[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 SUSUMU SONODA, SENJI TANAKA,
TAKASHAKO KUMAMOTO, TITOSHI NAKAMURA, TETSUO KUDO, Employees),
petitioners-appellants, vs. SOCIAL SECURITY SYSTEM, respondent-appellee.

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:
Amount of Premiums
Contributed
SS Monthly

Demetrio B. Salem for petitioners-appellants.

Name Number Salary 2.5% 3.5% Total

(Employee) (Employer)

Solicitor General Edilberto Barot and Solicitor Camilo D. Quiason for respondent-appellee.

Susumu Sonoda 03-075177 P520.00 P175.00 P245.00 P420.00

Senji Tanaka 03-075178 520.00 175.00 245.00 420.00

DECISION

Kahei Tanaka 307517 500.00 175.00 245.00 420.00

Takashiko

BARRERA, J p:

Kumamoto 03-075180 500.00 175.00 245.00 420.00

Hitoshi Nakamura 03-075181 500.00 175.00 245.00 420.00

The facts of this case are not disputed:

Tetsuo Kudo 03-075182 500.00 175.00 245.00 420.00

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:

T o t a l 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 attorney's 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.

"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.)"

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, alienemployees (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, 1 it is subject to the condition that upon their
departure from the Philippines, these employees, as well as their employer, are entitled to a
rebate of a proportionate amount of their respective contributions.
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:

"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% 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;

"I.
"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 are 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.

xxx xxx xxx." (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; 4 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 a refund of the premium-contributions may
be allowed.
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.

according to the company, that he refused to have his share of the corresponding monthly
contributions deducted from his salary. It was the duty of the employer to "report immediately
to the System" his name, age, civil status, occupation, salary and dependents Compliance with
this duty did not depend upon the employee's willingness to give his share of the contribution.
Section 24 is mandatory, to such an extent that if the employee should die or become sick or
disabled without the report having been made by the employer, the latter is liable for an
amount equivalent to the benefits to which the employee would have been entitled had such
report been made.
2. ID.; ID.; ID.; ID.; CLAIMS IN SECTION 5(a) OF THE SOCIAL SECURITY ACT
DEEMED TO INCLUDE CLAIM FOR DAMAGES UNDER SECTION 24; JURISDICTION
OF SOCIAL SECURITY COMMISSION TO AWARD DAMAGES AFFIRMED. It is true
that Section 24 uses the word "damages" in referring to the amount that may be claimed. But
this fact alone does not mean that the Social Security Commission lacks jurisdiction to award
the same. Section 5(a) of the Social Security Act provides that "the filing, determination and
settlement of claims shall be governed by the rules and regulations promulgated by the
Commission;" and the rules and regulations thus promulgated state that "the effectivity of
membership in the System, as well as the final determination and settlement of claims, shall be
vested in the Commission." The term 'claims" is broad enough to include a claim for damages
under Section 24. Otherwise am employer could nullify the jurisdiction of the Commission by
the simple expedient of not making a report as required by said Section.
DECISION
MAKALINTAL, J p:

[G.R. No. L-21448. August 30, 1967.]

POBLETE CONSTRUCTION CO., petitioner, vs. JUDITH ASIAIN, SOCIAL SECURITY
COMMISSION, and BENITO MACRHON, in his capacity as Sheriff of Rizal, respondents.
Fernando B. Duque and Yolando F . Bustamante for petitioner.
Solicitor General A. A. Alafriz, Solicitor C .D. Quiason and Atty. L.A.L. Javellana and E. T .
Duran for respondent SSC.

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

SYLLABUS

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

1. SOCIAL SECURITY SYSTEM; COMPULSORY COVERAGE; EMPLOYEE'S

UNWILLINGNESS TO GIVE HIS SHARE OF THE CONTRIBUTION; EFFECT
THEREOF. There is no question that the deceased Miguel Asiain was subject to
compulsory coverage in the Social Security System, although the deceased's SSS Form E-1
(Employees' Date Record) was never filed with the Social Security System for the reason,

In its resolution of September 15, 1960 the Commission declared itself without jurisdiction to
entertain the claims in the petition except the one for the sum of P3,600, which it awarded on
the basis of the evidence adduced at the hearing and pursuant to Section 24 of Republic Act
No. 1161, as amended. A subsequent motion for reconsideration filed by the respondents was
denied, and they elevated the case for review by the Court of Appeals, which upon proper

Orlando V . Calsado for-respondent Asiain.

application issued a writ of preliminary injunction to stop all further proceedings below,
including execution of the award.
The case was afterwards certified to this Court for the reason that when the respondents below
were declared in default they lost their standing before the Commission, and not having
regained the same by a motion to set aside or petition for relief, they had no right to appeal
from the default judgment; and that in any event no questions of fact are involved and hence,
if at all appealable, the appeal should be directly to this Court.
The procedural issues, we believe, need not concern us. The main point raised here by the
Poblete Construction Company, which it raised also in its motion to dismiss before the
Commission, is that the said body had no jurisdiction to entertain the claim of P3,600, which
should have been presented before the ordinary courts. This claim was filed under Section 24
of the Social Security Act (R.A. 1161, as amended), which provides:
'SEC. 24. Employment records and reports. (a) each employer shall report immediately to
the System the names, ages, civil status, occupations, salaries and dependents of all his
employees who are in his employ and who are or may later be subject to compulsory
coverage: Provided, That if an employee subject to compulsory coverage should die or
become sick or disabled without the System having previously received a report about him
from his employer, the said employer shall pay to the employee or his legal heirs damages
equivalent to the benefits to which said employee would have been entitled had his name been
reported on time by the employer to the System."
It appears that although the deceased Miguel Asiain had been employed in the Poblete
Construction Company since 1956 and had accomplished SSS Form E-1 (Employees' Date
Record) and transmitted the same to the said company's Manila Office, it was never filed with
the Social Security System for the reason, according to the company, that he refused to have
his share of the corresponding monthly contributions deducted from his salary. Upon these
facts the company maintains that the deceased was not a member of the System when he died
and hence the adjudication of the claim for damages under Section 24, supra, does not pertain
to the Commission but to the courts of justice.
We find the argument untenable. There is no question that the deceased Miguel Asiain was
subject to compulsory coverage in the Social Security System. 1 It was the duty of the
employer to "report immediately to the System" his name, age, civil status, occupation, salary
and dependents. Compliance with this duty did not depend upon the employee's willingness to
give his share of the contribution. Section 24 is mandatory, to such an extent that if the
employee should die or become sick or disabled without the report having been made by the
employer, the latter is liable for an amount equivalent to the benefits to which the employee
would have been entitled had such report been made. It is true that the provision uses the word
"damages" in referring to the amount that may be claimed. But this fact alone does not mean
that the Social Security Commission lacks jurisdiction to award the same. Section 5(a) of the
Social Security Act provides that "the filing, determination and settlement of claims shall be
governed by the rules and regulations promulgated by the Commission;" and the rules and
regulations thus promulgated state that "the effectivity of membership in the System, as well
as the final determination and settlement of claims, shall be vested in the Commission." The
term "claims" is broad enough to include a claim for "damages" under Section 24. Otherwise

an employer could nullify the jurisdiction of the Commission by the simple expedient of not
making a report as required by said Section. The collection of the employee's share is a duty
imposed by law, and his unwillingness to have it deducted from his salary does not excuse the
employer's failure to make the report aforesaid. It is precisely in this situation that the
employer is liable, and there is no question as to the amount of such liability in this case.
The decision of the Social Security Commission is affirmed, and the writ of preliminary
injunction is dissolved, with costs against herein petitioner.

[G.R. No. 125837. October 6, 2004.]

REYNALDO CANO CHUA, doing business under the name & style PRIME MOVER
CONSTRUCTION DEVELOPMENT, petitioner, vs. COURT OF APPEALS, SOCIAL
SECURITY COMMISSION, SOCIAL SECURITY SYSTEM, ANDRES PAGUIO, PABLO
CANALE, RUEL PANGAN, AURELIO PAGUIO, ROLANDO TRINIDAD, ROMEO
TAPANG and CARLOS MALIWAT, respondents.
DECISION
TINGA, J p:
This is a petition for review of the Decision 1 of the Court of Appeals in CA-G.R. CV No.
38269 dated 06 March 1996, and its Resolution dated 30 July 1996 denying petitioner's
Motion for Reconsideration, 2 affirming the Order of the Social Security Commission (SSC)
dated 1 February 1995 3 which held that private respondents were regular employees of the
petitioner and ordered petitioner to pay the Social Security System (SSS) for its unpaid
contributions, as well as penalty for the delayed remittance thereof.
On 20 August 1985, private respondents Andres Paguio, Pablo Canale, Ruel Pangan, Aurelio
Paguio, Rolando Trinidad, Romeo Tapang and Carlos Maliwat (hereinafter referred to as
respondents) filed a Petition 4 with the SSC for SSS coverage and contributions against
petitioner Reynaldo Chua, owner of Prime Mover Construction Development, claiming that
they were all regular employees of the petitioner in his construction business. 5
Private respondents claimed that they were assigned by petitioner in his various construction
projects continuously in the following capacity, since the period indicated, and with the
corresponding basic salaries, 6 to wit:
Andres Paguio Carpenter 1977 P42/day
Pablo Canale Mason 1977 42/day

Ruel Pangan Mason 1979 39/day

Aurelio Paguio Fine grading 1979 42/day
Romeo Tapang Fine grading 1979 42/day
Rolando Trinidad Carpenter 1983 (Jan.) 39/day
Carlos Maliwat Mason 1977 42/day
Private respondents alleged that petitioner dismissed all of them without justifiable grounds
and without notice to them and to the then Ministry of Labor and Employment. They further
alleged that petitioner did not report them to the SSS for compulsory coverage in flagrant
violation of the Social Security Act. 7
In his Answer, 8 petitioner claimed that private respondents had no cause of action against
him, and assuming there was any, the same was barred by prescription and laches. In addition,
he claimed that private respondents were not regular employees, but project employees whose
work had been fixed for a specific project or undertaking the completion of which was
determined at the time of their engagement. This being the case, he concluded that said
employees were not entitled to coverage under the Social Security Act. 9
Meanwhile, the SSS filed a Petition in Intervention 10 alleging that it has an interest in the
petition filed by private respondents as it is charged with the implementation and enforcement
of the provisions of the Social Security Act. The SSS stated that it is the mandatory obligation
of every employer to report its employees to the SSS for coverage and to remit the required
contribution, including the penalty imposed for late premium remittances. CSIDEc
On 01 February 1995, the SSC issued its Order 11 which ruled in favor of private respondents.
The SSC, relying on NLRC Case No. RAB-III-8-2373-85, 12 declared private respondents to
be petitioner's regular employees. 13 It ordered petitioner to pay the SSS the unpaid SS/EC
and Medicare contributions plus penalty for the delayed remittance thereof, without prejudice
to any other penalties which may have accrued. 14 The SSC denied the Motion for
Reconsideration 15 of petitioner for lack of merit. 16
Petitioner elevated the matter to the Court of Appeals via a Petition for Review. 17 He claimed
that private respondents were project employees, whose periods of employment were
terminated upon completion of the project. Thus, he claimed, no employer-employee relation
existed between the parties. 18 There being no employer-employee relationship, private
respondents are not entitled to coverage under the Social Security Act. 19 In addition,
petitioner claimed that private respondents' length of service did not change their status from
project to regular employees. 20
Moreover, granting that private respondents were entitled to coverage under the Act, petitioner
claimed that the SSC erred in imposing penalties since his failure to include private

respondents under SSS coverage was neither willful nor deliberate, but due to the honest belief
that project employees are not regular employees. 21 Likewise, he claimed that the SSC erred
in ordering payment of contributions and penalties even for long periods between projects
when private respondents were not working. 22
Petitioner also questioned the failure to apply the rules on prescription of actions and of
laches, claiming that the case, being one for the injury to the rights of the private respondents,
should have been filed within four (4) years from the time their cause of action accrued, or
from the time they were hired as project employees. He added that private respondents "went
into a long swoon, folded their arms and closed their eyes" 23 and filed their claim only in
1985, or six (6) years or eight (8) years after they were taken in by petitioner. 24
In resolving the petition, the Court of Appeals synthesized the issues in the petition, to wit: (1)
whether private respondents were regular employees of petitioner, and whether their causes of
action as such are barred by prescription or laches; (2) if so, whether petitioner is now liable to
pay the SSS contributions and penalties during the period of employment. 25
The Court of Appeals, citing Article 280 of the Labor Code, 26 declared that private
respondents were all regular employees of the petitioner in relation to certain activities since
they all worked either as masons, carpenters and fine graders in petitioner's various
construction projects for at least one year, and that their work was necessary and desirable to
petitioner's business which involved the construction of roads and bridges. 27 It cited the case
of Mehitabel Furniture Company, Inc. v. NLRC, 28 particularly the ruling therein which states:
By petitioner's own admission, the private respondents have been hired to work on certain
special orders that as a matter of business policy it cannot decline. These projects are
necessary or desirable in its usual business or trade, otherwise they would not have accepted . .
. Significantly, such special orders are not really seasonal but more or less regular, requiring
the virtually continuous services of the "temporary workers." The NLRC also correctly
observed that "if we were to accept respondent's theory, it would have no regular workers
because all of its orders would be special undertakings or projects." The petitioner could then
hire all its workers on a contract basis only and prevent them from attaining permanent status .
..
Furthermore, the NLRC has determined that the private respondents have worked for more
than one year in the so-called "special projects" of the petitioner and so fall under the second
condition specified in the above-quoted provision (Article 280, Labor Code). 29
The Court of Appeals rejected the claim of prescription, stating that the filing of private
respondents' claims was well within the twenty (20)-year period provided by the Social
Security Act. 30 It found that the principle of laches could not also apply to the instant case
since delay could not be attributed to private respondents, having filed the case within the
prescriptive period, and that there was no evidence that petitioner lacked knowledge that
private respondents would assert their rights. 31

Petitioner filed a Motion for Reconsideration, 32 claiming that the Court of Appeals
overlooked (1) the doctrine that length of service of a project employee is not the controlling
test of employment tenure, and (2) petitioner's failure to place private respondents under SSS
coverage was in good faith. The motion was denied for lack of merit. 33
In the present Petition for Review, petitioner again insists that private respondents were not
regular, but project, employees and thus not subject to SSS coverage. In addition, petitioner
claims that assuming private respondents were subject to SSS coverage, their petition was
barred by prescription and laches. Moreover, petitioner invokes the defense of good faith, or
his honest belief that project employees are not regular employees under Article 280 of the
Labor Code. aHcACT
Petitioner's arguments are mere reiterations of his arguments submitted before the SSC and the
Court of Appeals. More importantly, petitioner wants this Court to review factual questions
already passed upon by the SSC and the Court of Appeals which are not cognizable by a
petition for review under Rule 45. Well-entrenched is the rule that the Supreme Court's
jurisdiction in a petition for review is limited to reviewing or revising errors of law allegedly
committed by the appellate court, the findings of fact being generally conclusive on the Court
and it is not for the Court to weigh evidence all over again. 34
Stripped of the lengthy, if not repetitive, disquisition of the private parties in the case, and also
of the public respondents, on the nature of private respondents' employment, the controversy
boils down to one issue: the entitlement of private respondents to compulsory SSS coverage.
The Social Security Act was enacted pursuant to the policy of the government "to develop,
establish gradually and perfect a social security system which shall be suitable to the needs of
the laborers throughout the Philippines, and shall provide protection against the hazards of
disability, sickness, old age and death." 35 It provides for compulsory coverage of all
employees not over sixty years of age and their employers. 36

Well-settled is the rule that the mandatory coverage of Republic Act No. 1161, as amended, is
premised on the existence of an employer-employee relationship, the essential elements of
which are: (a) selection and engagement of the employee; (b) payment of wages; (c) the power
of dismissal; and (d) the power of control with regard to the means and methods by which the
work is to be accomplished, with the power of control being the most determinative factor. 37
There is no dispute that private respondents were employees of petitioner. Petitioner himself
admitted that they worked in his construction projects, 38 although the period of their
employment was allegedly co-terminus with their phase of work. 39 Even without such
admission from petitioner, the existence of an employer-employee relationship between the
parties can easily be determined by the application of the "control test," 40 the elements of
which are enumerated above. It is clear that private respondents are employees of petitioner,
the latter having control over the results of the work done, as well as the means and methods
by which the same were accomplished. Suffice it to say that regardless of the nature of their

employment, whether it is regular or project, private respondents are subject of the

compulsory coverage under the SSS Law, their employment not falling under the exceptions
provided by the law. 41 This rule is in accord with the Court's ruling in Luzon Stevedoring
Corp. v. SSS 42 to the effect that all employees, regardless of tenure, would qualify for
compulsory membership in the SSS, except those classes of employees contemplated in
Section 8(j) of the Social Security Act. 43
This Court also finds no reason to deviate from the finding of the Court of Appeals regarding
the nature of employment of private respondents. Despite the insistence of petitioner that they
were project employees, the facts show that as masons, carpenters and fine graders in
petitioner's various construction projects, they performed work which was usually necessary
and desirable to petitioner's business which involves construction of roads and bridges. In
Violeta v. NLRC, 44 this Court ruled that to be exempted from the presumption of regularity
of employment, the agreement between a project employee and his employer must strictly
conform to the requirements and conditions under Article 280 of the Labor Code. It is not
enough that an employee is hired for a specific project or phase of work. There must also be a
determination of, or a clear agreement on, the completion or termination of the project at the
time the employee was engaged if the objectives of Article 280 are to be achieved. 45 This
second requirement was not met in this case.
Moreover, while it may be true that private respondents were initially hired for specific
projects or undertakings, the repeated re-hiring and continuing need for their services over a
long span of time the shortest being two years and the longest being eight have
undeniably made them regular employees. 46 This Court has held that an employment ceases
to be co-terminus with specific projects when the employee is continuously rehired due to the
demands of the employer's business and re-engaged for many more projects without
interruption. 47 The Court likewise takes note of the fact that, as cited by the SSC, even the
National Labor Relations Commission in a labor case involving the same parties, found that
private respondents were regular employees of the petitioner. 48
Another cogent factor militates against the allegations of the petitioner. In the proceedings
before the SSC and the Court of Appeals, petitioner was unable to show that private
respondents were appraised of the project nature of their employment, the specific projects
themselves or any phase thereof undertaken by petitioner and for which private respondents
were hired. He failed to show any document such as private respondents' employment
contracts and employment records that would indicate the dates of hiring and termination in
relation to the particular construction project or phases in which they were employed. 49
Moreover, it is peculiar that petitioner did not show proof that he submitted reports of
termination after the completion of his construction projects, considering that he alleges that
private respondents were hired and rehired for various projects or phases of work therein.
Anent the issue of prescription, this Court rules that private respondents' right to file their
claim had not yet prescribed at the time of the filing of their petition, considering that a mere
eight (8) years had passed from the time delinquency was discovered or the proper assessment
was made. Republic Act No. 1161, as amended, prescribes a period of twenty (20) years, from
the time the delinquency is known or assessment is made by the SSS, within which to file a
claim for non-remittance against employers. 50

Likewise, this Court is in full accord with the findings of the Court of Appeals that private
respondents are not guilty of laches. The principle of laches or "stale demands" ordains that
the failure or neglect, for an unreasonable and unexplained length of time, to do that which by
exercising due diligence could or should have been done earlier, or the negligence or omission
to assert a right within a reasonable time, warrants a presumption that the party entitled to
assert it either has abandoned it or declined to assert it. 51 In the instant case, this Court finds
no proof that private respondents had failed or neglected to assert their right, considering that
they filed their claim within the period prescribed by law. STHDAc
This Court finds no merit in petitioner's protestations of good faith. In United Christian
Missionary Society v. Social Security Commission, 52 this Court ruled that good faith or bad
faith is irrelevant for purposes of assessment and collection of the penalty for delayed
remittance of premiums, since the law makes no distinction between an employer who
professes good reasons for delaying the remittance of premiums and another who deliberately
disregards the legal duty imposed upon him to make such remittance. 53 For the same reasons,
petitioner cannot now invoke the defense of good faith.
WHEREFORE, the Petition is DENIED. The Decision and Resolution of the Court of Appeals
promulgated on 6 March 1996 and 30 July 1996 respectively, are AFFIRMED. Costs against
petitioner.
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.

2. LABOR AND SOCIAL LEGISLATION; MEMORANDUM OF AGREEMENT

ENTERED INTO BY DOLE AND SSS; NATURE AND PURPOSE THEREOF.
Respondent appellate court correctly upheld the validity of the Memorandum of Agreement
entered into between the DOLE and the SSS. Upon the one hand, contrary to the trial court's
finding, the Memorandum of Agreement was approved by the Social Security Commission per
the Commission's Resolution No. 437, dated 14 July 1988. Upon the other hand, the
Memorandum of Agreement is not a rule or regulation enacted by the Commission in the
exercise of the latter's quasi-legislative authority under Section 4(a) of R.A. No. 1161, as
amended, which reads as follows: "Sec. 4. Powers and Duties of the Commission. For the
attainment of its main objectives as set forth in section two hereof, the Commission shall have
the following powers and duties: (a) To adopt, amend and rescind, subject to the approval of
the President, such rules and regulations as may be necessary to carry out the provisions and
purposes of this Act. . . ." What the Memorandum of Agreement did was to record the
understanding between the SSS on the one hand and the DOLE on the other hand that the
latter would include among the provisions of the Standard Contract of Employment required
in case of overseas employment, a stipulation providing for coverage of the Filipino seafarer
by the SSS. The Memorandum of Agreement is not an implementing rule or regulation of the
Social Security Commission which, under Section 4(a) abovequoted, is subject to the approval
of the President. Indeed, as a matter of strict law, the participation of the SSS in the
establishment by the DOLE of a uniform stipulation in the Standard Contract of Employment
for Filipino seafarers was not necessary; the Memorandum of Agreement related simply to the
administrative convenience of the two (2) agencies of government. It is worthy of special note
that by extending the 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." (Article XIII, Section 3, 1987 Constitution) 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.

Dennis B. Recon & Associates for petitioner.

The Solicitor General for respondents.
SYLLABUS
1. REMEDIAL LAW; APPEAL; STATUTORY RIGHT; COMPLIANCE WITH THE RULES,
REQUIRED. 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. (Spouses Gil and Elma
del Rosario vs. Court of Appeals, G.R. No. 113890 [1995]) 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. (Bank of America, NT & SA vs.
Gerochi, Jr., 230 SCRA 9 [1994]) 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.

3. ID.; R.A. NO. 1161 (SOCIAL SECURITY LAW), AS AMENDED; COVERAGE

THEREOF EXTENDED TO FILIPINO SEAFARERS ON BOARD FOREIGN VESSELS.
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) Filipinos recruited in the Philippines by foreign-based employers for
employment abroad may be covered by the SSS on a voluntary basis." (As amended by Sec. 2,
P.D. No. 177, S-1973 and Sec. 6, P.D. No. 735-S-1975) It will be seen that the Memorandum
of Agreement is in line with paragraph 9(b) of the Social Security statute quoted above. The
Memorandum of Agreement provides, inter alia, that: ". . . NOW THEREFORE, for and in
consideration of the foregoing premises, the parties hereto agree and stipulate that one of the
conditions that will be imposed by the Department of Labor and Employment in the contract
for overseas employment is the registration for coverage of seafarers with the Social Security

System, through the manning agenies as the authorized representatives of the foreign
employers in conformity with Section 9, paragraph (b) of the Social Security Law (R.A. No.
1161, as amended), subject to the following terms and conditions: . . ." Thus, the Standard
Contract of Employment to be entered into between foreign shipowners and Filipino seafarers
is the instrument by which the former express their assent to the inclusion of the latter in the
coverage of the Social Security Act. In other words, the extension of the coverage of the Social
Security System to Filipino seafarers arises by virtue of the assent given in the contract of
employment signed by employer and seafarer; that same contract binds petitioner Sta. Rita or
B. Sta. Rita Company, who is solidarily liable with the foreign shipowners/employers. It may
be noted that foreign shipowners and manning agencies had generally expressed their
conformity to the inclusion of Filipino seafarers within the coverage of the Social Security Act
even prior to the signing of the DOLE-SSS Memorandum of Agreement.
4. REMEDIAL LAW; CRIMINAL PROCEDURE; RIGHT AGAINST DOUBLE
JEOPARDY; WHEN NOT VIOLATED; CASE AT BAR. 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. (Rule 117, Section 7, Rules of Court) 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. (People v. Quizada , 160 SCRA 516 [1988]) 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.

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.

RESOLUTION
FELICIANO, J p:
This is a Petition for Review on 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.

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

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 wilfully 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

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:
"SECTION 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:
"SECTION 9. Compulsory Coverage. (a) Coverage in the SSS shall be compulsory upon
all employees not over sixty years of age and their employers; Provided, . . .
(b) Filipinos recruited in the Philippines by foreign-based employers for employment abroad
may be covered by the SSS on a voluntary basis." (As amended by Sec. 2, P.D. No. 177, S1973 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 in 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 xxx" 7 (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 xxx" 8 (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. Costs against petitioner.

[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 p:
Before us is a petition for review on certiorari of the Decision 1 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 letter 4 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 Pea. In support of her allegation, Leticia enclosed a notarized copy of the
original birth certificate 5 of one Jefren H. dela Pea, showing that the latter was born on
November 15, 1996 to Rosanna Y. Hernandez and Romeo C. dela Pea, 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
Memorandum 6 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; Jenelyn 7 and Jefren were Rosanna's children with one Romeo C.
dela Pea; 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 P10,350.00 representing
the total death benefits released to her and Jenelyn from December 1996 to August 1997 at
P1,150.00 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. aESIHT
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 Affidavit 13 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 Reports 15 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 Pea'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. Nio 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 Pea 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 Pea 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 Pea, 27 child of Romeo dela Pea and Rosanna
Hernandez, born on January 29, 1992. aHESCT
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 P10,350.00 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 Pea during the subsistence of her marriage to
Pablo. The SSC based its conclusion on the birth certificate of Jefren dela Pea stating that his
mother, Rosanna, and father, Romeo dela Pea, were married on November 1, 1990. The SSC
declared that Rosanna had a child with Romeo dela Pea while she was still married to Pablo
(as evidenced by the baptismal certificate of Jenelyn H. dela Pea showing that she was the
child of Rosanna Hernandez and Romeo dela Pea 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 Pea. It also gave credence to the testimonies of
Leticia and Mariquita that Jeylnn was the child of Rosanna and Romeo dela Pea. 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 Pea was not properly proven. In any case, even if Rosanna
married Romeo dela Pea 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 AETcSa
I
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.

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 Pea showing that he was born on November 15, 1996 to
Rosanna and Romeo dela Pea. 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:

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 Pea and married the

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. TCEaDI

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:
xxx xxx xxx

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

(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.

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. aAHDIc

xxx xxx xxx

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

(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

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 case 52 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. IHcTDA
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 Pea. According to Leticia,
there was a commotion at their ancestral house because Romeo dela Pea 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 Pea 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 Pea, on the other hand, was born on January 29, 1992 to spouses
Rosanna Hernandez and Romeo dela Pea and baptized on February 9, 1992. It will be noted
that Jenelyn dela Pea 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. . . . 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

Pea who wanted Jeylnn to be baptized using his name explains why Jeylnn was again
baptized in the Parish of Sto. Nio in San Fernando using the name Jenelyn dela Pea. 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 Pea 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.

Saan naman?

Hearing Officer:

Mrs. Dizon:

Kailan nagkahiwalay si Romeo at Rosanna?

Doon sa malapit sa amin sa may riles ng tren. 54

Mrs. Dizon:

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.

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?

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. 161357. November 30, 2005.]

ELENA P. DYCAICO, petitioner, vs. SOCIAL SECURITY SYSTEM and SOCIAL
SECURITY COMMISSION, respondents.

Mrs. Dizon:
DECISION
Oo.
CALLEJO, SR., J p:
Hearing Officer:

Oo, nagsasama sila, may bahay sila.

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 Decision 1 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.

Hearing Officer:

The case arose from the following undisputed facts:

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

Mrs. Dizon:

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 Law 2 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.
xxx xxx xxx
(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. EaTCSA
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 selfsupport, 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 12B(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. STcHDC
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.

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

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.

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. 1146 9 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 cDAISC
(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. aACEID

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

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.

The proviso infringes the due process clause

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-ofrelationship" 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

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 1977 22 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 employers 23 and the employees 24
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 selfemployed individuals, like Bonifacio, who have been included in the compulsory coverage of
Rep. Act No. 8282 25 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. cCSDaI
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 12B(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. DAHCaI
SO ORDERED.

[G.R. No. 192686. November 23, 2011.]

FIL-STAR MARITIME CORPORATION, CAPTAIN VICTORIO S. MIGALLOS and
GRANDSLAM ENTERPRISE CORPORATION, petitioners, vs. HANZIEL O. ROSETE,
respondent.
DECISION
MENDOZA, J p:
This is a petition for review on certiorari 1 under Rule 45 of the 1997 Rules of Civil Procedure
assailing the March 23, 2010 Decision 2 and the June 8, 2010 Resolution 3 of the Court of
Appeals (CA), in CA-G.R. SP No. 103256, which reversed the October 17, 2007 Resolution 4
of the National Labor Relations Commission (NLRC) and ordered the reinstatement of the
May 21, 2007 Decision 5 of the Labor Arbiter (LA), awarding disability benefits to respondent
Hanziel Rosete (respondent).
In 2005, petitioner Fil-Star Maritime Corporation (Fil-Star), the local manning agency of copetitioner Grandslam Enterprise Corporation (Grandslam), hired respondent as third officer on
board the ocean-going vessel "M/V Ansac Asia." He was in charge of the loading and
unloading operations of the vessel's cargo primarily consisting of soda ash in bulk. Respondent
stated that the nature of his work exposed him to minute particles of soda ash during the
loading and unloading operations. On November 22, 2005, respondent finished his contract
and returned to the Philippines.
Thereafter, the petitioners re-hired respondent to work as second officer on their vessel for a
period of nine (9) months. On January 5, 2006, respondent underwent a pre-employment
medical examination (PEME) with First Medical Team Health Care Specialist Group, 6 the
company accredited physician, and was pronounced "fit to work." On board the vessel, he was
tasked to make an inventory of the vessel's property for annual inspection. According to
respondent, he worked diligently and oftentimes worked odd hours just to familiarize himself
with his new job. He averred that overtime work and the violent motions of the vessel due to
weather inclemency caused undue strain to his eyes and his physical well-being.
On February 14, 2006 or a little over a month from his embarkation, respondent experienced
an abrupt blurring of his left eye. He reported it to his captain and was advised to do an eye
wash to relieve his pain until they reached Chiba, Japan. After the vessel arrived in Chiba,

respondent was not able to seek medical advice because he was tasked to man the ship's
navigation equipment. Five days later, respondent was able to receive medical attention in
Kawasaki, Japan. Respondent was diagnosed with Central Retinal Vein Occlusion and
immediately underwent three rounds of laser surgery on February 28, 2006, March 2, 2006
and March 4, 2006. aScITE
On March 9, 2006, respondent was declared fit for travel and was subsequently repatriated to
the Philippines. Upon arrival in Manila, respondent went to the Metropolitan Hospital but
could not get immediate treatment. On March 19, 2006, he experienced severe pain in his left
eye so he insisted that he be admitted to the hospital. Respondent underwent another series of
laser surgery on March 22 and 25, April 6, 18, and 25, 2006.

On May 21, 2007, Labor Arbiter Pablo C. Espiritu, Jr. (the LA) ruled in favor of respondent. 8
The decretal portion reads: ScAIaT
WHEREFORE, premises considered, respondents Filstar Maritime Corporation and
Grandslam Enterprise Corp. are jointly and severally liable to pay complainant full total and
permanent disability benefits in the amount of US$105,000.00 or its equivalent amount in
Philippine currency at the time of payment.
Respondents are further ordered to pay 10% attorney's fees based on the total judgment award.
All monetary claims are hereby dismissed.

On August 11, 2006, Dr. Antonio Say declared respondent's left eye to be legally blind with
poor possibility of recovery. Relevant portions of the medical certificate read:
A. Left eye is legally blind
B. Partial permanent disability

SO ORDERED. 9
The LA reasoned out that respondent left the Philippines in good condition, thus, it could be
logically inferred that he contracted the illness while on board the vessel. As respondent was
not able to perform his job for more than 120 days since his repatriation, he became entitled to
permanent disability benefits. Based on their CBA, respondent should be awarded
US$105,000.00. 10

Partial because the visual activity of the right eye is 20/20.

It is permanent because the poor visual activity of the left eye, hand movement, has poor
prognosis for visual recovery. 7
The petitioners denied his claim for permanent total disability and only rated his incapacity as
Grade 7. Respondent stressed that, under their Collective Bargaining Agreement (CBA), he
should be considered legally blind meriting entitlement to permanent total disability benefits
in the sum of US$105,000.00 for being unable to perform his job for more than 120 days from
his repatriation.
Thus, on August 29, 2006, respondent filed a complaint against Fil-Star, Capt. Victorio S.
Migallos and Grandslam for disability benefits, damages and attorney's fees.
The petitioners averred that after almost a month aboard the vessel, respondent complained of
a sudden blurring of his left eye. They referred him to the Honmoku Hospital where a Dr.
Yasuhiko Tomita diagnosed him with Central Retinal Vein Occlusion, left eye and NeoVascular Glaucoma, left eye, suspicion. After his repatriation, they immediately referred him
to the Metropolitan Medical Center where he was treated and underwent a series of Panretinal
Photocoagulation Session to prevent further neovascular formation. They shouldered the
expenses for all these procedures. They, however, argued that respondent was not qualified for
disability benefits, damages and attorney's fees because his illness was not an occupational
disease or work-related.

Not in conformity with the ruling, the petitioners appealed to the NLRC which, in its October
17, 2007 Resolution, modified the L.A. Decision by reducing respondent's disability benefits
from US$105,000.00 to US$20,900.00. 11 As modified, the decretal portion reads:
WHEREFORE, the assailed Decision dated 21 May 2007 is hereby MODIFIED by ordering
the respondents to pay jointly and severally complainant Hanziel O. Rosete a disability benefit
of US$20,900, the amount equivalent to Grade 7 under POEA Standard Employment Contract.
The payment of ten percent (10%) attorney's fees based on the judgment award is hereby
AFFIRMED.
SO ORDERED. 12
The NLRC ruled that the grant of US$105,000.00 based on the provisions of the CBA had no
legal basis because disability benefits under Article 28 thereon would refer only to permanent
disability resulting from accident while in employment. 13 The NLRC held respondent was
entitled to disability benefits but only up to Grade 7 as recommended by his own physician,
Dr. George Pile. 14
Both parties moved for reconsideration of said decision, but their respective motions were
denied by the NLRC in its Resolution dated January 15, 2008. 15

Respondent elevated the case to the CA via petition for certiorari under Rule 65 of the Rules
of Court. 16 On March 23, 2010, the CA reversed the NLRC's decision. The fallo reads:

WHETHER OR NOT THE COURT OF APPEALS COMMITTED PATENT AND

REVERSIBLE ERROR IN RULING THAT PRIVATE RESPONDENT HANZIEL O.
ROSETE IS ENTITLED TO ATTORNEY'S FEES. 22

WHEREFORE, the petition is GRANTED. The Resolutions dated October 17, 2007 and
January 15, 2008 of the National Labor Relations Commission (NLRC), Quezon City, in
NLRC-LAC (OFW-M) No. 07-000018-07(3) NLRC-OFW Case No. 06-08-02629-00 are
ANNULLED and SET ASIDE. The Labor Arbiter's Decision dated May 21, 2007 is
REINSTATED in full.

The petitioners contend that the CA erred in ruling that respondent was entitled to permanent
and total disability benefits and for applying the provision of their CBA to award respondent
US$105,000.00. They aver that Article 28 of their CBA only pertains to permanent disability
suffered as a result of an accident. 23

SO ORDERED. 17

The petition is partly meritorious.

The CA held that there was no doubt that respondent was unable to work for more than one
hundred twenty days (120) the requisite period for a grant of total disability benefits. Although
the petitioners claimed that their CBA provision should be controlling, the CA clarified that
"the relevant provisions of the POEA-SEC pertaining to permanent total disability remain
essential parts of the parties' valid and binding contract." 18 The CA further stated that
although respondent's Central Retinal Vein Occlusion was not listed as an occupational
disease, he successfully established a causal connection from his work as a seaman to his
illness. It stressed that compensability of a non-occupational disease, reasonable proof and not
direct proof of a causal connection between the work and the ailment is required. 19

The first issue is whether respondent is entitled to claim disability benefits from the
petitioners.

Petitioners' Motion for Reconsideration 20 was likewise denied by the CA in its June 8, 2010
Resolution. ESCTaA
Hence, this petition. 21
Petitioners submit the following issues for resolution:
I
WHETHER OR NOT THE COURT OF APPEALS COMMITTED PATENT AND
REVERSIBLE ERROR IN RULING THAT PRIVATE RESPONDENT HANZIEL O.
ROSETE IS ENTITLED TO TOTAL PERMANENT DISABILITY BENEFITS
II
WHETHER OR NOT THE COURT OF APPEALS COMMITTED PATENT AND
REVERSIBLE ERROR RULING THAT PRIVATE RESPONDENT HANZIEL O. ROSETE
IS ENTITLED TO DISABILITY BENEFITS UNDER THE COLLECTIVE BARGAINING
AGREEMENT
III

There is no quibble that respondent is entitled to disability benefits. The Standard Employment
Contract (SEC) for seafarers was created by the Philippine Overseas Employment
Administration (POEA) pursuant to its mandate under Executive Order (E.O.) No. 247 24
dated July 21, 1987 to "secure the best terms and conditions of employment of Filipino
contract workers and ensure compliance therewith" and to "promote and protect the well-being
of Filipino workers overseas." 25
In this case, respondent was diagnosed with Central Retinal Vein Occlusion of his left eye.
Central retinal vein occlusion is medically defined as the blockage of the central retinal vein
by a thrombus. It causes painless vision loss which is usually sudden, but it can also occur
gradually over a period of days to weeks. 26 This condition, despite numerous medical
procedures undertaken, eventually led to a total loss of sight of respondent's left eye. Loss of
one bodily function falls within the definition of disability which is essentially "loss or
impairment of a physical or mental function resulting from injury or sickness." 27
Although Central Retinal Vein Occlusion is not listed as one of the occupational diseases
under Section 32-A of the 2000 Amended Terms of POEA-SEC, 28 the resulting disability
which is loss of sight of one eye, is specifically mentioned in Section 32 thereof (Schedule of
Disability or Impediment for Injuries Suffered and Diseases Including Occupational Diseases
or Illness Contracted). More importantly, Section 20 (B), paragraph (4) states that "those
illnesses not listed in Section 32 of this Contract are disputably presumed as work-related." 29
The disputable presumption that a particular injury or illness that results in disability, or in
some cases death, is work-related stands in the absence of contrary evidence. In the case at
bench, the said presumption was not overturned by the petitioners. Although, the employer is
not the insurer of the health of his employees, he takes them as he finds them and assumes the
risk of liability. 30 Consequently, the Court concurs with the finding of the courts below that
respondent's disability is compensable. TSHEIc
Now, the Court shall determine whether respondent is entitled to be awarded permanent total
or permanent partial disability benefits.

It should be noted that the company-designated physician assessed the loss of respondent's left
eye as a permanent partial disability while respondent's own physician indicated his disability
as Grade 7.

A total disability does not require that the employee be absolutely disabled or totally
paralyzed. What is necessary is that the injury must be such that the employee cannot pursue
his usual work and earn therefrom (Austria v. Court of Appeals, G.R. No. 146636, Aug. 12,
2002, 387 SCRA 216, 221). On the other hand, a total disability is considered permanent if it
lasts continuously for more than 120 days. Thus, in the very recent case of Crystal Shipping,
Inc. v. Natividad (G.R. No. 134028, December 17, 1999, 321 SCRA 268, n 270-271), we held:

The Court is more inclined to rule, however, that respondent is suffering from a permanent
total disability as he was unable to return to his job that he was trained to do for more than one
hundred twenty days already. The recent case of Valenzona v. Fair Shipping Corporation, et
al., 31 citing Quitoriano v. Jebsens Maritime, Inc., 32 elucidated the concept of permanent
total disability, in this wise:

Permanent disability is inability of a worker to perform his job for more than 120 days,
regardless of whether or not he lose s the use of any part of his body. . . .

Thus, Court has applied the Labor Code concept of permanent total disability to the case of
seafarers. . . .
xxx xxx xxx
There are three kinds of disability benefits under the Labor Code, as amended by P.D. No.
626: (1) temporary total disability, (2) permanent total disability, and (3) permanent partial
disability. Section 2, Rule VII of the Implementing Rules of Book V of the Labor Code
differentiates the disabilities as follows:
Sec. 2. Disability. (a) A total disability is temporary if as a result of the injury or sickness
the employee is unable to perform any gainful occupation for a continuous period not
exceeding 120 days, except as otherwise provided for in Rule X of these Rules.
(b) A disability is total and permanent if as a result of the injury or sickness the employee is
unable to perform any gainful occupation for a continuous period exceeding 120 days, except
as otherwise provided for in Rule X of these Rules.
(c) A disability is partial and permanent if as a result of the injury or sickness the employee
suffers a permanent partial loss of the use of any part of his body.
In Vicente v. ECC (G.R. No. 85024, January 23, 1991, 193 SCRA 190, 195):
. . . the test of whether or not an employee suffers from 'permanent total disability' is a
showing of the capacity of the employee to continue performing his work notwithstanding the
disability he incurred. Thus, if by reason of the injury or sickness he sustained, the employee
is unable to perform his customary job for more than 120 days and he does not come within
the coverage of Rule X of the Amended Rules on Employees Compensability (which, in more
detailed manner, describes what constitutes temporary total disability), then the said employee
undoubtedly suffers from 'permanent total disability' regardless of whether or not he loses the
use of any part of his body. HDTcEI

Total disability, on the other hand, means the disablement of an employee to earn wages in the
same kind of work of similar nature that he was trained for, or accustomed to perform, or any
kind of work which a person of his mentality and attainments could do. It does not mean
absolute helplessness. In disability compensation, it is not the injury which is compensated,
but rather it is the incapacity to work resulting in the impairment of one's earning capacity. 33
[Emphasis and underscoring supplied]
A total disability does not require that the employee be completely disabled, or totally
paralyzed. What is necessary is that the injury must be such that the employee cannot pursue
his or her usual work and earn from it. 34 On the other hand, a total disability is considered
permanent if it lasts continuously for more than 120 days. 35 What is crucial is whether the
employee who suffers from disability could still perform his work notwithstanding the
disability he incurred. Evidently, respondent was not able to return to his job as a seafarer after
his left eye was declared legally blind. Records show that the petitioners did not give him a
new overseas assignment after his disability. This only shows that his disability effectively
barred his chances to be deployed abroad as an officer of an ocean-going vessel.
Therefore, it is fitting that respondent be entitled to permanent total disability benefits
considering that he would not able to resume his position as a maritime officer and the
probability that he would be hired by other maritime employers would be close to impossible.
Indeed, a sight-impaired maritime applicant cannot stand in the same footing as his healthy coapplicant.
The next issue to be resolved is whether respondent's entitlement to permanent total disability
benefits should be based on the CBA or his POEA-SEC which integrated the 2000 Amended
Standard Terms and Conditions Governing the Employment of Filipino Seafarers on Board
Ocean-Going Vessels. cDACST
The Court holds that respondent is entitled to claim permanent total disability benefits based
on his POEA-SEC and not based on their CBA as earlier ruled by the L.A. and later affirmed
by the CA.
The CBA provisions on disability are not applicable to respondent's case because Article 28
thereon specifically refers to disability sustained after an accident. Article 28 of the ITFJSU/AMOSUP CBA specifically states that:

Article 28: Disability

28.1 A seafarer who suffers permanent disability as a result of an accident whilst in the
employment of the Company regardless of fault, including accidents occurring while
travelling to or from the ship, and whose ability to work as a seafarer as a result thereof, but
excluding permanent disability due to wilful acts, shall be in addition to sick pay, be entitled to
compensation according to the provisions of this Agreement. [Emphasis supplied]
Respondent failed to show that the blurring of his left eye was caused by an accident on board
the ship. Thus, Article 28 of the CBA cannot be used to compute his disability benefits.
aTCAcI
Accordingly, what should govern the computation of his disability benefits is the POEA-SEC
incorporating the 2000 POEA Amended Standard Terms and Conditions. Under Section 20
(B), paragraph 6, of the 2000 POEA Amended Standard Terms and Conditions, to wit:
SECTION 20. COMPENSATION AND BENEFITS
xxx xxx xxx
B. COMPENSATION AND BENEFITS FOR INJURY OR ILLNESS
The liabilities of the employer when the seafarer suffers work-related injury or illness during
the term of his contract are as follows:
xxx xxx xxx
6. In case of permanent total or partial disability of the seafarer caused by either injury or
illness the seafarer shall be compensated in accordance with the schedule of benefits
enumerated in Section 32 of this Contract. Computation of his benefits arising from an illness
or disease shall be governed by the rates and the rules of compensation applicable at the time
the illness or disease was contracted. [Emphases and underscoring supplied]
Based on the schedule of disability under Section 32 of the 2000 POEA Amended Standard
Terms and Conditions, permanent total disability is classified as Grade 1. Thus, respondent's
disability benefit should be computed as follows:
Grade 1: US$50,000.00 x 120% = US$60,000.00
As to the award of attorney's fees, the Court likewise affirms the ruling that respondent is
entitled to it as provided under Article 2208 of the Civil Code:

Art. 2208. In the absence of stipulation, attorney's fees and expenses of litigation, other than
judicial costs, cannot be recovered, except:
xxx xxx xxx
(8) In actions for indemnity under workmen's compensation and employer's liability laws;
xxx xxx xxx

In the case at bench, respondent was compelled to litigate in order to claim disability benefits
from the petitioners. Thus, the award of attorney's fees is justified pursuant to Article 2208 (8)
of the Civil Code. aEACcS
WHEREFORE, the petition is PARTIALLY GRANTED. The March 23, 2010 Decision of the
Court of Appeals is hereby MODIFIED in the sense that petitioners Fil-star Maritime
Corporation and Grandslam Enterprise Corp. are jointly and severally liable to pay respondent
Hanziel O. Rosete full total and permanent disability benefits in the amount of US$60,000.00
or its equivalent amount in Philippine currency at the time of payment. All other aspects of the
CA Decision stand.
SO ORDERED.

[G.R. No. 183891. October 19, 2011.]

ROMARICO J. MENDOZA, petitioner, vs. PEOPLE OF THE PHILIPPINES, respondent.
RESOLUTION
BRION, J p:
We resolve the motion for reconsideration filed by petitioner Romarico J. Mendoza seeking
the reversal of our Decision dated August 3, 2010. The Decision affirmed the petitioner's
conviction for his failure to remit the Social Security Service (SSS) contributions of his
employees. The petitioner anchors the present motion on his supposed inclusion within the
coverage of Republic Act (RA) No. 9903 or the Social Security Condonation Law of 2009,
whose passage the petitioner claims to be a supervening event in his case. He further invokes
the equal protection clause in support of his motion.
In our Decision dated August 3, 2010, we AFFIRMED, with modification, the decree of
conviction issued by both the trial and appellate courts for the petitioner's violation of Section

22 (a) and (d), in relation to Section 28 of RA No. 8282 or the Social Security Act of 1997. To
recall its highlights, our Decision emphasized that the petitioner readily admitted during trial
that he did not remit the SSS premium contributions of his employees at Summa Alta Tierra
Industries, Inc. from August 1998 to July 1999, in the amount of P239,756.80; inclusive of
penalties, this unremitted amount totaled to P421,151.09. The petitioner's explanation for his
failure to remit, which the trial court disbelieved, was that during this period, Summa Alta
Tierra Industries, Inc. shut down as a result of the general decline in the economy. The
petitioner pleaded good faith and lack of criminal intent as his defenses.
We ruled that the decree of conviction was founded on proof beyond reasonable doubt, based
on the following considerations: first, the remittance of employee contributions to the SSS is
mandatory under RA No. 8282; and second, the failure to comply with a special law being
malum prohibitum, the defenses of good faith and lack of criminal intent are immaterial.
The petitioner further argued that since he was designated in the Information as a "proprietor,"
he was without criminal liability since "proprietors" are not among the corporate officers
specifically enumerated in Section 28 (f) of RA No. 8282 to be criminally liable for the
violation of its provisions. We rejected this argument based on our ruling in Garcia v. Social
Security Commission Legal and Collection. 1 We ruled that to sustain the petitioner's
argument would be to allow the unscrupulous to conveniently escape liability merely through
the creative use of managerial titles.
After taking into account the Indeterminate Penalty Law and Article 315 of the Revised Penal
Code, we MODIFIED the penalty originally imposed by the trial court 2 and, instead, decreed
the penalty of four (4) years and two (2) months of prision correccional, as minimum, to
twenty (20) years of reclusion temporal, as maximum. DIETHS
In the present motion for reconsideration, the petitioner points out that pending his appeal with
the Court of Appeals (CA), he voluntarily paid the SSS the amount of P239,756.80 to settle his
delinquency. 3 Note that the petitioner also gave notice of this payment to the CA via a Motion
for Reconsideration and a Motion for New Trial. Although the People did not contest the fact
of voluntary payment, the CA nevertheless denied the said motions.
The present motion for reconsideration rests on the following points:
First. On January 7, 2010, during the pendency of the petitioner's case before the Court, then
President Gloria Macapagal-Arroyo signed RA No. 9903 into law. RA No. 9903 mandates the
effective withdrawal of all pending cases against employers who would remit their delinquent
contributions to the SSS within a specified period, viz., within six months after the law's
effectivity. 4 The petitioner claims that in view of RA No. 9903 and its implementing rules, the
settlement of his delinquent contributions in 2007 entitles him to an acquittal. He invokes the
equal protection clause in support of his plea.
Second. The petitioner alternatively prays that should the Court find his above argument
wanting, he should still be acquitted since the prosecution failed to prove all the elements of
the crime charged.
Third. The petitioner prays that a fine be imposed, not imprisonment, should he be found
guilty.
The Solicitor General filed a Manifestation in Lieu of Comment and claims that the passage of
RA No. 9903 constituted a supervening event in the petitioner's case that supports the
petitioner's acquittal "[a]fter a conscientious review of the case." 5
THE COURT'S RULING
The petitioner's arguments supporting his prayer for acquittal fail to convince us. However, we
find basis to allow waiver of the petitioner's liability for accrued penalties.

The petitioner's liability for the crime is a settled matter

Upfront, we reject the petitioner's claim that the prosecution failed to prove all the elements of
the crime charged. This is a matter that has been resolved in our Decision, and the petitioner
did not raise anything substantial to merit the reversal of our finding of guilt. To reiterate, the
petitioner's conviction was based on his admission that he failed to remit his employees'
contribution to the SSS.
The petitioner cannot benefit from the terms of RA No. 9903, which condone only employers
who pay their delinquencies within six months from the law's effectivity
We note that the petitioner does not ask for the reversal of his conviction based on the
authority of RA No. 9903; he avoids making a straightforward claim because this law plainly
does not apply to him or to others in the same situation. The clear intent of the law is to grant
condonation only to employers with delinquent contributions or pending cases for their
delinquencies and who pay their delinquencies within the six (6)-month period set by the law.
Mere payment of unpaid contributions does not suffice; it is payment within, and only within,
the six (6)-month availment period that triggers the applicability of RA No. 9903.
True, the petitioner's case was pending with us when RA No. 9903 was passed. Unfortunately
for him, he paid his delinquent SSS contributions in 2007. By paying outside of the availment
period, the petitioner effectively placed himself outside the benevolent sphere of RA No. 9903.
This is how the law is written: it condones employers and only those employers with
unpaid SSS contributions or with pending cases who pay within the six (6)-month period
following the law's date of effectivity. Dura lex, sed lex.
The petitioner's awareness that RA No. 9903 operates as discussed above is apparent in his
plea for equal protection. In his motion, he states that caCTHI
[he] is entitled under the equal protection clause to the dismissal of the case against him since
he had already paid the subject delinquent contributions due to the SSS which accepted the
payment as borne by the official receipt it issued (please see Annex "A"). The equal protection
clause requires that similar subjects, [sic] should not be treated differently, so as to give undue
favor to some and unjustly discriminate against others. The petitioner is no more no less in the
same situation as the employer who would enjoy freedom from criminal prosecution upon
payment in full of the delinquent contributions due and payable to the SSS within six months
from the effectivity of Republic Act No. 9903. 6
The Court cannot amplify the scope of RA No. 9903 on the ground of equal protection, and
acquit the petitioner and other delinquent employers like him; it would in essence be an
amendment of RA No. 9903, an act of judicial legislation abjured by the trias politica
principle. 7
RA No. 9903 creates two classifications of employers delinquent in remitting the SSS
contributions of their employees: (1) those delinquent employers who pay within the six (6)month period (the former group), and (2) those delinquent employers who pay outside of this
availment period (the latter group). The creation of these two classes is obvious and
unavoidable when Section 2 and the last proviso of Section 4 8 of the law are read together.
The same provisions show the law's intent to limit the benefit of condonation to the former
group only; had RA No. 9903 likewise intended to benefit the latter group, which includes the
petitioner, it would have expressly declared so. Laws granting condonation constitute an act of
benevolence on the government's part, similar to tax amnesty laws; their terms are strictly
construed against the applicants. Since the law itself excludes the class of employers to which
the petitioner belongs, no ground exists to justify his acquittal. An implementing rule or

regulation must conform to and be consistent with the provisions of the enabling statute; it
cannot amend the law either by abridging or expanding its scope. 9
For the same reason, we cannot grant the petitioner's prayer to impose a fine in lieu of
imprisonment; neither RA No. 8282 nor RA No. 9903 authorizes the Court to exercise this
option.
On the matter of equal protection, we stated in Tolentino v. Board of Accountancy, et al. 10
that the guarantee simply means "that no person or class of persons shall be denied the same
protection of the laws which is enjoyed by other persons or other classes in the same place and
in like circumstances." In People v. Cayat, 11 we further summarized the jurisprudence on
equal protection in this wise:
It is an established principle of constitutional law that the guaranty of the equal protection of
the laws is not violated by a legislation based on reasonable classification. And the
classification, to be reasonable, (1) must rest on substantial distinctions; (2) must be germane
to the purposes of the law; (3) must not be limited to existing conditions only; and (4) must
apply equally to all members of the same class.
The difference in the dates of payment of delinquent contributions provides a substantial
distinction between the two classes of employers. In limiting the benefits of RA No. 9903 to
delinquent employers who pay within the six (6)-month period, the legislature refused to allow
a sweeping, non-discriminatory condonation to all delinquent employers, lest the policy
behind RA No. 8282 be undermined.
The petitioner is entitled to a waiver of his accrued penalties
Despite our discussion above, the petitioner's move to have our Decision reconsidered is not
entirely futile. The one benefit the petitioner can obtain from RA No. 9903 is the waiver of his
accrued penalties, which remain unpaid in the amount of P181,394.29. This waiver is derived
from the last proviso of Section 4 of RA No. 9903:
Provided, further, That for reason of equity, employers who settled arrears in contributions
before the effectivity of this Act shall likewise have their accrued penalties waived. AEIcSa
This proviso is applicable to the petitioner who settled his contributions long before the
passage of the law. Applied to the petitioner, therefore, RA No. 9903 only works to allow a
waiver of his accrued penalties, but not the reversal of his conviction.
Referral to the Chief Executive for possible exercise of executive clemency
We realize that with the affirmation of the petitioner's conviction for violation of RA No. 8282,
he stands to suffer imprisonment for four (4) years and two (2) months of prision correccional,
as minimum, to twenty (20) years of reclusion temporal, as maximum, notwithstanding the
payment of his delinquent contribution.
Under Article 5 of the Revised Penal Code, 12 the courts are bound to apply the law as it is
and impose the proper penalty, no matter how harsh it might be. The same provision, however,
gives the Court the discretion to recommend to the President actions it deems appropriate but
are beyond its power when it considers the penalty imposed as excessive. Although the
petitioner was convicted under a special penal law, the Court is not precluded from giving the
Revised Penal Code suppletory application in light of Article 10 13 of the same Code and our
ruling in People v. Simon. 14
WHEREFORE, the Court PARTIALLY GRANTS petitioner Romarico J. Mendoza's motion
for reconsideration. The Court AFFIRMS the petitioner's conviction for violation of Section

22(a) and (d), in relation to Section 28 of Republic Act No. 8282, and the petitioner is thus
sentenced to an indeterminate prison term of four (4) years and two (2) months of prision
correccional, as minimum, to twenty (20) years of reclusion temporal, as maximum. In light of
Section 4 of Republic Act No. 9903, the petitioner's liability for accrued penalties is
considered WAIVED. Considering the circumstances of the case, the Court transmits the case
to the Chief Executive, through the Department of Justice, and RECOMMENDS the grant of
executive clemency to the petitioner.
SO ORDERED.

[G.R. No. 170735. December 17, 2007.]

IMMACULADA L. GARCIA, petitioner, vs. SOCIAL SECURITY COMMISSION LEGAL
AND COLLECTION, SOCIAL SECURITY SYSTEM, respondents.
DECISION
CHICO-NAZARIO, J p:
This is petition for review on Certiorari under Rule 45 of the Rules of Court is assailing the 2
June 2005 Decision 1 and 8 December 2005 Resolution 2 both of the Court of Appeals in CAG.R. SP No. 85923. the appellate court affirmed the Order and Resolution both of the
Social Security Commission (SSC) in SSC Case No. 10048, finding Immaculada L. Garcia
(Garcia), the sole surviving director of Impact Corporation, petitioner herein, liable for
unremitted, albeit collected, SSS contributions.
Petitioner Immaculada L. Garcia, Eduardo de Leon, Ricardo de Leon, Pacita Fernandez, and
Consuelo Villanueva were directors 3 of Impact Corporation. The corporation was engaged in
the business of manufacturing aluminum tube containers and operated two factories. One was
a "slug" foundry-factory located in Cuyapo, Nueva Ecija, while the other was an Extrusion
Plant in Cainta, Metro Manila, which processed the "slugs" into aluminum collapsible tubes
and similar containers for toothpaste and other related products.
Records show that around 1978, Impact Corporation started encountering financial problems.
By 1980, labor unrest besieged the corporation.
In March 1983, Impact Corporation filed with the Securities and Exchange Commission
(SEC) a Petition for Suspension of Payments, 4 docketed as SEC Case No. 02423, in which it
stated that:
[Impact Corporation] has been and still is engaged in the business of manufacturing aluminum
tube containers . . . .
xxx xxx xxx

In brief, it is an on-going, viable, and profitable enterprise.

On 8 May 1985, the union of Impact Corporation filed a Notice of Strike with the Ministry of
Labor which was followed by a declaration of strike on 28 July 1985. Subsequently, the
Ministry of Labor certified the labor dispute for compulsory arbitration to the National Labor
Relations Commission (NLRC) in an Order 5 dated 25 August 1985. The Ministry of Labor, in
the same Order, noted the inability of Impact Corporation to pay wages, 13th month pay, and
SSS remittances due to cash liquidity problems. A portion of the order reads:
On the claims of unpaid wages, unpaid 13th month pay and non-remittance of loan
amortization and SSS premiums, we are for directing the company to pay the same to the
workers and to remit loan amortizations and SSS premiums previously deducted from their
wages to the Social Security System. Such claims were never contested by the company both
during the hearing below and in our office. In fact, such claims were admitted by the company
although it alleged cash liquidity as the main reason for such non-payment.

In the meantime, the Petition for Suspension of Payments was dismissed which was pending
before the SEC in an Order 8 dated 12 December 1985. Impact Corporation resumed
operations but only for its winding up and dissolution. 9 Due to Impact Corporation's liability
and cash flow problems, all of its assets, namely, its machineries, equipment, office furniture
and fixtures, were sold to scrap dealers to answer for its arrears in rentals.
On 1 December 1995, the SSS-LCD filed an amended Petition 10 in SSC Case No. 10048
wherein the directors of Impact Corporation were directly impleaded as respondents, namely:
Eduardo de Leon, Ricardo de Leon, 11 Pacita Fernandez, Consuelo Villanueva, and petitioner.
The amounts sought to be collected totaled P453,845.78 and P10,856.85 for the periods
August 1980 to December 1984 and August 1981 to July 1984, respectively, and the penalties
for late remittance at the rate of 3% per month from the date the contributions fell due until
fully paid pursuant to Section 22 (a) of the Social Security Law, 12 as amended, in the
amounts of P49,941.67 and P2,474,662.82.
Period Unremitted Amount Penalties TOTAL
(3% Interest Per

WHEREFORE, the dispute at Impact Corporation is hereby certified to the National Labor
Relations Commission for compulsory arbitration in accordance with Article 264 (g) of the
Labor Code, as amended.

Month)
August 1980 to P453,845.78 P49, 941.67 503,787.45
December 1984
August 1981 to P10,856.85 P2,474,662.82 2,485,519.67

xxx xxx xxx

July 1984

The company is directed to pay all the entitled workers unpaid wages, unpaid 13th month pay
and to remit to the Social Security System loan amortizations and SSS premiums previously
deducted from the wages of the workers. 6

Summonses were not served upon Eduardo de Leon, Pacita Fernandez, and Consuelo
Villanueva, their whereabouts unknown. They were all later determined to be deceased. On the
other hand, due to failure to file his responsive pleading, Ricardo de Leon was declared in
default.

On 3 July 1985, the Social Security System (SSS), through its Legal and Collection Division
(LCD), filed a case before the SSC for the collection of unremitted SSS premium
contributions withheld by Impact Corporation from its employees. The case which impleaded
Impact Corporation as respondent was docketed as SSC Case No. 10048. 7
Impact Corporation was compulsorily covered by the SSS as an employer effective 15 July
1963 and was assigned Employer I.D. No. 03-2745100-21.
In answer to the allegations raised in SSC Case No. 10048, Impact Corporation, through its
then Vice President Ricardo de Leon, explained in a letter dated 18 July 1985 that it had been
confronted with strikes in 1984 and layoffs were effected thereafter. It further argued that the
P402,988.93 is erroneous. It explained among other things, that its operations had been
suspended and that it was waiting for the resolution on its Petition for Suspension of Payments
by the SEC under SEC Case No. 2423. Despite due notice, the corporation failed to appear at
the hearings. The SSC ordered the investigating team of the SSS to determine if it can still file
its claim for unpaid premium contributions against the corporation under the Petition for
Suspension of Payments.

Petitioner filed with the SSC a Motion to Dismiss 13 on grounds of prescription, lack of cause
of action and cessation of business, but the Motion was denied for lack of merit. 14 In her
Answer with Counterclaim 15 dated 20 May 1999, petitioner averred that Impact Corporation
had ceased operations in 1980. In her defense, she insisted that she was a mere director
without managerial functions, and she ceased to be such in 1982. Even as a stockholder and
director of Impact Corporation, petitioner contended that she cannot be made personally liable
for the corporate obligations of Impact Corporation since her liability extended only up to the
extent of her unpaid subscription, of which she had none since her subscription was already
fully paid. The petitioner raised the same arguments in her Position Paper. 16
On 23 January 1998, Ricardo de Leon died following the death, too, of Pacita Fernandez died
on 7 February 2000. In an Order dated 11 April 2000, the SSC directed the System to check if
Impact Corporation had leviable properties to which the investigating team of respondent SSS
manifested that the Impact Corporation had already been dissolved and its assets disposed of.
17

In a Resolution dated 28 May 2003, the Social Security Commission ruled in favor of SSS and
declared petitioner liable to pay the unremitted contributions and penalties, stating the
following:
WHEREFORE, premises considered, this Commission finds, and so holds, that respondents
Impact Corporation and/or Immaculada L. Garcia, as director and responsible officer of the
said corporation, is liable to pay the SSS the amounts of P442,988.93, representing the unpaid
SS contributions of their employees for the period August 1980 to December 1984, not
inclusive, and P10,856.85, representing the balance of the unpaid SS contributions in favor of
Donato Campos, Jaime Mascarenas, Bonifacio Franco and Romeo Fullon for the period
August 1980 to December 1984, not inclusive, as well as the 3% per month penalty imposed
thereon for late payment in the amounts of P3,194,548.63 and P78,441.33, respectively,
computed as of April 30, 2003. This is without prejudice to the right of the SSS to collect the
penalties accruing after April 30, 2003 and to institute other appropriate actions against the
respondent corporation and/or its responsible officers.
Should the respondents pay their liability for unpaid SSS contributions within sixty (60) days
from receipt of a copy of this Resolution, the 3% per month penalty for late payment thereof
shall be deemed condoned pursuant to SSC Res. No. 397-S.97, as amended by SSC Res. Nos.
112-S.98 and 982-S.99, implementing the provision on condonation of penalty under Section
30 of R.A. No. 8282.
In the event the respondents fail to pay their liabilities within the aforestated period, let a writ
of execution be issued, pursuant to Section 22 (c) [2] of the SS Law, as amended, for the
satisfaction of their liabilities to the SSS. 18
Petitioner filed a Motion for Reconsideration 19 of the afore-quoted Decision but it was
denied for lack of merit in an Order 20 dated 4 August 2004, thus:
Nowhere in the questioned Resolution dated May 28, 2003 is it stated that the other directors
of the defunct Impact Corporation are absolved from their contribution and penalty liabilities
to the SSS. It is certainly farthest from the intention of the petitioner SSS or this Commission
to pin the entire liability of Impact Corporation on movant Immaculada L. Garcia, to the
exclusion of the directors of the corporation namely: Eduardo de Leon, Ricardo de Leon,
Pacita Fernandez and Conzuelo Villanueva, who were all impleaded as parties-respondents in
this case.
The case record shows that there was failure of service of summonses upon respondents
Eduardo de Leon, Pacita Fernandez and Conzuelo Villanueva, who are all deceased, for the
reason that their whereabouts are unknown. Moreover, neither the legal heirs nor the estate of
the defaulted respondent Ricardo de Leon were substituted as parties-respondents in this case
when he died on January 23, 1998. Needless to state, the Commission did not acquire
jurisdiction over the persons or estates of the other directors of Impact Corporation, hence, it
could not validly render any pronouncement as to their liabilities in this case.

Furthermore, the movant cannot raise in a motion for reconsideration the defense that she was
no longer a director of Impact Corporation in 1982, when she was allegedly eased out by the
managing directors of Impact Corporation as purportedly shown in the Deed of Sale and
Assignment of Shares of Stock dated January 22, 1982. This defense was neither pleaded in
her Motion to Dismiss dated January 17, 1996 nor in her Answer with Counterclaim dated
May 18, 1999 and is, thus, deemed waived pursuant to Section 1, Rule 9 of the 1997 Rules of
Civil Procedure, which has suppletory application to the Revised Rules of Procedure of the
Commission.
Finally, this Commission has already ruled in the Order dated April 27, 1999 that since the
original Petition was filed by the SSS on July 3, 1985, and was merely amended on December
1, 1995 to implead the responsible officers of Impact Corporation, without changing its causes
of action, the same was instituted well within the 20-year prescriptive period provided under
Section 22 (b) of the SS Law, as amended, considering that the contribution delinquency
assessment covered the period August 1980 to December 1984.
In view thereof, the instant Motion for Reconsideration is hereby denied for lack of merit.
Petitioner elevated her case to the Court of Appeals via a Petition for Review. Respondent SSS
filed its Comment dated 20 January 2005, and petitioner submitted her Reply thereto on 4
April 2005.
The Court of Appeals, applying Section 28 (f) of the Social Security Law, 21 again ruled
against petitioner. It dismissed the petitioner's Petition in a Decision dated 2 June 2005, the
dispositive portion of which reads:
WHEREFORE, premises considered, the petition is DISMISSED for lack of merit. The
assailed Resolution dated 28 May 2003 and the Order dated 4 August 2004 of the Social
Security Commission are AFFIRMED in toto. 22
Aggrieved, petitioner filed a Motion for Reconsideration of the appellate court's Decision but
her Motion was denied in a Resolution dated 8 December 2005.
Hence, the instant Petition in which petitioner insists that the Court of Appeals committed
grave error in holding her solely liable for the collected but unremitted SSS premium
contributions and the consequent late penalty payments due thereon. Petitioner anchors her
Petition on the following arguments:
I. SECTION 28(F) OF THE SSS LAW PROVIDES THAT A MANAGING HEAD,
DIRECTOR OR PARTNER IS LIABLE ONLY FOR THE PENALTIES OF THE
EMPLOYER CORPORATION AND NOT FOR UNPAID SSS CONTRIBUTIONS OF THE
EMPLOYER CORPORATION.

II. UNDER THE SSS LAW, IT IS THE MANAGING HEADS, DIRECTORS OR

PARTNERS WHO SHALL BE LIABLE TOGETHER WITH THE CORPORATION. IN
THIS CASE, PETITIONER HAS CEASED TO BE A STOCKHOLDER OF IMPACT
CORPORATION IN 1982. EVEN WHILE SHE WAS A STOCKHOLDER, SHE NEVER
PARTICIPATED IN THE DAILY OPERATIONS OF IMPACT CORPORATION.
III. UNDER SECTION 31 OF THE CORPORATION CODE, ONLY DIRECTORS,
TRUSTEES OR OFFICERS WHO PARTICIPATE IN UNLAWFUL ACTS OR ARE GUILTY
OF GROSS NEGLIGENCE AND BAD FAITH SHALL BE PERSONALLY LIABLE.
OTHERWISE, BEING A MERE STOCKHOLDER, SHE IS LIABLE ONLY TO THE
EXTENT OF HER SUBSCRIPTION.
IV. IMPACT CORPORATION SUFFERED IRREVERSIBLE ECONOMIC LOSSES,
EVENTS WHICH WERE NEITHER DESIRED NOR CAUSED BY ANY ACT OF THE
PETITIONER. THUS, BY REASON OF FORTUITOUS EVENTS, THE PETITIONER
SHOULD BE ABSOLVED FROM LIABILITY.
V. RESPONDENT SOCIAL SECURITY SYSTEM FAILED MISERABLY IN EXERTING
EFFORTS TO ACQUIRE JURISDICTION OVER THE LEVIABLE ASSETS OF IMPACT
CORPORATION, PERSON/S AND/OR ESTATE/S OF THE OTHER DIRECTORS OR
OFFICERS OF IMPACT CORPORATION.
VI. THE HONORABLE COMMISSION SERIOUSLY ERRED IN NOT RENDERING A
JUDGMENT BY DEFAULT AGAINST THE DIRECTORS UPON WHOM IT ACQUIRED
JURISDICTION.
Based on the foregoing, petitioner prays that the Decision dated 2 June 2005 and the
Resolution dated 8 December 2005 of the Court of Appeals be reversed and set aside, and a
new one be rendered absolving her of any and all liabilities under the Social Security Law.
In sum, the core issue to be resolved in this case is whether or not petitioner, as the only
surviving director of Impact Corporation, can be made solely liable for the corporate
obligations of Impact Corporation pertaining to unremitted SSS premium contributions and
penalties therefore.
As a covered employer under the Social Security Law, it is the obligation of Impact
Corporation under the provisions of Sections 18, 19 and 22 thereof, as amended, to deduct
from its duly covered employee's monthly salaries their shares as premium contributions and
remit the same to the SSS, together with the employer's shares of the contributions to the
petitioner, for and in their behalf.
From all indications, the corporation has already been dissolved. Respondents are now going
after petitioner who is the only surviving director of Impact Corporation.

A cursory review of the alleged grave errors of law committed by the Court of Appeals above
reveals there seems to be no dispute as to the assessed liability of Impact Corporation for the
unremitted SSS premiums of its employees for the period January 1980 to December 1984.
There is also no dispute as to the fact that the employees' SSS premium contributions have
been deducted from their salaries by Impact Corporation.
Petitioner in assailing the Court of Appeals Decision, distinguishes the penalties from the
unremitted or unpaid SSS premium contributions. She points out that although the appellate
court is of the opinion that the concerned officers of an employer corporation are liable for the
penalties for non-remittance of premiums, it still affirmed the SSC Resolution holding
petitioner liable for the unpaid SSS premium contributions in addition to the penalties.
Petitioner avers that under the aforesaid provision, the liability does not include liability for
the unremitted SSS premium contributions.
Petitioner's argument is ridiculous. The interpretation petitioner would like us to adopt finds
no support in law or in jurisprudence. While the Court of Appeals Decision provided that
Section 28 (f) refers to the liabilities pertaining to penalty for the non-remittance of SSS
employee contributions, holding that it is distinct from the amount of the supposed SSS
remittances, petitioner mistakenly concluded that Section 28 (f) is applicable only to penalties
and not to the liability of the employer for the unremitted premium contributions. Clearly, a
simplistic interpretation of the law is untenable. It is a rule in statutory construction that every
part of the statute must be interpreted with reference to the context, i.e., that every part of the
statute must be considered together with the other parts, and kept subservient to the general
intent of the whole enactment. 23 The liability imposed as contemplated under the foregoing
Section 28 (f) of the Social Security Law does not preclude the liability for the unremitted
amount. Relevant to Section 28 (f) is Section 22 of the same law.
SEC. 22. Remittance of Contributions. (a) The contributions imposed in the preceding
Section shall be remitted to the SSS within the first ten (10) days of each calendar month
following the month for which they are applicable or within such time as the Commission may
prescribe. Every employer required to deduct and to remit such contributions shall be liable
for their payment and if any contribution is not paid to the SSS as herein prescribed, he shall
pay besides the contribution a penalty thereon of three percent (3%) per month from the date
the contribution falls due until paid. If deemed expedient and advisable by the Commission,
the collection and remittance of contributions shall be made quarterly or semi-annually in
advance, the contributions payable by the employees to be advanced by their respective
employers: Provided, That upon separation of an employee, any contribution so paid in
advance but not due shall be credited or refunded to his employer.
Under Section 22 (a), every employer is required to deduct and remit such contributions
penalty refers to the 3% penalty that automatically attaches to the delayed SSS premium
contributions. The spirit, rather than the letter of a law determines construction of a provision
of law. It is a cardinal rule in statutory construction that in interpreting the meaning and scope
of a term used in the law, a careful review of the whole law involved, as well as the
intendment of the law, must be made. 24 Nowhere in the provision or in the Decision can it be

inferred that the persons liable are absolved from paying the unremitted premium
contributions.
Elementary is the rule that when laws or rules are clear, it is incumbent upon the judge to
apply them regardless of personal belief or predilections when the law is unambiguous and
unequivocal, application not interpretation thereof is imperative. 25 However, where the
language of a statute is vague and ambiguous, an interpretation thereof is resorted to. An
interpretation thereof is necessary in instances where a literal interpretation would be either
impossible or absurd or would lead to an injustice. A law is deemed ambiguous when it is
capable of being understood by reasonably well-informed persons in either of two or more
senses. 26 The fact that a law admits of different interpretations is the best evidence that it is
vague and ambiguous. 27 In the instant case, petitioner interprets Section 28 (f) of the Social
Security Law as applicable only to penalties and not to the liability of the employer for the
unremitted premium contributions. Respondents present a more logical interpretation that is
consistent with the provisions as a whole and with the legislative intent behind the Social
Security Law.
This Court cannot be made to accept an interpretation that would defeat the intent of the law
and its legislators. 28
Petitioner also challenges the finding of the Court of Appeals that under Section 28 (f) of the
Social Security Law, a mere director or officer of an employer corporation, and not necessarily
a "managing" director or officer, can be held liable for the unpaid SSS premium contributions.

Section 28 (f) of the Social Security Law provides the following:

(f) If the act or omission penalized by this Act be committed by an association, partnership,
corporation or any other institution, its managing head, directors or partners shall be liable to
the penalties provided in this Act for the offense.
This Court agrees in petitioner's observation that the SSS did not even deny nor rebut the
claim that petitioner was not the "managing head" of Impact Corporation. However, the Court
of Appeals rightly held that petitioner, as a director of Impact Corporation, is among those
officers covered by Section 28 (f) of the Social Security Law.
Petitioner invokes the rule in statutory construction called ejusdem generic; that is, where
general words follow an enumeration of persons or things, by words of a particular and
specific meaning, such general words are not to be construed in their widest extent, but are to
be held as applying only to persons or things of the same kind or class as those specifically
mentioned. According to petitioner, to be held liable under Section 28 (f) of the Social
Security Law, one must be the "managing head," "managing director," or "managing partner."
This Court though finds no need to resort to statutory construction. Section 28 (f) of the Social
Security Law imposes penalty on:

(1) the managing head;

(2) directors; or
(3) partners, for offenses committed by a juridical person
The said provision does not qualify that the director or partner should likewise be a "managing
director" or "managing partner." 29 The law is clear and unambiguous.
Petitioner nonetheless raises the defense that under Section 31 of the Corporation Code, only
directors, trustees or officers who participate in unlawful acts or are guilty of gross negligence
and bad faith shall be personally liable, and that being a mere stockholder, she is liable only to
the extent of her subscription.
Section 31 of the Corporation Code, stipulating on the liability of directors, trustees, or
officers, provides:
SEC. 31. Liability of directors, trustees or officers. Directors or trustees who willfully and
knowingly vote for or assent to patently unlawful acts of the corporation or who are guilty of
gross negligence or bad faith in directing the affairs of the corporation or acquire any personal
or pecuniary interest in conflict with their duty as such directors, or trustees shall be liable
jointly and severally for all damages resulting therefrom suffered by the corporation, its
stockholders or members and other persons.
Basic is the rule that a corporation is invested by law with a personality separate and distinct
from that of the persons composing it as well as from that of any other legal entity to which it
may be related. A corporation is a juridical entity with legal personality separate and distinct
from those acting for and in its behalf and, in general, from the people comprising it.
Following this, the general rule applied is that obligations incurred by the corporation, acting
through its directors, officers and employees, are its sole liabilities. 30 A director, officer, and
employee of a corporation are generally not held personally liable for obligations incurred by
the corporation.
Being a mere fiction of law, however, there are peculiar situations or valid grounds that can
exist to warrant the disregard of its independent being and the lifting of the corporate veil. This
situation might arise when a corporation is used to evade a just and due obligation or to justify
a wrong, to shield or perpetrate fraud, to carry out other similar unjustifiable aims or
intentions, or as a subterfuge to commit injustice and so circumvent the law. 31 Thus, Section
31 of the Corporation Law provides:
Taking a cue from the above provision, a corporate director, a trustee or an officer, may be
held solidarily liable with the corporation in the following instances:

1. When directors and trustees or, in appropriate cases, the officers of a corporation
(a) vote for or assent to patently unlawful acts of the corporation;
(b) act in bad faith or with gross negligence in directing the corporate affairs;
(c) are guilty of conflict of interest to the prejudice of the corporation, its stockholders or
members, and other persons.
2. When a director or officer has consented to the issuance of watered stocks or who, having
knowledge thereof, did not forthwith file with the corporate secretary his written objection
thereto.
3. When a director, trustee or officer has contractually agreed or stipulated to hold himself
personally and solidarily liable with the Corporation.
4. When a director, trustee or officer is made, by specific provision of law, personally liable
for his corporate action. 32
The aforesaid provision states:
SEC. 31. Liability of directors, trustees or officers. Directors or trustees who willfully and
knowingly vote for or assent to patently unlawful acts of the corporation or who are guilty of
gross negligence or bad faith in directing the affairs of the corporation or acquire any personal
or pecuniary interest in conflict with their duty as such directors, or trustees shall be liable
jointly and severally for all damages resulting therefrom suffered by the corporation, its
stockholders or members and other persons.
The situation of petitioner, as a director of Impact Corporation when said corporation failed to
remit the SSS premium contributions falls exactly under the fourth situation. Section 28 (f) of
the Social Security Law imposes a civil liability for any act or omission pertaining to the
violation of the Social Security Law, to wit:
(f) If the act or omission penalized by this Act be committed by an association, partnership,
corporation or any other institution, its managing head, directors or partners shall be liable to
the penalties provided in this Act for the offense.

days from the date they became due shall be presumed to have misappropriated such
contributions or loan amortizations and shall suffer the penalties provided in Article Three
hundred fifteen of the Revised Penal Code.
(i) Criminal action arising from a violation of the provisions of this Act may be commenced by
the SSS or the employee concerned either under this Act or in appropriate cases under the
Revised Penal Code: . . . .
Respondents would like this Court to apply another exception to the rule that the persons
comprising a corporation are not personally liable for acts done in the performance of their
duties.
The Court of Appeals in the appealed Decision stated:
Anent the unpaid SSS contributions of Impact Corporation's employees, the officers of a
corporation are liable in behalf of a corporation, which no longer exists or has ceased
operations. Although as a rule, the officers and members of a corporation are not personally
liable for acts done in performance of their duties, this rule admits of exception, one of which
is when the employer corporation is no longer existing and is unable to satisfy the judgment in
favor of the employee, the officers should be held liable for acting on behalf of the
corporation. Following the foregoing pronouncement, petitioner, as one of the directors of
Impact Corporation, together with the other directors of the defunct corporation, are liable for
the unpaid SSS contributions of their employees. 33
On the other hand, the SSC, in its Resolution, presented this discussion:
Although as a rule, the officers and members of a corporation are not personally liable for acts
done in the performance of their duties, this rule admits of exceptions, one of which is when
the employer corporation is no longer existing and is unable to satisfy the judgment in favor of
the employee, the officers should be held liable for acting on behalf of the corporation. . . . . 34
The rationale cited by respondents in the two preceding paragraphs need not have been applied
because the personal liability for the unremitted SSS premium contributions and the late
penalty thereof attaches to the petitioner as a director of Impact Corporation during the period
the amounts became due and demandable by virtue of a direct provision of law.

In fact, criminal actions for violations of the Social Security Law are also provided under the
Revised Penal Code. The Social Security Law provides, in Section 28 thereof, to wit:

Petitioner's defense that since Impact Corporation suffered irreversible economic losses, and
by reason of fortuitous events, she should be absolved from liability, is also untenable. The
evidence adduced totally belies this claim. A reference to the copy of the Petition for
Suspension of Payments filed by Impact Corporation on 18 March 1983 before the SEC
contained an admission that:

(h) Any employer who, after deducting the monthly contributions or loan amortizations from
his employees' compensation, fails to remit the said deductions to the SSS within thirty (30)

"[I]t has been and still is engaged in business" and "has been and still is engaged in the
business of manufacturing aluminum tube containers" and "in brief, it is an on-going, viable,

and profitable enterprise" which has "sufficient assets" and "actual and potential incomegeneration capabilities."
The foregoing document negates petitioner's assertion and supports the contention that during
the period involved Impact Corporation was still engaged in business and was an ongoing,
viable, profitable enterprise. In fact, the latest SSS form RIA submitted by Impact Corporation
is dated 7 May 1984. The assessed SSS premium contributions and penalty are obligations
imposed upon Impact Corporation by law, and should have been remitted to the SSS within
the first 10 days of each calendar month following the month for which they are applicable or
within such time as the SSC prescribes. 35
This Court also notes the evident failure on the part of SSS to issue a judgment in default
against Ricardo de Leon, who was the vice-president and officer of the corporation, upon his
non-filing of a responsive pleading after summons was served on him. As can be gleaned from
Section 11 of the SSS Revised Rules of Procedure, the Commissioner is mandated to render a
decision either granting or denying the petition. Under the aforesaid provision, if respondent
fails to answer within the time prescribed, the Hearing Commissioner may, upon motion of
petitioner, or motu proprio, declare respondent in default and proceed to receive petitioner's
evidence ex parte and thereafter recommend to the Commission either the granting or denial of
the petition as the evidence may warrant. 36
On a final note, this Court sees it proper to quote verbatim respondents' prefatory statement in
their Comment:
The Social Security System is a government agency imbued with a salutary purpose to carry
out the policy of the State to establish, develop, promote and perfect a sound and viable tax
exempt social security system suitable to the needs of the people throughout the Philippines
which shall promote social justice and 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.
The soundness and viability of the funds of the SSS in turn depends on the contributions of its
covered employee and employer members, which it invests in order to deliver the basic social
benefits and privileges to its members. The entitlement to and amount of benefits and
privileges of the covered members are contribution-based. Both the soundness and viability of
the funds of the SSS as well as the entitlement and amount of benefits and privileges of its
members are adversely affected to a great extent by the non-remittance of the much-needed
contributions. 37
The sympathy of the law on social security is toward its beneficiaries. This Court will not turn
a blind eye on the perpetration of injustice. This Court cannot and will not allow itself to be
made an instrument nor be privy to any attempt at the perpetration of injustice.
Following the doctrine laid down in Laguna Transportation Co., Inc. v. Social Security
System, 38 this Court rules that although a corporation once formed is conferred a juridical
personality separate and distinct from the persons comprising it, it is but a legal fiction
introduced for purposes of convenience and to subserve the ends of justice. The concept
cannot be extended to a point beyond its reasons and policy, and when invoked in support of
an end subversive of this policy, will be disregarded by the courts.
WHEREFORE, pursuant to the foregoing, the Decision of the Court of Appeals dated 2 June
2005 in CA-G.R. SP No. 85923 is hereby AFFIRMED WITH FINALITY. Petitioner

Immaculada L. Garcia, as sole surviving director of Impact Corporation is hereby ORDERED

to pay for the collected and unremitted SSS contributions of Impact Corporation. The case is
REMANDED to the SSS for computation of the exact amount and collection thereof.
SO ORDERED.
[G.R. No. 100388. December 14, 2000.]
SOCIAL SECURITY SYSTEM, petitioner, vs. THE COURT OF APPEALS and CONCHITA
AYALDE, respondents.
Atty. Bert M. Vega for petitioner.
Atty. Eduardo S. Ungco for private respondent.
SYNOPSIS
After the death of her husband, Margarita Tana, widow of the late Ignacio Tana, Sr., became
aware of the fact that her husband's employer, Conchita Ayalde, never reported him for Social
Security System (SSS) coverage. Margarita filed a petition before the Social Security
Commission and prayed that Ayalde be ordered to pay the SSS premium contributions and that
SSS should grant her the funeral and pension benefits due her. The SSS, in a petition-inintervention, revealed that Ayalde was never registered as a member-employer of the SSS, and
consequently, Tana, Sr. was never registered as member-employee. Respondent Ayalde belied
the allegation that Tana, Sr. was her employee, admitting only that he was hired intermittently
as an independent contractor to plow, harrow, or burrow the plantation she owned and rented.
After hearing both parties, the Social Security Commission held that Tana, Sr. had been
employed continuously from January 1961 to March 1979 with a salary based on the
minimum wage prevailing during his employment. Not having reported the petitioner's
husband for coverage with the SSS, respondent Conchita Ayalde was made liable to pay
damages equivalent to the death benefits and funeral expenses of Tana, Sr. Not satisfied with
the Commission's ruling, Ayalde appealed to the Court of Appeals. The Court of Appeals
rendered judgment in favor of Conchita Ayalde and dismissed the claim of Margarita Tana.
The SSS, as intervenor-appellee, filed a motion for reconsideration, but was denied. Hence,
this petition for review on certiorari. The pivotal issue to be resolved in this petition is whether
or not an agricultural laborer who was hired on "pakyaw" basis can be considered an employee
entitled to compulsory coverage and corresponding benefits under the Social Security Law.
The Supreme Court reversed and set aside the decision of the Court of Appeals and the
resolution of the Social Security Commission was reinstated. There was no shred of evidence
to show that Tana was only a seasonal worker. All witnesses, including Ayalde, testified that
Tana and his family resided in the plantation. The only logical explanation for this set up was
that Tana was working for most part of the year exclusively for Ayalde. A closer scrutiny of the
records revealed that while Ayalde may not have directly imposed on Tana the manner and
methods to follow in performing his tasks, she did exercise control through her overseer.
Under the circumstances, the relationship between Ayalde and Tana has more of the attributes

of employer-employee than that of an independent contractor hired to perform a specific

project.
SYLLABUS
1. REMEDIAL LAW; EVIDENCE; FINDINGS OF FACTS; WHEN MAY BE REVIEWED
BY THE SUPREME COURT. At the outset, we reiterate the well-settled doctrine that the
existence of an employer-employee relationship is ultimately a question of fact. And while it is
the general rule that factual issues are not within the province of the Supreme Court, said rule
is not without exception. In cases, such as this one, where there are conflicting and
contradictory findings of fact, this Court has not hesitated to scrutinize the records to
determine the facts for itself. Our disquisition of the facts shall be our guide as to whose
findings are supported by substantial evidence.
2. LABOR AND SOCIAL LEGISLATION; SOCIAL SECURITY SYSTEM LAW
(REPUBLIC ACT NO. 1161, AS AMENDED); EMPLOYER-EMPLOYEE RELATIONSHIP;
ESSENTIAL ELEMENTS REQUIRED. The mandatory coverage under the SSS Law
(Republic Act No. 1161, as amended by PD 1202 and PD 1636) is premised on the existence
of an employer-employee relationship, and Section 8(d) defines an "employee" 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 an employer-employee
relationship." The essential elements of an employer-employee relationship are: (a) the
selection and engagement of the employee; (b) the payment of wages; (c) the power of
dismissal; and (d) the power of control with regard to the means and methods by which the
work is to be accomplished, with the power of control being the most determinative factor.
3. ID.; ID.; ID.; NO PARTICULAR FORM OF EVIDENCE REQUIRED TO PROVE
EXISTENCE THEREOF; APPLICATION IN CASE AT BAR. In the parallel case of
Opulencia Ice Plant and Storage v. NLRC, the petitioners argued that since Manuel P. Esita's
name does not appear in the payrolls of the company it necessarily means that he was not an
employee. This Court held: "Petitioners further argue that 'complainant miserably failed to
present any documentary evidence to prove his employment. There was no time sheet, pay slip
and/or payroll/cash voucher to speak of. Absence of these material documents are necessarily
fatal to complainant's cause.' We do not agree. No particular form of evidence is required to
prove the existence of an employer-employee relationship. Any competent and relevant
evidence to prove the relationship may be admitted. For, if only documentary evidence would
be required to show that relationship, no scheming employer would ever be brought before the
bar of justice, as no employer would wish to come out with any trace of the illegality he has
authored considering that it should take much weightier proof to invalidate a written
instrument. Thus, as in this case where the employer-employee relationship between
petitioners and Esita was sufficiently proved by testimonial evidence, the absence of time
sheet, time record or payroll has become inconsequential." Clearly, then, the testimonial
evidence of the claimant and her witnesses constitute positive and credible evidence of the
existence of an employer-employee relationship between Tana and Ayalde. As the employer,
the latter is duty-bound to keep faithful and complete records of her business affairs, not the
least of which would be the salaries of the workers. And yet, the documents presented have
been selective, few and incomplete in substance and content. Consequently, Ayalde has failed
to convince us that, indeed, Tana was not her employee.

4. ID.; ID.; ID.; PRESENT WHEN ECONOMIC FACTS MAKE IT MORE NEARLY ONE
OF EMPLOYMENT WITH RESPECT TO THE ENDS SOUGHT TO BE
ACCOMPLISHED; APPLICATION IN CASE AT BAR. Under the circumstances, the
relationship between Ayalde and Tana has more of the attributes of employer-employee than
that of an independent contractor hired to perform a specific project. In the case of Dy Keh
Beng v. International Labor, we cited our long-standing ruling in Sunripe Coconut Products
Co. v. Court of Industrial Relations, to wit: "When a worker possesses some attributes of an
employee and others of an independent contractor, which make him fall within an intermediate
area, he may be classified under the category of an employee when the economic facts of the
relations make it more nearly one of employment than one of independent business enterprise
with respect to the ends sought to be accomplished."
DECISION
YNARES-SANTIAGO, J p:
In a petition before the Social Security Commission, Margarita Tana, widow of the late
Ignacio Tana, Sr., alleged that her husband was, before his demise, an employee of Conchita
Ayalde as a farmhand in the two (2) sugarcane plantations she owned (known as Hda. No.
Audit B-70 located in Pontevedra, La Carlota City) and leased from the University of the
Philippines (known as Hda. Audit B-15-M situated in La Granja, La Carlota City). She further
alleged that Tana worked continuously six (6) days a week, four (4) weeks a month, and for
twelve (12) months every year between January 1961 to April 1979. For his labor, Tana
allegedly received a regular salary according to the minimum wage prevailing at the time. She
further alleged that throughout the given period, social security contributions, as well as
medicare and employees compensation premiums were deducted from Tana's wages. It was
only after his death that Margarita discovered that Tana was never reported for coverage, nor
were his contributions/premiums remitted to the Social Security System (SSS). Consequently,
she was deprived of the burial grant and pension benefits accruing to the heirs of Tana had he
been reported for coverage.
Hence, she prayed that the Commission issue an order directing:
1. respondents Conchita Ayalde and Antero Maghari as her administrator to pay the premium
contributions of the deceased Ignacio Tana, Sr. and report his name for SSS coverage; and
2. the SSS to grant petitioner Margarita Tana the funeral and pension benefits due her. 1
The SSS, in a petition-in-intervention, revealed that neither Hda. B-70 nor respondents Ayalde
and Maghari were registered members-employers of the SSS, and consequently, Ignacio Tana,
Sr. was never registered as a member-employee. Likewise, SSS records reflected that there
was no way of verifying whether the alleged premium contributions were remitted since the
respondents were not registered members-employers. Being the agency charged with the
implementation and enforcement of the provisions of the Social Security Law, as amended, the
SSS asked the Commission's leave to intervene in the case. 2

In his answer, respondent Antero Maghari raised the defense that he was a mere employee who
was hired as an overseer of Hda. B-70 sometime during crop years 1964-65 to 1971-72, and as
such, his job was limited to those defined for him by the employer which never involved
matters relating to the SSS. Hence, he prayed that the case against him be dismissed for lack
of cause of action. 3
For her part, respondent Ayalde belied the allegation that Ignacio Tana, Sr. was her employee,
admitting only that he was hired intermittently as an independent contractor to plow, harrow,
or burrow Hda. No. Audit B-15-M. Tana used his own carabao and other implements, and he
followed his own schedule of work hours. Ayalde further alleged that she never exercised
control over the manner by which Tana performed his work as an independent contractor.
Moreover, Ayalde averred that way back in 1971 the University of the Philippines had already
terminated the lease over Hda. B-15-M and she had since surrendered possession thereof to
the University of the Philippines. Consequently, Ignacio Tana, Sr. was no longer hired to work
thereon starting in crop year 1971-72, while he was never contracted to work in Hda. No.
Audit B-70. She also prayed for the dismissal of the case considering that Ignacio Tana, Sr.
was never her employee. 4

Further, the SSS is ordered to pay to the petitioner her accrued pension covering the period
after the 5-year guaranteed period corresponding to the employer's liability.
SO ORDERED." 5
Respondent Ayalde filed a motion for reconsideration 6 which the Commission denied for lack
of merit in an Order dated November 3, 1988. 7
Not satisfied with the Commission's ruling, Ayalde appealed to the Court of Appeals, docketed
as CA-G.R. SP No. 16427, raising the following assignment of errors:
I
The Social Security Commission erred in not finding that there is sufficient evidence to show
that:
(a) The deceased Ignacio Tana, Sr. never worked in the farmland of respondent-appellant
situated in Pontevedra, La Carlota City, otherwise known as Hacienda No. Audit B-70,
(Pontevedra B-70 Farm for short), in any capacity, whether as a daily or monthly laborer or as
independent contractor;

After hearing both parties, the Social Security Commission issued a Resolution on January 28,
1988, the dispositive portion of which reads:
After a careful evaluation of the testimonies of the petitioner and her witnesses, as well as the
testimony of the respondent together with her documentary evidences, this Commission finds
that the late Ignacio Tana was employed by respondent Conchita Ayalde from January 1961 to
March 1979. The testimony of the petitioner which was corroborated by Agaton Libawas and
Aurelio Tana, co-workers of the deceased Ignacio Tana, sufficiently established the latter's
employment with the respondent.

(b) During the time that respondent-appellant was leasing a portion of the land of the
University of the Philippines, otherwise known as Hacienda Audit No. B-15-M, (La Granja B15 Farm for short), the deceased Ignacio Tana, Sr. was hired thereat on a 'pakyaw' basis, or as
an independent contractor, performing the services of an 'arador' (Plower), for which he was
proficient, using his own carabao and farming implements on his own time and discretion
within the period demanded by the nature of the job contracted.
II

As regards respondent Antero Maghari, he is absolved from liability because he is a mere

employee of Conchita Ayalde.

The Social Security Commission erred in holding that there is no evidence whatsoever to show
that respondent-appellant was no longer leasing La Granja B-15 Farm.

PREMISES CONSIDERED, this Commission finds and so holds that the late Ignacio Tana
had been employed continuously from January 1961 to March 1979 in Hda. B-70 and Hda. B15-M which are owned and leased, respectively, by respondent Conchita (Concepcion) Ayalde
with a salary based on the Minimum Wage prevailing during his employment. caIETS

III

Not having reported the petitioner's husband for coverage with the SSS, respondent Conchita
(Concepcion) Ayalde is, therefore, liable for the payment of damages equivalent to the death
benefits in the amount of P7,067.40 plus the amount of P750.00 representing funeral benefit or
a total of P7,817.40.

The Social Security Commission erred in not holding that the deceased Ignacio Tana, having
been hired as an independent contractor on ''pakyaw'' basis, did not fall within the coverage of
the Social Security Law. 8
The Court of Appeals rendered judgment in favor of respondent appellant Conchita Ayalde and
dismissed the claim of petitioner Margarita Tan.

The SSS, as intervenor-appellee, filed a Motion for Reconsideration, which was denied on the
ground that the arguments advanced are "mere reiterations of issues and arguments already
considered and passed upon in the decision in question which are utterly insufficient to justify
a modification or reversal of said decision." 9
Hence, this petition for review on certiorari on the following assigned errors:
1) The Court of Appeals was in error in ruling that an employee working under the "pakyaw"
system is considered under the law to be an independent contractor.
2) The Court of Appeals was in error in not giving due consideration to the fundamental tenet
that doubts in the interpretation and implementation of labor and social welfare laws should be
resolved in favor of labor.
3) The Court of Appeals was in error in disregarding the settled rule that the factual findings of
administrative bodies on matters within their competence shall not be disturbed by the courts.
4) The Court of Appeals was in error in ruling that even granting arguendo that Ignacio Tana
was employed by Conchita Ayalde, such employment did not entitle him to compulsory
coverage since he was not paid any regular daily wage or basic pay and he did not work for an
uninterrupted period of at least six months in a year in accordance with Section 8(j) (1) of the
SS Law.
The pivotal issue to be resolved in this petition is whether or not an agricultural laborer who
was hired on "pakyaw" basis can be considered an employee entitled to compulsory coverage
and corresponding benefits under the Social Security Law.
Petitioner, Social Security System (or SSS), argues that the deceased Ignacio Tana, Sr., who
was hired by Conchita Ayalde on "pakyaw" basis to perform specific tasks in her sugarcane
plantations, should be considered an employee; and as such, his heirs are entitled to pension
and burial benefits.
The Court of Appeals, however, ruled otherwise, reversing the ruling of the Social Security
Commission and declaring that the late Ignacio Tana, Sr. was an independent contractor, and in
the absence of an employer-employee relationship between Tana and Ayalde, the latter cannot
be compelled to pay to his heirs the burial and pension benefits under the SS Law.
At the outset, we reiterate the well-settled doctrine that the existence of an employer-employee
relationship is ultimately a question of fact. 10 And while it is the general rule that factual
issues are not within the province of the Supreme Court, said rule is not without exception. In
cases, such as this one, where there are conflicting and contradictory findings of fact, this
Court has not hesitated to scrutinize the records to determine the facts for itself. 11 Our
disquisition of the facts shall be our guide as to whose findings are supported by substantial
evidence.

The mandatory coverage under the SSS Law (Republic Act No. 1161, as amended by PD 1202
and PD 1636) is premised on the existence of an employer-employee relationship, and Section
8(d) defines an "employee" 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 an employer-employee relationship." The essential elements of an
employer-employee relationship are: (a) the selection and engagement of the employee; (b) the
payment of wages; (c) the power of dismissal; and (d) the power of control with regard to the
means and methods by which the work is to be accomplished, with the power of control being
the most determinative factor. 12
There is no question that Tana was selected and his services engaged by either Ayalde herself,
or by Antero Maghari, her overseer. Corollarily, they also held the prerogative of dismissing or
terminating Tana's employment. The dispute is in the question of payment of wages. Claimant
Margarita Tana and her corroborating witnesses testified that her husband was paid daily
wages "per quincena" as well as on "pakyaw" basis. Ayalde, on the other hand, insists that
Tana was paid solely on "pakyaw" basis. To support her claim, she presented payrolls covering
the period January of 1974 to January of 1976; 13 and November of 1978 to May of 1979. 14
A careful perusal of the records readily show that the exhibits offered are not complete, and
are but a mere sampling of payrolls. While the names of the supposed laborers appear therein,
their signatures are nowhere to be found. And while they cover the years 1975, 1976 and
portions of 1978 and 1979, they do not cover the 18-year period during which Tana was
supposed to have worked in Ayalde's plantations. Also an admitted fact is that these exhibits
only cover Hda. B70, Ayalde having averred that all her records and payrolls for the other
plantation (Hda. B-15-M) were either destroyed or lost. 15
To our mind, these documents are not only sadly lacking, they are also unworthy of credence.
The fact that Tana's name does not appear in the payrolls for the years 1975, 1976 and part of
1978 and 1979, is no proof that he did not work in Hda. B70 in the years 1961 to 1974, and the
rest of 1978 and 1979. The veracity of the alleged documents as payrolls are doubtful
considering that the laborers named therein never affixed their signatures to show that they
actually received the amounts indicated corresponding to their names. Moreover, no record
was shown pertaining to Hda. B-15-M, where Tana was supposed to have worked. Even
Ayalde admitted that she hired Tana as "arador" and sometimes as laborer during milling in
Hda. B-15-M. 16 In light of her incomplete documentary evidence, Ayalde's denial that Tana
was her employee in Hda. B-70 or Hda. B-15-M must fail.
In contrast to Ayalde's evidence, or lack thereof, is Margarita Tana's positive testimony,
corroborated by two (2) other witnesses. On the matter of wages, they testified as follows:
Margarita Tana:
Q. During the employment of your late husband, was he paid any wages?
A. Yes, he was paid.

A. Payroll is the list where the whole laborers are listed and receive their salaries.
Q. What was the manner of payment of his salary, was it on "pakyaw" or daily basis?
Q. And how did that differ from the pad paper which you said you signed?
A. Daily basis.

A. There is a difference.

Q. How many times did he receive his salary in a month's time?

Q. What is the difference?

A. 2 times.

A. In the payroll, at the end there is a column for signature but in the pad paper, we only sign
directly.

Q. You mean, payday in Hda. B-70 is every 15 days?

Q. Did it contain the amount that you receive?
A. Yes, sir.
A. Yes, sir.
xxx xxx xxx
ATTY. GALVAN:

Q. And the date corresponding to the payroll pad?

To prove that it is material to the main question because if ever the hacienda maintains
complete payrolls of their employees, then the burden of proof lies in the petitioner . . .

A. I am not sure but it only enumerates our names and then we were given our salaries.
Q. Now, did you have a copy of that?

HEARING OFFICER:
ATTY. GALVAN:
Let the witness answer, if she knows.
WITNESS:

Objection, Your Honor, it is not the petitioner who had a copy, it is usually the owner because
the preparation of the payrolls is done by the employer who . . .

There was no payroll, only pad paper.

ATTY. UNGCO:

ATTY. GALVAN: (continuing)

That is why I'm asking . . .

Q. Were the names of workers of the hacienda all listed in that pad paper every payday?

HEARING OFFICER:
Let the witness answer. Objection overruled.

A. Yes, we just sign on pad paper because we have no payroll to be signed.

WITNESS:

xxx xxx xxx

I don't have.

Q. What do you understand by payroll?

xxx xxx xxx

Q. When you are receiving daily wage of P4.00 how much was your quincenal together with
your husband?

Q. Do you know if all the workers of the hacienda were listed in that payrolls?
A. Yes, sir.

A. The highest salary I received for my own was P30.00 in one quincena.

Q. Who was in charge in giving your salaries?

Q. What about the salary of your husband, how much?

A. Antero Maghari. 19

A. The same.

These witnesses did not waver in their assertion that while Tana was hired by Ayalde as an
"arador" on " pakyaw" basis, he was also paid a daily wage which Ayalde's overseer disbursed
every fifteen (15) days. It is also undisputed that they were made to acknowledge receipt of
their wages by signing on sheets of ruled paper, which are different from those presented by
Ayalde as documentary evidence. In fine, we find that the testimonies of Margarita Tana,
Agaton Libawas and Aurelio Tana prevail over the incomplete and inconsistent documentary
evidence of Ayalde.

Q. Was this P30.00 per quincena later on increased?

A. There was an increase because formerly it was P4.00 now it is P8.00.
Q. In 1979 how much was your husband's salary per quincena?
A. In one quincena my husband receives P60.00 while I only receive P30.00. 17
AGATON LIBAWAS:
Q. During your employment, do you sign payrolls everytime you draw your salary?
A. We sign on intermediate pad.
Q. You mean, the practice of the hacienda is to have the names of the laborers receiving that
salaries listed on that intermediate pad?
A. Yes, sir. 18

In the parallel case of Opulencia Ice Plant and Storage v. NLRC, the petitioners argued that
since Manuel P. Esita's name does not appear in the payrolls of the company it necessarily
means that he was not an employee. This Court held:
"Petitioners further argue that 'complainant miserably failed to present any documentary
evidence to prove his employment. There was no timesheet, pay slip and/or payroll/cash
voucher to speak of. Absence of these material documents are necessarily fatal to
complainant's cause.'
We do not agree. No particular form of evidence is required to prove the existence of an
employer-employee relationship. Any competent and relevant evidence to prove the
relationship may be admitted. For, if only documentary evidence would be required to show
that relationship, no scheming employer would ever be brought before the bar of justice, as no
employer would wish to come out with any trace of the illegality he has authored considering
that it should take much weightier proof to invalidate a written instrument. Thus, as in this
case where the employer-employee relationship between petitioners and Esita was sufficiently
proved by testimonial evidence, the absence of time sheet, time record or payroll has become
inconsequential." 20 (Italics ours)

AURELIO TANA:
Q. By the way, how many times did you receive your salaries in a month?
A. We receive our wages twice a month that is, every 15 days.

Clearly, then, the testimonial evidence of the claimant and her witnesses constitute positive
and credible evidence of the existence of an employer-employee relationship between Tana
and Ayalde. As the employer, the latter is duty-bound to keep faithful and complete records of
her business affairs, not the least of which would be the salaries of the workers. And yet, the
documents presented have been selective, few and incomplete in substance and content.
Consequently, Ayalde has failed to convince us that, indeed, Tana was not her employee.

Q. Did you sign payrolls everytime you received your salaries?

A. In the pad paper as substitute payroll.

The argument is raised that Tana is an independent contractor because he was hired and paid
wages on " pakyaw" basis. We find this assertion to be specious for several reasons.

First, while Tana was sometimes hired as an "arador" or plower for intermittent periods, he
was hired to do other tasks in Ayalde's plantations. Ayalde herself admitted as much, although
she minimized the extent of Tana's labors. On the other hand, the claimant and her witnesses
were direct and firm in their testimonies, to wit:

A. Hauling canes by the use of bull carts and cutting canes. Their works are the same with that
of my husband's.
Q. But you mentioned among the duties of your husband as "arador" meaning plowing the
fields?

MARGARITA TANA:
A. Yes, he was also plowing because that is one of his duties. 21
Q. Was your late husband's work continuous or not?
AGATON LIBAWAS:
A. His work was continuous except on Sundays.
Q. Mrs. Witness, in January 1961, how many days in a week did your late husband work?

Q. How about petitioner Margarita Tana and the late Ignacio Tana, were they regular workers,
or extra workers?

A. 4 weeks in January 1961.

A. They were regular workers.

Q. And how many months for that year did he work?

Q. In your case, Mr. Witness, considering that according to you, you are only a relief worker,
please inform the Commission how many months each year from 1961 to 1984 did you work
in Hda. B-70 and Hda. B-15M with Conchita Ayalde?

A. 12 months.
Q. Is this working pattern of your husband, considering that you testified that he worked
continuously, the same all throughout his employment from 1961 to 1978?
A. Yes, he worked continuously from 1961 to 1978 for 6 days a week, 4 weeks a month and 12
months each year.
Q. Mrs. Witness, how many months did your husband work in 1979 considering that he died
in 1979?
A. 3 months.
Q. What was the nature of the work of your late husband from 1961 until his death in 1979?
A. Cutting canes, hauling canes with the use of canecarts, plowing, hauling fertilizers,
weeding and stubble cleaning.

A. During milling season, I worked 2 months, during cultivation if they are short of plowers
then they would call me to work for at least 3 months as a plower.
Q. So, all in all, each year, from 1961 to 1984 your average working months in Hda. B-70 and
B-15M are 5 months each year?
A. Yes, sir.
Q. Mr. Witness, to prove that you have worked there, will you please inform at least 5 laborers
of Hda. B-70 and B-15M of Conchita Ayalde?
A. Juan Dueas, Narciso Dueas, Aurelio Tana, Ignacio and Margarita Tana.
xxx xxx xxx
Q. Will you please inform the Commission if the deceased Ignacio Tana which is according to
you, was a regular worker of the 2 haciendas, if how many months did he work during lifetime
from 1961 until he died in 1979?

xxx xxx xxx

Q. Now, the other co-workers of yours, you said they were Agaton Libawas, Narciso Dueas,
Juan Dueas, and Aurelio Tana, what were their jobs?

A. His work was continuous.

Q. And by continuous you mean he worked straight 12 months each year except in 1979?

A. There inside the hacienda.

A. He worked only for 10 months because the 2 months are already preparation for
cultivation.

Q. What about the petitioner?

xxx xxx xxx

A. The same.

Q. And according to you, in a year's time, you worked only for at least 5 months in Hda. B-70
and B-15M, is that correct?
A. Yes.
Q. And during this time that you are working in your riceland you will agree with me that you
do not know whether the laborers of this Hda. B-70 and Hda. B-15M are really working
because you are devoting your time in your riceland, is that correct?

Q. How far is your house from the house of the petitioner?

A. About 20 arms-length.
Q. How far is Hda. B-70 from Hda. B-15.
A. It is very near it is divided by the road.

A. I knew because the place of their work is just near my house, it is along the way.
Q. What road are you referring to?
Q. How about when the canes are already tall, can you actually see the workers in Hda. B-70
and B-15M when you are busy at your riceland?
A. Yes, because they have to pass in my house.

A. Highway road from Barangay Buenavista to La Granja.

Q. During your employment will you please inform the Commission the frequency of work of
the late Ignacio Tana?

Q. Is there no other passage in that hacienda except that road in front of your house?
A. 4 weeks a month, 6 days a week, 12 months a year.
A. Yes.
Q. Are you sure about that?

Q. Why is it that you are in a position to inform the Commission about the period of
employment of Ignacio Tana?

A. Yes, I am sure. 22

A. Because we were together working. 23

AURELIO TANA:

It is indubitable, therefore, that Tana worked continuously for Ayalde, not only as "arador" on
" pakyaw" basis, but as a regular farmhand, doing backbreaking jobs for Ayalde's business.
There is no shred of evidence to show that Tana was only a seasonal worker, much less a
migrant worker. All witnesses, including Ayalde herself, testified that Tana and his family
resided in the plantation. If he was a mere "pakyaw" worker or independent contractor, then
there would be no reason for Ayalde to allow them to live inside her property for free. The
only logical explanation is that he was working for most part of the year exclusively for
Ayalde, in return for which the latter gratuitously allowed Tana and his family to reside in her
property.

Q. Do you know what is the work of the petitioner during the time when you were together
working in the field?
A. We were working together, like cutting and loading canes, hoeing, weeding, applying
fertilizers, digging canals and plowing. aETADI
Q. During your employment in the said hacienda where were you residing?

The Court of Appeals, in finding for Ayalde, relied on the claimant's and her witnesses'
admission that her husband was hired as an "arador" on " pakyaw" basis, but it failed to
appreciate the rest of their testimonies. Just because he was, for short periods of time, hired on
" pakyaw" basis does not necessarily mean that he was not employed to do other tasks for the
remainder of the year. Even Ayalde admitted that Tana did other jobs when he was not hired to
plow. Consequently, the conclusion culled from their testimonies to the effect that Tana was
mainly and solely an "arador" was at best a selective appreciation of portions of the entire
evidence. It was the Social Security Commission that took into consideration all the
documentary and testimonial evidence on record.
Secondly, Ayalde made much ado of her claim that Tana could not be her employee because
she exercised no control over his work hours and method of performing his task as "arador." It
is also an admitted fact that Tana, Jr. used his own carabao and tools. Thus, she contends that,
applying the "control test," Tana was not an employee but an independent contractor.

We find the above-quoted ruling to be applicable in the case of Tana. There is preponderance
of evidence to support the conclusion that he was an employee rather than an independent
contractor.
The Court of Appeals also erred when it ruled, on the alternative, that if ever Tana was an
employee, he was still ineligible for compulsory coverage because he was not paid any regular
daily wage and he did not work for an uninterrupted period of at least six months in a year in
accordance with Section 8(j) (I) of the Social Security Law. There is substantial testimonial
evidence to prove that Tana was paid a daily wage, and he worked continuously for most part
of the year, even while he was also occasionally called on to plow the soil on a "pakyaw"
basis. As a farm laborer who has worked exclusively for Ayalde for eighteen (18) years, Tana
should be entitled to compulsory coverage under the Social Security Law, whether his service
was continuous or broken.
Margarita Tana alleged that SSS premiums were deducted from Tana's salary, testifying, thus:

A closer scrutiny of the records, however, reveals that while Ayalde herself may not have
directly imposed on Tana the manner and methods to follow in performing his tasks, she did
exercise control through her overseer.
Be that as it may, the power of control refers merely to the existence of the power. It is not
essential for the employer to actually supervise the performance of duties of the employee; it
is sufficient that the former has a right to wield the power. 24 Certainly, Ayalde, on her own or
through her overseer, wielded the power to hire or dismiss, to check on the work, be it in
progress or quality, of the laborers. As the owner/lessee of the plantations, she possessed the
power to control everyone working therein and everything taking place therein.
Jurisprudence provides other equally important considerations which support the conclusion
that Tana was not an independent contractor. First, Tana cannot be said to be engaged in a
distinct occupation or business. His carabao and plow may be useful in his livelihood, but he is
not independently engaged in the business of farming or plowing. Second, he had been
working exclusively for Ayalde for eighteen (18) years prior to his demise. Third, there is no
dispute that Ayalde was in the business of growing sugar cane in the two plantations for
commercial purposes. There is also no question that plowing or preparing the soil for planting
is a major part of the regular business of Ayalde.
Under the circumstances, the relationship between Ayalde and Tana has more of the attributes
of employer-employee than that of an independent contractor hired to perform a specific
project. In the case of Dy Keh Beng v. International Labor, 25 we cited our long-standing
ruling in Sunripe Coconut Products Co. v. Court of Industrial Relations, to wit:
"When a worker possesses some attributes of an employee and others of an independent
contractor, which make him fall within an intermediate area, he may be classified under the
category of an employee when the economic facts of the relations make it more nearly one of
employment than one of independent business enterprise with respect to the ends sought to be
accomplished." (Italics Ours) 26

Q. Were there deductions from the salaries of your husband while he was employed with the
respondent from 1961 to 1979?
A. Yes, there were deductions but I do not know because they were the ones deducting it.
Q. Why do you know that his salaries were deducted for SSS premiums?
A. Because Antero Maghari asked me and my husband to sign SSS papers and he told us that
they will take care of everything.
Q. How much were the deductions every payday?
A. I do not know how much because our daily wage was only P4.00. 27
Agaton Libawas, also testified:
Q. Mr. Witness, in your 15-day wages do you notice any deductions from it?
A. There were deductions and we were informed that it was for SSS.
Q. Mr. Witness, since when were there deductions from your salaries?
A. Since 1961.
Q. Up to when?

A. Up to 1979.
Q. Mr. Witness, are you a member of the SSS?
A. No.
Q. How about petitioner, if you know?
A. No, also.
Q. What happened to the deductions did you not ask your employer?
A. We asked but we were answered that we were being remitted for our SSS.
Q. Did you not verify?
A. No, because I just relied on their statement. 28
Ayalde failed to counter these positive assertions. Even on the assumption that there were no
deductions, the fact remains that Tana was and should have been covered under the Social
Security Law. The circumstances of his employment place him outside the ambit of the
exception provided in Section 8(j) of Republic Act No. 1611, as amended by Section 4 of R.A.
2658.
WHEREFORE, in view of all the foregoing, the Decision of the Court of Appeals in C.A.G.R. SP No. 16427 and the Resolution dated June 14, 1991 are hereby REVERSED and SET
ASIDE. The Resolution of the Social Security Commission in SSC Case No. 8851 is
REINSTATED. DHATcE
No costs.
SO ORDERED.
||| (Social Security System v. Court of Appeals, G.R. No. 100388, [December 14, 2000], 401
PHIL 132-154)