PHILIPPINE BLOOMING MILLS CO., INC. (As Employer) and FRANCISCO TONG (As Assistant General Manager) and Attorney-in-Fact of SUSUMO SONODA, SENJI TANAKA, TAKASHIKO KUMAMOTO, HITOSHI NAKAMURA, TETSUO KODU, (Employees), petitioners and appellants, vs. SOCIAL SECURITY SYSTEM, respondent and appellee.
FACTS
The Philippine Blooming Mills Co., Inc., a domestic corporation, employed six Japanese technicians under contracts with a minimum period of 6 months and a maximum of 24 months, from April 28, 1957, to October 26, 1958. In August 1957, the corporation inquired from the Social Security System (SSS) whether these alien employees were subject to compulsory coverage. The SSS, through its First Deputy Administrator, replied on August 29, 1957, citing Rule I, Section 3(d) of its Rules and Regulations, stating that aliens employed temporarily in the Philippines are compulsorily covered but, upon their departure, are entitled to a rebate of a proportionate amount of their contributions, and their employers are entitled to the same proportionate rebate. Starting September 1957, the employer and the employees paid their respective premium contributions to the SSS. On October 7, 1958, after the Japanese technicians’ employment ended, the corporation, on its behalf and as attorney-in-fact for the employees, filed a claim with the SSS for a refund of the total premiums paid (P2,520.00). The SSS denied the claim, citing amended Rule IX, which required membership for at least two years before a separated employee could be allowed a return of personal contributions and did not provide for an employer’s refund. The Social Security Commission denied the petition, ruling that although the original Rule I, Section 3(d) provided for a rebate, this rule was amended, with the amendment approved by the President on January 14, 1958, eliminating the rebate provision. The amended rules were published in the Official Gazette in November 1958, after the employees’ departure. The Commission held that the amended Rule IX, requiring two years of membership for a refund, governed at the time of the employees’ separation in October 1958.
ISSUE
Whether the amendment of the SSS Rules and Regulations, which eliminated the provision for a rebate of premium contributions for temporarily employed aliens upon their departure, constituted an impairment of the obligation of contract, and whether the appellants are bound by the amended rules despite their publication after the claim was filed.
RULING
The Supreme Court affirmed the resolution of the Social Security Commission, denying the refund. The Court held that membership in the SSS is not a result of a bilateral, consensual contract but is a compulsory coverage imposed by Republic Act 1161, an exercise of the state’s police power to provide social security. Therefore, the constitutional prohibition against the impairment of the obligation of contract does not apply. The Court further ruled that the amended Rules and Regulations, promulgated pursuant to the Commission’s authority and approved by the President on January 14, 1958, had the force and effect of law. Under the original rules (Rule XI, Section 2), any amendment takes effect on the date it is approved by the President, not the date of its publication in the Official Gazette. Consequently, the amendment was effective as of January 14, 1958. Since the Japanese technicians were separated in October 1958, the governing rule was the amended Rule IX, which required at least two years of membership for a refund of contributions, a condition the employees did not meet. The delayed publication in November 1958 did not affect the date of effectivity. Thus, the appellants were not entitled to a refund.
