PHILIPPINE BLOOMING MILLS CO., INC. (AS EMPLOYER), AND FRANCISCO TONG (AS ASSISTANT GENERAL MANAGER AND ATTORNEY-IN-FACT OF SUSUMU SONODA, SENJI TANAKA, TAKASHIKO KUMAMOTO, HITO…

The facts of this case are not disputed:

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

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

“SIR:

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

“Aliens employed in the Philippines:

“Aliens
who are employed in the Philippines shall also be compulsorily covered.
But aliens who are employed temporarily shall, upon their departure
from the Philippines, be entitled to a rebate of a proportionate amount
of their contributions; their employers shall be entitled to the same
proportionate rebate of their contributions in behalf of said aliens
employed by them. (Rule I, Sec. 3[d], Rules and Regulations.)”

Starting
September, 1957, and until the aforementioned Japanese employees left
the Philippines on October 26, 1958, the corresponding premium
contributions of the employer and the employees on the latter’s
memberships in the SSS were as follows:

	SS	Monthly	Amount of Premiums Contributed
Name	Number	Salary
			2.5%	3.5%
			(Employee)	(Employer)	Total
Susumu Sonoda	03-075177	P520.00	P175.00	P245.00	P420.00
Senji Tanaka	03-075178	520.00	175.00	245.00	420.00
Kahei Tanaka	03-075179	500.00	175.00	245.00	420.00
Takashiko Kumamoto	03-075180	500.00	175.00	245.00	420.00
	03-075181	500.00	175.00	245.00	420.00
Hitoshi Nakamura	03-075182	500.00	175.00	245.00	420.00
Tetsuo Kudo	Total –		P1,050.00	P1,470.00	P2,520.00

On October 7, 1958, the Assistant General Manager of the
corporation, on its behalf and as attorney-in-fact of the Japanese
technicians, filed a claim with the SSS for the refund of the premiums
paid to the System, on the ground of termination of the members’
employment. As this claim was denied, they filed a petition with the
Social Security Commission for the return or refund of the premiums, in
the total sum of P2,520.00, paid by the employer corporation and the 6
Japanese employees, plus attorneys’ fees. This claim was controverted
by the SSS, alleging that Rule IX of the Rules and Regulations of the
System, as amended, requires membership in the System for at least 2
years before a separated or resigned employee may be allowed a return
of his personal contributions. Under the same rule, the employer is not
also entitled to a refund of the premium-contributions it had paid.

After hearing, the Commission denied the petition for the reason
that, although under the original provisions of Section 3(d) of Rule I
of the Rules and Regulations of the SSS, alien-employees (who are
employed temporarily) and their employees 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,
it ^[1] 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:

“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:

x x x

“(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.

“2. These Rules and Regulations, any
amendment thereof, or any additional rule or rules subsequently adopted
by the Commission, shall take effect on the date they are approved by
the President of the Philippines.”

Rule I, Section 3(d) and Rule IX, however, were later amended, which
amendment was approved by the President on January 14, 1958, to read as
follows:

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

“EFFECT OF SEPARATION FROM EMPLOYMENT

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

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

x x x.” (Rule IX)

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

It is not here disputed that the Rules and Regulations of the SSS,
having been promulgated in implementation of a law, have the force and
effect of a statute;^[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.

Concepcion, C.J., Dizon, Makalintal, Bengzon, J.P., Zaldivar, Sanchez, and Ruiz Castro, JJ., concur.
Reyes, J.B.L., J., reserve vote.
Regala, J., on leave, no part.

---

^[1] Appellants must be referring to their obligation to pay the premium-contributions and retain membership in the System.

^[2] Vol. 53, No. 17, p. 5588.

^[3] V91. 54, No. 31, p. 7388.

^[4] U. S. v. Tupasi Molina, 29 Phil. 119, cited in People v. Que Po Lay, G.R. No. L-6791, March 29, 1954.

^[5] “ART. 2. Laws shall
take effect after fifteen days following the completion of their
publication in the Official Gazette, unless it is otherwise provided. x
x x.”