECURITY SYSTEM. ROMAN
CATHOLIC ARCHBISHOP OF MANILA, petitioner-appellant,
vs.
SOCIAL SECURITY COMMISSION, respondent-appellee.

Feria, Manglapus and Associates for petitioner-appellant.

Legal Staff, Social Security System and Solicitor General for respondent-appellee.

GUTIERREZ DAVID, J.:

On September 1, 1958, the Roman Catholic Archbishop of Manila, thru counsel, filed with the Social Security
Commission a request that "Catholic Charities, and all religious and charitable institutions and/or organizations, which
are directly or indirectly, wholly or partially, operated by the Roman Catholic Archbishop of Manila," be exempted from
compulsory coverage of Republic Act No. 1161, as amended, otherwise known as the Social Security Law of 1954. The
request was based on the claim that the said Act is a labor law and does not cover religious and charitable institutions
but is limited to businesses and activities organized for profit. Acting upon the recommendation of its Legal Staff, the
Social Security Commission in its Resolution No. 572, series of 1958, denied the request. The Roman Catholic
Archbishop of Manila, reiterating its arguments and raising constitutional objections, requested for reconsideration of
the resolution. The request, however, was denied by the Commission in its Resolution No. 767, series of 1958; hence,
this appeal taken in pursuance of section 5(c) of Republic Act No. 1161, as amended.

Section 9 of the Social Security Law, as amended, provides that coverage "in the System shall be compulsory upon all
members between the age of sixteen and sixty rears inclusive, if they have been for at least six months a the service of
an employer who is a member of the System, Provided, that the Commission may not compel any employer to become
member of the System unless he shall have been in operation for at least two years and has at the time of admission, if
admitted for membership during the first year of the System's operation at least fifty employees, and if admitted for
membership the following year of operation and thereafter, at least six employees x x x." The term employer" as used in
the law is defined as any person, natural or juridical, domestic or foreign, who carries in the Philippines any trade,
business, industry, undertaking, or activity of any kind and uses the services of another person who is under his orders
as regards the employment, except the Government and any of its political subdivisions, branches or instrumentalities,
including corporations owned or controlled by the Government" (par. [c], see. 8), while an "employee" refers to "any
person who performs services for an 'employer' in which either or both mental and physical efforts are used and who
receives compensation for such services" (par. [d], see. 8). "Employment", according to paragraph [i] of said section 8,
covers any service performed by an employer except those expressly enumerated thereunder, like employment under
the Government, or any of its political subdivisions, branches or instrumentalities including corporations owned and
controlled by the Government, domestic service in a private home, employment purely casual, etc.

From the above legal provisions, it is apparent that the coverage of the Social Security Law is predicated on the
existence of an employer-employee relationship of more or less permanent nature and extends to employment of all
kinds except those expressly excluded.

Appellant contends that the term "employer" as defined in the law should — following the principle of ejusdem
generis — be limited to those who carry on "undertakings or activities which have the element of profit or gain, or which
are pursued for profit or gain," because the phrase ,activity of any kind" in the definition is preceded by the words "any
trade, business, industry, undertaking." The contention cannot be sustained. The rule ejusdem generis applies only
where there is uncertainty. It is not controlling where the plain purpose and intent of the Legislature would thereby be
hindered and defeated. (Grosjean vs. American Paints Works [La], 160 So. 449). In the case at bar, the definition of the
term "employer" is, we think, sufficiently comprehensive as to include religious and charitable institutions or entities not
organized for profit, like herein appellant, within its meaning. This is made more evident by the fact that it contains an
exception in which said institutions or entities are not included. And, certainly, had the Legislature really intended to
limit the operation of the law to entities organized for profit or gain, it would not have defined an "employer" in such a
way as to include the Government and yet make an express exception of it.

It is significant to note that when Republic Act No. 1161 was enacted, services performed in the employ of institutions
organized for religious or charitable purposes were by express provisions of said Act excluded from coverage thereof
(sec. 8, par. [j] subpars. 7 and 8). That portion of the law, however, has been deleted by express provision of Republic
Act No. 1792, which took effect in 1957. This is clear indication that the Legislature intended to include charitable and
religious institutions within the scope of the law.

In support of its contention that the Social Security Law was intended to cover only employment for profit or gain,
appellant also cites the discussions of the Senate, portions of which were quoted in its brief. There is, however, nothing
whatsoever in those discussions touching upon the question of whether the law should be limited to organizations for
profit or gain. Of course, the said discussions dwelt at length upon the need of a law to meet the problems of
industrializing society and upon the plight of an employer who fails to make a profit. But this is readily explained by the
fact that the majority of those to be affected by the operation of the law are corporations and industries which are
established primarily for profit or gain.

Appellant further argues that the Social Security Law is a labor law and, consequently, following the rule laid down in
the case of Boy Scouts of the Philippines vs. Araos (G.R. No. L-10091, January 29, 1958) and other cases1, applies
only to industry and occupation for purposes of profit and gain. The cases cited, however, are not in point, for the
reason that the law therein involved expressly limits its application either to commercial, industrial, or agricultural
establishments, or enterprises. .

Upon the other hand, the Social Security Law was enacted pursuant to the "policy of the Republic of the Philippines to
develop, establish gradually and perfect a social security system which shall be suitable to the needs of the people
throughout the Philippines and shall provide protection to employees against the hazards of disability, sickness, old age
and death." (See. 2, Republic Act No. 1161, as amended.) Such enactment is a legitimate exercise of the police power.
It affords protection to labor, especially to working women and minors, and is in full accord with the constitutional
provisions on the "promotion of social justice to insure the well-being and economic security of all the people." Being in
fact a social legislation, compatible with the policy of the Church to ameliorate living conditions of the working class,
appellant cannot arbitrarily delimit the extent of its provisions to relations between capital and labor in industry and
agriculture.

There is no merit in the claim that the inclusion of religious organizations under the coverage of the Social Security Law
violates the constitutional prohibition against the application of public funds for the use, benefit or support of any priest
who might be employed by appellant. The funds contributed to the System created by the law are not public funds, but
funds belonging to the members which are merely held in trust by the Government. At any rate, assuming that said
funds are impressed with the character of public funds, their payment as retirement death or disability benefits would
not constitute a violation of the cited provisions of the Constitution, since such payment shall be made to the priest not
because he is a priest but because he is an employee.

Neither may it be validly argued that the enforcement of the Social Security Law impairs appellant's right to disseminate
religious information. All that is required of appellant is to make monthly contributions to the System for covered
employees in its employ. These contributions, contrary to appellant's contention, are not in the nature of taxes on
employment." Together with the contributions imposed upon the employees and the Government, they are intended for
the protection of said employees against the hazards of disability, sickness, old age and death in line with the
constitutional mandate to promote social justice to insure the well-being and economic security of all the people.

IN VIEW OF THE FOREGOING, Resolutions Nos. 572 kind 767, series of 1958, of the Social Security Commission are
hereby affirmed. So ordered with costs against appellant.
CASE 2

G.R. No. L-17361             April 29, 1968

FRANKLIN BAKER COMPANY OF THE PHILIPPINES, petitioner-appellant,

vs.
SOCIAL SECURITY SYSTEM, respondent-appellee.

Ross, Selph and Carrascoso, for petitioner-appellant.

Office of the Solicitor General and Ernesto T. Duran for respondent-appellee.

MAKALINTAL, J.:

Appeal from the ruling of the Social Security Commission dismissing petition for reconsideration of an order of
respondent Social Security System.

Petitioner-appellant Franklin Baker Company of the Philippines is engaged in the manufacture of dessicated coconut in
San Pablo City. The deceased Tomas Zamora was one of its employees. Both were compulsory members of the Social
Security System.

Due to the annual overhauling of its machinery and also to lack of production orders from its mother company in the
United States petitioner temporarily ceased its operations from December 22, 1957 to February 18, 1958. Zamora
rendered no actual services during that period. He then went on sick leave without pay from March 9, 1958, up to the
day of his death, June 13, 1958.

On July 10, 1958 the System received a death claim application from petitioner for and in behalf of the designated
beneficiaries of the deceased employee. After processing the claim the System found that no premium remittances had
been made for him for the months of February, March, and June, 1958. Of the unpaid premiums, P5.85 was chargeable
to the employee while P8.18 was due from the employer-petitioner. The employee's share of the unpaid premiums was
subsequently deducted from the death benefits awarded to his beneficiaries and the System billed petitioner for its
share.

Under Resolution No. 139, Series of 1958, the Social Security Commission adopted the rule that "employers are liable
to the 3-1/2% company's share during the months when there are no premiums remitted, if there is existing employer-
employee relationship between them during those months." Petitioner excepted to the System's demand for payment
by filing a petition for reconsideration with the Commission. On April 28, 1960 the Commission resolved to dismiss said
petition, and the case is now before us on appeal from the resolution of dismissal.

Petitioner raises two issues: (1) that the employer is not liable for its share of the premiums during the period when the
employee is on leave without pay since he receives no compensation; and (2) that the adoption of a "theoretical salary"
basis upon which the employer's liability of 3-1/2% is computed during the time that the employee receives no
compensation is erroneous.

The first issue has already been resolved by us in several cases. Insular Lumber Co. vs. SSS, G.R. No. L-17623, Jan.
31, 1963; Roman Archbishop of Manila vs. SSS, G.R. No. L-15045, Jan. 20, 1961; Insular Life Assurance Co., Ltd., et
al. vs. SSS, G.R. No. L-16359, Dec. 28, 1961. In those cases we held:

... 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.

The ruling of the Commission adopting the "theoretical salary" basis assailed by petitioner under the second issue
raised by it in this appeal reads as follows:

Neither does the absence of compensation for the employee for a particular month militate against the adoption
of a theoretical salary upon which the premium contributions are to be based. In such cases, this Commission
has adopted the policy that where an employee does not earn any compensation for a particular month, the
basis for his premium contributions shall be the salary for the month immediately preceding the wageless month
or, in case of a variable wage earner, then, it shall be his daily rate of compensation multiplied by the number of
days in which he would have worked for that wageless month (Circulars Nos. 21 and 24). The adoption of such
a theoretical salary is justified on the ground that during the period when the employer-employee relationship
subsists, there is a legal obligation to remit premium contributions to the System for the benefit of the employee.
Petitioner contends that the adoption of the so-called "theoretical salary" basis is beyond the authority and competence
of the Social Security Commission, as it is not justified by the Social Security Act (R. A. 1161, as amended by Act
1792), particularly section 19 thereof which defines the employer's obligation to contribute to the System. This section
provides:

SEC. 19. Employer's contribution.— Beginning as of the last day of the month immediately preceding the month
when an employee's compulsory coverage takes effect and every month thereafter during his employment, his
employer shall pay, with respect to such covered employee in his employ, a monthly contribution equal to three
and a half per centum of the monthly compensation of said covered employee. Notwithstanding any contract to
the contrary, an employer shall not deduct, directly or indirectly, from the compensation of his employees
covered by the System or otherwise recover from them the employer's contribution with respect to such
employees. (As amended by Section 11, R.A. 1792)

Since the deceased employee, Tomas Zamora, received no compensation for the period in question, petitioner
maintains that the imposition of a 3-1/2% monthly contribution upon the employer on the basis of the monthly
"theoretical" compensation is in effect a deviation from or an amendment of the statute, which only Congress can make,
We do not think this view is correct. The obligation of the employer to contribute its share to the System is effective
during the existence of the employer-employee relationship. This is already settled in several cases (supra), and implicit
in the provision aforequoted which says that the employer shall pay the 3-1/2% contribution "beginning as of the last
day of the month immediately preceding the month when an employee's compulsory coverage takes effect and every
month thereafter during his employment ...." The time when an employee may not be actual receiving compensation, as
when he is on sick leave without pay, is not excepted. Obviously, inasmuch as the obligation to contribute does not
cease during that period, a reasonable basis for computing the amount of the contribution must be adopted; and the
one prescribed by the Commission in its circulars Nos. 21 and 24 and applied in the case at bar is reasonable, both on
legal and actuarial considerations. It does not amount to legislation, but merely implementation of the existing statute.
The provisions of the Social Security Act should be liberally construed in favor of those seeking its benefits. "Any
interpretation which would defeat rather than promote the ends for which the Social Security Act was enacted should be
eschewed. 1

The resolution appealed from, passed by the Social Security Commission on April 28, 1960, is affirmed, with costs
against petitioner-appellant.
CASE 3

G.R. No. L-15798            December 28, 1961

JOSE P. TECSON, Petitioner-Appellant, vs. SOCIAL SECURITY

SYSTEM, Respondent-Appellee.

Sycip, Quisumbing, Salazar and Associates for petitioner-appellant.

Office of the Solicitor General and Teodoro R. Banzon for respondent-appellee.

LABRADOR, J. chanrobles virtual law library

This is an appeal from a decision or ruling of the Social Security Commission

denying payment of death benefits to Jose P. Tecson, the beneficiary of an
employee of Yuyitung Publishing Company, by the name of Lim Hoc. chanroblesvirtualawlibrary chanrobles virtual law library

The facts as found by the Social Security Commission are as follows:

The facts attendant are as follows: The late Lim Hoc, a former employee of the
Yuyitung Publishing Company, was, at the time of his death on November 3,
1957, a member of the System, having qualified as such on September 1, 1957.
In the SSS-Form E-1 accomplished and filed by him with the System, he gave
his civil status as married, but made no mention of the members of his family or
other relatives. Instead, he designated therein the petitioner Jose P. Tecson,
reportedly a friend and co-worker of his, as his beneficiary. After the death of
Lim Hoc, petitioner, in his capacity as the designated beneficiary, filed with the
System a claim for death benefits. (ROA, p. 31).

In denying the petition of Tecson the Social Security Commission states that the
legislative policy underlying the system is to grant and afford protection to the
covered employee as well as his family; that while Section 13 of the law (Rep.
Act No. 1161 as amended) makes mention of the beneficiary as recorded by his
employer, it is not just anyone that the employee designates who may be
appointed his beneficiary because Section 24 (a) of the law clearly provides that
the employer shall report to the system the names, ages, civil status, salaries
and dependents of employees, and paragraph (a) of the same section provides
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, etc. chanroblesvirtualawlibrary chanrobles virtual law library

It may be true that the purpose of the coverage under the Social Security
System is protection of the employee as well as of his family, but this purpose or
intention of the law cannot be enforced to the extent of contradicting the very
provisions of said law as contained in Section 13, thereof, as follows:

Section 13. - Upon the covered employee's death or total and permanent
disability under such conditions as the Commission may define, before becoming
eligible for retirement and if either such death or disability is not compensable
under the Workmen's Compensation Act, he or, in case of his death, his
beneficiaries as recorded by his employer shall be entitled to the following
benefit: ... (R.A. 1161 as amended.)
When the provisions of a law are clear and explicit, the courts can do nothing but
apply its clear and explicit provisions. (Velasco v. Lopez, 1 Phil. 720; Caminetti
vs. U.S., 242 U.S. 470, 61 L. ed. 442). chanroblesvirtualawlibrary chanrobles virtual law library

It should be remembered that the benefits or compensation allowed an

employee or his beneficiary under the provisions of the Social Security Act are
paid out of funds which are contributed in part by the employees and in part by
the employers' (commercial or industrial companies members of the System).
Sections 18 and 19 of the Social Security Act (Republic Act No. 1161 as
amended) provide that 2-�% of the salary of an employee subject to
compulsory coverage, shall be deducted and withheld from his monthly
compensation and paid over to the System, while the employer for his part
contributes another amount of 3-�% of the salary of said employee. The
contributions are collected by the System, which acts as the trustee of such
funds. It is provided also in the Act that of the total yearly collection not more
than 12% during the first two year of the operation of the System and not more
than 10% during any year thereafter shall be disbursed for salaries and wages of
the employees of the System (Sec. 24). A certain percentage of the funds of the
System may be invested in interest-bearing bonds and deposits and in loans or
advances to the National Government (Sec. 25). As these funds are obtained
from the employees and the employers, without the Government having
contributed any portion thereof, it would be unjust for the System to refuse to
pay the benefits to those whom the employee has designated as his
beneficiaries. The contribution of the employee is his money; the contribution of
the employer is for the benefit of the employee. Hence the beneficiary should
primarily be the one to profit by such contributions. This is what is expressly
provided in above-quoted Section 13 of the law. chanroblesvirtualawlibrary chanrobles virtual law library

It should also be noted that the Social Security System is not a law of
succession. Its purpose is to provide social security, which means funds for the
beneficiary, if the employee dies, or for the employee himself and his
dependents if he is unable to perform his task because of illness or disability, or
is laid off by reason of the termination of the employment, or because of
temporary lay-off due to strike, etc. It should also be remembered that the
beneficiaries of the System are those who dependent upon the employee for
support. Section 23 of the law (before its amendment by Republic Act No. 2658,
which took effect on June 18, 1960) requires the employer to report and
transmit to the System such record of the names, ages, civil status, occupations,
salaries and dependents of all his employees. It is not the heirs of the employee
who are to receive the benefits or compensation. It is only in case the benificiary
is the estate, or if there is none designated, or if the designation is void, that the
System is required to pay the employee's heirs. Such is the express provision of
Section 15 of the same Act, as amended. chanroblesvirtualawlibrary chanrobles virtual law library

The Commission held that under its regulations, which are quoted below, the
employee must choose the beneficiaries from anyone of the persons enumerated
therein:

(a) The following persons may be designated as beneficiaries entitled to receive

death benefits provided they have been registered as such in the records of the
System prior to said employee's death, to wit: chanrobles virtual law library
(1) The legitimate widow or widower if not legally separated from the
deceased;  chanrobles virtual law library

(2) Legitimate and/or legitimated children;  chanrobles virtual law library

(3) Grandchildren; chanrobles virtual law library

(4) Parents;  chanrobles virtual law library

(5) Grandparents; chanrobles virtual law library

(6) Natural children duly acknowledged; chanrobles virtual law library

(7) Brothers and/or sisters; chanrobles virtual law library

(8) In the absence of any of the foregoing relatives, any other person designated
by the employee. (Rule 7, [3], of the Rules and Regulations of the Social
Security System).

The above rule indicates the persons that may be designated as beneficiaries.
The deceased Lim Hoc must have designated Jose P. Tecson as his beneficiary
under the provisions of Section 23 of the Act. The employer must have received
no information from the deceased employee Lim Hoc about the existence of Lim
Hoc's wife and children, their names, ages, civil status, occupations, salaries,
etc. It was subsequently known that Lim Hoc had a wife and children in
Communist China; the omission by him of their existence and names in the
records of the employer must have been due to the fact that they were not at
the time, at least, dependent upon him. If they were actually dependents, their
names would have appeared in the record of the employer. The absence in the
record of his employee of their existence and names must have been due to the
lack of communication, of which We can take judicial notice, between Communist
China and the Philippines, or to the express desire of Lim Hoc to extend the
benefits of his contributions to the system to his "friend and co-worker", to the
exclusion of his wife. It is to be noted also that the funeral expenses of Lim Hoc
are to be paid from the benefits, so that what is to be paid to Tecson would be
greatly reduced. chanroblesvirtualawlibrary chanrobles virtual law library

FOR ALL THE FOREGOING CONSIDERATIONS, the resolution should be, as it is

hereby, set aside and annulled, and the respondent System is hereby ordered to
pay the monetary claim of Jose P. Tecson. Without costs. chanroblesvirtualawlibrary chanrobles virtual law library

Bengzon, C.J., Padilla, Bautista Angelo, Concepcion, Reyes, J.B.L., Barrera,

Paredes, Dizon and De Leon, JJ., concur.
CASE 4

G.R. No. L-26298 September 28, 1984

CMS ESTATE, INC., petitioner,

vs.
SOCIAL SECURITY SYSTEM and SOCIAL SECURITY COMMISSION, respondents.

Sison Dominguez & Cervantes for petitioner.

The Legal Counsel for respondent SSS.

CUEVAS, J.:

This appeal by the CMS Estate, Inc. from the decision rendered by the Social Security Commission in its Case No. 12,
entitled "CMS Estate, Inc. vs. Social Security System, declaring CMS subject to compulsory coverage as of September
1, 1957 and "directing the Social Security System to effect such coverage of the petitioner's employees in its logging
and real estate business conformably to the provision of Republic Act No. 1161, as amended was certified to Us by the
defunct Court of Appeals 1 for further disposition considering that purely questions of law are involved.

Petitioner is a domestic corporation organized primarily for the purpose of engaging in the real estate business. On
December 1, 1952, it started doing business with only six (6) employees. It's Articles of Incorporation was amended on
June 4, 1956 in order to engage in the logging business. The Securities and Exchange Commission issued the
certificate of filing of said amended articles on June 18, 1956. Petitioner likewise obtained an ordinary license from the
Bureau of Forestry to operate a forest concession of 13,000 hectares situated in the municipality of Baganga, Province
of Davao.

On January 28, 1957, petitioner entered into a contract of management with one Eufracio D. Rojas for the operation
and exploitation of the forest concession The logging operation actually started on April 1, 1957 with four monthly
salaried employees. As of September 1, 1957, petitioner had 89 employees and laborers in the logging operation. On
December 26, 1957, petitioner revoked its contract of management with Mr. Rojas.

On August 1, 1958, petitioner became a member of the Social Security System with respect to its real estate business.
On September 6, 1958, petitioner remitted to the System the sum of P203.13 representing the initial premium on the
monthly salaries of the employees in its logging business. However, on October 9, 1958, petitioner demanded the
refund of the said amount, claiming that it is not yet subject to compulsory coverage with respect to its logging
business. The request was denied by respondent System on the ground that the logging business was a mere
expansion of petitioner's activities and for purposes of the Social Security Act, petitioner should be considered a
member of the System since December 1, 1952 when it commenced its real estate business.

On November 10, 1958, petitioner filed a petition with the Social Security Commission praying for the determination of
the effectivity date of the compulsory coverage of petitioner's logging business.

After both parties have submitted their respective memoranda, the Commission issued on January 14, 1960,
Resolution No. 91,   the dispositive portion of which reads as follows:
2

Premises considered, the instant petition is hereby denied and petitioner is hereby adjudged to be
subject to compulsory coverage as of Sept. 1, 1957 and the Social Security System is hereby directed
to effect such coverage of petitioner's employees in its logging and real estate business conformably to
the provisions of Rep. Act No. 1161, as amended.

SO ORDERED.

Petitioner's motion for reconsideration was denied in Resolution No. 609 of the Commission.

These two (2) resolutions are now the subject of petitioner's appeal. Petitioner submits that respondent Commission
erred in holding —

(1) that the contributions required of employers and employees under our Social Security Act of 1954
are not in the nature of excise taxes because the said Act was allegedly enacted by Congress in the
exercise of the police power of the State, not of its taxing power;

(2) that no contractee — independent contractor relationship existed between petitioner and Eufracio D.
Rojas during the time that he was operating its forest concession at Baganga, Davao;
 (3) that a corporation which has been in operation for more than two years in one business is
immediately covered with respect to any new and independent business it may subsequently engage in;

(4) that a corporation should be treated as a single employing unit for purposes of coverage under the
Social Security Act, irrespective of its separate, unrelated and independent business established and
operated at different places and on different dates; and

(5) that Section 9 of the Social Security Act on the question of compulsory membership and employers
should be given a liberal interpretation.

Respondent, on the other hand, advances the following propositions, inter alia:

(1) that the Social Security Act speaks of compulsory coverage of employers and not of business;

(2) that once an employer is initially covered under the Social Security Act, any other business
undertaken or established by the same employer is likewise subject in spite of the fact that the latter has
not been in operation for at least two years;

(3) that petitioner's logging business while actually of a different, distinct, separate and independent
nature from its real estate business should be considered as an operation under the same
management;

(4) that the amendment of petitioner's articles of incorporation, so as to enable it to engage in the
logging business did not alter the juridical personality of petitioner; and

(5) the petitioner's logging operation is a mere expansion of its business activities.

The Social Security Law was enacted pursuant to the policy of the government "to develop, establish gradually and
perfect a social security system which shall be suitable to the needs of the people throughout the Philippines, and shall
provide protection against the hazards of disability, sickness, old age and death" (Sec. 2, RA 1161, as amended). It is
thus clear that said enactment implements the general welfare mandate of the Constitution and constitutes a legitimate
exercise of the police power of the State. As held in the case of Philippine Blooming Mills Co., Inc., et al. vs. SSS   —
3

Membership in the SSS is not a result of bilateral, concensual agreement where the rights and
obligations of the parties are defined by and subject to their will, RA 1161 requires compulsory coverage
of employees and employers 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 the lawful exercise of the police power of the State, to which the principle of non-
impairment of the obligation of contract is not a proper defense.

xxx xxx xxx

The taxing power of the State is exercised for the purpose of raising revenues. However, under our Social Security
Law, the emphasis is more on the promotion of the general welfare. The Act is not part of out Internal Revenue Code
nor are the contributions and premiums therein dealt with and provided for, collectible by the Bureau of Internal
Revenue. The funds contributed to the System belong to the members who will receive benefits, as a matter of right,
whenever the hazards provided by the law occur.

All that is required of appellant is to make monthly contributions to the System for covered employees in
its employ. These contributions, contrary to appellant's contention, are not 'in the nature of taxes on
employment.' Together with the contributions imposed upon employees and the Government, they are
intended for the protection of said employees against the hazards of disability, sickness, old age and
death in line with the constitutional mandate to promote social justice to insure the well-being and
economic security of all the people. 4

Because of the broad social purpose of the Social Security Act, all doubts in construing the Act should favor coverage
rather than exemption.

Prior to its amendment, Sec. 9 of the Act provides that before an employer could be compelled to become a member of
the System, he must have been in operation for at least two years and has at the time of admission at least six
employees. It should be pointed out that it is the employer, either natural, or judicial person, who is subject to
compulsory coverage and not the business. If the intention of the legislature was to consider every venture of the
employer as the basis of a separate coverage, an express provision to that effect could have been made.
Unfortunately, however, none of that sort appeared provided for in the said law.

Should each business venture of the employer be considered as the basis of the coverage, an employer with more than
one line of business but with less than six employees in each, would never be covered although he has in his employ a
total of more than six employees which is sufficient to bring him within the ambit of compulsory coverage. This would
frustrate rather than foster the policy of the Act. The legislative intent must be respected. In the absence of an express
provision for a separate coverage for each kind of business, the reasonable interpretation is that once an employer is
covered in a particular kind of business, he should be automatically covered with respect to any new name. Any
interpretation which would defeat rather than promote the ends for which the Social Security Act was enacted should be
eschewed.  5

Petitioner contends that the Commission cannot indiscriminately combine for purposes of coverage two distinct and
separate businesses when one has not yet been in operation for more than two years thus rendering nugatory the
period for more than two years thus rendering nugatory the period of stabilization fixed by the Act. This contention lacks
merit since the amendatory law, RA 2658, which was approved on June 18, 1960, eliminated the two-year stabilization
period as employers now become automatically covered immediately upon the start of the business.

Section 10 (formerly Sec. 9) of RA 1161, as amended by RA 2658 now provides:

Sec. 10. Effective date of coverage. — Compulsory coverage of the employer shall take effect on the
first day of his operation, and that of the employee on the date of his employment. (Emphasis supplied)

As We have previously mentioned, it is the intention of the law to cover as many persons as possible so as to promote
the constitutional objective of social justice. It is axiomatic that a later law prevails over a prior statute and moreover the
legislative in tent must be given effect. 6

Petitioner further submits that Eufrancio Rojas is an independent contractor who engages in an independent business
of his own consisting of the operation of the timber concession of the former. Rojas was appointed as operations
manager of the logging consession;   he has no power to appoint or hire employees; as the term implies, he only
7

manages the employees and it is petitioner who furnishes him the necessary equipment for use in the logging business;
and he is not free from the control and direction of his employer in matter connected with the performance of his work.
These factors clearly indicate that Rojas is not an independent contractor but merely an employee of petitioner; and
should be entitled to the compulsory coverage of the Act.

The records indubitably show that petitioner started its real estate business on December 1, 1952 while its logging
operation was actually commenced on April 1, 1957. Applying the provision of Sec. 10 of the Act, petitioner is subject to
compulsory coverage as of December 1, 1952 with respect to the real estate business and as of April 1, 1957 with
respect to its logging operation.

WHEREFORE, premises considered, the appeal is hereby DISMISSED. With costs against petitioner.

SO ORDERED.
CASE 5

G.R. No. L-21642             July 30, 1966

SOCIAL SECURITY SYSTEM, petitioner-appellee,

vs.
CANDELARIA D. DAVAC, ET AL., respondents;
LOURDES Tuplano, respondent-appellant.

J. Ma. Francisco and N. G. Bravo for respondent-appellant.

Office of the Solicitor General Arturo A. Alafriz, Solicitor Camilo D. Quiason and E. T. Duran for petitioner-appellee.

BARRERA, J.:

This is an appeal from the resolution of the Social Security Commission declaring respondent Candelaria Davac as the
person entitled to receive the death benefits payable for the death of Petronilo Davac.

The facts of the case as found by the Social Security Commission, briefly are: The late Petronilo Davac, a former
employee of Lianga Bay Logging Co., Inc. became a member of the Social Security System (SSS for short) on
September 1, 1957. As such member, he was assigned SS I.D. No. 08-007137. In SSS form E-1 (Member's Record)
which he accomplished and filed with the SSS on November 21, 1957, he designated respondent Candelaria Davac as
his beneficiary and indicated his relationship to her as that of "wife". He died on April 5, 1959 and, thereupon, each of
the respondents (Candelaria Davac and Lourdes Tuplano) filed their claims for death benefit with the SSS. It appears
from their respective claims and the documents submitted in support thereof, that the deceased contracted two
marriages, the first, with claimant Lourdes Tuplano on August 29, 1946, who bore him a child, Romeo Davac, and the
second, with Candelaria Davac on January 18, 1949, with whom he had a minor daughter Elizabeth Davac. Due to their
conflicting claims, the processing thereof was held in abeyance, whereupon the SSS filed this petition praying that
respondents be required to interpose and litigate between themselves their conflicting claims over the death benefits in
question. 1äwphï1.ñët

On February 25, 1963, the Social Security Commission issued the resolution referred to above, Not satisfied with the
said resolution, respondent Lourdes Tuplano brought to us the present appeal.

The only question to be determined herein is whether or not the Social Security Commission acted correctly in
declaring respondent Candelaria Davac as the person entitled to receive the death benefits in question.

Section 13, Republic Act No. 1161, as amended by Republic Act No. 1792, in force at the time Petronilo Davac's death
on April 5, 1959, provides:

1. SEC. 13. Upon the covered employee's death or total and permanent disability under such conditions as the
Commission may define, before becoming eligible for retirement and if either such death or disability is not
compensable under the Workmen's Compensation Act, he or, in case of his death, his beneficiaries, as
recorded by his employer shall be entitled to the following benefit: ... . (emphasis supplied.)

Under this provision, the beneficiary "as recorded" by the employee's employer is the one entitled to the death benefits.
In the case of Tecson vs. Social Security System, (L-15798, December 28, 1961), this Court, construing said Section
13, said:

It may be true that the purpose of the coverage under the Social Security System is protection of the employee
as well as of his family, but this purpose or intention of the law cannot be enforced to the extent of contradicting
the very provisions of said law as contained in Section 13, thereof, ... . When the provision of a law are clear
and explicit, the courts can do nothing but apply its clear and explicit provisions (Velasco vs. Lopez, 1 Phil, 270;
Caminetti vs. U.S., 242 U.S. 470, 61 L. ed. 442).

But appellant contends that the designation herein made in the person of the second and, therefore, bigamous wife is
null and void, because (1) it contravenes the provisions of the Civil Code, and (2) it deprives the lawful wife of her share
in the conjugal property as well as of her own and her child's legitime in the inheritance.

As to the first point, appellant argues that a beneficiary under the Social Security System partakes of the nature of a
beneficiary in life insurance policy and, therefore, the same qualifications and disqualifications should be applied.

Article 2012 of the New Civil Code provides:

ART. 2012. Any person who is forbidden from receiving any donation under Article 739 cannot be named
beneficiary of a life insurance policy by the person who cannot make any donation to him according to said
article.
And Article 739 of the same Code prescribes:

ART. 739. The following donations shall be void:

(1) Those made between persons who were guilty of adultery or concubinage at the time of the donation;

xxx     xxx     xxx

Without deciding whether the naming of a beneficiary of the benefits accruing from membership in the Social Security
System is a donation, or that it creates a situation analogous to the relation of an insured and the beneficiary under a
life insurance policy, it is enough, for the purpose of the instant case, to state that the disqualification mentioned in
Article 739 is not applicable to herein appellee Candelaria Davac because she was not guilty of concubinage, there
being no proof that she had knowledge of the previous marriage of her husband Petronilo.1

Regarding the second point raised by appellant, the benefits accruing from membership in the Social Security System
do not form part of the properties of the conjugal partnership of the covered member. They are disbursed from a public
special fund created by Congress in pursuance to the declared policy of the Republic "to develop, establish gradually
and perfect a social security system which ... shall provide protection against the hazards of disability, sickness, old age
and death."2

The sources of this special fund are the covered employee's contribution (equal to 2-½ per cent of the employee's
monthly compensation);3 the employer's contribution (equivalent to 3-½ per cent of the monthly compensation of the
covered employee);4 and the Government contribution which consists in yearly appropriation of public funds to assure
the maintenance of an adequate working balance of the funds of the System.5 Additionally, Section 21 of the Social
Security Act, as amended by Republic Act 1792, provides:

SEC. 21. Government Guarantee. — The benefits prescribed in this Act shall not be diminished and to
guarantee said benefits the Government of the Republic of the Philippines accepts general responsibility for the
solvency of the System.

From the foregoing provisions, it appears that the benefit receivable under the Act is in the nature of a special privilege
or an arrangement secured by the law, pursuant to the policy of the State to provide social security to the workingmen.
The amounts that may thus be received cannot be considered as property earned by the member during his lifetime.
His contribution to the fund, it may be noted, constitutes only an insignificant portion thereof. Then, the benefits are
specifically declared not transferable,6 and exempted from tax legal processes, and lien.7 Furthermore, in the settlement
of claims thereunder the procedure to be observed is governed not by the general provisions of law, but by rules and
regulations promulgated by the Commission. Thus, if the money is payable to the estate of a deceased member, it is
the Commission, not the probate or regular court that determines the person or persons to whom it is payable.8 that the
benefits under the Social Security Act are not intended by the lawmaking body to form part of the estate of the covered
members may be gathered from the subsequent amendment made to Section 15 thereof, as follows:

SEC. 15. Non-transferability of benefit. — The system shall pay the benefits provided for in this Act to such
persons as may be entitled thereto in accordance with the provisions of this Act. Such benefits are not
transferable, and no power of attorney or other document executed by those entitled thereto in favor of any
agent, attorney, or any other individual for the collection thereof in their behalf shall be recognized except when
they are physically and legally unable to collect personally such benefits: Provided, however, That in the case of
death benefits, if no beneficiary has been designated or the designation there of is void, said benefits shall be
paid to the legal heirs in accordance with the laws of succession. (Rep. Act 2658, amending Rep. Act 1161.)

In short, if there is a named beneficiary and the designation is not invalid (as it is not so in this case), it is not the heirs
of the employee who are entitled to receive the benefits (unless they are the designated beneficiaries themselves). It is
only when there is no designated beneficiaries or when the designation is void, that the laws of succession are
applicable. And we have already held that the Social Security Act is not a law of succession.9

Wherefore, in view of the foregoing considerations, the resolution of the Social Security Commission appealed from is
hereby affirmed, with costs against the appellant.

So ordered.
CASE 6

G.R. No. 194137

AMBASSADOR HOTEL, INC., Petitioner

vs.
SOCIAL SECURITY SYSTEM, Respondent

DECISION

MENDOZA, J.:

This is a petition for review on certiorari seeking to reverse and set aside the July 29, 2010 Decision  and October 18,
1

2010 Resolution  of the Court Appeals (CA) in CA-G.R. CV No. 87948, which affirmed in toto the December 20, 2005
2

Decision   of the Regional Trial Court, Branch 218, Quezon City (RTC) in Criminal Case No. Q-04-125458, a case for
3

nonpayment of Social Security System (SSS) contributions.

Sometime in September 2001, the SSS filed a complaint with the City Prosecutor's Office of Quezon City against
Ambassador Hotel, Inc. (Ambassador Hotel) and its officers for non-remittance of SSS contributions and penalty
liabilities for the period from June 1999 to March 2001 in the aggregate amount of ₱769,575.48.

After preliminary investigation, the City Prosecutor's Office filed an Information,  dated January 28, 2004, before the
4

RTC charging Ambassador Hotel, Inc.'s Yolanda Chan (Yolanda), as Pr

esident and Chairman of the Board; and Alvin Louie Rivera, as Treasurer and Head of the Finance Department, with
violation of Section 22(a), in relation to Section 22(d) and Section 28(e) of Republic Act (R.A.) No. 1161, as amended
by R.A. No. 8282. Only Yolanda was arrested. Upon arraignment, she pleaded not guilty. Thereafter, trial ensued.

Evidence of the Prosecution

The prosecution presented Maria Rezell C. De Ocampo (De Ocampo), Accounts Officer of SSS and Simeon Nicolas
Chan (Simeon), former President of Ambassador Hotel. Their combined testimonies tended to establish the following:

De Ocampo was assigned to investigate the account of Ambassador Hotel. In the course of her investigation, she
discovered that the hotel was delinquent in its payment of contributions for the period from June 1999 to March 2001,
as an examination of the hotel's records revealed that its last payment was made in May 1999. Thereafter, De Ocampo
prepared a delinquency assessment and a billing letter for Ambassador Hotel. On April 17, 2001, she visited
Ambassador Hotel, where a certain Guillermo Ciriaco (Ciriaco) assisted her. De Ocampo then informed Ciriaco of the
hotel's delinquency. She showed him the assessment, billing letter, and letter of authority. De Ocampo also requested
for the records of previous SSS payments, but the same could not be produced. Thus, she told Ciriaco that
Ambassador Hotel had to comply with the said request within fifteen (15) days.

De Ocampo referred the matter to their Cluster Legal Unit. On May 23, 2001, she prepared an investigation report
stating that Ambassador Hotel failed to present the required reports and to fully pay their outstanding delinquency. In
turn, the Cluster Legal Unit issued a final demand letter to Ambassador Hotel. De Ocampo sent the final demand letter
to Ambassador Hotel via registered mail. She also returned to the hotel to personally serve the said letter, which was
received by Norman Cordon, Chief Operating Officer of Ambassador Hotel.

On July 4, 2001, Pilar Barzanilla of Ambassador Hotel went to the SSS office and submitted a list of unpaid
contributions from June 1999 to March 2001.  On September 14, 2001, De Ocampo went back to the hotel to seek
1âwphi1

compliance with the demand letter. The representatives of the hotel requested that the delinquency be settled by
installment. They also submitted a collection list, the audited financial settlement and the request of installment to the
SSS. Ambassador Hotel, however, did not tender any postdated checks for the installment payments.

De Ocampo concluded that based on the actual assessment and documents submitted, the unpaid contributions of
Ambassador Hotel from June 1999 to March 2001 amounted to ₱303,459.00. Further, as of January 2, 2005, the hotel
is liable for penalties in the amount of ₱531,341.44.

On the other hand, Simeon testified that he was the President of Ambassador Hotel from 1971 until he was replaced in
1998; and that on April 25, 1998, her daughter, Yolanda, became the President of the hotel pursuant to Board
Resolution No. 7, series of 1998. 5

Evidence of the Defense

The defense presented the following witnesses: Yolanda, President and Chairman of the Board of Ambassador Hotel;
Atty. Laurenao Galon (Atty. Galon), lawyer of Ambassador Hotel; Michael Paragas, Sheriff of RTC Branch 46; and
Norman D. Cordon (Cordon), Chief Operating Officer of Ambassador Hotel. Their testimonies are summarized, to wit:
Yolanda was elected as President of Ambassador Hotel on April 25, 1998. Simeon, however, prevented her from
assuming her office and performing her functions as President. Consequently, she filed a case for grave coercion and
grave threats against Simeon and his allies. On the other hand, Simeon filed a case for injunction, damages and
declaration of nullity of the corporate meeting, which elected Yolanda as President. The case was raffled to RTC
Branch 46, which ruled in her favor. Pursuant to the Order, dated April 10, 2001 of R TC Branch 46, she assumed the
position of President of the hotel without any impediment.

Accordingly, Yolanda argued that because she was not performing the functions as the President of Ambassador Hotel
from April 25, 1998 until April 10, 2001, she could not be held criminally liable for the non-payment of SSS contributions
from June 1999 to March 2001.

Further, Cordon testified that the SSS indeed conducted an investigation as to their non-remittance of contributions. He
attempted to locate the records regarding their SSS contributions, but could not find any. Cordon also communicated
with the SSS, but it failed to respond and instead filed the present case against them.

The RTC Ruling

In its December 20, 2005 Decision, the RTC held that Yolanda could not be held criminally liable for the non-payment
of SSS contributions because she was not performing the duties of the hotel's president from June 1999 to March
2001. It opined that Yolanda could not be considered as the managing head of the hotel within the purview of Section
28(f) of R.A. No. 8282; thus, she was not criminally accountable. The RTC, however, ruled that the acquittal of Yolanda
did not absolve Ambassador Hotel from its civil liabilities. Thus, it concluded that Ambassador Hotel must pay SSS in
the amount of ₱584,804.00 as contributions for SSS Medicare and Employee Compensation, including 3% penalties
thereon.

Aggrieved, Ambassador Hotel filed an appeal insofar as the civil liability is concerned. It alleged that the RTC did not
acquire jurisdiction over its person because it was not a party in the said case.

The CA Ruling

In its assailed decision, dated July 29, 2010, the CA affirmed in toto the RTC ruling. It held that the payment of SSS
contributions is mandatory and its non-payment results in criminal prosecution. The appellate court stated that every
criminal liability carries with it civil liability. As Ambassador Hotel neither waived nor reserved its right to institute a
separate civil case, it was deemed instituted in the criminal case. The CA opined that the acquittal of Yolanda did not
extinguish the civil action against Ambassador Hotel as the RTC did not declare that the fact from which the civil liability
might arise did not exist. Moreover, it underscored that Ambassador Hotel was not deprived of due process as its
directors and officers were informed numerous times regarding its delinquency and the pending case filed against it.
The CA concluded that Ambassador Hotel was given every opportunity to contest its obligation with the SSS yet it did
nothing.

Ambassador Hotel moved for reconsideration, but its motion was denied by the CA in its assailed resolution, dated
October 18, 2010.

Hence, this petition.

ISSUES

WHETHER OR NOT THE LOWER COURT ACQUIRED JURISDICTION OVER THE PERSON OF THE PETITIONER.

II

WHETHER OR NOT PETITIONER WAS DEPRIVED OF DUE PROCESS WHEN THE LOWER COURT DECLARED
IT LIABLE TO RESPONDENT SSS EVEN THOUGH IT IS NOT A PARTY TO THE CASE.

III

WHETHER OR NOT THE DECISION RENDERED BY THE LOWER COURT DECLARING PETITIONER LIABLE TO
RESPONDENT SOCIAL SECURITY SYSTEM FOR ALLEGED UNREMITTED SSS CONTRIBUTION IS VALID. 6

In its Memorandum,   Ambassador Hotel argued that it has a separate and distinct personality from its officers such as
7

Yolanda; that it was neither a party to the criminal case nor was summons issued against it, hence, the RTC did not
acquire jurisdiction over it; that it was deprived due process when the RTC ruled that it was civilly liable for the unpaid
SSS contributions even though the trial court had no jurisdiction over its person; and that the RTC had no right to
render an adverse decision against it because it was not a party in the criminal action.
In its Memorandum,   the SSS countered that under R.A. No. 8282, employers, including juridical entities, that violate
8

their obligation to remit the SSS contributions shall be criminally liable and that in cases of corporations, it is the
managing head that shall be the one criminally responsible. It argued that since Yolanda, as President of Ambassador
Hotel, was properly arrested, the RTC acquired jurisdiction over it. The SSS added that the acquittal of Yolanda did not
extinguish the civil liability of the hotel because it was deemed instituted in the criminal action. Further, it highlighted
that Ambassador Hotel was given sufficient notice of its delinquency and the pending case against it.

The Court's Ruling

The petition is bereft of merit.

The Social Security System is a government agency imbued with a salutary purpose to carry out the policy of the State
to establish, develop, promote and perfect a sound and viable tax-exempt social security system suitable to the needs
of the people throughout the Philippines which shall promote social justice and provide meaningful protection to
members and their beneficiaries against the hazards of disability, sickness, maternity, old- age, death and other
contingencies resulting in loss of income or financial burden. 9

The soundness and viability of the funds of the SSS in turn depend on the contributions of its covered employee and
employer members, which it invests in order to deliver the basic social benefits and privileges to its members. The
entitlement to and amount of benefits and privileges of the covered members are contribution-based. Both the
soundness and viability of the funds of the SSS as well as the entitlement and amount of benefits and privileges of its
members are adversely affected to a great extent by the non-remittance of the much-needed contributions.  10

Ambassador Hotel is obligated to remit SSS contributions

Under Section 8(c) of R.A. No. 8282, an employer is defined as "any person, natural or juridical, domestic or foreign,
who carries on in the Philippines any trade, business, industry, undertaking, or activity of any kind and uses the
services of another person who is under his orders as regards the employment, except the Government and any of its
political subdivisions, branches or instrumentalities, including corporations owned or controlled by the Government."
Ambassador Hotel, as a juridical entity, is still bound by the provisions of R.A. No. 8282. Section 22 (a) thereof states:

Remittance of Contributions. (a) The contributions imposed in the preceding section shall be remitted to the SSS within
the first ten (10) 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 percent (3%) 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
semiannually in advance, the contributions payable by the employees to be advanced by their respective
employers: Provided, That upon separation of an employee, any contribution so paid in advance but not due shall be
credited or refunded to his employer.

Verily, prompt remittance of SSS contributions under the aforesaid provision is mandatory. Any divergence from this
rule subjects the employer not only to monetary sanctions, that is, the payment of penalty of three percent (3%) per
month, but also to criminal prosecution if the employer fails to: (a) register its employees with the SSS; (b) deduct
monthly contributions from the salaries/wages of its employees; or (c) remit to the SSS its employees' SSS
contributions and/or loan payments after deducting the same from their respective salaries/wages.  11

To acquire jurisdiction over Ambassador Hotel, its managing head, director or partner must be arrested

As discussed above, even when the employer is a corporation, it shall still be held liable for the non-remittance of SSS
contributions. It is, however, the head, directors or officers that shall suffer the personal criminal liability. Although a
corporation is invested by law with a personality separate and distinct from that of the persons composing it,   the 12

corporate veil is pierced when a director, trustee or officer is made personally liable by specific provision of law.   In this
13

regard, Section 28 (f) of R.A. No. 8282 explicitly provides that "[i]f the act or omission penalized by this Act be
committed by an association, partnership, corporation or any other institution, its managing head, directors or partners
shall be liable to the penalties provided in this Act for the offense." Thus, a corporation cannot invoke its separate
judicial entity to escape its liability for non-payment of SSS contributions.

To acquire jurisdiction over the corporation in a criminal case, its head, directors or partners must be served with a
warrant of arrest. Naturally, a juridical entity cannot be the subject of an arrest because it is a mere fiction of law; thus,
an arrest on its representative is sufficient to acquire jurisdiction over it. To reiterate, the law specifically disregards the
separate personality between the corporation and its officers with respect to violations of R.A. No. 8282; thus, an arrest
on its officers binds the corporation.

In this case, Yolanda, as President of Ambassador Hotel, was arrested and brought before the R TC. Consequently,
the trial court acquired jurisdiction over the person of Yolanda and of Ambassador Hotel as the former was its
representative. No separate service of summons is required for the hotel because the law simply requires the arrest of
its agent for the court to acquire jurisdiction over it in the criminal action. Likewise, there is no requirement to implead
Ambassador Hotel as a party to the criminal case because it is deemed included therein through its managing head,
directors or partners, as provided by Section 28 (f) of R.A. No. 8282.

The acquittal of Yolanda does not extinguish the civil liability of Ambassador Hotel

It is a basic rule that when a criminal action is instituted, the civil action for the recovery of civil liability arising from the
offense charged shall be deemed instituted with the criminal action unless the offended party waives the civil action,
reserves the right to institute it separately, or institutes the civil action prior to the criminal action.   Necessarily, when
14

the Information was filed with the R TC, the civil action against Ambassador Hotel for the recovery of civil liability arising
from the non-remittance of SSS contributions was deemed instituted therein.

Further, extinction of the penal action does not carry with it the extinction of the civil action, unless the extinction
proceeds from a declaration in a final judgment that the fact from which the civil liability might arise did not
exist.   When Yolanda was acquitted in the criminal case because it was proven that she did not perform the functions
15

of the president from June 1999 to March 2001, it did not result in the dismissal of the civil case against Ambassador
Hotel. The RTC did not declare in its judgment that the fact from which the civil liability might arise did not exist. Thus,
the civil action, deemed impliedly instituted in the criminal case, remains.

The argument of Ambassador Hotel - that the RTC lost its jurisdiction over it when Yolanda was acquitted - fails to
convince. It is a well-settled rule that the jurisdiction of a court depends upon the state of facts existing at the time it is
invoked, and if the jurisdiction once attaches to the person and subject matter of the litigation, the subsequent
happening of events, although they are of such a character as would have prevented jurisdiction from attaching in the
first instance, will not operate to oust jurisdiction already attached.   Also, it is fundamental that the jurisdiction of a
16

court in criminal cases is determined by the allegations of the information or criminal complaint and not by the result of
the evidence presented at the trial, much less by the trial judge's personal appraisal of the affidavits and exhibits
attached by the fiscal to the record of the case without hearing the parties and their witnesses nor receiving their
evidence at a proper trial. 17

In this case, the Information alleged that Yolanda was the President of Ambassador Hotel. Moreover, such fact was
supported by the affidavits and exhibits attached to the Information. Hence, the R TC properly issued a warrant of
arrest over Yolanda pursuant to Section 28(f) of R.A. No. 8282 to acquire jurisdiction over her person and that of
Ambassador Hotel. From that moment, the jurisdiction over their persons was acquired.

Even though it was established during the trial that Yolanda was not performing the functions of the hotel's president
from June 1999 to March 2001, which negated her criminal responsibility, it is non sequitur that the jurisdiction over
Ambassador hotel will be detached. Any subsequent event during trial will not strip the RTC of its jurisdiction because
once it attaches, the same shall remain with the said court until it renders judgment.

To subscribe to the theory of Ambassador Hotel - that evidence will dictate the jurisdiction of the court - will create a
chaotic situation. It will be absurd for the courts to first conduct trial on the merits before it can determine whether it has
jurisdiction over the person or subject matter. The more logical and orderly approach is for the court to determine
jurisdiction by the allegations in the information or criminal complaint, as supported by the affidavits and exhibits
attached therein, and not by the evidence at trial. Once jurisdiction attaches, it shall not be removed from the court until
the termination of the case.

As the jurisdiction over Ambassador Hotel was obtained, it became a party in the case and, as will be discussed later, it
was given fair opportunity to present its evidence and controve1t the prosecution's evidence. In fine, the RTC's
jurisdiction over Ambassador Hotel continued in spite of Yolanda's acquittal.

Ambassador Hotel failed to controvert the evidence of its non-remittance of SSS contributions

The CA found that· Ambassador Hotel was well informed of its delinquency by the SSS even before the case was filed.
When the case was eventually filed, its directors and officers were also notified. Notably, even its own lawyer, Atty.
Galon, testified during trial on its behalf. Ambassador Hotel was given the opportunity to present its defense before the
court for its non-payment of SSS contributions. Thus, it was given the right to be heard and controvert the evidence
presented against it.

During trial, the prosecution established that the SSS, through De Ocampo, discovered that the last remittance of SSS
contributions by Ambassador Hotel was made in May 1999. She then informed the hotel of its delinquency when she
visited the establishment on April 17, 2001. She gave the hotel's representative the delinquency assessment and the
billing letter. De Ocampo also requested that the records of previous SSS payments be presented, but these could
not be produced. After referring the case to the Cluster Legal Unit, De Ocampo sent a final demand letter to
Ambassador Hotel by registered mail and personal service. Notwithstanding the several notices of its delinquency,
Ambassador Hotel failed to settle its obligations. Moreover, though it offered to pay its delinquency through installment,
no postdated checks were ever submitted.

On the other hand, Ambassador Hotel's evidence simply focused on establishing that Yolanda was not acting as its
President from June 1999 to March 2001 because of an internal dispute. Although this may be sufficient to eliminate
the criminal liability of Yolanda, it does not justify the nonpayment of SSS contributions. Ambassador Hotel did not
squarely address the issue on its obligations because there was dearth of evidence that it remitted the said
contributions. Cordon, a witness for the hotel, even admitted that they were informed of their delinquency and that they
attempted to unearth its SSS records to defend its obligations, but failed to do so. The hotel never proved that it had
already paid its contributions or, if not, who should have been accountable for its non-payment. Glaringly, even though
Ambassador Hotel was given sufficient leeway to explain its obligations, it did not take advantage of the said
opportunity. Consequently, it had nothing else to blame for its predicament but itself.

In fine, the Court is of the view that there is preponderance of evidence that Ambassador Hotel failed to remit its SSS
contributions from June 1999 to March 2001 in the amount of ₱584,804.00. It must pay the said amount to the SSS
plus interest at the legal rate of six percent (6%) per annum.

WHEREFORE, the petition is DENIED. The July 29, 2010 Decision and October 18, 2010 Resolution of the Court
Appeals in CA-G.R. CV No. 87948 are AFFIRMED with MODIFICATION in that the judgment award shall earn interest
at the rate of six percent (6%) per annum from the date of finality until fully paid.
CASE 7

G.R. No. 191237               September 24, 2014

ROBERT KUA, CAROLINE N. KUA, and MA. TERESITA N. KUA, Petitioners,

vs.
GREGORIO SACUPAYO and MAXIMINIANO PANERIO, Respondents.

DECISION

PEREZ, J.:

We heed the urgings in this petition to reverse the Decision  of the Court of Appeals in CA-G.R. SP No. 01569-MIN
1

which ordered the reinstatement or Criminal Case Nos. 2006-072, 2006-073 and 2006-074 pending before, and
subsequently withdrawn by, the Regional Trial Court (RTC), Branch 20, Cagayan de Oro City.  Petitioners Robert,
2

Caroline and Ma. Teresita, all surnamed Kua, were charged in the criminal cases for failure to remit Social Security
System (SSS) contributions and pay inentsion loans of respondents Gregorio Sacupayo and Maximiniano Panerio
under Section 22 (a) and (d), in relation to Section 28 (e), of Republic Act (R.A.) No. 8282, the Social Security (SS)
Law.

The Court of Appeals fairly summarizes the facts, to wit:

[Petitioners] Robert Kua, Engr. Juanito Pagcaliwagan, Caroline N. Kua, Cleofe P. Adiao, Ma. Teresita N. Kua and
Francisco Alconis are members of the Board of Directors and the officers of Vicmar Development Corporation, a
domestic corporation, x x x. [Respondents] Gregorio G. Sacupayo and Maximiniano Panerio were VICMAR employees
since 1985 and 1995[,] respectively. Sacupayo was a foreman while Panerio was an assistant foreman.

As required by law, Vicmar, through its officers, deducted the Social Security System (SSS) contributions of
[respondents] from their wages. It also deducted four hundred sixty eight pesos (Php468.00) per month from the wage
of Sacupayo ashis monthly amortization for a ten thousand peso (Php10,000.00) loan he obtained from the SSS on
November 14, 2002. The deductions wereremitted by Vicmar to the SSS at first.

Sometime in 2003 and 2004, unknown to [respondents] and despite the continued SSS deductions from their wages,
Vicmar stopped remitting the same to the SSS. The un-remitted contributions for each [respondent] reached five
thousand seven hundred sixty pesos (Php5,760.00) each. For the amortizations, a total of eleven thousand two
hundred thirty two pesos (Php11,232.00) was deducted from the wages of Sacupayo as full payment for his loan. Yet
only four thousand pesos (Php4,000.00) was remitted.

Meantime, on August 7, 2004 and August 9, 2004 respectively, Sacupayo and Panerio were dismissed from
employment. Both filed complaints for illegal dismissal.

Panerio was thereafter afflicted with Chronic Persistent Asthma on September 28, 2004. But when he applied for
sickness benefits before the SSS in October 2004, the same was denied for the reason that no contributions or
payments were made for twelve (12) months prior to the semester of confinement. Sacupayo, for his part, filed another
loan application before the SSS. But thiswas also denied outright for nonpayment of a previous loan which should have
been fully paid if not for the failure of Vicmar to remit the amounts due to the SSS.

xxxx

Aggrieved by the wrongful acts of Vicmar in failing to remit the amounts due to the SSS that were deducted from their
wages, [respondents] filed complaints before the Office of the City Prosecutor in Cagayan de Oro City. Vicmar then
remitted to SSS the contributions and loan payments of [respondents] sometime thereafter. Nevertheless, probable
cause was found and three (3) separate Informations all dated June 6, 2005 were filed against [petitioners] officers of
Vicmar for violation of Section 22 (a) in relation to Section 28 (e) of RA 8282 otherwise known as the Social Security
Act of 1997. The cases were first filed before the Municipal Trial Court in Cities but these were dismissed outright for
lack of jurisdiction. However, the same was also filed before the RTC where the three (3) cases were given due course,
raffled and consolidated to Branch 20 thereof.

[Petitioners] appealed the finding of probable cause against them before the Office of the Regional State Prosecutor
(RSP). This was granted by the RSP in a Resolution dated July 14, 2005, which ordered the City Prosecutor to desist
from filing the case or to withdraw the cases if one has already been filed for the following reason:

xxxx

Section 28 of RA 8282 above-cited merely lays down a disputable presumption that the members’ contribution to the
SSS is deemed misappropriated if the employer fails to remit the same to the SSS within 30 days from the date they
became due. The full payment and remittance of the same destroys this presumption. Section 22 of R.A. 1161 even
allowed delayed remittance and payment by providing for a 3% penalty. In this case, the full payment made by
[petitioners] had never been rebutted nor questioned by [respondents]. x x x [Petitioners] having already fullypaid to the
SSS the total and full membership dues for [respondents], there is no more reason to prosecute them under the
aforecited section of RA 8282.

[Respondents] sought reconsideration thereto alleging lack of jurisdiction considering the prescribed penalty for the
crimes charged. But the same was denied by the RSP in a Resolution dated August 9, 2005. Hence, [respondents] filed
an appeal before the Department of Justice which seemingly remains un-acted upon to this day.

Pursuant to the Resolution of the RSP reversing the finding of probable cause by the City Prosecutor, [petitioners] filed
a Motion to Dismiss dated February 13, 2006 before [the] RTC. The City Prosecutor likewise filed a Comment
manifesting agreement to the withdrawal of the criminal cases pending resolution of the appeal with the DOJ. This was
opposed by [respondents] for the reason that the RSP lacked jurisdiction to resolve the appeal of [petitioners]. In an
Order dated May 17, 2006, the trial court deemed it best to momentarily suspend the proceedings considering the
pending appeal before the DOJ.

On November 8, 2006, [petitioners] filed a second Motion to Dismiss alleging, among others, that [respondents] have
already been paid the benefits due to them in the laborcase. Moreover, the DOJ still has not acted upon on the appeal
of [respondents]. [Petitioners] then argued that the cases should be withdrawn on the ground of fairness. The public
prosecutor, pursuant to a directive of the RTC to comment on the Motion, adopted in totothe earlier manifestation of the
City Prosecutor espousing the withdrawal of the case.

This time, in the herein assailed Order dated December 5, 2006, the RTC granted the Motion of [petitioners] and
ordered the withdrawal of the criminal cases x x x:

xxxx

Considering therefore the time that elapsed without any action taked by the Department of Justice and the
manifestation of the Public Prosecutor withdrawing the case from the docket of the court and in as much as it is the
Public Prosecutor that is in control of the prosecution of all criminal cases, the motion to withdraw case is hereby
granted.3

WHEREFORE, Criminal Case Nos. 2006-072, 2006-073 and 2006-074 for violation of Sec. 22 (a) and (d) in relation to
Sec. 28 (e) of R.A. 8282 is hereby ordered withdrawn from the dockets of the Court. 4

Respondents filed a Petition for Certiorariand Mandamus under Rule 65 of the Rules of Court before the appellate court
toannul and set aside the trial court’s withdrawal of Criminal Case Nos. 2006-072, 2006-073 and 2006-074 from its
docket.

As stated at the outset, the Court of Appeals granted respondents’ petition, reversed and set aside the RTC’s ruling,
and reinstated the criminal cases against petitioners:

WHEREFORE, premises considered, the Order dated December 5, 2006 of the Regional Trial Court, Branch 20,
Cagayan de Oro City is REVERSED and SET ASIDE. Criminal Case Nos. 2006-072, 2006-073 and 2006-074 are
REINSTATED. The Presiding Judge of the Regional Trial Court, Branch 20, Cagayan de Oro City is DIRECTED to
issue the corresponding warrants for the arrest of the accused therein [petitioners herein] and to proceed with the
disposition of the said cases with dispatch. 5

Hence, this appeal by certiorariof petitioners insisting on the withdrawal of the criminal cases against them.

In reversing the trial court, the appellate court found grave abuse of discretion in the trial court’s withdrawal of the
criminal cases from its docket by merely parroting the reasoning of the public prosecutor and not making its own
independent assessment of the merits of the case.

The Court of Appeals summarized the trial court’s reasoning:

1. The lapse of almost seven (7) months without any action taken by the DOJ; and

2. The manifestation to withdraw the case by the Public Prosecutor who is in control of the prosecution of all
criminal cases. 6

and found it "flawed and insufficient to effect a withdrawal of the criminal cases" because:

1. The suspension of arraignment ofan accused, while authorized under Section 11,  Rule 116 of the Rules of
7

Court, is only for a period of 60 days reckoned from the filing of the petition with the reviewing office.
 2. Its own failure to act for seven (7) months without arraigning the accused cannot be an excuse to dismiss the
case, especially when the rules dictate that the deferment of arraignment in such case may only be done for a
period of 60 days.

3. The controlling case of Crespo v. Mogul  teaches us that, while the prosecution of criminal actions is under
8

the discretion and control of the public prosecutor, once a complaint or information is filed, any disposition of the
case, be it a dismissal or a conviction or acquittal of an accused, rests in the sound discretion of the court.

4. Well-settled in jurisprudence is the principle that trial judges ought to make its own independent assessment
of the merits of the case and not abdicate its judicial power and act asa mere surrogate of the Secretary of
Justice.

5. In any event, there exists probable cause to indict petitioners for violation of Sections 22 (a) and (d),
inrelation to Section 28 (e), of the SS Law.

6. R.A. No. 8282, a special law, requires employers to: (a) register its employees with the SSS; (b) deduct
employee contributions from their salaries; and (3) remit these contributions to the SSS within a given period. 9

7. Violation of R.A. No. 8282, a special law, is mala prohibita: criminal liability attaches, without regard to intent
and good faith of the accused, once the law is violated.

8. The case in point is Tan, et al. v. Ballena, et al.  where good faith and absence of malicious intentof the
10

accused and the subsequent remittance of the SSS contributions and loan amortizations, held no sway over the
accused’s criminal liability under the SS Law for failure to remit SSS contributions and loan amortizations of
accused’s employees.

9. On the whole, petitioners’ admission of their violations of the provisions of the SS Law clearlyand readily
established a prima facie case against them and the trial court should not have ordered the withdrawal of the
criminal cases.

Against the foregoing, petitioners are adamant that:

41. In the case at bar, the Petitioners did not fail to remit the SSS contributions of the Respondents. They have, in fact,
fully paid the same, albeit belatedly. Still, in this case, there was only delayed remittance of SSS contributions. There
was no non-remittance thereof.

Thus, the presumption of misappropriation in the SSS law is effectively rebutted. In view thereof, no criminal liability
attaches to the Petitioners.

42. The Office of the Solicitor General, in behalf of the State, joined the foregoing conclusion by stating thus[:]

Considering that [petitioners] had already fully paid and remitted [respondents’] SSS contributions, albeit belatedly,
there is no more reason to hold them liable under Section 28 (e) of Republic Act No. 8282. In remitting [respondents’]
contributions, it issafe to conclude that there was no malicious intent on the part of [petitioners] to misappropriate the
same. As explained by [petitioners], their failure to remit the deductions on time was due to the financial crisis that the
corporation suffered at that time. The presumption, therefore, that [petitioners] had intended to misappropriate the
amounts deducted from the [respondents’] salaries had already been destroyed by their full payments of the same to
the SSS. 11

The ruling of the appellate court is sound and backed by jurisprudence.

Sections 22 (a) and (d) and 28 (e) of R.A. No. 8282 read:

SEC. 22. Remittance of Contributions. ‐(a) The contribution imposed in the preceding section shall be remitted to the
SSS within the first ten (10) days of each calendar month following the month for which they are applicable or within
suchtime 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 percent (3%) per month from the date the contribution falls due until paid. If
deemed expedient and advisable by the Commission, the collection and remittance of contributions shall be made
quarterly or semi‐ annually in advance, the contributions payable by the employees to be advanced by their respective
employers: Provided, That upon separation of an employee, any contribution so paid in advance but not due shall be
credited or refunded to his employer.

xxxx

(d) The last complete record of monthly contributions paid by the employer or the average of the monthly contributions
paid during the past three (3) years as of the date of filing of the action for collection shall be presumed to be the
monthly contributions payable by and due from the employer to the SSS for each of the unpaid month, unless
contradicted and overcome by other evidence: Provided, That the SSS shall not be barred from determining and
collecting the true and correct contributions due the SSS even after full payment pursuant to this paragraph, nor shall
the employer be relieved of his liability under Section Twenty‐eight of this Act.

SEC. 28. Penal Clause. ‐x x x

(e) Whoever fails or refuses to complywith the provisions of this Act or with the rules and regulations promulgated by
the Commission, shall be punished by a fine of not less thanFive thousand pesos (₱5,000.00) nor more than Twenty
thousand pesos (₱20,000.00), or imprisonment for not less than six (6) years and one (1) day nor more than twelve
(12) years or both, at the discretion of the court: Provided, That where the violation consists in failure or refusal to
register employees or himself, in case of the covered self‐employed, or to deduct contributions from the employees'
compensation and remit the same to the SSS, the penalty shall be a fine of not less than Five thousand pesos
(₱5,000.00) nor more than Twenty thousand pesos (₱20,000.00) and imprisonment for not less than six (6) years and
one (1) day nor more than twelve (12) years.

The elements of criminal liability under Section 22 (a) are:

1. The employer fails to register its employees with the SSS;

2. The employer fails to deduct monthly contributions from the salaries and/or wages of its employees; and

3. Having deducted the SSS contributions and/or loan payments to SSS, the employer fails to remit these to the
SSS.

In this case, petitioners split hairs that they "did not fail to remit the SSS contributions of respondents;" they "fully paid
the same, albeit belatedly."

We affirm the finding of a prima facie case of petitioners’ failure to remit the SSS contributions and loan amortization of
respondents for a period of approximately two (2) years, in 2003 and 2004. In October 2004, after respondents were
successively dismissed from employment by Vicmar in August 2004, they separately filed for SSS benefits, relating to
sickness and procurement of a loan, which were both denied outright for lack of contributions or payments twelve
months (12) prior to the semester of confinement and failure to pay a prior loan. After respondents filed criminal
complaints against petitioners, the latter then remitted their SSS wage deductions and loan payments to the SSS.

The factual milieu obtaining herein does not denote a simple delay in payment. Again, petitioners initially failed to remit
the SSS contributions and payments of respondents such thatrespondents were denied benefits under the SS Law
which they wanted to avail of. It was only under threat of criminal liability that petitioners subsequently remitted what
they had long deducted from the wages of respondents.

Indeed, the affidavit of Vicmar’s Plant Manager, Juanito Pagcaliwagan, admits the fact of non-payment of contributions:

x x x "[W]hen funds became available, as Plant Manager, I immediately caused the payment to SSS [of] the
contributions of the employees and the employer’s share, together with the payment of loans of the employees,"  x x x. 12

In Tan, et al. v. Ballena, et al.  likewise involving the determination of probable cause to indict petitioners therein for
13

failing to remit SSS contributions and loan payments of their employees, we affirmed the Court of Appeals’ and our
power to intervene and exercise our own powers of review with respect to the DOJ’s finding. We ruled that in the
exceptional case in which grave abuse of discretion is committed, as when a clear sufficiency or insufficiency of
evidence to support a finding of probable cause is ignored, the Court of Appeals may take cognizance of the case viaa
petition under Rules 65 of the Rules of Court.

More so in this instance when the trial court has already taken cognizance and acquired jurisdiction over the criminal
cases against petitioners. On more than one occasion,we have declared that while the recommendation of the public
prosecutor of the ruling of the DOJ Secretary is persuasive, it is not binding on courts.  Here, the trial court abdicated
14

its judicial power and refused to performa positive duty enjoined by law, which is the independent resolution of the issue
of probable cause. It is the court’s bounden duty to assess independently the merits of the motion, and the assessment
must be embodied in a written order disposing of the motion. 15

The trial court failed in that regard.

Significantly, we note that the issue before us is the validity of the order of the trial court directing the withdrawal from
its dockets of "Criminal Case Nos. 2006-072, 2006-073 and 2006-074 for violation of Sec. 22 (a) and (d) in relation to
Sec. 28 (e) of R.A. No. 8282."
The culpability of the accused under the indictment is not yet before us. Yet to be determined during the ensuing trial
are considerations such as the extent and reason for the delay, the date of actual remittance and all other
circumstances that attended such remittance.  All these are matters of defense that need proof during trial.
1âwphi1

WHEREFORE, the petition is DENIED. The Decision of the Court of Appeals in CA-G.R. SP No. 01569-MIN is
AFFIRMED. Criminal Case Nos. 2006-072, 2006-073 and 2006-074 pending before the Regional Trial Court, Branch
20, Cagayan de Oro City are REINSTATED and the Presiding Judge thereof is DIRECTED to dispose of the cases with
dispatch.

SO ORDERED.
CASE 8

G.R. No. 209741, April 15, 2015

SOCIAL SECURITY COMMISSION, Petitioner, v. EDNA A. AZOTE, Respondent.

DECISION

MENDOZA, J.:

This petition for review on certiorari1 under Rule 45 of the Rules of Court filed by petitioner Social
Security Commission (SSC) assails the August 13, 2013 Decision2 of the Court of Appeals (CA), and its
October 29, 2013 Resolution3 in CA-G.R. SP No. 122933, allowing respondent Edna A. Azote (Edna) to
claim the death benefits of her late husband, Edgardo Azote (Edgardo).

The Antecedents:

On June 19, 1992, respondent Edna and Edgardo, a member of the Social Security System (SSS), were
married in civil rites at the Regional Trial Court, Branch 9, Legazpi City, Albay (RTC).  Their union
produced six children4 born from 1985 to 1999.  On April 27, 1994, Edgardo submitted Form E-4 to the
SSS with Edna and their three older children as designated beneficiaries. Thereafter or on September 7,
2001, Edgardo submitted another Form E-4 to the SSS designating his three younger children as
additional beneficiaries.5

On January 13, 2005, Edgardo passed away.  Shortly thereafter, Edna filed her claim for death benefits
with the SSS as the wife of a deceased-member.  It appeared, however, from the SSS records that
Edgardo had earlier submitted another Form E-4 on November 5, 1982 with a different set of
beneficiaries, namely: Rosemarie Azote (Rosemarie), as his spouse; and Elmer Azote (Elmer), as
dependent, born on October 9, 1982.  Consequently, Edna’s claim was denied.  Her children were
adjudged as beneficiaries and she was considered as the legal guardian of her minor children. The
benefits, however, would be stopped once a child would attain the age of 21.6

On March 13, 2007, Edna filed a petition with the SSC to claim the death benefits, lump sum and
monthly pension of Edgardo.7  She insisted that she was the legitimate wife of Edgardo. In its answer,
the SSS averred that there was a conflicting information in the forms submitted by the deceased. 
Summons was published in a newspaper of general circulation directing Rosemarie to file her answer. 
Despite the publication, no answer was filed and Rosemarie was subsequently declared in default.8

In the Resolution,9 dated December 8, 2010, the SSC dismissed Edna’s petition for lack of merit.  Citing
Section 24(c) of the SS Law, it explained that although Edgardo filed the Form E-4 designating Edna
and their six children as beneficiaries, he did not revoke the designation of Rosemarie as his wife-
beneficiary, and Rosemarie was still presumed to be his legal wife.

The SSC further wrote that the National Statistics Office (NSO) records revealed that the marriage of
Edgardo to one  Rosemarie Teodora Sino was registered on July 28, 1982.  Consequently, it opined that
Edgardo’s marriage to Edna was not valid as there was no showing that his first marriage had been
annulled or dissolved. The SSC stated that there must be a judicial determination of nullity of a previous
marriage before a party could enter into a second marriage.10

In an order,11 dated June 8, 2011, the SSC denied Edna’s motion for reconsideration.  It explained that
it was incumbent upon Edna to prove that her marriage to the deceased was valid, which she failed to
do.  It further opined that Rosemarie could not be merely presumed dead, and that death benefits
under the SSS could not be considered properties which may be disposed of in a holographic will.12

In the assailed August 13, 2013 Decision, the CA reversed and set aside the resolution and the order of
the SSC.  It held that the SSC could not make a determination of the validity or invalidity of the
marriage of Edna to Edgardo considering that no contest came from either Rosemarie or Elmer.13

The CA explained that Edna had established her right to the benefits by substantial evidence, namely,
her marriage certificate and the baptismal certificates of her children.14  It ruled that Edgardo made a
deliberate change of his wife-beneficiary in his 1994 E-4 form, as such was clearly his voluntary act
manifesting his intention to revoke his former declaration in the 1982 E-4 form.15  The 1994 E-4 form
submitted by Edgardo, designating Edna as his wife, superseded his former declaration in his 1982 E-4
form.16
It further opined that the Davac case cited by the SSC was not applicable because there were two
conflicting claimants in that case, both claiming to be wives of the deceased,  while in this case, Edna
was the sole claimant for the death benefits, and that her designation as wife-beneficiary remained valid
and unchallenged.  It was of the view that Rosemarie’s non-appearance despite notice could be deemed
a waiver to claim death benefits from the SSS, thereby losing whatever standing she might have had to
dispute Edna’s claim.17

In the assailed October 29, 2013 Resolution,18 the CA denied the SSC’s motion for reconsideration.19

Hence, the present petition.

GROUNDS

RESPONDENT COURT OF APPEALS GRAVELY ERRED IN RULING THAT THE COMMISSION IS

BEREFT OF AUTHORITY TO DETERMINE THE VALIDITY OR INVALIDITY OF THE MARRIAGE OF
THE PRIVATE RESPONDENT AND MEMBER EDGARDO AZOTE.

RESPONDENT COURT OF APPEALS GRAVELY ERRED IN GRANTING THE PETITION OF THE

PRIVATE RESPONDENT AND FINDING HER ENTITLED TO THE SS BENEFITS.

THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN RULING THAT THE DESIGNATION
OF THE PRIVATE RESPONDENT AS WIFE-BENEFICIARY IS VALID.20

The SSC argues that the findings of fact of the CA were not supported by the records.  It submits that
under Section 5 of the SS Law, it is called upon to determine the rightful beneficiary in the performance
of its quasi-judicial function of adjudicating SS benefits.  In fact, it cited a number of cases,21 where the
SSC had passed upon the validity of marriages for the purpose of determining who were entitled to SS
benefits.22

The SSC contends that Edna was not the legitimate spouse of deceased member Edgardo as the CA
failed to consider the NSO certification showing that Edgardo was previously married to Rosemarie. 
With the death certificate of Rosemarie showing that she died only on November 6, 2004, it proved that
she was alive at the time Edna and Edgardo were married, and, therefore, there existed a legal
impediment to his second marriage, rendering it void.  Edna is, therefore, not a legitimate spouse who
is entitled to the death benefits of Edgardo.23

The SSC claims that the right to designate a beneficiary is subject to the SS Law. The designation of a
wife-beneficiary merely creates a disputable presumption that they are legally married and may be
overthrown by evidence to the contrary.  Edna’s designation became invalid with the determination of
the subsistence of a previous marriage.  The SSC posits that even though Edgardo revoked and
superseded his earlier designation of Rosemarie as beneficiary, his designation of Edna was still not
valid considering that only a legitimate spouse could qualify as a primary beneficiary.24

The Court’s Ruling

The petition is meritorious.

The law in force at the time of Edgardo’s death was Republic Act (R.A.) No. 8282,25 the amendatory law
of R.A. No. 1161 or the “Social Security Law.”  It is a tax-exempt social security service designed to
promote social justice and provide meaningful protection to members and their beneficiaries against the
hazards of disability, sickness, maternity, old age, death, and other contingencies resulting in loss of
income or financial burden.26  As a social security program of the government, Section 8 (e) and (k) of
the said law expressly provides who would be entitled to receive benefits from its deceased-member, to
wit:

SEC. 8. Terms Defined. - For purposes of this Act, the following terms shall, unless the context indicates
otherwise, have the following meanings:

xxxx

(e) Dependents - The dependents shall be the following:

(1) The legal spouse entitled by law to receive support from the member;

(2) The legitimate, legitimated or legally adopted, and illegitimate child who is unmarried, not gainfully
employed, and has not reached twenty-one (21) years of age, or if over twenty-one (21) years of age,
he is congenitally or while still a minor has been permanently incapacitated and incapable of self-
support, physically or mentally; and

(3) The parent who is receiving regular support from the member.

xxxx

(k) Beneficiaries - The dependent spouse until he or she remarries, the dependent legitimate,
legitimated or legally adopted, and illegitimate children, who shall be the primary beneficiaries of the
member: Provided, That the dependent illegitimate children shall be entitled to fifty percent (50%) of
the share of the legitimate, legitimated or legally adopted children: Provided, further, That in the
absence of the dependent legitimate, legitimated children of the member, his/her dependent illegitimate
children shall be entitled to one hundred percent (100%) of the benefits. In their absence, the
dependent parents who shall be the secondary beneficiaries of the member. In the absence of all the
foregoing, any other person designated by the member as his/her secondary beneficiary. (Emphasis
supplied)

Applying Section 8(e) and (k) of R. A. No. 8282, it is clear that only the legal spouse of the deceased-
member is qualified to be the beneficiary of the latter’s SS benefits.  In this case, there is a concrete
proof that Edgardo contracted an earlier marriage with another individual as evidenced by their
marriage contract.  Edgardo even acknowledged his married status when he filled out the 1982 Form E-
4 designating Rosemarie as his spouse.27

It is undisputed that the second marriage of Edgardo with Edna was celebrated at the time when the
Family Code was already in force.  Article 41 of the Family Code expressly states:

Art. 41. A marriage contracted by any person during subsistence of a previous marriage shall be  null
and void, unless before the celebration of the subsequent marriage, the prior spouse had been absent
for four consecutive years and the spouse present has a well-founded belief that the absent spouse was
already dead.  In case of disappearance where there is danger under the circumstances set forth in the
provisions of Article 391 of the Civil Code, an absence of only two years shall be sufficient.

For the purpose of contracting a subsequent marriage under the preceding paragraph, the spouse
present must institute a summary proceeding as provided in this Code for the declaration of
presumptive death of the absentee, without prejudice to the effect of reappearance of the absent
spouse. (Emphasis and underscoring supplied)

Using the parameters outlined in Article 41 of the Family Code, Edna, without doubt, failed to establish
that there was no impediment or that the impediment was already removed at the time of the
celebration of her marriage to Edgardo.  Settled is the rule that “whoever claims entitlement to the
benefits provided by law should establish his or her right thereto by substantial evidence.”28 Edna could
not adduce evidence to prove that the earlier marriage of Edgardo was either annulled or dissolved or
whether there was a declaration of Rosemarie’s presumptive death before her marriage to Edgardo.
What is apparent is that Edna was the second wife of Edgardo. Considering that Edna was not able to
show that she was the legal spouse of a  deceased-member, she would not qualify under the law to be
the beneficiary of the death benefits of Edgardo.

The Court does not subscribe to the disquisition of the CA that the updated Form E-4 of Edgardo was
determinative of Edna’s status and eligibility to claim the death benefits of deceased-member. Although
an SSS member is free to designate a beneficiary, the designation must always conform to the statute. 
To blindly rely on the form submitted by the deceased-member would subject the entire social security
system to the whims and caprices of its members and would render the SS Law inutile.

Although the SSC is not intrinsically empowered to determine the validity of marriages, it is required by
Section 4(b) (7) of R.A. No. 828229 to examine available statistical and economic data to ensure that the
benefits fall into the rightful beneficiaries.  As held in Social Security Commission vs. Favila,30

SSS, as the primary institution in charge of extending social security protection to workers and their
beneficiaries is mandated by Section 4(b)(7) of RA 8282 to require reports, compilations and analyses
of statistical and economic data and to make an investigation as may be needed for its proper
administration and development.  Precisely, the investigations conducted by SSS are appropriate in
order to ensure that the benefits provided under the SS Law are received by the rightful beneficiaries. 
It is not hard to see that such measure is necessary for the system’s proper administration, otherwise, it
will be swamped with bogus claims that will pointlessly deplete its funds.  Such scenario will certainly
frustrate the purpose of the law which is to provide covered employees and their families protection
against the hazards of disability, sickness, old age and death, with a view to promoting their well-being
in the spirit of social justice.  Moreover and as correctly pointed out by SSC, such investigations are
likewise necessary to carry out the mandate of Section 15 of the SS Law which provides in part, viz:

Sec. 15. Non-transferability of Benefits. – The SSS shall pay the benefits provided for in this Act to
such [x x x] persons as may be entitled thereto in accordance with the provisions of this Act 
x x x. (Emphasis supplied.)

The existence of two Form E-4s designating, on two different dates, two different women as his spouse
is already an indication that only one of them can be the legal spouse.  As can be gleaned from the
certification issued by the NSO,31 there is no doubt that Edgardo married Rosemarie in 1982.  Edna
cannot be considered as the legal spouse of Edgardo as their marriage took place during the existence
of a previously contracted marriage.  For said reason, the denial of Edna’s claim by the SSC was correct.
It should be emphasized that the SSC determined Edna’s eligibility on the basis of available statistical
data and documents on their database as expressly permitted by Section 4(b) (7) of R.A. No. 8282.

It is of no moment that the first wife, Rosemarie, did not participate or oppose Edna’s claim.
Rosemarie’s non-participation or her subsequent death on November 11, 200432 did not cure or
legitimize the status of Edna.

WHEREFORE, the petition is GRANTED.  The August 13, 2013 Decision and the October 29, 2013
Resolution of the Court of Appeals in CA-G.R. SP No. 122933 are REVERSED and SET ASIDE. 
Accordingly, the petition for entitlement of SS death benefits filed by respondent Edna Azote
is DENIED for lack of merit.

SO ORDERED.

CASE 9
 G.R. No. 209741, April 15, 2015

SOCIAL SECURITY COMMISSION, Petitioner, v. EDNA A. AZOTE, Respondent.

DECISION

MENDOZA, J.:

This petition for review on certiorari1 under Rule 45 of the Rules of Court filed by petitioner Social
Security Commission (SSC) assails the August 13, 2013 Decision2 of the Court of Appeals (CA), and its
October 29, 2013 Resolution3 in CA-G.R. SP No. 122933, allowing respondent Edna A. Azote (Edna) to
claim the death benefits of her late husband, Edgardo Azote (Edgardo).

The Antecedents:

On June 19, 1992, respondent Edna and Edgardo, a member of the Social Security System (SSS), were
married in civil rites at the Regional Trial Court, Branch 9, Legazpi City, Albay (RTC).  Their union
produced six children4 born from 1985 to 1999.  On April 27, 1994, Edgardo submitted Form E-4 to the
SSS with Edna and their three older children as designated beneficiaries. Thereafter or on September 7,
2001, Edgardo submitted another Form E-4 to the SSS designating his three younger children as
additional beneficiaries.5

On January 13, 2005, Edgardo passed away.  Shortly thereafter, Edna filed her claim for death benefits
with the SSS as the wife of a deceased-member.  It appeared, however, from the SSS records that
Edgardo had earlier submitted another Form E-4 on November 5, 1982 with a different set of
beneficiaries, namely: Rosemarie Azote (Rosemarie), as his spouse; and Elmer Azote (Elmer), as
dependent, born on October 9, 1982.  Consequently, Edna’s claim was denied.  Her children were
adjudged as beneficiaries and she was considered as the legal guardian of her minor children. The
benefits, however, would be stopped once a child would attain the age of 21.6

On March 13, 2007, Edna filed a petition with the SSC to claim the death benefits, lump sum and
monthly pension of Edgardo.7  She insisted that she was the legitimate wife of Edgardo. In its answer,
the SSS averred that there was a conflicting information in the forms submitted by the deceased. 
Summons was published in a newspaper of general circulation directing Rosemarie to file her answer. 
Despite the publication, no answer was filed and Rosemarie was subsequently declared in default.8

In the Resolution,9 dated December 8, 2010, the SSC dismissed Edna’s petition for lack of merit.  Citing
Section 24(c) of the SS Law, it explained that although Edgardo filed the Form E-4 designating Edna
and their six children as beneficiaries, he did not revoke the designation of Rosemarie as his wife-
beneficiary, and Rosemarie was still presumed to be his legal wife.

The SSC further wrote that the National Statistics Office (NSO) records revealed that the marriage of
Edgardo to one  Rosemarie Teodora Sino was registered on July 28, 1982.  Consequently, it opined that
Edgardo’s marriage to Edna was not valid as there was no showing that his first marriage had been
annulled or dissolved. The SSC stated that there must be a judicial determination of nullity of a previous
marriage before a party could enter into a second marriage.10

In an order,11 dated June 8, 2011, the SSC denied Edna’s motion for reconsideration.  It explained that
it was incumbent upon Edna to prove that her marriage to the deceased was valid, which she failed to
do.  It further opined that Rosemarie could not be merely presumed dead, and that death benefits
under the SSS could not be considered properties which may be disposed of in a holographic will.12

In the assailed August 13, 2013 Decision, the CA reversed and set aside the resolution and the order of
the SSC.  It held that the SSC could not make a determination of the validity or invalidity of the
marriage of Edna to Edgardo considering that no contest came from either Rosemarie or Elmer.13

The CA explained that Edna had established her right to the benefits by substantial evidence, namely,
her marriage certificate and the baptismal certificates of her children.14  It ruled that Edgardo made a
deliberate change of his wife-beneficiary in his 1994 E-4 form, as such was clearly his voluntary act
manifesting his intention to revoke his former declaration in the 1982 E-4 form.15  The 1994 E-4 form
submitted by Edgardo, designating Edna as his wife, superseded his former declaration in his 1982 E-4
form.16

It further opined that the Davac case cited by the SSC was not applicable because there were two
conflicting claimants in that case, both claiming to be wives of the deceased,  while in this case, Edna
was the sole claimant for the death benefits, and that her designation as wife-beneficiary remained valid
and unchallenged.  It was of the view that Rosemarie’s non-appearance despite notice could be deemed
a waiver to claim death benefits from the SSS, thereby losing whatever standing she might have had to
dispute Edna’s claim.17

In the assailed October 29, 2013 Resolution,18 the CA denied the SSC’s motion for reconsideration.19

Hence, the present petition.

GROUNDS

RESPONDENT COURT OF APPEALS GRAVELY ERRED IN RULING THAT THE COMMISSION IS

BEREFT OF AUTHORITY TO DETERMINE THE VALIDITY OR INVALIDITY OF THE MARRIAGE OF
THE PRIVATE RESPONDENT AND MEMBER EDGARDO AZOTE.

RESPONDENT COURT OF APPEALS GRAVELY ERRED IN GRANTING THE PETITION OF THE

PRIVATE RESPONDENT AND FINDING HER ENTITLED TO THE SS BENEFITS.

THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN RULING THAT THE DESIGNATION
OF THE PRIVATE RESPONDENT AS WIFE-BENEFICIARY IS VALID.20

The SSC argues that the findings of fact of the CA were not supported by the records.  It submits that
under Section 5 of the SS Law, it is called upon to determine the rightful beneficiary in the performance
of its quasi-judicial function of adjudicating SS benefits.  In fact, it cited a number of cases,21 where the
SSC had passed upon the validity of marriages for the purpose of determining who were entitled to SS
benefits.22

The SSC contends that Edna was not the legitimate spouse of deceased member Edgardo as the CA
failed to consider the NSO certification showing that Edgardo was previously married to Rosemarie. 
With the death certificate of Rosemarie showing that she died only on November 6, 2004, it proved that
she was alive at the time Edna and Edgardo were married, and, therefore, there existed a legal
impediment to his second marriage, rendering it void.  Edna is, therefore, not a legitimate spouse who
is entitled to the death benefits of Edgardo.23

The SSC claims that the right to designate a beneficiary is subject to the SS Law. The designation of a
wife-beneficiary merely creates a disputable presumption that they are legally married and may be
overthrown by evidence to the contrary.  Edna’s designation became invalid with the determination of
the subsistence of a previous marriage.  The SSC posits that even though Edgardo revoked and
superseded his earlier designation of Rosemarie as beneficiary, his designation of Edna was still not
valid considering that only a legitimate spouse could qualify as a primary beneficiary.24

The Court’s Ruling

The petition is meritorious.

The law in force at the time of Edgardo’s death was Republic Act (R.A.) No. 8282,25 the amendatory law
of R.A. No. 1161 or the “Social Security Law.”  It is a tax-exempt social security service designed to
promote social justice and provide meaningful protection to members and their beneficiaries against the
hazards of disability, sickness, maternity, old age, death, and other contingencies resulting in loss of
income or financial burden.26  As a social security program of the government, Section 8 (e) and (k) of
the said law expressly provides who would be entitled to receive benefits from its deceased-member, to
wit:

SEC. 8. Terms Defined. - For purposes of this Act, the following terms shall, unless the context indicates
otherwise, have the following meanings:

xxxx

(e) Dependents - The dependents shall be the following:

(1) The legal spouse entitled by law to receive support from the member;

(2) The legitimate, legitimated or legally adopted, and illegitimate child who is unmarried, not gainfully
employed, and has not reached twenty-one (21) years of age, or if over twenty-one (21) years of age,
he is congenitally or while still a minor has been permanently incapacitated and incapable of self-
support, physically or mentally; and
(3) The parent who is receiving regular support from the member.

xxxx

(k) Beneficiaries - The dependent spouse until he or she remarries, the dependent legitimate,
legitimated or legally adopted, and illegitimate children, who shall be the primary beneficiaries of the
member: Provided, That the dependent illegitimate children shall be entitled to fifty percent (50%) of
the share of the legitimate, legitimated or legally adopted children: Provided, further, That in the
absence of the dependent legitimate, legitimated children of the member, his/her dependent illegitimate
children shall be entitled to one hundred percent (100%) of the benefits. In their absence, the
dependent parents who shall be the secondary beneficiaries of the member. In the absence of all the
foregoing, any other person designated by the member as his/her secondary beneficiary. (Emphasis
supplied)

Applying Section 8(e) and (k) of R. A. No. 8282, it is clear that only the legal spouse of the deceased-
member is qualified to be the beneficiary of the latter’s SS benefits.  In this case, there is a concrete
proof that Edgardo contracted an earlier marriage with another individual as evidenced by their
marriage contract.  Edgardo even acknowledged his married status when he filled out the 1982 Form E-
4 designating Rosemarie as his spouse.27

It is undisputed that the second marriage of Edgardo with Edna was celebrated at the time when the
Family Code was already in force.  Article 41 of the Family Code expressly states:

Art. 41. A marriage contracted by any person during subsistence of a previous marriage shall be  null
and void, unless before the celebration of the subsequent marriage, the prior spouse had been absent
for four consecutive years and the spouse present has a well-founded belief that the absent spouse was
already dead.  In case of disappearance where there is danger under the circumstances set forth in the
provisions of Article 391 of the Civil Code, an absence of only two years shall be sufficient.

For the purpose of contracting a subsequent marriage under the preceding paragraph, the spouse
present must institute a summary proceeding as provided in this Code for the declaration of
presumptive death of the absentee, without prejudice to the effect of reappearance of the absent
spouse. (Emphasis and underscoring supplied)

Using the parameters outlined in Article 41 of the Family Code, Edna, without doubt, failed to establish
that there was no impediment or that the impediment was already removed at the time of the
celebration of her marriage to Edgardo.  Settled is the rule that “whoever claims entitlement to the
benefits provided by law should establish his or her right thereto by substantial evidence.”28 Edna could
not adduce evidence to prove that the earlier marriage of Edgardo was either annulled or dissolved or
whether there was a declaration of Rosemarie’s presumptive death before her marriage to Edgardo.
What is apparent is that Edna was the second wife of Edgardo. Considering that Edna was not able to
show that she was the legal spouse of a  deceased-member, she would not qualify under the law to be
the beneficiary of the death benefits of Edgardo.

The Court does not subscribe to the disquisition of the CA that the updated Form E-4 of Edgardo was
determinative of Edna’s status and eligibility to claim the death benefits of deceased-member. Although
an SSS member is free to designate a beneficiary, the designation must always conform to the statute. 
To blindly rely on the form submitted by the deceased-member would subject the entire social security
system to the whims and caprices of its members and would render the SS Law inutile.

Although the SSC is not intrinsically empowered to determine the validity of marriages, it is required by
Section 4(b) (7) of R.A. No. 828229 to examine available statistical and economic data to ensure that the
benefits fall into the rightful beneficiaries.  As held in Social Security Commission vs. Favila,30

SSS, as the primary institution in charge of extending social security protection to workers and their
beneficiaries is mandated by Section 4(b)(7) of RA 8282 to require reports, compilations and analyses
of statistical and economic data and to make an investigation as may be needed for its proper
administration and development.  Precisely, the investigations conducted by SSS are appropriate in
order to ensure that the benefits provided under the SS Law are received by the rightful beneficiaries. 
It is not hard to see that such measure is necessary for the system’s proper administration, otherwise, it
will be swamped with bogus claims that will pointlessly deplete its funds.  Such scenario will certainly
frustrate the purpose of the law which is to provide covered employees and their families protection
against the hazards of disability, sickness, old age and death, with a view to promoting their well-being
in the spirit of social justice.  Moreover and as correctly pointed out by SSC, such investigations are
likewise necessary to carry out the mandate of Section 15 of the SS Law which provides in part, viz:

Sec. 15. Non-transferability of Benefits. – The SSS shall pay the benefits provided for in this Act to
such [x x x] persons as may be entitled thereto in accordance with the provisions of this Act 
x x x. (Emphasis supplied.)

The existence of two Form E-4s designating, on two different dates, two different women as his spouse
is already an indication that only one of them can be the legal spouse.  As can be gleaned from the
certification issued by the NSO,31 there is no doubt that Edgardo married Rosemarie in 1982.  Edna
cannot be considered as the legal spouse of Edgardo as their marriage took place during the existence
of a previously contracted marriage.  For said reason, the denial of Edna’s claim by the SSC was correct.
It should be emphasized that the SSC determined Edna’s eligibility on the basis of available statistical
data and documents on their database as expressly permitted by Section 4(b) (7) of R.A. No. 8282.

It is of no moment that the first wife, Rosemarie, did not participate or oppose Edna’s claim.
Rosemarie’s non-participation or her subsequent death on November 11, 200432 did not cure or
legitimize the status of Edna.

WHEREFORE, the petition is GRANTED.  The August 13, 2013 Decision and the October 29, 2013
Resolution of the Court of Appeals in CA-G.R. SP No. 122933 are REVERSED and SET ASIDE. 
Accordingly, the petition for entitlement of SS death benefits filed by respondent Edna Azote
is DENIED for lack of merit.

SO ORDERED.