G.R. No. 47800. December 2, 1940.

MAXIMO CALALANG, Petitioner, v. A. D. WILLIAMS, ET AL., Respondents.

Maximo Calalang in his own behalf.

Solicitor General Ozaeta and Assistant Solicitor General Amparo for respondents Williams, Fragante and
Bayan

City Fiscal Mabanag for the other respondents.

SYLLABUS

1. CONSTITUTIONAL LAW; CONSTITUTIONALITY OF COMMONWEALTH ACT No. 648; DELEGATION OF

LEGISLATIVE POWER; AUTHORITY OF DIRECTOR OF PUBLIC WORKS AND SECRETARY OF PUBLIC WORKS
AND COMMUNICATIONS TO PROMULGATE RULES AND REGULATIONS. — The provisions of section 1 of
Commonwealth Act No. 648 do not confer legislative power upon the Director of Public Works and the
Secretary of Public Works and Communications. The authority therein conferred upon them and under
which they promulgated the rules and regulations now complained of is not to determine what public
policy demands but merely to carry out the legislative policy laid down by the National Assembly in said
Act, to wit, "to promote safe transit upon, and avoid obstructions on, roads and streets designated as
national roads by acts of the National Assembly or by executive orders of the President of the Philippines"
and to close them temporarily to any or all classes of traffic "whenever the condition of the road or the
traffic thereon makes such action necessary or advisable in the public convenience and interest." The
delegated power, if at all, therefore, is not the determination of what the law shall be, but merely the
ascertainment of the facts and circumstances upon which the application of said law is to be predicated.
To promulgate rules and regulations on the use of national roads and to determine when and how long a
national road should be closed to traffic, in view of the condition of the road or the traffic thereon and
the requirements of public convenience and interest, is an administrative function which cannot be
directly discharged by the National Assembly. It must depend on the discretion of some other government
official to whom is confided the duty of determining whether the proper occasion exists for executing the
law. But it cannot be said that the exercise of such discretion is the making of the law.

2. ID.; ID.; POLICE POWER; PERSONAL LIBERTY; GOVERNMENTAL AUTHORITY. — Commonwealth Act No.
548 was passed by the National Assembly in the exercise of the paramount police power of the state. Said
Act, by virtue of which the rules and regulations complained of were promulgated, aims to promote safe
transit upon and avoid obstructions on national roads, in the interest and convenience of the public. In
enacting said law, therefore, the National Assembly was prompted by considerations of public
convenience and welfare. It was inspired by a desire to relieve congestion of traffic, which is, to say the
least, a menace to public safety. Public welfare, then, lies at the bottom of the enactment of said law, and
the state in order to promote the general welfare may interfere with personal liberty, with property, and
with business and occupations. Persons and property may be subjected to all kinds of restraints and
burdens, in order to secure the general comfort, health, and prosperity of the state (U.S. v. Gomer Jesus,
31 Phil., 218). To this fundamental aim of our Government the rights of the individual are subordinated.
Liberty is a blessing without which life is a misery, but liberty should not be made to prevail over authority
because then society will fall into anarchy. Neither should authority be made to prevail over liberty
because then the individual will fall into slavery. The citizen should achieve the required balance of liberty
and authority in his mind through education and, personal discipline, so that there may be established
the resultant equilibrium, which means peace and order and happiness for all. The moment greater
authority is conferred upon the government, logically so much is withdrawn from the residuum of liberty
which resides in the people. The paradox lies in the fact that the apparent curtailment of liberty is precisely
the very means of insuring its preservation.

3. ID.; ID.; SOCIAL JUSTICE. — Social justice is "neither communism, nor despotism, nor atomism, nor
anarchy," but the humanization of laws and the equalization of social and economic forces by the State
so that justice in its rational and objectively secular conception may at least be approximated. Social
justice means the promotion of the welfare of all the people, the adoption by the Government of
measures calculated to insure economic stability of all the competent elements of society, through the
maintenance of a proper economic and social equilibrium in the interrelations of the members of the
community, constitutionally, through the adoption of measures legally justifiable, or extra-
constitutionally, through the exercise of powers underlying the existence of all governments on the time-
honored principle of salus populi est suprema lex. Social justice, therefore, must be founded on the
recognition of the necessity of interdependence among divers and diverse units of a society and of the
protection that should be equally and evenly extended to all groups as a combined force in our social and
economic life, consistent with the fundamental and paramount objective of the state of promoting the
health, comfort, and quiet of all persons, and of bringing about "the greatest good to the greatest
number."

DECISION

LAUREL, J.:

Maximo Calalang, in his capacity as a private citizen and as a taxpayer of Manila, brought before this court
this petition for a writ of prohibition against the respondents, A. D. Williams, as Chairman of the National
Traffic Commission; Vicente Fragante, as Director of Public Works; Sergio Bayan, as Acting Secretary of
Public Works and Communications; Eulogio Rodriguez, as Mayor of the City of Manila; and Juan
Dominguez, as Acting Chief of Police of Manila.

It is alleged in the petition that the National Traffic Commission, in its resolution of July 17, 1940, resolved
to recommend to the Director of Public Works and to the Secretary of Public Works and Communications
that animal-drawn vehicles be prohibited from passing along Rosario Street extending from Plaza
Calderon de la Barca to Dasmariñas Street, from 7:30 a.m. to 12:30 p.m. and from 1:30 p.m. to 5:30 p.m.;
and along Rizal Avenue extending from the railroad crossing at Antipolo Street to Echague Street, from 7
a.m. to 11 p.m., from a period of one year from the date of the opening of the Colgante Bridge to traffic;
that the Chairman of the National Traffic Commission, on July 18, 1940 recommended to the Director of
Public Works the adoption of the measure proposed in the resolution aforementioned, in pursuance of
the provisions of Commonwealth Act No. 548 which authorizes said Director of Public Works, with the
approval of the Secretary of Public Works and Communications, to promulgate rules and regulations to
regulate and control the use of and traffic on national roads; that on August 2, 1940, the Director of Public
Works, in his first indorsement to the Secretary of Public Works and Communications, recommended to
the latter the approval of the recommendation made by the Chairman of the National Traffic Commission
as aforesaid, with the modification that the closing of Rizal Avenue to traffic to animal-drawn vehicles be
limited to the portion thereof extending from the railroad crossing at Antipolo Street to Azcarraga Street;
that on August 10, 1940, the Secretary of Public Works and Communications, in his second indorsement
addressed to the Director of Public Works, approved the recommendation of the latter that Rosario Street
and Rizal Avenue be closed to traffic of animal-drawn vehicles, between the points and during the hours
as above indicated, for a period of one year from the date of the opening of the Colgante Bridge to traffic;
that the Mayor of Manila and the Acting Chief of Police of Manila have enforced and caused to be enforced
the rules and regulations thus adopted; that as a consequence of such enforcement, all animal-drawn
vehicles are not allowed to pass and pick up passengers in the places above-mentioned to the detriment
not only of their owners but of the riding public as well.

It is contended by the petitioner that Commonwealth Act No. 548 by which the Director of Public Works,
with the approval of the Secretary of Public Works and Communications, is authorized to promulgate rules
and regulations for the regulation and control of the use of and traffic on national roads and streets is
unconstitutional because it constitutes an undue delegation of legislative power. This contention is
untenable. As was observed by this court in Rubi v. Provincial Board of Mindoro (39 Phil, 660, 700), "The
rule has nowhere been better stated than in the early Ohio case decided by Judge Ranney, and since
followed in a multitude of cases, namely: ’The true distinction therefore is between the delegation of
power to make the law, which necessarily involves a discretion as to what it shall be, and conferring an
authority or discretion as to its execution, to be exercised under and in pursuance of the law. The first
cannot be done; to the latter no valid objection can be made.’ (Cincinnati, W. & Z. R. Co. v. Comm’rs.
Clinton County, 1 Ohio St., 88.) Discretion, as held by Chief Justice Marshall in Wayman v. Southard (10
Wheat., 1) may be committed by the Legislature to an executive department or official. The Legislature
may make decisions of executive departments or subordinate officials thereof, to whom it has committed
the execution of certain acts, final on questions of fact. (U.S. v. Kinkead, 248 Fed., 141.) The growing
tendency in the decisions is to give prominence to the ’necessity’ of the case."cralaw virtua1aw library

Section 1 of Commonwealth Act No. 548 reads as follows:jgc:chanrobles.com.ph

"SECTION 1. To promote safe transit upon, and avoid obstructions on, roads and streets designated as
national roads by acts of the National Assembly or by executive orders of the President of the Philippines,
the Director of Public Works, with the approval of the Secretary of Public Works and Communications,
shall promulgate the necessary rules and regulations to regulate and control the use of and traffic on such
roads and streets. Such rules and regulations, with the approval of the President, may contain provisions
controlling or regulating the construction of buildings or other structures within a reasonable distance
from along the national roads. Such roads may be temporarily closed to any or all classes of traffic by the
Director of Public Works and his duly authorized representatives whenever the condition of the road or
the traffic thereon makes such action necessary or advisable in the public convenience and interest, or
for a specified period, with the approval of the Secretary of Public Works and Communications."cralaw
virtua1aw library

The above provisions of law do not confer legislative power upon the Director of Public Works and the
Secretary of Public Works and Communications. The authority therein conferred upon them and under
which they promulgated the rules and regulations now complained of is not to determine what public
policy demands but merely to carry out the legislative policy laid down by the National Assembly in said
Act, to wit, "to promote safe transit upon and avoid obstructions on, roads and streets designated as
national roads by acts of the National Assembly or by executive orders of the President of the Philippines"
and to close them temporarily to any or all classes of traffic "whenever the condition of the road or the
traffic makes such action necessary or advisable in the public convenience and interest." The delegated
power, if at all, therefore, is not the determination of what the law shall be, but merely the ascertainment
of the facts and circumstances upon which the application of said law is to be predicated. To promulgate
rules and regulations on the use of national roads and to determine when and how long a national road
should be closed to traffic, in view of the condition of the road or the traffic thereon and the requirements
of public convenience and interest, is an administrative function which cannot be directly discharged by
the National Assembly. It must depend on the discretion of some other government official to whom is
confided the duty of determining whether the proper occasion exists for executing the law. But it cannot
be said that the exercise of such discretion is the making of the law. As was said in Locke’s Appeal (72 Pa.
491): "To assert that a law is less than a law, because it is made to depend on a future event or act, is to
rob the Legislature of the power to act wisely for the public welfare whenever a law is passed relating to
a state of affairs not yet developed, or to things future and impossible to fully know." The proper
distinction the court said was this: "The Legislature cannot delegate its power to make the law; but it can
make a law to delegate a power to determine some fact or state of things upon which the law makes, or
intends to make, its own action depend. To deny this would be to stop the wheels of government. There
are many things upon which wise and useful legislation must depend which cannot be known to the law-
making power, and, must, therefore, be a subject of inquiry and determination outside of the halls of
legislation." (Field v. Clark, 143 U. S. 649, 694; 36 L. Ed. 294.)

In the case of People v. Rosenthal and Osmeña, G.R. Nos. 46076 and 46077, promulgated June 12, 1939,
and in Pangasinan Transportation v. The Public Service Commission, G.R. No. 47065, promulgated June
26, 1940, this Court had occasion to observe that the principle of separation of powers has been made to
adapt itself to the complexities of modern governments, giving rise to the adoption, within certain limits,
of the principle of "subordinate legislation," not only in the United States and England but in practically
all modern governments. Accordingly, with the growing complexity of modern life, the multiplication of
the subjects of governmental regulations, and the increased difficulty of administering the laws, the
rigidity of the theory of separation of governmental powers has, to a large extent, been relaxed by
permitting the delegation of greater powers by the legislative and vesting a larger amount of discretion in
administrative and executive officials, not only in the execution of the laws, but also in the promulgation
of certain rules and regulations calculated to promote public interest.

The petitioner further contends that the rules and regulations promulgated by the respondents pursuant
to the provisions of Commonwealth Act No. 548 constitute an unlawful interference with legitimate
business or trade and abridge the right to personal liberty and freedom of locomotion. Commonwealth
Act No. 548 was passed by the National Assembly in the exercise of the paramount police power of the
state.

Said Act, by virtue of which the rules and regulations complained of were promulgated, aims to promote
safe transit upon and avoid obstructions on national roads, in the interest and convenience of the public.
In enacting said law, therefore, the National Assembly was prompted by considerations of public
convenience and welfare. It was inspired by a desire to relieve congestion of traffic. which is, to say the
least, a menace to public safety. Public welfare, then, lies at the bottom of the enactment of said law, and
the state in order to promote the general welfare may interfere with personal liberty, with property, and
with business and occupations. Persons and property may be subjected to all kinds of restraints and
burdens, in order to secure the general comfort, health, and prosperity of the state (U.S. v. Gomez Jesus,
31 Phil., 218). To this fundamental aim of our Government the rights of the individual are subordinated.
Liberty is a blessing without which life is a misery, but liberty should not be made to prevail over authority
because then society will fall into anarchy. Neither should authority be made to prevail over liberty
because then the individual will fall into slavery. The citizen should achieve the required balance of liberty
and authority in his mind through education and personal discipline, so that there may be established the
resultant equilibrium, which means peace and order and happiness for all. The moment greater authority
is conferred upon the government, logically so much is withdrawn from the residuum of liberty which
resides in the people. The paradox lies in the fact that the apparent curtailment of liberty is precisely the
very means of insuring its preservation.

The scope of police power keeps expanding as civilization advances. As was said in the case of Dobbins v.
Los Angeles (195 U.S. 223, 238; 49 L. ed. 169), "the right to exercise the police power is a continuing one,
and a business lawful today may in the future, because of the changed situation, the growth of population
or other causes, become a menace to the public health and welfare, and be required to yield to the public
good." And in People v. Pomar (46 Phil., 440), it was observed that "advancing civilization is bringing within
the police power of the state today things which were not thought of as being within such power
yesterday. The development of civilization, the rapidly increasing population, the growth of public
opinion, with an increasing desire on the part of the masses and of the government to look after and care
for the interests of the individuals of the state, have brought within the police power many questions for
regulation which formerly were not so considered."cralaw virtua1aw library

The petitioner finally avers that the rules and regulations complained of infringe upon the constitutional
precept regarding the promotion of social justice to insure the well-being and economic security of all the
people. The promotion of social justice, however, is to be achieved not through a mistaken sympathy
towards any given group. Social justice is "neither communism, nor despotism, nor atomism, nor
anarchy," but the humanization of laws and the equalization of social and economic forces by the State
so that justice in its rational and objectively secular conception may at least be approximated. Social
justice means the promotion of the welfare of all the people, the adoption by the Government of
measures calculated to insure economic stability of all the competent elements of society, through the
maintenance of a proper economic and social equilibrium in the interrelations of the members of the
community, constitutionally, through the adoption of measures legally justifiable, or extra-
constitutionally, through the exercise of powers underlying the existence of all governments on the time-
honored principle of salus populi est suprema lex.

Social justice, therefore, must be founded on the recognition of the necessity of interdependence among
divers and diverse units of a society and of the protection that should be equally and evenly extended to
all groups as a combined force in our social and economic life, consistent with the fundamental and
paramount objective of the state of promoting the health, comfort, and quiet of all persons, and of
bringing about "the greatest good to the greatest number."cralaw virtua1aw library

In view of the foregoing, the writ of prohibition prayed for is hereby denied, with costs against the
petitioner. So ordered.

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

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

Feria, Manglapus and Associates for petitioner-appellant.

Legal Staff, Social Security System and Solicitor General for respondent-appellee.
GUTIERREZ DAVID, J.:

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

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

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

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

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

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

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

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

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

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

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

G.R. No. L-21223 August 31, 1966

PHILIPPINE BLOOMING MILLS CO., INC. (As Employer) and FRANCISCO TONG (As Assistant General
Manager) and Attorney-in-Fact of SUSUMO SONODA, SENJI TANAKA, TAKASHIKO KUMAMOTO,
HITOSHI NAKAMURA, TETSUO KODU, (Employees), petitioners and appellants,
vs.
SOCIAL SECURITY SYSTEM, respondent and appellee.

Demetrio B. Salem for petitioners and appellants.

Office of the Solicitor General Edilberto Barot and Solicitor Camilo D. Quiason for respondent and
appellee.

BARRERA, J.:

The facts of this case are not disputed:

The Philippine Blooming Mills Co., Inc., a domestic corporation since the start of its operations in 1957,
has been employing Japanese technicians under a pre-arranged contract of employment, the minimum
period of which employment is 6 months and the maximum is 24 months.

From April 28, 1957, to October 26, 1958, the corporation had in its employ 6 Japanese technicians. In
connection with the employment of these aliens, it sent an inquiry to the Social Security System (SSS)
whether these employees are subject to compulsory coverage under the System, which inquiry was
answered by the First Deputy Administrator of the SSS, under date of August 29, 1957, as follows:

SIR:

With reference to your letter of August 24, 1957, hereunder are our answers to your queries:

Aliens employed in the Philippines:

Aliens who are employed in the Philippines shall also be compulsorily covered. But aliens who are
employed temporarily shall, upon their departure from the Philippines, be entitled to a rebate of a
proportionate amount of their contributions; their employers shall be entitled to the same proportionate
rebate of their contributions in behalf of said aliens employed by them. (Rule I, Sec. 3[d], Rules and
Regulations.)
Starting September, 1957, and until the aforementioned Japanese employees left the Philippines on
October 26, 1958, the corresponding premium contributions of the employer and the employees on the
latter's memberships in the SSS were as follows:

Name SS Number Monthly Salary Amount of Premiums

Contributed
2.5%
(Employee) 3.5%
(Employer) Total
Susumu Sonoda 03-075177 P520.00 P175.00 P245.00 P420.00
Senji Tanaka 03-075178 520.00 175.00 245.00 420.00
Kahei Tanaka 03-075179 500.00 175.00 245.00 420.00
Takashiko Kumamoto 03-075180 500.00 175.00 245.00 420.00
Hitoshi Nakamura 03-075181 500.00 175.00 245.00 420.00
Tetsuo Kudo 03-075182 500.00 175.00 245.00 420.00
Total—
P1,050.00
P1,470.00
P2,520.00
On October 7, 1958, the Assistant General Manager of the corporation, on its behalf and as attorney-in-
fact of the Japanese technicians, filed a claim with the SSS for the refund of the premiums paid to the
System, on the ground of termination of the members' employment. As this claim was denied, they filed
a petition with the Social Security Commission for the return or refund of the premiums, in the total sum
of P2,520.00, paid by the employer corporation and the 6 Japanese employees, plus attorneys' fees. This
claim was controverted by the SSS, alleging that Rule IX of the Rules and Regulations of the System, as
amended, requires membership in the System for at least 2 years before a separated or resigned
employee may be allowed a return of his personal contributions. Under the same rule, the employer is
not also entitled to a refund of the premium contributions it had paid.

After hearing, the Commission denied the petition for the reason that, although under the original
provisions of Section 3 (d) of Rule I of the Rules and Regulations of the SSS, alien-employees (who are
employed temporarily) and their employers are entitled to a rebate of a proportionate amount of their
respective contributions upon the employees' departure from the Philippines, said rule was amended by
eliminating that portion granting a return of the premium contributions. This amendment became
effective on January 14, 1958, or before the employment of the subject aliens terminated. The rights of
covered employees who are separated from employment, under the present Rules, are covered by Rule
IX which allows a return of the premiums only if they have been members for at least 2 years.

It is this resolution of the Commission that is the subject of the present appeal, appellants contending that
the amendment of the Rules and Regulations of the SSS, insofar as it eliminates the provision on the return
of premium contributions, originally embodied in Section 3(d) of Rule I, constituted an impairment of
obligations of contract. It is claimed, in effect, that when appellants-employees became members in
September, 1957, and paid the corresponding premiums to the System, it1 is subject to the condition that
upon their departure from the Philippines, these employees, as well as their employer, are entitled to a
rebate of a proportionate amount of their respective contributions.
The contention cannot be sustained. Appellants' argument is based on the theory that the employees'
membership in the System established contractual relationship between the members and the System, in
the sense contemplated and protected by the constitutional prohibition against its impairment by law.
But, membership in this institution is not the result of a bilateral, consensual agreement where the rights
and obligations of the parties are defined by and subject to their will. Republic Act 1161 requires
compulsory coverage of employers and employees under the System. It is actually a legal imposition, on
said employers and employees, designed to provide social security to the workingmen. Membership in
the SSS is, therefore, in compliance with a lawful exercise of the police power of the State, to which the
principle of non-impairment of the obligation of contract is not a proper defense.

As pointed out by the Solicitor General, the issue that should be determined in this case is whether, in
implementing the SSS law and denying appellants' claim for refund of their premium contributions, due
process was observed.

The Rules and Regulations promulgated by the SSS, pursuant to the rule-making authority granted in
Section 4(a) of Republic Act 1161, was duly approved by the President on July 18, 1957, and published in
the Official Gazette on September 15, 1957.2 These rules and regulations, among others, provide:

DETERMINATION OF COMPULSORY COVERAGE

3. The determination of whether an employer or an employee shall be compulsorily covered shall be

vested in the Commission. The following general principles shall guide the Commission in deciding each
case:

xxx xxx xxx

(d) Aliens who are employed in the Philippines shall also be compulsorily covered. But aliens who ate
employed temporarily and whose visas are only for fixed terms shall, upon their departure from the
Philippines, be entitled to a rebate of a proportionate amount of their contributions; their employers shall
be entitled to the same proportionate rebate of their contributions in behalf of said aliens employed by
them.

XI

AMENDMENTS AND EFFECTIVITY

1. The Commission may, by appropriate resolution, amend, repeal, revise and/or modify all or any part or
parts of these Rules and Regulations, as well as adopt any additional rule or rules, whenever the need
therefor should arise. Any amendment and/or additional rule, however, shall not take effect until and
after the corresponding resolution of the Commission has been submitted to and approved by the
President of the Philippines.

2. These Rules and Regulations, any amendment thereof, or any additional rule or rules subsequently
adopted by the Commission, shall take effect on the date they are approved by the President of the
Philippines.
Rule I Section 3 (d) and Rule IX, however, were later amended, which amendment was approved by the
President on January 14, 1958, to read as follows:

(d) Aliens who are employed in the Philippines shall also be compulsorily covered (Sec. 3, Rule I)

EFFECT OF SEPARATION FROM EMPLOYMENT

When an employee under compulsory coverage is separated from employment, his employer's
contribution on his account shall cease at the end of the month of separation; but such employee may
continue his membership in the System and receive the benefits of the Act, as amended, in accordance
with these rules. If he continues paying the 6 per cent monthly premiums representing his as well as the
employer's contribution, based on his monthly salary at the time of his separation; but if at the time of
his separation the covered employee has been a member of the System for at least two years, he shall
have the option to choose any one of the following adjustments of his membership in the System:

1. A refund of an amount equivalent to his total contributions of two and one-half per centum plus
interests at the rate of three per centum per annum, compounded annually;

xxx xxx x x x (Rule IX)

These amended Rules were published in the November 10, 1958 issue of the Official Gazette.3

It is not here disputed that the Rules and Regulations of the SSS, having been promulgated in
implementation of a law, have the force and effect of a statute;" that the amendment thereto, although
approved by the President on January 14, 1958, was published in the Official Gazette in November, 1958,
or after the employment of the Japanese technicians had ceased and the corresponding claim for the
refund of the premium contributions was filed with the System. The question pertinent to this case now
is whether or not appellants are bound by the amended Rules requiring membership for two years before
refund of the premium contributions may be allowed.1äwphï1.ñët

These rules and regulations were promulgated to provide guidelines to be observed in the enforcement
of the law. As a matter of fact, Section 3 of Rule I is merely an enumeration of the "general principles to
(shall) guide the Commission" in the determination of the extent or scope of the compulsory coverage of
the law. One of these guiding principles is paragraph (d) relied upon by appellants, on the coverage of
temporarily-employed aliens. It is not here pretended, that the amendment of this Section 3(d) of Rule I,
as to eliminate the provision granting to these aliens the right to a refund of part of their premium
contributions upon their departure from the Philippines, is not in implementation of the law or beyond
the authority of the Commission to do.

It may be argued, however, that while the amendment to the Rules may have been lawfully made by the
Commission and duly approved by the President on January 14, 1958, such amendment was only
published in the November 1958 issue of the Official Gazette, and after appellants' employment had
already ceased. Suffice it to say, in this regard, that under Article 2 of the Civil Code,5 the date of
publication of laws in the Official Gazette is material for the purpose of determining their effectivity, only
if the statutes themselves do not so provide.

In the present case, the original Rules and Regulations of the SSS specifically provide that any amendment
thereto subsequently adopted by the Commission, shall take effect on the date of its approval by the
President. Consequently, the delayed publication of the amended rules in the Official Gazette did not
affect the date of their effectivity, which is January 14, 1958, when they were approved by the President.
It follows that when the Japanese technicians were separated from employment in October, 1958, the
rule governing refund of premiums is Rule IX of the amended Rules and Regulations, which requires
membership for 2 years before such refund of premiums may be allowed.

Wherefore, finding no error in the resolution of the Commission appealed from, the same is hereby
affirmed, with costs against the appellants. So ordered.

G.R. No. L-26298 January 20, 1927

THE PEOPLE OF THE PHILIPPINE ISLANDS, plaintiff-appellee,

vs.
JULIAN ERINIA Y VINOLLA, defendant-appellant.

Hermogenes Caluag for appellant.

Attorney-General Jaranilla for appellee.

OSTRAND, J.:

This is an appeal from a judgment of the Court of First Instance of Manila finding the defendant guilty of
the crime of consummated rape and sentencing him to suffer seventeen years, four months and one day
of reclusion temporal, with the accessory penalties provided by law and to pay the costs.

The victim of the crime was a child of 3 years and 11 months old and the evidence is conclusive that the
defendant endeavored to have carnal intercourse with her, but there may be some doubt whether he
succeeded in penetrating the vagina before being disturbed by the timely intervention of the mother and
the sister of the child. The physician who examined the genital organ of the child a few hours after the
commission of the crime found a slight inflammation of the exterior parts of the organ, indicating that an
effort had been made to enter the vagina, but in testifying before the court he expressed doubts as to
whether the entry had been effected. The mother of the child testified that she found its genital organ
covered with a sticky substance, but that cannot be considered conclusive evidence of penetration.

It has been suggested that the child was of such tender age that penetration was impossible; that the
crime of rape consequently was impossible of consummation; and that, therefore, the offense committed
should be treated only as abusos deshonestos. We do not think so. It is probably true that a complete
penetration was impossible, but such penetration is not essential to the commission of the crime; it is
sufficient if there is a penetration of the labia. In the case of Kenny vs. State ([Tex. Crim. App.], 79 S. W.,
817; 65 L. R. A., 316) where the offended party was a child of the age of 3 years and 8 months the
testimony of several physicians was to the effect that her labia of the privates of a child of that age can
be entered by a man's male organ to the hymen and the defendant was found guilty of the consummated
crime rape.

There being no conclusive evidence of penetration of the genital organ of the offended party, the
defendant is entitled to the benefit of the doubt and can only be found guilty of frustrated rape, but in
view of the fact that he was living in the house of the parents of the child as their guest, the aggravating
circumstance of abuse of confidence existed and the penalty must therefore be imposed in its maximum
degree.

The judgment appealed from is modified and the defendant-appellant is hereby found guilty of the crime
of frustrated rape and is sentenced to suffer twelve years of prision mayor, with the accessory penalties
prescribed by law, and with the costs in both instances. So ordered.

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

SOCIAL SECURITY SYSTEM, petitioner-appellee,

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

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

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

BARRERA, J.:

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

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

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

The only question to be determined herein is whether or not the Social Security Commission acted
correctly in declaring respondent Candelaria Davac as the person entitled to receive the death benefits in
question.
Section 13, Republic Act No. 1161, as amended by Republic Act No. 1792, in force at the time Petronilo
Davac's death on April 5, 1959, provides:

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

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

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

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

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

Article 2012 of the New Civil Code provides:

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

And Article 739 of the same Code prescribes:

ART. 739. The following donations shall be void:

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

xxx xxx xxx

Without deciding whether the naming of a beneficiary of the benefits accruing from membership in the
Social Security System is a donation, or that it creates a situation analogous to the relation of an insured
and the beneficiary under a life insurance policy, it is enough, for the purpose of the instant case, to state
that the disqualification mentioned in Article 739 is not applicable to herein appellee Candelaria Davac
because she was not guilty of concubinage, there being no proof that she had knowledge of the previous
marriage of her husband Petronilo.1
Regarding the second point raised by appellant, the benefits accruing from membership in the Social
Security System do not form part of the properties of the conjugal partnership of the covered member.
They are disbursed from a public special fund created by Congress in pursuance to the declared policy of
the Republic "to develop, establish gradually and perfect a social security system which ... shall provide
protection against the hazards of disability, sickness, old age and death."2

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

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

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

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

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

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

G.R. No. L-19124 November 18, 1967

INVESTMENT PLANNING CORPORATION OF THE PHILIPPINES, petitioner-appellant,

vs.
SOCIAL SECURITY SYSTEM, respondent-appellee.

MAKALINTAL, J.:

Petitioner is a domestic corporation engaged in business management and the sale of securities. It has
two classes of agents who sell its investment plans: (1) salaried employees who keep definite hours and
work under the control and supervision of the company; and (2) registered representatives who work on
commission basis.

On August 27, 1960 petitioner, through counsel, applied to respondent Social Security Commission for
exemption of its so-called registered representatives from the compulsory coverage of the Social Security
Act. The application was denied in a letter signed by the Secretary to the Commission on January 16, 1961.
A motion to reconsider was filed and also denied, after hearing, by the Commission itself in its resolution
dated September 8, 1961. The matter was thereafter elevated to this Court for review.

The issue submitted for decision here is whether petitioner's registered representatives are employees
within the meaning of the Social Security Act (R.A. No. 1161 as amended). Section 8 (d) thereof defines
the term "employee" — for purposes of the Act — as "any person who performs services for an 'employer'
in which either or both mental and physical efforts are used and who receives compensation for such
services, where there is, employer-employee relationship." (As amended by Sec.4, R.A. No. 2658). These
representatives are in reality commission agents. The uncontradicted testimony of petitioner's lone
witness, who was its assistant sales director, is that these agents are recruited and trained by him
particularly for the job of selling "'Filipinos Mutual Fund" shares, made to undergo a test after such
training and, if successful, are given license to practice by the Securities and Exchange Commission. They
then execute an agreement with petitioner with respect to the sale of FMF shares to the general public.
Among the features of said agreement which respondent Commission considered pertinent to the issue
are: (a) an agent is paid compensation for services in the form of commission; (b) in the event of death or
resignation he or his legal representative shall be paid the balance of the commission corresponding to
him; (c) he is subject to a set of rules and regulations governing the performance of his duties under the
agreement; (d) he is required to put up a performance bond; and (e) his services may be terminated for
certain causes. At the same time the Commission found from the evidence and so stated in its resolution
that the agents "are not required to report (for work) at any time; they do not have to devote their time
exclusively to or work solely for petitioner; the time and the effort they spend in their work depend
entirely upon their own will and initiative; they are not required to account for their time nor submit a
record of their activities; they shoulder their own selling expenses as well as transportation; and they are
paid their commission based on a certain percentage of their sales." The record also reveals that the
commission earned by an agent on his sales is directly deducted by him from the amount he receives from
the investor and turns over to the company the amount invested after such deduction is made. The
majority of the agents are regularly employed elsewhere — either in the government or in private
enterprises.

Of the three requirements under Section 8 (d) of the Social Security Act it is admitted that the first is
present in respect of the agents whose status is in question. They exert both mental and physical efforts
in the performance of their services. The compensation they receive, however, is not necessarily for those
efforts but rather for the results thereof, that is, for actual sales that they make. This point is relevant in
the determination of whether or not the third requisite is also present, namely, the existence of employer-
employee relationship. Petitioner points out that in effect such compensation is paid not by it but by the
investor, as shown by the basis on which the amount of the commission is fixed and the manner in which
it is collected.

Petitioner submits that its commission agents, engaged under the terms and conditions already
enumerated, are not employees but independent contractors, as defined in Article 1713 of the Civil Code,
which provides:

Art. 1713. By the contract for a piece of work the contractor binds himself to execute a piece of work
for the employer, in consideration of a certain price or compensation. The contractor may either employ
only his labor or skill, or also furnish the material.

We are convinced from the facts that the work of petitioner's agents or registered representatives more
nearly approximates that of an independent contractor than that of an employee. The latter is paid for
the labor he performs, that is, for the acts of which such labor consists; the former is paid for the result
thereof. This Court has recognized the distinction in Chartered Bank, et al. vs. Constantino, 56 Phil. 717,
where it said:

On this point, the distinguished commentator Manresa in referring to Article 1588 of the (Spanish) Civil
Code has the following to say. . . .

The code does not begin by giving a general idea of the subject matter, but by fixing its two distinguishing
characteristics.

But such an idea was not absolutely necessary because the difference between the lease of work by
contract or for a fixed price and the lease of services of hired servants or laborers is sufficiently clear. In
the latter, the direct object of the contract is the lessor's labor; the acts in which such labor consists,
performed for the benefit of the lessee, are taken into account immediately. In work done by contract or
for a fixed price, the lessor's labor is indeed an important, a most important factor; but it is not the direct
object of the contract, nor is it immediately taken into account. The object which the parties consider,
which they bear in mind in order to determine the cause of the contract, and upon which they really give
their consent, is not the labor but its result, the complete and finished work, the aggregate of the lessor's
acts embodied in something material, which is the useful object of the contract. . . . (Manresa
Commentarios al Codigo Civil, Vol. X, ed., pp. 774-775.)
Even if an agent of petitioner should devote all of his time and effort trying to sell its investment plans
would not necessarily be entitled to compensation therefor. His right to compensation depends upon and
is measured by the tangible results he produces.

The specific question of when there is "employer-employee relationship" for purposes of the Social
Security Act has not yet been settled in this jurisdiction by any decision of this Court. But in other
connections wherein the term is used the test that has been generally applied is the so-called control test,
that is, whether the "employer" controls or has reserved the right to control the "employee" not only as
to the result of the work to be done but also as to the means and methods by which the same is to be
accomplished.

Thus in Philippine Manufacturing Company vs. Geronimo, et al., L-6968, November 29, 1954, involving the
Workmen's Compensation Act, we read:

. . . Garcia, a painting contractor, had a contract undertaken to paint a water tank belonging to the
Company "in accordance with specifications and price stipulated," and with "the actual supervision of the
work (being) taken care of by" himself. Clearly, this made Garcia an independent contractor, for while the
company prescribed what should be done, the doing of it and the supervision thereof was left entirely to
him, all of which meant that he was free to do the job according to his own method without being subject
to the control of the company except as to the result.

Cruz, et al. vs. The Manila Hotel Company, L-9110, April 30, 1957, presented the issue of who were to be
considered employees of the defendant firm for purposes of separation gratuity. LVN Pictures, Inc. vs.
Phil. Musicians Guild, et al., L-12582, January 28, 1961, involved the status of certain musicians for
purposes of determining the appropriate bargaining representative of the employees. In both instances
the "control" test was followed. (See also Mansal vs. P.P. Gocheco Lumber Co., L-8017, April 30, 1955; and
Viana vs. Allagadan, et al., L-8967, May 31, 1956.)

In the United States, the Federal Social Security Act of 1935 set forth no definition of the term 'employee'
other than that it 'includes an officer of a corporation.' Under that Act the U.S. Supreme Court adopted
for a time and in several cases the so-called 'economic-reality' test instead of the 'control' test. (U.S. vs.
Silk and Harrison, 91 Law Ed. 1757; Bartels vs. Birmingham, Ibid, 1947, both decided in June 1947). In the
Bartels case the Court said:

In United States v. Silk, No. 312, 331 US 704, ante, 1957, 67 SCt 1463, supra, we held that the relationship
of employer-employee, which determines the liability for employment taxes under the Social Security Act
was not to be determined solely by the idea of control which an alleged employer may or could exercise
over the details of the service rendered to his business by the worker or workers. Obviously control is
characteristically associated with the employer-employee relationship, but in the application of social
legislation employees are those who as a matter of economic reality are dependent upon the business to
which they render service. In Silk, we pointed out that permanency of the relation, the skill required, the
investment in the facilities for work and opportunities for profit or less from the activities were also factors
that should enter into judicial determination as to the coverage of the Social Security Act. It is the total
situation that controls. The standards are as important in the entertainment field as we have just said, in
Silk, that they were in that of distribution and transportation. (91 Law, Ed. 1947, 1953;)

However, the 'economic-reality' test was subsequently abandoned as not reflective of the intention of
Congress in the enactment of the original Security Act of 1935. The change was accomplished by means
of an amendatory Act passed in 1948, which was construed and applied in later cases. In Benson vs. Social
Security Board, 172 F. 2d. 682, the U.S. Supreme Court said:

After the decision by the Supreme Court in the Silk case, the Treasury Department revamped its
Regulation, 12 Fed. Reg. 7966, using the test set out in the Silk case for determining the existence of an
employer-employee relationship. Apparently this was not the concept of such a relationship that Congress
had in mind in the passage of such remedial acts as the one involved here because thereafter on June 14,
1948, Congress enacted Public Law 642, 42 U.S C.A. Sec. 1301 (a) (6). Section 1101(a) (6) of the Social
Security Act was amended to read as follows:

The term "employee" includes an officer of a corporation, but such term does not include (1) any
individual who, under the usual common-law rules applicable in determining the employer-employee
relationship, has the status of an independent contractor or (2) any individual (except an officer of a
corporation) who is not an employee under such common law rules.

While it is not necessary to explore the full effect of this enactment in the determination of the existence
of employer-employee relationships arising in the future, we think it can fairly be said that the intent of
Congress was to say that in determining in a given case whether under the Social Security Act such a
relationship exists, the common-law elements of such a relationship, as recognized and applied by the
courts generally at the time of the passage of the Act, were the standard to be used . . . .

The common-law principles expressly adopted by the United States Congress are summarized in Corpus
Juris Secundum as follows:

Under the common-law principles as to tests of the independent contractor relationship, discussed in
Master and Servant, and applicable in determining coverage under the Social Security Act and related
taxing provisions, the significant factor in determining the relationship of the parties is the presence or
absence of a supervisory power to control the method and detail of performance of the service, and the
degree to which the principal may intervene to exercise such control, the presence of such power of
control being indicative of an employment relationship and the absence of such power being indicative of
the relationship of independent contractor. In other words, the test of existence of the relationship of
independent contractor, which relationship is not taxable under the Social Security Act and related
provisions, is whether the one who is claimed to be an independent contractor has contracted to do the
work according to his own methods and without being subject to the control of the employer except as
to the result of the work. (81 C.J.S. Sec. 5, pp. 24-25); See also Millard's Inc. vs. United States, 46 F. Supp.
385; Schmidt vs. Ewing, 108 F. Supp. 505; Ramblin vs. Ewing, 106 F. Supp. 268.

In the case last cited (Rambin v. Ewing) the question presented was whether the plaintiff there, who was
a sales representative of a cosmetics firm working on a commission basis, was to be considered an
employee. Said the Court:

Plaintiff's only remuneration was her commission of 40%, plus $5 extra for every $250 of sales. Plaintiff
was not guaranteed any minimum compensation and she was not allowed a drawing account or advance
of any kind against unearned commissions. Plaintiff paid all of her traveling expenses and she even had to
pay the postage for sending orders to Avon.
The only office which Avon maintained in Shreveport was an office for the city manager. Plaintiff worked
from her own home and she was never furnished any leads. The relationship between plaintiff and Avon
was terminable at will . . .

xxx xxx xxx

. . . A long line of decisions holds that commission sales representatives are not employees within the
coverage of the Social Security Act. The underlying circumstances of the relationship between the sales
representatives and company often vary widely from case to case, but commission sales representatives
have uniformly been held to be outside the Social Security Act.

Considering the similarity between the definition of "employee" in the Federal Social Security Act (U.S.)
as amended and its definitions in our own Social Security Act, and considering further that the local statute
is admittedly patterned after that of the United States, the decisions of American courts on the matter
before us may well be accorded persuasive force. The logic of the situation indeed dictates that where
the element of control is absent; where a person who works for another does so more or less at his own
pleasure and is not subject to definite hours or conditions of work, and in turn is compensated according
to the result of his efforts and not the amount thereof, we should not find that the relationship of
employer and employee exists.

We have examined the contract form between petitioner and its registered representatives and found
nothing therein which would indicate that the latter are under the control of the former in respect of the
means and methods they employ in the performance of their work. The fact that for certain specified
causes the relationship may be terminated (e.g., failure to meet the annual quota of sales, inability to
make any sales production during a six-month period, conduct detrimental to petitioner, etc.) does not
mean that such control exists, for the causes of termination thus specified have no relation to the means
and methods of work that are ordinarily required of or imposed upon employees.

In view of the foregoing considerations, the resolution of respondent Social Security Commission subject
of this appeal is reversed and set aside, without pronouncement as to costs.

G.R. No. 172101 November 23, 2007

REPUBLIC OF THE PHILIPPINES, represented by the SOCIAL SECURITY COMMISSION and SOCIAL
SECURITY SYSTEM, Petitioners,
vs.
ASIAPRO COOPERATIVE, Respondent.

DECISION

CHICO-NAZARIO, J.:

Before this Court is a Petition for Review on Certiorari under Rule 45 of the 1997 Revised Rules of Civil
Procedure seeking to annul and set aside the Decision1 and Resolution2 of the Court of Appeals in CA-
G.R. SP No. 87236, dated 5 January 2006 and 20 March 2006, respectively, which annulled and set aside
the Orders of the Social Security Commission (SSC) in SSC Case No. 6-15507-03, dated 17 February 20043
and 16 September 2004,4 respectively, thereby dismissing the petition-complaint dated 12 June 2003 filed
by herein petitioner Social Security System (SSS) against herein respondent.

Herein petitioner Republic of the Philippines is represented by the SSC, a quasi-judicial body authorized
by law to resolve disputes arising under Republic Act No. 1161, as amended by Republic Act No. 8282.5
Petitioner SSS is a government corporation created by virtue of Republic Act No. 1161, as amended. On
the other hand, herein respondent Asiapro Cooperative (Asiapro) is a multi-purpose cooperative created
pursuant to Republic Act No. 69386 and duly registered with the Cooperative Development Authority
(CDA) on 23 November 1999 with Registration Certificate No. 0-623-2460.7

The antecedents of this case are as follows:

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.8 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
Contracts9 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 surplus10 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 letter11 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 2002,12 respondent cooperative, through its counsel, sent a reply to petitioner
SSS’s 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 2002,13 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 Petition14 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 cooperative’s 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.

On 17 February 2004, petitioner SSC issued an Order denying the Motion to Dismiss filed by the
respondent cooperative. The respondent cooperative moved for the reconsideration of the said Order,
but it was likewise denied in another Order issued by the SSC dated 16 September 2004.

Intending to appeal the above Orders, respondent cooperative filed a Motion for Extension of Time to File
a Petition for Review before the Court of Appeals. Subsequently, respondent cooperative filed a
Manifestation stating that it was no longer filing a Petition for Review. In its place, respondent cooperative
filed a Petition for Certiorari before the Court of Appeals, docketed as CA-G.R. SP No. 87236, with the
following assignment of errors:

I. The Orders dated 17 February 2004 and 16 September 2004 of [herein petitioner] SSC were issued with
grave abuse of discretion amounting to a (sic) lack or excess of jurisdiction in that:

A. [Petitioner] SSC arbitrarily proceeded with the case as if it has jurisdiction over the petition a quo,
considering that it failed to first resolve the issue of the existence of an employer-employee relationship
between [respondent] cooperative and its owners-members.

B. While indeed, the [petitioner] SSC has jurisdiction over all disputes arising under the SSS Law with
respect to coverage, benefits, contributions, and related matters, it is respectfully submitted that
[petitioner] SSC may only assume jurisdiction in cases where there is no dispute as to the existence of an
employer-employee relationship.

C. Contrary to the holding of the [petitioner] SSC, the legal issue of employer-employee relationship raised
in [respondent’s] Motion to Dismiss can be preliminarily resolved through summary hearings prior to the
hearing on the merits. However, any inquiry beyond a preliminary determination, as what [petitioner SSC]
wants to accomplish, would be to encroach on the jurisdiction of the National Labor Relations Commission
[NLRC], which is the more competent body clothed with power to resolve issues relating to the existence
of an employment relationship.

II. At any rate, the [petitioner] SSC has no jurisdiction to take cognizance of the petition a quo.

A. [Respondent] is not an employer within the contemplation of the Labor Law but is a multi-purpose
cooperative created pursuant to Republic Act No. 6938 and composed of owners-members, not
employees.

B. The rights and obligations of the owners-members of [respondent] cooperative are derived from their
Membership Agreements, the Cooperatives By-Laws, and Republic Act No. 6938, and not from any
contract of employment or from the Labor Laws. Moreover, said owners-members enjoy rights that are
not consistent with being mere employees of a company, such as the right to participate and vote in
decision-making for the cooperative.
C. As found by the Bureau of Internal Revenue [BIR], the owners-members of [respondent] cooperative
are not paid any compensation income.15 (Emphasis supplied.)

On 5 January 2006, the Court of Appeals rendered a Decision granting the petition filed by the respondent
cooperative. The decretal portion of the Decision reads:

WHEREFORE, the petition is GRANTED. The assailed Orders dated [17 February 2004] and [16 September
2004], are ANNULLED and SET ASIDE and a new one is entered DISMISSING the petition-complaint dated
[12 June 2003] of [herein petitioner] Social Security System.16

Aggrieved by the aforesaid Decision, petitioner SSS moved for a reconsideration, but it was denied by the
appellate court in its Resolution dated 20 March 2006.

Hence, this Petition.

In its Memorandum, petitioners raise the issue of whether or not the Court of Appeals erred in not finding
that the SSC has jurisdiction over the subject matter and it has a valid basis in denying respondent’s
Motion to Dismiss. The said issue is supported by the following arguments:

I. The [petitioner SSC] has jurisdiction over the petition-complaint filed before it by the [petitioner SSS]
under R.A. No. 8282.

II. Respondent [cooperative] is estopped from questioning the jurisdiction of petitioner SSC after invoking
its jurisdiction by filing an [A]nswer with [M]otion to [D]ismiss before it.

III. The [petitioner SSC] did not act with grave abuse of discretion in denying respondent [cooperative’s]
[M]otion to [D]ismiss.

IV. The existence of an employer-employee relationship is a question of fact where presentation of

evidence is necessary.

V. There is an employer-employee relationship between [respondent cooperative] and its [owners-

members].

Petitioners claim that SSC has jurisdiction over the petition-complaint filed before it by petitioner SSS as
it involved an issue of whether or not a worker is entitled to compulsory coverage under the SSS Law.
Petitioners avow that Section 5 of Republic Act No. 1161, as amended by Republic Act No. 8282, expressly
confers upon petitioner SSC the power to settle disputes on compulsory coverage, benefits, contributions
and penalties thereon or any other matter related thereto. Likewise, Section 9 of the same law clearly
provides that SSS coverage is compulsory upon all employees. Thus, when petitioner SSS filed a petition-
complaint against the respondent cooperative and Stanfilco before the petitioner SSC for the compulsory
coverage of respondent cooperative’s owners-members as well as for collection of unpaid SSS
contributions, it was very obvious that the subject matter of the aforesaid petition-complaint was within
the expertise and jurisdiction of the SSC.

Petitioners similarly assert that granting arguendo that there is a prior need to determine the existence
of an employer-employee relationship between the respondent cooperative and its owners-members,
said issue does not preclude petitioner SSC from taking cognizance of the aforesaid petition-complaint.
Considering that the principal relief sought in the said petition-complaint has to be resolved by reference
to the Social Security Law and not to the Labor Code or other labor relations statutes, therefore,
jurisdiction over the same solely belongs to petitioner SSC.

Petitioners further claim that the denial of the respondent cooperative’s Motion to Dismiss grounded on
the alleged lack of employer-employee relationship does not constitute grave abuse of discretion on the
part of petitioner SSC because the latter has the authority and power to deny the same. Moreover, the
existence of an employer-employee relationship is a question of fact where presentation of evidence is
necessary. Petitioners also maintain that the respondent cooperative is already estopped from assailing
the jurisdiction of the petitioner SSC because it has already filed its Answer before it, thus, respondent
cooperative has already submitted itself to the jurisdiction of the petitioner SSC.

Finally, petitioners contend that there is an employer-employee relationship between the respondent
cooperative and its owners-members. The respondent cooperative is the employer of its owners-
members considering that it undertook to provide services to Stanfilco, the performance of which is under
the full and sole control of the respondent cooperative.

On the other hand, respondent cooperative alleges that its owners-members own the cooperative, thus,
no employer-employee relationship can arise between them. The persons of the employer and the
employee are merged in the owners-members themselves. Likewise, respondent cooperative’s owners-
members even requested the respondent cooperative to register them with the petitioner SSS as self-
employed individuals. Hence, petitioner SSC has no jurisdiction over the petition-complaint filed before it
by petitioner SSS.

Respondent cooperative further avers that the Court of Appeals correctly ruled that petitioner SSC acted
with grave abuse of discretion when it assumed jurisdiction over the petition-complaint without
determining first if there was an employer-employee relationship between the respondent cooperative
and its owners-members. Respondent cooperative claims that the question of whether an employer-
employee relationship exists between it and its owners-members is a legal and not a factual issue as the
facts are undisputed and need only to be interpreted by the applicable law and jurisprudence.

Lastly, respondent cooperative asserts that it cannot be considered estopped from assailing the
jurisdiction of petitioner SSC simply because it filed an Answer with Motion to Dismiss, especially where
the issue of jurisdiction is raised at the very first instance and where the only relief being sought is the
dismissal of the petition-complaint for lack of jurisdiction.

From the foregoing arguments of the parties, the issues may be summarized into:

I. Whether the petitioner SSC has jurisdiction over the petition-complaint filed before it by petitioner SSS
against the respondent cooperative.

II. Whether the respondent cooperative is estopped from assailing the jurisdiction of petitioner SSC since
it had already filed an Answer with Motion to Dismiss before the said body.

Petitioner SSC’s 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 supplied.)

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
relationship17 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.18 Moreover, it is well-settled that once jurisdiction is
acquired by the court, it remains with it until the full termination of the case.19 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:

ART. 217. JURISDICTION OF LABOR ARBITERS AND THE COMMISSION. - (a) x x x.

xxxx

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 (₱5,000.00) regardless of whether
accompanied with a claim for reinstatement.20

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.21

Even before the petitioner SSC could make a determination of the existence of an employer-employee
relationship, however, the respondent cooperative already elevated the Order of the petitioner SSC,
denying its Motion to Dismiss, to the Court of Appeals by filing a Petition for Certiorari. As a consequence
thereof, the petitioner SSC became a party to the said Petition for Certiorari pursuant to Section 5(b)22
of Republic Act No. 8282. The appellate court ruled in favor of the respondent cooperative by declaring
that the petitioner SSC has no jurisdiction over the petition-complaint filed before it because there was
no employer-employee relationship between the respondent cooperative and its owners-members.
Resultantly, the petitioners SSS and SSC, representing the Republic of the Philippines, filed a Petition for
Review before this Court.

Although as a rule, in the exercise of the Supreme Court’s power of review, the Court is not a trier of facts
and the findings of fact of the Court of Appeals are conclusive and binding on the Court,23 said rule is not
without exceptions. There are several recognized exceptions24 in which factual issues may be resolved
by this Court. One of these exceptions finds application in this present case which is, when the findings of
fact are conflicting. There are, indeed, conflicting findings espoused by the petitioner SSC and the
appellate court relative to the existence of employer-employee relationship between the respondent
cooperative and its owners-members, which necessitates a departure from the oft-repeated rule that
factual issues may not be the subject of appeals to this Court.

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 worker’s conduct, with the latter
assuming primacy in the overall consideration.25 The most important element is the employer’s control
of the employee’s conduct, not only as to the result of the work to be done, but also as to the means and
methods to accomplish.26 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.27 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.28 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."29 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.30 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 cooperative’s 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.31 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.32 Also, the respondent cooperative is solely and
entirely responsible for its owners-members, team leaders and other representatives at Stanfilco.33 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.34 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 be.35

It is settled that the contracting parties may establish such stipulations, clauses, terms and conditions as
they want, and their agreement would have the force of law between them. However, the agreed terms
and conditions must not be contrary to law, morals, customs, public policy or public order.36 The Service
Contract provision in question must be struck down for being contrary to law and public policy since it is
apparently being used by the respondent cooperative merely to circumvent the compulsory coverage of
its employees, who are also its owners-members, by the Social Security Law.

This Court is not unmindful of the pronouncement it made in Cooperative Rural Bank of Davao City, Inc.
v. Ferrer-Calleja37 wherein it held that:

A cooperative, therefore, is by its nature different from an ordinary business concern, being run either by
persons, partnerships, or corporations. Its owners and/or members are the ones who run and operate the
business while the others are its employees x x x.

An employee therefore of such a cooperative who is a member and co-owner thereof cannot invoke the
right to collective bargaining for certainly an owner cannot bargain with himself or his co-owners. In the
opinion of August 14, 1981 of the Solicitor General he correctly opined that employees of cooperatives
who are themselves members of the cooperative have no right to form or join labor organizations for
purposes of collective bargaining for being themselves co-owners of the cooperative.1awp++i1

However, in so far as it involves cooperatives with employees who are not members or co-owners thereof,
certainly such employees are entitled to exercise the rights of all workers to organization, collective
bargaining, negotiations and others as are enshrined in the Constitution and existing laws of the country.

The situation in the aforesaid case is very much different from the present case. The declaration made by
the Court in the aforesaid case was made in the context of whether an employee who is also an owner-
member of a cooperative can exercise the right to bargain collectively with the employer who is the
cooperative wherein he is an owner-member. Obviously, an owner-member cannot bargain collectively
with the cooperative of which he is also the owner because an owner cannot bargain with himself. In the
instant case, there is no issue regarding an owner-member’s right to bargain collectively with the
cooperative. The question involved here is whether an employer-employee relationship can exist between
the cooperative and an owner-member. In fact, a closer look at Cooperative Rural Bank of Davao City, Inc.
will show that it actually recognized that an owner-member of a cooperative can be its own employee.

It bears stressing, too, that a cooperative acquires juridical personality upon its registration with the
Cooperative Development Authority.38 It has its Board of Directors, which directs and supervises its
business; meaning, its Board of Directors is the one in charge in the conduct and management of its
affairs.39 With that, a cooperative can be likened to a corporation with a personality separate and distinct
from its owners-members. Consequently, an owner-member of a cooperative can be an employee of the
latter and an employer-employee relationship can exist between them.

In the present case, it is not disputed that the respondent cooperative had registered itself with the
Cooperative Development Authority, as evidenced by its Certificate of Registration No. 0-623-2460.40 In
its by-laws,41 its Board of Directors directs, controls, and supervises the business and manages the
property of the respondent cooperative. Clearly then, the management of the affairs of the respondent
cooperative is vested in its Board of Directors and not in its owners-members as a whole. Therefore, it is
completely logical that the respondent cooperative, as a juridical person represented by its Board of
Directors, can enter into an employment with its owners-members.

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.

WHEREFORE, premises considered, the instant Petition is hereby GRANTED. The Decision and the
Resolution of the Court of Appeals in CA-G.R. SP No. 87236, dated 5 January 2006 and 20 March 2006,
respectively, are hereby REVERSED and SET ASIDE. The Orders of the petitioner SSC dated 17 February
2004 and 16 September 2004 are hereby REINSTATED. The petitioner SSC is hereby DIRECTED to continue
hearing the petition-complaint filed before it by the petitioner SSS as regards the compulsory coverage of
the respondent cooperative and its owners-members. No costs.

SO ORDERED.

G.R. No. 119891 August 21, 1995

BEN STA. RITA, petitioner,

vs.
THE COURT OF APPEALS, THE PEOPLE OF THE PHILIPPINES and THE SOCIAL SECURITY SYSTEM,
respondents.

RESOLUTION

FELICIANO, J.:

This is a Petition for Review an Certiorari of the Decision of the Court of Appeals ("CA") in CA-G.R. SP. No.
34384 which ordered the Regional Trial Court ("RTC"), Branch 92, Quezon City, to reinstate Criminal Case
No. Q-92-35426 filed against petitioner Ben Sta. Rita.

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."1

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. 2

The RTC sustained petitioner's motion and dismissed the criminal case filed 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.3
The People, through the Solicitor General, filed in the Court of Appeals a petition for certiorari, prohibition
and mandamus assailing the order of dismissal issued by the trial court. Respondent appellate court
granted the petition and ordered the Presiding Judge of the trial court to reinstate the criminal case
against petitioner. A motion for reconsideration thereof was denied by the CA in a Resolution dated 17
April 1995.

Thereafter, petitioner filed in this Court a motion for extension of thirty (30) days from the expiration of
reglementary period within which to file a petition for review on certiorari. The Court granted the motion
and gave petitioner until 9 June 1995 to file the petition with warning that no further extension will be
given. Despite the warning, the petition was filed only on 13 June 1995 or four (4) days after the due date.
Moreover, it failed to comply with requirement no. 2 of Circular No. 1-88, as amended and Circular No.
19-91 of the Court as it did not contain an affidavit of service of copies thereof to respondents. It was only
on 14 July 1995, through an ex-parte manifestation, that the affidavit of service was belatedly submitted
to this Court.

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.

xxx xxx xxx

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.

Petitioner prays that the Court set aside the decision of the Court of Appeals ordering the reinstatement
of Criminal Case No. Q-92-35426 and that the Order of the RTC dismissing the same be upheld.

It is well-settled in our jurisdiction that the right to appeal is a statutory right and a party who seeks to
avail of the right must comply with the rules.4 These rules, particularly the statutory requirement for
perfecting an appeal within the reglementary period laid down by law, must be strictly followed as they
are considered indispensable interdictions against needless delays and for orderly discharge of judicial
business.5 Petitioner's failure to seasonably file the Petition and its failure to comply with the aforequoted
Circulars of the Court necessitate the denial of the Petition.

Besides, even if the Petition had been filed on time and had complied with the Circulars, it would still have
to be denied as petitioner has failed to show that respondent appellate court committed any reversible
error in rendering the assailed decision.
The Court agrees with the CA that the Information filed against petitioner was sufficient as it clearly stated
the designation of the offense by the statute, i.e. violation of the Social Security Law, and the acts or
omissions complained of as constituting the offense, i.e., petitioner's failure to remit his contributions to
the SSS. The CA found that there is prima facie evidence to support the allegations in the Information and
to warrant the prosecution of petitioner.

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 finding, the Memorandum
of Agreement was approved by the Social Security Commission per the Commission's Resolution No. 437,
dated 14 July 1988.6 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.

xxx xxx xxx

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.

Moreover, the Court finds 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 defines 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 defines 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) Fillpinos recruited in the Philippines by foreign 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) (Emphasis supplied)

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:
xxx xxx xxx

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 is
the contract for overseas employment is the registration for coverage of seafarers with the Social Security
System, through the manning agencies 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:

xxx xxx xxx7

(Emphasis supplied)

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. Thus, the Whereas clauses of the Memorandum of
Agreement state that:

WHEREAS, in the 74th Maritime Session (ILO) held from September 24 to October 9, 1987 in Geneva, it
was agreed that as an internationally accepted principle, seafarers shall have the right to social security
protection;

xxx xxx xxx

WHEREAS, after a series of consultations with seafaring unions and manning agencies, it was the
consensus that Philippine social security coverage be extended to seafarers under the employ of vessels
flying foreign flags;

xxx xxx xxx8

(Emphasis supplied)

It is, finally, worthy of special note that by extending the benefits 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."9 Nullification of the SSS stipulation in those individual employment contracts, through
nullification 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.
The Court of Appeals properly held that the reinstatement of the criminal case against petitioner did not
violate his right against double jeopardy since the dismissal of the information by the trial court had been
effected at his own instance. 10 There are only two (2) instances where double jeopardy will attach
notwithstanding the fact that the case was dismissed with the express consent of the accused. The first is
where the ground for dismissal is insufficiency of evidence for the prosecution; and the second is where
the criminal proceedings have been unreasonably prolonged in violation of the accused's right to speedy
trial. 11 Neither situation exists in the case at bar. There is no legal impediment to the reinstatement of
Criminal Case No. Q-92-35426 against petitioner Sta. Rita.

WHEREFORE, the Court Resolved to DENY the Petition for having been filed late, for failure to comply with
applicable Court Circulars and for lack of merit. The assailed Decision of the Court of Appeals is hereby
AFFIRMED. Cost against petitioner.

G.R. No. 161357 November 30, 2005

ELENA P. DYCAICO, Petitioner,

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

DECISION

CALLEJO, SR., J.:

Before the Court is the petition for review under Rule 45 of the Rules of Court filed by Elena P. Dycaico
which seeks to reverse and set aside the Decision1 dated April 15, 2003 of the Court of Appeals (CA) in
CA-G.R. SP

No. 69632. The assailed decision affirmed the Resolution dated February 6, 2002 of the Social Security
Commission (SSC), denying the petitioner’s claim for survivor’s pension accruing from the death of her
husband Bonifacio S. Dycaico, a Social Security System (SSS) member-pensioner. Likewise sought to be
reversed and set aside is the appellate court’s Resolution dated December 15, 2003, denying the
petitioner’s motion for reconsideration.

The case arose from the following undisputed facts:

Bonifacio S. Dycaico became a member of the SSS on January 24, 1980. In his self-employed data record
(SSS Form RS-1), he named the petitioner, Elena P. Dycaico, and their eight children as his beneficiaries.
At that time, Bonifacio and Elena lived together as husband and wife without the benefit of marriage.

In June 1989, Bonifacio was considered retired and began receiving his monthly pension from the SSS. He
continued to receive the monthly pension until he passed away on June 19, 1997. A few months prior to
his death, however, Bonifacio married the petitioner on January 6, 1997.

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 under Section 12-B(d) of Republic Act (Rep. Act) No.
8282 or the Social Security Law2 she could not be considered a primary beneficiary of Bonifacio as of the
date of his retirement. The said proviso 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. …

Applying this proviso, the petitioner was informed that the –

Records show that the member [referring to Bonifacio] was considered retired on June 5, 1989 and
monthly pension was cancelled upon our receipt of a report on his death on June 19, 1997. In your death
claim application, submitted marriage contract with the deceased member shows that you were married
in 1997 or after his retirement date; hence, you could not be considered his primary beneficiary.

In view of this, we regret that there is no other benefit due you. However, if you do not conform with us,
you may file a formal petition with our Social Security Commission to determine your benefit eligibility.3

On July 9, 2001, the petitioner filed with the SSC a petition alleging that the denial of her survivor’s pension
was unjustified. She contended that Bonifacio designated her and their children as primary beneficiaries
in his SSS Form RS-1 and that it was not indicated therein that only legitimate family members could be
made beneficiaries. Section 12-B(d) of Rep. Act No. 8282 does not, likewise, require that the primary
beneficiaries be legitimate relatives of the member to be entitled to the survivor’s pension. The SSS is
legally bound to respect Bonifacio’s designation of them as his
beneficiaries. Further, Rep. Act No. 8282 should be interpreted to promote social justice.

On February 6, 2002, the SSC promulgated its Resolution affirming the denial of the petitioner’s claim.
The SSC refuted the petitioner’s contention that primary beneficiaries need not be legitimate family
members by citing the definitions of "primary beneficiaries" and "dependents" in Section 8 of Rep. Act
No. 8282. Under paragraph (k) of the said provision, "primary beneficiaries" are "[t]he dependent spouse
until he or she remarries, the dependent legitimate, legitimated or legally adopted, and illegitimate
children …" Paragraph (e) of the same provision, on the other hand, defines "dependents" as the
following: "(1) [t]he legal spouse entitled by law to receive support from the member; (2) [t]he legitimate,
legitimated or legally adopted, and illegitimate child who is unmarried, not gainfully employed and has
not reached twenty-one (21) years of age, or if over twenty-one (21) years of age, he is congenitally or
while still a minor has been permanently incapacitated and incapable of self-support, physically or
mentally; and (3) [t]he parent who is receiving regular support from the member." Based on the foregoing,
according to the SSC, it has consistently ruled that entitlement to the survivor’s pension in one’s capacity
as primary beneficiary is premised on the legitimacy of relationship with and dependency for support
upon the deceased SSS member during his lifetime.

Under Section 12-B(d) of Rep. Act No. 8282, the primary beneficiaries who are entitled to survivor’s
pension are those who qualify as
such as of the date of retirement of the deceased member. Hence, the petitioner, who was not then the
legitimate spouse of Bonifacio as of the date of his retirement, could not be considered his primary
beneficiary. The SSC further opined that Bonifacio’s designation of the petitioner as one of his primary
beneficiaries in his SSS Form RS-1 is void, not only on moral considerations but also for misrepresentation.
Accordingly, the petitioner is not entitled to claim the survivor’s pension under Section 12-B(d) of Rep.
Act No. 8282.

Aggrieved, the petitioner filed with the CA a petition for review of the SSC’s February 6, 2002 Resolution.
In the assailed Decision, dated April 15, 2003, the appellate court dismissed the petition. Citing the same
provisions in Rep. Act No. 8282 as those cited by the SSC, the CA declared that since the petitioner was
merely the common-law wife of Bonifacio at the time of his retirement in 1989, his designation of the
petitioner as one of his beneficiaries in the SSS Form RS-1 in 1980 is void. The CA further observed that
Bonifacio’s children with the petitioner could no longer qualify as primary beneficiaries because they have
all reached twenty-one (21) years of age. The decretal portion of the assailed decision reads:

WHEREFORE, premises considered, the Petition is DISMISSED and the assailed 06 February 2002
Resolution of respondent Commission is hereby AFFIRMED in toto. No costs.

SO ORDERED.4

The petitioner sought reconsideration of the said decision but in the assailed Resolution dated December
15, 2003, the appellate court denied her motion. Hence, the petitioner’s recourse to this Court.

The petitioner points out that the term "primary beneficiaries" as used in Section 12-B(d) of Rep. Act No.
8282 does not have any qualification. She thus theorizes that regardless of whether the primary
beneficiary designated by the member as such is legitimate or not, he or she is entitled to the survivor’s
pension. Reliance by the appellate court and the SSC on the definitions of "primary beneficiaries" and
"dependents" in Section 8 of Rep. Act No. 8282 is allegedly unwarranted because these definitions cannot
modify Section 12-B(d) thereof.

The petitioner maintains that when she and Bonifacio got married in January 1997, a few months before
he passed away, they merely intended to legalize their relationship and had no intention to commit any
fraud. Further, since Rep. Act No. 8282 is a social legislation, it should be construed liberally in favor of
claimants like the petitioner. She cites the Court’s pronouncement that "the sympathy of the law on social
security is toward its beneficiaries, and the law, by its own terms, requires a construction of utmost
liberality in their favor."5

The SSS, on the other hand, contends that Section 12-B(d) of Rep. Act No. 8282 should be read in
conjunction with the definition of the terms "dependents" and "primary beneficiaries" in Section 8
thereof. Since the petitioner was not as yet the legal spouse of Bonifacio at the time of his retirement in
1989, she is not entitled to claim the survivor’s pension accruing at the time of his death. The SSS insists
that the designation by Bonifacio of the petitioner and their illegitimate children in his SSS Form RS-1 is
void.

According to the SSS, there is nothing in Rep. Act No. 8282 which provides that "should there be no
primary or secondary beneficiaries, the benefit accruing from the death of a member should go to his
designated common-law spouse" and that "to rule otherwise would be to condone the designation of
common-law spouses as beneficiaries, a clear case of circumventing the SS Law and a violation of public
policy and morals."6 Finally, the SSS is of the opinion that Section 12-B(d) of Rep. Act No. 8282 is clear and
explicit; hence, there is no room for its interpretation, only for application.
In the Resolution dated July 19, 2005, the Court required the parties, as well as the Office of the Solicitor
General, to file their respective comments on the issue of whether or not the proviso "as of the date of
his retirement" in Section 12-B(d) of Rep. Act No. 8282 violates the equal protection and due process
clauses of the Constitution. The Court believes that this issue is intertwined with and indispensable to the
resolution of the merits of the petition.

In compliance therewith, in its comment, the SSC argues that the proviso "as of the date of his retirement"
in Section 12-B(d) of Rep. Act No. 8282 does not run afoul of the equal protection clause of the
Constitution as it merely determines the reckoning date of qualification and entitlement of beneficiaries
to the survivorship pension. It asserts that this classification of beneficiaries is based on valid and
substantial distinctions that are germane to the legislative purpose of Rep. Act No. 8282.

The SSC also impugns the marriage of the petitioner to Bonifacio after his retirement stating that it was
contracted as an afterthought to enable her to qualify for the survivorship pension upon the latter’s death.
It further alleges that there is no violation of the due process clause as the petitioner was given her day
in court and was able to present her side.

The SSS filed its separate comment and therein insists that the petitioner was not the legitimate spouse
of the deceased member at the time when the contingency occurred (his retirement) and, therefore, she
could not be considered a primary beneficiary within the contemplation of Rep. Act No. 8282. The SSS
posits that the statute’s intent is to give survivorship pension only to primary beneficiaries at the time of
the retirement of the deceased member. Rep. Act No. 8282 itself ordains the persons entitled thereto and
cannot be subject of change by the SSS.

The Solicitor General agrees with the stance taken by the SSS that the proviso "as of the date of his
retirement" merely marks the period when the primary beneficiary must be so to be entitled to the
benefits. It does not violate the equal protection clause because the classification resulting therefrom
rests on substantial distinctions. Moreover, the condition as to the period for entitlement, i.e., as of the
date of the member’s retirement, is relevant as it set the parameters for those availing of the benefits and
it applies to all those similarly situated. The Solicitor General is also of the view that the said proviso does
not offend the due process clause because claimants are given the opportunity to file their claims and to
prove their case before the Commission.

For clarity, Section 12-B(d) of Rep. Act No. 8282 is quoted anew below:

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. …

Under Section 8(k) of the same law, the "primary beneficiaries" are:

1. The dependent spouse until he or she remarries; and

2. The dependent legitimate, legitimated or legally adopted, and illegitimate children.

Further, the "dependent spouse" and "dependent children" are qualified under paragraph (e) of the same
section as follows:

1. The legal spouse entitled by law to receive support until he or she remarries; and

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

The SSS denied the petitioner’s application for survivor’s pension on the sole ground that she was not the
legal spouse of Bonifacio "as of the date of his retirement;" hence, she could not be considered as his
primary beneficiary under Section 12-B(d) of Rep. Act No. 8282.

The Court holds that the proviso "as of the date of his retirement" in Section 12-B(d) of Rep. Act No. 8282,
which qualifies the term "primary beneficiaries," is unconstitutional for it violates the due process and
equal protection clauses of the Constitution.7

In an analogous case, Government Service Insurance System v. Montesclaros,8 the Court invalidated the
proviso in Presidential Decree (P.D.) No. 11469 which stated that "the dependent spouse shall not be
entitled to said pension if his marriage with the pensioner is contracted within three years before the
pensioner qualified for the pension." In the said case, the Court characterized retirement benefits as
property interest of the pensioner as well as his or her surviving spouse. The proviso, which denied a
dependent spouse’s claim for survivorship pension if the dependent spouse contracted marriage to the
pensioner within the three-year prohibited period, was declared offensive to the due process clause.
There was outright confiscation of benefits due the surviving spouse without giving him or her an
opportunity to be heard. The proviso was also held to infringe the equal protection clause as it
discriminated against dependent spouses who contracted their respective marriages to pensioners within
three years before they qualified for their pension.

For reasons which shall be discussed shortly, the proviso "as of the date of his retirement" in Section 12-
B(d) of Rep. Act No. 8282 similarly violates the due process and equal protection clauses of the
Constitution.

The proviso infringes the equal protection clause

As illustrated by the petitioner’s case, the proviso "as of the date of his retirement" in Section 12-B(d) of
Rep. Act No. 8282 which qualifies the term "primary beneficiaries" results in the classification of
dependent spouses as primary beneficiaries into two groups:

(1) Those dependent spouses whose respective marriages to SSS members were contracted prior to the
latter’s retirement; and

(2) Those dependent spouses whose respective marriages to SSS members were contracted after the
latter’s retirement.

Underlying these two classifications of dependent spouses is that their respective marriages are valid. In
other words, both groups are legitimate or legal spouses. The distinction between them lies solely on the
date the marriage was contracted. The petitioner belongs to the second group of dependent spouses, i.e.,
her marriage to Bonifacio was contracted after his retirement. As such, she and those similarly situated
do not qualify as "primary beneficiaries" under Section 12-B(d) of Rep. Act No. 8282 and, therefore, are
not entitled to survivor’s pension under the same provision by reason of the subject proviso.

It is noted that the eligibility of "dependent children" who are biological offsprings of a retired SSS member
to be considered as his primary beneficiaries under Section 12-B(d) of Rep. Act No. 8282 is not
substantially affected by the proviso "as of the date of his retirement." A biological child, whether
legitimate, legitimated or illegitimate, is entitled to survivor’s pension upon the death of a retired SSS
member so long as the said child is unmarried, not gainfully employed and has not reached twenty-one
(21) years of age, or if over twenty-one (21) years of age, he or she is congenitally or while still a minor
has been permanently incapacitated and incapable of self-support, physically or mentally.

On the other hand, the eligibility of legally adopted children to be considered "primary beneficiaries"
under Section 12-B(d) of Rep. Act No. 8282 is affected by the proviso "as of the date of his retirement" in
the same manner as the dependent spouses. A legally adopted child who satisfies the requirements in
Section 8(e)(2)10 thereof is considered a primary beneficiary of a retired SSS member upon the latter’s
death only if the said child had been legally adopted prior to the member’s retirement. One who was
legally adopted by the SSS member after his or her retirement does not qualify as a primary beneficiary
for the purpose of entitlement to survivor’s pension under Section 12-B(d) of Rep. Act No. 8282.

In any case, the issue that now confronts the Court involves a dependent spouse who claims to have been
unjustly deprived of her survivor’s pension under Section 12-B(d) of Rep. Act No. 8282. Hence, the
subsequent discussion will focus on the resultant classification of the dependent spouses as primary
beneficiaries under the said provision.

As earlier stated, the petitioner belongs to the second group of dependent spouses, i.e., her marriage to
Bonifacio was contracted after his retirement. She and those similarly situated are undoubtedly
discriminated against as the proviso "as of the date of his retirement" disqualifies them from being
considered "primary beneficiaries" for the purpose of entitlement to survivor’s pension.

Generally, a statute based on reasonable classification does not violate the constitutional guaranty of the
equal protection clause of the law.11 With respect to Rep. Act No. 8282, in particular, as a social security
law, it is recognized that it "is permeated with provisions that draw lines in classifying those who are to
receive benefits. Congressional decisions in this regard are entitled to deference as those of the institution
charged under our scheme of government with the primary responsibility for making such judgments in
light of competing policies and interests."12

However, as in other statutes, the classification in Rep. Act No. 8282 with respect to entitlement to
benefits, to be valid and reasonable, 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.13

The legislative history of Rep. Act No. 8282 does not bear out the purpose of Congress in inserting the
proviso "as of the date of his retirement" to qualify the term "primary beneficiaries" in Section 12-B(d)
thereof. To the Court’s mind, however, it reflects congressional concern with the possibility of
relationships entered after retirement for the purpose of obtaining benefits. In particular, the proviso was
apparently intended to prevent sham marriages or those contracted by persons solely to enable one
spouse to claim benefits upon the anticipated death of the other spouse.

This concern is concededly valid. However, 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, regardless of the duration of the said marriage, bears no relation to the
achievement of the policy objective of the law, i.e., "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."14 The nexus of the classification to the policy objective is
vague and flimsy. Put differently, such classification of dependent spouses is not germane to the aforesaid
policy objective.

For if it were the intention of Congress to prevent sham marriages or those entered in contemplation of
imminent death, then it should have prescribed a definite "duration-of-relationship" or durational period
of relationship as one of the requirements for entitlement to survivor’s pension. For example, in the
United States, a provision in their social security law which excludes from social security benefits the
surviving wife and stepchild of a deceased wage earner who had their respective relationships to the wage
earner for less than nine months prior to his death, was declared valid.15 Thus, nine months is recognized
in the United States as the minimum duration of a marriage to consider it as having been contracted in
good faith for the purpose of entitlement to survivorship pension.

In contrast, the proviso "as of the date of his retirement" in Section 12-B(d) in Rep. Act No. 8282 effectively
disqualifies from entitlement to survivor’s pension all those dependent spouses whose respective
marriages to retired SSS members were contracted after the latter’s retirement. The duration of the
marriage is not even considered. It is observed that, in certain instances, the retirement age under Rep.
Act No. 8282 is sixty (60)
years old.16 A marriage contracted by a retired SSS member after the said age may still last for more than
ten years, assuming the member lives up to over seventy (70) years old. In such a case, it cannot be said
that the marriage was a sham or was entered into solely for the purpose of enabling one spouse to obtain
the financial benefits due upon the death of the other spouse. Nonetheless, the said surviving spouse is
not entitled to survivor’s pension because he or she is not a primary beneficiary as of the date of
retirement of the SSS member following Section 12-B(d) of Rep. Act No. 8282.

Further, the classification of dependent spouses on the basis of whether their respective marriages to the
SSS member were contracted prior to or after the latter’s retirement for the purpose of entitlement to
survivor’s pension does not rest on real and substantial distinctions. It is arbitrary and discriminatory. It is
too sweeping because the proviso "as of the date of his retirement," which effectively disqualifies the
dependent spouses whose respective marriages to the retired SSS member were contracted after the
latter’s retirement as primary beneficiaries, unfairly lumps all these marriages as sham relationships or
were contracted solely for the purpose of acquiring benefits accruing upon the death of the other spouse.
The proviso thus unduly prejudices the rights of the legal surviving spouse, like the petitioner, and defeats
the avowed policy of the law "to provide meaningful protection to members and their beneficiaries
against the hazards of disability, sickness, maternity, old age, death, and other contingencies resulting in
loss of income or financial burden."17

The proviso infringes the due process clause

As earlier opined, in Government Service Insurance System v. Montesclaros,18 the Court characterized
retirement benefits as a property interest of a retiree. We held therein that "[i]n a pension plan where
employee participation is mandatory, the prevailing view is that employees have contractual or vested
rights in the pension where the pension is part of the terms of employment."19 Thus, it was ruled that,
"where the employee retires and meets the eligibility requirements, he acquires a vested right to benefits
that is protected by the due process clause" and "[r]etirees enjoy a protected property interest whenever
they acquire a right to immediate payment under pre-existing law."20 Further, since pursuant to the
pertinent law therein, the dependent spouse is entitled to survivorship pension, "a widow’s right to
receive pension following the demise of her husband is also part of the husband’s contractual
compensation."21

Although the subject matter in the above-cited case involved the retirement benefits under P.D. No. 1146
or the Revised Government Service Insurance Act of 197722 covering government employees, the
pronouncement therein that retirees enjoy a protected property interest in their retirement benefits
applies squarely to those in the private sector under Rep. Act No. 8282. This is so because the mandatory
contributions of both the employers23 and the employees24 to the SSS do not, likewise, make the
retirement benefits under Rep. Act No. 8282 mere gratuity but form part of the latter’s compensation.
Even the retirement benefits of self-employed individuals, like Bonifacio, who have been included in the
compulsory coverage of Rep. Act No. 828225 are not mere gratuity because they are required to pay both
the employer and employee contributions.26 Further, under Rep. Act No. 8282, the surviving spouse is
entitled to survivor’s pension accruing on the death of the member; hence, the surviving spouse’s right to
receive such benefit following the demise of the wife or husband, as the case may be, is also part of the
latter’s contractual compensation.

The proviso "as of the date of his retirement" in Section 12-B(d) of Rep. Act No. 8282 runs afoul of the due
process clause as it outrightly deprives the surviving spouses whose respective marriages to the retired
SSS members were contracted after the latter’s retirement of their survivor’s benefits. There is outright
confiscation of benefits due such surviving spouses without giving them an opportunity to be heard.

By this outright disqualification of the surviving spouses whose respective marriages to SSS members were
contracted after the latter’s retirement, the proviso "as of the date of his retirement" qualifying the term
"primary beneficiaries" for the purpose of entitlement to survivor’s pension has created the presumption
that marriages contracted after the retirement date of SSS members were entered into for the purpose
of securing the benefits under Rep. Act No. 8282. This presumption, moreover, is conclusive because the
said surviving spouses are not afforded any opportunity to disprove the presence of the illicit purpose.
The proviso, as it creates this conclusive presumption, is unconstitutional because it presumes a fact which
is not necessarily or universally true. In the United States, this kind of presumption is characterized as an
"irrebuttable presumption" and statutes creating permanent and irrebutable presumptions have long
been disfavored under the due process clause. 27

In the petitioner’s case, for example, she asserted that when she and Bonifacio got married in 1997, it was
merely to legalize their relationship and not to commit fraud. This claim is quite believable. After all, they
had been living together since 1980 and, in fact, during that time their eldest child was already twenty-
four (24) years old. However, the petitioner was not given any opportunity to prove her claim that she
was Bonifacio’s bona fide legal spouse as she was automatically disqualified from being considered as his
primary beneficiary. In effect, the petitioner was deprived of the survivor’s benefits, a property interest,
accruing from the death of Bonifacio without any opportunity to be heard. Standards of due process
require that the petitioner be allowed to present evidence to prove that her marriage to Bonifacio was
contracted in good faith and as his bona fide spouse she is entitled to the survivor’s pension accruing upon
his death.28 Hence, the proviso "as of the date of his retirement" in Section 12-B(d) which deprives the
petitioner and those similarly situated dependent spouses of retired SSS members this opportunity to be
heard must be struck down.

Conclusion

Even as the proviso "as of the date of his retirement" in Section 12-B(d) is nullified, the enumeration of
primary beneficiaries for the purpose of entitlement to survivor’s pension is not substantially affected
since the following persons are considered as such under Section 8(k) of Rep. Act No. 8282:

(1) The dependent spouse until he or she remarries; and

(2) The dependent legitimate, legitimated or legally adopted, and illegitimate children.

In relation thereto, Section 8(e) thereof qualifies the dependent spouse and dependent children as
follows:

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

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

Finally, the Court concedes that the petitioner did not raise the issue of the validity of the proviso "as of
the date of his retirement" in Section 12-B(d) of Rep. Act No. 8282. The rule is that the Court does not
decide questions of a constitutional nature unless absolutely necessary to a decision of the case.29
However, the question of the constitutionality of the proviso is absolutely necessary for the proper
resolution of the present case. Accordingly, the Court required the parties to present their arguments on
this issue and proceeded to pass upon the same in the exercise of its equity jurisdiction and in order to
render substantial justice to the petitioner who, presumably in her advanced age by now, deserves to
receive forthwith the survivor’s pension accruing upon the death of her husband.

WHEREFORE, the petition is GRANTED. The Decision dated April 15, 2003 and Resolution dated December
15, 2003 of the Court of Appeals in CA-G.R. SP No. 69632 are REVERSED and SET ASIDE. The proviso "as of
the date of his retirement" in Section 12-B(d) of Rep. Act No. 8282 is declared VOID for being contrary to
the due process and equal protection clauses of the Constitution. The Social Security System cannot deny
the claim of petitioner Elena P. Dycaico for survivor’s pension on the basis of this invalid proviso.

SO ORDERED.
G.R. No. 165546 February 27, 2006

SOCIAL SECURITY SYSTEM, Petitioner,

vs.
ROSANNA H. AGUAS, JANET H. AGUAS, and minor JEYLNN H. AGUAS, represented by her Legal
Guardian, ROSANNA H. AGUAS, Respondents.

DECISION

CALLEJO, SR., J.:

Before us is a petition for review on certiorari of the Decision1 of the Court of Appeals (CA) in CA-G.R. SP
No. 66531 and its Resolution denying the motion for reconsideration thereof.

The antecedents are as follows:

Pablo Aguas, a member of the Social Security System (SSS) and a pensioner, died on December 8, 1996.
Pablo’s surviving spouse, Rosanna H. Aguas, filed a claim with the SSS for death benefits on December 13,
1996. Rosanna indicated in her claim that Pablo was likewise survived by his minor child, Jeylnn, who was
born on October 29, 1991.2 Her claim for monthly pension was settled on February 13, 1997.3

Sometime in April 1997, the SSS received a sworn letter4 dated April 2, 1997 from Leticia Aguas-
Macapinlac, Pablo’s sister, contesting Rosanna’s claim for death benefits. She alleged that Rosanna
abandoned the family abode approximately more than six years before, and lived with another man on
whom she has been dependent for support. She further averred that Pablo had no legal children with
Rosanna, but that the latter had several children with a certain Romeo dela Peña. In support of her
allegation, Leticia enclosed a notarized copy of the original birth certificate5 of one Jefren H. dela Peña,
showing that the latter was born on November 15, 1996 to Rosanna Y. Hernandez and Romeo C. dela
Peña, and that the two were married on November 1, 1990.

As a result, the SSS suspended the payment of Rosanna and Jeylnn’s monthly pension in September 1997.
It also conducted an investigation to verify Leticia’s allegations. In a Memorandum6 dated November 18,
1997, the Social Security Officer who conducted the investigation reported that, based on an interview
with Mariquita D. Dizon, Pablo’s first cousin and neighbor, and Jessie Gonzales (also a neighbor). She
learned that the deceased had no legal children with Rosanna; Jenelyn7 and Jefren were Rosanna’s
children with one Romeo C. dela Peña; and Rosanna left the deceased six years before his death and lived
with Romeo while she was still pregnant with Jenelyn, who was born on October 29, 1991. Mariquita also
confirmed that Pablo was not capable of having a child as he was under treatment.

On the basis of the report and an alleged confirmation by a certain Dr. Manuel Macapinlac that Pablo was
infertile, the SSS denied Rosanna’s request to resume the payment of their pensions. She was advised to
refund to the SSS within 30 days the amount of ₱10,350.00 representing the total death benefits released
to her and Jenelyn from December 1996 to August 1997 at ₱1,150.00 per month.8

Rosanna and Jeylnn, through counsel, requested for a reconsideration of the said decision.9 However, in
its Letter dated February 6, 1998, the SSS denied the claim.10

This prompted Rosanna and Jeylnn to file a claim/petition for the Restoration/Payment of Pensions with
the Social Security Commission (SSC) on February 20, 1998.11 Janet H. Aguas, who also claimed to be the
child of the deceased and Rosanna, now joined them as claimant. The case was docketed as SSC Case No.
3-14769-98.

The claimants appended to their petition, among others, photocopies of the following: (1) Pablo and
Rosanna’s marriage certificate; (2) Janet’s certificate of live birth; (3) Jeylnn’s certificate of live birth; and
(4) Pablo’s certificate of death.

In its Answer, the SSS averred that, based on the sworn testimonies and documentary evidence showing
the disqualification of the petitioners as primary beneficiaries, the claims were barren of factual and legal
basis; as such, it was justified in denying their claims.12

In their Position Paper, the claimants averred that Jeylnn was a legitimate child of Pablo as evidenced by
her birth certificate bearing Pablo’s signature as Jeylnn’s father. They asserted that Rosanna never left
Pablo and that they lived together as husband and wife under one roof. In support thereof, they attached
a Joint Affidavit13 executed by their neighbors, Vivencia Turla and Carmelita Yangu, where they declared
that Rosanna and Pablo lived together as husband and wife until the latter’s death. In Janet’s birth
certificate, which was registered in the Civil Registry of San Fernando, it appears that her father was Pablo
and her mother was Rosanna. As to the alleged infertility of Pablo, the claimants averred that Dr.
Macapinlac denied giving the opinion precisely because he was not an expert on such matters, and that
he treated the deceased only for tuberculosis. The claimant likewise claimed that the information the SSS
gathered from the doctor was privileged communication.14

In compliance with the SSC’s order, the SSS secured Confirmation Reports15 signed by clerks from the
corresponding civil registers confirming (1) the fact of marriage between Pablo and Rosanna on December
4, 1977; (2) the fact of Jefren dela Peña’s birth on November 15, 1996; (3) the fact of Jeylnn’s birth on
October 29, 1991; and (4) the fact of Pablo’s death on December 8, 1996.

The SSC decided to set the case for hearing. It also directed the SSS to verify the authenticity of Pablo’s
signature as appearing on Jeylnn’s birth certificate from his claim records, particularly his SSS Form E-1
and retirement benefit application.16 The SSS complied with said directive and manifested to the SSC
that, based on the laboratory analysis conducted, Pablo’s signature in the birth certificate was made by
the same person who signed the member’s record and other similar documents submitted by Pablo.17

The SSC then summoned Vivencia Turla, Carmelita Yangu and Leticia Aguas-Macapinlac for clarificatory
questions with regard to their respective sworn affidavits.18 Vivencia testified that she had known Pablo
and Rosanna for more than 30 years already; the couple were married and lived in Macabacle, Dolores,
San Fernando, Pampanga; she was a former neighbor of the spouses, but four years after their marriage,
she (Vivencia) and her family moved to Sto. Niño Triangulo, San Fernando, Pampanga; she would often
visit the two, especially during Christmas or fiestas; the spouses’ real child was Jeylnn; Janet was only an
adopted child; the spouse later transferred residence, not far from their old house, and Janet, together
with her husband and son, remained in the old house.19

On the other hand, Carmelita testified that she had been a neighbor of Pablo and Rosanna for 15 years
and that, up to the present, Rosanna and her children, Janet, Jeylnn and Jefren, were still her neighbors;
Janet and Jeylnn were the children of Pablo and Rosanna but she did not know whose child Jefren is.20

According to Leticia, Janet was not the real child of Pablo and Rosanna; she was just taken in by the
spouses because for a long time they could not have children;21 however, there were no legal papers on
Janet’s adoption.22 Later on, Rosanna got pregnant with Jeylnn; after the latter’s baptism, there was a
commotion at the house because Romeo dela Peña was claiming that he was the father of the child and
he got mad because the child was named after Pablo; the latter also got mad and even attempted to shoot
Rosanna; he drove them away from the house; since then, Pablo and Rosanna separated;23 she knew
about this because at that time their mother was sick, and she would often visit her at their ancestral
home, where Pablo and Rosanna were also staying; Rosanna was no longer living in their ancestral home
but Janet resided therein; she did not know where Rosanna was staying now but she knew that the latter
and Romeo dela Peña were still living together.24

Subsequently, Mariquita Dizon and Jessie Gonzales were also summoned for clarificatory questions.25
During the hearing, Mariquita brought with her photocopies of two baptismal certificates: that of Jeylnn
Aguas,26 child of Pablo Aguas and Rosanna Hernandez born on October 29, 1991, and that of Jenelyn H.
dela Peña,27 child of Romeo dela Peña and Rosanna Hernandez, born on January 29, 1992.

On March 14, 2001, the SSC rendered a decision denying the claims for lack of merit and ordering Rosanna
to immediately refund to the SSS the amount of ₱10,350.00 erroneously paid to her and Jeylnn as primary
beneficiaries of the deceased. The SSC likewise directed the SSS to pay the death benefit to qualified
secondary beneficiaries of the deceased, and in their absence, to his legal heirs.28

The SSC ruled that Rosanna was no longer qualified as primary beneficiary, it appearing that she had
contracted marriage with Romeo dela Peña during the subsistence of her marriage to Pablo. The SSC
based its conclusion on the birth certificate of Jefren dela Peña stating that his mother, Rosanna, and
father, Romeo dela Peña, were married on November 1, 1990. The SSC declared that Rosanna had a child
with Romeo dela Peña while she was still married to Pablo (as evidenced by the baptismal certificate of
Jenelyn H. dela Peña showing that she was the child of Rosanna Hernandez and Romeo dela Peña and that
she was born on January 29, 1992). The SSC concluded that Rosanna was no longer entitled to support
from Pablo prior to his death because of her act of adultery. As for Jeylnn, the SSC ruled that, even if her
birth certificate was signed by Pablo as her father, there was more compelling evidence that Jeylnn was
not his legitimate child. The SSC deduced from the records that Jeylnn and Jenelyn was one and the same
person and concluded, based on the latter’s baptismal certificate, that she was the daughter of Rosanna
and Romeo dela Peña. It also gave credence to the testimonies of Leticia and Mariquita that Jeylnn was
the child of Rosanna and Romeo dela Peña. As for Janet, the SSC relied on Leticia’s declaration that she
was only adopted by Pablo and Rosanna.29

The claimants filed a motion for reconsideration of the said decision but their motion was denied by the
SSC for lack of merit and for having been filed out of time.30 The claimants then elevated the case to the
CA via a petition for review under Rule 43 of the Rules of Court.

On September 9, 2003, the CA rendered a decision in favor of petitioners. The fallo of the decision reads:
WHEREFORE, the resolution and order appealed from are hereby REVERSED and SET ASIDE, and a new
one is entered DECLARING petitioners as ENTITLED to the SSS benefits accruing from the death of Pablo
Aguas. The case is hereby REMANDED to public respondent for purposes of computing the benefits that
may have accrued in favor of petitioners after the same was cut and suspended in September 1997.

SO ORDERED.31

In so ruling, the CA relied on the birth certificates of Janet and Jeylnn showing that they were the children
of the deceased. According to the appellate court, for judicial purposes, these records were binding upon
the parties, including the SSS. These entries made in public documents may only be challenged through
adversarial proceedings in courts of law, and may not be altered by mere testimonies of witnesses to the
contrary. As for Rosanna, the CA found no evidence to show that she ceased to receive support from Pablo
before he died. Rosanna’s alleged affair with Romeo dela Peña was not properly proven. In any case, even
if Rosanna married Romeo dela Peña during her marriage to Pablo, the same would have been a void
marriage; it would not have ipso facto made her not dependent for support upon Pablo and negate the
presumption that, as the surviving spouse, she is entitled to support from her husband.32

The SSS filed a motion for reconsideration of the decision, which the CA denied for lack of merit.33 Hence,
this petition.

Petitioner seeks a reversal of the decision of the appellate court, contending that it

GRAVELY ERRED IN HOLDING THAT ROSANNA AGUAS IS ACTUALLY DEPENDENT FOR SUPPORT UPON THE
MEMBER DURING HIS LIFETIME TO QUALIFY AS PRIMARY BENEFICIARY WITHIN THE INTENDMENT OF
SECTION 8(e), IN RELATION TO SECTION (k) OF THE SSS LAW, AS AMENDED.

II

ERRED IN HOLDING THAT JANET AGUAS AND JEYLNN AGUAS ARE ENTITLED TO THE PENSION BENEFIT
ACCRUING FROM THE DEATH OF PABLO AGUAS.34

Petitioner invokes Section 8 of Republic Act No. 1161, as amended by Presidential Decree No. 735, which
defines a dependent spouse as "the legitimate spouse dependent for support upon the employee."
According to petitioner, Rosanna forfeited her right to be supported by Pablo when she engaged in an
intimate and illicit relationship with Romeo dela Peña and married the latter during her marriage to Pablo.
Such act constitutes abandonment, which divested her of the right to receive support from her husband.
It asserts that her act of adultery is evident from the birth certificate of Jefren H. dela Peña showing that
he was born on November 15, 1996 to Rosanna and Romeo dela Peña. Petitioner submits that Rosanna
cannot be considered as a dependent spouse of Pablo; consequently, she is not a primary beneficiary.35

As for Janet and Jeylnn, petitioner maintains that they are not entitled to the pension because, based on
the evidence on record, particularly the testimonies of the witnesses, they are not the legitimate children
of Pablo. It argues that, in the exercise of its quasi-judicial authority under Section 5(a) of the Social
Security Act, the SSC can pass upon the legitimacy of respondents’ relationship with the member to
determine whether they are entitled to the benefits, even without correcting their birth certificates.36
Respondents, for their part, assert that petitioner failed to prove that Rosanna committed acts of adultery
or that she married another man after the death of her husband. They contend that Janet and Jeylnn’s
legitimacy may be impugned only on the grounds stated in Article 166 of the Family Code, none of which
were proven in this case.37

The issue to be resolved in this case is whether Rosanna, Jeylnn and Janet are entitled to the SSS death
benefits accruing from the death of Pablo.

The petition is partly meritorious.

The general rule is that only questions of law may be raised by the parties and passed upon by the Court
in petitions for review under Rule 45 of the Rules of Court.38 In an appeal via certiorari, the Court may
not review the factual findings of the CA.39 It is not the Court’s function under Rule 45 to review, examine,
and evaluate or weigh the probative value of the evidence presented.40 However, the Court may review
findings of facts in some instances, such as, when the judgment is based on a misapprehension of facts,
when the findings of the CA are contrary to those of the trial court or quasi-judicial agency, or when the
findings of facts of the CA are premised on the absence of evidence and are contradicted by the evidence
on record.41 The Court finds these instances present in this case.

At the time of Pablo’s death, the prevailing law was Republic Act No. 1161, as amended by Presidential
Decree No. 735. Section 13 of the law enumerates those who are entitled to death benefits:

Sec.13. Death benefits. – Effective July 1, 1975, upon the covered employee’s death, (a) his primary
beneficiaries shall be entitled to the basic monthly pension, and his dependents to the dependent’s
pension: Provided, That he has paid at least thirty-six monthly contributions prior to the semester of
death: Provided, further, That if the foregoing condition is not satisfied, or if he has no primary
beneficiaries, his secondary beneficiaries shall be entitled to a lump sum benefit equivalent to thirty times
the basic monthly pension: Provided, however, That the death benefit shall not be less than the total
contributions paid by him and his employer on his behalf nor less than five hundred pesos: Provided,
finally, That the covered employee who dies in the month of coverage shall be entitled to the minimum
benefit.

Section 8(k) and (e), in turn, defines dependents and primary beneficiaries of an SSS member as follows:

SECTION 8. Terms defined. – For the purposes of this Act the following terms shall, unless the context
indicates otherwise, have the following meanings:

xxxx

(e) Dependent. – The legitimate, legitimated, or legally adopted child who is unmarried, not gainfully
employed, and not over twenty-one years of age provided that he is congenitally incapacitated and
incapable of self-support physically or mentally; the legitimate spouse dependent for support upon the
employee; and the legitimate parents wholly dependent upon the covered employee for regular support.

xxxx
(k) Beneficiaries. – The dependent spouse until he remarries and dependent children, who shall be the
primary beneficiaries. In their absence, the dependent parents and, subject to the restrictions imposed
on dependent children, the legitimate descendants and illegitimate children who shall be the secondary
beneficiaries. In the absence of any of the foregoing, any other person designated by the covered
employee as secondary beneficiary.

Whoever claims entitlement to such benefits should establish his or her right thereto by substantial
evidence. Substantial evidence, the quantum of evidence required to establish a fact in cases before
administrative or quasi-judicial bodies, is that level of relevant evidence which a reasonable mind might
accept as adequate to justify a conclusion.42

The Court has reviewed the records of the case and finds that only Jeylnn has sufficiently established her
right to a monthly pension.

Jeylnn’s claim is justified by the photocopy of her birth certificate which bears the signature of Pablo.
Petitioner was able to authenticate the certification from the Civil Registry showing that she was born on
October 29, 1991. The records also show that Rosanna and Pablo were married on December 4, 1977 and
the marriage subsisted until the latter’s death on December 8, 1996. It is therefore evident that Jeylnn
was born during Rosanna and Pablo’s marriage.

It bears stressing that under Article 164 of the Family Code, children conceived or born during the
marriage of the parents are legitimate. This Court, in De Jesus v. Estate of Decedent Juan Gamboa Dizon,43
extensively discussed this presumption –

There is perhaps no presumption of the law more firmly established and founded on sounder morality
and more convincing reason than the presumption that children born in wedlock are legitimate. This
presumption indeed becomes conclusive in the absence of proof that there is physical impossibility of
access between the spouses during the first 120 days of the 300 days which immediately precedes the
birth of the child due to (a) the physical incapacity of the husband to have sexual intercourse with his wife;
(b) the fact that the husband and wife are living separately in such way that sexual intercourse is not
possible; or (c) serious illness of the husband, which absolutely prevents sexual intercourse. Quite
remarkably, upon the expiration of the periods set forth in Article 170,44 and in proper cases Article
171,45 of the Family Code (which took effect on 03 August 1988), the action to impugn the legitimacy of
the child would no longer be legally feasible and the status conferred by the presumption becomes fixed
and unassailable.46

Indeed, impugning the legitimacy of a child is a strictly personal right of the husband or, in exceptional
cases, his heirs.47 In this case, there is no showing that Pablo challenged the legitimacy of Jeylnn during
his lifetime. Hence, Jeylnn’s status as a legitimate child of Pablo can no longer be contested.

The presumption that Jeylnn is a legitimate child is buttressed by her birth certificate bearing Pablo’s
signature, which was verified from his specimen signature on file with petitioner. A birth certificate signed
by the father is a competent evidence of paternity.48

The presumption of legitimacy under Article 164, however, can not extend to Janet because her date of
birth was not substantially proven. Such presumption may be availed only upon convincing proof of the
factual basis therefor, i.e., that the child’s parents were legally married and that his/her conception or
birth occurred during the subsistence of that marriage.49 It should be noted that respondents likewise
submitted a photocopy of Janet’s alleged birth certificate. However, the Court cannot give said birth
certificate the same probative weight as Jeylnn’s because it was not verified in any way by the civil register.
It stands as a mere photocopy, without probative weight. Unlike Jeylnn, there was no confirmation by the
civil register of the fact of Janet’s birth on the date stated in the certificate.

In any case, a record of birth is merely prima facie evidence of the facts contained therein.50 Here, the
witnesses were unanimous in saying that Janet was not the real child but merely adopted by Rosanna and
Pablo. Leticia also testified that Janet’s adoption did not undergo any legal proceedings; hence, there were
no papers to prove it. Under Section 8(e) of Republic Act No. 1161, as amended, only "legally adopted"
children are considered dependent children. Absent any proof that the family has legally adopted Janet,
the Court cannot consider her a dependent child of Pablo, hence, not a primary beneficiary.

On the claims of Rosanna, it bears stressing that for her to qualify as a primary beneficiary, she must prove
that she was "the legitimate spouse dependent for support from the employee." The claimant-spouse
must therefore establish two qualifying factors: (1) that she is the legitimate spouse, and (2) that she is
dependent upon the member for support. In this case, Rosanna presented proof to show that she is the
legitimate spouse of Pablo, that is, a copy of their marriage certificate which was verified with the civil
register by petitioner. But whether or not Rosanna has sufficiently established that she was still dependent
on Pablo at the time of his death remains to be resolved. Indeed, a husband and wife are obliged to
support each other,51 but whether one is actually dependent for support upon the other is something
that has to be shown; it cannot be presumed from the fact of marriage alone.

In a parallel case52 involving a claim for benefits under the GSIS law, the Court defined a dependent as
"one who derives his or her main support from another. Meaning, relying on, or subject to, someone else
for support; not able to exist or sustain oneself, or to perform anything without the will, power, or aid of
someone else." It should be noted that the GSIS law likewise defines a dependent spouse as "the
legitimate spouse dependent for

support upon the member or pensioner." In that case, the Court found it obvious that a wife who
abandoned the family for more than 17 years until her husband died, and lived with other men, was not
dependent on her husband for support, financial or otherwise, during that entire period. Hence, the Court
denied her claim for death benefits.

The obvious conclusion then is that a wife who is already separated de facto from her husband cannot be
said to be "dependent for support" upon the husband, absent any showing to the contrary. Conversely, if
it is proved that the husband and wife were still living together at the time of his death, it would be safe
to presume that she was dependent on the husband for support, unless it is shown that she is capable of
providing for herself.

Rosanna had the burden to prove that all the statutory requirements have been complied with,
particularly her dependency on her husband for support at the time of his death. Aside from her own
testimony, the only evidence adduced by Rosanna to prove that she and Pablo lived together as husband
and wife until his death were the affidavits of Vivencia Turla and Carmelita Yangu where they made such
declaration.

Still, the affidavits of Vivencia and Carmelita and their testimonies before the SSC will not prevail over the
categorical and straightforward testimonies of the other witnesses who testified that Rosanna and Pablo
had already separated for almost six years before the latter died. Except for the bare assertion of
Carmelita that the couple never separated, there was no further statement regarding the witnesses’
assertion in their affidavits that the couple lived together until Pablo’s death. On the contrary, Leticia
narrated that the two separated after Jeylnn’s baptism as a result of an argument regarding Romeo dela
Peña. According to Leticia, there was a commotion at their ancestral house because Romeo dela Peña was
grumbling why Jeylnn was named after Pablo when he was the father, and as a result, Pablo drove them
away. The SSC’s observation and conclusion on the two baptismal certificates of Jeylnn and Jenelyn
convinces this Court to further believe Leticia’s testimony on why Pablo and Rosanna separated. As noted
by the SSC:

It appears from the records that Jeylnn Aguas and Jenelyn H. dela Peña are one and the same person.
Jeylnn Aguas, born on October 29, 1991 was baptized at the Metropolitan Cathedral of San Fernando,
Pampanga, on November 24, 1991 as the child of Pablo Aguas and Rosanna Hernandez. Jenelyn H dela
Peña, on the other hand, was born on January 29, 1992 to spouses Rosanna Hernandez and Romeo dela
Peña and baptized on February 9, 1992. It will be noted that Jenelyn dela Peña was born approximately
three months after the birth of Jeylnn Aguas. It is physically impossible for Rosanna to have given birth
successively to two children in so short a time. x x x The testimony of Leticia Aguas-Macapinlac that
Rosanna was driven away by Pablo after the baptism of Jeylnn because of the commotion that was created
by Romeo dela Peña who wanted Jeylnn to be baptized using his name explains why Jeylnn was again
baptized in the Parish of Sto. Niño in San Fernando using the name Jenelyn dela Peña. They changed her
date of birth also to make it appear in the record of the parish that she is another child of Rosanna.53

On the other hand, Mariquita categorically affirmed that Rosanna was no longer living at Pablo’s house
even before he died, and that she is still living with Romeo dela Peña up to the present. Mariquita testified
as follows:

Hearing Officer:

Nagsama ba si Rosanna at Romeo?

Mrs. Dizon:

Ngayon at kahit na noon.

Hearing Officer:

Kailan namatay si Pablo?

Mrs. Dizon:

1996.

Hearing Officer:

Noong bago mamatay si Pablo?

Mrs. Dizon:

Nagsasama na sila Romeo at Rosanna noon.

Hearing Officer:

So, buhay pa si Pablo ……

Mrs. Dizon:

…. nagsasama na sila ni Romeo.

Hearing Officer:

Kailan nagkahiwalay si Romeo at Rosanna?

Mrs. Dizon:

Hindi na sila nagkahiwalay.

Hearing Officer:

Hindi, ibig ko sabihin si Pablo at Rosana?

Mrs. Dizon:

Hindi ko alam kasi hindi ako madalas pumunta sa kanila eh, dahil namatay na yung nanay ni Kuya Pabling,
yung tiyahin ko, kapatid ng nanay ko. Noon madalas ako noong buhay pa yung nanay ni Kuya Pabling dahil
kami ang nag aalaga sa kanya.

Hearing Officer:

Bago namatay si Pablo, nagsasama ba sina Romeo at Rosanna?

Mrs. Dizon:

Oo.

Hearing Officer:

Sa ngayon, may alam ka pa ba kung nagsasama pa sila Romeo at Rosanna?

Mrs. Dizon:

Oo, nagsasama sila, may bahay sila.

Hearing Officer:

Saan naman?

Mrs. Dizon:
Doon sa malapit sa amin sa may riles ng tren.54

In conclusion, the Court finds that, among respondents, only Jeylnn is entitled to the SSS death benefits
accruing from the death of Pablo, as it was established that she is his legitimate child. On the other hand,
the records show that Janet was merely "adopted" by the spouses, but there are no legal papers to prove
it; hence, she cannot qualify as a primary beneficiary. Finally, while Rosanna was the legitimate wife of
Pablo, she is likewise not qualified as a primary beneficiary since she failed to present any proof to show
that at the time of his death, she was still dependent on him for support even if they were already living
separately.

IN LIGHT OF ALL THE FOREGOING, the petition is PARTIALLY GRANTED. The Decision and Resolution of the
Court of Appeals are AFFIRMED WITH MODIFICATION. Only Jeylnn H. Aguas is declared entitled to the SSS
death benefits accruing from the death of Pablo Aguas.

SO ORDERED.

G.R. No. 164790 August 29, 2008

SOCIAL SECURITY SYSTEM and LORELIE B. SOLIDUM, Branch Manager, Cubao Branch, petitioner,
vs.
GLORIA DE LOS SANTOS, respondent.

DECISION

REYES, R.T., J.:

AN ESTRANGED wife who was not dependent upon her deceased husband for support is not qualified to
be his beneficiary.

The principle is applied in this petition for review on certiorari of the Decision1 of the Court of Appeals
(CA), awarding benefits to respondent Gloria de los Santos.

The Facts

Antonio de los Santos and respondent Gloria de los Santos, both Filipinos, were married on April 29, 1964
in Manila. Less than one (1) year after, in February 1965, Gloria left Antonio and contracted another
marriage with a certain Domingo Talens in Nueva Ecija. Sometime in 1969, Gloria went back to Antonio
and lived with him until 1983. They had three children: Alain Vincent, Arlene, and Armine.

In 1983, Gloria left Antonio and went to the United States (US). On May 8, 1986, she filed for divorce
against Antonio with the Superior Court of Orange, Sta. Ana, California. On May 21, 1983, she executed a
document waiving all her rights to their conjugal properties and other matters. The divorce was granted
on November 5, 1986.

On May 23, 1987, Antonio married Cirila de los Santos in Camalig, Albay. Their union produced one child,
May-Ann N. de los Santos, born on May 15, 1989. On her part, Gloria married Larry Thomas Constant, an
American citizen, on July 11, 1987, in the US.
On May 15, 1989, Antonio amended his records at the Social Security System (SSS). He changed his
beneficiaries from Mrs. Margarita de los Santos to Cirila de los Santos; from Gloria de los Santos to May-
Ann de los Santos; and from Erlinda de los Santos to Armine de los Santos.

Antonio retired from his employment on March 1, 1996, and from then on began receiving monthly
pension. He died of respiratory failure on May 15, 1999. Upon his death, Cirila applied for and began
receiving his SSS pension benefit, beginning December 1999.

On December 21, 1999, Gloria filed a claim for Antonio’s death benefits with the SSS Cubao Branch. Her
claim was denied because she was not a qualified beneficiary of Antonio. The SSS letter of denial dated
September 1, 2000 stated:

We regret to inform you that your claim is denied for the following reason/s:

We received documents showing that you have remarried in the United States to one Larry T. Constant.
You were also the one who filed for petition for dissolution of your marriage with the deceased member,
which was in fact granted by the Superior Court of California, County of Orange.

These circumstances are sufficient ground for denial as the SSS law specifically defines beneficiaries as
"the dependent spouse, until he or she remarries, the dependent legitimate, legitimated or legally
adopted and illegitimate children who shall be the primary beneficiary." x x x2

SSC Disposition

Gloria elevated her claim to the Social Security Commission (SSC). On February 12, 2001, she filed a
petition to claim death benefits, with a prayer that she be declared the rightful beneficiary of the deceased
Antonio.3

The SSC motu proprio impleaded Cirila as respondent in the case, it appearing that she was another
claimant to the death benefits of Antonio. Upon receipt of the summons, Cirila moved to dismiss the
petition of Gloria. She argued that Gloria had no personality to sue because the latter is neither a
dependent nor a beneficiary of Antonio, as evidenced by the E-4 form accomplished and submitted by
him when he was still alive. Gloria had also remarried an American citizen in the US. And that she, Cirila,
was the true and legal wife of Antonio.

Cirila likewise reasoned out that the authority to determine the validity of the two marriages of Antonio
lay with the regular courts. Since Gloria had already filed for settlement of the intestate estate of Antonio
before the Regional Trial Court (RTC), the petition she filed with the SSC should be considered as forum
shopping.

Gloria opposed the motion to dismiss. She contended that her marriage to Larry Constant was not the
subsequent marriage contemplated under the Social Security Law (SS Law)4 that would disqualify her as
a beneficiary; that the decree of divorce issued by a foreign state involving Filipino citizens has no validity
and effect under Philippine law. Lastly, Gloria remonstrated that there was no forum shopping because
the petition she filed before the RTC did not involve the issue of her entitlement to SSS benefits.
The SSC denied the motion to dismiss. After submission of position papers from both sides, it issued a
Resolution, dated February 13, 2002,5 dismissing Gloria’s petition with the following disposition:

WHEREFORE, this Commission finds, and so holds, that May-Ann de los Santos, daughter of Antonio and
private respondent Cirila de los Santos is the secondary beneficiary of the former and as such, she is
entitled to the balance of her father’s five-year guaranteed pension.

Accordingly, the SSS is hereby ordered to compute the balance of the five-year guaranteed pension less
the amount of P21,200 representing the total of the monthly pensions and dependent’s pension
previously received by private respondent Cirila Nimo and minor May-Ann de los Santos, respectively, and
to pay the latter, through her natural guardian Cirila Nimo, the difference between the two amounts, if
any. If there was overpayment of pension, the private respondent is hereby ordered to forthwith refund
the amount thereof to the SSS.

The petition is dismissed for lack of merit.

SO ORDERED.6

The SSC deemed that Gloria abandoned Antonio when she obtained a divorce against him abroad and
subsequently married another man. She thus failed to satisfy the requirement of dependency required of
primary beneficiaries under the law. The Commission likewise rejected her efforts to use the invalidity of
the divorce, which she herself obtained, to claim benefits from the SSS for her personal profit.

However, despite all the sophistry with which petitioner, through her counsel, sought to justify her acts
in the USA, the petition must fail. The petitioner, who was primarily responsible for obtaining the decree
of marital dissolution from an American court, now wishes to invoke the very invalidity of her divorce and
subsequent marriage in order to lay hands on the benefit she seeks. It is sheer folly, if not downright
reprehensible, for the petitioner to seek to profit from committing an act considered as unlawful under
Philippine law. This Commission will not allow itself to be used as an instrument to subvert the policies
laid down in the SS Law which it has sworn to uphold at all times. x x x7 (Emphasis added)

The SSC added that since the marriage of Antonio to Cirila was void, the latter was likewise not a qualified
beneficiary. The fruit of their union, May-Ann, was considered as an illegitimate child and qualified as a
secondary beneficiary. May-Ann was entitled to 50% of the share of the legitimate children of Antonio in
accordance with Section 8(k) of the SS Law.8 However, considering that the legitimate children of Antonio
have reached the age of majority, May-Ann is the only remaining qualified beneficiary and was thus
entitled to 100% of the benefit.

R.A. No. 8282, which is the law in force at the time of retiree Antonio’s death on May 15, 1999, provides
as follows:

"Section 12-B. Retirement Benefits. x x x

(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. Provided, That if he has no primary beneficiaries and he dies
within sixty (60) months from the start of his monthly pension, his secondary beneficiaries shall be entitled
to a lump sum benefit equivalent to the total monthly pensions corresponding to the balance of the five-
year guaranteed period, excluding the dependents’ pension." (Emphasis supplied)
Since Antonio de los Santos retired on March 1, 1996, and began receiving monthly pension since then,
the determination of who his primary beneficiaries were at that times should be based on the relevant
provisions of the applicable prevailing law then, R.A. No. 1161, as amended, which is quoted hereunder:

"Section 8. Terms Defined. x x x

xxxx

(k) Beneficiaries. – The dependent spouse until he remarries and dependent children who shall be the
primary beneficiaries. In their absence, the dependent parents, and subject to the restrictions imposed
on dependent children, the legitimate descendants and illegitimate children who shall be the secondary
beneficiaries. In the absence of any of the foregoing, any other person designed by the covered employee
as secondary beneficiary." (Emphasis supplied)

Applying these provisions to the case at hand, May-Ann de los Santos as the illegitimate child of Antonio
and Cirila is considered her father’s secondary beneficiary who, in the absence of a primary beneficiary x
x x, becomes entitled to the balance of the five-year guaranteed pension as Antonio died just three (3)
years after he began receiving his retirement pension, pursuant to Section 12-B par. (d) of the SS Law, as
amended.9

CA Decision

Gloria appealed the above SSC Resolution to the CA. She insisted that she, as the legal wife, was the
qualified beneficiary to Antonio’s death benefits.

The CA agreed with the SSC in its determination that the marriage of Gloria and Antonio subsisted until
his death and the subsequent marriages contracted by both of them were void for being bigamous. But
contrary to findings of the SSC, the CA found that being the legal wife, Gloria was entitled by law to receive
support from her husband. Thus, her status qualified Gloria to be a dependent and a primary beneficiary
under the law. The dispositive portion of the CA decision reads:

WHEREFORE, in the light of the foregoing, the Petition for Review is GRANTED and the appealed
Resolution dated February 13, 2003, is hereby REVERSED and SET ASIDE. Respondent SSS is DIRECTED to
compute the amount of benefits to which petitioner is entitled under the law.10

Issues

Petitioner SSS and the concerned Branch head present a lone issue for Our consideration: THE
HONORABLE COURT OF APPEALS GRAVELY ERRED IN HOLDING THAT RESPONDENT IS STILL QUALIFIED AS
A PRIMARY BENEFICIARY OF DECEASED SSS MEMBER ANTONIO, UNDER SECTION 12-B IN RELATION TO
SECTION 8(e) and (k) OF THE SS LAW.11

The controversy revolves on who between respondent Gloria, the first wife who divorced Antonio in the
US, or Cirila, the second wife, is his primary beneficiary entitled to claim death benefits from the SSS.

Our Ruling
At the outset, let it be recalled that in 2005, this Court ruled in Dycaico v. Social Security System12 that
the proviso "as of the date of retirement" in Section 12-B(d) of Republic Act No. 8282,13 which qualifies
the term "primary beneficiaries," is unconstitutional for it violates the due process and equal protection
clauses. For ready reference, the concerned provision is reproduced below:

SECTION 12-B. Retirement Benefits. – (a) A member who has paid at least one hundred twenty (120)
monthly contributions prior to the semester of retirement and who (1) has reached the age of sixty (60)
years and is already separated from employment or has ceased to be self-employed or (2) has reached
the age of sixty-five (65) years, shall be entitled for as long as he lives to the monthly pension; Provided,
That he shall have the option to receive his first eighteen (18) monthly pensions in lump sum discounted
at a preferential rate of interest to be determined by the SSS.

xxxx

(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; Provided, That if he has no primary beneficiaries and he dies
within sixty (60) months from the start of his monthly pension, his secondary beneficiaries shall be entitled
to a lump sum benefit equivalent to the total monthly pensions corresponding to the balance of the five-
year guaranteed period, excluding the dependents’ pension. (Emphasis added)

In deciding that death benefits should not be denied to the wife who was married to the deceased retiree
only after the latter’s retirement, this Court in Dycaico reasoned:

x x x In particular, the proviso was apparently intended to prevent sham marriages or those contracted by
persons solely to enable one spouse to claim benefits upon the anticipated death of the other spouse.

x x x However, 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,
regardless of the duration of the said marriage, bears no relation to the achievement of the policy
objective of the law, i.e., "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." x x x14

That said, the reckoning point in determining the beneficiaries of the deceased Antonio should be the
time of his death. There is no need to look into the time of his retirement, as was the course followed by
the SSC in resolving the claim of respondent. We note, however, that considering the circumstances of
this case, the Dycaico ruling does not substantially affect the determination of Antonio’s beneficiaries.

The SS Law clearly and expressly provides who are the qualified beneficiaries entitled to receive benefits
from the deceased:

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

xxxx

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

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

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

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

xxxx

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

As found by both the SSC and the CA, the divorce obtained by respondent against the deceased Antonio
was not binding in this jurisdiction. Under Philippine law, only aliens may obtain divorces abroad, provided
they are valid according to their national law.15 The divorce was obtained by respondent Gloria while she
was still a Filipino citizen and thus covered by the policy against absolute divorces. It did not sever her
marriage ties with Antonio.

However, although respondent was the legal spouse of the deceased, We find that she is still disqualified
to be his primary beneficiary under the SS Law. She fails to fulfill the requirement of dependency upon
her deceased husband Antonio.

Social Security System v. Aguas16 is instructive in determining the extent of the required "dependency"
under the SS Law. In Aguas, the Court ruled that although a husband and wife are obliged to support each
other, whether one is actually dependent for support upon the other cannot be presumed from the fact
of marriage alone.17

Further, Aguas pointed out that a wife who left her family until her husband died and lived with other
men, was not dependent upon her husband for support, financial or otherwise, during the entire period.

Said the Court:

In a parallel case involving a claim for benefits under the GSIS law, the Court defined a dependent as "one
who derives his or her main support from another. Meaning, relying on, or subject to, someone else for
support; not able to exist or sustain oneself, or to perform anything without the will, power, or aid of
someone else." It should be noted that the GSIS law likewise defines a dependent spouse as "the
legitimate spouse dependent for support upon the member or pensioner." In that case, the Court found
it obvious that a wife who abandoned the family for more than 17 years until her husband died, and lived
with other men, was not dependent on her husband for support, financial or otherwise, during that entire
period. Hence, the Court denied her claim for death benefits.
The obvious conclusion then is that a wife who is already separated de facto from her husband cannot be
said to be "dependent for support" upon the husband, absent any showing to the contrary. Conversely, if
it is proved that the husband and wife were still living together at the time of his death, it would be safe
to presume that she was dependent on the husband for support, unless it is shown that she is capable of
providing for herself.18

Respondent herself admits that she left the conjugal abode on two (2) separate occasions, to live with
two different men. The first was in 1965, less than one year after their marriage, when she contracted a
second marriage to Domingo Talens. The second time she left Antonio was in 1983 when she went to the
US, obtained a divorce, and later married an American citizen.

In fine, these uncontroverted facts remove her from qualifying as a primary beneficiary of her deceased
husband.

WHEREFORE, the petition is GRANTED and the appealed Decision REVERSED and SET ASIDE. The
Resolution of the Social Security Commission is REINSTATED.

SO ORDERED.

G.R. No. 165545 March 24, 2006

SOCIAL SECURITY SYSTEM, Petitioner,
vs.
TERESITA JARQUE VDA. DE BAILON, Respondent.

DECISION

CARPIO MORALES,J.:

The Court of Appeals Decision1 dated June 23, 20042 and Resolution dated September 28, 20043
reversing the Resolution dated April 2, 20034 and Order dated June 4, 20035 of the Social Security
Commission (SSC) in SSC Case No. 4-15149-01 are challenged in the present petition for review on
certiorari.

On April 25, 1955, Clemente G. Bailon (Bailon) and Alice P. Diaz (Alice) contracted marriage in Barcelona,
Sorsogon.6

More than 15 years later or on October 9, 1970, Bailon filed before the then Court of First Instance (CFI)
of Sorsogon a petition7 to declare Alice presumptively dead.

By Order of December 10, 1970,8 the CFI granted the petition, disposing as follows:

WHEREFORE, there being no opposition filed against the petition notwithstanding the publication of the
Notice of Hearing in a newspaper of general circulation in the country, Alice Diaz is hereby declared to
[sic] all legal intents and purposes, except for those of succession, presumptively dead.

SO ORDERED.9 (Underscoring supplied)

Close to 13 years after his wife Alice was declared presumptively dead or on August 8, 1983, Bailon
contracted marriage with Teresita Jarque (respondent) in Casiguran, Sorsogon.10

On January 30, 1998, Bailon, who was a member of the Social Security System (SSS) since 1960 and a
retiree pensioner thereof effective July 1994, died.11

Respondent thereupon filed a claim for funeral benefits, and was granted P12,00012 by the SSS.

Respondent filed on March 11, 1998 an additional claim for death benefits13 which was also granted by
the SSS on April 6, 1998.14

Cecilia Bailon-Yap (Cecilia), who claimed to be a daughter of Bailon and one Elisa Jayona (Elisa) contested
before the SSS the release to respondent of the death and funeral benefits. She claimed that Bailon
contracted three marriages in his lifetime, the first with Alice, the second with her mother Elisa, and the
third with respondent, all of whom are still alive; she, together with her siblings, paid for Bailon’s medical
and funeral expenses; and all the documents submitted by respondent to the SSS in support of her claims
are spurious.

In support of her claim, Cecilia and her sister Norma Bailon Chavez (Norma) submitted an Affidavit dated
February 13, 199915 averring that they are two of nine children of Bailon and Elisa who cohabited as
husband and wife as early as 1958; and they were reserving their right to file the necessary court action
to contest the marriage between Bailon and respondent as they personally know that Alice is "still very
much alive."16

In the meantime, on April 5, 1999, a certain Hermes P. Diaz, claiming to be the brother and guardian of
"Aliz P. Diaz," filed before the SSS a claim for death benefits accruing from Bailon’s death,17 he further
attesting in a sworn statement18 that it was Norma who defrayed Bailon’s funeral expenses.

Elisa and seven of her children19 subsequently filed claims for death benefits as Bailon’s beneficiaries
before the SSS.20

Atty. Marites C. de la Torre of the Legal Unit of the SSS Bicol Cluster, Naga City recommended the
cancellation of payment of death pension benefits to respondent and the issuance of an order for the
refund of the amount paid to her from February 1998 to May 1999 representing such benefits; the denial
of the claim of Alice on the ground that she was not dependent upon Bailon for support during his lifetime;
and the payment of the balance of the five-year guaranteed pension to Bailon’s beneficiaries according
to the order of preference provided under the law, after the amount erroneously paid to respondent has
been collected. The pertinent portions of the Memorandum read:

1. Aliz [sic] Diaz never disappeared. The court must have been misled by misrepresentation in declaring
the first wife, Aliz [sic] Diaz, as presumptively dead.

xxxx

x x x the Order of the court in the "Petition to Declare Alice Diaz Presumptively Dead," did not become
final. The presence of Aliz [sic] Diaz, is contrary proof that rendered it invalid.
xxxx

3. It was the deceased member who abandoned his wife, Aliz [sic] Diaz. He, being in bad faith, and is the
deserting spouse, his remarriage is void, being bigamous.

xxxx

In this case, it is the deceased member who was the deserting spouse and who remarried, thus his
marriage to Teresita Jarque, for the second time was void as it was bigamous. To require affidavit of
reappearance to terminate the second marriage is not necessary as there is no disappearance of Aliz [sic]
Diaz, the first wife, and a voidable marriage [sic], to speak of.21 (Underscoring supplied)

In the meantime, the SSS Sorsogon Branch, by letter of August 16, 2000,22 advised respondent that as
Cecilia and Norma were the ones who defrayed Bailon’s funeral expenses, she should return the P12,000
paid to her.

In a separate letter dated September 7, 1999,23 the SSS advised respondent of the cancellation of her
monthly pension for death benefits in view of the opinion rendered by its legal department that her
marriage with Bailon was void as it was contracted while the latter’s marriage with Alice was still
subsisting; and the December 10, 1970 CFI Order declaring Alice presumptively dead did not become final,
her "presence" being "contrary proof" against the validity of the order. It thus requested respondent to
return the amount of P24,000 representing the total amount of monthly pension she had received from
the SSS from February 1998 to May 1999.

Respondent protested the cancellation of her monthly pension for death benefits by letter to the SSS
dated October 12, 1999.24 In a subsequent letter dated November 27, 199925 to the SSC, she reiterated
her request for the release of her monthly pension, asserting that her marriage with Bailon was not
declared before any court of justice as bigamous or unlawful, hence, it remained valid and subsisting for
all legal intents and purposes as in fact Bailon designated her as his beneficiary.

The SSS, however, by letter to respondent dated January 21, 2000,26 maintained the denial of her claim
for and the discontinuance of payment of monthly pension. It advised her, however, that she was not
deprived of her right to file a petition with the SSC.

Respondent thus filed a petition27 against the SSS before the SSC for the restoration to her of her
entitlement to monthly pension.

In the meantime, respondent informed the SSS that she was returning, under protest, the amount of
P12,000 representing the funeral benefits she received, she alleging that Norma and her siblings "forcibly
and coercively prevented her from spending any amount during Bailon’s wake."28

After the SSS filed its Answer29 to respondent’s petition, and the parties filed their respective Position
Papers, one Alicia P. Diaz filed an Affidavit30 dated August 14, 2002 with the SSS Naga Branch attesting
that she is the widow of Bailon; she had only recently come to know of the petition filed by Bailon to
declare her presumptively dead; it is not true that she disappeared as Bailon could have easily located
her, she having stayed at her parents’ residence in Barcelona, Sorsogon after she found out that Bailon
was having an extramarital affair; and Bailon used to visit her even after their separation.
By Resolution of April 2, 2003, the SSC found that the marriage of respondent to Bailon was void and,
therefore, she was "just a common-law-wife." Accordingly it disposed as follows, quoted verbatim:

WHEREFORE, this Commission finds, and so holds, that petitioner Teresita Jarque-Bailon is not the
legitimate spouse and primary beneficiary of SSS member Clemente Bailon.

Accordingly, the petitioner is hereby ordered to refund to the SSS the amount of P24,000.00 representing
the death benefit she received therefrom for the period February 1998 until May 1999 as well as
P12,000.00 representing the funeral benefit.

The SSS is hereby ordered to pay Alice (a.k.a. Aliz) Diaz-Bailon the appropriate death benefit arising from
the demise of SSS member Clemente Bailon in accordance with Section 8(e) and (k) as well as Section 13
of the SS Law, as amended, and its prevailing rules and regulations and to inform this Commission of its
compliance herewith.

SO ORDERED.31 (Underscoring supplied)

In so ruling against respondent, the SSC ratiocinated.

After a thorough examination of the evidence at hand, this Commission comes to the inevitable conclusion
that the petitioner is not the legitimate wife of the deceased member.

xxxx

There is x x x ample evidence pointing to the fact that, contrary to the declaration of the then CFI of
Sorsogon (10th Judicial District), the first wife never disappeared as the deceased member represented in
bad faith. This Commission accords credence to the findings of the SSS contained in its Memorandum
dated August 9, 1999,32 revealing that Alice (a.k.a. Aliz) Diaz never left Barcelona, Sorsogon, after her
separation from Clemente Bailon x x x.

As the declaration of presumptive death was extracted by the deceased member using artifice and by
exerting fraud upon the unsuspecting court of law, x x x it never had the effect of giving the deceased
member the right to marry anew. x x x [I]t is clear that the marriage to the petitioner is void, considering
that the first marriage on April 25, 1955 to Alice Diaz was not previously annulled, invalidated or otherwise
dissolved during the lifetime of the parties thereto. x x x as determined through the investigation
conducted by the SSS, Clemente Bailon was the abandoning spouse, not Alice Diaz Bailon.

xxxx

It having been established, by substantial evidence, that the petitioner was just a common-law wife of the
deceased member, it necessarily follows that she is not entitled as a primary beneficiary, to the latter’s
death benefit. x x x

xxxx

It having been determined that Teresita Jarque was not the legitimate surviving spouse and primary
beneficiary of Clemente Bailon, it behooves her to refund the total amount of death benefit she received
from the SSS for the period from February 1998 until May 1999 pursuant to the principle of solutio indebiti
xxx

Likewise, it appearing that she was not the one who actually defrayed the cost of the wake and burial of
Clemente Bailon, she must return the amount of P12,000.00 which was earlier given to her by the SSS as
funeral benefit.33 (Underscoring supplied)

Respondent’s Motion for Reconsideration34 having been denied by Order of June 4, 2003, she filed a
petition for review35 before the Court of Appeals (CA).

By Decision of June 23, 2004, the CA reversed and set aside the April 2, 2003 Resolution and June 4, 2003
Order of the SSC and thus ordered the SSS to pay respondent all the pension benefits due her. Held the
CA:

x x x [T]he paramount concern in this case transcends the issue of whether or not the decision of the then
CFI, now RTC, declaring Alice Diaz presumptively dead has attained finality but, more importantly,
whether or not the respondents SSS and Commission can validly re-evaluate the findings of the RTC, and
on its own, declare the latter’s decision to be bereft of any basis. On similar import, can respondents SSS
and Commission validly declare the first marriage subsisting and the second marriage null and void?

xxxx

x x x while it is true that a judgment declaring a person presumptively dead never attains finality as the
finding that "the person is unheard of in seven years is merely a presumption juris tantum," the second
marriage contracted by a person with an absent spouse endures until annulled. It is only the competent
court that can nullify the second marriage pursuant to Article 87 of the Civil Code and upon the
reappearance of the missing spouse, which action for annulment may be filed. Nowhere does the law
contemplates [sic] the possibility that respondent SSS may validly declare the second marriage null and
void on the basis alone of its own investigation and declare that the decision of the RTC declaring one to
be presumptively dead is without basis.

Respondent SSS cannot arrogate upon itself the authority to review the decision of the regular courts
under the pretext of determining the actual and lawful beneficiaries of its members. Notwithstanding its
opinion as to the soundness of the findings of the RTC, it should extend due credence to the decision of
the RTC absent of [sic] any judicial pronouncement to the contrary. x x x

x x x [A]ssuming arguendo that respondent SSS actually possesses the authority to declare the decision of
the RTC to be without basis, the procedure it followed was offensive to the principle of fair play and thus
its findings are of doubtful quality considering that petitioner Teresita was not given ample opportunity
to present evidence for and her behalf.

xxxx

Respondent SSS is correct in stating that the filing of an Affidavit of Reappearance with the Civil Registry
is no longer practical under the premises. Indeed, there is no more first marriage to restore as the marital
bond between Alice Diaz and Clemente Bailon was already terminated upon the latter’s death. Neither is
there a second marriage to terminate because the second marriage was likewise dissolved by the death
of Clemente Bailon.
However, it is not correct to conclude that simply because the filing of the Affidavit of Reappearance with
the Civil Registry where parties to the subsequent marriage reside is already inutile, the respondent SSS
has now the authority to review the decision of the RTC and consequently declare the second marriage
null and void.36 (Emphasis and underscoring supplied)

The SSC and the SSS separately filed their Motions for Reconsideration37 which were both denied for lack
of merit.

Hence, the SSS’ present petition for review on certiorari38 anchored on the following grounds:

THE DECISION OF THE HONORABLE COURT OF APPEALS IS CONTRARY TO LAW.

II

THE HONORABLE COURT OF APPEALS GRAVELY ABUSED ITS DISCRETION AMOUNTING TO LACK OF
JURISDICTION.39

The SSS faults the CA for failing to give due consideration to the findings of facts of the SSC on the prior
and subsisting marriage between Bailon and Alice; in disregarding the authority of the SSC to determine
to whom, between Alice and respondent, the death benefits should be awarded pursuant to Section 540
of the Social Security Law; and in declaring that the SSS did not give respondent due process or ample
opportunity to present evidence in her behalf.

The SSS submits that "the observations and findings relative to the CFI proceedings are of no moment to
the present controversy, as the same may be considered only as obiter dicta in view of the SSC’s finding
of the existence of a prior and subsisting marriage between Bailon and Alice by virtue of which Alice has
a better right to the death benefits."41

The petition fails.

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.

The two marriages involved herein having been solemnized prior to the effectivity on August 3, 1988 of
the Family Code, the applicable law to determine their validity is the Civil Code which was the law in effect
at the time of their celebration.42
Article 83 of the Civil Code43 provides:

Art. 83. Any marriage subsequently contracted by any person during the lifetime of the first spouse of
such person with any person other than such first spouse shall be illegal and void from its performance,
unless:

(1) The first marriage was annulled or dissolved; or

(2) The first spouse had been absent for seven consecutive years at the time of the second marriage
without the spouse present having news of the absentee being alive, or if the absentee, though he has
been absent for less than seven years, is generally considered as dead and believed to be so by the spouse
present at the time of contracting such subsequent marriage, or if the absentee is presumed dead
according to Articles 390 and 391. The marriage so contracted shall be valid in any of the three cases until
declared null and void by a competent court. (Emphasis and underscoring supplied)

Under the foregoing provision of the Civil Code, a subsequent marriage contracted during the lifetime of
the first spouse is illegal and void ab initio unless the prior marriage is first annulled or dissolved or
contracted under any of the three exceptional circumstances. It bears noting that the marriage under any
of these exceptional cases is deemed valid "until declared null and void by a competent court." It follows
that the onus probandi in these cases rests on the party assailing the second marriage.44

In the case at bar, as found by the CFI, Alice had been absent for 15 consecutive years45 when Bailon
sought the declaration of her presumptive death, which judicial declaration was not even a requirement
then for purposes of remarriage.46

Eminent jurist Arturo M. Tolentino (now deceased) commented:

Where a person has entered into two successive marriages, a presumption arises in favor of the validity
of the second marriage, and the burden is on the party attacking the validity of the second marriage to
prove that the first marriage had not been dissolved; it is not enough to prove the first marriage, for it
must also be shown that it had not ended when the second marriage was contracted. The presumption in
favor of the innocence of the defendant from crime or wrong and of the legality of his second marriage,
will prevail over the presumption of the continuance of life of the first spouse or of the continuance of
the marital relation with such first spouse.47 (Underscoring supplied)

Under the Civil Code, a subsequent marriage being voidable,48 it is terminated by final judgment of
annulment in a case instituted by the absent spouse who reappears or by either of the spouses in the
subsequent marriage.

Under the Family Code, no judicial proceeding to annul a subsequent marriage is necessary. Thus Article
42 thereof provides:

Art. 42. The subsequent marriage referred to in the preceding Article shall be automatically terminated
by the recording of the affidavit of reappearance of the absent spouse, unless there is a judgment
annulling the previous marriage or declaring it void ab initio.

A sworn statement of the fact and circumstances of reappearance shall be recorded in the civil registry of
the residence of the parties to the subsequent marriage at the instance of any interested person, with
due notice to the spouses of the subsequent marriage and without prejudice to the fact of reappearance
being judicially determined in case such fact is disputed. (Emphasis and underscoring supplied)

The termination of the subsequent marriage by affidavit provided by the above-quoted provision of the
Family Code does not preclude the filing of an action in court to prove the reappearance of the absentee
and obtain a declaration of dissolution or termination of the subsequent marriage.49

If the absentee reappears, but no step is taken to terminate the subsequent marriage, either by affidavit
or by court action, such absentee’s mere reappearance, even if made known to the spouses in the
subsequent marriage, will not terminate such marriage.50 Since the second marriage has been contracted
because of a presumption that the former spouse is dead, such presumption continues inspite of the
spouse’s physical reappearance, and by fiction of law, he or she must still be regarded as legally an
absentee until the subsequent marriage is terminated as provided by law.51

If the subsequent marriage is not terminated by registration of an affidavit of reappearance or by judicial

declaration but by death of either spouse as in the case at bar, Tolentino submits:

x x x [G]enerally if a subsequent marriage is dissolved by the death of either spouse, the effects of
dissolution of valid marriages shall arise. The good or bad faith of either spouse can no longer be raised,
because, as in annullable or voidable marriages, the marriage cannot be questioned except in a direct
action for annulment.52 (Underscoring supplied)

Similarly, Lapuz v. Eufemio53 instructs:

In fact, even if the bigamous marriage had not been void ab initio but only voidable under Article 83,
paragraph 2, of the Civil Code, because the second marriage had been contracted with the first wife having
been an absentee for seven consecutive years, or when she had been generally believed dead, still the
action for annulment became extinguished as soon as one of the three persons involved had died, as
provided in Article 87, paragraph 2, of the Code, requiring that the action for annulment should be brought
during the lifetime of any one of the parties involved. And furthermore, the liquidation of any conjugal
partnership that might have resulted from such voidable marriage must be carried out "in the testate or
intestate proceedings of the deceased spouse," as expressly provided in Section 2 of the Revised Rule 73,
and not in the annulment proceeding.54 (Emphasis and underscoring supplied)

It bears reiterating that a voidable marriage cannot be assailed collaterally except in a direct proceeding.
Consequently, such marriages can be assailed only during the lifetime of the parties and not after the
death of either, in which case the parties and their offspring will be left as if the marriage had been
perfectly valid.55 Upon the death of either, the marriage cannot be impeached, and is made good ab
initio.56

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.

In light of the foregoing discussions, consideration of the other issues raised has been rendered
unnecessary.

WHEREFORE, the petition is DENIED.

No costs.
SO ORDERED.

G.R. No. 175952 April 30, 2008

SOCIAL SECURITY SYSTEM, petitioner,

vs.
ATLANTIC GULF AND PACIFIC COMPANY OF MANILA, INC. and SEMIRARA COAL CORPORATION,
respondents.

DECISION

TINGA, J.:

In this Petition for Review on Certiorari1 under Rule 45 of the 1997 Rules of Civil Procedure, petitioner
Republic of the Philippines represented by the Social Security System (SSS) assails the Decision2

dated 31 August 2006 of the Eleventh Division of the Court of Appeals and its Resolution3 dated 19
December 2006 denying petitioner’s Motion for Reconsideration.

Following are the antecedents culled from the decision of the Court of Appeals:

On 13 February 2004, Atlantic Gulf and Pacific Company of Manila, Inc. (AG & P) and Semirara Coal
Corporation (SEMIRARA) (collectively referred to as private respondents) filed a complaint for specific
performance and damages against SSS before the Regional Trial Court of Batangas City, Branch 3,
docketed as Civil Case No. 7441. The complaint alleged that:

xxx

3. Sometime in 2000, plaintiff informed the SSS in writing of its premiums and loan amortization
delinquencies covering the period from January 2000 to May 2000 amounting to P7.3 Million. AG&P
proposed to pay its said arrears by end of 2000, but requested for the condonation of all penalties;

4. In turn, the defendant suggested two (2) options to AG&P, either to pay by installment or through
"dacion en pago";

5. AG&P chose to settle its obligation with the SSS under the second option, that is through dacion en
pago of its 5,999 sq. m. property situated in Baguio City covered by TCT No. 3941 with an appraised value
of about P80.0 Million. SSS proposes to carve-out from the said property an area sufficient to cover
plaintiffs’ delinquencies. AG&P, however, is not amenable to subdivide its Baguio property;

6. AG&P then made another proposal to SSS. This time, offering as payment a portion of its 58,153 square
meter-lot, situated in F.S. Sebastian, Sto. Niño, San Pascual, Batangas. In addition, SSS informed AG&P of
its decision to include other companies within the umbrella of DMCI group with arrearages with the SSS.
In the process of elimination of the companies belonging to the DMCI group with possible outstanding
obligation with the SSS, it was only SEMIRARA which was left with outstanding delinquencies with the SSS.
Thus, SEMIRARA’s inclusion in the proposed settlement through dacion en pago;
7. AG&P was, thereafter, directed by the defendant to submit certain documents, such as Transfer
Certificate of Title, Tax Declaration covering the subject lot, and the proposed subdivision plan, which
requirements AG&P immediately complied;

8. On April 4, 2001, SSS, in its Resolution No. 270, finally approved AG&P’s proposal to settle its and
SEMIRARA’s delinquencies through dacion en pago, which as of March 31, 2001 amounted to
P29,261,902.45. Approval of AG&P’s proposal was communicated to it by Ms. Aurora E.L. Ortega, Vice-
President, NCR-Group of the SSS in a letter dated April 23, 2001. … ;

9. As a result of the approval of the dacion en pago, posting of contributions and loan amortization to
individual member accounts, both for AG&P and SEMIRARA employees, was effected immediately
thereafter. Thus, the benefits of the member-employees of both companies were restored;

10. From the time of the approval of AG&P’s proposal up to the present, AG&P is (sic) religiously remitting
the premium contributions and loan amortization of its member-employees to the defendant;

11. To effect the property transfer, a Deed of Assignment has to be executed between the plaintiffs and
the defendant. Because of SSS failure to come up with the required Deed of Assignment to effect said
transfer, AG&P prepared the draft and submitted it to the Office of the Vice-President – NCR thru SSS
Baclaran Branch in July 2001. Unfortunately, the defendant failed to take any action on said Deed of
Assignment causing AG&P to re-submit it to the same office of the Vice-President – NCR in December
2001. From its original submission of the Deed of Assignment in July 2001 to its re-submission in December
2001, and SSS returning of the revised draft in February 28, 2003 AG&P was consistent in its regular follow
ups with SSS as to the status of its submitted Deed of Assignment;

12. On February 28, 2003, or more than a year after the approval of AG&P’s proposal, defendant sent the
revised copy of the Deed of Assignment to AG&P. However, the amount of the plaintiffs’ obligation
appearing in the approved Deed of Assignment has ballooned from P29,261,902.45 to P40,846,610.64
allegedly because of the additional interests and penalty charges assessed on plaintiffs’ outstanding
obligation from April 2001, the date of approval of the proposal, up to January 2003;

13. AG&P demanded for the waiver and deletion of the additional interests on the ground that delay in
the approval of the deed and the subsequent delay in conveyance of the property in defendant’s name
was solely attributable to the defendant; hence, to charge plaintiffs with additional interests and penalties
amounting to more than P10,000,000.00, would be unreasonable….;

14. AG&P and SEMIRARA maintain their willingness to settle their alleged obligation of P29,261,902.45 to
SSS. Defendant, however, refused to accept the payment through dacion en pago, unless plaintiffs also
pay the additional interests and penalties being charged;

xxx

Instead of filing an answer, SSS moved for the dismissal of the complaint for lack of jurisdiction and non-
exhaustion of administrative remedies. In an order dated 28 July 2004, the trial court granted SSS’s motion
and dismissed private respondents’ complaint. The pertinent portions of the assailed order are as follows:
Clearly, the motion is triggered on the issue of the court’s jurisdiction over the subject matter and the
nature of the instant complaint. The length and breadth of the complaint as perused, boils down to the
questions of premium and loan amortization delinquencies of the plaintiff, the option taken for the
payment of the same in favor of the defendant and the disagreement between the parties as to the
amount of the unpaid contributions and salary loan repayments. In other words, said questions are
directly related to the collection of contributions due the defendant. Republic Act No. 1161 as amended
by R.A. No. 8282, specifically provides that any dispute arising under the said Act shall be cognizable by
the Commission and any case filed with respect thereto shall be heard by the Commission. Hence, a
procedural process mandated by a special law.

Observingly, the running dispute between plaintiffs and defendant originated from the disagreement as
to the amount of unpaid contributions and the amount of the penalties imposed appurtenant thereto.
The alleged dacion en pago is crystal clear manifestation of offering a special form of payment which to
the mind of the court will produce effect only upon acceptance by the offeree and the observance and
compliance of the required formalities by the parties. No matter in what form it may be, still the court
believes that the subject matter is the payment of contributions and the corresponding penalties which
are within the ambit of Sec. 5 (a) of R.A. No. 1161, as amended by R.A. No. 8282.

WHEREFORE, the Court having no jurisdiction over the subject matter of the instant complaint, the motion
is granted and this case is hereby ordered DISMISSED.

SO ORDERED.4

Private respondents moved for the reconsideration of the order but the same was denied in an Order
dated 15 September 2004.

Consequently, private respondents filed an appeal before the Court of Appeals alleging that the trial court
erred in its pronouncement that it had no jurisdiction over the subject matter of the complaint and in
granting the motion to dismiss.

The Court of Appeals reversed and set aside the trial court’s challenged order, granted private
respondents’ appeal and ordered the trial court to proceed with the civil case with dispatch. From the
averments in their complaint, the appellate court observed that private respondents are seeking to
implement the Deed of Assignment which they had drafted and submitted to SSS sometime in July 2001,
pursuant to SSS’s letter addressed to AG& P dated 23 April 2001 approving AG&P and SEMIRARA’S
delinquencies through dacion en pago, which as of 31 March 2001, amounted to P29,261,902.45. The
appellate court thus held that the subject of the complaint is no longer the payment of the premium and
loan amortization delinquencies, as well as the penalties appurtenant thereto, but the enforcement of
the dacion en pago pursuant to SSS Resolution No. 270. The action then is one for specific performance
which case law holds is an action incapable of pecuniary estimation falling under the jurisdiction of the
Regional Trial Court.5

SSS filed a motion for reconsideration of the appellate court’s decision but the same was denied in a
Resolution dated 19 December 2006.

Now before the Court, SSS insists on the Social Security Commission’s (the Commission) jurisdiction over
the complaint pursuant to Section 5 (a) of Republic Act (R.A.) No. 8282. SSS maintains the Commission’s
jurisdiction over all disputes arising from the provisions of R.A. No. 1161, amended by R.A. No. 8282 to
the exclusion of trial courts.6

The main issue in this case pertains to which body has jurisdiction to entertain a controversy arising from
the non-implementation of a dacion en pago agreed upon by the parties as a means of settlement of
private respondents’ liabilities.

At the outset, it is well to restate the rule that what determines the nature of the action as well as the
tribunal or body which has jurisdiction over the case are the allegations in the complaint.7

The pertinent provision of law detailing the jurisdiction of the Commission is Section 5(a) of R.A. No. 1161,
as amended by R.A. No. 8282, otherwise known as the Social Security Act of 1997, to wit:

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, and any case filed with respect thereto shall be heard by the Commission, or any of its
members, or by hearing officers duly authorized by the Commission and decided within the mandatory
period of twenty (20) days after the submission of the evidence. The filing, determination and settlement
of disputes shall be governed by the rules and regulations promulgated by the Commission.

The law clearly vests upon the Commission jurisdiction over "disputes arising under this Act with respect
to coverage, benefits, contributions and penalties thereon or any matter related thereto..." Dispute is
defined as "a conflict or controversy."8

From the allegations of respondents’ complaint, it readily appears that there is no longer any dispute with
respect to respondents’ accountability to the SSS. Respondents had, in fact, admitted their delinquency
and offered to settle them by way of dacion en pago subsequently approved by the SSS in Resolution No.
270-s. 2001. SSS stated in said resolution that "the dacion en pago proposal of AG&P Co. of Manila and
Semirara Coals Corporation to pay their liabilities in the total amount of P30,652,710.71 as of 31 March
2001 by offering their 5.8 ha. property located in San Pascual, Batangas, be, as it is hereby, approved.."9
This statement unequivocally evinces its consent to the dacion en pago. In Vda. de Jayme v. Court of
Appeals,10 the Court ruled significantly as follows:

Dacion en pago is the delivery and transmission of ownership of a thing by the debtor to the creditor as
an accepted equivalent of the performance of the obligation. It is a special mode of payment where the
debtor offers another thing to the creditor who accepts it as equivalent of payment of an outstanding
debt. The undertaking really partakes in one sense of the nature of sale, that is the creditor is really buying
the thing or property of the debtor, payment for which is to be charged against the debtor’s debt. As such,
the essential elements of a contract of sale, namely, consent, object certain, and cause or consideration
must be present. In its modern concept, what actually takes place in dacion en pago is an objective
novation of the obligation where the thing offered as an accepted equivalent of the performance of an
obligation is considered as the object of the contract of sale, while the debt is considered as the purchase
price. In any case, common consent is an essential prerequisite, be it sale or novation, to have the effect
of totally extinguishing the debt or obligation.11

The controversy, instead, lies in the non-implementation of the approved and agreed dacion en pago on
the part of the SSS. As such, respondents filed a suit to obtain its enforcement which is, doubtless, a suit
for specific performance and one incapable of pecuniary estimation beyond the competence of the
Commission.12 Pertinently, the Court ruled in Singson v. Isabela Sawmill,13 as follows:

In determining whether an action is one the subject matter of which is not capable of pecuniary estimation
this Court has adopted the criterion of first ascertaining the nature of the principal action or remedy
sought. If it is primarily for the recovery of a sum of money, the claim is considered capable of pecuniary
estimation, and whether jurisdiction in the municipal courts or in the courts of first instance would depend
on the amount of the claim. However, where the basic issue is something other than the right to recover
a sum of money, where the money claim is purely incidental to, or a consequence of, the principal relief
sought, this Court has considered such actions as cases where the subject of the litigation may not be
estimated in terms of money, and are cognizable exclusively by courts of first instance (now Regional Trial
Courts).14

In fine, the Court finds the decision of the Court of Appeals in accord with law and jurisprudence.

WHEREFORE, the petition is DENIED. The Decision dated 31 August 2006 of the Court of Appeals Eleventh
Division in CA-G.R. CV No. 83775 AFFIRMED.

Let the case be remanded to the trial court for further proceedings.

SO ORDERED.

G.R. No. 147745 April 9, 2003

MARIA BUENA OBRA, petitioner,

vs.
SOCIAL SECURITY SYSTEM (Jollar Industrial Sales and Services Inc.), respondents.

PUNO, J.:

On appeal is the Decision1 of the Court of Appeals in CA-G.R. SP No. 60704 dated September 27, 2000
sustaining the Decision2 of the Employees' Compensation Commission dated April 13, 2000, as well as its
subsequent Resolution3 dated March 6, 2001 denying petitioner's Motion for Reconsideration.

The facts of the case are as follows:

Juanito Buena Obra, husband of petitioner, worked as a driver for twenty-four (24) years and five (5)
months. His first and second employers were logging companies. Thereafter, he was employed at Jollar
Industrial Sales and Services Inc. as a dump truck driver from January 1980 to June 1988. He was assigned
to the following projects:4

1. January 1980 to December 1981 – F.F. Cruz Project, Nabua, Camarines Sur – hauling/delivery of filling
materials from quarry to job site

2. January 1982 to December 1983 – F.F. Cruz, 300 MW Coal Fire Thermal Plant, Calaca, Bacungan and
Makban Geothermal Plant, Los Baños, Laguna – hauling/delivery of filling materials from quarry to job site
3. January 1984 to December 1985 – Dizon Copper Silver Mines, Pili, San Marcelino, Zambales –
hauling/delivery filling materials from quarry to job site

4. January 1986 to June 1988 – Metro Manila Hauling Project

On 27 June 1988, Juanito suffered a heart attack while driving a dump truck inside the work compound,
and died shortly thereafter. In the Report of Death5 submitted by his employer to the Social Security
System (SSS), Juanito expired at the Worker's Quarters at 10:30 a.m., of Myocardial Infarction.

Petitioner Maria M. Buenaobra immediately filed her claim for death benefits under the SSS law. She
started receiving her pension in November 1988. Petitioner was, however, unaware of the other
compensation benefits due her under Presidential Decree No. 626, as amended, or the Law on Employees'
Compensation. In September 1998, or more than ten (10) years after the death of her husband, that she
learned of the benefits under P.D. No. 626 through the television program of then broadcaster Ted Failon
who informed that one may claim for Employees Compensation Commission (ECC) benefits if the spouse
died while working for the company. Petitioner prepared the documents to support her claim for ECC
benefits. On 23 April 1999, she filed with the SSS her claim for funeral benefits under P.D. No. 626, as
amended, which was docketed as SSS # 04-0089326-0.6

On 28 July 1999, the SSS denied the claim of petitioner for funeral benefits ruling that the cause of death
of Juanito was not work-connected, absent a causal relationship between the illness and the job. Caridad
R. Borja, Assistant Vice-President National Capital Region (AVP – NCR) Central of the SSS Member
Assistance Center in Quezon City wrote:

"Please be informed that funeral claim under the Employees Compensation is hereby denied. Per medical
evaluation, cause of death of subject member's (sic) cannot be considered work connected since there is
no causal relationship between the illness and the job."

On 8 October 1999, petitioner wrote to Atty. Teofilo E. Hebron, Executive Director of the ECC, appealing
the denial of her claim. On 11 November 1999, Atty. Hebron ordered Dr. Simeon Z. Gonzales, Assistant
Vice-President (AVP) of the Medical Services Group of the SSS to review the claim of petitioner.

On 23 November 1999, the Medical Services Group through Dr. Perla A. Taday, AVP for Medical
Operations, concluded its re-evaluation and affirmed the denial of petitioner's claim. It reiterated that
"there is no causal relationship between the cause of death/illness and member's job as dump truck
driver."7 Pursuant to Section 5, Rule XVIII of the Implementing Rules of PD 626, the records of the
deceased Juanito were elevated to the Commission.

On 13 April 2000, the Commission rendered a decision, dismissing the appeal.8 It ruled that petitioner
failed to show by substantial evidence that her husband's cause of death was due to, or the risk of
contracting his ailment was increased by his occupation and working conditions, as per Section 1(b), Rule
III of P.D. No. 626, as amended. In addition, the Commission declared that petitioner's claim has
prescribed, citing ECC Resolution No. 93-08-0068.

Petitioner appealed to the Court of Appeals. She alleged that her cause of action had not prescribed
because the filing of her claim for SSS benefits shortly after Juanito's death suspended the running of the
prescriptive period for filing EC claims, as per Item No. III of ECC Resolution No. 90-03-0022 dated 23
March 1990. The appellate court dismissed the petition. It ruled that petitioner's filing of her claim for SSS
benefits shortly after Juanito's death did not suspend the running of the prescriptive period for filing EC
claims. It interpreted the aforementioned ECC Resolutions to mean that a claimant must indicate the kind
of claim filed before the running of the prescriptive period for filing EC claims may be interrupted. In the
case at bar, petitioner indeed filed a claim with SSS. In fact, she has been receiving her pension since
November 1988. However, she failed to specify whether the basis of her claim was any contingency which
may be held compensable under the EC Program.9

In addition, the Court of Appeals cited P.D. No. 626 which states that a contingency may be held
compensable if listed in Annex "A" of the Rules Implementing Employees' Compensation as an
occupational disease, and satisfying all conditions set forth therein; or if not listed as an occupational
disease, or listed but has not satisfied the conditions set forth therein, it must be proven by substantial
evidence that the risk of contracting the disease which caused the death of the member, was increased
by the member's working conditions.10

The appellate court likewise held that the three-year prescriptive period does not apply in the instant
case. Instead, it applied Art. 1142(2) of the Civil Code which reads:

"Art. 1144. The following actions must be brought within ten (10) years from the time the right of action
accrues:

(1) Upon a written contract;

(2) Upon an obligation created by law;

(3) Upon a judgment. [Emphasis supplied.]"

The appellate court then held that the petitioner's cause of action has prescribed. Petitioner's husband
died on 27 June 1988. She filed her claim for funeral benefits under P.D. No. 626 or the Law on Employees'
Compensation only on 23 April 1999, or more than ten (10) years from his death.

Lastly, the appellate court ruled that even assuming petitioner's cause of action has not prescribed, her
claim for Employees' Compensation benefits cannot prosper because of her failure to prove by substantial
evidence that her husband's working conditions increased the risk of contracting the myocardial infarction
that caused his death.

Petitioner's Motion for Reconsideration dated 27 September 2000 was denied by the appellate court in a
Resolution promulgated on 6 March 2001.

Hence, this petition. The following issues are raised:11

(1) WHETHER, INDEED, THE CLAIM OF PETITIONER, HAD PRESCRIBED.

(2) WHETHER OR NOT THE ILLNESS OF PETITIONER'S HUSBAND, MYOCARDIAL INFARCTION, IS WORK-
RELATED.

On the first issue, we rule that the claim of petitioner for funeral benefits under P.D. No. 626, as amended,
has not yet prescribed.
The issue of prescription in the case at bar is governed by P.D. No. 626, or the Law on Employees'
Compensation. Art. 201 of P.D. No. 626 and Sec. 6, Rule VII of the 1987 Amended Rules on Employees'
Compensation both read as follows:

"No claim for compensation shall be given due course unless said claim is filed with the System within
three years from the time the cause of action accrued."

This is the general rule. The exceptions are found in Board Resolution 93-08-0068 and ECC Rules of
Procedure for the Filing and Disposition of Employees' Compensation Claims. Board Resolution 93-08-
0068 issued on 5 August 1993, states:

"A claim for employee's compensation must be filed with System (SSS/GSIS) within three (3) years from
the time the cause of action accrued, provided however, that any claim filed within the System for any
contingency that may be held compensable under the Employee's Compensation Program (ECP) shall be
considered as the EC claim itself. The three-year prescriptive period shall be reckoned from the onset of
disability, or date of death. In case of presumptive death, the three (3) years limitation shall be counted
from the date the missing person was officially declared to be presumptively dead." (emphasis supplied)

In addition, Section 4(b), Rule 3 of the ECC Rules of Procedure for the Filing and Disposition of Employees'
Compensation Claims, reads:

"RULE 3. FILING OF CLAIM

Section 4. When to file.

(a) Benefit claims shall be filed with the GSIS or the SSS within three (3) years from the date of the
occurrence of the contingency (sickness, injury, disability or death).

(b) Claims filed beyond the 3-year prescriptive period may still be given due course, provided that:

1. A claim was filed for Medicare, retirement with disability, burial, death claims, or life (disability)
insurance, with the GSIS within three (3) years from the occurrence of the contingency.

2. In the case of the private sector employees, a claim for Medicare, sickness, burial, disability or death
was filed within three (3) years from the occurrence of the contingency.

3. In any of the foregoing cases, the employees' compensation claim shall be filed with the GSIS or the SSS
within a reasonable time as provided by law. [Emphasis supplied.]"

We agree with the petitioner that her claim for death benefits under the SSS law should be considered as
the Employees' Compensation claim itself. This is but logical and reasonable because the claim for death
benefits which petitioner filed with the SSS is of the same nature as her claim before the ECC.
Furthermore, the SSS is the same agency with which Employees' Compensation claims are filed. As
correctly contended by the petitioner, when she filed her claim for death benefits with the SSS under the
SSS law, she had already notified the SSS of her employees' compensation claim, because the SSS is the
very same agency where claims for payment of sickness/disability/death benefits under P.D. No. 626 are
filed.
Section 4(b)(2), Rule 3 of the ECC Rules of Procedure for the Filing and Disposition of the Employees'
Compensation Claims, quoted above, also provides for the conditions when EC claims filed beyond the
three-year prescriptive period may still be given due course. Section 4(b)(2) states the condition for
private sector employees, requiring that a claim for Medicare, sickness, burial, disability or death should
be filed within three (3) years from the occurrence of the contingency. In the instant case, the petitioner
was able to file her claim for death benefits under the SSS law within the three-year prescriptive period.
In fact, she has been receiving her pension under the SSS law since November 1988.

It is true that under the proviso, the employees' compensation claim shall be filed with the GSIS/SSS within
a reasonable time as provided by law. It should be noted that neither statute nor jurisprudence has
defined the limits of "reasonable time." Thus, what is reasonable time depends upon the peculiar facts
and circumstances of each case.12 In the case at bar, we also find petitioner's claim to have been filed
within a reasonable time considering the situation and condition of the petitioner. We have ruled that
when the petitioner filed her claim for death benefits under the SSS law, her claim for the same benefits
under the Employees' Compensation Law should be considered as filed. The evidence shows that the
System failed to process her compensation claim. Under the circumstances, the petitioner cannot be
made to suffer for the lapse committed by the System. It is the avowed policy of the State to construe
social legislations liberally in favor of the beneficiaries.13 This court has time and again upheld the policy
of liberality of the law in favor of labor. Presidential Decree No. 626 itself, in its Art. 166 reads:

"ART. 166. Policy. – The State shall promote and develop a tax-exempt employees' compensation program
whereby employees and their dependents, in the event of work-connected disability or death, may
promptly secure adequate income benefit, and medical or related benefits." (emphasis supplied)

Furthermore, Art. 4 of P.D. No. 442, as amended, otherwise known as the Labor Code of the Philippines,
which P.D. No. 626 forms a part of, reads as follows:

"ART. 4. Construction in favor of labor. – All doubts in the implementation and interpretation of the
provisions of this Code, including its implementing rules and regulations, shall be resolved in favor of
labor."

Particularly, the policy of liberality in deciding claims for compensability was given emphasis by this court
in the case of Employees' Compensation Commission vs. Court of Appeals,14 where it held that:

". . . the liberality of law in favor of the working man and woman still prevails and the official agency
charged by law to implement the constitutional guarantee of social justice should adopt a liberal attitude
in favor of the employee in deciding claims for compensability, especially in light of compassionate policy
towards labor which the 1987 Constitution vivifies and enhances. Elsewise stated, a humanitarian
impulse, dictated by no less than the Constitution itself under the social justice policy, calls for a liberal
and sympathetic approach to legitimate appeals of disabled public servants; or that all doubts to the right
to compensation must be resolved in favor of the employee or laborer. Verily the policy is to extend the
applicability of the law on employees' compensation to as many employees who can avail of the benefits
thereunder."

Claims falling under the Employees' Compensation Act should be liberally resolved to fulfill its essence as
a social legislation designed to afford relief to the working man and woman in our society.15
The second issue of whether or not the illness of petitioner's husband, myocardial infarction which was
the cause of his death is work-related, must likewise be resolved in favor of the petitioner.

Under the law on employees' compensation, death is compensable only when it results from a work-
connected injury or sickness. In the instant case, the cause of petitioner's husband's death was myocardial
infarction and it must be considered work-connected. While it is true that myocardial infarction is not
among the occupational diseases listed under Annex "A" of the Amended Rules on Employees'
Compensation, the Commission, under ECC Resolution No. 432 dated July 20, 1977, laid down the
conditions under which cardio-vascular or heart diseases can be considered as work-related and thus
compensable, viz:

(a) If the heart disease was known to have been present during employment, there must be proof that an
acute exacerbation was clearly precipitated by the unusual strain by reasons of the nature of his/her/her
work.

(b) The strain of work that brings about an acute attack must be of sufficient severity and must be followed
within 24 hours by the clinical signs of a cardiac insult to constitute causal relationship.

(c) If a person who was apparently asymptomatic before being subjected to strain at work showed signs
and symptoms of cardiac injury during the performance of his/her work and such symptoms and signs
persisted, it is reasonable to claim a causal relationship.

Myocardial infarction is also known as heart attack. It results in permanent heart damage or death. A
heart attack is called myocardial infarction because part of the heart muscle (myocardium) may literally
die (infarction). This occurs when a blood clot blocks one of the coronary arteries (the blood vessels that
bring blood and oxygen to the heart muscle). When the heart muscle does not obtain the oxygen-rich
blood that it needs, it will begin to die. The severity of a heart attack usually depends on how much of the
heart muscle is injured or dies during the heart attack. Heart attack accounts for 1 out of every 5 deaths.
It is a major cause of sudden death in adults. Heavy exertion or emotional stress can trigger a heart
attack.16

In the case at bar, the petitioner's husband's heart disease falls under the second condition of ECC
Resolution No. 432 dated July 20, 1977 which states that the strain of work that brought about the acute
attack must be of sufficient severity and must be followed within 24 hours by the clinical signs of a cardiac
insult to constitute causal relationship. Petitioner's husband was driving a dump truck within the company
premises where they were stacking gravel and sand when he suffered the heart attack. He had to be taken
down from the truck and brought to the workers' quarters where he expired at 10:30 a.m., just a few
minutes after the heart attack, which is much less than the 24 hours required by ECC Resolution No. 432.
This is a clear indication that severe strain of work brought about the acute attack that caused his death.

Professional drivers, especially truck drivers like the decedent in the instant case, carry the burden of
being more exposed and subjected to the stress and strain of everyday traffic, and the greater physical
exertion brought about by driving a large and heavy vehicle. In addition, according to the petitioner, her
husband was under a lot of stress in the workplace. He was a model worker and his employer highly
depended on him. He became the object of envy of his co-workers which caused him much emotional
stress. Add to this the fact that he has been a truck driver for more than twenty-four (24) years. Due to
the combination of emotional stress and vigorous physical exertion, it was easy for him to succumb to the
heart ailment. We hold that the illness of the decedent which caused his death is work-connected, and
thus compensable by virtue of ECC Resolution No. 432 dated 20 July 1977.

As a final note, we find it necessary to reiterate that P.D. No. 626, as amended, is a social legislation whose
primordial purpose is to provide meaningful protection to the working class against the hazards of
disability, illness and other contingencies resulting in the loss of income. Thus, as the official agents
charged by law to implement social justice guaranteed by the Constitution, the ECC and the SSS should
adopt a liberal attitude in favor of the employee in deciding claims for compensability especially where
there is some basis in the facts for inferring a work connection with the illness or injury, as the case may
be. It is only this kind of interpretation that can give meaning and substance to the compassionate spirit
of the law as embodied in Article 4 of the New Labor Code which states that all doubts in the
implementation and interpretation of the provisions of the Labor Code including its implementing rules
and regulations should be resolved in favor of labor.17

IN VIEW WHEREOF, the petition is GRANTED. The Decision of the Court of Appeals in CA-G.R. SP No. 60704
dated 27 September 2000 and its Resolution dated 06 March 2001 are hereby SET ASIDE. The SSS is hereby
directed to pay herein petitioner the death/funeral benefits due him under the existing law.

SO ORDERED.