SOCIAL SECURITY SYSTEM, PETITIONER AND APPELLEE, VS. CANDELARIA D. DAVAC, ET AL., RESPONDENTS, LOURDES TUPLANO, RESPONDENT AND APPELLANT.

Social Security System versus Davac

The Case

This is a dispute between two women claiming the same death benefit from the Social Security System. The System itself filed the action, asking the two claimants to interplead and settle between themselves who is entitled to the benefit payable on the death of Petronilo Davac. One claimant is Lourdes Tuplano, the first wife. The other is Candelaria Davac, the second wife, whom the deceased himself recorded with the System as his beneficiary. The case matters because it fixes the rule that the person recorded by the employer as beneficiary is the one entitled to the death benefit, and that this benefit is a special privilege under a public fund, not ordinary conjugal or hereditary property.

Procedural History

Because the two claimants filed conflicting claims, the Social Security System held processing in abeyance and filed a petition asking that the respondents be required to interplead and litigate their conflicting claims. The Social Security Commission then issued a resolution declaring Candelaria Davac as the person entitled to receive the death benefits. Lourdes Tuplano was not satisfied and brought the matter to the Supreme Court on appeal. The Supreme Court affirmed the resolution of the Commission.

Facts

Petronilo Davac, a former employee of Lianga Bay Logging Company, became a member of the Social Security System on the first of September 1957. In his member's record form, which he accomplished and filed with the System on the twenty-first of November 1957, he designated Candelaria Davac as his beneficiary and stated his relationship to her as that of wife.

It turned out that the deceased had contracted two marriages. The first was with Lourdes Tuplano, on the twenty-ninth of August 1946, and she bore him a child, Romeo Davac. The second was with Candelaria Davac, on the eighteenth of January 1949, and with her he had a minor daughter, Elizabeth Davac.

Petronilo Davac died on the fifth of April 1959. Both women then filed their claims for the death benefit. With the claims in conflict, the System asked them to interplead, and the Commission resolved in favor of Candelaria Davac. Lourdes Tuplano appealed.

Issues

• Whether or not the Social Security Commission acted correctly in declaring Candelaria Davac as the person entitled to receive the death benefits in question.
• Whether or not the designation of the second wife as beneficiary is null and void because it contravenes the Civil Code on donations and life insurance beneficiaries.
• Whether or not the designation deprives the lawful wife of her share in the conjugal property and of her own and her child's legitime in the inheritance.

Applicable Provisions

Section 13 of Republic Act Number 1161, as amended by Republic Act Number 1792, in force at the time of the member's death, provides:

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: * * *.

This is the provision that decides the case, because it makes the beneficiary as recorded by the employer the person entitled to the benefit.

Article 2012 of the New Civil Code, invoked by the appellant, 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.

This bears on the argument that a social security beneficiary is like a life insurance beneficiary and carries the same disqualifications.

Article 739 of the same Code, also invoked, provides:

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;

This is the disqualification the appellant sought to fasten on the second wife.

Section 21 of the Social Security Act, as amended, 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.

This shows the public character of the fund from which the benefit is paid.

Section 15 of the same Act, as amended by Republic Act Number 2658, provides:

SEC. 15. Non-transfer ability of benefit. The System shall pay the benefits provided for in this Act to such person 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 thereof is void, said benefits shall be paid to the legal heirs in accordance with the laws of succession.

This confirms that the laws of succession apply only when no beneficiary is designated or the designation is void.

Ruling

On the first issue, the Court held that the Commission acted correctly. Under Section 13, the beneficiary as recorded by the employer is the one entitled to the death benefit, and the Court applied its earlier ruling in Tecson versus Social Security System that when the provisions of a law are clear and explicit, the courts can do nothing but apply them.

On the second issue, the Court did not decide whether naming a social security beneficiary is a donation or creates a relation akin to insurance. It held that the disqualification in Article 739 does not apply to Candelaria Davac because she was not guilty of concubinage, there being no proof that she knew of her husband's previous marriage. For a woman to be guilty of concubinage, she must know the man to be married.

On the third issue, the Court held that the benefits do not form part of the conjugal partnership of the covered member. They are disbursed from a public special fund created by Congress to provide social security. The benefit is a special privilege secured by law, not property earned by the member during his lifetime. It is not transferable and is exempt from tax, legal processes, and lien. Hence, if there is a named beneficiary and the designation is not invalid, it is not the heirs who receive the benefit. It is only when there is no designated beneficiary or the designation is void that the laws of succession apply, and the Social Security Act is not a law of succession.

Doctrine

Under Section 13 of the Social Security Act, the beneficiary as recorded by the employer is the person entitled to the death benefit. The designation is invalid only on grounds that actually attach to the beneficiary, such as the disqualification in Article 739, which requires guilt of adultery or concubinage at the time of the donation. Social security benefits are not conjugal property and not part of the estate of the member; they are a special privilege paid from a public special fund. The laws of succession govern only when no beneficiary is designated or the designation is void.

Disposition

The Supreme Court affirmed the resolution of the Social Security Commission, with costs against the appellant, Lourdes Tuplano.

Remember This

The one line to memorize is that the beneficiary as recorded by the employer is entitled to the death benefit, and the laws of succession step in only when no beneficiary is designated or the designation is void. Examiners use this case to test the nature of social security benefits as a special privilege outside the conjugal partnership and the estate, and the requirement of knowledge for concubinage under Article 739.