G.R. No.

173582             January 28, 2008 Petitioner’s declaration was confirmed when Gina herself filed a claim
for the same death benefits on 13 July 2001 in which she also declared
YOLANDA SIGNEY, petitioner, that both she and petitioner were common-law wives of the deceased
vs. and that Editha Espinosa (Editha) was the legal wife.
SOCIAL SECURITY SYSTEM, EDITHA ESPINOSA-CASTILLO, and
GINA SERVANO, representative of GINALYN and RODELYN In addition, in October 2001, Editha also filed an application for death
SIGNEY, respondents. benefits with the SSS stating that she was the legal wife of the
deceased.7
DECISION
The SSS, through a letter dated 4 December 2001,8 denied the death
TINGA, J.: benefit claim of petitioner. However, it recognized Ginalyn and
Rodelyn, the minor children of the deceased with Gina, as the primary
We are called to determine who is entitled to the social security beneficiaries under the SSS Law. The SSS also found that the 20
benefits of a Social Security System (SSS) member who was survived March 1992 marriage between petitioner and the deceased was null
not only by his legal wife, but also by two common-law wives with and void because of a prior subsisting marriage contracted on 29
whom he had six children. October 1967 between the deceased and Editha, as confirmed with the
Local Civil Registry of Cebu City.
This Petition for Review on Certiorari1 under Rule 45 of the 1997 Rules
of Civil Procedure assails the 31 March 2004 Decision2 of the Court of Thereafter, petitioner filed a petition9 with the SSC in which she
Appeals affirming the resolution of the Social Security Commission attached a waiver of rights10 executed by Editha whereby the latter
(SSC),3 as well as the 23 July 2004 Resolution4 of the same court waived "any/all claims from National Trucking Forwarding Corporation
denying petitioner’s motion for reconsideration. (NTFC) under the supervision of National Development Corporation
(NDC), Social Security System (SSS) and other (i)nsurance (b)enefits
due to the deceased Rodolfo Signey Sr., who died intestate on May 21,
The facts as culled from the records are as follows:
2001 at Manila Doctors," and further declared that "I am legally married
to Mr. Aquilino Castillo and not to Mr. Rodolfo P. Signey Sr."11
Rodolfo Signey, Sr., a member of the SSS, died on 21 May 2001. In
his member’s records, he had designated Yolanda Signey (petitioner)
In a Resolution12 dated 29 January 2003, the SSC affirmed the decision
as primary beneficiary and his four children with her as secondary
of the SSS. The SSC gave more weight to the SSS field investigation
beneficiaries. On 6 July 2001, petitioner filed a claim for death benefits
and the confirmed certification of marriage showing that the deceased
with the public respondent SSS.5 She revealed in her SSS claim that
was married to Editha on 29 October 1967, than to the aforestated
the deceased had a common-law wife, Gina Servano (Gina), with
declarations of Editha in her waiver of rights. It found that petitioner
whom he had two minor children namey, Ginalyn Servano (Ginalyn),
only relied on the waiver of Editha, as she failed to present any
born on 13 April 1996, and Rodelyn Signey (Rodelyn), born on 20 April
evidence to invalidate or otherwise controvert the confirmed marriage
2000.6
certificate. The SSC also found, based on the SSS field investigation
report dated 6 November 2001 that even if Editha was the legal wife,
she was not qualified to the death benefits since she herself admitted Registry No. 2083 on 21 November 1967. The SSS field investigation
that she was not dependent on her deceased husband for support reports verified the authenticity of the said certification.17
inasmuch as she was cohabiting with a certain Aquilino Castillo.13
The SSC did not give credence to the waiver executed by Editha,
Considering that petitioner, Editha, and Gina were not entitled to the which manifested her lack of interest in the outcome of the case,
death benefits, the SSC applied Section 8(e) and (k) of Republic Act considering that she was not entitled to the benefit anyway because of
(RA) No. 8282, the SSS Law which was in force at the time of the her admitted cohabitation with Aquilino Castillo. Moreover, the SSC
member’s death on 21 May 2001, and held that the dependent held that considering that one of the requisites of a valid waiver is the
legitimate and illegitimate minor children of the deceased member existence of an actual right which could be renounced, petitioner in
were also considered primary beneficiaries. The records disclosed that effect recognized that Editha had a right over the benefits of the
the deceased had one legitimate child, Ma. Evelyn Signey, who deceased thereby enabling her to renounce said right in favor of
predeceased him, and several illegitimate children with petitioner and petitioner and her children. The declaration by Editha that she was not
with Gina. Based on their respective certificates of live birth, the married to the deceased is not only contrary to the records of the Local
deceased SSS member’s four illegitimate children with petitioner could Civil Registrar of Cebu City which state that they were married on 29
no longer be considered dependents at the time of his death because October 1967 but also renders nugatory the waiver of right itself, for if
all of them were over 21 years old when he died on 21 May 2001, the she was not married to the deceased then she would have no rights
youngest having been born on 31 March 1978. On the other hand, the that may be waived.
deceased SSS member’s illegitimate children with Gina were qualified
to be his primary beneficiaries for they were still minors at the time of Petitioner had argued that the illegitimate children of the deceased with
his death, Ginalyn having been born on 13 April 1996, and Rodelyn on Gina failed to show proof that they were indeed dependent on the
20 April 2000.14 deceased for support during his lifetime. The SSC observed that
Section 8(e) of the SSS Law, as amended, provides among others that
The SSC denied the motion for reconsideration filed by petitioner in an dependents include the legitimate, legitimated or legally adopted, and
Order15 dated 9 April 2003. This order further elaborated on the illegitimate child who is unmarried, not gainfully employed, and has not
reasons for the denial of petitioner’s claims. It held that the mere reached 21 years of age. The provision vested the right of the benefit
designation of petitioner and her children as beneficiaries by the to his illegitimate minor children, Ginalyn and Rodelyn, irrespective of
deceased member was not the controlling factor in the determination of any proof that they had been dependent on the support of the
beneficiaries. Sections 13, 8(e) and 8(k) of the SSS Law, as amended, deceased.18
provide that dependent legal spouse entitled by law to receive support
from the member and dependent legitimate, legitimated or legally Petitioner appealed the judgment of the SSC to the Court of Appeals
adopted, and illegitimate children of the member shall be the primary by filing a Petition for Review19 under Rule 43 of the 1997 Rules of Civil
beneficiaries of the latter.16 Based on the certification dated 25 July Procedure. The appellate court affirmed the decision of the SSC in its
2001 issued by the Office of the Local Civil Registrar of Cebu City, the 31 March 2004 Decision. Resolving the determinative question of who
marriage of the deceased and Editha on 29 October 1967 at the between petitioner and the illegitimate children of the deceased are the
Metropolitan Cathedral, Cebu City was duly registered under LCR primary beneficiaries lawfully entitled to the social security benefits
accruing by virtue of the latter’s death, it held that based on Section
8(e) of R. A. No. 8282, a surviving spouse claiming death benefits as a We deemed it best not to disturb the findings of fact of the SSS which
dependent must be the legal spouse. Petitioner’s presentation of a are supported by substantial evidence22 and affirmed by the SSC and
marriage certificate attesting to her marriage to the deceased was the Court of Appeals. Moreover, petitioner ought to be reminded of the
futile, according to the appellate court, as said marriage is null and void basic rule that this Court is not a trier of facts.23
in view of the previous marriage of the deceased to Editha as certified
by the Local Civil Registrar of Cebu City. It is a well-known rule that in proceedings before administrative bodies,
technical rules of procedure and evidence are not binding.24 The
The appellate court also held that the law is clear that for a child to be important consideration is that both parties were afforded an
qualified as dependent, he must be unmarried, not gainfully employed opportunity to be heard and they availed themselves of it to present
and must not be 21 years of age, or if over 21 years of age, he is their respective positions on the matter in dispute.25 It must likewise be
congenitally or while still a minor has been permanently incapacitated noted that under Section 2, Rule 126 of the SSC Revised Rules of
and incapable of self-support, physically or mentally. And in this case, Procedure, the rules of evidence prevailing in the courts of law shall
only the illegitimate children of the deceased with Gina namely, not be controlling. In the case at bar, the existence of a prior subsisting
Ginalyn and Rodelyn, are the qualified beneficiaries as they were still marriage between the deceased and Editha is supported by substantial
minors at the time of the death of their father. Considering petitioner is evidence. Petitioner, who has fully availed of her right to be heard, only
disqualified to be a beneficiary and the absence of any legitimate relied on the waiver of Editha and failed to present any evidence to
children of the deceased, it follows that the dependent illegitimate invalidate or otherwise controvert the confirmed marriage certificate
minor children of the deceased should be entitled to the death benefits registered under LCR Registry No. 2083 on 21 November 1967. She
as primary beneficiaries, the Court of Appeals concluded.20 did not even try to allege and prove any infirmity in the marriage
between the deceased and Editha.
The Court of Appeals denied the motion for reconsideration of
petitioner in a Resolution21 dated 23 July 2004. It found that there was As to the issue of who has the better right over the SSS death benefits,
no new matter of substance which would warrant a modification and/or Section 8(e) and (k) of R. A. No. 828227 is very clear. Hence, we need
reversal of the 31 March 2004 Decision. only apply the law. Under the principles of statutory construction, if a
statute is clear, plain and free from ambiguity, it must be given its literal
Hence, this petition for review on certiorari. meaning and applied without attempted interpretation. This plain
meaning rule or verba legis, derived from the maxim index animi
Petitioner raises issues similar to the ones which have been sermo est (speech is the index of intention), rests on the valid
adequately resolved by the SSC and the appellate court. The first issue presumption that the words employed by the legislature in a statute
is whether petitioner’s marriage with the deceased is valid. The second correctly express its intent by the use of such words as are found in the
issue is whether petitioner has a superior legal right over the SSS statute. Verba legis non est recedendum, or, from the words of a
benefits as against the illegitimate minor children of the deceased. statute there should be no departure.28

There is no merit in the petition. Section 8(e) and (k) of R.A. No. 8282 provides:
SEC. 8. Terms Defined.—For the purposes of this Act, the foregoing, any other person designated by the member as
following terms shall, unless the context indicates otherwise, his/her secondary beneficiary.
have the following meanings:
SEC. 13. Death Benefits. — Upon the death of a member who
xxx has paid at least thirty-six (36) monthly contributions prior to
the semester of death, his primary beneficiaries shall be
(e) Dependents — The dependent shall be the following: entitled to the monthly pension: Provided, That if he has no
primary beneficiaries, his secondary beneficiaries shall be
(1) The legal spouse entitled by law to receive support from entitled to a lump sum benefit equivalent to thirty-six (36) times
the member; the monthly pension. If he has not paid the required thirty-six
(36) monthly contributions, his primary or secondary
beneficiaries shall be entitled to a lump sum benefit equivalent
2) The legitimate, legitimated, or legally adopted,
to the monthly pension times the number of monthly
and illegitimate child who is unmarried, not gainfully
contributions paid to the SSS or twelve (12) times the monthly
employed and has not reached twenty-one years (21) of
pension, whichever is higher. (Emphasis supplied).
age, or if over twenty-one (21) years of age, he is
congenitally or while still a minor has been permanently
incapacitated and incapable of self-support, physically or Whoever claims entitlement to the benefits provided by law should
mentally; and establish his or her right thereto by substantial evidence. Since
petitioner is disqualified to be a beneficiary and because the deceased
has no legitimate child, it follows that the dependent illegitimate minor
3) The parent who is receiving regular support from the
children of the deceased shall be entitled to the death benefits as
member.
primary beneficiaries. The SSS Law is clear that for a minor child to
qualify as a "dependent,29" the only requirements are that he/she must
xxx be below 21 years of age, not married nor gainfully employed.30

(k) Beneficiaries — The dependent spouse until he or she In this case, the minor illegitimate children Ginalyn and Rodelyn were
remarries, the dependent legitimate, legitimated or legally born on 13 April 1996 and 20 April 2000, respectively. Had the
adopted, and illegitimate children, who shall be the primary legitimate child of the deceased and Editha survived and qualified as a
beneficiaries of the member: Provided, That the dependent dependent under the SSS Law, Ginalyn and Rodelyn would have been
illegitimate children shall be entitled to fifty percent (50%) of the entitled to a share equivalent to only 50% of the share of the said
share of the legitimate, legitimated or legally adopted legitimate child. Since the legitimate child of the deceased
children: Provided, further, That in the absence of the predeceased him, Ginalyn and Rodelyn, as the only qualified primary
dependent legitimate, legitimated or legally adopted children of beneficiaries of the deceased, are entitled to 100% of the benefits.
the member, his/her dependent illegitimate children shall be
entitled to one hundred percent (100%) of the benefits. In their
WHEREFORE, the petition is DENIED. The Decision of the Court of
absence, the dependent parents who shall be the secondary
Appeals is AFFIRMED. Cost against petitioner.
beneficiaries of the member. In the absence of all of the
 SO ORDERED. CERTIFICATION

DANTE O. TINGA Pursuant to Section 13, Article VIII of the Constitution, and the Division
Associate Justice Chairperson’s Attestation, it is hereby certified that the conclusions in
the above Decision were reached in consultation before the case was
assigned to the writer of the opinion of the Court’s Division.

REYNATO S. PUNO
WE CONCUR: Chief Justice

LEONARDO A. QUISUMBING
Associate Justice
Chairperson
Footnotes
ANTONIO T. CARPIO CONCHITA CARPIO MORALES
Associate Justice Associate Justice 2
 Id. at 101-110. Penned by Associate Justice Remedios
Salazar-Fernando and concurred in by Associate Justices
PRESBITERO J. VELASCO, JR. Edgardo Sundiam and Eubulo Verzola (Associate Justice
Associate Justice Danilo Pine replaced the latter, who was on leave, in
concurring in the resolution)

22
 Substantial evidence is more than a mere scintilla. It means
ATTESTATION such relevant evidence as a reasonable mind might accept as
adequate to support a conclusion. See Ang Tibay v. Court of
I attest that the conclusions in the above Decision had been reached in Industrial Relations, 69 Phil. 635, 642-643 (1940); Gelmart
consultation before the case was assigned to the writer of the opinion Industries (Phil.), Inc. v. Leogardo, Jr., No. L-70544, 5
of the Court’s Division. November 1987, 155 SCRA 403, 409-410.

LEONARDO A. QUISUMBING  The Union Insurance Society of Canton v. Court of Appeals,

23

Associate Justice et.al., G.R. No. 100319, 8 August 1996, 260 SCRA 431, 440.
Chairperson, Second Division See also Go v. Court of Appeals, G.R. No. 104609, 30 June
1993, 224 SCRA 145, 147; Social Security System v. Aguas, et
al., G.R. No. 165546, 27 February 2006, 483 sCRA 383.
  Robusta AgroMarine Products, Inc. v. Gorombaleom, G.R.
24
 If the child is above 21 years of age, it must be proven that
30

No. 80500, 5 July 1989, 175 SCRA 93, 98 (1989); Adamson & he/she is congenitally or while still a minor has been
Adamson, Inc. v. Amores, 152 SCRA 237, 250-251 (1987). permanently incapacitated and incapable of self-support,
physically or mentally. See Sec. 8 (e), R.A. No. 8282.
 Esquig v. Civil Service Commission, G.R. No. 92490, 30 July
25

1990, 188 SCRA 166, 169. G.R. No. L-15045             January 20, 1961

26
 SEC. 2. Technical Rules not Binding.—These rules shall be IN RE: PETITION FOR EXEMPTION FROM COVERAGE BY THE
liberally construed to carry out the objectives of the Social SOCIAL SECURITY SYSTEM. ROMAN CATHOLIC ARCHBISHOP
Security Law of 1997 and to assist the parties in obtaining OF MANILA, petitioner-appellant,
expeditious and inexpensive settlement or resolution of any vs.
dispute arising under the Social Security Law. SOCIAL SECURITY COMMISSION, respondent-appellee.

In any proceeding before the Commission or any of the Feria, Manglapus and Associates for petitioner-appellant.
Commissioners or Hearing Officers, which shall be non-litigious Legal Staff, Social Security System and Solicitor General for
in nature, the rules of evidence prevailing in the courts of law or respondent-appellee.
equity shall not be controlling and it is the spirit and intention of
these rules that the Commission and the Commissioners or GUTIERREZ DAVID, J.:
Hearing Officers shall use every and all reasonable means to
ascertain the facts in each case speedily and objectively and On September 1, 1958, the Roman Catholic Archbishop of Manila, thru
without regard to technicalities of law or procedure, all in the counsel, filed with the Social Security Commission a request that
interest of due process. (Emphasis supplied). "Catholic Charities, and all religious and charitable institutions and/or
organizations, which are directly or indirectly, wholly or partially,
 An act further strengthening the social security system therby
27
operated by the Roman Catholic Archbishop of Manila," be exempted
amending for this purpose Republic Act No. 1161, as amended from compulsory coverage of Republic Act No. 1161, as amended,
otherwise known as the Social Security Law. otherwise known as the Social Security Law of 1954. The request was
based on the claim that the said Act is a labor law and does not cover
 Globe-Mackay Cable and Radio Corporation v. NLRC, G.R.
28
religious and charitable institutions but is limited to businesses and
No. 82511, 3 March 1992, 206 SCRA 701, 711. See Cecilleville activities organized for profit. Acting upon the recommendation of its
Realty and Service Corporation v. Court of Appeals, 344 Phil. Legal Staff, the Social Security Commission in its Resolution No. 572,
375, 381 (1997); Republic v. Court of Appeals, 359 Phil. 530, series of 1958, denied the request. The Roman Catholic Archbishop of
602 (1998); Victoria v. Commission on Election, G.R. No. Manila, reiterating its arguments and raising constitutional objections,
109005, 10 January 1994, 229 SCRA 269, 273; Fianza v. requested for reconsideration of the resolution. The request, however,
PLEB of the City of Baguio, 312 Phil. 1108, 1123-1124 (1995). was denied by the Commission in its Resolution No. 767, series of
1958; hence, this appeal taken in pursuance of section 5(c) of Republic
Act No. 1161, as amended.
Section 9 of the Social Security Law, as amended, provides that phrase ,activity of any kind" in the definition is preceded by the words
coverage "in the System shall be compulsory upon all members "any trade, business, industry, undertaking." The contention cannot be
between the age of sixteen and sixty rears inclusive, if they have been sustained. The rule ejusdem generis applies only where there is
for at least six months a the service of an employer who is a member uncertainty. It is not controlling where the plain purpose and intent of
of the System, Provided, that the Commission may not compel any the Legislature would thereby be hindered and defeated. (Grosjean vs.
employer to become member of the System unless he shall have been American Paints Works [La], 160 So. 449). In the case at bar, the
in operation for at least two years and has at the time of admission, if definition of the term "employer" is, we think, sufficiently
admitted for membership during the first year of the System's operation comprehensive as to include religious and charitable institutions or
at least fifty employees, and if admitted for membership the following entities not organized for profit, like herein appellant, within its
year of operation and thereafter, at least six employees x x x." The meaning. This is made more evident by the fact that it contains an
term employer" as used in the law is defined as any person, natural or exception in which said institutions or entities are not included. And,
juridical, domestic or foreign, who carries in the Philippines any trade, certainly, had the Legislature really intended to limit the operation of
business, industry, undertaking, or activity of any kind and uses the the law to entities organized for profit or gain, it would not have defined
services of another person who is under his orders as regards the an "employer" in such a way as to include the Government and yet
employment, except the Government and any of its political make an express exception of it.
subdivisions, branches or instrumentalities, including corporations
owned or controlled by the Government" (par. [c], see. 8), while an It is significant to note that when Republic Act No. 1161 was enacted,
"employee" refers to "any person who performs services for an services performed in the employ of institutions organized for religious
'employer' in which either or both mental and physical efforts are used or charitable purposes were by express provisions of said Act excluded
and who receives compensation for such services" (par. [d], see. 8). from coverage thereof (sec. 8, par. [j] subpars. 7 and 8). That portion of
"Employment", according to paragraph [i] of said section 8, covers any the law, however, has been deleted by express provision of Republic
service performed by an employer except those expressly enumerated Act No. 1792, which took effect in 1957. This is clear indication that the
thereunder, like employment under the Government, or any of its Legislature intended to include charitable and religious institutions
political subdivisions, branches or instrumentalities including within the scope of the law.
corporations owned and controlled by the Government, domestic
service in a private home, employment purely casual, etc. In support of its contention that the Social Security Law was intended
to cover only employment for profit or gain, appellant also cites the
From the above legal provisions, it is apparent that the coverage of the discussions of the Senate, portions of which were quoted in its brief.
Social Security Law is predicated on the existence of an employer- There is, however, nothing whatsoever in those discussions touching
employee relationship of more or less permanent nature and extends upon the question of whether the law should be limited to organizations
to employment of all kinds except those expressly excluded. for profit or gain. Of course, the said discussions dwelt at length upon
the need of a law to meet the problems of industrializing society and
Appellant contends that the term "employer" as defined in the law upon the plight of an employer who fails to make a profit. But this is
should — following the principle of ejusdem generis — be limited to readily explained by the fact that the majority of those to be affected by
those who carry on "undertakings or activities which have the element the operation of the law are corporations and industries which are
of profit or gain, or which are pursued for profit or gain," because the established primarily for profit or gain.
Appellant further argues that the Social Security Law is a labor law Neither may it be validly argued that the enforcement of the Social
and, consequently, following the rule laid down in the case of Boy Security Law impairs appellant's right to disseminate religious
Scouts of the Philippines vs. Araos (G.R. No. L-10091, January 29, information. All that is required of appellant is to make monthly
1958) and other cases1, applies only to industry and occupation for contributions to the System for covered employees in its employ.
purposes of profit and gain. The cases cited, however, are not in point, These contributions, contrary to appellant's contention, are not in the
for the reason that the law therein involved expressly limits its nature of taxes on employment." Together with the contributions
application either to commercial, industrial, or agricultural imposed upon the employees and the Government, they are intended
establishments, or enterprises. . for the protection of said employees against the hazards of disability,
sickness, old age and death in line with the constitutional mandate to
Upon the other hand, the Social Security Law was enacted pursuant to promote social justice to insure the well-being and economic security of
the "policy of the Republic of the Philippines to develop, establish all the people.
gradually and perfect a social security system which shall be suitable
to the needs of the people throughout the Philippines and shall provide IN VIEW OF THE FOREGOING, Resolutions Nos. 572 kind 767, series
protection to employees against the hazards of disability, sickness, old of 1958, of the Social Security Commission are hereby affirmed. So
age and death." (See. 2, Republic Act No. 1161, as amended.) Such ordered with costs against appellant.
enactment is a legitimate exercise of the police power. It affords
protection to labor, especially to working women and minors, and is in [G.R. NO. 160265 : July 13, 2009]
full accord with the constitutional provisions on the "promotion of social
justice to insure the well-being and economic security of all the NELY T. CO, Petitioner, v. PEOPLE OF THE PHILIPPINES,
people." Being in fact a social legislation, compatible with the policy of
SOCIAL SECURITY SYSTEM, OFFICE OF THE SOLICITOR
the Church to ameliorate living conditions of the working class,
GENERAL and SPOUSES JOSE and MERCEDES
appellant cannot arbitrarily delimit the extent of its provisions to
relations between capital and labor in industry and agriculture. LIM.* Respondents.

There is no merit in the claim that the inclusion of religious DECISION

organizations under the coverage of the Social Security Law violates
the constitutional prohibition against the application of public funds for CORONA, J.:
the use, benefit or support of any priest who might be employed by
appellant. The funds contributed to the System created by the law are This is a Petition for Review on Certiorari 1 of the May 15,
not public funds, but funds belonging to the members which are merely 2003 and October 6, 2003 resolutions2 of the Court of Appeals
held in trust by the Government. At any rate, assuming that said funds (CA) in CA-G.R. SP No. 69510.
are impressed with the character of public funds, their payment as
retirement death or disability benefits would not constitute a violation of On January 12, 2001, an Information charging petitioner Nely
the cited provisions of the Constitution, since such payment shall be T. Co with violation of Section 22(d) in relation to Section
made to the priest not because he is a priest but because he is an
28(e) of RA3 1161, as amended by RA 8282 (the Social
employee.
Security Law of 1997)4 was filed in the Regional Trial Court
(RTC), Quezon City, Branch 78, on the basis of the complaint employer-employee relationship between the parties. This
of respondent spouses Jose and Mercedes Lim, who claimed NLRC resolution attained finality on December 20, 2001.11
to be petitioner's employees.5 Petitioner was accused of failing
to remit the compulsory contributions of respondent spouses Notwithstanding the NLRC ruling on the lack of employer-
to respondent Social Security System (SSS).6 employee relationship between petitioner and respondent
spouses, Judge Percival Mandap Lopez of the RTC denied
On July 3, 2001, petitioner filed a motion to quash the petitioner's motion to quash (the Information charging
Information, arguing that the facts alleged in the Information violation of the SSS law) in a resolution dated November 12,
did not constitute an offense because respondent spouses 2001.12 On March 8, 2002, petitioner filed a petition
were not her employees. In support of her motion, petitioner for certiorari and prohibition against Judge Lopez in the CA
cited the ruling of the National Labor Relations Commission seeking to set aside the November 12, 2001 RTC resolution
(NLRC) on the issue of whether petitioner and respondent denying her motion to quash.
spouses had an employer-employee relationship with her or
her company. In a resolution dated January 13, 2003, the CA required
petitioner to implead the People of the Philippines, SSS, Office
Prior to this, on March 27, 2000 (before the filing of the of the Solicitor General and respondent spouses.13 For
Information), respondent spouses had filed a labor case for petitioner's failure to comply with this order, the CA dismissed
illegal dismissal and nonpayment of overtime pay, holiday the petition on May 15, 2003 and denied reconsideration on
pay, holiday premium pay, service incentive leave and 13th October 6, 2003. According to the CA, petitioner was bound
month pay against Ever-Ready Phils., Inc.7 and its officers by the negligence of her former counsel.
Joseph Thomas Co, William Co, Wilson Co and petitioner.8
Hence, this petition.
On September 29, 2000, labor arbiter (LA) Ernesto S. Dinopol
rendered a decision dismissing the complaint for lack of merit. For our resolution are the following issues: (1) whether
He held that respondent spouses had voluntarily left the petitioner's motion for reconsideration of the CA's dismissal of
company as shown by the deeds of release and quitclaim they the petition was correctly denied and (2) whether petitioner's
executed. They were also not entitled to their monetary motion to quash should have been granted by the RTC.
claims under Article 82 of the Labor Code because they were
field personnel of the company.9 On the first issue, petitioner argues that the CA should have
granted her motion for reconsideration of the May 15, 2003
Aggrieved, both parties appealed to the NLRC. In a resolution resolution. She asserts that under Rule 37, Section 1 (a) of
dated May 31, 2001, it affirmed the decision of the LA and the Rules of Court, the abandonment of her case by her
ruled that the respondent spouses, as sales representatives, former counsel14 amounted to extrinsic fraud which was a
were independent contractors.10 Therefore, there was no meritorious ground.
Petitioner is incorrect. Extrinsic fraud is a valid ground in a person being deprived unjustly of her liberty due to the
motion for new trial, not a motion for reconsideration: procedural lapse of counsel was a strong and compelling
reason to warrant suspension of the Rules of Court.16 For the
SECTION 1. Grounds of and period for filing motion for new rule-making power of this Court is coupled with the duty to
trial or reconsideration. ― Within the period for taking an protect and promote constitutional and substantive
appeal, the aggrieved party may move the trial court to set rights,17 not to defeat them. Thus, the rules of procedure
aside the judgment or final order and grant a new trial for should be viewed as mere tools designed to facilitate the
one or more of the following causes materially affecting the attainment of justice. Their strict and rigid application,
substantial rights of said party: resulting in technicalities that tend to frustrate rather than
promote substantial justice, must always be avoided.18
(a) Fraud, accident, mistake or excusable negligence which
ordinary prudence could not have guarded against and by Petitioner maintains that the factual finding in the illegal
reason of which such aggrieved party has probably been dismissal case that respondent spouses were not her
impaired in his rights; or employees is binding in this case. There being no employer-
employee relationship, respondent spouses were not entitled
(b) Newly discovered evidence, which he could not, with to coverage under RA 1161, as amended, and petitioner
reasonable diligence, have discovered and produced at the should not be penalized under said law. We agree.
trial, and which if presented would probably alter the result.
Well-settled is the rule that the mandatory coverage of RA
Within the same period, the aggrieved party may also move 1161, as amended, is premised on the existence of an
for reconsideration upon the grounds that the damages employer-employee relationship.19 Applicable here is Smith
awarded are excessive, that the evidence is insufficient Bell & Co., Inc. v. Court of Appeals:20
to justify the decision or final order, or that the
decision or final order is contrary to law. (Emphasis Based on the records of the case at bar and those of G.R. No.
supplied)cralawlibrary
L-44620, it is clear that the resolution of this Court dated 26
January 1977, rendered in G.R. No. L-44620 [illegal dismissal
Petitioner asserted no other ground aside from extrinsic fraud. case], constitutes a bar to SSC Case No. 2453. We, therefore,
Therefore, her motion was properly denied and we do not see find merit in the petition at bar.
the need to discuss the merits of such ground.
xxxxxxxxx
Nevertheless, in the interest of justice and to prevent undue
delay in the disposition of this case, we tackle the next issue It is true that in SSC Case No. 2453, private respondents
raised by petitioner despite the CA's proper dismissal of her sought to enforce their alleged right to compulsory coverage
petition.15 This was a criminal case and the possibility of a by the SSS on the main allegation that they are employees of
petitioner company. On the other hand, in NLRC Case No. Although the instant case involves a criminal charge
ROVII-153, private respondents, in order to support their whereas Constantino involved an administrative charge, still
position that they were illegally dismissed by petitioner the findings in the latter case are binding herein because the
company from their work, maintained that there was an same set of facts are the subject of both cases. What is
employee-employer relationship existing between petitioner decisive is that the issues already litigated in a final and
and private respondents at the time of such dismissal. In executory judgment preclude - by the principle of bar by prior
other words, the issue common to both cases is whether judgment, an aspect of the doctrine of res judicata, and even
there existed an employee-employer relationship at the under the doctrine of "law of the case," - the re-litigation of
time of the occurrence of the acts complained of both in the same issue in another action. It is well established that
SSC Case No. 2453 and NLRC Case No. RO-VII-153. when a right or fact has been judicially tried and determined
by a court of competent jurisdiction, so long as it remains
It is well to note that the said issue was adjudged with unreversed, it should be conclusive upon the parties and
finality in G.R. No. L-44620, through this Court's resolutions those in privity with them. The dictum therein laid down
dated 26 January 1977 and 14 March 1977. The dismissal of became the law of the case and what was once irrevocably
the petition of the herein private respondents in G.R. No. L- established as the controlling legal rule or decision continues
44620, though contained in a minute resolution, was an to be binding between the same parties as long as the facts
adjudication on the merits of the case. on which the decision was predicated continue to be the facts
of the case before the court. Hence, the binding effect and
The present controversy, therefore, squarely falls under enforceability of that dictum can no longer be resurrected
the umbrage of res judicata, particularly, under the rule anew since such issue had already been resolved and finally
on "conclusiveness of judgment." Following this rule, as laid to rest, if not by the principle of res judicata, at least by
stated in Bienvenida Machoca Arcadio v. Carriaga, Jr., we hold conclusiveness of judgment.
that the judgment in G.R. No. L-44620 bars SSC Case No.
2453, as the relief sought in the latter case is inextricably It may be true that the basis of administrative liability differs
related to the ruling in G.R. No. L-44620 to the effect that from criminal liability as the purpose of administrative
private respondents, are not employees of proceedings on the one hand is mainly to protect the public
petitioner.21 (Emphasis supplied)ςηαñrοblεš νιr†υαl lαω lιbrαrÿ
service, based on the time-honored principle that a public
office is a public trust. On the other hand, the purpose of the
The only difference is that the instant case is a criminal case criminal prosecution is the punishment of crime. However, the
whereas the case in Smith Bell  was a civil case. However, the dismissal by the Court of the administrative case
doctrine of conclusiveness of judgment also applies in criminal against Constantino based on the same subject matter and
cases. As we declared in Constantino v. Sandiganbayan (First after examining the same crucial evidence operates to dismiss
Division):22 the criminal case because of the precise finding that the act
from which liability is anchored does not exist.
It is likewise clear from the decision of the Court The reasons for establishing the principle of "conclusiveness
in Constantino that the level of proof required in of judgment" are founded on sound public policy, and to grant
administrative cases which is substantial evidence was not this petition would have the effect of unsettling this well-
mustered therein. The same evidence is again before the settled doctrine. It is allowable to reason back from a
Court in connection with the appeal in the criminal case. judgment to the basis on which it stands, upon the obvious
Ineluctably, the same evidence cannot with greater reason principle that where a conclusion is indisputable, and could
satisfy the higher standard in criminal cases such as the have been drawn only from certain premises, the premises
present case which is evidence beyond reasonable doubt.23 are equally indisputable with the conclusion. When a fact
has been once determined in the course of a judicial
We are mindful that in Republic v. Asiapro Cooperative,24 we proceeding, and a final judgment has been rendered in
ruled that the question on the existence of an employer- accordance therewith, it cannot be again litigated
employee relationship for the purpose of determining the between the same parties without virtually impeaching
coverage of the SSS law falls within the jurisdiction of the the correctness of the former decision, which, from
Social Security Commission (SSC) which is primarily charged motives of public policy, the law does not permit to be
with the duty of settling disputes under RA 1161, as done.28
amended.25 In that case, the SSS filed a petition in the SSC
praying that Asiapro Cooperative (Asiapro) be directed to Res judicata has two concepts. The first is bar by prior
register as an employer, to report its owners-members as judgment under Rule 39, Section 47 (b), and the second is
covered employees under the compulsory coverage of SSS conclusiveness of judgment under Rule 39, Section 47 (c).
and to remit the necessary contributions in accordance with Both concepts are founded on the principle of estoppel, and
the law.26 Asiapro sought the dismissal of the petition alleging are based on the salutary public policy against unnecessary
that no employer-employee relationship existed between it multiplicity of suits. Like the splitting of causes of action, res
and its owners-members, thus SSC had no jurisdiction over it. judicata is in pursuance of such policy. Matters settled by a
We held that, based on Section 5 of RA 8282,27 SSC had Court's final judgment should not be litigated upon or
jurisdiction over the petition. invoked again. Relitigation of issues already settled
merely burdens the Courts and the taxpayers, creates
Republic v. Asiapro Cooperative,  however, is inapplicable here uneasiness and confusion, and wastes valuable time
as this case does not concern the issue of jurisdiction of the and energy that could be devoted to worthier
SSC. Furthermore, the question of the existence of an cases.29 (Emphasis supplied) cralawlibrary

employer-employee relationship was already disposed of with

finality, albeit in the context of an illegal dismissal case in the To sum up, the final and executory NLRC decision (to the
NLRC. There was no need for the RTC to make an effect that respondent spouses were not the employees of
independent finding because the doctrine of conclusiveness of petitioner) was binding on this criminal case for violation of
judgment had already set in. RA 1161, as amended. Accordingly, the RTC committed grave
abuse of discretion when it refused to grant petitioner's
 4
motion to quash the Information. Simply said, any conviction  Should be Section 22(a) and (b) in relation to Section 22(e):
for violation of the SSS law based on the erroneous premise
of the existence of an employer-employee relationship would Sec. 22. Remittance of Contributions. - (a) The contribution
be a transgression of petitioner's constitutional rights. imposed in the preceding section shall be remitted to the SSS
within the first ten (10) days of each calendar month
WHEREFORE, the petition is hereby GRANTED. Criminal following the month for which they are applicable or within
Case No. Q-01-97619 is ORDERED dismissed. such time as the Commission may prescribe. Every employer
required to deduct and to remit such contributions shall be
No costs. liable for their payment and if any contribution is not paid to
the SSS as herein prescribed, he shall pay besides the
SO ORDERED. contribution a penalty thereon of three percent (3%) per
month from the date the contribution falls due until paid. If
deemed expedient and advisable by the Commission, the
collection and remittance of contributions shall be made
quarterly or semi-annually in advance, the contributions
payable by the employees to be advanced by their respective
Endnotes:
employers: Provided, That upon separation of an employee,
any contribution so paid in advance but not due shall be
credited or refunded to his employer.
*
 The Court of Appeals and Regional Trial Court, Quezon City, (b) The contributions payable under this Act in cases where
Branch 78 were originally impleaded as public respondents. an employer refuses or neglects to pay the same shall be
However, they were excluded pursuant to Rule 45, Section 4 collected by the SSS in the same manner as taxes are made
of the Rules of Court. collectible under the National Internal Revenue Code, as
1
amended. Failure or refusal of the employer to pay or remit
 Under Rule 45 of the Rules of Court. Rollo, p. 3. the contributions herein prescribed shall not prejudice the
right of the covered employee to the benefits of the coverage.
2
 Penned by Associate Justice Eloy R. Bello, Jr. (retired) and
concurred in by then Presiding Justice Cancio C. Garcia (now xxxxxxxxx
retired Supreme Court Justice) and Associate Justice Mariano
C. del Castillo of the First Division of the Court of Appeals. Id., Sec. 28. Penal Clause. - xxx
pp. 23-24.

3
(e) Whoever fails or refuses to comply with the provisions of
 Republic Act. this Act or with the rules and regulations promulgated by the
Commission, shall be punished by a fine of not less than Five have accrued from such date until said contributions is paid,
thousand pesos (P5,000) nor more than Twenty thousand despite demand made upon said accused to comply therewith.
pesos (P20,000), or imprisonment for not less than six (6)
years and one (1) day nor more than twelve (12) years or CONTRARY TO LAW. (Rollo, p. 80.)
both, at the discretion of the court: Provided, That where the
violation consists in failure or refusal to register employees or 6
 Id., p. 234.
himself, in case of the covered self-employed, or to deduct
contributions from the employees' compensation and remit 7
 Formerly Richie's Commercial/Ever-Ready Marketing.
the same to the SSS, the penalty shall be a fine of not less
than Five thousand pesos (P5,000) nor more than Twenty 8
 Docketed as NLRC-NCR-Case No. 00-03-01826-2000.
thousand pesos (P20,000) and imprisonment for not less than
six (6) years and one (1) day nor more than twelve (12) 9
 Rollo, pp. 63-64.
years.
10
5  Third Division. Penned by Commissioner Ireneo B. Bernardo
 Docketed as Criminal Case No. Q-01-97619. The information
and concurred in by Presiding Commissioner Lourdes C. Javier
read:
and Commissioner Tito F. Genilo. Id., pp. 66-70.
The undersigned accuses [petitioner] of Violation of Sec. 11
 Id., p. 72.
22(d), in relation to Section 28(e) of Republic Act No. 1161,
as amended, committed as follows: 12
 Id., pp. 54-55. Petitioner did not file a motion for
reconsideration of the November 12, 2001 resolution of the
That on or about and during the period from September 1997
RTC. She argued in her petition in the CA that the question
to March 2000 in Quezon City, Philippines, the above-named
raised was purely one of law. Id., p. 75.
accused, being then the owner of Ever Ready Marketing, with
address located at No. 37 Sibuyan St., this City, a 13
 Id., p. 130.
compulsorily covered employer under the Social Security Law,
as amended, did then and there [willfully] and unlawfully fail, 14
neglect and refuse and still fails, neglects and refuses to remit  Atty. Ateneones S. Bacale.
to the Social Security System (SSS) at East Avenue, Diliman,
15
this City, contributions for SSS Medicare and Employees  See Bunao v. Social Security System, G.R. No. 15906, 13
Compensation (EC) for its covered employees in the amount December 2005, 477 SCRA 564, 570-571.
of P173,393.00, Philippine Currency, and the 3% penalty
16
imposed thereon in the amount of P164,843.03 computed as  De Guzman v. People, G.R. No. 167492, 22 March 2007,
of April 28, 2000 as well as the additional 3% penalty that 518 SCRA 767, 772, citing Alonzo v. Villamor, et al., 16 Phil.
315 (1910).
17
 See Section 5(5), Article VIII, Constitution. Co., 122 Phil. 249 (1965) and National Housing Authority v.
Baello, G.R. No. 143230, 20 August 2004, 437 SCRA 86.
18
 De Guzman v. Sandiganbayan, G.R. No. 103276, 11 April
29
1996, 256 SCRA 171, 179.  Camara v. Court of Appeals, 369 Phil. 858, 865 (1999).

19
 Chua v. Court of Appeals, 483 Phil. 126, 136 (2004),
citing Security System v. Court of Appeals, G.R. No. 100388,
14 December 2000, 348 SCRA 1, 10 11. G.R. No. L-19124      November 18, 1967

20
 G.R. No. 59692, 11 October 1990, 190 SCRA 362. This INVESTMENT PLANNING CORPORATION OF THE
ruling was reiterated in Commander Realty, Inc. v. PHILIPPINES, petitioner-appellant,
Fernandez, G.R. No. 167945, 14 July 2006, 495 SCRA 146, vs.
157-164. SOCIAL SECURITY SYSTEM, respondent-appellee.

21
 Id., pp. 370-372, citation omitted. MAKALINTAL, J.:

22
 G.R. No. 140656, 13 September 2007, 533 SCRA 205. Petitioner is a domestic corporation engaged in business management
and the sale of securities. It has two classes of agents who sell its
23 investment plans: (1) salaried employees who keep definite hours and
 Id., pp. 228-230, citations omitted.
work under the control and supervision of the company; and (2)
24
registered representatives who work on commission basis.
 G.R. No. 172101, 23 November 2007, 538 SCRA 659.
On August 27, 1960 petitioner, through counsel, applied to respondent
25
 Id., p. 672. Social Security Commission for exemption of its so-called registered
representatives from the compulsory coverage of the Social Security
26
 Id., p. 664. Act. The application was denied in a letter signed by the Secretary to
the Commission on January 16, 1961. A motion to reconsider was filed
27
 Sec. 5. Settlement of Disputes. - (a) Any dispute arising and also denied, after hearing, by the Commission itself in its
under this Act with respect to coverage, benefits, resolution dated September 8, 1961. The matter was thereafter
contributions and penalties thereon or any other matter elevated to this Court for review.
related thereto, shall be cognizable by [SSC], xxxx
The issue submitted for decision here is whether petitioner's registered
28 representatives are employees within the meaning of the Social
 Rasdas v. Estenor, G.R. No. 157605, 13 December 2005,
Security Act (R.A. No. 1161 as amended). Section 8 (d) thereof defines
477 SCRA 538, 550, citing Kidpalos v. Baguio Gold Mining
the term "employee" — for purposes of the Act — as "any person who
performs services for an 'employer' in which either or both mental and performance of their services. The compensation they receive,
physical efforts are used and who receives compensation for such however, is not necessarily for those efforts but rather for the results
services, where there is, employer-employee relationship." (As thereof, that is, for actual sales that they make. This point is relevant in
amended by Sec.4, R.A. No. 2658). These representatives are in the determination of whether or not the third requisite is also present,
reality commission agents. The uncontradicted testimony of petitioner's namely, the existence of employer-employee relationship. Petitioner
lone witness, who was its assistant sales director, is that these agents points out that in effect such compensation is paid not by it but by the
are recruited and trained by him particularly for the job of selling investor, as shown by the basis on which the amount of the
"'Filipinos Mutual Fund" shares, made to undergo a test after such commission is fixed and the manner in which it is collected.
training and, if successful, are given license to practice by the
Securities and Exchange Commission. They then execute an Petitioner submits that its commission agents, engaged under the
agreement with petitioner with respect to the sale of FMF shares to the terms and conditions already enumerated, are not employees but
general public. Among the features of said agreement which independent contractors, as defined in Article 1713 of the Civil Code,
respondent Commission considered pertinent to the issue are: (a) an which provides:
agent is paid compensation for services in the form of commission; (b)
in the event of death or resignation he or his legal representative shall Art. 1713. By the contract for a piece of work the contractor
be paid the balance of the commission corresponding to him; (c) he is binds himself to execute a piece of work for the employer, in
subject to a set of rules and regulations governing the performance of consideration of a certain price or compensation. The
his duties under the agreement; (d) he is required to put up a contractor may either employ only his labor or skill, or also
performance bond; and (e) his services may be terminated for certain furnish the material.
causes. At the same time the Commission found from the evidence
and so stated in its resolution that the agents "are not required to
We are convinced from the facts that the work of petitioner's agents or
report (for work) at any time; they do not have to devote their time
registered representatives more nearly approximates that of an
exclusively to or work solely for petitioner; the time and the effort they
independent contractor than that of an employee. The latter is paid for
spend in their work depend entirely upon their own will and initiative;
the labor he performs, that is, for the acts of which such labor consists;
they are not required to account for their time nor submit a record of
the former is paid for the result thereof. This Court has recognized the
their activities; they shoulder their own selling expenses as well as
distinction in Chartered Bank, et al. vs. Constantino, 56 Phil. 717,
transportation; and they are paid their commission based on a certain
where it said:
percentage of their sales." The record also reveals that the commission
earned by an agent on his sales is directly deducted by him from the
amount he receives from the investor and turns over to the company On this point, the distinguished commentator Manresa in
the amount invested after such deduction is made. The majority of the referring to Article 1588 of the (Spanish) Civil Code has the
agents are regularly employed elsewhere — either in the government following to say. . . .
or in private enterprises.
The code does not begin by giving a general idea of the subject
Of the three requirements under Section 8 (d) of the Social Security matter, but by fixing its two distinguishing characteristics.
Act it is admitted that the first is present in respect of the agents whose
status is in question. They exert both mental and physical efforts in the
 But such an idea was not absolutely necessary because the . . . Garcia, a painting contractor, had a contract undertaken to
difference between the lease of work by contract or for a fixed paint a water tank belonging to the Company "in accordance
price and the lease of services of hired servants or laborers is with specifications and price stipulated," and with "the actual
sufficiently clear. In the latter, the direct object of the contract is supervision of the work (being) taken care of by" himself.
the lessor's labor; the acts in which such labor consists, Clearly, this made Garcia an independent contractor, for while
performed for the benefit of the lessee, are taken into account the company prescribed what should be done, the doing of it
immediately. In work done by contract or for a fixed price, the and the supervision thereof was left entirely to him, all of which
lessor's labor is indeed an important, a most important factor; meant that he was free to do the job according to his own
but it is not the direct object of the contract, nor is it method without being subject to the control of the company
immediately taken into account. The object which the parties except as to the result.
consider, which they bear in mind in order to determine the
cause of the contract, and upon which they really give their Cruz, et al. vs. The Manila Hotel Company, L-9110, April 30, 1957,
consent, is not the labor but its result, the complete and presented the issue of who were to be considered employees of the
finished work, the aggregate of the lessor's acts embodied in defendant firm for purposes of separation gratuity. LVN Pictures, Inc.
something material, which is the useful object of the vs. Phil. Musicians Guild, et al., L-12582, January 28, 1961, involved
contract. . . . (Manresa Commentarios al Codigo Civil, Vol. X, the status of certain musicians for purposes of determining the
ed., pp. 774-775.) appropriate bargaining representative of the employees. In both
instances the "control" test was followed. (See also Mansal vs. P.P.
Even if an agent of petitioner should devote all of his time and effort Gocheco Lumber Co., L-8017, April 30, 1955; and Viana vs. Allagadan,
trying to sell its investment plans would not necessarily be entitled to et al., L-8967, May 31, 1956.)
compensation therefor. His right to compensation depends upon and is
measured by the tangible results he produces. In the United States, the Federal Social Security Act of 1935 set forth
no definition of the term 'employee' other than that it 'includes an officer
The specific question of when there is "employer-employee of a corporation.' Under that Act the U.S. Supreme Court adopted for a
relationship" for purposes of the Social Security Act has not yet been time and in several cases the so-called 'economic-reality' test instead
settled in this jurisdiction by any decision of this Court. But in other of the 'control' test. (U.S. vs. Silk and Harrison, 91 Law Ed. 1757;
connections wherein the term is used the test that has been generally Bartels vs. Birmingham, Ibid, 1947, both decided in June 1947). In the
applied is the so-called control test, that is, whether the "employer" Bartels case the Court said:
controls or has reserved the right to control the "employee" not only as
to the result of the work to be done but also as to the means and In United States v. Silk, No. 312, 331 US 704, ante, 1957, 67
methods by which the same is to be accomplished. SCt 1463, supra, we held that the relationship of employer-
employee, which determines the liability for employment taxes
Thus in Philippine Manufacturing Company vs. Geronimo, et al., L- under the Social Security Act was not to be determined solely
6968, November 29, 1954, involving the Workmen's Compensation by the idea of control which an alleged employer may or could
Act, we read: exercise over the details of the service rendered to his
business by the worker or workers. Obviously control is
 characteristically associated with the employer-employee contractor or (2) any individual (except an officer of a
relationship, but in the application of social legislation corporation) who is not an employee under such
employees are those who as a matter of economic reality are common law rules.
dependent upon the business to which they render service. In
Silk, we pointed out that permanency of the relation, the skill While it is not necessary to explore the full effect of this
required, the investment in the facilities for work and enactment in the determination of the existence of employer-
opportunities for profit or less from the activities were also employee relationships arising in the future, we think it can
factors that should enter into judicial determination as to the fairly be said that the intent of Congress was to say that in
coverage of the Social Security Act. It is the total situation that determining in a given case whether under the Social Security
controls. The standards are as important in the entertainment Act such a relationship exists, the common-law elements of
field as we have just said, in Silk, that they were in that of such a relationship, as recognized and applied by the courts
distribution and transportation. (91 Law, Ed. 1947, 1953;) generally at the time of the passage of the Act, were the
standard to be used . . . .
However, the 'economic-reality' test was subsequently abandoned as
not reflective of the intention of Congress in the enactment of the The common-law principles expressly adopted by the United States
original Security Act of 1935. The change was accomplished by means Congress are summarized in Corpus Juris Secundum as follows:
of an amendatory Act passed in 1948, which was construed and
applied in later cases. In Benson vs. Social Security Board, 172 F. 2d. Under the common-law principles as to tests of the
682, the U.S. Supreme Court said: independent contractor relationship, discussed in Master and
Servant, and applicable in determining coverage under the
After the decision by the Supreme Court in the Silk case, the Social Security Act and related taxing provisions, the significant
Treasury Department revamped its Regulation, 12 Fed. Reg. factor in determining the relationship of the parties is the
7966, using the test set out in the Silk case for determining the presence or absence of a supervisory power to control the
existence of an employer-employee relationship. Apparently method and detail of performance of the service, and the
this was not the concept of such a relationship that Congress degree to which the principal may intervene to exercise such
had in mind in the passage of such remedial acts as the one control, the presence of such power of control being indicative
involved here because thereafter on June 14, 1948, Congress of an employment relationship and the absence of such power
enacted Public Law 642, 42 U.S C.A. Sec. 1301 (a) (6). being indicative of the relationship of independent contractor. In
Section 1101(a) (6) of the Social Security Act was amended to other words, the test of existence of the relationship of
read as follows: independent contractor, which relationship is not taxable under
the Social Security Act and related provisions, is whether the
The term "employee" includes an officer of a one who is claimed to be an independent contractor has
corporation, but such term does not include (1) any contracted to do the work according to his own methods and
individual who, under the usual common-law rules without being subject to the control of the employer except as
applicable in determining the employer-employee to the result of the work. (81 C.J.S. Sec. 5, pp. 24-25); See also
relationship, has the status of an independent Millard's Inc. vs. United States, 46 F. Supp. 385; Schmidt vs.
 Ewing, 108 F. Supp. 505; Ramblin vs. Ewing, 106 F. Supp. the element of control is absent; where a person who works for another
268. does so more or less at his own pleasure and is not subject to definite
hours or conditions of work, and in turn is compensated according to
In the case last cited (Rambin v. Ewing) the question presented was the result of his efforts and not the amount thereof, we should not find
whether the plaintiff there, who was a sales representative of a that the relationship of employer and employee exists.
cosmetics firm working on a commission basis, was to be considered
an employee. Said the Court: We have examined the contract form between petitioner and its
registered representatives and found nothing therein which would
Plaintiff's only remuneration was her commission of 40%, plus indicate that the latter are under the control of the former in respect of
$5 extra for every $250 of sales. Plaintiff was not guaranteed the means and methods they employ in the performance of their work.
any minimum compensation and she was not allowed a The fact that for certain specified causes the relationship may be
drawing account or advance of any kind against unearned terminated (e.g., failure to meet the annual quota of sales, inability to
commissions. Plaintiff paid all of her traveling expenses and make any sales production during a six-month period, conduct
she even had to pay the postage for sending orders to Avon. detrimental to petitioner, etc.) does not mean that such control exists,
for the causes of termination thus specified have no relation to the
The only office which Avon maintained in Shreveport was an means and methods of work that are ordinarily required of or imposed
office for the city manager. Plaintiff worked from her own home upon employees.
and she was never furnished any leads. The relationship
between plaintiff and Avon was terminable at will . . . In view of the foregoing considerations, the resolution of respondent
Social Security Commission subject of this appeal is reversed and set
xxx      xxx      xxx aside, without pronouncement as to costs.

. . . A long line of decisions holds that commission sales G.R. No. L-21930             August 31, 1966
representatives are not employees within the coverage of the
Social Security Act. The underlying circumstances of the AGAPITA PAJARILLO, ET AL., petitioners-appellants,
relationship between the sales representatives and company vs.
often vary widely from case to case, but commission sales SOCIAL SECURITY SYSTEM, respondent-appellee.
representatives have uniformly been held to be outside the
Social Security Act. Paulino Manongdo for petitioners-appellants.
Orlando L. Espinas for respondent-appellee.
Considering the similarity between the definition of "employee" in the
Federal Social Security Act (U.S.) as amended and its definitions in our BARRERA, J.:
own Social Security Act, and considering further that the local statute is
admittedly patterned after that of the United States, the decisions of This is an appeal by Agapita Pajarillo, et al., from the resolution of the
American courts on the matter before us may well be accorded Social Security Commission, denying their petition to be exempted
persuasive force. The logic of the situation indeed dictates that where from coverage of the Social Security System.
There is no controversy as to the facts of this case. Appellants are the form of advances from fish dealers, and payable in kind when the
owners of fishing boats being used for fishing at sea, namely: boat returns with catch from the fishing trip. (pp. 23-24, t.s.n.).

Owner Name of Vessel These fishing trips are not regular. The fishermen go out to the sea
only when there is no moon or it is not yet very bright. For this reason,
Agapita Pajarillo Bagong Kalayaan even in months of fine weather, the most that a boat can make are 18
Basilio Medina Stella Maris fishing days every month. These men have no regular income. If the
trip yields a catch, the proceeds thereof are divided into three parts:
Rosario Relloso Villa Florida one part goes to the owner of the boat and equipment; one part is set
Teofila Campana Salenian aside to cover expenses like crude oil and for maintenance of the boat,
and the other one-third is divided among the men, with the pilot getting
Melicia Totanes Nazareno 3 times the share of a crew-member; and the "machinist", who tends or
Melicia Totanes San Pedro operates the engine of the motorized boat, receiving twice the share of
a crew-member. (pp. 9, 23, t.s.n.).
Ireneo Racelis Ricardo
Salvador Boral Villa Rosario The men (usually 12 for every vessel, including the pilot) are under no
obligation to stay in one outfit. Sometimes, they join as members of the
Cesar King Felipa
crew for one night only; sometimes two, or three days. Then, they
Ramon King Tacia leave and join other outfits. (pp. 18-19, t.s.n.). Even the pilot himself is
not bound to retain his charge for any definite duration. He can return
Jaime King Aday
the boat to its owner anytime, if he does not want to manage it
Amelia Reyes Queen Mary anymore. (p. 11, t.s.n.). The vessel-owners, appellants in the present
case, required to register as employers with the Social Security
Amelia Reyes Nanay
System, filed a joint petition with the Social Security Commission,
Teofilo Nasis Teresita claiming that there exists no employer-employee relationship between
them and the crew of their fishing vessels, and praying that they be
Rosario Reyes Charing Uno
exempted from the compulsory coverage of the law. After hearing, their
Rosario Reyes Charing Dos petition was denied, the Commission holding that while the services of
the crew-members are engaged by the pilots, the latter are mere
Aurora Sales Aurora
employees or agents of the boat-owners. Thus, it is contended, a boat-
owner can abolish the employment of the crew-members by
As such property-owners, they enter into agreement1 with the so- withdrawing from the pilot the authority to take charge of the vessel.
called patrons or pilots, whereby the latter take charge of appellants Appellants, consequently, were directed to report their coverage and
fishing vessels, equipment, and gear used for fishing. Once entrusted that of their respective pilots and crew-members to the Commission
with the equipment, the pilot "hires" the crew to man the boat and and to pay the prescribed premiums pursuant to Sections 18, 19 and
secures their provisions. This is usually financed from loans obtained in
20 of the Republic Act 1161, as amended. The boat-owners filed the Their sole participation in the venture is the furnishing or delivery of the
present appeal. equipment used for fishing, after which, they merely wait for the boat's
return and receive their share in the catch, if there is any. For this part,
The only issue raised before the Commission and presented in this a person who joins the outfit is entitled to a share or participation in the
appeal is, as stated by the Commission itself, "whether under the facts fruit of the fishing trip. If it gives no return, the men get nothing. It
set forth above, there exists an employer-employee relationship appears to us, therefore, that the undertaking is in the nature of a joint
between the petitioners and the crew-members of their respective venture, with the boat-owner supplying the boat and its equipments,
fishing boats within the meaning of Republic Act 1161, as amended. and the pilot and crew-members contributing the necessary labor, and
the parties getting specific shares for their respective contributions.
Under the law, an employer is a "person, natural or juridical, domestic
or foreign, who carries on in the Philippines any trade, business, But, even assuming arguendo that the pilot and crew-members may be
industry, undertaking, or activity of any kind and uses the services of treated as employees of the boat-owners, they cannot also be made
another person who is under his orders as regards the employment. subject to compulsory coverage under the Social Security Act. As
"2 In the case at bar, the pilots are not under the orders of the boat- previously stated, the men are under no obligation to remain in the
owners as regards their employment. They go out to sea not upon outfit for any definite period. Thus, one can be the crew-member of an
direction of the boat-owners, but upon their own volition as to when, outfit for one day and be the member of the crew of another vessel the
how long and where to go fishing. Much less do the boat-owners in any next day. Also, a fishing boat has no regular schedule of fishing trips. It
way control the crew-members with whom the former have no all depends on the weather and other natural conditions, and the
relationship whatsoever. These crew-members simply join every trip for volition of the pilots and crew-men themselves. And, even when a
which the pilots allow them, without any reference to the owners of the fishing trip is completed, it is no assurance of income for the fishermen
vessel. and the boat-owner as well. Clearly, the services rendered by the
fishermen are no different from the agricultural labor performed by a
On the other hand, an employee is defined as a "person who performs share or leasehold tenant or worker, which is specifically excluded from
services for an 'employer' in which either or both mental and physical the definition of "employment",4 and exempted from the coverage of the
efforts are used and who receives compensation for such services, Social Security Act.
where there is an employer-employee relationship."3 In the present
case, neither the pilots nor the crew-members receive compensation Add to this the extreme difficulty, if not impossibility, of determining
from the boat-owners. They only share in their own catch produced by the monthly wage of earning of these fishermen for the purpose of
their own efforts. There is no showing that outside of their one-third fixing the amount of their and the supposed employer's
share, the boat-owners have anything to do with the distribution of the contributions,5 and there is even reason to exempt the parties to this
rest of the catch among the pilots and the crew-members. The latter kind of undertaking from compulsory registration with the Social
perform no service for the boat-owners, but mainly for their own security System.
benefit.
1äwphï1.ñët

In view of the foregoing considerations, the resolution of the Social

In the undertaking in question, the boat-owners obviously are not Security Commission appealed from is hereby set aside, and
responsible for the wage, salary, or fee of the pilot and crew-members.
petitioners-appellants are declared exempted from compulsory COURT OF APPEALS and MANILA COSMOS AERATED WATER
coverage of the Social Security law. No costs. So ordered. FACTORY, INC., respondents.

Concepcion, C.J., Reyes, J.B.L., Dizon, Makalintal, Bengzon, J.P.,

Zaldivar Sanchez and Castro, JJ., concur.
Regala, J., is on leave. ABAD SANTOS, J:

Footnotes This is a petition to review a decision of the Court of Appeals in Social

Security System, et al. vs. Manila Cosmos Aerated Water Factory,
1
All agreements entered into in connection with this occupation Inc., CA-G.R. No. SP 03296-R, adverse to the petitioner. The
are not in writing. antecedent facts consist of the following:

2
Sec. 8(c), Rep. Act 1161. In a petition filed with the Social Security Commission SSC the Social
Security System (SSS) together with Jose Concepcion, Manuel Chan,
3
Sec. 8(d), Ibid., as amended by Rep. Act 2658. Manuel Ong, Roberto Lai, Arturo Gonzales, William Co, Federico
Marcial, Santiago Mancuba, Jesus Crelencia, Alfredo So and Pedro
4
"SEC. 8. Term defined. — ... . Aquino, the individual petitioners were sought to be declared
employees of Manila Cosmos AerAted Water Factory, Inc. (Cosmos)
and not independent contractors under the following Agreement to
xxx     xxx     xxx
Peddle Soft Drinks.
"(j) Employment. — Any service performed by an
1. The MANUFACTURER shall provide the PEDDLER
employee for his employer, except —
with a delivery truck to be used by the latter, under his
own responsibility, exclusively in the sales of the
"(1) Agricultural labor when performed by a share or products of the former purchased by the PEDDLER
leasehold tenant or worker who is not paid any regular from the MANUFACTURER;
daily wage or base pay and who does not work for an
uninterrupted period of at least six months in a
2. The PEDDLER himself shall carefully and in strict
year; ... ."
observance to traffic regulations, drive the truck
furnished him by the MANUFACTURER or should he
(Rep Act 1161, as amended by Rep. Act 2658). employ a driver or helpers, such driver or helpers shall
be his employees under his direction and responsibility,
G.R. No. L-55764 February 16, 1982 and not that of the MANUFACTURER, and their
compensation including salaries, wages, overtime pay,
SOCIAL SECURITY SYSTEM, petitioner, separation pay, bonus or other remunerations and
vs. privileges shall be for the PEDDLERS own account;
3. The PEDDLER shall be responsible for any damage 8. This contract shall be effective only up to December
to property, death or injuries to persons or damage to 31, 1962 and supersedes any or all other previous
the truck used by him caused by his own acts or that of contracts that may have been entered into between the
his driver and helpers; parties; However, either of the parties may terminate
the same upon seven (7) days prior notice to the other;
4. The PEDDLER shall secure at his own expense all
necessary license and permits required by law or 9. Upon the termination of this agreement, unless the
ordinance, and shall bear any and all expenses which same is renewed, the delivery truck and such other
may be incurred by him in the sales of the equipment furnished by the MANUFACTURER to the
MANUFACTURER'S products, covered by this PEDDLER shall be returned by the latter in good order
contract; and workable condition, ordinary wear and tear
excepted, and shall promptly settle his outstanding
5. All goods soft drinks) purchased by the PEDDLER account if any, with the manufacturer. (Rollo, pp. 24-
shall be charged to him at a factory price of P0.86 per 25.)
case of the 6.6 oz. size, ex-warehouse; PROVIDED,
However, that, if the PEDDLER purchases a total of not The status of the individual petitioners was important because if they
less than 200 cases of the 6.5 oz. size a day, he shall were employees of Cosmos and not independent contractors, then
be entitled to a dealer's discount of P7.30; Cosmos would have "to pay the employer's share of premium
contributions (employer's and employees' share) for and in behalf of
6. Upon the execution of this agreement, the PEDDLER the delivery helpers, as employees of respondent corporation, plus the
shall give a cash bond in the amount of P500.00 penalties thereon for late remittance of premium contributions, covering
against which the MANUFACTURER shall charge the the period of delinquency from the respective dates of their coverage
PEDDLER with any unpaid account at the end of the up to the present" as prayed for in the petition.
day or with any damage to the truck or other account
which is properly chargeable to the PEDDLER; within After hearing, the SSC rendered a resolution in favor of the SSS and
30 days after termination of this agreement, the cash the peddlers holding that an employer-employee relationship existed
bond, after deducting proper charges, shall be returned between Cosmos and the peddlers. Cosmos appealed to the Court of
to the PEDDLER; Appeals and in a decision promulgated on October 16, 1979, that
Court affirmed the resolution of the SSC. However, upon a motion for
7. The PEDDLER shall liquidate and pay his account at reconsideration, the Court of Appeals on October 13, 1980, set aside
the end of each day, and his failure to do so shall its previous decision and reversed the resolution of the SSC. Hence,
subject his cash bond or so much thereof as may be the instant appeal where the petitioner is the SSS alone; the individual
necessary to such set offs and payments as shall be peddlers have not seen fit to appeal.
proper against the accounts in question;
We could have dismissed the instant petition by minute resolution
because precedents warrant such an action. But to put an end to
litigations of this sort and arrest what Cosmos calls judicial answer for his obligations to Mafinco (Par. 7) and
harassment, a decision is in order. another cash bond of P1,000 to answer for his
obligations to his employees (Par. 11). He should
In Mafinco Trading Corporation vs.Ople, et al. No. L-37790, March 25, liquidate his accounts at the end of each day (Par. 8).
1976, 70 SCRA 139, the question was whether there was an employer- The contract would be effective up to May 31, 1973.
employee relationship under the terms of a peddling contract in words Either party might terminate it upon five days prior
almost Identical to the one quoted above. This Court, thru Mr. Justice notice to the other (Par. 9).
Aquino said:
We hold that under their peddling contracts of
A restatement of the provisions of the peddling contract Repomanta and Moralde were not employees of
is necessary in order to find out whether under that Mafinco but were independent contractors as found by
instrument Repomanta and Moralde were independent the NLRC and its fact-finder and by the committee
contractors or mere employees of Mafinco. appointed by the Secretary of labor to look into the
status of Cosmos and Mafinco peddlers. They were
Under the peddling contract, Mafinco would provide the distributors of Cosmos soft drinks with their own capital
peddler with a delivery truck to be used in the and employees. Ordinarily, an employee or a mere
distribution of Cosmos soft drinks (Par. 1). Should the peddler does not execute a formal contract of
peddler employ a driver and helpers, he would be employment. He is simply hired and he works under the
responsible for their compensation and social security direction and control of the employer.
contributions and he should comply with applicable
labor laws "in relation to his employees" (Par. 2). Repomanta and Moralde voluntarily executed with
Mafinco formal peddling contracts which indicate the
The peddler would be responsible for any damage to manner in which they would sell Cosmos soft drinks.
persons or property or to the truck caused by his own That circumstance signifies that they were acting as
acts or omissions or those of his driver and helpers independent businessmen. They were free to sign or
(Par. 3). Mafinco would bear the cost of gasoline and not to sign that contract. If they did not want to sell
maintenance of the truck (Par. 4). The peddler would Cosmos products under the conditions defined in that
secure at his own expense the necessary licenses and contract; they were free to reject it.
permits and bear the expenses to be incurred in the
sale of Cosmos products (Par. 5). But having signed it, they were bound by its stipulations
and the consequences thereof under existing labor
The soft drinks would be charged to the peddler at laws. One such stipulation is the right of the parties to
P2.52 per case of 24 bottles, ex-warehouse. Should he terminate the contract upon five days' prior notice (Par.
purchase at least 250 cases a day, he would be entitled 9). Whether the termination in this case was an
to a peddler's discount of eleven pesos (Par. 6). The unwarranted dismissal of an employee, as contended
peddler would post a cash bond in the sum of P1,500 to by Repomanta and Moralde, is a point that cannot be
resolved without submission of evidence. Using the Those tests to determine the existence of an employer-
contract itself as the sole criterion, the termination employee relationship or whether the person doing a
should perforce be characterized as simply the exercise particular work for another is an independent contractor
of a right freely stipulated upon by the parties. cannot be satisfactorily applied in the instant case. It
should be obvious by now that the instant case is a
In determining the existence of employer-employee penumbral, sui generis case lying on the shadowy
relationship, the following elements are generally borderline that separates an employee from an
considered, namely: (1) the selection and engagement independent contractor.
of the employee; (2) the payment of wages: (3) the
power of dismissal: and (4) the power to control the In determining whether the relationship is that of
employees' conduct — although the latter is flip, most employer and employee or whether one is an
important element (Viaña Al-Lagadan and Piga 99 Phil, independent contractor, "each case must be
406, 411, Citing 35 Am. Jur. 445). determined on its own facts and all the features of the
relationship are to be considered" (56 C.J.S. 45). We
On the other hand, an independent contractor is "one are convinced that on the basis of the peddling
who exercise independent employment and contracts contract, no employer-employee relationship was
to do a piece of work according to his own methods and created. (At pp. 161-163, emphasis supplied.)
without being subject to control of his employer except
as to the result of the work" (Mansal vs. P.P. Gocheco We hold that conformably to Mafinco, the peddling contract involved in
Lumber Co., 96 Phil. 941). the instant petition makes the peddler an independent contractor.
Additionally, We have taken into account the fact that the individual
Among the factors to be considered are whether the petitioners before the SSC who were the principal beneficiaries of the
contractor is carrying on an independent business; petition have become indifferent to their cause.
whether the work is part of the employer's general
business; the nature and extent of the work; the skill WHEREFORE, the judgment of the Court of Appeals is hereby
required; the term and duration of the relationship; the affirmed. Costs against the petitioner.
right to assign the performance of the work to another;
the power to terminate the relationship; the existence of SO ORDERED.
a contract for the performance of a specified piece of
work; the control and supervision of the work; the G.R. No. L-46058 December 14, 1987
employer's powers and duties with respect to the hiring,
firing, and payment of the contractor's servants; the
SOCIAL SECURITY SYSTEM, petitioner,
control of the premises; the duty to supply the
vs.
premises, tools, appliances, material and labor; and the
COURT OF APPEALS and the QUALITY TOBACCO
mode, manner, and terms of payment. (56 C.J.S. 46).
CORPORATION, respondents.
 consequences to the VENDOR and that he shall be
liable for all damages caused by said violation.
PARAS, J.:
4. The VENDEE shall be solely responsible for the
This is a petition for review on certiorari of the decision of the Court of cigarettes delivered to him by the VENDOR as well as
Appeals * dated March 16, 1977 in CA-G.R. No. 05087-SP entitled Romeo Carreon, petitioner- for the aforementioned proceeds from the sale thereof,
appellee vs. Quality Tobacco Corporation, respondent-appellant and Social Security System, and any loss thereof due to any cause shall be solely
intervenor-appellee, reversing the Resolution dated January 21, 1976 of the Social Security System
and dismissing the petition filed by Romeo Carreon.
for his own risk and account.

The facts are found by the Court of Appeals are as follows: xxx xxx xxx

QTC, formerly U.S. Tobacco Corporation, is a firm 6. The VENDOR may loan a delivery truck or trucks to
engaged in the manufacture and sale of cigarettes. On the VENDEE, which truck or trucks shall be used by the
August 12, 1972, QTC, as VENDOR, entered into an VENDEE exclusively in connection with this contract
agreement with CARREON, as VENDEE, the salient and at all time maintained by the said VENDEE in good
provisions of which are as follows: condition; and for as long as the VENDEE may be
allowed the use of the VENDOR's truck or trucks, the
VENDEE shall pay all the expenses for gasoline, oil,
2. The VENDEE shall purchase one or more brands of
repairs, operating costs, maintenance, tires, spare
cigarettes of the VENDOR on cash basis only, subject
parts, etc., but the VENDOR may at its discretion
to the discretion of the VENDOR as to the brand and
assume the payment of major repair.
quantity thereof;
xxx xxx xxx
xxx xxx xxx
9. This contract, may, however, be terminated upon
3. The VENDEE shall sell the cigarettes herein
one (1) week's notice of either party at any time.
mentioned only within Quezon Province and or such
other places as may be designated and or limited
thereafter by the VENDOR and only to residents of, or 10. In the event a court litigation should be necessary
retailers or jobbers doing, and having their place of to recover from the VENDEE any amount due to the
business in, said assigned territory, strictly, at such VENDOR, the VENDEE shall pay to the VENDOR all
prices set by the VENDOR from time to time for the such damages that the VENDOR may suffer arising
aforementioned respective brands of cigarettes in the from the violation by the VENDEE of any of the terms
sale thereof by the VENDEE in said assigned territory. and conditions of this contract and/or implementation
The VENDEE is fully aware that a violation of this and/or instructions mentioned in Paragraph 7 hereof
particular paragraph will cause grave and serious plus the cost of suit and attorney's fees of at least 20%
of the amount sought to be recovered, which in no case
 shall be less than Five Hundred Pesos (P500.00) for WHEREFORE, the Resolution of the Social Security
the purposes of this paragraph, venue of actions is Commission of January 21, 1976 in its Case No. 2543
hereby agreed to be in the City of Manila and the is hereby REVERSED and the petition filed in said case
VENDEE hereby waives any other proper venue in any by Romeo Carreon is dismissed.
action which may be brought by or against him in
connection with this contract or in connection with other In a Motion for Reconsideration dated March 25, 1977, the Social
actions which may be brought incident thereto. Security System sought the reconsideration of the aforequoted
decision (Rollo, pp. 43-49). However, finding no merit in said motion,
The contract with CARREON was terminated by QTC the Court of Appeals denied the same in its resolution dated April 14,
on December 18,1972. 1977 (Rollo, pp. 50-51).

On April 29, 1974, CARREON filed a petition with the Hence this petition.
Social Security Commission alleging that he was an
employee of QTC, and asking that QTC be ordered to The First Division of this Court without giving due course to said
report him for coverage under the Social Security Law petition resolved to require the respondents to comment (Rollo, p. 64).
QTC answered claiming that CARREON has not been Private respondent filed its Comment on August 9, 1977 (Rollo, p. 69).
an employee but was an 'Independent businessman.'
The Social Security System intervened and, taking the Thereafter, this Court resolved to give due course to the petition and
side of CARREON, also asked that QTC be ordered to required the parties to submit simultaneous memoranda (Rollo, p. 74).
pay Social Security contributions in respect of On September 23, 1977, private respondent and petitioner filed their
CARREON. On January 21, 1976, the Social Security respective memoranda (Rollo, pp. 80-118).
Commission resolved CARREON's petition, finding him
to be an employee of QTC. The rulings in
The issue raised by the petitioner before this Court is the very same
U.S. Tobacco Corporation vs. Benjamin Serna, et
issue resolved by the Court of Appeals-that is, whether or not Romeo
al., CA-G.R. No. 32041, September 5, 1967, and The
Carreon is an employee or an independent contractor under the
Shell Co. Phil. Ltd. vs. Fireman's Insurance Co. of
contract aforequoted. Corollary thereto the question as to whether or
Newark, et al., 100 Phil. 757, were inter alia, relied
not the Mafinco case is applicable to this case was raised by the
upon.
parties.
Cognizant of the striking similarities obtaining in the case before it and
the Mafinco vs. Ople case decided by this Court on March 25, 1976,
and relying solely on the doctrine laid down in said case, the Court of
Appeals issued the herein assailed decision dated March 16, 1977, the
dispositive part of which reads:
The Court took cognizance of the fact that the question of whether or It is the contention of petitioner that the Mafinco case which has been
not an employer-employee relationship exists in a certain situation the sole basis of the Court of Appeals' finding that Romeo Carreon is
continues to bedevil the courts. Some businessmen with the aid of an independent contractor is not applicable in the instant petition, there
lawyers have tried to avoid the bringing about of an employer- being no substantial parallelism between said contract and the contract
employee relationship in some of their enterprises because that of purchase and sale in this case. It pointed out that there are in the
juridical relation spawns obligations connected with workmen's Mafinco contract provisions which by express implication point to the
compensation, social security, medicare, minimum wage, termination status of the peddler as an independent contractor such as: a) that
pay and unionism. should the peddler employ a driver or helpers, the latter shall be his
employee/s and his/their compensation shall be for the peddler's
For this reason, in order to put the issue at rest, this Court has laid account; that the peddler shall comply with the provisions of the Social
down in a formidable line of decisions the elements to be generally Security Act and all applicable laws (par. 2); b) peddler is responsible
considered in determining the existence of an employer-employee for damage to property, death or injuries to persons covered by his
relationship, as follows: a) selection and engagement of the employee; own acts or omissions or those of his driver or helpers (par. 3); c)
b) the payment of wages; c) the power of dismissal; and d) the peddler is required to secure at his own expense all necessary licenses
employer's power to control the employee with respect to the means and permits and to bear all expenses which may be incurred in the sale
and method by-which the work is to be accomplished. The last which is of soft drinks (par. 5); d) the peddler is to furnish a performance bond
the so-called "control test" is the most important element (Brotherhood of P l,000.00 in favor of Mafinco to assure performance by the peddler
Labor Unity Movement of the Phils. vs. Zamora, 147 SCRA 49 [1987]; of his obligation to his employee under the Social Security Act (par.
Dy Ke Beng vs. International Labor and Marine Union of the Phil., 90 11), which provisions are notably absent in the contract in the case at
SCRA 162 [1979]; Mafinco Trading Corp. vs. Ople, 70 SCRA 141 bar (Rollo, pp. 103-104).
[1976]; Social Security System vs. Court of Appeals, 37 SCRA 579
[1971]). It further contends that the Court of Appeals in an effort to justify its
holding picked out only paragraphs 1, 2, 4, 6 and 9 of the Mafinco
Applying the control test, that is, whether the employer controls or has contract and thereafter concluded that the two contracts are similar.
reserved the right to control the employee not only as to the result of
the work to be done but also as to the means and method by which the Private respondent on the other hand, avers that the Mafinco contract
same is to be accomplished, the question of whether or not there is an is applicable to the case at bar. The two contracts need not embody
employer-employee relationship for purposes of the Social Security Act almost the same provisions in order that they may be considered
has been settled in this jurisdiction in the case of Investment Planning similar. It is enough that the aspect of similarity arising from the terms
Corp. vs. SSS, 21 SCRA 924 (1967). In other words, where the and condition be considered because of their relevance to the issue, is
element of control is absent; where a person who works for another relatively much stronger than the dissimilarity.
does so more or less at his own pleasure and is not subject to definite
hours or conditions of work, and in turn is compensated according to Private respondent likewise maintains that the decision was correctly
the result of his effort, the relationship of employer-employee does not concluded not only on the similarity of the two contracts but also on
exist. (SSS vs. Court of Appeals, 30 SCRA 210 [1969]). factual evidence adduced at the trial and since respondent Court has
already examined the facts and passed judgment on the basis thereof,
its decision is no longer subject to review. Stated otherwise, the Court reflective of their agreement to warrant reformation. As earlier pointed
of Appeals "looked behind the contract" but found the evidence out, the Court of Appeals did not consider the entirety of the contract
insufficient to justify a finding that the terms of the contract were not but only portions thereof which led to the conclusion that Carreon was
followed. That the evidence for Carreon and SSS failed to pierce" the an independent contractor.
contract (Rollo, p. 83).
Thus, after a study of the records and applying the "control tests," there
Private respondent's contention is untenable. appears to be no question that the existence of an employer-employee
relationship between Romeo Carreon and QTC has been established,
The distinction between a question of law and a question of fact is based on the following "undisputed" facts as pointed out by the
explained in our jurisprudence in Ramos vs. Pepsi Cola Bottling Co. Solicitor General, to wit: (a) QTC assigned a definite sales territory for
(19 SCRA 289, 292 [1967]), to wit: Romeo Carreon; (b) QTC provided Romeo Carreon with a delivery
truck for the exclusive use of the latter in his sales activities; (c) QTC
For a question to be one of law it must involve no dictated the price of the cigarettes sold by Romeo Carreon; (d) QTC
examination of the probative value of the evidence prescribed what brand of cigarettes Romeo Carreon could sell; (e)
presented by the litigants or any of them and the QTC determined the persons to whom Romeo Carreon could sell, (f)
distinction is well-known. There is a question of law in a QTC issued circulars and memoranda relative to Romeo Carreon's
given case when the doubt or difference arises as to sales activities; (g) QTC required Romeo Carreon to submit to it daily,
what the law is in a certain state of facts; there is a weekly and monthly reports; (h) QTC grounded Romeo Carreon for six
question of fact when the doubt arises as to the truth or months in 1966; (i) Romeo Carreon was supervised by sales
the falsehood of alleged facts. coordinators of QTC; (j) Romeo Carreon was subject to payment of
damages and loss even of accrued rights for any violation of
instructions made by QTC in relation to his sales activities; and (k)
cited in G.R. No. L-39767, Lorenzo Hernandez vs. The Court of
Romeo Carreon was paid an allowance by QTC. All these indicate
Appeals, March 31, 1987.
control and supervision over Carreon's work.
In the case at bar, it is evident that the basic contention is what the law
Moreover, it is elementary that findings of administrative agencies are
is in the given state of facts. More than that, the well-settled rule that
generally accorded not only. respect but also of finality (Rosario Bros,
the finding of facts of the Court of Appeals is conclusive on the parties,
Inc. vs. Ople, 131 SCRA 72 [1984]).
admits of exceptions among which are: (1) when the findings of fact of
the Court of Appeals are contrary to those of the trial court and (2)
when the findings of fact of the Court of Appeals are premised on the PREMISES CONSIDERED, the decision of the Court of Appeals dated
supposed absence of evidence and are contradicted by evidence on March 16, 1987 and its resolution of April 14, 1977 are hereby
record (Sacay vs. Sandiganbayan, 142 SCRA 609 [1986]; Manlapaz REVERSED and SET ASIDE, and the resolution of the Social Security
vs. Court of Appeals, 147 SCRA 239 [1987]). Commission dated January 21,1976 is AFFIRMED and REINSTATED.

In this case, the Court of Appeals ruled that there is not enough SO ORDERED.
evidence to show that the contract between Carreon and QTC was not
G.R. No. L-26146            October 31, 1969 The facts are as found by the Court of Appeals are as follows: "1. That
there are only two (2) racing entities in the Philippines, namely, the
SOCIAL SECURITY SYSTEM, petitioner, [Manila Jockey Club, Inc.], and the [Philippine Racing Club, Inc.],
vs. whose clubs and personnel are expressly prohibited by the [Games
THE HONORABLE COURT OF APPEALS, MANILA JOCKEY CLUB, and Amusements Board] Rules from owning a race horse ...; 2. That
INC., PHILIPPINE RACING CLUB, INC., respondents. about 10 days before a scheduled race, the clubs receive inscription of
horses, accomplished on entry forms, whereon the names of the
Office of the Solicitor General Antonio P. Barredo, Assistant Solicitor horses and their owners appear, duly certified by the owners ... .
General Frine C. Zaballero and Attorneys Luz M. Villamor and Luis S. Thereafter, the handicapper prepares a list of the entries to enable
Topacio for petitioner. horse owners to determine whether to join the scheduled race. If they
Lichauco, Picazo and Agcaoili for respondent Manila Jockey Club, Inc. decide to join, they file with the club a declaration therefor ... stating the
Cesar S. de Guzman for respondent Phil. Racing Club, Inc. name of the horse and of the jockey, together with the jockey's
signature thereon to show his conformity thereto. Upon receipt of said
declarations, the clubs screen the same in order that disqualified
FERNANDO, J.:
jockeys or disqualified race mounts may not participate. Once the
screening is completed, the program on the race is printed and
A recent decision, Investment Planning Corporation v. Social Security released to the public, after which no changes can be made except
System,1 is decisive of this controversy, the issue involved being where the entry is incapacitated by reason of sickness or accident; 3.
whether or not jockeys connected with respondents Manila Jockey That the maximum number of participants allowed in a racing event,
Club, Inc. and Philippine Racing Club, Inc. may be considered as their are 14 qualified horses mounted by the same number of qualified
employees and, therefore, fall within the coverage of the Social jockeys; 4. That from the total bets in a single race, the law allots 1/2%
Security Act. Respondent Court of Appeals, in its decision of February to the [Games and Amusements Board], 6-1/2% to the club, 5-1/2% as
4, 1966, set aside a resolution of petitioner Social Security System of prize money, and the remainder for dividends to bettors. The prize
July 3, 1963, which held that for the purposes of coverage under the money must, in turn, be shared by the horse owner of the winning
Social Security Act, there is an employer-employee relationship mounts with his jockey and trainers, who get 20% and 10% each of
between the two above-named respondents on the one hand and the said prize money. However, the jockeys and trainees of mounts who
jockeys on the other. The matter was elevated to the Court of Appeals do not place first, second or third, do not receive anything from the
with the result aforesaid, the dispositive portion of its decision of prize money; 5. That the stewards are, under the law, officials of the
February 4, 1966 stating: "Let a new resolution be entered declaring club which pays their per diems but licensed by the [Games and
[that] jockeys are not employees of [Manila Jockey Club, Inc.] and Amusements Board] — whose duty it is to supervise the conduct of the
[Philippine Racing Club, Inc.] ... within the purview of the Social races and enforce [its] rules as well, as to penalize mounts and jockey
Security Act." Hence, this appeal by certiorari from such Court of for infractions relative thereto; 6. That for a person to ride as jockey, he
Appeals decision, the Social Security System being the petitioner. must first secure a license from the [Games and Amusements Board].
And upon payment to the club of the nominal fee of P6.00, the jockey
We have to affirm in the light of the facts as found by the Court of may use the race tracks for training, may participate in racing meets
Appeals under the control test set forth in authoritative Investment held therein and/or to sit as spectator in the grandstand A of the
Planning Corporation decision. hippodrome; and 7. That the clubs have employees, such as janitors,
club guards, and the like, who maintain and operate the offices and the stewards who, as noted, are entrusted with the duty to supervise the
race tracks, which personnel are already under SSS coverage."2 conduct of the races and enforce the Games and Amusements Board
rules. As noted in the decision: "The stewards admittedly received per
In the decision now sought to be reviewed, reference is made to the diems from the race clubs. However, the acts and decisions of race
statutory definition of the term "employee" under the Social Security stewards, when exercising their office as such, are not under the
Act.3 Thus: "Employee — Any person who performs services for an control of the race clubs. The powers and authority of the stewards
'employer' in which either or both mental and physical efforts are used proceed from the law aforecited, not from the club sponsoring the race
and who received compensation for such services, where there is an meet. Such powers and authority of the race stewards are in turn
employer-employee relationship."4 defined and delimited by the same law and by the [Games and
Amusements Board] rules. Consequently, the acts and decision of the
Why jockeys do not fall under the facts obtaining within such a stewards when acting as such, are independent of and not subject to
category was explained in the Court of Appeals decision in this wise: the will of anybody, save the [Games and Amusements Board]. And
"The evidence invariably shows that the selection and employment of the jockeys, the race horse owners as well as the racing clubs must
the jockey is made by the race horse owner whose horse the jockey abide by the decision of the stewards relative to the conduct of the race
will ride, not by the race club. Upon the other hand, the jockey decides and the enforcement of [such] rules."8The absence of control that may
for himself the horse he is to mount. This was testified to by Samuel be exercised on the part of respondents over the jockeys negates the
Sharuff, a race horse owner, corroborated by Exhibits B and B-5 existence of an employer-employee relationship. That is the principle
consisting of declaration forms which race horse owners file with the adopted by us in the leading Investment Planning Corporation
race club before the scheduled race meet, stating inter alia the name of decision. Thus: "The specific question of when there is 'employer-
the race horse being entered in the race and the name of the jockey employee relationship' for purposes of the Social Security Act has not
chosen to ride the mount, which declaration must bear the signature of yet been settled in this jurisdiction by any decision of this Court. But in
the jockey concerned as evidence of his conformity thereto, in other connections wherein the term is used the test that has been
accordance with the [Games and Amusements Board] rules ... ."5 It generally applied is the so-called control test, that is, whether the
went on to state: "Thus, the matter as to which jockey shall ride which 'employer' controls or has reserved the right to control the 'employee'
horse, is mutually agreed upon by and between the race horse owner not only as to the result of the work to be done but also as to the
and the jockey. Once such agreement is reached, the race club cannot means and methods by which the same is to be accomplished."9
compel the race horse owner to accept another jockey or the jockey to
ride another horse. Nor can the race club prevent the jockey from As was noted further by Justice Makalintal who penned the decision:
riding the horse, which the jockey had previously agreed with the race "The logic of the situation indeed dictates that where the element of
horse owner to ride."6 control is absent; where a person who works for another does so more
or less at his own pleasure and is not subject to definite hours or
After citing the pertinent statutory provision as well as the rules of the conditions of works, and in turn is compensated according to the result
Games and Amusements Board,7 the Court of Appeals concluded, as of his efforts and not the amount thereof, we should not find that the
noted, that there was no employer-employee relationship, especially so relationship of employer and employee exists."10
in view of the undeniable fact that no control was exercised by
respondents over the jockeys. Such control is exercised by racing
Petitioner Social Security System would have us reverse the decision change was accomplished by means of an amendatory Act passed in
of the Court of Appeals with the plea that instead of the control test the 1948, which was construed and applied in later cases."15
"economic facts of the relation" test should be the criterion as to
whether or not the matter falls within the coverage of the Social Petitioner Social Security System is not in agreement with such a view.
Security Act. As set forth in its brief: "The Supreme Court of the United For it, as noted, the "economic-reality" or the "economic facts of
States in the case of National Labor Relations Board vs. Hearst relation" test, the distinction being simply a matter of terminology, calls
Publications, Inc., 322 U.S. 111, 88 L. Ed. 1170, considered the for acceptance. If it were a new question, perhaps such a plea might
aforementioned 'economic facts of the relation' test as more reliable, be impressed with a greater persuasive force.
thus: 'In short when the particular situation of employment combines
those characteristics so that the economic facts of the relation make Considering, however, that such an approach was suggested and
more nearly one of the employment than of independent business rejected in the Investment Planning Corporation decision, we cannot
enterprise with respect to the ends sought to be accomplished by the yield assent. We adhere to the Investment Planning Corporation
legislation, those characteristics may outweigh technical legal doctrine. It bears reiteration. Thus: "Considering the similarity between
classification for purposes unrelated to the statute's objectives and the definition of 'employee' in the Federal Social Security Act (U.S.) as
bring the relation within its position."'11 amended and its definitions in our own Social Security Act, and
considering further that the local statute is admittedly patterned after
We are unable to accord acceptance to such a plea in view of the that of the United States, the decisions of American courts on the
controlling Investment Planning Corporation decision. In fairness to matter before us may well be accorded persuasive force. The logic of
petitioner Social Security System, it must be stated that our decision the situation indeed dictates that where the element of control is
was rendered on November 18, 1967 but its brief was filed as far back absent; where a person who works for another does so more or less at
as February 8 of the same year. Our decision noted United v. his own pleasure and is not subject to definite hours or conditions of
Silk, 12 quoted with approval in a case decided the same year, Bartels work, and in turn, is compensated according to the result of his efforts
v. Birmingham.13 Then came this citation from Bartels: "'In United and not the amount thereof, we should not find that the relationship of
States v. Silk, No. 312, 331 US 704, ante, 1957, 67 S. Ct. 1463, ..., we employer and employee exists."16
held that the relationship of employer-employee, which determines the
liability for employment taxes under the Social Security Act was not to The matter being thus foreclosed, there being a reaffirmance of the
be determined solely by the idea of control which an alleged employer authoritative holding in the Investment Planning Corporation decision,
may or could exercise over the details of the service rendered to his there is nothing that calls for a reversal of the Court of Appeals
business by the worker or workers. Obviously control is decision, now sought to be reviewed.
characteristically associated with the employer-employee relationship,
but in the application of social legislation employees are those who as
WHEREFORE, the decision of the Fourth Division of the Court of
a matter of economic reality are dependent upon the business to which
Appeals of February 4, 1966 is affirmed. Without pronouncement as to
they render service.'"14 After which the Investment Planning
costs.
Corporation opinion goes on to state: "However, the 'economic-reality'
test was subsequently abandoned as not reflective of the intention of
Congress in the enactment of the original Security Act of 1935. The G.R. No. 192531               November 12, 2014
BERNARDINA P. BARTOLOME, Petitioner, We regret to inform you that wecannot give due course to your claim
vs. because you are no longer considered as the parent of JOHN
SOCIAL SECURITY SYSTEM and SCANMAR MARITIME COLCOL as he was legally adopted by CORNELIO COLCOL based on
SERVICES, INC., Respondents. documents you submitted to us.

DECISION The denial was appealed tothe Employees’ Compensation

Commission (ECC), which affirmed the ruling of the SSS La Union
VELASCO, JR., J.: Branch through the assailed Decision, the dispositive portion of which
reads:
Nature of the Case
WHEREFORE, the appealed decision is AFFIRMED and the claim is
This Appeal, filed under Rule 43 of the Rules of Court, seeks to annul hereby dismissed for lack of merit.
the March 17, 2010 Decision  of the Employees Compensation
1

Commission (ECC) in ECC Case No. SL-18483-0218-10, entitled SO ORDERED. 6

Bernardina P. Bartolome v. Social Security System (SSS) [Scanmar

Maritime Services, Inc.}, declaring that petitioner is not a beneficiary of In denying the claim, both the SSS La Union branch and the ECC ruled
the deceased employee under Presidential Decree No. (PD) 442, against petitioner’s entitlement to the death benefits sought after under
otherwise known as the Labor Code of the Philippines, as amended by PD 626 on the ground she can no longer be considered John’s primary
PD 626. 2
beneficiary. As culled from the records, John and his sister Elizabeth
were adopted by their great grandfather, petitioner’s grandfather,
The Facts Cornelio Colcol (Cornelio), by virtue of the Decision  in Spec. Proc. No.
7

8220-XII of the Regional Trial Court in Laoag City dated February 4,

John Colcol (John), born on June 9, 1983, was employed as electrician 1985, which decree of adoption attained finality.  Consequently, as
8

by Scanmar Maritime Services, Inc., on board the vessel Maersk argued by the agencies, it is Cornelio who qualifies as John’s primary
Danville, since February 2008. As such, he was enrolled under the beneficiary, not petitioner. Neither, the ECC reasoned, would petitioner
government's Employees' Compensation Program qualify as John’s secondary beneficiary even if it wereproven that
(ECP).  Unfortunately, on June 2, 2008, an accident occurred on board
3 Cornelio has already passed away. As the ECC ratiocinated:
the vessel whereby steel plates fell on John, which led to his untimely
death the following day. 4

John was, at the time of his death, childless and unmarried. Thus,
petitioner Bernardina P. Bartolome, John’s biological mother and,
allegedly, sole remaining beneficiary, filed a claim for death benefits
under PD 626 with the Social Security System (SSS) at San Fernando
City, La Union. However, the SSS La Union office, in a letter dated
June 10, 2009  addressed to petitioner, denied the claim, stating:
5
Under Article 167 (j) of P.D. 626, as amended, provides (sic) that I. The Honorable ECC’s Decision is contrary to evidence on
beneficiaries are the "dependent spouse until he remarries and record.
dependent children, who are the primary beneficiaries. In their
absence, the dependent parentsand subject to the restrictions imposed II. The Honorable ECC committed grave abuse in denying the
on dependent children, the illegitimate children and legitimate just, due and lawful claims of the petitioner as a lawful
descendants who are the secondary beneficiaries; Provided; that the beneficiary of her deceased biological son.
dependent acknowledged natural child shall be considered as a
primary beneficiary when there are no other dependent children who III. The Honorable ECC committed grave abuse of discretion in
are qualified and eligible for monthly income benefit." not giving due course/denying petitioner’s otherwise
meritorious motion for reconsideration. 11

The dependent parent referred to by the above provision relates to the

legitimate parent of the covered member, as provided for by Rule XV, In resolving the case, the pivotal issue is this: Are the biological
Section 1 (c) (1) of the Amended Rules on Employees’ Compensation. parents of the covered, but legally adopted, employee considered
This Commission believes that the appellant is not considered a secondary beneficiaries and, thus, entitled, in appropriate cases, to
legitimate parent of the deceased, having given up the latter for receive the benefits under the ECP?
adoption to Mr. Cornelio C. Colcol. Thus, in effect, the adoption
divested her of the statusas the legitimate parent of the deceased.
The Court's Ruling
xxxx
The petition is meritorious.
In effect, the rights which previously belong [sic] to the biological parent
The ECC’s factual findings are not consistent with the evidence on
of the adopted child shall now be upon the adopting parent. Hence, in
record
this case, the legal parent referred to by P.D. 626, as amended, as the
beneficiary, who has the right to file the claim, is the adoptive father of
the deceased and not herein appellant.  (Emphasis supplied)
9 To recall, one of the primary reasons why the ECC denied petitioner’s
claim for death benefits is that eventhough she is John’s biological
mother, it was allegedly not proven that his adoptive parent, Cornelio,
Aggrieved, petitioner filed a Motion for Reconsideration, which was
was no longer alive. As intimated by the ECC:
likewise denied by the ECC.  Hence, the instant petition.
10

Moreover, there had been no allegation in the records as to whether

The Issues
the legally adoptive parent, Mr. Colcol, is dead, which would
immediately qualify the appellant [petitioner] for Social Security
Petitioner raises the following issues in the petition: benefits. Hence, absent such proof of death of the adoptive father, this
Commission will presume him to be alive and well, and as such, is the
ASSIGNMENT OF ERRORS one entitled to claim the benefit being the primary beneficiary of the
deaceased. Thus, assuming that appellant is indeed a qualified
beneficiary under the Social Security law, in view of her status as other
beneficiary, she cannot claim the benefit legally provided by law to the imposed on dependent children, the illegitimate children and legitimate
primary beneficiary, in this case the adoptive father since he is still descendants who are the secondary beneficiaries; Provided, that the
alive. dependent acknowledged natural child shall be considered as a
primary beneficiary when there are no other dependent children who
We disagree with the factual finding of the ECC on this point. are qualified and eligible for monthly income benefit. (Emphasis
supplied)
Generally, findings of fact by administrative agencies are generally
accorded great respect, if not finality, by the courts by reason of the Concurrently, pursuant to the succeeding Article 177(c) supervising the
special knowledge and expertise of said administrative agenciesover ECC "[T]o approve rules and regulations governing the processing of
matters falling under their jurisdiction.  However, in the extant case,
12 claims and the settlement of disputes arising therefrom as prescribed
the ECC had overlooked a crucial piece of evidence offered by the by the System," the ECC has issued the Amended Rules on
petitioner – Cornelio’s death certificate. 13 Employees’ Compensation, interpreting the above-cited provision as
follows:
Based on Cornelio’s death certificate, it appears that John’s adoptive
father died on October 26, 1987,  or only less than three (3) years
14 RULE XV – BENEFICIARIES
since the decree of adoption on February 4, 1985, which attained
finality.  As such, it was error for the ECC to have ruled that it was not
15
SECTION 1. Definition. (a) Beneficiaries shall be either primary or
duly proven that the adoptive parent, Cornelio, has already passed secondary, and determined atthe time of employee’s death.
away.
(b) The following beneficiaries shall be considered
The rule limiting death benefits claims to the legitimate parents is primary:
contrary to law
(1) The legitimate spouse living with the
This brings us to the question of whether or not petitioner is entitled to employee at the time of the employee’s death
the death benefits claim in view of John’s work-related demise. The until he remarries; and
pertinent provision, in this regard, is Article 167 (j) of the Labor Code,
as amended, which reads: (2) Legitimate, legitimated, legally adopted or
acknowledged natural children, who are
ART. 167. Definition of terms. - Asused in this Title unless the context unmarried not gainfully employed, not over 21
indicates otherwise: years of age, or over 21 years of age provided
that he is incapacitated and incapable of self -
xxxx support due to physicalor mental defect which
is congenital or acquired during minority;
(j) 'Beneficiaries' means the dependent spouse until he remarries and Provided, further, that a dependent
dependent children, who are the primary beneficiaries. In their acknowledged natural child shall be considered
absence, the dependent parents and subject to the restrictions as a primary beneficiary only when there are no
 other dependent children who are qualified and Examining the Amended Rules on Employees’ Compensation in light
eligible for monthly income benefit; provided of the Labor Code, as amended, it is at once apparent that the ECC
finally, that if there are two or more indulged in an unauthorized administrative legislation. In net effect, the
acknowledged natural children, they shall be ECC read into Art. 167 of the Code an interpretation not contemplated
counted from the youngest and without by the provision. Pertinent in elucidating on this point isArticle 7 of the
substitution, but not exceeding five. Civil Code of the Philippines, which reads:

(c) The following beneficiaries shall be considered Article 7. Laws are repealed only by subsequent ones, and their
secondary: violation or non-observance shall not beexcused by disuse, or custom
or practice to the contrary.
(1) The legitimate parentswholly dependent
upon the employee for regular support; When the courts declared a law to be inconsistent with the
Constitution, the former shall be void and the latter shall govern.
(2) The legitimate descendants and illegitimate
children who are unmarried, not gainfully Administrative or executive acts, orders and regulations shall be valid
employed, and not over 21 years of age, or only when they are not contrary to the laws or the Constitution.
over 21 years of age providedthat he is (Emphasis supplied)
incapacitated and incapable of self - support
dueto physical or mental defect which is As applied, this Court held in Commissioner of Internal Revenue v.
congenital or acquired during minority. Fortune Tobacco Corporation  that:
16

(Emphasis supplied)
As we have previously declared, rule-making power must be confined
Guilty of reiteration, the ECC denied petitioner’s claim on the ground to details for regulating the mode or proceedings in order to carry into
that she is no longer the deceased’s legitimate parent, as required by effect the law as it has been enacted, and it cannot be extended to
the implementing rules. As held by the ECC, the adoption decree amend or expand the statutory requirements or to embrace matters not
severed the relation between John and petitioner, effectively divesting covered by the statute. Administrative regulations must always be in
her of the status of a legitimate parent, and, consequently, that of being harmony with the provisions of the law because any resulting
a secondary beneficiary. discrepancy between the two will always be resolved in favor of the
basic law. (Emphasis supplied)
We disagree.
Guided by this doctrine, We find that Rule XV of the Amended Rules
a. Rule XV, Sec. 1(c)(1) of the Amended Rules on Employees’ on Employees’ Compensation is patently a wayward restriction of and
Compensation deviates from the clear language of Art. 167 (j) of the a substantial deviation from Article 167 (j) of the Labor Code when it
Labor Code, as amended interpreted the phrase "dependent parents" to refer to "legitimate
parents."
It bears stressing that a similar issue in statutory construction was parents" are parents, whether legitimate or illegitimate, biological or by
resolved by this Court in Diaz v. Intermediate Appellate Court  in this
17
adoption,who are in need of support or assistance.
wise:
Moreover, the same Article 167 (j),as couched, clearly shows that
It is Our shared view that the word "relatives" should be construed in its Congress did not intend to limit the phrase "dependent parents" to
general acceptation. Amicus curiae Prof. Ruben Balane has this to say: solely legitimate parents. At the risk of being repetitive, Article 167
provides that "in their absence, the dependent parents and subject to
The term relatives, although used many times in the Code, is not the restrictions imposed on dependent children, the illegitimate children
defined by it. In accordancetherefore with the canons of statutory and legitimate descendants who are secondary beneficiaries." Had the
interpretation, it should beunderstood to have a general and inclusive lawmakers contemplated "dependent parents" to mean legitimate
scope, inasmuch as the term is a general one. Generalia verba sunt parents, then it would have simply said descendants and not
generaliter intelligenda. That the law does not make a distinction "legitimate descendants." The manner by which the provision in
prevents us from making one: Ubi lex non distinguit, nec nos question was crafted undeniably show that the phrase "dependent
distinguera debemus. xxx parents" was intended to cover all parents – legitimate, illegitimate or
parents by nature or adoption.
According to Prof. Balane, to interpret the term relatives in Article 992
in a more restrictive sense thanit is used and intended is not warranted b. Rule XV, Section 1(c)(1) of the Amended Rules on Employees’
by any rule ofinterpretation. Besides, he further states that when the Compensation is in contravention of the equal protection clause
law intends to use the termin a more restrictive sense, it qualifies the
term with the word collateral, as in Articles 1003 and 1009 of the New To insist that the ECC validly interpreted the Labor Code provision is
Civil Code. an affront to the Constitutional guarantee of equal protection under the
laws for the rule, as worded, prevents the parents of an illegitimate
Thus, the word "relatives" is a general term and when used in a statute child from claiming benefits under Art. 167 (j) of the Labor Code, as
it embraces not only collateral relatives but also all the kindred of the amended by PD 626. To Our mind, such postulation cannot be
person spoken of, unless the context indicates that it was used in a countenanced.
more restrictive or limited sense — which as already discussed earlier,
is not so in the case at bar. (Emphasis supplied) As jurisprudence elucidates, equal protection simply requires that all
persons or things similarly situated should be treated alike, both as to
In the same vein, the term "parents" in the phrase "dependent parents" rights conferred and responsibilities imposed. It requires public bodies
in the afore-quoted Article 167 (j) of the Labor Code is usedand ought and institutions to treat similarly situated individuals in a similar
to be taken in its general sense and cannot be unduly limited to manner.  In other words, the concept of equal justice under the law
18

"legitimate parents" as what the ECC did. The phrase "dependent requires the state to govern impartially, and it may not drawdistinctions
parents" should, therefore, include all parents, whether legitimate or between individuals solely on differences that are irrelevant to a
illegitimate and whether by nature or by adoption. When the law does legitimate governmental objective. 19

not distinguish, one should not distinguish. Plainly, "dependent

The concept of equal protection, however, does not require the its assailed Decision, had petitioner not given up John for adoption,
universal application of the laws to all persons or things without she could have still claimed death benefits under the law.
distinction. What it simply requires isequality among equals as
determined according to a valid classification. Indeed, the equal To begin with, nowhere in the law nor in the rules does it say that
protection clause permits classification. Such classification, however, "legitimate parents" pertain to those who exercise parental authority
to be valid must pass the test of reasonableness. The test has four over the employee enrolled under the ECP. Itwas only in the assailed
requisites: (1) The classification rests on substantial distinctions; (2) It Decision wherein such qualification was made. In addition, assuming
is germane tothe purpose of the law; (3) It is not limited to existing arguendothat the ECC did not overstep its boundaries in limiting the
conditions only; and (4) It applies equally to all members of the same adverted Labor Code provision to the deceased’s legitimate parents,
class. "Superficial differences do not make for a valid classification." 20
and that the commission properly equated legitimacy to parental
authority, petitioner can still qualify as John’s secondary beneficiary.
In the instant case, there is no compelling reasonable basis to
discriminate against illegitimate parents. Simply put, the above-cited True, when Cornelio, in 1985, adoptedJohn, then about two (2) years
rule promulgated by the ECC that limits the claim of benefits to the old, petitioner’s parental authority over John was severed. However,
legitimate parents miserably failed the test of reasonableness since the lest it be overlooked, one key detail the ECC missed, aside from
classification is not germane to the law being implemented. We see no Cornelio’s death, was that when the adoptive parent died less than
pressing government concern or interest that requires protection so as three (3) years after the adoption decree, John was still a minor, at
to warrant balancing the rights of unmarried parents on one hand and about four (4) years of age.
the rationale behind the law on the other. On the contrary, the SSS can
better fulfill its mandate, and the policy of PD 626 – that employees John’s minority at the time of his adopter’s death is a significant factor
and their dependents may promptly secure adequate benefits in the in the case at bar. Under such circumstance, parental authority should
event of work-connected disability or death - will be better served if be deemed to have reverted in favor of the biological parents.
Article 167 (j) of the Labor Code is not so narrowly interpreted. Otherwise, taking into account Our consistent ruling that adoption is a
personal relationship and that there are no collateral relatives by virtue
There being no justification for limiting secondary parent beneficiaries of adoption,  who was then left to care for the minor adopted child if
21

to the legitimate ones, there can be no other course of action to take the adopter passed away?
other than to strikedown as unconstitutional the phrase "illegitimate" as
appearing in Rule XV, Section 1(c)(1) of the Amended Rules on To be sure, reversion of parental authority and legal custody in favor of
Employees’ Compensation. the biological parents is not a novel concept. Section 20 of Republic
Act No. 8552  (RA 8552), otherwise known as the Domestic Adoption
22

Petitioner qualifies as John’s dependent parent Act, provides:

In attempting to cure the glaring constitutional violation of the adverted Section 20. Effects of Rescission.– If the petition [for rescission of
rule, the ECC extended illegitimate parents an opportunity to file claims adoption] is granted, the parental authority of the adoptee's biological
for and receive death benefitsby equating dependency and legitimacy parent(s), if known, or the legal custody of the Department shall be
to the exercise of parental authority. Thus, as insinuated by the ECC in restored if the adoptee is still a minoror incapacitated. The reciprocal
rights and obligations of the adopter(s) and the adoptee to each other xxx
shall be extinguished. (emphasis added)
(2) When the parents, legitimate or illegitimate, or the legitimate
The provision adverted to is applicable herein by analogy insofar as the ascendants of the adopted concur withthe adopter, they shall divide the
restoration of custody is concerned.  The manner herein of terminating
1âwphi1 entire estate, one-half tobe inherited by the parents or ascendants and
the adopter’s parental authority, unlike the grounds for the other half, by the adopters;
rescission,  justifies the retention of vested rights and obligations
23

between the adopter and the adoptee, while the consequent xxx
restoration of parental authority in favor of the biological parents,
simultaneously, ensures that the adoptee, who is still a minor, is not left (6) When only collateral blood relatives of the adopted survive, then the
to fend for himself at such a tender age. ordinary rules of legal or intestate succession shall apply.

To emphasize, We can only apply the rule by analogy, especially since Similarly, at the time of Cornelio Colcol’s death, which was prior to the
RA 8552 was enacted after Cornelio’s death. Truth be told, there is a effectivity of the Family Code, the governing provision is Art. 984 of the
lacuna in the law as to which provision shall govern contingencies in all New Civil Code, which provides:
fours with the factual milieu of the instant petition. Nevertheless, We
are guided by the catena of cases and the state policies behind RA
Art. 984. In case of the death of an adopted child, leaving no children
8552  wherein the paramount consideration is the best interest of the
24

or descendants, his parents and relatives by consanguinity and not by

child, which We invoke to justify this disposition. It is, after all, for the
adoption, shall be his legal heirs.
best interest of the child that someone will remain charged for his
welfare and upbringing should his or her adopter fail or is rendered
incapacitated to perform his duties as a parent at a time the adoptee From the foregoing, it is apparent that the biological parents retain their
isstill in his formative years, and, to Our mind, in the absence or, as in rights of succession tothe estate of their child who was the subject of
this case, death of the adopter, no one else could reasonably be adoption. While the benefits arising from the death of an SSS covered
expected to perform the role of a parent other than the adoptee’s employee do not form part of the estateof the adopted child, the
biological one. pertinent provision on legal or intestate succession at least reveals the
policy on the rights of the biological parents and those by adoption vis-
à-vis the right to receive benefits from the adopted. In the same way
Moreover, this ruling finds support on the fact that even though
that certain rights still attach by virtue of the blood relation, so too
parental authority is severed by virtue of adoption, the ties between the
should certain obligations, which, We rule, include the exercise of
adoptee and the biological parents are not entirely eliminated. To
parental authority, in the event of the untimely passing of their minor
demonstrate, the biological parents, insome instances, are able to
offspring’s adoptive parent. We cannot leave undetermined the fate of
inherit from the adopted, as can be gleaned from Art. 190 of the Family
a minor child whose second chance ata better life under the care of the
Code:
adoptive parents was snatched from him by death’s cruel grasp.
Otherwise, the adopted child’s quality of life might have been better off
Art. 190. Legal or intestate succession to the estate of the adopted not being adopted at all if he would only find himself orphaned in the
shall be governed by the following rules: end. Thus, We hold that Cornelio’s death at the time of John’sminority
resulted in the restoration of petitioner’s parental authority over the as a beneficiary - effectively made petitioner, to Our mind, entitled to
adopted child. death benefit claims as a secondary beneficiary under PD 626 as a
dependent parent.
On top of this restoration of parental authority, the fact of petitioner’s
dependence on John can be established from the documentary All told, the Decision of the ECC dated March 17, 2010 is bereft of
evidence submitted to the ECC. As it appears in the records, petitioner, legal basis. Cornelio’s adoption of John, without more, does not
prior to John’s adoption, was a housekeeper. Her late husband died in deprive petitioner of the right to receive the benefits stemming from
1984, leaving her to care for their seven (7) children. But since she was John’s death as a dependent parent given Cornelio’s untimely demise
unable to "give a bright future to her growing children" as a during John’s minority. Since the parent by adoption already died, then
housekeeper, she consented to Cornelio’s adoption of Johnand the death benefits under the Employees' Compensation Program shall
Elizabeth in 1985. accrue solely to herein petitioner, John's sole remaining beneficiary.

Following Cornelio’s death in 1987, so records reveal, both petitioner WHEREFORE, the petition is hereby GRANTED. The March 17, 2010
and John repeatedly reported "Brgy. Capurictan, Solsona, Ilocos Decision of the Employees' Compensation Commission, in ECC Case
Norte" as their residence. In fact, this veryaddress was used in John’s No. SL-18483-0218-10, is REVERSED and SET ASIDE. The ECC is
Death Certificate  executed in Brazil, and in the Report of Personal
25
hereby directed to release the benefits due to a secondary beneficiary
Injury or Loss of Life accomplished by the master of the vessel of the deceased covered employee John Colcol to petitioner
boarded by John.  Likewise, this is John’s known address as per the
26
Bernardina P. Bartolome.
ECC’s assailed Decision.  Similarly, this same address was used by
27

petitioner in filing her claim before the SSS La Union branch and, No costs.
thereafter, in her appeal with the ECC. Hence, it can be assumed that
aside from having been restored parental authority over John, SO ORDERED.
petitioner indeed actually execised the same, and that they lived
together under one roof.
PRESBITERO J. VELASCO, JR.
Associate Justice
Moreover, John, in his SSS application,  named petitioner as one of
28

his beneficiaries for his benefits under RA 8282, otherwise known as

MARTIN S. VILLARAMA, JR.
the "Social Security Law." While RA 8282 does not cover
Associate Justice
compensation for work-related deaths or injury and expressly allows
the designation of beneficiaries who are not related by blood to the
member unlike in PD 626, John’s deliberate act of indicating petitioner ESTELA M. PERLAS-
BIENVENIDO L. REYES
as his beneficiary at least evinces that he, in a way, considered BERNABE*
Associate Justice
petitioner as his dependent. Consequently, the confluence of Associate Justice
circumstances – from Cornelio’s death during John’s minority, the
restoration ofpetitioner’s parental authority, the documents showing FRANCIS F. JARDELEZA
singularity of address, and John’s clear intention to designate petitioner Associate Justice
 ATTESTATION 17
 G.R. No. L-66574, February 21, 1990, 182 SCRA 427, 435.

I attest that the conclusions in the above Decision had been reached in  Biraogo v. The Philippine Truth Commission of 2010, G.R.
18

consultation before the case was assigned to the writer of the opinion Nos. 192935 and 193036, December 7, 2010, 637 SCRA 78,
of the Court's Division. 167.

PRESBITERO J. VELASCO, JR.

Associate Justice
Chairperson

CERTIFICATION

Pursuant to Section 13, Article VIII of the Constitution and the Division
Chairperson's Attestation, I certify that the conclusions in the above
Decision had been reached in consultation before the case was
assigned to the writer of the opinion of the Court's Division.

ANTONIO T. CARPIO
Acting Chief Justice

Footnotes

* Acting Member per Special Order No. 1866 dated November

4, 2014.

 Further amending certain articles of Presidential Decree No.

2

442 entitled "Labor Code of the Philippines"

 Hipolito, Jr. vs. Cinco, G.R. No. 174143, November 28, 2011,
12

661 SCRA 211, 326-327.

16
 G.R. Nos. 167274-75, July 21, 2008, 559 SCRA 160, 179.