G.R. No. L-16696 and L-16702; January 31, 1962
LUCIANO ESCOSURA, ET AL., petitioners-appellees, vs. SAN MIGUEL BREWERY, INC., respondent-appellant.

FACTS

The petitioners are employees of San Miguel Brewery, Inc., compulsorily covered by the Social Security System (SSS) in 1957. During their employment, they fell ill and were hospitalized. Pursuant to the company’s private Health, Welfare and Retirement Plan, they received sick leave pay equivalent to 50% of their wages for the first three days and 75% thereafter. Notwithstanding this receipt of partial pay from their employer, the employees filed claims with the Social Security Commission for sickness benefit allowances under Section 14(a) of Republic Act No. 1161 (the Social Security Act) for the same periods of confinement.
The employer, San Miguel Brewery, opposed the claims. It argued that the employees’ receipt of any sick leave pay, even if not full pay, under its private plan precluded them from claiming the statutory sickness benefits for the same period. The Social Security Commission ruled in favor of the employees. It ordered the employer to advance the claimed allowances and then seek 70% reimbursement from the SSS. The Commission interpreted the statutory bar—which required exhaustion of “all leaves of absence with pay” before SSS benefits could begin—to apply only to leaves with full pay.

ISSUE

Whether the phrase “all leaves of absence with pay” in Section 14(a) of the Social Security Act, as it stood at the time, refers only to leaves where the employee receives his full compensation, thereby allowing employees who receive only partial sick pay from their employer to also claim statutory sickness benefits.

RULING

Yes. The Supreme Court affirmed the Commission’s resolution, holding that the statutory precondition “before all leaves of absence with pay … shall have been exhausted” means leaves with full compensation. The Court’s legal logic rested on statutory construction and legislative intent. First, the unqualified term “pay” in legal and common usage denotes full compensation for services. Had Congress intended the bar to apply to any payment, regardless of amount, it would have used qualifying language. Second, the Social Security Act is social legislation designed for the welfare of employees; it must be liberally construed in their favor. Adopting the employer’s interpretation would allow employers to frustrate the law’s purpose by granting nominal sick pay (e.g., one centavo) to permanently bar access to statutory benefits, a result Congress could not have intended.
The Court further addressed the employer’s concern about employees receiving more while sick than while working. It clarified that under the facts, the combined employer plan payment (max 75% of wage) and the employer’s net obligation after SSS reimbursement (only 18% of the daily wage) would not exceed the employee’s full wage. Moreover, Section 9 of the Act provides a remedy, allowing employers and employees to adjust private plan benefits to account for the integration with SSS benefits. Therefore, the employees were entitled to receive sickness benefits under the Act despite having received partial sick leave pay from their employer.