G.R. No. L-14833. April 28, 1962.
OROMECA LUMBER CO., INC., petitioner-appellant, vs. SOCIAL SECURITY COMMISSION and SOCIAL SECURITY SYSTEM, respondents-appellees.

FACTS

Oromeca Lumber Co., Inc., a corporation, filed a petition with the Social Security Commission (SSC) for a refund of social security premiums it remitted from September 1, 1957, to April 11, 1958. Its claim was that, having been incorporated only on April 11, 1956, it was not yet subject to the compulsory coverage of the Social Security Act until it had been in operation for two years, or by April 11, 1958. The Social Security System (SSS) opposed, contending the corporation was merely a continuation of the pre-existing partnership “Ortega, Roman & Lacson De Leon Company,” which operated under the name “Oromeca Lumber Company” since 1947.
The parties submitted a stipulation of facts. It established that the partnership was registered in 1947, dissolved on April 6, 1956, and that the appellant corporation was formed on April 4, 1956, and incorporated on April 11, 1956, engaging in the identical lumber business. The Articles of Dissolution of the partnership, though not physically attached to the stipulation, were referenced therein and revealed the partners’ express will to organize the business into a corporation to expand it, with the dissolution to be effective upon the new corporation’s registration, which would assume all assets and liabilities.

ISSUE

Whether the appellant corporation, Oromeca Lumber Co., Inc., having been incorporated on April 11, 1956, is entitled to a two-year exemption from compulsory social security coverage, thereby warranting a refund of premiums paid before April 11, 1958.

RULING

No. The Supreme Court affirmed the SSC’s denial of the refund. The legal logic centered on piercing the veil of separate corporate identity to assess the true nature of the business continuity. While the corporation is a distinct juridical entity from the partnership, the Court found that the appellant merely absorbed and continued the business of its predecessor. The stipulation of facts and the Articles of Dissolution demonstrated an unbroken business lineage: the partnership operated since 1947, dissolved expressly to be incorporated, and the corporation assumed all assets and liabilities while conducting the exact same business.
The Court held that administrative bodies like the SSC are not strictly bound by technical rules of evidence and could properly consider the Articles of Dissolution, which were integral to the stipulation by reference and were public records. Since the corporation was a mere continuation, it inherited the partnership’s operational history. Consequently, for purposes of computing the two-year period for compulsory coverage under the Social Security Act, the appellant was deemed to have been an employer engaged in business since June 18, 1947, the start of the partnership’s operations. Therefore, it was already subject to compulsory coverage by September 1, 1957, and not entitled to any refund.