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On August 30, 1957, the Faculty Club of the University of Santo Tomas, Inc. and San Beda College Lay Faculty Club,
Inc. filed a petition for declaratory relief with preliminary injunction before the Court of First Instance of Manila
alleging in substance that they have existing agreements with their respective employers — the University of Santo
Tomas and San Beda College — for the establishment of gratuity and retirement funds which have been in
operation prior to September 1, 1957; that the Social Security Commission tried to compel them to integrate their
private system into the Social Security System on said date; that inasmuch as their private systems grant more
benefits to the members than the Social Security System the integration of their private systems would deprive
their members of property without due process of law, as well as would impair the obligation of their contract to
the detriment of the members. Hence, they prayed for the issuance of preliminary injunction ex parte commanding
the Social Security Commission to desist from compelling them to integrate during the pendency of the case on the
ground that, unless said Commission is enjoined, it might enforce the penal provisions of the Social Security Act.

Judge Froilan Bayona, presiding, issued ex parte a writ of preliminary injunction enjoining the Social Security
Commission from compelling the integration sought for.

On September 7, 1957, the Social Security Commission moved to dissolve the preliminary injunction on the
following grounds (1) a statute is presumed constitutional; (2) there is no irreparable injury shown to justify the
issuance of injunction; (3) injunction does not lie against laws for public welfare; (4) injunction does not lie against
enforcement of penal law; (5) injunction does not lie to stop the collection of contributions under the Social
Security Laws; and (6) the preliminary injunction was barred by laches.

w/n there is existence or non-existence of irreparable injury which seems to be the main basis of the issuance of
the writ.

Damages are irreparable within the meaning of the rule relative to the issuance of injunction where there is no
standard by which their amount can be measured with reasonable accuracy (Crouc v. Central Labor Council, 83
ALR, 193). "An irreparable injury which a court of equity will enjoin includes that degree of wrong of a repeated
and continuing kind which produce hurt, inconvenience, or damage that can be estimated only by conjecture, and
not by any accurate standard of measurement" (Phipps v. Rogue River Valley Canal Co., 7 ALR, 741). An irreparable
injury to authorize an injunction consists of "a serious charge of, or is destructive to, the property it affects, either
physically or in the character in which it has been held and enjoined, or when the property has some peculiar
quality or use, so that its pecuniary value will not fairly recompense the owner of the loss thereof" (Dunker v. Field
and Tub Club, 92 P., 502).

Respondent corporations made a lengthy discourse on the matter of irreparable injury they may suffer if the
injunction were not issued, but the array of figures they have laid out merely succeeded in proving that the
damage, if any they may suffer is susceptible of mathematical computation. It is not then irreparable. As already
stated, this term has a definite meaning in law. It does not have reference to the amount of damages that may be
caused but rather to the difficulty of measuring the damages inflicted. If full compensation can be obtained by way
of damages, equity will not apply the remedy of injunction (28 Am. Jur., 244; 43 C.J.S., 427, 446).

Neither can respondent corporations contend that their integration would mean the destruction of their existing
private systems. The most that can happen would be a diminution of benefits in proportion to the reduction of the
contributions to their private systems. But while they may suffer such reduction in benefits they also stand to
benefit under the government system. Bear in mind that the integration does not mean the discontinuance of the
private system for under the law three alternatives are open to respondents in effecting the integration. 1 In other
words, respondents may continue with whatever private social system they may have at present as a complement
to the benefits afforded to them under the government system without prejudice to their integration into the
government security system.
It may be conceded that, if the injunction be lifted, the possible damages respondents may suffer are their
contributions and those of their employers to the government security system. But restoration of said
contributions had been assured by petitioner should the provision under consideration be declared
unconstitutional and invalid. There can always be an appropriate arrangement to provide for refund in the event of
such circumstance. Surely, the millions of pesos available to the Social Security System would be more than
sufficient to compensate respondents for the contributions they have made.

The same thing may not be said if the enforcement of the law is restrained, for then respondents would be more
harassed and prejudiced in case the constitutionality of the law is upheld, since they will have to pay all the back
contributions from September, 1957, including interests, up to the time the preliminary injunction is dissolved.
Restoration would then be much more difficult in view of the contingencies that may arise with regard to the
members of their private system. There are, to be sure, more weighty reasons favoring the lifting of the injunction
issued by respondent judge.

PREMISES CONSIDERED, petition is granted. The writ of preliminary injunction issued by respondent judge is
hereby lifted. No costs.


The instant case stemmed from a petition filed by Alberto Angeles (Angeles) before the Social Security Commission
(SSC) to compel respondents Rizal Poultry and Livestock Association, Inc. (Rizal Poultry) or BSD Agro Industrial
Development Corporation (BSD Agro) to remit to the Social Security System (SSS) all contributions due for and in
his behalf. Respondents countered with a Motion to Dismiss citing rulings of the National Labor Relations
Commission (NLRC) and Court of Appeals regarding the absence of employer-employee relationship between
Angeles and the respondents.

As a brief backgrounder, Angeles had earlier filed a complaint for illegal dismissal against BSD Agro and/or its
owner, Benjamin San Diego (San Diego). The Labor Arbiter initially found that Angeles was an employee and that
he was illegally dismissed. On appeal, however, the NLRC reversed the Labor Arbiters Decision and held that no
employer-employee relationship existed between Angeles and respondents. The ruling was anchored on the
finding that the duties performed by Angeles, such as carpentry, plumbing, painting and electrical works, were not
independent and integral steps in the essential operations of the company, which is engaged in the poultry
business. Angeles elevated the case to the Court of Appeals via petition for certiorari. The appellate court affirmed
the NLRC ruling and upheld the absence of employer-employee relationship. Angeles moved for reconsideration
but it was denied by the Court of Appeals. No further appeal was undertaken, hence, an entry of judgment was
made on 26 May 2001.

SSC did not take into consideration the decision of the NLRC. It denied respondents motion to dismiss in an Order
dated 19 February 2002. The SSC ratiocinated, thus:

Decisions of the NLRC and other tribunals on the issue of existence of employer-employee relationship between parties are not binding on the
Commission. At most, such finding has only a persuasive effect and does not constitute res judicata as a ground for dismissal of an action pending
before Us. While it is true that the parties before the NLRC and in this case are the same, the issues and subject matter are entirely different. The
labor case is for illegal dismissal with demand for backwages and other monetary claims, while the present action is for remittance of unpaid
SS[S] contributions. In other words, although in both suits the respondents invoke lack of employer-employee relationship, the same does not
proceed from identical causes of action as one is for violation of the Labor Code while the instant case is for violation of the SS[S] Law.

Moreover, the respondents arguments raising the absence of employer-employee relationship as a defense already traverse the very issues of the
case at bar, i.e., the petitioners fact of employment and entitlement to SS[S] coverage. Generally, factual matters should not weigh in resolving a
motion to dismiss when it is based on the ground of failure to state a cause of action, but rather, merely the sufficiency or insufficienciy of the
allegations in the complaint.

Unfazed, respondents sought recourse before the Court of Appeals by way of a petition for certiorari. The Court of
Appeals reversed the rulings of the SSC and held that there is a common issue between the cases before the SSC
and in the NLRC; and it is whether there existed an employer-employee relationship between Angeles and
respondents. Thus, the case falls squarely under the principle of res judicata, particularly under the rule on
conclusiveness of judgment, as enunciated in Smith Bell and Co. v. Court of Appeals.


SSC maintains that the prior judgment rendered by the NLRC and Court of Appeals, that no employer-employee
relationship existed between the parties, does not have the force of res judicata by prior judgment or as a rule on
the conclusiveness of judgment. It contends that the labor dispute and the SSC claim do not proceed from the same
cause of action in that the action before SSC is for non-remittance of SSS contributions while the NLRC case was for
illegal dismissal. The element of identity of parties is likewise unavailing in this case, according to SSC. Aside from
SSS intervening, another employer, Rizal Poultry, was added as respondent in the case lodged before the SSC.
There is no showing that BSD Agro and Rizal Poultry refer to the same juridical entity. Thus, the finding of absence
of employer-employee relationship between BSD Agro and Angeles could not automatically extend to Rizal Poultry.

The elements of res judicata are: (1) the judgment sought to bar the new action must be final; (2) the decision must
have been rendered by a court having jurisdiction over the subject matter and the parties; (3) the disposition of the
case must be a judgment on the merits; and (4) there must be as between the first and second action, identity of
parties, subject matter, and causes of action. Should identity of parties, subject matter, and causes of action be
shown in the two cases, then res judicata in its aspect as a bar by prior judgment would apply. If as between the
two cases, only identity of parties can be shown, but not identical causes of action, then res judicata as
conclusiveness of judgment applies.

Verily, the principle of res judicata in the mode of conclusiveness of judgment applies in this case. The first element
is present in this case. The NLRC ruling was affirmed by the Court of Appeals. It was a judicial affirmation through a
decision duly promulgated and rendered final and executory when no appeal was undertaken within the
reglementary period. The jurisdiction of the NLRC, which is a quasi-judicial body, was undisputed. Neither can the
jurisdiction of the Court of Appeals over the NLRC decision be the subject of a dispute. The NLRC case was clearly
decided on its merits; likewise on the merits was the affirmance of the NLRC by the Court of Appeals.

With respect to the fourth element of identity of parties, we hold that there is substantial compliance.

The parties in SSC and NLRC cases are not strictly identical. Rizal Poultry was impleaded as additional respondent
in the SSC case. Jurisprudence however does not dictate absolute identity but only substantial identity. There is
substantial identity of parties when there is a community of interest between a party in the first case and a party in
the second case, even if the latter was not impleaded in the first case.

BSD Agro, Rizal Poultry and San Diego were litigating under one and the same entity both before the NLRC and the
SSC. Although Rizal Poultry is not a party in the NLRC case, there are numerous indications that all the while, Rizal
Poultry was also an employer of Angeles together with BSD Agro and San Diego. Angeles admitted before the NLRC
that he was employed by BSD Agro and San Diego from 1985 until 1997. He made a similar claim in his Petition
before the SSC including as employer Rizal Poultry as respondent. Angeles presented as evidence before the SSC his
Identification Card and a Job Order to prove his employment in Rizal Poultry. He clarified in his Opposition to the
Motion to Dismiss filed before SSC that he failed to adduce these as evidence before the NLRC even if it would have
proven his employment with BSD Agro. Most significantly, the three respondents, BSD Agro, Rizal Poultry and San
Diego, litigated as one entity before the SSC. They were represented by one counsel and they submitted their
pleadings as such one entity. Certainly, and at the very least, a community of interest exists among them. We
therefore rule that there is substantial if not actual identity of parties both in the NLRC and SSC cases.

As previously stated, an identity in the cause of action need not obtain in order to apply res judicata by
conclusiveness of judgment. An identity of issues would suffice.
The remittance of SSS contributions is mandated by Section 22(a) of the Social Security Act of 1997, viz:

SEC. 22. 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. x x x.

The mandatory coverage under the Social Security Act is premised on the existence of an employer-employee
relationship. This is evident from Section 9(a) which provides:

SEC. 9. Coverage. - (a) Coverage in the SSS shall be compulsory upon all employees not over sixty (60) years of age
and their employers: Provided, That in the case of domestic helpers, their monthly income shall not be less than
One thousand pesos (P1,000.00) a month x x x.

Section 8(d) of the same law defines an employee as any person who performs services for an employer in which
either or both mental or physical efforts are used and who receives compensation for such services, where there is
an employer-employee relationship. The illegal dismissal case before the NLRC involved an inquiry into the
existence or non-existence of an employer-employee relationship. The very same inquiry is needed in the SSC case.
And there was no indication therein that there is an essential conceptual difference between the definition of
employee under the Labor Code and the Social Security Act.

In the instant case, therefore, res judicata in the concept of conclusiveness of judgment applies. The judgment in the
NLRC case pertaining to a finding of an absence of employer-employee relationship between Angeles and
respondents is conclusive on the SSC case.

Applying the rule on res judicata by conclusiveness of judgment in conjunction with the aforecited cases, the Court
of Appeals aptly ruled, thus:

In SSC Case No. 9-15225-01, private respondent Angeles is seeking to compel herein petitioners to remit to the
Social Security System (SSS) all contributions due for and in his behalf, whereas in NLRC NCR CA 018066-99 (NLRC
RAB-IV-5-9028-97 RI) private respondent prayed for the declaration of his dismissal illegal. In SSC No. 9-15225-01,
private respondent, in seeking to enforce his alleged right to compulsory SSS coverage, alleged that he had been an
employee of petitioners; whereas to support his position in the labor case that he was illegally dismissed by
petitioners BSD Agro and/or Benjamin San Diego, he asserted that there was an employer-employee relationship
existing between him and petitioners at the time of his dismissal in 1997. Simply stated, the issue common to both
cases is whether there existed an employer-employee relationship between private respondent and petitioners at
the time of the acts complaint of were committed both in SSC Case No. 9-15225-01 and NLRC NCR CA 018066-99
(NLRC RAB-IV-5-9028-977-RI).

The issue of employer-employee relationship was laid to rest in CA GR. SP. No. 55383, through this Courts Decision
dated October 27, 2000 which has long attained finality. Our affirmation of the NLRC decision of May 18, 1999 was
an adjudication on the merits of the case.

Considering the foregoing circumstances, the instant case falls squarely under the umbrage of res judicata,
particularly, under the rule on conclusiveness of judgment. Following this rule, as enunciated in Smith Bell and Co.
and Carriaga, Jr. cases, We hold that the relief sought in SSC Case No. 9-15225-01 is inextricably related to Our
ruling in CA GR SP No. 55383 to the effect that private respondent was not an employee of petitioners.

The NLRC decision on the absence of employer-employee relationship being binding in the SSC case, we affirm the
dismissal by Court of Appeals of the SSC case.


Respondent Asiapro, as a cooperative, is composed of owners-members. Under its by-laws, owners-members are
of two categories, to wit: (1) regular member, who is entitled to all the rights and privileges of membership; and
(2) associate member, who has no right to vote and be voted upon and shall be entitled only to such rights and
privileges provided in its by-laws, Its primary objectives are to provide savings and credit facilities and to develop
other livelihood services for its owners-members.In the discharge of the aforesaid primary objectives, respondent
cooperative entered into several Service Contracts with Stanfilco - a division of DOLE Philippines, Inc. and a
company based in Bukidnon.The owners-members do not receive compensation or wages from the respondent
cooperative.Instead, they receive a share in the service surplus which the respondent cooperative earns from
different areas of trade it engages in, such as the income derived from the said Service Contracts with Stanfilco. The
owners-members get their income from the service surplus generated by the quality and amount of services they
rendered, which is determined by the Board of Directors of the respondent cooperative.

In order to enjoy the benefits under the Social Security Law of 1997, the owners-members of the respondent
cooperative, who were assigned to Stanfilco requested the services of the latter to register them with petitioner
SSS as self-employed and to remit their contributions as such. Also, to comply with Section 19-A of Republic Act No.
1161, as amended by Republic Act No. 8282, the SSS contributions of the said owners-members were equal to the
share of both the employer and the employee.

On 26 September 2002, however, petitioner SSS through its Vice-President for Mindanao Division, Atty. Eddie
A. Jara, sent a letter to the respondent cooperative, addressed to its Chief Executive Officer (CEO) and General
Manager Leo G. Parma, informing the latter that based on the Service Contracts it executed with Stanfilco,
respondent cooperative is actually a manpower contractor supplying employees to Stanfilco and for that reason, it
is an employer of its owners-members working with Stanfilco.Thus, respondent cooperative should register itself
with petitioner SSS as an employer and make the corresponding report and remittance of premium contributions
in accordance with the Social Security Law of 1997. On 9 October 2002, respondent cooperative, through its
counsel, sent a reply to petitioner SSSs letter asserting that it is not an employer because its owners-members are
the cooperative itself; hence, it cannot be its own employer. Again, on 21 October 2002 petitioner SSS sent a letter
to respondent cooperative ordering the latter to register as an employer and report its owners-members as
employees for compulsory coverage with the petitioner SSS. Respondent cooperative continuously ignored the
demand of petitioner SSS.

Accordingly, petitioner SSS, on 12 June 2003, filed a Petition before petitioner SSC against the respondent
cooperative and Stanfilco praying that the respondent cooperative or, in the alternative, Stanfilco be directed to
register as an employer and to report respondent cooperatives owners-members as covered employees under the
compulsory coverage of SSS and to remit the necessary contributions in accordance with the Social Security Law of
1997.The same was docketed as SSC Case No. 6-15507-03. Respondent cooperative filed its Answer with Motion to
Dismiss alleging that no employer-employee relationship exists between it and its owners-members, thus,
petitioner SSC has no jurisdiction over the respondent cooperative. Stanfilco, on the other hand, filed an Answer
with Cross-claim against the respondent cooperative.

I - w/n the [petitioner SSC] has jurisdiction over the petition-complaint filed before it by the [petitioner SSS] under
R.A. No. 8282.
II - There is an employer-employee relationship between [respondent cooperative] and its [owners-members].

Petitioner SSCs jurisdiction is clearly stated in Section 5 of Republic Act No. 8282 as well as in Section 1, Rule III of
the 1997 SSS Revised Rules of Procedure.

Section 5 of Republic Act No. 8282 provides:

SEC. 5. Settlement of Disputes. (a) Any dispute arising under this Act with respect to coverage, benefits,
contributions and penalties thereon or any other matter related thereto, shall be cognizable by the
Commission, x x x. (Emphasis supplied.)

Similarly, Section 1, Rule III of the 1997 SSS Revised Rules of Procedure states:

Section 1. Jurisdiction. Any dispute arising under the Social Security Act with respect to coverage, entitlement of
benefits, collection and settlement of contributions and penalties thereon, or any other matter related thereto,
shall be cognizable by the Commission after the SSS through its President, Manager or Officer-in-charge of the
Department/Branch/Representative Office concerned had first taken action thereon in writing. (Emphasis

It is clear then from the aforesaid provisions that any issue regarding the compulsory coverage of the SSS is well
within the exclusive domain of the petitioner SSC. It is important to note, though, that the mandatory coverage
under the SSS Law is premised on the existence of an employer-employee relationship except in cases of
compulsory coverage of the self-employed.

It is axiomatic that the allegations in the complaint, not the defenses set up in the Answer or in the Motion
to Dismiss, determine which court has jurisdiction over an action; otherwise, the question of jurisdiction
would depend almost entirely upon the defendant. Moreover, it is well-settled that once jurisdiction is acquired
by the court, it remains with it until the full termination of the case. The said principle may be applied even to
quasi-judicial bodies.

In this case, the petition-complaint filed by the petitioner SSS before the petitioner SSC against the respondent
cooperative and Stanfilco alleges that the owners-members of the respondent cooperative are subject to the
compulsory coverage of the SSS because they are employees of the respondent cooperative. Consequently, the
respondent cooperative being the employer of its owners-members must register as employer and report its
owners-members as covered members of the SSS and remit the necessary premium contributions in accordance
with the Social Security Law of 1997. Accordingly, based on the aforesaid allegations in the petition-complaint filed
before the petitioner SSC, the case clearly falls within its jurisdiction. Although the Answer with Motion to Dismiss
filed by the respondent cooperative challenged the jurisdiction of the petitioner SSC on the alleged lack of
employer-employee relationship between itself and its owners-members, the same is not enough to deprive the
petitioner SSC of its jurisdiction over the petition-complaint filed before it. Thus, the petitioner SSC cannot be
faulted for initially assuming jurisdiction over the petition-complaint of the petitioner SSS.

Nonetheless, since the existence of an employer-employee relationship between the respondent cooperative and
its owners-members was put in issue and considering that the compulsory coverage of the SSS Law is predicated
on the existence of such relationship, it behooves the petitioner SSC to determine if there is really an employer-
employee relationship that exists between the respondent cooperative and its owners-members.

The question on the existence of an employer-employee relationship is not within the exclusive jurisdiction of the
National Labor Relations Commission (NLRC). Article 217 of the Labor Code enumerating the jurisdiction of the
Labor Arbiters and the NLRC provides that:



6. Except claims for Employees Compensation, Social Security, Medicare and maternity benefits, all other claims,
arising from employer-employee relations, including those of persons in domestic or household service, involving
an amount exceeding five thousand pesos (P5,000.00) regardless of whether accompanied with a claim for
Although the aforesaid provision speaks merely of claims for Social Security, it would necessarily include issues on
the coverage thereof, because claims are undeniably rooted in the coverage by the system. Hence, the question on
the existence of an employer-employee relationship for the purpose of determining the coverage of the Social
Security System is explicitly excluded from the jurisdiction of the NLRC and falls within the jurisdiction of the SSC
which is primarily charged with the duty of settling disputes arising under the Social Security Law of 1997.

On the basis thereof, considering that the petition-complaint of the petitioner SSS involved the issue of compulsory
coverage of the owners-members of the respondent cooperative, this Court agrees with the petitioner SSC when it
declared in its Order dated 17 February 2004 that as an incident to the issue of compulsory coverage, it may
inquire into the presence or absence of an employer-employee relationship without need of waiting for a prior
pronouncement or submitting the issue to the NLRC for prior determination. Since both the petitioner SSC and the
NLRC are independent bodies and their jurisdiction are well-defined by the separate statutes creating them,
petitioner SSC has the authority to inquire into the relationship existing between the worker and the person or
entity to whom he renders service to determine if the employment, indeed, is one that is excepted by the Social
Security Law of 1997 from compulsory coverage.

In determining the existence of an employer-employee relationship, the following elements are considered: (1) the
selection and engagement of the workers; (2) the payment of wages by whatever means; (3) the power of
dismissal; and (4) the power to control the workers conduct, with the latter assuming primacy in the overall
consideration. The most important element is the employers control of the employees conduct, not only as
to the result of the work to be done, but also as to the means and methods to accomplish. The power of
control refers to the existence of the power and not necessarily to the actual exercise thereof. It is not essential for
the employer to actually supervise the performance of duties of the employee; it is enough that the employer has
the right to wield that power. All the aforesaid elements are present in this case.

First. It is expressly provided in the Service Contracts that it is the respondent cooperative which has the exclusive
discretion in the selection and engagement of the owners-members as well as its team leaders who will be
assigned at Stanfilco. Second. Wages are defined as remuneration or earnings, however designated, capable
of being expressed in terms of money, whether fixed or ascertained, on a time, task, piece or commission basis, or
other method of calculating the same, which is payable by an employer to an employee under a written or
unwritten contract of employment for work done or to be done, or for service rendered or to be rendered.
In this case, the weekly stipends or the so-called shares in the service surplus given by the respondent cooperative
to its owners-members were in reality wages, as the same were equivalent to an amount not lower than that
prescribed by existing labor laws, rules and regulations, including the wage order applicable to the area and
industry; or the same shall not be lower than the prevailing rates of wages. It cannot be doubted then that those
stipends or shares in the service surplus are indeed wages, because these are given to the owners-members as
compensation in rendering services to respondent cooperatives client, Stanfilco. Third. It is also stated in the
above-mentioned Service Contracts that it is the respondent cooperative which has the power to investigate,
discipline and remove the owners-members and its team leaders who were rendering services at Stanfilco.
Fourth. As earlier opined, of the four elements of the employer-employee relationship, the control test is the most
important. In the case at bar, it is the respondent cooperative which has the sole control over the manner and
means of performing the services under the Service Contracts with Stanfilco as well as the means and
methods of work. Also, the respondent cooperative is solely and entirely responsible for its owners-members,
team leaders and other representatives at Stanfilco. All these clearly prove that, indeed, there is an employer-
employee relationship between the respondent cooperative and its owners-members.

It is true that the Service Contracts executed between the respondent cooperative and Stanfilco expressly provide
that there shall be no employer-employee relationship between the respondent cooperative and its owners-
members. This Court, however, cannot give the said provision force and effect.

As previously pointed out by this Court, an employee-employer relationship actually exists between the
respondent cooperative and its owners-members. The four elements in the four-fold test for the existence of an
employment relationship have been complied with. The respondent cooperative must not be allowed to deny its
employment relationship with its owners-members by invoking the questionable Service Contracts provision,
when in actuality, it does exist. The existence of an employer-employee relationship cannot be negated by
expressly repudiating it in a contract, when the terms and surrounding circumstances show otherwise. The
employment status of a person is defined and prescribed by law and not by what the parties say it should

In sum, having declared that there is an employer-employee relationship between the respondent cooperative and
its owners-member, we conclude that the petitioner SSC has jurisdiction over the petition-complaint filed before it
by the petitioner SSS. This being our conclusion, it is no longer necessary to discuss the issue of whether the
respondent cooperative was estopped from assailing the jurisdiction of the petitioner SSC when it filed its Answer
with Motion to Dismiss.

4.) Poblete Construction vs Asiain

Miguel Asiain was an employee of the Poblete Construction Company from 1956 until his death on November 22,
1959, with a monthly salary of P300. Upon his death his widow, Judith Asiain, for herself and her minor children,
filed a petition before the Social Security Commission against the company and its manager, Domingo Poblete
(Case No. 78), to recover the following sum: (1) P3,600.00 equivalent to one year's salary of the deceased; (2)
P600.00 representing his unpaid salary for two months; (3) P288.00 "representing the cash received by
respondents from their laborers as contribution to the family of the deceased;" and (4) P2,000.00 by way of
attorney's fees.

The respondents below moved to dismiss the petition on the grounds that the Social Security Commission had no
jurisdiction over the subject-matter and that the petitioner Judith Asiain had no capacity to sue. The Commission
denied the motion to dismiss in its order of February 25, 1960 and ordered the respondents to file their answer.
When no answer was forthcoming, the respondents were declared in default in an order dated March 9, 1960, and
the petitioners were allowed to present their evidence.

In its resolution of September 15, 1960 the Commission declared itself without jurisdiction to entertain the claims
in the petition except the one for the sum of P3,600, which it awarded on the basis of the evidence adduced at the
hearing and pursuant to Section 24 of Republic Act No. 1161, as amended.

It appears that although the deceased Miguel Asiain had been employed in the Poblete Construction Company since
1956 and had accomplished SSS Form E-1 (Employees' Date Record) and transmitted the same to the said
company's Manila Office, it was never filed with the Social Security System for the reason, according to the
company, that he refused to have his share of the corresponding monthly contributions deducted from his salary.
Upon these facts the company maintains that the deceased was not a member of the System when he died and
hence the adjudication of the claim for damages under Section 24, supra, does not pertain to the Commission but to
the courts of justice.

W/n Miguel Asiain was subject to compulsory coverage in the Social Security System.

YES. It was the duty of the employer to "report immediately to the System" his name, age, civil status, occupation,
salary and dependents. Compliance with this duty did not depend upon the employee's willingness to give his
share of the contribution. Section 24 is mandatory, to such an extent that if the employee should die or become sick
or disabled without the report having been made by the employer, the latter is liable for an amount equivalent to
the benefits to which the employee would have been entitled had such report been made. It is true that the
provision uses the word "damages" in referring to the amount that may be claimed. But this fact alone does not
mean that the Social Security Commission lacks jurisdiction to award the same. Section 5(a) of the Social Security
Act provides that "the filing, determination and settlement of claims shall be governed by the rules and regulations
promulgated by the Commission;" and the rules and regulations thus promulgated state that "the effectivity of
membership in the System, as well as the final determination and settlement of claims, shall be vested in the
Commission." The term "claims" is broad enough to include a claim for "damages" under Section 24. Otherwise an
employer could nullify the jurisdiction of the Commission by the simple expedient of not making a report as
required by said Section. The collection of the employee's share is a duty imposed by law, and his unwillingness to
have it deducted from his salary does not excuse the employer's failure to make the report aforesaid. It is precisely
in this situation that the employer is liable, and there is no question as to the amount of such liability in this case.


On 20 August 1985, private respondents Andres Paguio, Pablo Canale, Ruel Pangan, Aurelio Paguio, Rolando
Trinidad, Romeo Tapang and Carlos Maliwat (hereinafter referred to as respondents) filed a Petition with the SSC
for SSS coverage and contributions against petitioner Reynaldo Chua, owner of Prime Mover Construction
Development, claiming that they were all regular employees of the petitioner in his construction business.
Private respondents claimed that they were assigned by petitioner in his various construction projects
continuously in the following capacity.

Private respondents alleged that petitioner dismissed all of them without justifiable grounds and without notice to
them and to the then Ministry of Labor and Employment. They further alleged that petitioner did not report them
to the SSS for compulsory coverage in flagrant violation of the Social Security Act.

Petitioner claimed that private respondents had no cause of action against him, and assuming there was any, the
same was barred by prescription and laches. In addition, he claimed that private respondents were not regular
employees, but project employees whose work had been fixed for a specific project or undertaking the completion
of which was determined at the time of their engagement. This being the case, he concluded that said employees
were not entitled to coverage under the Social Security Act.

Meanwhile, the SSS filed a Petition in Intervention alleging that it has an interest in the petition filed by private
respondents as it is charged with the implementation and enforcement of the provisions of the Social Security Act.
The SSS stated that it is the mandatory obligation of every employer to report its employees to the SSS for coverage
and to remit the required contribution, including the penalty imposed for late premium remittances.

On 01 February 1995, the SSC issued its Order which ruled in favor of private respondents. It ordered petitioner to
pay the SSS the unpaid SS/EC and Medicare contributions plus penalty for the delayed remittance thereof, without
prejudice to any other penalties which may have accrued.

Petitioner elevated the matter to the Court of Appeals via a Petition for Review. He claimed that private
respondents were project employees, whose periods of employment were terminated upon completion of the
project. Thus, he claimed, no employer-employee relation existed between the parties. There being no employer-
employee relationship, private respondents are not entitled to coverage under the Social Security Act.

(1) whether private respondents were regular employees of petitioner;
(2) if so, whether petitioner is now liable to pay the SSS contributions and penalties during the period of

(1) There is no dispute that private respondents were employees of petitioner. Petitioner himself admitted that
they worked in his construction projects, although the period of their employment was allegedly co-terminus with
their phase of work. Even without such admission from petitioner, the existence of an employer-employee
relationship between the parties can easily be determined by the application of the control test, the elements of
which are enumerated above. It is clear that private respondents are employees of petitioner, the latter having
control over the results of the work done, as well as the means and methods by which the same were
accomplished. Suffice it to say that regardless of the nature of their employment, whether it is regular or project,
private respondents are subject of the compulsory coverage under the SSS Law, their employment not falling under
the exceptions provided by the law. This rule is in accord with the Courts ruling in Luzon Stevedoring Corp. v. SSS
the effect that all employees, regardless of tenure, would qualify for compulsory membership in the SSS, except
those classes of employees contemplated in Section 8(j) of the Social Security Act.
This Court also finds no reason to deviate from the finding of the Court of Appeals regarding the nature of
employment of private respondents. Despite the insistence of petitioner that they were project employees, the
facts show that as masons, carpenters and fine graders in petitioners various construction projects, they performed
work which was usually necessary and desirable to petitioners business which involves construction of roads and
bridges. Moreover, while it may be true that private respondents were initially hired for specific projects or
undertakings, the repeated re-hiring and continuing need for their services over a long span of timethe shortest
being two years and the longest being eighthave undeniably made them regular employees.

(2) The Social Security Act 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 laborers throughout the Philippines,
and shall provide protection against the hazards of disability, sickness, old age and death. It provides for
compulsory coverage of all employees not over sixty years of age and their employers.

Well-settled is the rule that the mandatory coverage of Republic Act No. 1161, as amended, is premised on the
existence of an employer-employee relationship, the essential elements of which are: (a) selection and engagement
of the employee; (b) payment of wages; (c) the power of dismissal; and (d) the power of control with regard to the
means and methods by which the work is to be accomplished, with the power of control being the most
determinative factor.

This Court finds no merit in petitioners protestations of good faith. In United Christian Missionary Society v. Social
Security Commission, this Court ruled that good faith or bad faith is irrelevant for purposes of assessment and
collection of the penalty for delayed remittance of premiums, since the law makes no distinction between an
employer who professes good reasons for delaying the remittance of premiums and another who deliberately
disregards the legal duty imposed upon him to make such remittance.


Petitioner Sta. Rita was charged in the RTC with violating Section 2(a) in relation to Sections 22(d) and 28(e) of
Republic Act No. 1161, as amended, otherwise known as the Social Security Law. The Information alleged that
petitioner, "as President/General Manager of B. Sta. Rita Co., Inc. a compulsorily (sic) covered employer under the
Social Security Law, as amended, did then and there willfully and unlawfully fail, neglect and refuse and still fails,
neglects and refuses to remit to the Social Security System contributions for SSS, Medicare and Employees
Compensation for its covered employees."

Petitioner Sta. Rita moved to dismiss said criminal case on the following grounds: 1. That the facts charged do not
constitute an offense; and
2. That the RTC has no jurisdiction over this case.
The RTC sustained petitioner's motion and dismissed the criminal case led against him. It ruled that the
Memorandum of Agreement entered into between the Department of Labor and Employment ("DOLE") and the
Social Security System ("SSS") extending the coverage of Social Security, Medical Care and Employment
Compensation laws to Filipino seafarers on board foreign vessels was null and void as it was entered into by the
Administrator of the SSS without the sanction of the Commission and approval of the President of the Philippines,
in contravention of Section 4(a) of R.A. No. 1161, as amended.

Respondent appellate court granted the petition and ordered the Presiding Judge of the trial court to reinstate the
criminal case against petitioner.
In the Petition for Review, petitioner Sta. Rita contends that the Filipino seafarers recruited by B. Sta. Rita Co. and
deployed on board foreign vessels outside the Philippines are exempt from the coverage of R.A. No. 1161 under
Section 8 (j) (5) thereof:

"Terms Defined
EMPLOYMENT — Any service performed by an employee for his employer, except —
xxx xxx xxx
(5) Service performed on or in connection with an alien vessel by an employee if he is employed when such vessel
is outside the Philippines.

According to petitioner, the Memorandum of Agreement entered into by the DOLE and the SSS is null and void as it
has the effect of amending the aforequoted provision of R.A. No. 1161 by expanding its coverage. This allegedly
cannot be done as only Congress may validly amend legislative enactments.

NATURE AND PURPOSE THEREOF. — Respondent appellate court correctly upheld the validity of the
Memorandum of Agreement entered into between the DOLE and the SSS. Upon the one hand, contrary to the trial
court's nding, the Memorandum of Agreement was approved by the Social Security Commission per the
Commission's Resolution No. 437, dated 14 July 1988. Upon the other hand, the Memorandum of Agreement is not
a rule or regulation enacted by the Commission in the exercise of the latter's quasi-legislative authority under
Section 4(a) of R.A. No. 1161, as amended, which reads as follows: "Sec. 4. Powers and Duties of the Commission. —
For the attainment of its main objectives as set forth in section two hereof, the Commission shall have the following
powers and duties: (a) To adopt, amend and rescind, subject to the approval of the President, such rules and
regulations as may be necessary to carry out the provisions and purposes of this Act. . . ." What the Memorandum
of Agreement did was to record the understanding between the SSS on the one hand and the DOLE on the other
hand that the latter would include among the provisions of the Standard Contract of Employment required in case
of overseas employment, a stipulation providing for coverage of the Filipino seafarer by the SSS. The Memorandum
of Agreement is not an implementing rule or regulation of the Social Security Commission which, under Section
4(a) abovequoted, is subject to the approval of the President. Indeed, as a matter of strict law, the participation of
the SSS in the establishment by the DOLE of a uniform stipulation in the Standard Contract of Employment for
Filipino seafarers was not necessary; the Memorandum of Agreement related simply to the administrative
convenience of the two (2) agencies of government. It is worthy of special note that by extending the bene ts of the
Social Security Act to Filipino seafarers on board foreign vessels, the individual employment agreements entered
into with the stipulation for such coverage contemplated in the DOLE-SSS Memorandum of Agreement, merely give
effect to the constitutional mandate to the State to afford protection to labor whether "local or overseas." (Article
XIII, Section 3, 1987 Constitution) Nulli cation of the SSS stipulation in those individual employment contracts,
through nulli cation of the Memorandum of Agreement, constituted serious reversible error on the part of the trial
court. That petitioner should seek to deprive his countrymen of social security protection after his foreign principal
had agreed to such protection, is cause for dismay and is to be deplored.

SEAFARERS ON BOARD FOREIGN VESSELS. — The Court nds no merit in petitioner's contention that Section
8(j)(5) of R.A. No. 1161, as amended, absolutely exempts Filipino seafarers on board foreign vessels from the
coverage of the SSS statute. Section 8(j)(5) simply de nes the term "employment" and does not in any way relate to
the scope of coverage of the Social Security System. That coverage is, upon the other hand, set out in Section 9 of
R.A. No. 1161 as amended, which de nes the scope of SSS coverage in the following terms: "Sec. 9. Compulsory
Coverage. — (a) Coverage in the SSS shall be compulsory upon all employees not over sixty years of age and their
employers; Provided, . . . (b)Filipinos recruited in the Philippines by foreign-based employers for employment
abroad may be covered by the SSS on a voluntary basis." (As amended by Sec. 2, P.D. No. 177, S-1973 and Sec. 6,
P.D. No. 735-S-1975) It will be seen that the Memorandum of Agreement is in line with paragraph 9(b) of the Social
Security statute quoted above. The Memorandum of Agreement provides, inter alia, that: ". . . NOW THEREFORE,
for and in consideration of the foregoing premises, the parties hereto agree and stipulate that one of the conditions
that will be imposed by the Department of Labor and Employment in the contract for overseas employment is the
registration for coverage of seafarers with the Social Security System, through the manning agenies as the
authorized representatives of the foreign employers in conformity with Section 9, paragraph (b) of the Social
Security Law (R.A. No. 1161, as amended), subject to the following terms and conditions: . . ." Thus, the Standard
Contract of Employment to be entered into between foreign shipowners and Filipino seafarers is the instrument by
which the former express their assent to the inclusion of the latter in the coverage of the Social Security Act. In
other words, the extension of the coverage of the Social Security System to Filipino seafarers arises by virtue of the
assent given in the contract of employment signed by employer and seafarer; that same contract binds petitioner
Sta. Rita or B. Sta. Rita Company, who is solidarily liable with the foreign shipowners/employers. It may be noted
that foreign shipowners and manning agencies had generally expressed their conformity to the inclusion of
Filipino seafarers within the coverage of the Social Security Act even prior to the signing of the DOLE-SSS
Memorandum of Agreement.


In 1955 Clemente Bailon and Alice Diaz married in Barcelona, Sorsogon. 15+ years later, Clemente filed an action to
declare the presumptive death of Alice she being an absentee. The petition was granted in 1970. In 1983, Clemente
married Jarque. The two live together untile Clemente’s death in 1998. Jarque then sought to claim her husband’s
SSS benefits and the same were granted her. On the other hand, a certain Cecilia Baion-Yap who claimed that she is
the daughter of Bailon to a certain Elisa Jayona petitioned before the SSS that they be given the reimbursement for
the funeral spending for it was actually them who shouldered the burial expenses of Clemente. They further claim
that Clemente contracted three marriages; one with Alice, another with Elisa and the other with Jarque. Cecilia also
averred that Alice is alive and kicking and Alice subsequently emerged; Cecilia claimed that Clemente obtained the
declaration of Alice’s presumptive death in bad faith for he was aware of the whereabouts of Alice or if not he could
have easily located her in her parent’s place. She was in Sorsogon all along in her parents’ place. She went there
upon learning that Clemente had been having extra-marital affairs. SSS then ruled that Jarque should reimburse
what had been granted her and to return the same to Cecilia since she shouldered the burial expenses and that the
benefits should go to Alice because her reappearance had terminated Clemente’s marriage with Harque. Further,
SSS ruled that the RTC’s decision in declaring Alice to be presumptively death is erroneous. Teresita appealed the
decision of the SSS before the Social Security Comission and the SSC affirmed SSS. The CA however ruled the

ISSUE: Whether or not the mere appearance of the absent spouse declared presumptively dead automatically
terminates the subsequent marriage.


HELD: There is no previous marriage to restore for it is terminated upon Clemente’s death. Likewise there is no
subsequent marriage to terminate for the same is terminated upon Clemente’s death. SSS is correct in ruling that it
is futile for Alice to pursue the recording of her reappearance before the local civil registrar through an affidavit or
a court action. But it is not correct for the SSS to rule upon the declaration made by the RTC. The SSC or the SSS has
no judicial power to review the decision of the RTC. SSS is indeed empowered to determine as to who should be the
rightful beneficiary of the benefits obtained by a deceased member in case of disputes but such power does not
include the appellate power to review a court decision or declaration. In the case at bar, the RTC ruling is binding
and Jarque’s marriage to Clemente is still valid because no affidavit was filed by Alice to make known her
reappearance legally. Alice reappeared only after Clemente’s death and in this case she can no longer file such an
affidavit; in this case the bad faith [or good faith] of Clemente can no longer be raised – the marriage herein is
considered voidable and must be attacked directly not collaterally – it is however impossible for a direct attack
since there is no longer a marriage to be attacked for the same has been terminated upon Clemente’s death.

That the SSC is empowered to settle any dispute with respect to SSS coverage, benefits and contributions, there is
no doubt. In so exercising such power, however, it cannot review, much less reverse, decisions rendered by courts
of law as it did in the case at bar when it declared that the December 10, 1970 CFI Order was obtained through
fraud and subsequently disregarded the same, making its own findings with respect to the validity of Bailon and
Alice’s marriage on the one hand and the invalidity of Bailon and respondent’s marriage on the other.

In interfering with and passing upon the CFI Order, the SSC virtually acted as an appellate court. The law does not
give the SSC unfettered discretion to trifle with orders of regular courts in the exercise of its authority to determine
the beneficiaries of the SSS.

In the case at bar, as no step was taken to nullify, in accordance with law, Bailon’s and respondent’s marriage prior
to the former’s death in 1998, respondent is rightfully the dependent spouse-beneficiary of Bailon.

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.

Appellant Roman Catholic Archbishop of Manila 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."

W/n the rule of ejusdem generis can be applied in this case.

NO. 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.

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.

Elena Dycaico seeks to reverse the Decision of the Court of Appeals that affirmed the decision of Social Security
Commission denying her claim for survivor’s pension which accrues from the death of her husband, Bonifacio

Bonifacio Dycaico became a member of SSS and designated Elena Dycaico and their eight children as beneficiaries
therein. At that time, Bonifacio and Elena lived together as husband and wife without the benefit of marriage.
Nine years after, Bonifacio was considered retired and began receiving his monthly pension from the SSS. He
continued to receive the monthly pension until he passed away. A few months prior to his death, however,
Bonifacio married the petitioner.

Shortly after Bonifacio’s death, the petitioner filed with the SSS an application for survivor’s pension. Her
application, however, was denied on the ground that they were not living under the benefit of marriage when
Bonifacio became a member of SSS. The basis was Section 12-B(d) of Republic Act (Rep. Act) No. 8282 which reads:
Sec. 12-B. Retirement Benefits. –

(d) Upon the death of the retired member, his primary beneficiaries as of the date of his retirement shall be
entitled to receive the monthly pension. …

An appeal was made to the Court of Appeals but it was, likewise, denied. The same Court ruled that that since the
petitioner was merely the common-law wife of Bonifacio at the time of his retirement, his designation of the
petitioner as one of his beneficiaries is void. The petitioner claims that there is no merit to the decision of Court of
Appeals as the SSS law does is silent denying the beneficiary’s claim for survivor pension.

Whether or not there is a violation to equal protection clause of the Constitution.

The Supreme Court (SC) en banc struck down Section 12-B of the SSS law and declared it unconstitutional (G.R. No.
161357, November 30, 2005). According to the SC, the said provision violates the equal protection and due
process clauses of the Constitution.

A statute, to be valid and reasonable, must satisfy the following requirements: must satisfy the following
requirements: (1) it must rest on substantial distinctions; (2) it must be germane to the purpose of the law; (3) it
must not be limited to existing conditions only; and (4) it must apply equally to all members of the same class.
Classifying dependent spouses and determining their entitlement to survivor’s pension based on whether the
marriage was contracted before or after the retirement of the other spouse bears no relation to the achievement of
the policy objective of the law.

The equal protection clause mandates that those who are similarly situated must be treated alike, and if a law
makes a classification, the same must be germane or relevant to the purpose of the law and there must be
substantial distinction between the groups, among others (Dycaico vs. SSS). The classification between a spouse
married before retirement of the member and one married after retirement bears no relation to achieving the
objective of the law, which is to provide meaningful protection to members and their beneficiaries against the
hazard of disability, sickness, maternity, old age, death and other contingencies resulting in loss of income or
financial burden. Further, there is no substantial distinction between the spouses married before and after
retirement to warrant a different treatment (Dycaico vs. SSS).

The said provision of the law also violates the due process clause. The manifest purpose of the provision is to
prevent instances where a person would marry the SSS member for the purpose of entitlement to the survivor’s
pension. However, the outright blanket disqualification for a person married after the retirement of the SSS
member prevents the person from presenting her side. Thus, the surviving spouse is deprived of the survivor’s
pension, which is a vested right, without observing due process (Dycaico vs. SSS).
With the foregoing reasoning, the SC held that the SSS cannot deny the application of a legal spouse for surviving
pension on the sole ground that the marriage occurred after the retirement of the deceased SSS member.

10.) SSS vs DAVAC

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.

The SSS issued the resolution naming Candelaria Davac as the valid beneficiary. Not satisfied with the resolution,
Lourdes Tuplano brought the appeal.

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.

Yes. SSS resolution affirmed.

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.

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
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."


In 2005, petitioner Fil-Star Maritime Corporation (Fil-Star), the local manning agency of co-petitioner Grandslam
Enterprise Corporation (Grandslam), hired respondent as third officer on board the ocean-going vessel "M/V
Ansac Asia." After his first contract expired, he was re-hired to work as second officer on their vessel for a period of
nine (9) months. On board the vessel, he was tasked to make an inventory of the vessels property for annual
inspection. According to respondent, he worked diligently and oftentimes worked odd hours just to familiarize
himself with his new job. He averred that overtime work and the violent motions of the vessel due to weather
inclemency caused undue strain to his eyes and his physical well-being.

A little over a month from his embarkation, respondent experienced an abrupt blurring of his left eye. After several
delays, He reported it to his captain and was advised to do an eye wash to relieve his pain respondent was able to
receive medical attention in Kawasaki, Japan and was diagnosed with Central Retinal Vein Occlusion (CRVO) and
immediately underwent three rounds of laser surgery.

On March 9, 2006, respondent was declared fit for travel and was subsequently repatriated to the Philippines. On
March 19, 2006, he experienced severe pain in his left eye so he insisted that he be admitted to the hospital.
Respondent underwent another series of laser surgery. His left eye was later declared to be legally blind with poor
possibility of recovery.

The petitioners denied his claim for permanent total disability and only rated his incapacity as Grade 7.
Respondent stressed that, under their Collective Bargaining Agreement (CBA), he should be considered legally
blind meriting entitlement to permanent total disability benefits in the sum of US$105,000.00 for being unable to
perform his job for more than 120 days from his repatriation. Thus respondent filed a complaint against Fil-Star,
Capt. Victorio S. Migallos and Grandslam for disability benefits, damages and attorneys fees.


I. Whether respondent is entitled to claim disability benefits from the petitioners

II. Whether respondent is entitled to be awarded permanent total or permanent partial disability benefits

III. Whether respondents entitlement to permanent total disability benefits should be based on the CBA or his POEA-
SEC which integrated the 2000 Amended Standard Terms and Conditions Governing the Employment of Filipino
Seafarers on Board Ocean-Going Vessels.


(1) There is no quibble that respondent is entitled to disability benefits. In this case, respondent was
diagnosed with CRVO of his left eye which causes painless vision loss which is usually sudden, but it can
also occur gradually over a period of days to weeks. This condition, despite numerous medical procedures
undertaken, eventually led to a total loss of sight of respondents left eye. Loss of one bodily function falls
within the definition of disability which is essentially "loss or impairment of a physical or mental function
resulting from injury or sickness."

Although CRVO is not listed as one of the occupational diseases under Section 32-A of the 2000 Amended Terms of
POEA-SEC, the resulting disability which is loss of sight of one eye, is specifically mentioned in Section 32 thereof.
More importantly, Section 20 (B), paragraph (4) states that "those illnesses not listed in Section 32 of this Contract
are disputably presumed as work-related."

(2) The Court is more inclined to rule that respondent is suffering from a permanent total disability as he
was unable to return to his job that he was trained to do for more than one hundred twenty days already.
To recall, a disability is total and permanent if as a result of the injury or sickness the employee is unable
to perform any gainful occupation for a continuous period exceeding 120 days, except as otherwise
provided for in Rule X of these Rules. A total disability does not require that the employee be absolutely
disabled or totally paralyzed. What is necessary is that the injury must be such that the employee cannot
pursue his usual work and earn therefrom.

Therefore, it is fitting that respondent be entitled to permanent total disability benefits considering that he would
not able to resume his position as a maritime officer and the probability that he would be hired by other maritime
employers would be close to impossible. Indeed, a sight-impaired maritime applicant cannot stand in the same
footing as his healthy co-applicant.

(3) The Court holds that respondent is entitled to claim permanent total disability benefits based on his
POEA-SEC and not based on their CBA as earlier ruled by the L.A. and later affirmed by the CA.

The CBA provisions on disability are not applicable to respondents case because Article 28 thereon specifically
refers to disability sustained after an accident. Respondent failed to show that the blurring of his left eye was
caused by an accident on board the ship. Thus, Article 28 of the CBA cannot be used to compute his disability


Petitioner SSS filed with the Pasay City Prosecutor’s Office a complaint against respondent Martels and the five co-
accused for SENCOR’s non-payment of contributions amounting to P6,936,435.80 for the period January 1991 to
May 1997. The respondents admitted their failure to remit monthly contributions to the SSS and offered a parcel
of land in Tagaytay City covered by TCT No. 26340 registered under Martel’s name. Petitioner accepted the offer
on the condition that they will settle their obligation by way of dacion en pago or through cash settlement within a
reasonable time.

After three years, the respondent offered to the petitioner instead of the Tagaytay City property computer related
services. On December 2001, the petitioner filed with the Pasay City Prosecutor’s Office another complaint against
respondent Martels and the five co-accused for non-remittance of contributions from February 1991 to October
2000 amounting to P21,148,258.30.

The respondents argue that the petitioner could no longer hold them criminally liable under the SSS Law for their
failure to remit their monthly contribution after they accepted the offer to assign the Tagaytay City property. They
also argued that the relationship between SENCOR and the petitioner was converted into an ordinary debtor-
creditor relationship via novation.

W/n an employer which has admitted its failure to remit monthly contributions to SSS and offered in lieu of the
payment of the contributions a property as payment for its liability be cleared from its criminal liability provided
under Section 28 (e) of RA 1161 or the Social Security Law?

NO. Novation, a civil law concept relating to the modification of obligations, takes place when the parties to an
existing contract execute a new contract which either changes the object or principal condition of the original
contract, substitutes the person of the debtor, or subrogates a third person in the rights of the creditor. The effect is
either to modify or extinguish the original contract. In its extinctive form, the new obligation replaces the original,
extinguishing the obligors obligations under the old contract.

The facts of this case negate the application of novation. In the first place, there is, between SENCOR and petitioner,
no original contract that can be replaced by a new contract changing the object or principal condition of the
original contract, substituting the person of the debtor, or subrogating a third person in the rights of the creditor.
The original relationship between SENCOR and petitioner is defined by law RA 1161, as amended which requires
employers like SENCOR to make periodic contributions to petitioner under pain of criminal prosecution. Unless
Congress enacts a law further amending RA 1161 to give employers a chance to settle their overdue contributions
to prevent prosecution, no amount of agreements between petitioner and SENCOR (represented by respondent
Martels) can change the nature of their relationship and the consequence of SENCORs non-payment of

In that case, the accused, who was charged with Qualified Theft, invoked People v. Nery to support his claim that the
complainants acceptance of partial payment of the stolen funds before the filing of the Information with the trial
court converted his liability into a civil obligation thus rendering baseless his prosecution. The Court rejected this
claim and held that unlike in Nery, there was, in that case, no prior contractual relationship or bilateral agreement,
which can be modified or altered by the parties, thus:
Reliance on the aforecited Nery case, in support of the contention that the acceptance by complainant of payment
converted the liability of the accused-appellant into a civil obligation or else that it estopped said complainant from
proceeding with the prosecution of the case, is misplaced and unwarranted.

[I]n the Nery case, which is an action for estafa, there was contractual relationship between the parties that
can be validly novated by the settlement of the obligation of the offender. Whatever was said in that case,
therefore, cannot be invoked in the present case where no contractual relationship or bilateral agreement,
which can be modified or altered by the parties, is involved. There is here merely a taking of the
complainants property by one who never acquired juridical possession thereof, qualified by grave abuse of

Secondly, as Prosecutor Puti correctly noted, the agreement between petitioner and respondent Martels for the
latter to pay SENCORs overdue contributions through the assignment to petitioner of a piece of realty never
materialized. Petitioners acceptance of respondent Martels offer was subject to a suspensive condition that x x x
[private] respondents will x x x settle their obligation either by way of dacion en pago or through cash settlement
within a reasonable time x x x. This condition was not met because three years after respondent Martels offer,
petitioner did not receive any payment. In fact, respondent Jose Martel, at that point, changed the terms of the
supposed settlement by offering computer-related services instead of assigning the Tagaytay City realty. In their
Comment to the petition, respondent Martels explained that they made such alternative offer because the
processing of the papers for the Tagaytay property met with some delay. In short, respondent Martels failed to
make good on their promise in 1998 to settle SENCORs liability through dacion en pago. The circumstances the DOJ
cited as proof of the compromise agreements alleged implementation were nothing but steps preparatory to the
actual payment of SENCORs overdue contributions.

In sum, we hold that any payment respondent Martels would have made to petitioner (and it appears that pending
this petition, respondent Martels partially paid SENCORs liability) only affects their civil, if any, but not their
criminal liability for violation of Section 22(a) and (b) in relation to Section 28(e) of RA 1161, as amended. As
noted in the Resolution dated 28 February 2001 of the Pasay City Prosecutors Office, respondent Martels do not
dispute SENCORs non-remittance of contributions from February 1991 to October 2000. Thus, the existence of
probable cause against respondent Martels, SENCORs directors, is beyond doubt.