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132 SCRA 108 (1984)


- Petitioner is a domestic corporation organized primarily for the purpose of engaging in real estate
business. On December 1, 1952, it started doing business with 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. The logging operation actually started on April 1, 1957 with
four monthly-salaried employees.

As of September 1, 1957, petitioner had 89 employees and laborers in the logging operation.

- 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

On September 6, 1958, petitioner remitted to the System the sum of P203.13 representing the initial
premium on the monthly salaries of the employees in its logging business.

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 compulsory coverage 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 Security System 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. -


WON the contributions required of employers and employees under our Social Security Act of 1954 are
obligatory because the said Act was allegedly enacted by Congress in the exercise of the police power of
the State, not of its taxing power


The said enactment implements the general welfare mandate of the Constitution and

constitutes a legitimate exercise of the police power of the State.

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). - Membership in the SSS is not a result of bilateral,
concensual agreement where the rights and obligations of the parties are defined by and subject to their
will, RA 1161 requires compulsory coverage of employees and employers under the System. It is actually
a legal imposition on said employers and employees, designed to provide social security to the
workingmen. The principle of non-impairment of the obligation of contract as provided in the Bill of
Rights is not 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 the promotion of the general welfare

. The Act is not part of our 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 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.

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 prevails over a prior statute and moreover the
legislative intent must be given effect.