Republic of the Philippines

SUPREME COURT
Manila
EN BANC
1G.R. No. L-15045 January 20, 1961
IN RE: PETITION FOR EXEMPTION FROM COVERAGE BY THE SOCIAL
SECURITY SYSTEM. ROMAN CATHOLIC ARCHBISHOP OF MANILA, petitioner-
appellant,
vs.
SOCIAL SECURITY COMMISSION, respondent-appellee.
Feria, Manglapus and Associates for petitioner-appellant.
Legal Staff, Social Security System and Solicitor General for respondent-appellee.
GUTIERREZ DAVID, J.:
On September 1, 1958, the Roman Catholic Archbishop of Manila, thru counsel, filed
with the Social Security Commission a request that "Catholic Charities, and all religious
and charitable institutions and/or organizations, which are directly or indirectly, wholly or
partially, operated by the Roman Catholic Archbishop of Manila," be exempted from
compulsory coverage of Republic Act No. 1161, as amended, otherwise known as the
Social Security Law of 1954. The request was based on the claim that the said Act is a
labor law and does not cover religious and charitable institutions but is limited to
businesses and activities organized for profit. Acting upon the recommendation of its
Legal Staff, the Social Security Commission in its Resolution No. 572, series of 1958,
denied the request. The Roman Catholic Archbishop of Manila, reiterating its arguments
and raising constitutional objections, requested for reconsideration of the resolution. The
request, however, was denied by the Commission in its Resolution No. 767, series of
1958; hence, this appeal taken in pursuance of section 5(c) of Republic Act No. 1161, as
amended.
Section 9 of the Social Security Law, as amended, provides that coverage "in the System
shall be compulsory upon all members between the age of sixteen and sixty rears
inclusive, if they have been for at least six months a the service of an employer who is a
member of the System, Provided, that the Commission may not compel any employer to
become member of the System unless he shall have been in operation for at least two
years and has at the time of admission, if admitted for membership during the first year of
the System's operation at least fifty employees, and if admitted for membership the
following year of operation and thereafter, at least six employees x x x." The term
employer" as used in the law is defined as any person, natural or juridical, domestic or
foreign, who carries in the Philippines any trade, business, industry, undertaking, or
activity of any kind and uses the services of another person who is under his orders as
regards the employment, except the Government and any of its political subdivisions,
branches or instrumentalities, including corporations owned or controlled by the
Government" (par. [c], see. 8), while an "employee" refers to "any person who performs
services for an 'employer' in which either or both mental and physical efforts are used and
who receives compensation for such services" (par. [d], see. 8). "Employment", according
to paragraph [i] of said section 8, covers any service performed by an employer except
those expressly enumerated thereunder, like employment under the Government, or any
of its political subdivisions, branches or instrumentalities including corporations owned
and controlled by the Government, domestic service in a private home, employment
purely casual, etc.
From the above legal provisions, it is apparent that the coverage of the Social Security
Law is predicated on the existence of an employer-employee relationship of more or less
permanent nature and extends to employment of all kinds except those expressly
excluded.
Appellant contends that the term "employer" as defined in the law should following
the principle of ejusdem generis be limited to those who carry on "undertakings or
activities which have the element of profit or gain, or which are pursued for profit or
gain," because the phrase ,activity of any kind" in the definition is preceded by the words
"any trade, business, industry, undertaking." The contention cannot be sustained. The rule
ejusdem generisapplies only where there is uncertainty. It is not controlling where the
plain purpose and intent of the Legislature would thereby be hindered and defeated.
(Grosjean vs. American Paints Works [La], 160 So. 449). In the case at bar, the definition
of the term "employer" is, we think, sufficiently comprehensive as to include religious
and charitable institutions or entities not organized for profit, like herein appellant, within
its meaning. This is made more evident by the fact that it contains an exception in which
said institutions or entities are not included. And, certainly, had the Legislature really
intended to limit the operation of the law to entities organized for profit or gain, it would
not have defined an "employer" in such a way as to include the Government and yet make
an express exception of it.
It is significant to note that when Republic Act No. 1161 was enacted, services performed
in the employ of institutions organized for religious or charitable purposes were by
express provisions of said Act excluded from coverage thereof (sec. 8, par. [j] subpars. 7
and 8). That portion of the law, however, has been deleted by express provision of
Republic Act No. 1792, which took effect in 1957. This is clear indication that the
Legislature intended to include charitable and religious institutions within the scope of
the law.
In support of its contention that the Social Security Law was intended to cover only
employment for profit or gain, appellant also cites the discussions of the Senate, portions
of which were quoted in its brief. There is, however, nothing whatsoever in those
discussions touching upon the question of whether the law should be limited to
organizations for profit or gain. Of course, the said discussions dwelt at length upon the
need of a law to meet the problems of industrializing society and upon the plight of an
employer who fails to make a profit. But this is readily explained by the fact that the
majority of those to be affected by the operation of the law are corporations and
industries which are established primarily for profit or gain.
Appellant further argues that the Social Security Law is a labor law and, consequently,
following the rule laid down in the case of Boy Scouts of the Philippines vs. Araos (G.R.
No. L-10091, January 29, 1958) and other cases1, applies only to industry and occupation
for purposes of profit and gain. The cases cited, however, are not in point, for the reason
that the law therein involved expressly limits its application either to commercial,
industrial, or agricultural establishments, or enterprises. .
Upon the other hand, the Social Security Law was enacted pursuant to the "policy of the
Republic of the Philippines to develop, establish gradually and perfect a social security
system which shall be suitable to the needs of the people throughout the Philippines and
shall provide protection to employees against the hazards of disability, sickness, old age
and death." (See. 2, Republic Act No. 1161, as amended.) Such enactment is a legitimate
exercise of the police power. It affords protection to labor, especially to working women
and minors, and is in full accord with the constitutional provisions on the "promotion of
social justice to insure the well-being and economic security of all the people." Being in
fact a social legislation, compatible with the policy of the Church to ameliorate living
conditions of the working class, appellant cannot arbitrarily delimit the extent of its
provisions to relations between capital and labor in industry and agriculture.
There is no merit in the claim that the inclusion of religious organizations under the
coverage of the Social Security Law violates the constitutional prohibition against the
application of public funds for the use, benefit or support of any priest who might be
employed by appellant. The funds contributed to the System created by the law are not
public funds, but funds belonging to the members which are merely held in trust by the
Government. At any rate, assuming that said funds are impressed with the character of
public funds, their payment as retirement death or disability benefits would not constitute
a violation of the cited provisions of the Constitution, since such payment shall be made
to the priest not because he is a priest but because he is an employee.
Neither may it be validly argued that the enforcement of the Social Security Law impairs
appellant's right to disseminate religious information. All that is required of appellant is to
make monthly contributions to the System for covered employees in its employ. These
contributions, contrary to appellant's contention, are not in the nature of taxes on
employment." Together with the contributions imposed upon the employees and the
Government, they are intended for the protection of said employees against the hazards of
disability, sickness, old age and death in line with the constitutional mandate to promote
social justice to insure the well-being and economic security of all the people.
IN VIEW OF THE FOREGOING, Resolutions Nos. 572 kind 767, series of 1958, of the
Social Security Commission are hereby affirmed. So ordered with costs against appellant.
Paras, C.J., Padilla, Bautista Angelo, Paredes and Dizon, JJ., concur.
Concepcion, Reyes, J.B.L. and Barrera, JJ., concur in the result.
Bengzon, J., reserves his vote.

Footnotes
1 UST Hospital Employees Association vs. UST Hospital, G.R. No. L-6988, May 24,
1954; San Beda College vs. National Labor Union, G.R. No. L-7649, October 29, 1955;
Quezon Institute vs. Velasco & Quezon Institute vs. Parazo, G.R. Nos. L-7742-43,
November 23, 1955.

Republic of the Philippines

SUPREME COURT
Manila
EN BANC
2G.R. No. L-26712-16 December 27, 1969
UNITED CHRISTIAN MISSIONARY SOCIETY, UNITED CHURCH BOARD FOR
WORLD MINISTERS, BOARD OF FOREIGN MISSION OF THE REFORMED
CHURCH IN AMERICA, BOARD OF MISSION OF THE EVANGELICAL UNITED
PRESBYTERIAN CHURCH, COMMISSION OF ECUMENICAL MISSION ON
RELATIONS OF THE UNITED PRESBYTERIAN CHURCH, petitioners,
vs.
SOCIAL SECURITY COMMISSION and SOCIAL SECURITY SYSTEM, respondents.
Sedfrey A. Ordoez for petitioners.
Office of the Solicitor General Antonio P. Barredo, Assistant Solicitor General Felicisimo
R. Rosete and Solicitor Buenaventura J. Guerrero for respondents.
TEEHANKEE, J.:
In this appeal from an order of the Social Security Commission, we uphold the
Commission's Order dismissing the petition before it, on the ground that in the absence of
an express provision in the Social Security Act1 vesting in the Commission the power to
condone penalties, it has no legal authority to condone, waive or relinquish the penalty
for late premium remittances mandatorily imposed under the Social Security Act.
The five petitioners originally filed on November 20, 1964 separate petitions with
respondent Commission, contesting the social security coverage of American
missionaries who perform religious missionary work in the Philippines under specific
employment contracts with petitioners. After several hearings, however, petitioners
commendably desisted from further contesting said coverage, manifesting that they had
adopted a policy of cooperation with the Philippine authorities in its program of social
amelioration, with which they are in complete accord. They instead filed their
consolidated amended petition dated May 7, 1966, praying for condonation of assessed
penalties against them for delayed social security premium remittances in the aggregate
amount of P69,446.42 for the period from September, 1958 to September, 1963.
In support of their request for condonation, petitioners alleged that they had labored
under the impression that as international organizations, they were not subject to
coverage under the Philippine Social Security System, but upon advice by certain Social
Security System officials, they paid to the System in October, 1963, the total amount of
P81,341.80, representing their back premiums for the period from September, 1958 to
September, 1963. They further claimed that the penalties assessed against them appear to
be inequitable, citing several resolutions of respondent Commission which in the past
allegedly permitted condonation of such penalties.
On May 25, 1966, respondent System filed a Motion to Dismiss on the ground that "the
Social Security Commission has no power or authority to condone penalties for late
premium remittance, to which petitioners filed their opposition of June 15, 1966, and in
turn, respondent filed its reply thereto of June 22, 1966.
Respondent Commission set the Motion to Dismiss for hearing and oral argument on July
20, 1966. At the hearing, petitioners' counsel made no appearance but submitted their
Memorandum in lieu of oral argument. Upon petition of the System's Counsel, the
Commission gave the parties a further period of fifteen days to submit their
Memorandum consolidating their arguments, after which the motion would be deemed
submitted for decision. Petitioners stood on their original memorandum, and respondent
System filed its memorandum on August 4, 1966.
On September 22, 1966, respondent Commission issued its Order dismissing the petition,
as follows:
Considering all of the foregoing, this Commission finds, and so holds, that in the absence
of an express provision in the Social Security Act vesting in the Commission the power to
condone penalties, it cannot legally do so. The policy enunciated in Commission
Resolution No. 536, series of 1964, cited by the parties, in their respective pleadings, has
been reiterated in Commission Resolution No. 878, dated August 18, 1966, wherein the
Commission adopting the recommendation of the Committee on Legal Matters and
Legislation of the Social Security Commission ruled that it "has no power to condone,
waive or relinquish the penalties for late premium remittances which may be imposed
under the Social Security Act."
WHEREFORE, the petition is hereby dismissed and petitioners are directed to pay the
respondent System, within thirty (30) days from receipt of this Order, the amount of
P69,446.42 representing the penalties payable by them, broken down as follows:
United Christian Missionary Society P5,253.53
Board of Mission of the Evangelical United Brothers 7,891.74
Church
United Church Board for World Ministers 12,353.75
Commission on Ecumenical Mission & Relations 33,019.36
Board of Foreign Mission of the Reformed Church in 10,928.04
America
TOTAL P 69,446.42

Upon failure of the petitioners to comply with this Order within the period specified
herein, a warrant shall be issued to the Sheriff of the Province of Rizal to levy and sell so
much of the property of the petitioners as may be necessary to satisfy the aforestated
liability of the petitioners to the System.
This Court is thus confronted on appeal with this question of first impression as to
whether or not respondent Commission erred in ruling that it has no authority under the
Social Security Act to condone the penalty prescribed by law for late premium
remittances.
We find no error in the Commission's action.
1. The plain text and intent of the pertinent provisions of the Social Security Act clearly
rule out petitioners' posture that the respondent Commission should assume, as against
the mandatory imposition of the 3% penalty per month for late payment of premium
remittances, the discretionary authority of condoning, waiving or relinquishing such
penalty.
The pertinent portion of Section 22 (a) of the Social Security Act peremptorily provides
that:
SEC 22. Remittance of premiums. (a) The contributions imposed in the preceding
sections shall be remitted to the System within the first seven 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
contribution shall be liable for their payment and if any contribution is not paid to the
system, as herein prescribed, he shall pay besides the contribution a penalty thereon of
three per centum per month from the date the contribution falls due until paid . . .2
No discretion or alternative is granted respondent Commission in the enforcement of the
law's mandate that the employer who fails to comply with his legal obligation to remit the
premiums to the System within the prescribed period shall pay a penalty of three 3% per
month. The prescribed penalty is evidently of a punitive character, provided by the
legislature to assure that employers do not take lightly the State's exercise of the police
power in the implementation of the Republic's declared policy "to develop, establish
gradually and perfect a social security system which shall be suitable to the needs of the
people throughout the Philippines and (to) provide protection to employers against the
hazards of disability, sickness, old age and death."3 In this concept, good faith or bad
faith is rendered irrelevant, 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. From
the moment the remittance of premiums due is delayed, the penalty immediately attaches
to the delayed premium payments by force of law.
2. Petitioners contend that in the exercise of the respondent Commission's power of
direction and control over the system, as provided in Section 3 of the Act, it does have the
authority to condone the penalty for late payment under Section 4 (1), whereby it is
empowered to "perform such other acts as it may deem appropriate for the proper
enforcement of this Act." The law does not bear out this contention. Section 4 of the
Social Security Act precisely enumerates the powers of the Commission. Nowhere from
said powers of the Commission may it be shown that the Commission is granted
expressly or by implication the authority to condone penalties imposed by the Act.
3. Moreover, the funds contributed to the System by compulsion of law have already been
held by us to be "funds belonging to the members which are merely held in trust by the
Government."4 Being a mere trustee of the funds of the System which actually belong to
the members, respondent Commission cannot legally perform any acts affecting the same,
including condonation of penalties, that would diminish the property rights of the owners
and beneficiaries of such funds without an express or specific authority therefor.
4. Where the language of the law is clear and the intent of the legislature is equally plain,
there is no room for interpretation and construction of the statute. The Court is therefore
bound to uphold respondent Commission's refusal to arrogate unto itself the authority to
condone penalties for late payment of social security premiums, for otherwise we would
be sanctioning the Commission's reading into the law discretionary powers that are not
actually provided therein, and hindering and defeating the plain purpose and intent of the
legislature.
5. Petitioners cite fourteen instances in the past wherein respondent Commission had
granted condonation of penalties on delayed premium payments. They charge the
Commission with grave abuse of discretion in not having uniformly applied to their cases
its former policy of granting condonation of penalties. They invoke more compelling
considerations of equity in their cases, in that they are non-profit religious organizations
who minister to the spiritual needs of the Filipino people, and that their delay in the
payment of their premiums was not of a contumacious or deliberate defiance of the law
but was prompted by a well-founded belief that the Social Security Act did not apply to
their missionaries.
The past instances of alleged condonation granted by the Commission are not, however,
before the Court, and the unilateral conclusion asserted by petitioners that the
Commission had granted such condonations would be of no avail, without a review of the
pertinent records of said cases. Nevertheless, assuming such conclusion to be correct, the
Commission, in its appealed Order of September 22, 1966 makes of record that since its
Resolution No. 536, series of 1964, which it reiterated in another resolution dated August
18, 1966, it had definitely taken the legal stand, pursuant to the recommendation of its
Committee on Legal Matters and Legislation, that in the absence of an express provision
in the Social Security Act vesting in the Commission the power to condone penalties, it
"has no power to condone, waive or relinquish the penalties for late premium remittances
which may be imposed under the Social Security Act."
6. The Commission cannot be faulted for this correct legal position. Granting that it had
erred in the past in granting condonation of penalties without legal authority, the Court
has held time and again that "it is a well-known rule that erroneous application and
enforcement of the law by public officers do not block subsequent correct application of
the statute and that the Government is never estopped by mistake or error on the part of
its agents."5 Petitioners' lack of intent to deliberately violate the law may be conceded,
and was borne out by their later withdrawal in May, 1966 of their original petitions in
November, 1964 contesting their social security coverage. The point, however, is that
they followed the wrong procedure in questioning the applicability of the Social Security
Act to them, in that they failed for five years to pay the premiums prescribed by law and
thus incurred the 3% penalty thereon per month mandatorily imposed by law for late
payment. The proper procedure would have been to pay the premiums and then contest
their liability therefor, thereby preventing the penalty from attaching. This would have
been the prudent course, considering that the Act provides in Section 22 (b) thereof that
the premiums which the employer refuses or neglects to pay may be collected by the
System in the same manner as taxes under the National Internal Revenue Code, and that
at the time they instituted their petitions in 1964 contesting their coverage, the Court had
already ruled in effect against their contest three years earlier, when it held in Roman
Catholic Archbishop vs. Social Security Commission6 that the legislature had clearly
intended to include charitable and religious institutions and other non-profit institutions,
such as petitioners, within the scope and coverage of the Social Security Act.
7. No grave abuse of discretion was committed, therefore, by the Commission in issuing
its Order dismissing the petition for condonation of penalties for late payment of
premiums, as claimed by petitioners in their second and last error assigned. Petitioners
were duly heard by the Commission and were given due opportunity to adduce all their
arguments, as in fact they filed their Memorandum in lieu of oral argument and waived
the presentation of an additional memorandum. The mere fact that there was a pending
appeal in the Court of Appeals from an identical ruling of the Commission in an earlier
case as to its lack of authority to condone penalties does not mean, as petitioners contend,
that the Commission was thereby shorn of its authority and discretion to dismiss their
petition on the same legal ground.7 The Commission's action has thus paved the way for
a final ruling of the Court on the matter.
ACCORDINGLY, the order appealed from is hereby affirmed, without pronouncement as
to costs.
Concepcion, C.J., Reyes, J.B.L., Makalintal, Zaldivar Sanchez, Castro and Fernando, JJ.,
concur.
Dizon and Barredo, JJ., took no part.

Footnotes
1 Republic Act No. 1161, as amended.
2 Emphasis supplied.
3 Section 2, Social Security Act; Roman Catholic Archbishop vs. Social Security
Commission, 1 SCRA 10 (January 20, 1961).
4 Roman Catholic Archbishop vs. Social Security Commission, fn 3.
5 E. Rodriguez, Inc. vs. Collector of Internal Revenue, 28 SCRA 1119, 1130 and cases
cited (July 31, 1969).
6 Fn 3.
7 The case referred to is Social Security System, appellee vs. Woodwork Inc., appellant,
CA-G.R. No. 36668-R. The Court of Appeals therein upheld the Commission's ruling in
its decision of October 20, 1969, pursuant to its decisions in two other appealed cases,
Luzsteveco vs. SSC, CA-G.R. No. 38425-R, June 30, 1969 and Carmelo & Bauermann,
Inc. vs. SSS, CA-GR No. 39250-R, August 14, 1969, although it remanded the records of
the case to the SSS to give the appellant an opportunity to go over the assessment
schedules for the purpose only of determining the exact amount of penalties due.

Republic of the Philippines

SUPREME COURT
Manila
FIRST DIVISION
3G.R. No. 152058 September 27, 2004
SOCIAL SECURITY COMMISSION and SOCIAL SECURITY SYSTEM, petitioners,
vs.
COURT OF APPEALS and JOSE RAGO, respondents.
DECISION
DAVIDE, JR., C.J.:
This is a petition for the review of the decision1 of 18 October 2001 and the resolution of
30 January 2002 of the Court of Appeals in CA-G.R. SP No. 63389 entitled Jose Rago vs.
Social Security Commission and Social Security System. The decision reversed the 20
December 2000 Resolution of the Social Security Commission (SSC) in SSC Case No. 4-
15009-2000 denying respondent Jose Ragos request to convert his monthly pension from
permanent partial disability to permanent total disability. The resolution denied the
motion to reconsider the decision.
Private respondent Jose Rago (hereafter Rago) worked as an electrician for Legend
Engineering in Basak, Pardo, Cebu City. On 1 December 1993, at about 6:15 p.m., while
working on the ceiling of a building, he stepped on a weak ceiling joist. The structure
gave way and he crashed into the corridor twelve feet below. The x-rays taken that day
revealed that he had a (1) marked compression fracture of L1 vertebra without signs of
dislocation and bone destruction; and (2) slight kyphosis at the level of L1 vertebrae, with
the alignment of the spine still normal.2He was confined at the Perpetual Succour
Hospital in Cebu City for twenty-four (24) days from 1 December 1993 to 24 December
1993,3 and, thereafter, he was confined in his home from 25 December 1993 to 25
August 1994.4
On 20 May 1994, Rago filed a claim for permanent partial disability with the Cebu City
office of the Social Security System (SSS). Since he had only 35 monthly contributions,
he was granted only a lump sum benefit.5 He made additional premium contributions on
6 November 1995, and sought the adjustment of his approved partial disability benefits
from lump sum to monthly payments. The adjustment was resolved in his favor on 18
October 1995.6
On 9 November 1995, Rago filed a claim for Employees Compensation (EC) sickness
benefit, which was supported by an x-ray report dated 1 December 1993. This was
approved for a maximum of 120 days to cover the period of illness from 1 December
1993 to 30 March 1994.
On 7 June 1996, Rago filed another claim to convert his SSS disability to EC disability.
Again, it was resolved in his favor on 14 June 1996.7
Two years later, on 16 June 1998, Rago claimed for the extension of his EC partial
disability. A rating of 50% OB (of the body) was granted corresponding to the maximum
benefit allowed under the Manual on Ratings of Physical Impairment.8
Thereafter, Rago filed several requests for the adjustment of his partial disability to total
disability. This time, his requests were denied by the Cebu City office of the SSS in its
letters of 11 April 1999, 10 September 1999, 28 September 1999, 4 April 2000, and 17
April 2000. The denial was based on the medical findings of the Cebu City office that he
was not totally prevented from engaging in any gainful occupation.9
Undaunted, on 3 April 2000, Rago filed with the petitioner Social Security Commission
(SSC) a petition for total permanent disability benefits based on the following grounds:
1. his convalescence period from the time of his hospital confinement to home
confinement totaled 268 days and under SSS guidelines, if the injury persisted for more
than 240 days, the injury would be considered as a permanent total disability;
2. his x-ray results showed a deterioration of his condition without any visible
improvement on the disabilities resulting from the accident; and
3. he had lost his original capacity to work as an electrician and has been unemployed
since the accident.
The petition was docketed as SSC Case No. 4-15009-2000.10
In its position paper dated 24 August 2000, the SSS argued that Rago had already been
granted the maximum partial disability benefits. The physical examination conducted by
the Cebu City office of the SSS showed that he was more than capable of physically
engaging in any gainful occupation and that there was no manifestation of progression of
illness. Thus, the SSS recommended the denial of Ragos petition.11
In a resolution dated 20 December 2000, the SSC denied Ragos petition for lack of
merit. The SSC ruled that he was not entitled to permanent partial disability more than
what was already granted, more so to permanent total disability benefits since he was
already granted the maximum allowable benefit for his injury.12
Without filing a motion for reconsideration, Rago appealed to the Court of Appeals by
filing a petition for review and reiterating his claim for permanent disability benefits
under Section 13-A (g) of R.A. No. 1161, as amended by R.A. No. 8282.13 The petition
was docketed as CA-G.R. SP No. 63389.
In its decision of 18 October 2001, the Court of Appeals reversed the SSCs resolution,
and decreed as follows:
WHEREFORE, the assailed decision of the Social Security Commission is hereby
reversed and set aside. Petitioners plea for conversion of his disability status from
permanent partial to permanent total is granted. The SSS is hereby directed to pay him
the necessary compensation benefits in accordance with the proper computation.
The SSS seasonably filed a motion for reconsideration on the ground that the Court of
Appeals should have considered an order issued by the SSC dated 11 July 2001 which
affirmed, but clarified, its 20 December 2000 Resolution under appeal. The SSS then
referred to the findings and conclusions of the SSC in said 11 July 2001 order, which
emphasized that: (1) Rago failed to file a motion for reconsideration with the SSC, which
is mandatory, before filing a petition for review with the Court of Appeals; (2) the manual
verification of the monthly contributions of Rago revealed that he had only 35
contributions and not 59; and (3) thus, whether or not the sickness or disability of Rago
had showed signs of progression, a conversion of the same from permanent partial
disability to permanent total disability could not be granted. This is because Rago lacked
the required number of contributions mentioned in Section 13-A (a) of R.A. 1161, as
amended, which reads:
SEC. 13-A. Permanent disability benefits. (a) Upon the permanent total disability of a
member who has paid at least thirty-six (36) monthly contributions prior to the semester
of disability, he shall be entitled to the monthly pension: Provided, That if he has not paid
the required thirty-six (36) monthly contributions, he shall be entitled to a lump sum
benefit equivalent to the monthly pension times the number of monthly contributions paid
to the SSS or twelve (12) times the monthly pension, whichever is higher. A member who
(1) has received a lump sum benefit and (2) is re-employed or has resumed self-
employment or has resumed self-employment not earlier than one (1) year from the date
of his disability shall again be subject to compulsory coverage and shall be considered a
new member.
With that, the SSC ordered the SSS to re-compute the lump sum benefit due Rago and his
EC benefit on the basis of the actual monthly contributions remitted in his behalf and to
collect all excess payments made to him.14
In its resolution of 30 January 2002, the Court of Appeals denied the motion for
reconsideration. It explained the denial in this wise:
At the outset, the Court strikes down the Commissions July 11, 2001 clarificatory order
as an exercise of grave abuse of authority amounting to lack and/or excess of jurisdiction.
The said Order was issued at a time when the Commission itself was knowledgeable of
the petition for review pending before this Court. It must be pointed out that when
petitioner timely filed his petition for review, [the] appeal from the Commissions
resolution had thus become perfected, and it is this Court which therefore had jurisdiction
over the matter, and sole authority to make any affirmation or modification of the assailed
resolution. Once appeal is perfected, the lower tribunal loses its jurisdiction over the case,
in favor of the appellate tribunal. The Court deems it the height of injustice for the
Commission to add to and bolster its final ruling with additional observations and
justifications, not otherwise embodied in the original ruling, after the losing claimant had
already perfected and was actively pursuing his appeal. It behooves upon the
Commission, therefore, to refrain from making any substantial addition, or modification
of its assailed ruling, such authority in law, now having been transferred to this Court.
What prompted the Social Security Commission to issue its clarificatory order is not
made clear in its motion for reconsideration, nor in the clarificatory order itself. In any
case, any modification of the tenor and justification of the assailed resolution of the
Commission by the same body effectively altered the tenor of the earlier ruling,
amounting to a violation of the petitioners right to due process and fair play, and,
therefore, null and void.
Moreover, the specific arguments raised by the Commission are not convincing to
encourage a reversal of our earlier decision.
To be sure, the alleged failure to file a motion for reconsideration of the Commissions
December 20, 2000 resolution is not a fatal mistake, it appearing that the same was in
clear violation of the petitioners rights and claims, as a member of the Social Security
System. It is the established rule that the filing of a motion for reconsideration may be
dispensed with when the assailed ruling is a patent nullity. Furthermore, the fact that the
petitioner as credited by SSS monthly contributions short to entitle him to be qualified for
permanent total disability benefits appear to be largely due to the SSS and its branches
failure to accurately account the petitioners total payments, and not on the petitioners or
his employers failure to do so. The same July 11, 2001 Order shows that the SSS
Cotabato City Branch and the SSS Davao Hub Branch Office were unable to account for
the complete contributions of the petitioner while he was employed by the San Miguel
Corporation.15
Thus, in their petition in the case at bar, the SSS and the SSC pray to set aside the Court
of Appeals decision of 18 October 2001 and resolution of 30 January 2002 and to
remand the case to the SSC for further proceedings.16
In support of their prayer, the petitioners assert that the Court of Appeals erred in
disregarding the established jurisprudence that the filing of a motion for reconsideration
is a prerequisite to the filing of a petition for review to enable the tribunal, board or office
concerned to pass upon and correct its mistakes without the intervention of the higher
court. Failure to do so is a fatal procedural defect.17
The petitioners likewise argue that they had not violated Ragos rights; hence, his case
does not fall within the purview of Arroyo v. House of Representatives Electoral
Tribunal18 where we held that a prior motion for reconsideration could be dispensed with
if fundamental rights to due process were violated.
Additionally, the petitioners contend that the SSCs 11 July 2001 clarificatory order was
issued to rectify its perceived error in the 20 January 2000 resolution relative to the
number of Ragos contributions which directly affected the computation of his disability
benefits. Petitioners further maintain that the Court of Appeals relied heavily on the x-ray
reports which contained no statement that Rago could no longer work. However, a certain
Alvin C. Cabreros attested in an affidavit that Rago went out "disco[e]ing" after the
accident, for which reason, Rago is not totally helpless as he portrayed himself to be.
On 20 March 2003, we received a handwritten letter from Rago informing us that his
lawyer had withdrawn from the case and of his difficulty in securing a new counsel. After
naming Attys. Pedro Rosito, Arturo Fernan or Fritz Quianola of the IBP Cebu City at
Capitol Compound as his "informal lawyers," he asked us to consider, in lieu of his
Comment, an attached copy of the opposition to the motion for reconsideration he filed
with the Court of Appeals. In said pleading, Rago argued that the word "may" as used in
the provision concerning the filing of a motion for reconsideration in the SSCs 1997
Revised Rules of Procedure is not mandatory but merely permissive. He also agreed with
the conclusion of the Court of Appeals that a very strict interpretation of procedural rules
would defeat the constitutional mandate on social justice.
We gave due course to the petition and required the parties to submit their Memoranda,
which they did.
We shall first dispose of the procedural issue of prematurity raised by petitioners which is
Ragos failure to file a motion for reconsideration. Section 5, Rule VI of the SSCs 1997
Revised Rules of Procedure provides:
The party aggrieved by the order, resolution, award or decision of the Commission may
file a motion for reconsideration thereof within fifteen (15) days from receipt of the same.
Only one motion for reconsideration shall be allowed any party.
The filing of the motion for reconsideration shall interrupt the running of the period to
appeal, unless said motion is pro forma.
The ordinary acceptations of the terms "may" and "shall" may be resorted to as guides in
ascertaining the mandatory or directory character of statutory provisions. As regards
adjective rules in general, the term "may" is construed as permissive and operating to
confer discretion, while the word "shall" is imperative and operating to impose a duty
which may be enforced.19 However, these are not absolute and inflexible criteria in the
vast areas of law and equity. Depending upon a consideration of the entire provision, its
nature, its object and the consequences that would follow from construing it one way or
the other, the convertibility of said terms either as mandatory or permissive is a standard
recourse in statutory construction.20
Conformably therewith, we have consistently held that the term "may" is indicative of a
mere possibility, an opportunity or an option. The grantee of that opportunity is vested
with a right or faculty which he has the option to exercise.21 If he chooses to exercise the
right, he must comply with the conditions attached thereto.22
Applying these guidelines, we can construe Section 5, Rule VI as granting Rago, or any
member of the System aggrieved by the SSCs resolution, the option of filing a motion
for reconsideration which he may or may not exercise. Should he choose to do so, he is
allowed to file only one motion for reconsideration within fifteen days from the
promulgation of the questioned resolution.
This is as far as we go in construing the provision in isolation because a second
procedural rule now comes into play: the requirements for appeals filed against the
rulings of quasi-judicial agencies in the exercise of its quasi-judicial functions.
Section 1 of Rule VII of the SSC rules provides:
[A]ny order, resolution, award or decision of the Commission, in the absence of an appeal
therefrom as herein provides, shall become final and executory fifteen (15) days after the
date of notification to the parties, and judicial review thereof shall be permitted only after
any party claiming to be aggrieved thereby has exhausted his remedies before the
Commission.
It now becomes apparent that the permissive nature of a motion for reconsideration with
the SSC must be read in conjunction with the requirements for judicial review, or the
conditions sine qua non before a party can institute certain civil actions. A combined
reading of Section 5 of Rule VI, quoted earlier, and Section 1 of Rule VII of the SSCs
1997 Revised Rules of Procedure reveals that the petitioners are correct in asserting that a
motion for reconsideration is mandatory in the sense that it is a precondition to the
institution of an appeal or a petition for review before the Court of Appeals. Stated
differently, while Rago certainly had the option to file a motion for reconsideration before
the SSC, it was nevertheless mandatory that he do so if he wanted to subsequently avail
of judicial remedies.
This rule is explicit in Rule 43 of the Rules of Court, which states:
Sec. 1. Scope This Rule shall apply to appeals from judgments or final orders of the
Court of Tax Appeals and from awards, judgments, final orders or resolutions of or
authorized by any quasi-judicial agency in the exercise of its quasi-judicial functions.
Among these agencies are theSocial Security Commission.
Sec. 4. Period of appeal. The appeal shall be taken within fifteen (15) days from notice
of the award, judgment, final order or resolution, or from the date of its last publication, if
publication is required by law for its effectivity, or of the denial of petitioners motion for
new trial or reconsideration duly filed in accordance with the governing law of the court
or agency a quo. Only one (1) motion for reconsideration shall be allowed.
The policy of judicial bodies to give quasi-judicial agencies, such as the SSC, an
opportunity to correct its mistakes by way of motions for reconsideration or other
statutory remedies before accepting appeals therefrom finds extensive doctrinal support
in the well-entrenched principle of exhaustion of administrative remedies.
The reason for the principle rests upon the presumption that the administrative body, if
given the chance to correct its mistake or error, may amend its decision on a given matter
and decide it properly.23 The principle insures orderly procedure and withholds judicial
interference until the administrative process would have been allowed to duly run its
course. This is but practical since availing of administrative remedies entails lesser
expenses and provides for a speedier disposition of controversies.24 Even comity dictates
that unless the available administrative remedies have been resorted to and appropriate
authorities given an opportunity to act and correct the errors committed in the
administrative forum, judicial recourse must be held to be inappropriate,
impermissible,25 premature, and even unnecessary.26
However, we are not unmindful of the doctrine that the principle of exhaustion of
administrative remedies is not an ironclad rule. It may be disregarded (1) when there is a
violation of due process, (2) when the issue involved is purely a legal question, (3) when
the administrative action is patently illegal amounting to lack or excess of jurisdiction, (4)
when there is estoppel on the part of the administrative agency concerned, (5) when there
is irreparable injury, (6) when the respondent is a department secretary whose acts as an
alter ego of the President bears the implied and assumed approval of the latter, (7) when
to require exhaustion of administrative remedies would be unreasonable, (8) when it
would amount to a nullification of a claim, (9) when the subject matter is a private land in
land case proceedings, (10) when the rule does not provide a plain, speedy and adequate
remedy, (11) when there are circumstances indicating the urgency of judicial
intervention,27 (12) when no administrative review is provided by law, (13) where the
rule of qualified political agency applies, and (14) when the issue of non-exhaustion of
administrative remedies has been rendered moot.28
Fortunately for Rago, his case falls within some of these exceptions as discussed below.
Petitioners attempts to distinguish Arroyo v. House of Representatives Electoral
Tribunal29 from this case is misplaced. The ground relied upon by the Court of Appeals
for exempting this case from exhaustion of administrative remedies was not the denial of
due process but of the patent nullity of the SSC decision in question.
It is true that Rago disregarded procedural and curative rules in taking immediate
recourse to the appellate court. The Court of Appeals similarly erred in taking cognizance
of Ragos appeal. We likewise do not subscribe to issuing rulings or decisions that do not
acknowledge or give reason for the disregard of the procedural defect of the petition,
especially when it was specifically raised as an issue in respondents answer.30
Nevertheless, to require Rago to comply with the principle of exhaustion of
administrative remedies at this stage of the proceedings would be unreasonable, unjust
and inequitable. It would prolong needlessly and uselessly the resolution of his claim.
Petitioners SSS and SSC have consistently shown their obstinacy in their stand to deny
Ragos request to convert his permanent partial disability to permanent total disability.
The SSCs reliance on the SSS recommendations, which did not consider other evidence
of the illness progression and its disregard of long-standing jurisprudence, made for the
patent nullity of the SSC decision. The error was made more blatant when, in the SSCs
clarificatory order, it classified the disability based on the amount of contributions Rago
had paid.31
To give the SSC another chance to rectify its error in accordance with the principle of
exhaustion of administrative remedies would inevitably result in the same inflexible
stance in defense of its error. We say another chance because we can consider the SSCs
clarificatory order as in the nature of a judgment on Ragos motion for reconsideration as
if he had filed one. Otherwise, to admit the misnamed order which was issued when the
SSC no longer had jurisdiction over the case, and which modified and altered the contents
and tenor of its original resolution, would have amounted to a violation of Ragos right to
due process. To this extent we give imprimatur to the assailed decision and resolution of
the Court of Appeals, and uphold its factual determination that Rago is entitled to the
conversion of his permanent partial disability to permanent total disability. Thus:
There is merit in the petition. Evidently clear from the recitals of the assailed decision
some indicia of petitioners state of permanent total disability. To emphasize, he was
granted sickness benefit for a maximum period of 120 days from December 1, 1993 to
March 30, 1994. Then he was awarded lump sum permanent partial disability benefits
paid on June 15, 1994, which was then adjusted on October 18, 1995 to monthly pension
benefit covering the period of 30 months from May 20, 1994 to October 1996. More, the
permanent partial disability benefit was extended for another eight (8) months from July
3, 1998 to February 1999, all in all covering a period of 38 months. If temporary total
disability lasting continuously for more than 120 days is deemed total and permanent, it is
not therefore amiss to consider the payment of permanent partial disability benefits for 38
months as recognition of permanent total disability. Award of permanent partial disability
benefits for 19 months was considered by the Supreme Court as an acknowledgment that
the awardee was suffering from permanent total disability. (Diopenes vs. GSIS (205
SCRA 331[1992]).
xxx
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. (IJARES v. Court of Appeals, 313 SCRA 141
[1999]). The cited radiologic report under date of February 26, 1999 is demonstrative of
the fact that petitioner is still in a state which at the time of the taking deters him from
performing his job or any such related function. It is evident that the pain caused to
petitioner by his injuries still persists even after more than 5 years when the accident
occurred on December 1, 1993. The disability caused thereby which had earlier been
diagnosed as permanent partial had possibly became permanent total. (GSIS vs. CA 260
SCRA 133, [1996]). Also in the case of Tria vs. ECC, (supra) a disability is total and
permanent if as a result of the injury, the employee is not able to perform any gainful
occupation for a period exceeding 120 days.
Moreover, prior payment of compensation benefits for permanent partial disability may
not foreclose his right to compensation benefits for permanent total disability. Otherwise,
the social justice policy underlying the enactment of labor laws would lose its meaning.
Caution should be taken against a too strict interpretation of the rules lest the
constitutional mandate of social justice policy calls for a liberal and sympathetic approval
of the pleas of disabled employees like herein petitioner. Compassion for him is not a
dole out. It is a right. (GSIS vs. Court of Appeals, 285 SCRA 430 [1998]).32
The Court of Appeals correctly observed that Ragos injury made him unable to perform
any gainful occupation for a continuous period exceeding 120 days. The SSS had granted
Rago sickness benefit for 120 days and, thereafter, permanent partial disability for 38
months. Such grant is an apparent recognition by the SSS that his injury is permanent and
total as we have pronounced in several cases.33 This is in conformity with Section 2 (b),
Rule VII of the Amended Rules on Employees Compensation which defines a disability
to be 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, and
Section 1, b (1) of Rule XI of the same Amended Rules which provides that a temporary
total disability lasting continuously for more than 120 days, shall be considered
permanent.
In Vicente vs. Employees Compensation Commission,34 we laid down the litmus test and
distinction between Permanent Total Disability and Permanent Partial Disability, to wit:
[W]hile permanent total disability invariably results in an employees loss of work or
inability to perform his usual work, permanent partial disability, on the other hand,
occurs when an employee loses the use of any particular anatomical part of his body
which disables him to continue with his former work. Stated otherwise, 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 a
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.
We further reiterate that disability should be understood less on its medical significance
than on the loss of earning capacity. Permanent total disability means disablement of an
employee to earn wages in the same kind of work, or 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 attainment could do. It does not mean absolute helplessness.35 Moreover, a persons
disability may not manifest fully at one precise moment in time but rather over a period
of time. It is possible that an injury which at first was considered to be temporary may
later on become permanent or one who suffers a partial disability becomes totally and
permanently disabled from the same cause.36
With this, petitioners additional arguments that the x-ray reports lacked a physicians
finding that Rago could no longer work and that Mr. Cabreros affidavit attested to the
contrary lose persuasive worth. X-ray reports and its confirmation by a physician are
simply appraised for their evidentiary value and are not considered as indispensable
prerequisites to compensation.37 Even then, the three x-ray reports submitted by Rago
clearly show the degenerative condition of his injury, viz.
(a) Radiology report stated 1 December 1993 revealed "Mark compression fracture o L1
vertebra without signs of dislocation and bone destruction and slight kyphosis at the level
of L1 vertebra but the alignment of the spine is normal";
(b) Radiology report dated 4 may 1994 showed that "consistent with compression fracture
with mild posterior dislocation of the L1"; and
(c) Radiology report dated 26 February 1999 showed anterior wedging or compression
fracture of L1 with gibbus deformity and thoraco-lumber junction and suggested lumbo-
sacral AP for further study. [emphasis supplied]
Clearly, Rago is entitled to permanent total disability benefits.
One final note. Although the SSS and the SSC should be commended for their vigilance
against unjustified claims that will deplete the funds intended to be disbursed for the
benefit only of deserving disabled employees, they should be cautioned against a very
strict interpretation of the rules lest it results in the withholding of full assistance from
those whose capabilities have been diminished, if not completely impaired, as a
consequence of their dedicated service. A humanitarian impulse, dictated by no less than
the Constitution under its social justice policy, calls for a liberal and sympathetic
approach to the legitimate appeals of disabled workers like Rago. Compassion for them is
not a dole out but a right.38
WHEREFORE, the decision of the Court of Appeals dated 18 October 2001 and its
resolution of 30 January 2002 in CA-G.R. SP No. 63389 reversing the Social Security
Commissions Resolution of 20 December 2000 in SSC Case No. 4-15009-2000 are
hereby AFFIRMED.
No pronouncement as to costs.
SO ORDERED.
Quisumbing, Ynares-Santiago, Carpio, and Azcuna, JJ., concur.
Item No. ____
Agenda for 22 September 2004
FIRST DIVISION
FORCONCURRENCE
4G.R. No. 152058
SOCIAL SECURITY COMMISSION and SOCIAL SECURITY SYSTEM, petitioners,
vs.
COURT OF APPEALS and JOSE RAGO, respondents.
X- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -X
COUNSEL FOR THE PETITIONERS:
ATTY. AMADO D. VALDEZ
ATTY. JESUS F.D. CLARIZA
ATTY. MARIANO C. ALOJADO
OFFICE OF THE GOVERNMENT CORPORATE COUNSEL
3rd Floor, MWSS Bldg., Katipunan Avenue
Balara, Quezon City
COUNSEL FOR THE PRIVATE RESPONDENT:
MERCADO LIM AND ASSOCIATES LAW OFFICES
Unit B, 1544 San Marcelino Street
Ermita, Manila
X- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - X
Court of Appeals - Decision of 18 October 2001 and the
Sixth Division Resolution of 30 January 2002:
Per Cosico, R. J., with the concurrence of
Barcelona, R. and Santos, A., JJ,
X- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - X
(Please return to the Office of Chief Justice HILARIO G. DAVIDE, JR.)
Footnotes
1 Per Cosico, R. J., with the concurrence of Barcelona, R. and Santos, A., JJ, Rollo, 120-
126.
2 Rollo, 44.
3 Id., 39
4 Id.
5 Id., 56.
6 Id., 57.
7 Rollo, 57.
8 Id.
9 Id.
10 Rollo, 31-35.
11 Id., 62-64.
12 Id., 312-320.
13 Otherwise known as the Social Security Law of 1997. Section 13-A (g) provides the
percentage degree of disability, which is equivalent to the ratio` that the designated
number of months of compensability bears to seventy-five (75), rounded to the next
higher integer, shall not be additive for distinct, separate and unrelated permanent partial
disabilities, but shall be additive for deteriorating and related permanent partial
disabilities, to a maximum of one hundred percent (100%), in which case the employee
shall be deemed as permanently totally disabled.
14 Rollo, 110-119.
15 Rollo, 136-137.
16 Rollo, 330-336.
17 PNCC v. NLRC, G.R. No. 112629, 7 July 1995, 245 SCRA 668.
18 G.R. No. 118597, 14 July 1995, 246 SCRA 384.
19 Manufacturers Hanover Trust Co. & Chemical Bank v. Guerrero, G.R. No. 136804, 19
February 2003; Tan v. Securities and Exchange Commission, G.R. No. 95696, 3 March
1992, 206 SCRA 740, citing Shauf v. Court of Appeals, G.R. No. G.R. No. 90314, 27
November 1990, 191 SCRA 713; Bersabal v. Judge Salvador G.R. No. L-35910, 21 July
1978, 84 SCRA 176.
20 De Mesa, et al. v. Mencias, 124 Phil 1187 (1966). See also Federation of Free Workers
and Allied Sugar Centrals Employees and Workers Union FFW v. Inciong, No. L-
48848, 11 May 1998, 161 SCRA 295,citing In Re Guarina, 24 Phil 37 (1913) and San
Carlos Milling Co. v. Commissioner of Internal Revenue, G.R. No. 103379, 23
November 1993, 228 SCRA 135.
21 In Shauf v. Court of Appeals, G.R. No. 90314, 27 November 1990, 191 SCRA 713,
"may" was used in a U.S. federal statute (about equal opportunity for civilian
employment in U.S. military installations) to give an aggrieved party a number of
remedies which are not exclusive. In People v. Court of Appeals, 312 Phil 739 (1995),
"may" as used in section 7 of Rule 112 presented an "opportunity," a "possibility" or an
option of filing a motion for preliminary investigation and in Section 1 of Rule 45, as an
opportunity or option to file a petition for review. In Legaspi v. Estrella, G.R. No. 90205,
24 August 1990 (Cited in the SCRA as Supangan, Jr. v. Santos, a consolidation of cases),
189 SCRA 56 (1990) we interpreted "may" as used in Section 146 of Batas Pambansa
Blg. 337 or the old Local Government Code as- being indicative of a "possibility" or an
"opportunity," to avoid defeating the purpose of the law to immediately include sectoral
representatives in the legislative councils of local government units.
22 Id., People v. Court of Appeals, 312 Phil 739 (1995).
23 Lopez v. City of Manila, 363 Phil 68 (1999).
24 See Carale v. Abarintos, G.R. No. 120704, 3 March 1997, 269 SCRA 132; Paat v.
Court of Appeals, 334 Phil 146 (1997); see also Union Bank of the Philippines v. Court of
Appeals, G.R. No. 131729, 19 May 1998citing University of the Philippines v. Catungal,
Jr., 338 Phil 728 (1997); Associated Communications and Wireless Services, Ltd. v.
Dumlao, et al., G.R. No. 136762, 21 November 2002.
25 Garcia v. Court of Appeals, 411 Phil 25 (2001).
26 Lopez v. City of Manila, supra note 23; Ambil v. COMELEC, G.R. No. 143398, 25
October 2000, 344 SCRA 358.
27 Paat v. Court of Appeals, 334 Phil 146 (1997); Roxas & Co. Inc. v. Court of Appeals,
378 Phil 727 (1999).
28 Province of Zamboanga del Norte v. Court of Appeals, G.R. No. 109853, 11 October
2000.
29 G.R. No. 118597, 14 July 1995, 246 SCRA 384.
30 See generally Yao v. Court of Appeals, G.R. No. 132428, 24 October 2000, 344 SCRA
202.
31 This tenuous basis was again put to question when it was later brought to our attention
that the manual verification of Mr. Ragos contributions revealed that he had 57 total
contributions and not 35. It was claimed that the additional 29 contributions were not
made available to the SSC at the time of the promulgation of the clarificatory judgment.
32 Rollo, 124-126.
33 In Abaya, Jr. v. ECC, G.R. No. 64255, 16 August 1989, 176 SCRA 507, partial
permanent benefits was granted for more than 150 days. In Aguja v. GSIS, G.R. No.
84846, 5 August 1991, 200 SCRA 187, permanent partial disability benefits was granted
for 25 months. In Aquino v. ECC, G.R. No. 89558, 22 August 1991, 201 SCRA 84,
permanent partial disability was granted for 19 months. The Court held that such grants
indicated a recognition on the part of the System of the members permanent total
disability. In Diopenes v. GSIS G.R. No. 96844, 23 January 1992, 205 SCRA 331,
temporary total disability benefits was granted for 240 days and permanent partial
disability for 19 months.
34 G.R. No. 85024, 23 January 1991, 193 SCRA 190; see also Ijares v. Court of Appeals,
G.R. No. 105854, 26 August 1999, 313 SCRA 141.
35 Marcelino v. Seven-Up Bottling Co., 150-C Phil 133 (1972); Landicho v. WCC, G.R.
No. L-45996, 26 March 1979, 89 SCRA 147; Legaspi v. Province of Negros Oriental,
G.R. No. L-43066, 29 December 1978, 87 SCRA 418; GSIS v. Court of Appeals, 363
Phil 1999.
36 GSIS v. Court of Appeals, G.R. No. 117572, 29 January 1998, 285 SCRA 430 citing
GSIS v. Court of Appeals, G.R. No. 116015, 31 July 1996, 260 SCRA 133.
37 Balanga v. Workmens Compensation Commission, No. L-43339, 22 June 1978, 83
SCRA 721; Romero v. WCC, G.R. No. L-42617, 30 June 1997, 77 SCRA 482; and
Ybaez v. WCC, G.R. No. L-44123, 30 June 1997, 77 SCRA 501.
38 See GSIS v. Court of Appeals, G.R. No. 117572, 29 January 1998, 285 SCRA 430.

Republic of the Philippines

SUPREME COURT
Manila
EN BANC
G.R. No. L-21642 July 30, 1966
SOCIAL SECURITY SYSTEM, petitioner-appellee,
vs.
CANDELARIA D. DAVAC, ET AL., respondents;
LOURDES Tuplano, respondent-appellant.
J. Ma. Francisco and N. G. Bravo for respondent-appellant.
Office of the Solicitor General Arturo A. Alafriz, Solicitor Camilo D. Quiason and E. T.
Duran for petitioner-appellee.
BARRERA, J.:
This is an appeal from the resolution of the Social Security Commission declaring
respondent Candelaria Davac as the person entitled to receive the death benefits payable
for the death of Petronilo Davac.
The facts of the case as found by the Social Security Commission, briefly are: The late
Petronilo Davac, a former employee of Lianga Bay Logging Co., Inc. became a member
of the Social Security System (SSS for short) on September 1, 1957. As such member, he
was assigned SS I.D. No. 08-007137. In SSS form E-1 (Member's Record) which he
accomplished and filed with the SSS on November 21, 1957, he designated respondent
Candelaria Davac as his beneficiary and indicated his relationship to her as that of "wife".
He died on April 5, 1959 and, thereupon, each of the respondents (Candelaria Davac and
Lourdes Tuplano) filed their claims for death benefit with the SSS. It appears from their
respective claims and the documents submitted in support thereof, that the deceased
contracted two marriages, the first, with claimant Lourdes Tuplano on August 29, 1946,
who bore him a child, Romeo Davac, and the second, with Candelaria Davac on January
18, 1949, with whom he had a minor daughter Elizabeth Davac. Due to their conflicting
claims, the processing thereof was held in abeyance, whereupon the SSS filed this
petition praying that respondents be required to interpose and litigate between themselves
their conflicting claims over the death benefits in question.1wph1.t
On February 25, 1963, the Social Security Commission issued the resolution referred to
above, Not satisfied with the said resolution, respondent Lourdes Tuplano brought to us
the present appeal.
The only question to be determined herein is whether or not the Social Security
Commission acted correctly in declaring respondent Candelaria Davac as the person
entitled to receive the death benefits in question.
Section 13, Republic Act No. 1161, as amended by Republic Act No. 1792, in force at the
time Petronilo Davac's death on April 5, 1959, provides:
1. SEC. 13. Upon the covered employee's death or total and permanent disability under
such conditions as the Commission may define, before becoming eligible for retirement
and if either such death or disability is not compensable under the Workmen's
Compensation Act, he or, in case of his death, his beneficiaries, as recorded by his
employer shall be entitled to the following benefit: ... . (emphasis supplied.)
Under this provision, the beneficiary "as recorded" by the employee's employer is the one
entitled to the death benefits. In the case of Tecson vs. Social Security System, (L-15798,
December 28, 1961), this Court, construing said Section 13, said:
It may be true that the purpose of the coverage under the Social Security System is
protection of the employee as well as of his family, but this purpose or intention of the
law cannot be enforced to the extent of contradicting the very provisions of said law as
contained in Section 13, thereof, ... . When the provision of a law are clear and explicit,
the courts can do nothing but apply its clear and explicit provisions (Velasco vs. Lopez, 1
Phil, 270; Caminetti vs. U.S., 242 U.S. 470, 61 L. ed. 442).
But appellant contends that the designation herein made in the person of the second and,
therefore, bigamous wife is null and void, because (1) it contravenes the provisions of the
Civil Code, and (2) it deprives the lawful wife of her share in the conjugal property as
well as of her own and her child's legitime in the inheritance.
As to the first point, appellant argues that a beneficiary under the Social Security System
partakes of the nature of a beneficiary in life insurance policy and, therefore, the same
qualifications and disqualifications should be applied.
Article 2012 of the New Civil Code provides:
ART. 2012. Any person who is forbidden from receiving any donation under Article 739
cannot be named beneficiary of a life insurance policy by the person who cannot make
any donation to him according to said article.
And Article 739 of the same Code prescribes:
ART. 739. The following donations shall be void:
(1) Those made between persons who were guilty of adultery or concubinage at the time
of the donation;
xxx xxx xxx
Without deciding whether the naming of a beneficiary of the benefits accruing from
membership in the Social Security System is a donation, or that it creates a situation
analogous to the relation of an insured and the beneficiary under a life insurance policy, it
is enough, for the purpose of the instant case, to state that the disqualification mentioned
in Article 739 is not applicable to herein appellee Candelaria Davac because she was not
guilty of concubinage, there being no proof that she had knowledge of the previous
marriage of her husband Petronilo.1
Regarding the second point raised by appellant, the benefits accruing from membership in
the Social Security System do not form part of the properties of the conjugal partnership
of the covered member. They are disbursed from a public special fund created by
Congress in pursuance to the declared policy of the Republic "to develop, establish
gradually and perfect a social security system which ... shall provide protection against
the hazards of disability, sickness, old age and death."2
The sources of this special fund are the covered employee's contribution (equal to 2-
per cent of the employee's monthly compensation);3 the employer's contribution
(equivalent to 3- per cent of the monthly compensation of the covered employee);4 and
the Government contribution which consists in yearly appropriation of public funds to
assure the maintenance of an adequate working balance of the funds of the System.5
Additionally, Section 21 of the Social Security Act, as amended by Republic Act 1792,
provides:
SEC. 21. Government Guarantee. The benefits prescribed in this Act shall not be
diminished and to guarantee said benefits the Government of the Republic of the
Philippines accepts general responsibility for the solvency of the System.
From the foregoing provisions, it appears that the benefit receivable under the Act is in
the nature of a special privilege or an arrangement secured by the law, pursuant to the
policy of the State to provide social security to the workingmen. The amounts that may
thus be received cannot be considered as property earned by the member during his
lifetime. His contribution to the fund, it may be noted, constitutes only an insignificant
portion thereof. Then, the benefits are specifically declared not transferable,6 and
exempted from tax legal processes, and lien.7Furthermore, in the settlement of claims
thereunder the procedure to be observed is governed not by the general provisions of law,
but by rules and regulations promulgated by the Commission. Thus, if the money is
payable to the estate of a deceased member, it is the Commission, not the probate or
regular court that determines the person or persons to whom it is payable.8 that the
benefits under the Social Security Act are not intended by the lawmaking body to form
part of the estate of the covered members may be gathered from the subsequent
amendment made to Section 15 thereof, as follows:
SEC. 15. Non-transferability of benefit. The system shall pay the benefits provided for
in this Act to such persons as may be entitled thereto in accordance with the provisions of
this Act. Such benefits are not transferable, and no power of attorney or other document
executed by those entitled thereto in favor of any agent, attorney, or any other individual
for the collection thereof in their behalf shall be recognized except when they are
physically and legally unable to collect personally such benefits: Provided, however, That
in the case of death benefits, if no beneficiary has been designated or the designation
there of is void, said benefits shall be paid to the legal heirs in accordance with the laws
of succession. (Rep. Act 2658, amending Rep. Act 1161.)
In short, if there is a named beneficiary and the designation is not invalid (as it is not so
in this case), it is not the heirs of the employee who are entitled to receive the benefits
(unless they are the designated beneficiaries themselves). It is only when there is no
designated beneficiaries or when the designation is void, that the laws of succession are
applicable. And we have already held that the Social Security Act is not a law of
succession.9
Wherefore, in view of the foregoing considerations, the resolution of the Social Security
Commission appealed from is hereby affirmed, with costs against the appellant.
So ordered.
Concepcion, C.J., Reyes, J.B.L., Dizon, Makalintal, Bengzon, J.P., Zaldivar and Sanchez,
concur.
Footnotes
1For a woman to be guilty of concubinage, she must know the man to be married (Viada
y Vilaseca, Vol. 5, p. 217).
2Sec. 1, Rep. Act 1792, in force at the time of death of herein covered member.
3See. 18, id.
4Sec. 19, id.
5Sec. 20, id.
6Sec. 15, id.
7See. 16, id.
8Sec. 5, id.
9See Tecson vs. Social Security System, supra.