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SOCIAL SECURITY LAW

ABRIGO
APOLINARIO
ATMOSFERA
BACANI
BERNAL
CHUA
CLEMENTE
CRUZ, A.
CRUZ, B.
DELA CRUZ
GORDON
IGOT
LANZON
MANAUIS
NEPOMUCENO
1) CMS Estate FACTS:
Inc. v. SSS 1. On Dec. 1, 1952, CMS Estate was organized for the purpose of
(L-26298) engaging in real estate, and did business with only 6 employees. Its
AOI was amended in order to engage in the logging business, and
CHUA obtained an ordinary license from the Bureau of Forestry to operate a
forest concession of 13.000 hectares.
2. CMS entered into a contract of management with Rojas for the
operation and exploitation of the forest concession. When it started,
the company only has four monthly salaried employees but as of Sept.
1, 1957, it had 89 employees.
3. On Dec. 26, 1957, it revoked its contract of management with Rojas.
4. On Aug. 1, 1958, CMS Estate became a member of SSS with respect to
its real estate business. It remitted to SSS P203.13 representing the
initial premium on the monthly salaries of the employees in its logging
business.
5. However, CMS demanded the refund of the amount, claiming that it is
not yet subject to compulsory coverage with respect to logging
business. This was denied by SSS on the ground that the logging
business was a mere expansion of CMS’ activities and for purposes of
SSS Act, CMS should be considered a member since Dec. 1, 1952.
6. CMS then filed a petition with Social Security Commission for the
determination of their effectivity date of the compulsory coverage of
their logging business.
7. SSC → subject to compulsory coverage as of Sept. 1, 1957
8. CMS Estate → Sec. 9 of SS At should be given liberal interpretation;
SSC cannot combine two distinct businesses when one has not yet
been in operation for more than 2 years
9. SSS → Social Security Act speaks of compulsory coverage of
employees, not business; once employer is initially covered under SS
Act, any other business undertaken by the same employer is likewise
subject in spite of the fact that the latter has not been in operation
for at least 2 years

ISSUE: W/N logging business was subject to compulsory coverage of SS Act -


YES

HELD: 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). Said enactment
implements the general welfare mandate of the Constitution and constitutes
a legitimate exercise of the police power of the State.

As mentioned in PH Blooming Mills v SSS, the membership in the SSS is not a


result of bilateral, consensual 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.

While the taxing power of the State is for the purpose of raising revenue, the
emphasis of the SS Law is on the promotion of general welfare. The funds
contributed to the System belong to the members who will receive benefits
as a matter of right whenever hazards provided by law occur.
All that is required of CMS is to make monthly contributions for covered
employees in its employ, which contributions are not in the nature of taxes
2) Phil. FACTS: The Philippine Blooming Mills Co., Inc., has been employing Japanese
Blooming Mills technicians under a pre-arranged contract of employment, the minimum
I n c . v. S S S period of which employment is 6 months and the maximum is 24 months. The
(L-21223) corporation had in its employ 6 Japanese technicians. In connection with the
CLEMENTE employment of these aliens, it sent an inquiry to the Social Security System
(SSS) whether these employees are subject to compulsory coverage under the
System, which inquiry was answered by the First Deputy Administrator of the
SSS saying that they were. But for aliens shall, upon their departure from the
Philippines, be entitled to a rebate of a proportionate amount of their
contributions. The employers likewise shall be entitled to the same
proportionate rebate of their contributions in behalf of said aliens employed
by them.

A claim was filed with the SSS for the refund of the premiums paid to
the System, on the ground of termination of the members’ employment. As
this claim was denied, they filed a petition with the Social Security
Commission (SSC) for the return or refund of the premiums, paid by the
employer corporation and the 6 Japanese employees, plus attorneys’ fees.

SSS: Denied the claim. It alleged:


1. That Rule IX of the Rules and Regulations of the System requires
membership in the System for at least 2 years before a separated or
resigned employee may be allowed a return of his personal
contributions. Under the same rule, the employer is not also entitled
to a refund of the premium-contributions it had paid.

SSC: denied the petition for the reason that:


1. Although under the original provisions of Section 3(d) of Rule I of the
Rules and Regulations of the SSS, alien-employees (who are employed
temporarily) and their employers are entitled to a rebate of a
proportionate amount of their respective contributions upon the
employees’ departure from the Philippines, said rule was amended by
eliminating that portion granting a return of the premium
contributions.

2. This amendment became effective before the employment of the


subject aliens terminated. The rights of covered employees who are
separated from employment, under the present Rules, are covered by
Rule IX which allows a return of the premiums only if they have been
members for at least 2 years.

Appellants now come to court contending that:

1. The amendment of the Rules and Regulations of the SSS, insofar as it


eliminates the provision on the return of premium-contributions,
constituted an impairment of obligations of contract.

2. That when appellants employees became members and paid the


corresponding premiums to the System, it is subject to the condition
that upon their departure from the Philippines, these employees, as
well as their employer, are entitled to a rebate of a proportionate
amount of their respective contributions.
3) In Re Petition FACTS:
for Exemption ● In 1958, Petitioner filed with SSS a request that Catholic charities, and
from Coverage religious and charitable institutions be exempted from compulsory
by the SSS, coverage of Social Security Law of 1954.
Roman Catholic -They claim that the said Act is a labor law and does not cover
Bishop of Manila
v. SSC (L-15045) religious and charitable institution
- Application is limited to businesses and activities organized
CRUZ, A. for profit
● Social Security Commission denied the request
● Petiitioner filed for reconsideration of the resolution
● Commission denied the request
● Social Security Law provides that the coverage of this law is
predicated upon the existence of an employer-employee
relationship of more or less permanent nature and extends to
employment of all kinds except those expressly excluded
- 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."
-Employer - 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 about the employment, except the Government and
any of its political subdivisions, branches or instrumentalities, including
corporations owned or controlled by the Government
-Employee - any person who performs services for an
'employer' in which either or both mental and physical efforts are used and
who receives compensation for such services
● Petitioner alleges that the term “employer” under the law should
be limited to those who carry n “undertakings or activities which
have the element of profit or gain

ISSUE: Whether Petitioner should be exempt from being covered under the
law

HELD:NO.The Social Security Law was enacted pursuant to the policy to


establish gradually and perfect a social security system which shall be
suitable to the needs of the people throughout the Philippines. (See. 2,
Republic Act No. 1161)

Such enactment is a legitimate exercise of the police power. Being in fact a


social legislation, compatible with the policy of the Church to ameliorate
living conditions of the working class, Petitioner 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
4) SSS v . FACTS:
A t l a n t i c G u l f ● On February 13, 2004, Atlantic Gulf and Pacific Company of Manila, Inc.
and Pacific and Semirara Coal Corporation (SEMIRARA) filed a complaint for specific
C o m p a n y performance and damages against SSS before the RTC of Batangas City.
(175952) April ● The complaint alleged that in 2000, Atlantic Gulf informed the SSS in
30, 2008 writing of its premiums and loan amortization delinquencies covering the
TINGA, J. period from January 2000 to May 2000 amounting to P7.3 Million.
● Atlanta Gulf proposed to pay its said arrears by end of 2000, but
CRUZ, B. requested for the condonation of all penalties In turn, SSS suggested 2
options to AG&P, either to pay by installment or through dacion en pago.
● Atlanta Gulf chose to settle its obligation with the SSS through dacion en
pago of its 5,999 sq.m. property situated in Baguio City with an
appraised value of about P80.0 Million.
● SSS proposes to carve-out from the said property an area sufficient to
cover Atlanta Gulf’s delinquencies.
● However, Atlanta was not not amenable to subdivide the Baguio property
● Atlanta Gulf then made another proposal to SSS. This time, offering as
payment a portion of its 58,153 sqm lot in F.S. Sebastian, Sto. Nio, San
Pascual, Batangas. In addition, SSS informed Atlanta Gulf of its decision to
include other companies within the umbrella of DMCI group with
arrearages with the SSS.
● In the process of elimination only SEMIRARA was left with outstanding
delinquencies with the SSS. Thus, SEMIRARAs inclusion in the proposed
settlement through dacion en pago;
● Atlanta Gulf was directed by the SSS to submit documents, such as TCTs,
Tax Declaration, and the proposed subdivision plan.
● On April 4, 2001, SSS, in its Resolution approved Atlanta Gulf’s proposal to
settle its and SEMIRARAs delinquencies through dacion en pago, amounted
to P29,261,902.45. As a result of the approval of the dacion en pago,
posting of contributions and loan amortization to individual member
accounts was effected immediately thereafter. Thus, the benefits of the
member-employees of both companies were restored
● From the time of the approval of Atlanta Gulf’s proposal up to the
present, it has religiously remitted the premium contributions and loan
amortization of its member-employees to the defendant; To effect the
property transfer, a Deed of Assignment has to be executed.
● Because of SSS failure to come up with the required Deed of Assignment
to effect said transfer, Atlanta Gulf prepared the draft and submitted it to
the Office of the Vice-President NCR thru SSS Baclaran Branch.
● However, SSS failed to take any action on said Deed of Assignment
causing Atlanta Gulf to re-submit it to the same office. Atlanta Gulf was
also consistent in its regular follow ups with SSS as to the status of its
submitted Deed of Assignment;
● On February 28, 2003, or more than a year after the approval of the
proposal, SSS sent the revised copy of the Deed of Assignment. However,
the amount of obligation appearing in the approved Deed of Assignment
has ballooned from P29,261,902.45 to P40,846,610.64 allegedly
because of the additional interests and penalty charges assessed on
plaintiffs outstanding obligation from April 2001, the date of approval of
the proposal, up to January 2003
● Atlanta Gulf demanded for the waiver and deletion of the additional
interests on the ground that delay in the approval of the deed and the
subsequent delay in conveyance of the property in SSS’ name was solely
attributable to it ; hence, to charge would be unreasonable.
● Atlanta Gulf and SEMIRARA maintain their willingness to settle their
alleged obligation of P29,261,902.45 to SSS. However, SSS refused to
accept the payment through dacion en pago, unless they also pay the
additional interests and penalties being charged
● SSS moved for the dismissal of the complaint for lack of jurisdiction and
non-exhaustion of administrative remedies.
5) Phil. FACTS:
American Life The Social Security System (System) issued, with the approval of the
Insurance Co. v. Chairman of the Social Security Commission (Commission) Circular No. 34
SSC (Exhibit A), requiring all insurance firms to submit immediately the names of
their agents, solicitors or underwriters, who, pursuant to the Social Security
DELA CRUZ
Act (Act) are employees of said firms, subject to compulsory coverage of the
System, and to pay the corresponding, premiums, based on the actual
commissions received by each agent during each month.

Sometime later, the System, sent to the Philippine American Life Insurance
Company SSS Form R-1-A-1, advising plaintiff that pursuant to said Circular
No. 34, the insurance agents thereof are considered its employees, subject to
compulsory coverage under said Act, and urging plaintiff to accomplish said
SSS Form and to submit the same, within ten (10) days, to avoid the penalties
provided for by law.

Instead of complying with this request, plaintiff commenced, in the Court of


First Instance of Manila, the present action, for prohibition with preliminary
injunction, against the Commission — to restrain the latter 1) from
compelling plaintiff to remit contributions to the administrative branch of
the System, and 2) from prosecuting plaintiff and its officers for their refusal
to make the aforementioned contributions.

The trial court ruled (1) holding that plaintiff's agents, solicitors or
underwriters are not employees of plaintiff; (2) commanding defendant
Social Security Commission to desist absolutely from taking criminal action
against plaintiff's officers under the provisions of Section 28 (e) and (f) of the
Social Security Act, and from requiring plaintiff to remit contributions.
Hence, the present appeal to this Court, since questions purely of law.

ISSUE:
Whether or not the trial court had jurisdiction to hear and decide this case
(NO)
HELD:
- Section 5(a) of RA 1161 confers on the Social Security Commission the
power to determine and settle claims, which power partakes of a
quasi-judicial function. In the exercise of said power, the Commission
is not inferior to courts of first instance, in much the same way as the
Public Service Commission, as a board performing quasi judicial
functions, is not inferior to said courts. The quasi-judicial nature of
the functions of the Social Security Commission is emphasized by its
authority, expressly granted by said Sec. 5 (a), to promulgate rules
and regulations governing "the filing, determination and settlement of
claims". Hence, the lower court had no jurisdiction to issue the writ of
prohibition therein prayed for by the appellee.
- The Commission performs administrative, as well as quasi-judicial
functions. Although, it can sue and be sued in courts of first instance,
either as regards its administrative functions, or in the otherwise
when the act complained of forms part of its quasi-judicial functions.
- Although Circular No. 34 bears the approval of the Chairman of the
Commission, said approval does not constitute a "decision" thereof, as
the term is used in section 5, which regulates the judicial review of
such decision. Indeed, a "decision" connotes the adjudication or
settlement of a controversy, and the same did not exist between the
System and the plaintiff when the Chairman of the Commission affixed
his signature to said Circular No. 34 on or before November 6, 1960.
- It is only fair and just, as well as administratively expedient, that
6 ) P o b l e t e FACTS:
Construction
Miguel Asiain was an employee of the Poblete Construction Company. His
C o . v. S S C
(17605) Jan. 22, widow, Judith Asiain, filed a petition before the Social Security
1964 Commission against the company and its manager, Domingo Poblete, to
recover the following sums: (1) P3,600.00 equivalent to one year's salary
GORDON of the deceased; (2) P600.00 representing his unpaid salary for two
months; (3) P288,00 "representing the cash received by respondents from
their laborers as contribution to the family of the deceased;" and (4)
P2,000.00 by way of attorney's fees.
Poblete Construction Company moved to dismiss the petition on the
grounds that the deceased was not a member of the System when he died
because of his refusal to have his share of the corresponding monthly
contributions deducted from his salary. Hence the adjudication of the
claim for damages under Section 24, supra, does not pertain to the
Commission but to the courts of justice.
Section 24 of the Social Security Act (R.A. 1161, as amended), which
provides:
'SEC. 24. Employment records and reports. — (a) each employer
shall report immediately to the System the names, ages, civil
status, occupations, salaries and dependents of all his employees
who are in his employ and who are or may later be subject to
compulsory coverage: Provided, That if an employee subject to
compulsory coverage should die or become sick or disabled
without the System having previously received a report about
him from his employer, the said employer shall pay to the
employee or his legal heirs damages equivalent to the benefits to
which said employee would have been entitled had his name
been reported on time by the employer to the System."

The Commission declared itself without jurisdiction to entertain the


claims in the petition except the one for the sum of P3,600. A subsequent
motion for reconsideration filed by the respondents was denied, and they
elevated the case for review by the Court of Appeals, which upon proper
application issued a writ of preliminary injunction to stop all further
proceedings below, including execution of the award.

ISSUE: W/N SSC has the power to hear the case

HELD: YES. Social Security Commission was exercising its quasi-judicial


powers granted by Section 5 (a) of Republic Act No. 1161. Even assuming,
arguendo, that the claim was not within the jurisdiction of the
Commission, a certiorari from CFI is improper because the same law puts
SSC in equal footing with CFI. Certiorari can only be issued by a superior
court against an inferior one.
The deceased Miguel Asiain was subject to compulsory coverage in the
Social Security System. It was the duty of the employer to "report
immediately to the System" his name, age, civil status, occupation, salary
and dependents. Compliance with this duty did not depend upon the
employee's willingness to give his share of the contribution. Section 24 is
mandatory, to such an extent that if the employee should die or become
sick or disabled without the report having been made by the employer, the
latter is liable for an amount equivalent to the benefits to which the