G.R. No. 18081. November 18, 1963
SOCIAL SECURITY SYSTEM EMPLOYEES ASSOCIATION (PAFLU) PETITIONER, VS. THE HON. JUDGE E. SORIANO, ETC. ET AL.
BAUTISTA ANGELO, J.:
reconsider its decision rendered on April 30, 1963, or in the
alternative, to require the court a quo to elevate the
evidence the parties had submitted in the case for declaratory relief
pending before the latter court (Civil Case No. 48516) in order that it
may be taken into account in considering their motion for
reconsideration. The alternative request was granted and, accordingly,
the evidence above-referred to was elevated before this Court.
EVIDENCE FOR PETITIONER
The evidence for petitioner submitted to us follows:
Copy of the consolidated balance sheet of the SSS as of June 30,
1958 showing its total assets to be P17,234,869.61 and its total
income, P12,215,269.36 (Exhibit 2). Copy of the consolidated balance
sheet as of June 30, 1959 showing: assets, P49,407,122.57 and income,
P36,340,862.11 (Exhibit 3). Consolidated balance sheet as of June 30,
1960 showing: assets, P87,907,181.82 and income, P44,565,312.06
(Exhibit 4). Consolidated balance sheet as of June 30, 1961 showing:
assets, P138,170,450.80 and income, P58,779,083.92 (Exhibit 5).
Consolidated balance sheet as of June 30, 1962 showing: assets,
P194,424,319.38 and income, P69,316,986.71 (Exhibit 6).
Copy of Resolution No. 669 of the SSC (Exhibit 13). Attached thereto
are several indorsements regarding the following matter: “Whether or
not the construction of the five-million peso building which the Social
Security System contemplates to erect in Quezon City shall be subject
to the supervision of the Bureau of Public Works by virtue of Section
1901 of the Revised Administrative Code, as amended.” The indorsements
include opinions of the Director of Public Works, Government Corporate
Counsel, and the Auditor of the SSS.
Copy of a letter dated November 16, 1962 of Acting Secretary of
Finance denying the request of the SSC for exemption from payment of
customs duties and taxes on the importation of one Recordak Reliant 500
Microfilmer (Exhibit 14). A copy of a brochure prepared by the Research
and Public Information Staff of the SSS entitled “The Philippine Social
Security Program in Brief” (Exhibit 15). In this brochure, the SSC
applies to itself Republic Act 2254 which governs only government-owned
or controlled corporations thereby placing itself in the category of a
government-owned corporation. There is an excerpt in this brochure
which reads: “The Social Security System of the Philippines can be said
to cover a broad and considerable scope, i.e., it is an insurance scheme of general application.” (Italic supplied).
Copy of the June-July, 1961 issue of the Philippine Security
Bulletin Vol. Ill (Exhibit 16) containing excerpts showing that the SSS
is run like a government corporation and applying to it Republic Act
2254 governing government-owned or controlled corporations. And on page
124, there appears an article of the Chief of the Research and Public
Information Staff of the SSC stating that the SSS is but a counterpart
of the GSIS for government employees. He stated: “It will then include
a rather detailed explanation of the operation of the Government
Service Insurance System which is the social security program of
government employees in the Philippines.”
Copy of the April, 1962 issue of the Philippine Social Security
Bulletin (Exhibit 18) showing that the SSS funds are in the nature of
trust funds of the highest order. It shows that the social security
funds are invested in real estate, banks, stocks and bonds of the
government and of private companies, time deposits and savings deposits
which up to that time amounted to P160,468,629.54.
Copy of the 1958 annual report of the SSC showing how the funds of
the System are invested (Exhibit 20). It mentions certain guideposts
for the investment of its funds, which include interest-bearing bonds
of the government, interest-bearing deposits in any domestic banks, and
projects and investments which shall redound to the benefit of the
System. The intention is to put the SSS on the same footing as any
other insurance entity.
And copy of the 1960 annual report of the SSC (Exhibit 21) stating
in part: “What it (social security) does provide is basic protection
against the major hazards of life which neither the wage-earner nor the
employer, neither the individual nor his family, can by themselves
provide. It increases the opportunities and minimizes the risks for the
individual.” Exhibit 22 is another report of the SSC which acknowledges
that the System is operated on the social insurance principles.
EVIDENCE FOR RESPONDENTS
The evidence for respondents submitted to us follows:
The structural and functional charts of the SSS showing its
organization and that of its officers, departments and sections
(Exhibits A and B). A list of its employees (Exhibit C). Two job forms
showing the duties of a field representative and a claims computer in
the Claims Department (Exhibits D, and D-1).
A copy of the Social Security Act of 1954 (Exhibit E), and a
document containing rules and regulations regarding compulsory
coverage, effectivity of coverage, payment of premiums, integration,
coverage of seasonal employees, retirement, death and disability,
sickness, effect of separation from employment and hearing procedure in
the Commission. These rules show that the SSC has quasi-legislative and
quasi-judicial powers (Exhibit F).
Copy of the agreement entered into between the SSC and the PAFLU
recognizing the latter as sole and exclusive bargaining agent, the
validity of which would depend upon the final outcome of the present
litigation (Exhibit G). Copy of a resolution of the SSC stating that
the management would pay the wages and salaries of those employees and
workers who declared strike (Exhibit G-1).
An actuarial graph showing the administration expenses,
contributions, interests earned, and their stand in relation with one
another (Exhibit H), Some Position Description Forms of several
employees in the System (Exhibit I), as well as several copies of
printed records on appeal submitted in various cases pending in this
Court (Exhibit J, J-1 to J-5).
Abstract of the testimony given by Higinio B. Francisco, First Deputy Administrator, and Pedro Sen, Associate Actuary.
In rebuttal, respondents submitted a photostatic copy of a letter of
Acting Secretary Rodrigo D. Perez dated March 7, 1963 to the
Administrator of the SSS. This letter contains a request that the SSS
pay customs duties and taxes on the importation by the latter of a
Recordak Reliant 500 Microfilmer subject to refund if certified by the
Executive Secretary that said machine is being used by the corporation.
DISCUSSION
The evidence elevated before this Court, the nature of which has
been briefly described above, shows the following relevant facts:
The Acting Secretary of Finance in a letter dated November 16, 1962
required the SSS, pursuant to the provisions of Section 1205 of the
Tarriff and Customs Code to pay customs duty and tax on its importation
of one Recordak Reliant 500 Microfilmer. The SSS requested for
exemption on the plea that being a government entity it is exempt from
the payment of any customs duty or tax, but the exemption was denied on
the ground that the System is not performing a strictly governmental
function. Said the Secretary of Finance:
“Under the law creating the Social Security System
(Republic Act No. 2658), the nature of its functions are similar to a
business corporation. It is performing functions not strictly
governmental or political and therefore not entitled to tax exemption
under Section 1205 of the Tariff and Customs Code.”
This shows that even the Secretary of Finance is of the opinion that
the SSS performs proprietary functions for it is operated like a
business corporation.
The case of the construction of the 5-million peso building which
the SSS contemplated to erect in Quezon City as embodied in Resolution
No. 669 of the SSC is interesting. The question raised was whether the
construction would be undertaken under the supervision of the Bureau of
Public Works by virtue of Section 1901 of the Revised Administrative
Code, as amended. The SSS contended that, not being strictly a
government project, it can undertake it independently from the Bureau
of Public Works. The Director of Public Works in turn was of the
opinion that it is included in the category of national public building
and, hence, comes under the section above-referred to. When the
question was referred to the Government Corporate Counsel for opinion,
the latter expressed the view that the SSS only exercises ministrant
functions which are generally exercised by government-owned or
controlled corporations, and that it is not a part of the national or
other branches of the government. The opinion says in part:
“The ministrant functions, are those that
are undertaken only by way of advancing the general interest of society
which are merely optional, such as, public works, public charity,
health and safety regulations, and other functions of similar nature.
The ministrant functions are exercised by organizations, like the Social Security System
and other government-owned and controlled corporations, created to
promote certain aspects of the economic and social life of our people.“While
the promulgation of decisions by the Social Security Commission is
quasi-judicial or governmental in nature, however, the construction of
a building is in the nature of an investment, which is proprietary. The
latter, therefore, pertains more to the ministrant aspect of the
functions of the System.* * * * * * *
“Under
its charter, the Social Security Commission is created ‘to develop
establish gradually and perfect a social security system which shall be
suitable to the needs of the people throughout the Philippines.’ (Sec.
2, Rep. Act 1161, as amended by Rep. Act No. 1792). Said Commission has
the power, among others, to enter into agreements or contracts for such
services as it may deem necessary for the proper, efficient and stable
administration of the System (Sec. 4(g) ; the power to sue and be sued
in court (Sec. 4(j), or in short the System has corporate powers separate and distinct from those of our Government. In this connection, the Social Security System is not a part of the ‘National or other branch of the Government,’
and the Bureau of Public Works cannot, therefore, unless so requested,
exercise supervision over the architectural and engineering features of
the proposed SSS building.”
The Auditor of the Social Security System concurred in the opinion
expressed by the Government Corporate Counsel. The SSC in its
Resolution 669 in turn confirmed the action taken by a majority of its
members which acquiesced in the opinion of the Government Corporate
Counsel as concurred in by its auditor. As a consequence, the
construction was undertaken without the supervision of the Director of
Public Works.
Respondents do not seem to agree to our view that the SSS is
operated under the same insurance scheme or principle underlying the
operation of the GSIS. But the very brochure prepared by the Research
and Public Information Staff of the SSS, as well as the several feature
articles that appeared in several issues of the Philippine Security
Bulletin published upon the authority of the SSS clearly belie this
contention. Thus, in said brochure Exhibit 15 we read the following:
“The Social Security System of the Philippines can be said to cover a
broad and considerable scope, i.e., it is an insurance scheme of general application.”
And on page 124 of the June-July, 1961 issue of the same bulletin, Vol.
Ill, the Chief of the Research and Public Information Staff has
expressed the view, in an article he published, that the SSS is but a
counterpart of the GSIS for government employees. He said: “It will
then include a rather detailed explanation of the operation of the
Government Insurance System which is the social security program for
government employees in the Philippines.”
Finally, it is contended that the SSS is not operated for profit.
This contention is also belied by the Philippine Social Security
Bulletin of the SSS wherein in its 1962 issue it is well-explained how
the funds of the System have been invested in real estate, banks,
stocks and bonds of the government and of private companies, time
deposits and savings deposits, which at that time amounted to
P160,468,629.54, thus confirming the explanation given in the 1958
annual report of the SSC regarding the guideposts to be followed in the
investment of the funds of the System. And in the consolidated balance
sheets of the SSS for the year 1958, 1959, 1960, 1961 and 1962, one can
glean the many benefits that had been extended to the members of the
System which is the main feature of its operation. Thus, as of December
31, 1957 the total benefit payments amounted to P75,437.68; as of June
30, 1960, the benefit payments amounted to P2,761,395.45; as of June
30, 1961, the benefit payments amounted to P4,829,176.78, and as of
June 30, 1962, the benefit payments amounted to P7,751,348.56.
The same consolidated balance sheets show the tremendous increase in
the assets and income of the System as a result of its operation. Thus,
as of June 30, 1958, its assets amounted to P17,234,869.61, while its
total income, P12,215,269.36. As of June 30, 1959, its assets amounted
to P49,407,122.57, while its income, P36,340,862.11; as of June 30,
1960, its assets, P87,907,181.82, and its income, P44,565,312.06; as of
June 30, 1961, its assets, P138,170,450.80, and its income,
P58,779,083.92; and as of June 30, 1962, its assets amounted to
P194,424,319.38 and its total income, P69,316,986.71.
There is, therefore, nothing in the evidence before us that may in
any way sway us from our conclusion that the SSC or SSS is a
government-owned or controlled corporation performing basically
proprietary functions, and as such it comes under the operation of the
Magna Carta of Labor.
Wherefore, the motion is denied.
Bengzon, C. J., Labrador, Concepción, Barrera, Paredes, Dizon, Regala and Makalintal, JJ., concur.
Reyes, J. B. L., J. In the result.