CMS ESTATE, INC.

V SOCIAL SECURITY SYSTEM

CUEVAS; September 28, 1984
NATURE
Appeal by the CMS Estate, Inc.
FACTS
- Petitioner is a domestic corporation organized primarily for the purpose of engaging in real estate
business. On December 1, 1952, it started doing businesswith only six (6) employees.- January 28,
1957: petitioner entered into a contract of management with one Eufracio D. Rojas for the operation and
exploitation of the forest concession. Thelogging operation actually started on April 1, 1957 with four
monthly-salaried employees.
As of September 1, 1957, petitioner had 89 employees and laborersin the logging operation.
- December 26, 1957: petitioner revoked its contract of management with Mr. Rojas.August 1, 1958: petitioner became a member of the Social Security System with respect to its
real estate business.
On September 6, 1958,
petitionerremitted to the System the sum of P203.13 representing the initial premium on the
monthly salaries of the employees in its logging business.
October 9, 1958: petitioner demanded the refund of the said amount.
- On November 10, 1958, petitioner filed a petition with the Social Security Commission praying for the
determination of the effectivity date of the compulsorycoverage of petitioner's logging business.
- January 14, 1960: the instant petition was denied and petitioner was adjudged to be subject to
compulsory coverage as Sept. 1, 1957 and the Social SecuritySystem was directed to effect such
coverage of petitioner's employees in its logging and real estate business conformably to the
provisions of Rep. Act No. 1161,as amended.Petitioners Claim
CMS Estate, Inc. is not yet subject to compulsory coverage with respect to its logging business because
it does not have the minimum required number ofemployees (per company).Respondents Comments
The logging business was a mere expansion of petitioner's activities and for purposes of the Social
Security Act, petitioner should be considered a member of theSystem since December 1, 1952 when it
commenced its real estate business.
ISSUES
1. WON the contributions required of employers and employees under our Social Security Act of 1954
are obligatory because the said Act was allegedly enactedby Congress in the exercise of the police
power of the State, not of its taxing power
2. WON a contractee-independent contractor relationship existed between petitioner and Eufracio Rojas.
during the time that he was operating its forestconcession at Baganga, Davao
3. WON Section 9 of the Social Security Act on the question of compulsory membership and employers
should be given a liberal interpretation
HELD
1.
Ratio
The said enactment implements the general welfare mandate of the Constitution and
constitutes a legitimate exercise of the police power of theState.
Reasoning
- The Social Security Law was enacted pursuant to the policy of the government "

to develop, establish gradually and perfect a social security system whichshall be suitable to the
needs of the people throughout the Philippines, and shall provide protection against the hazards
of disability, sickness, oldage and death
" (Sec. 2, RA 1161, as amended).- Membership in the SSS is
not a result of bilateral, concensual agreement where the rights and obligations of the parties are
defined by and subject totheir will
, RA 1161 requires compulsory coverage of employees and employers under the System. It is actually a
legal imposition on said employers andemployees, designed to provide social security to the
workingmen. The principle of non-impairment of the obligation of contract as provided in the Bill of
Rights isnot a proper defense, the enactment being a lawful exercise of the police power of the State.The taxing power of the State is exercised for the purpose of raising revenues. However, under our
Social Security Law, the
emphasis is more on thepromotion of the general welfare
. The Act is not part of out Internal Revenue Code nor are the contributions and premiums therein dealt
with and provided for,collectible by the Bureau of Internal Revenue. The funds contributed to the System
belong to the members who will receive benefits, as a matter of right,whenever the hazards provided by
the law occur.- Together with the contributions imposed upon employees and the Government, they are
intended for the protection of said employees against the hazards ofdisability, 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 thepeople.
- It is the intention of the law to cover as many persons as possible so as to promote the constitutional
objective of social justice. It is clear that a later law prevailsover a prior statute and moreover the
legislative intent must be given effect.2.
Ratio
Rojas was not an independent contractor but merely an employee of the petitioner.
Reasoning
- Rojas was appointed as operations manager of the logging concession; he has no power to appoint or
hire employees; as the term implies, he only managesthe employees and it is petitioner who furnishes
him the necessary equipment for use in the logging business; and he is not free from the control
and direction ofhis employer in matter connected with the performance of his work. Rojas should be
entitled to the compulsory coverage of the Act.3.
Ratio
Because of the broad social purpose of the Social Security Act, all doubts in construing the Act should
favor coverage rather than exemption.
Reasoning
Prior to its amendment, Sec. 9 of the Act provides that before an employer could be compelled to
become a member of the System, he must have been inoperation for at least two years and has at the
time of admission at least six employees.
It should be pointed out that it is the employer, either natural, or judicial person, who is subject
to compulsory coverage and not the business.
- It is the intention of the law to cover as many persons as possible so as to promote the constitutional
objective of social justice. It is axiomatic that a later lawprevails over a prior statute and moreover the
legislative in tent must be given effect

ROMAN
Petitioner:
1. Appellant further argues that the Social Security Law is a labor law and, consequently, following the
rule laid down in the case of Boy Scouts of the Philippines vs. Araos (G.R. No. L-10091, January 29,
1958) and other cases1, applies only to industry and occupation for purposes of profit and gain. The
cases cited, however, are not in point, for the reason that the law therein involved expressly limits its
application either to commercial, industrial, or agricultural establishments, or enterprises.
2. 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.

Respondent:
1. Ejusdem generis applies only if there is uncertainty:
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. It is apparent that the
coverage of the Social Security Law is predicated on the existence of an employer-employee
relationship of more or less permanent nature and extends to employment of all kinds except those
expressly excluded. The definition of the term "employer" is, thus, sufficiently comprehensive as to
include religious and charitable institutions or entities not organized for profit within its meaning. 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.
2. Social Security Law was enacted pursuant to the "policy of the Republic of the Philippines to develop,
establish gradually and perfect a social security system which shall be suitable to the needs of the
people throughout the Philippines and shall provide protection to employees against the hazards of
disability, sickness, old age and death." (See. 2, Republic Act No. 1161, as amended.)
Facts:
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.

Issue:
Whether or not the 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.

Judgment:
Resolutions Nos. 572 kind 767, series of 1958, of the Social Security Commission are hereby affirmed.
So ordered with costs against appellant.
Latin Maxims:
ejusdem generis (eh-youse-dem generous) adj. Latin for "of the same kind," used to interpret loosely
written statutes.
ROMAN CATHOLIC ARCHBISHOP OF MANILA vs. SOCIAL SECURITY COMMISSIONFacts:

Roman Catholic Archbishop of Manila, thru counsel, filed a request with the respondent Social
SecurityCommission a request that they be exempted from coverage of RA No. 1161, otherwise known
as theSocial Security Law of 1954 because said act is a labor law and does not cover religious and
charitableinstitutions.

Appellant contends that the term "employer" as defined in the law should

following the principle of

ejusdem generis

be limited to those who carry on "undertakings or activities which have the element of profit or gain, or
which are pursued for profit or gain," because the phrase ,activity of any kind" in thedefinition is
preceded by the words "any trade, business, industry, undertaking."

Respondent
denied
the request and the petitioners moti
on for reconsideration.
Act provides
in the System shall be
compulsory upon
all
members between the age of sixteen and sixty years inclusive, if they have been for at least six months
at 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 thefirst year of the
System's operation at least fifty employees, and if admitted for membership the following year of
operation and t
hereafter, at least six employees
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
hisorders as regards the employment, except the Government and any of its political subdivisions,
branches or instrumentalities, including corporations owned or controlled by the Government" (par. [c],
see. 8)employee


any person who performs services for an 'employer' in which either or both mental and physicalefforts
are used and who receives compensation for such services" (par. [d], see. 8).Employment

covers any service performed by an employer except those expressly enumerated thereunder,like
employment under the Government, or any of its political subdivisions, branches or
instrumentalitiesincluding corporations owned and controlled by the Government, domestic service in a
private home,employment purely casual, etc. (paragraph [i] of said section 8)
Issue:
Whether or not the term employer following the principle of ejusdem generis be limited to those who
carry onactivities for gain.
Held:
No
Ratio:

ejusdem generis applies only where there is

uncertainty
. It is not controlling where the plain purpose andintent of the Legislature would thereby be hindered and
defeated.
Contributions 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
insurethe well-being and economic security of all the people.

The law explicitly states those which are not covered by the contribution and the petitioner is not
amongthose cited.

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
excludedfrom coverage thereof (sec. 8, par. [j] subpars. 7 and 8). That portion of the law, however, has
been
deletedby express provision
of Republic Act No. 1792, which took effect in 1957. This is clear indication that theLegislature intended
to include charitable and religious institutions within the scope of the law.