G.R. No. L-23565. March 21, 1968
THE INSULAR LIFE ASSURANCE CO., LTD., PETITIONER-APPELLANT, VS. SOCIAL SECURITY COMMISSION AND RAMON GAVIOLA, JR. RESPONDENTS-APPELLEES.
ANGELES, J.:
The Insular Life Assurance Co., Ltd. has taken this appeal from
the decision of the Court of First Instance of Manila dismissing its petition
for declaratory relief (Case No. 46745) against the Social Security Commission
and Ramon Gaviola, Jr.
The subject petition alleged that on November 6, 1960, the
respondent Ramon Gaviola, Jr., as administrator of
the Social Security System, issued Circular No. 34, which reads: :
“TO: ALL EMPLOYEES
RE: COVERAGE OF INSURANCE AGENTS OR UNDERWRITERS
“Your attention is invited to the fact that under the provisions
of the Social Security Act, as amended, Insurance Agents, Underwriters, and
other similarly situated, are considered employees of the insurance firms they
work for and are therefore subject to the compulsory coverage of the Social
Security System, if they possess all the qualifications therefor.
“In view thereof, all firms or employers who have not yet submitted
names of their agents or underwriters for coverage should do so immediately and
pay the corresponding premiums based on the actual Commissions received by
each agent during each month.”
Contesting the construction of the term “employer and
employee” given by the Social Security System in the aforequoted
circular, and claiming that it is not bound to comply with its terms, inasmuch
as its insurance agents and underwriters are not its employees, the petitioner
prayed the Court of First Instance to declare said Circular No. 34 null and
void ab initio.
On April 25, 1961,
the respondents filed a motion to dismiss the petition on the ground that the
complaint states no cause of action and that the Court has not jurisdiction
over the subject matter of the action.
On June 12, 1961,
the court denied the motion to dismiss for the reason that the grounds alleged
therein do not appear indubitable.
Accordingly, respondent Gaviola filed his
answer, setting up specific and special defenses, among which is the alleged
lack of jurisdiction of the said court over the subject matter of the case,
and prayed that said petition be dismissed and that petitioner be ordered to
ventilate its action, if any, before the Social Security Commission.
On a stipulation of facts and memoranda from both parties, the
case was submitted for decision.
Without going over the merits of the petition, the lower court
finally dismissed it on the ground of lack of jurisdiction, declaring that by
filing the petition for declaratory relief, petitioner did not only deprive the
Social Security Commission of its statutory power to decide the matter in
dispute, but also sought to go about the procedure for appeal delineated by law
with respect to any decision of said Commission, with the result of divesting
the Court of Appeals or the Supreme Court of their appellate jurisdiction over
the decision of the Commission.
Hence, this appeal.
The issue is whether or not the Court of First Instance has
jurisdiction over the petition for declaratory relief which prays for the annulment
of Circular No. 34 issued by the administrator of the Social Security System.
It is urged, in support of the jurisdiction of the lower court,
that the Social Security Act has limited the semi-judicial powers of the
Commission to money claims involving the benefits that may accrue to any member
of the System, so that the provisions of section 5 of the Social Security Act,
which treat of the settlement of claims, appeals to court, and court review
thereof, are not to be applied to the instant case, since the issue does not
involve a money claim but the compulsory coverage of the Act. In furtherance of this argument, the
petitioner-appellant ratiocinates:
“THE LAW, as we have previously shown[1]
x x x has not vested upon
the Social Security Commission the power to determine who are the employers
and/or employees covered by the Social Security Act. Section 4 of the Social Security Act has
enumerated the powers and duties of the Commission, and such power is not among
those so enumerated. Therefore, it is
evident that the Legislature has seen fit to leave the determination of this
important question to our courts of justice.
And since no such power of ultimate decision is lodged in the Social
Security Commission, it follows that its unilateral appreciation as to who are
or are not covered by the Social Security Act, can never be binding and final
and can not by the same token, be appealable either
to the Court of Appeals or the Supreme Court.”
On the other hand, the defendant-appellee
points out to an alleged erroneous citation contained in appellant’s brief[2]
where section 5 [a] of the Social
Security Act is quoted in its original form, which error, according to the appellee, might probably be the reason for
petitioner-appellant’s insistence that the Social Security Commission has no
jurisdiction to decide any matter except money claims.
Delving into the history of Section 5 of the law above referred
to, We have found that while it originally read:
“Sec. 5. (a) Settlement of Claims.
– The filing, determination and settlement of claims shall be governed by the
rules and regulations promulgated by the Commission. If the money is payable to the estate of a
deceased person, the System shall pay the same to such person or persons as it
may ascertain to be lawfully entitled thereto.”
“(b) Appeal to courts. – Any decision of
the Commission, in the absence of an appeal therefrom
as herein provided, shall become final fifteen days after the date of
notification, and judicial review thereof shall be permitted only after any
party claiming to be aggrieved thereby has exhausted his remedies before the
Commission. The Commission shall be
deemed to be a party to any judicial action involving any such decision, and
may be represented by an attorney employed by the Commission, or when
requested by the Commission, by the Solicitor General or any fiscal.
“(c) Court review. – The decision
of the Commission upon any disputed matter may be reviewed both upon
the law and the facts by the Court of Appeals.
For the purpose of such review the procedure concerning appeals from the
Court of First Instance shall be followed as far as practicable and consistent
with the purposes of this Act. Appeal
from a decision of the Commission must be taken within fifteen days from
notification of such decision. If the
decision of the Commission involves only questions of law, the same shall be
reviewed by the Supreme Court. No appeal
bond shall be required. The case shall
be heard in a summary manner, and shall take precedence over all cases, except
that in the Supreme Court, criminal cases wherein life imprisonment or death
has been imposed by the trial court shall take precedence. No appeal shall act as a supersedeas or a stay of the order of the
Commission, unless the Commission itself, or the Court of Appeals, or the
Supreme Court, shall so order.” [Underscoring supplied]
However, as amended by section 3 of Republic Act 2658, which had
taken effect upon its approval on June 18, 1960, long before this case was
instituted in the lower court, said provision no longer contains the second
sentence of paragraph (a) as above underscored. A
limited construction of the original provision would, of course, naturally
result in the conclusion that the two sentences in paragraph (a) of
section 5 apply only to money claims.
But as the section as a whole now stands, there should be no reason to
decipher the provisions thereof as to apply only to such a limited scope.
What is clear, indeed, from the provisions of section 5 of the
Social Security Act, particularly paragraphs (b) and (c), is the restriction
upon the court to review the decision of the Social Security Commission
“on any disputed matter” unless “any party claiming to be
aggrieved thereby has exhausted his remedies before the Commission.”
At any rate, the question as to whether the Social Security
Commission should first, before the courts, pass upon the propriety or legality
of Circular No. 34, now in dispute, finds its answer in Philippine American
Life Insurance Co. vs. Social Security Commission,[3]
when this Court, referring to the same circular, made this pronouncement.
“It is true that the same bears the approval of the Chairman
of the Commission. Even if this fact
were construed as an approval of the Circular by the
Commission itself, such approval would not constitute a decision thereof, as
the term is used in said section 5, which regulates the judicial review of such
decision. Indeed, a ‘decision, connotes
the adjudication or settlement of a controversy,
and the same did not exist between the System and the plaintiff when the
Chairman of the Commission affixed his signature to said Circular No. 34, on
or before November 6, 1960, The issue did not arise until March 7, 1961, when
plaintiff expressed its objection to the circular upon the ground that the agents, solicitors and underwriters, thereof are not its
employees. It is only fair and just,
therefore, as well as administratively expedient, that before a judicial
review could be sought, said issue be previously submitted to and passed upon
by the Commission, on appeal from the action taken or contemplated to be taken
by the System, since, prior to such submission to and determination by the
Commission, the same had no occasion to consider the specific reasons adduced
by the plaintiff in support of its objection to said Circular No.
34.” [underscoring
supplied]
The fact that the petition held to have
been improperly brought to court in the aforecited case, was one for
prohibition and not declaratory relief, would not preclude the application of
the above ruling to the present case.
For a petition for declaratory relief has its own conditions sine–qua
non[4]
one of which is that the issue involved must be ripe for judicial
determination.[5] As already adverted to, by mandate of section
5(b) of the Social Security Act, any matter in dispute that concerns the Social
Security Commission may not be property entertained before the courts until all
remedies in said Commission have been exhausted.
To except petitions for declaratory relief, as proposed by
petitioner-appellant, from the application of section 5(b) of the Act, simply
because in such actions the Court of First Instance is not asked to exercise
any appellate or review power, would render it easy for parties to circumvent
said provision on appeals from decisions of the Social Security Commission, and
it would practically strip the Commission of its semi-judicial powers. For then, any party involved with the Social
Security System on any deed, will, contract or other instruments, statute,
executive order or regulation, can always petition the Court of First Instance
for declaratory judgment to determine questions of construction or validity arising therefrom, instead of
having first a decision on the matter from the Social Security Commission and
then appealing to the appellate courts.
As ruled in Elliot vs. American Manufacturing Company,[6]
courts are loath to interfere prematurely with administrative proceedings, and
will not assume jurisdiction of declaratory judgment proceedings until
administrative remedies have been exhausted.[7]
“Indeed, declaratory relief is discretionary upon the courts
to entertain. It may refuse to exercise
the power to declare rights and to construe instruments in any case where the
declaration or construction is not necessary and proper at the time under all
circumstances.”[8]
If We are to apply further one of the principles laid down in Chua
U. et al. vs. Hon. Manuel Lim, et al.[9]
one other reason for upholding the of the petition filed in the court below is
that the declaratory judgment sought would necessarily affect also other
insurance companies which were not represented nor made parties in the
proceedings.
IN VIEW OF ALL THE FOREGOING, the decision appealed from
is hereby affirmed, with costs against the petitioner-appellant.
Reyes, Acting C.J., Dizon, Makalintal, Bengzon, Zalvidar, Sanchez, Ruiz Castro, and Fernando, JJ., concur.
Concepcion, C.J., on leave.
[1]
Referring to above argument.
[2]
p. 14, Appellant’s brief.
[3]
G. R. No. L-20383, May 24, 1967.
[4]
1/ There must be a judicial controversy; 2/ the controversy must be between
persons whose interests are adverse; 3/ the party seeking declaratory relief
must have a legal interest in the controversy; and 4/ the issue involved must
be ripe for judicial determination.
[5]
Tolentino vs.
Board of Accountancy, et al. 90
Phil. 83; Delument et al. vs. Republic, 50 Of.
Gaz. 2, p. 578; Edades vs.
Edades, 99 Phil. 675, cited in Caltex
(Phil.) Inc vs. Palomar, G.R. No. L-19650, September 29, 1966.
[6]
138 Fed. 2d. 678.
[7]
Chua U., et al. vs. Hon. Manuel Lim, et al., G.R. No. L-19639,
February 26, 1965.
[8]
Santos Chan vs. Galang, G.R. No. L-21732,
Oct. 17, 1966.
[9]
Supra, (decided by Justice J.B.L. Reyes.)