G.R. No. L-20383; May 24, 1967
THE PHILIPPINE AMERICAN LIFE INSURANCE COMPANY, petitioner-appellee, vs. SOCIAL SECURITY COMMISSION, respondent-appellant.

FACTS

The Social Security System (SSS), with the approval of the Chairman of the Social Security Commission, issued Circular No. 34 requiring insurance firms to submit the names of their agents, solicitors, or underwriters for compulsory coverage under the Social Security Act, as they were considered employees. The SSS demanded compliance from the Philippine American Life Insurance Company (Philamlife). Philamlife objected, contending that its insurance agents were not employees. Instead of appealing to the Social Security Commission, Philamlife filed an action for prohibition with preliminary injunction in the Court of First Instance of Manila to restrain the Commission from compelling contributions and from prosecuting its officers. The lower court ruled in favor of Philamlife, holding that its agents were not employees and ordering the Commission to desist. The Commission appealed directly to the Supreme Court.

ISSUE

1. Whether the trial court had jurisdiction to hear and decide the case.
2. Whether Philamlife had a cause of action against the Commission.
3. Whether insurance agents of a life insurance company are its employees for purposes of compulsory coverage under the Social Security System.

RULING

1. The trial court had no jurisdiction. The Social Security Commission, in the exercise of its quasi-judicial functions to determine and settle claims, is not inferior to courts of first instance. A writ of prohibition under Rule 65 may only be issued by a superior court to an inferior tribunal, board, or person. Furthermore, judicial review of Commission decisions is governed by Section 5 of the Social Security Act, which permits review by the Court of Appeals or the Supreme Court only after exhausting remedies before the Commission.
2. Philamlife had no cause of action. It failed to exhaust administrative remedies by not appealing the SSS’s action to the Social Security Commission. The approval of Circular No. 34 by the Commission’s Chairman did not constitute a final “decision” on a contested matter. Even if it were considered a decision, Philamlife was required to seek reconsideration from the Commission first. An appeal to the Commission was a plain, speedy, and adequate remedy, and the threat of criminal prosecution came from the SSS, not the Commission, which could have restrained such action during an appeal.
3. The Supreme Court deemed it unnecessary to rule on the substantive issue of employer-employee relationship. The lower court’s lack of jurisdiction and Philamlife’s failure to exhaust administrative remedies were dispositive. Moreover, the issue became moot with the passage of Republic Act No. 4857, which explicitly amended the Social Security Act to provide that any dispute regarding coverage is cognizable by the Commission.
The Supreme Court reversed the decision of the Court of First Instance and ordered the dismissal of Philamlife’s complaint.