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Phil. Blooming V SSS Digest

The Philippine Blooming Mills Co. employed 6 Japanese technicians temporarily from April 1957 to October 1958 and paid social security premiums for them. The company requested a refund of the premiums after the technicians departed. The Social Security System denied the refund, citing an amended rule requiring 2 years of membership for a refund. While the amendment was approved in January 1958, it was only published in November 1958. The court upheld the denial, finding that membership in the social security system results from legal imposition rather than contract, and the amended rules took effect upon presidential approval in January 1958, prior to the technicians' departure.

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296 views3 pages

Phil. Blooming V SSS Digest

The Philippine Blooming Mills Co. employed 6 Japanese technicians temporarily from April 1957 to October 1958 and paid social security premiums for them. The company requested a refund of the premiums after the technicians departed. The Social Security System denied the refund, citing an amended rule requiring 2 years of membership for a refund. While the amendment was approved in January 1958, it was only published in November 1958. The court upheld the denial, finding that membership in the social security system results from legal imposition rather than contract, and the amended rules took effect upon presidential approval in January 1958, prior to the technicians' departure.

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PRELIMINARY CONSIDERATIONS

1. Constitutionality
a. SSS Law
i.

Philippine Blooming Mills Co., Inc., et.al., v.


Social Security System, G.R. No. L-21223,
31 August 1966.

Facts:
1. The petitioner, Philippine Blooming Mills Co., Inc, is the
employer. It has been employing Japanese technicians
under a pre-arranged contract of employment where the
minimum period is 6 months and the maximum is 24
months.
2. PBMCI employed 6 Japanese technicians from April 28,
1957 to Oct. 26, 1958 (1 yr and 6 mo).
3. PBMCI then contacted and made an inquiry with SSS
regarding the inclusion of alien employees in the
compulsory coverage in the System.
4. The First Deputy Administrator of SSS answered that
under Rule I, Sec. 3[d], Rules and Regulations: 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.
5. From Sept. 1957 until the departure of the Japanese
technicians on Oct. 26 1958, the premiums contributed in
total amounted to P2,520.00

6. Then on Oct. 7 1958, the Employer filed a claim with SSS


for the refund of the Premiums paid on the ground of the
termination of the 6 technicians. However, this was
denied.
7. 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.
8. This claim was disputed 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.
9. Denied by the Commission after the hearing, saying that
said rule (regarding the rebate) 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.
10. PBMCI contends that the amendment of 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 the Japanese technicians became
members in September, 1957, and paid the corresponding

premiums to the System, it 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.
11. This contention cannot be sustained because
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. (Thus,
the case was appealed)
Issue: Whether in implementing the SSS law and denying
PBMCI's claim for refund of their premium contributions, due
process was observed.
Whether or not appellants are bound by the amended Rules
requiring membership for two years before refund of the
premium contributions may be allowed
Held: Yes.
The Rules and Regulations of the SSS, having been promulgated
in implementation of a law, have the force and effect of a statute;
that the amendment, 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.
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
technicians' employment had already ceased. Thus, under Article
2 of the Civil Code, 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 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.
Doctrines:
Constitutional Law; Social Security System; Membership therein
is not the result of a contractual agreement but a legal
imposition.Membership in the Social Security System 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 security to
the working men. Membership in the Social Security System 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.
Effectivity of laws; Amended rules take effect upon approval by
the President.Under Article 2 of the New Civil Code, 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. When the original Rules and
Regulations of the Social Security System specifically provide that
any amendment thereto subsequently adopted by the
Commission, shall take effect on the date of its approval by the
President, 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.

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