PHILIPPINEJURISPRUDENCEFULLTEXT

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G.R.No.175952April30,2008
SOCIALSECURITYSYSTEMvs.ATLANTICGULFANDPACIFICCOMPANYOFMANILA,INC.,ETAL.

RepublicofthePhilippines
SUPREMECOURT
Manila
SECONDDIVISION
G.R.No.175952April30,2008
SOCIALSECURITYSYSTEM,petitioner,
vs.
ATLANTICGULFANDPACIFICCOMPANYOFMANILA,INC.andSEMIRARACOALCORPORATION,respondents.
DECISION
TINGA,J.:
In this Petition for Review on Certiorari1 under Rule 45 of the 1997 Rules of Civil Procedure, petitioner Republic of the Philippines
representedbytheSocialSecuritySystem(SSS)assailstheDecision2
dated31August2006oftheEleventhDivisionoftheCourtofAppealsanditsResolution3dated19December2006denyingpetitioners
MotionforReconsideration.
FollowingaretheantecedentsculledfromthedecisionoftheCourtofAppeals:
On 13 February 2004, Atlantic Gulf and Pacific Company of Manila, Inc. (AG & P) and Semirara Coal Corporation (SEMIRARA)
(collectivelyreferredtoasprivaterespondents)filedacomplaintforspecificperformanceanddamagesagainstSSSbeforetheRegional
TrialCourtofBatangasCity,Branch3,docketedasCivilCaseNo.7441.Thecomplaintallegedthat:
xxx
3.Sometimein2000,plaintiffinformedtheSSSinwritingofitspremiumsandloanamortizationdelinquenciescoveringtheperiod
fromJanuary2000toMay2000amountingtoP7.3Million.AG&Pproposedtopayitssaidarrearsbyendof2000,butrequestedfor
thecondonationofallpenalties
4.Inturn,thedefendantsuggestedtwo(2)optionstoAG&P,eithertopaybyinstallmentorthrough"dacionenpago"
5. AG&P chose to settle its obligation with the SSS under the second option, that is through dacion en pago of its 5,999 sq. m.
propertysituatedinBaguioCitycoveredbyTCTNo.3941withanappraisedvalueofaboutP80.0Million.SSSproposestocarve
out from the said property an area sufficient to cover plaintiffs delinquencies. AG&P, however, is not amenable to subdivide its
Baguioproperty
6.AG&PthenmadeanotherproposaltoSSS.Thistime,offeringaspaymentaportionofits58,153squaremeterlot,situatedinF.S.
Sebastian,Sto.Nio,SanPascual,Batangas.Inaddition,SSSinformedAG&Pofitsdecisiontoincludeothercompanieswithinthe
umbrellaofDMCIgroupwitharrearageswiththeSSS.IntheprocessofeliminationofthecompaniesbelongingtotheDMCIgroup
with possible outstanding obligation with the SSS, it was only SEMIRARA which was left with outstanding delinquencies with the
SSS.Thus,SEMIRARAsinclusionintheproposedsettlementthroughdacionenpago
7. AG&P was, thereafter, directed by the defendant to submit certain documents, such as Transfer Certificate of Title, Tax
Declarationcoveringthesubjectlot,andtheproposedsubdivisionplan,whichrequirementsAG&Pimmediatelycomplied
8.OnApril4,2001,SSS,initsResolutionNo.270,finallyapprovedAG&PsproposaltosettleitsandSEMIRARAsdelinquencies
through dacion en pago, which as of March 31, 2001 amounted to P29,261,902.45. Approval of AG&Ps proposal was
communicatedtoitbyMs.AuroraE.L.Ortega,VicePresident,NCRGroupoftheSSSinaletterdatedApril23,2001.
9.Asaresultoftheapprovalofthedacionenpago,postingofcontributionsandloanamortizationtoindividualmemberaccounts,
both for AG&P and SEMIRARA employees, was effected immediately thereafter. Thus, the benefits of the memberemployees of
bothcompanieswererestored
10.FromthetimeoftheapprovalofAG&Psproposaluptothepresent,AG&Pis(sic)religiouslyremittingthepremiumcontributions
andloanamortizationofitsmemberemployeestothedefendant
11.Toeffectthepropertytransfer,aDeedofAssignmenthastobeexecutedbetweentheplaintiffsandthedefendant.Becauseof
SSSfailuretocomeupwiththerequiredDeedofAssignmenttoeffectsaidtransfer,AG&Ppreparedthedraftandsubmittedittothe
OfficeoftheVicePresidentNCRthruSSSBaclaranBranchinJuly2001.Unfortunately,thedefendantfailedtotakeanyactionon
saidDeedofAssignmentcausingAG&PtoresubmitittothesameofficeoftheVicePresidentNCRinDecember2001.Fromits
originalsubmissionoftheDeedofAssignmentinJuly2001toitsresubmissioninDecember2001,andSSSreturningoftherevised
draft in February 28, 2003 AG&P was consistent in its regular follow ups with SSS as to the status of its submitted Deed of
Assignment
12.OnFebruary28,2003,ormorethanayearaftertheapprovalofAG&Psproposal,defendantsenttherevisedcopyoftheDeed
of Assignment to AG&P. However, the amount of the plaintiffs obligation appearing in the approved Deed of Assignment has
balloonedfromP29,261,902.45toP40,846,610.64allegedlybecauseoftheadditionalinterestsandpenaltychargesassessedon
plaintiffsoutstandingobligationfromApril2001,thedateofapprovaloftheproposal,uptoJanuary2003
13.AG&Pdemandedforthewaiveranddeletionoftheadditionalinterestsonthegroundthatdelayintheapprovalofthedeedand
thesubsequentdelayinconveyanceofthepropertyindefendantsnamewassolelyattributabletothedefendanthence,tocharge
plaintiffswithadditionalinterestsandpenaltiesamountingtomorethanP10,000,000.00,wouldbeunreasonable.
14. AG&P and SEMIRARA maintain their willingness to settle their alleged obligation of P29,261,902.45 to SSS. Defendant,
however, refused to accept the payment through dacion en pago, unless plaintiffs also pay the additional interests and penalties
beingcharged
xxx
Instead of filing an answer, SSS moved for the dismissal of the complaint for lack of jurisdiction and nonexhaustion of administrative
remedies.Inanorderdated28July2004,thetrialcourtgrantedSSSsmotionanddismissedprivaterespondentscomplaint.Thepertinent
portionsoftheassailedorderareasfollows:
Clearly,themotionistriggeredontheissueofthecourtsjurisdictionoverthesubjectmatterandthenatureoftheinstantcomplaint.
Thelengthandbreadthofthecomplaintasperused,boilsdowntothequestionsofpremiumandloanamortizationdelinquenciesof
theplaintiff,theoptiontakenforthepaymentofthesameinfavorofthedefendantandthedisagreementbetweenthepartiesasto
the amount of the unpaid contributions and salary loan repayments. In other words, said questions are directly related to the
collectionofcontributionsduethedefendant.RepublicActNo.1161asamendedbyR.A.No.8282,specificallyprovidesthatany

disputearisingunderthesaidActshallbecognizablebytheCommissionandanycasefiledwithrespecttheretoshallbeheardby
theCommission.Hence,aproceduralprocessmandatedbyaspeciallaw.
Observingly, the running dispute between plaintiffs and defendant originated from the disagreement as to the amount of unpaid
contributionsandtheamountofthepenaltiesimposedappurtenantthereto.Theallegeddacionenpagoiscrystalclearmanifestation
ofofferingaspecialformofpaymentwhichtothemindofthecourtwillproduceeffectonlyuponacceptancebytheoffereeandthe
observanceandcomplianceoftherequiredformalitiesbytheparties.Nomatterinwhatformitmaybe,stillthecourtbelievesthat
thesubjectmatteristhepaymentofcontributionsandthecorrespondingpenaltieswhicharewithintheambitofSec.5(a)ofR.A.
No.1161,asamendedbyR.A.No.8282.
WHEREFORE,theCourthavingnojurisdictionoverthesubjectmatteroftheinstantcomplaint,themotionisgrantedandthiscase
isherebyorderedDISMISSED.
SOORDERED.4
PrivaterespondentsmovedforthereconsiderationoftheorderbutthesamewasdeniedinanOrderdated15September2004.
Consequently,privaterespondentsfiledanappealbeforetheCourtofAppealsallegingthatthetrialcourterredinitspronouncementthatit
hadnojurisdictionoverthesubjectmatterofthecomplaintandingrantingthemotiontodismiss.
TheCourtofAppealsreversedandsetasidethetrialcourtschallengedorder,grantedprivaterespondentsappealandorderedthetrial
court to proceed with the civil case with dispatch. From the averments in their complaint, the appellate court observed that private
respondents are seeking to implement the Deed of Assignment which they had drafted and submitted to SSS sometime in July 2001,
pursuant to SSSs letter addressed to AG& P dated 23 April 2001 approving AG&P and SEMIRARAS delinquencies through dacion en
pago,whichasof31March2001,amountedtoP29,261,902.45.Theappellatecourtthusheldthatthesubjectofthecomplaintisnolonger
thepaymentofthepremiumandloanamortizationdelinquencies,aswellasthepenaltiesappurtenantthereto,buttheenforcementofthe
dacionenpagopursuanttoSSSResolutionNo.270.Theactionthenisoneforspecificperformancewhichcaselawholdsisanaction
incapableofpecuniaryestimationfallingunderthejurisdictionoftheRegionalTrialCourt.5
SSSfiledamotionforreconsiderationoftheappellatecourtsdecisionbutthesamewasdeniedinaResolutiondated19December2006.
Now before the Court, SSS insists on the Social Security Commissions (the Commission) jurisdiction over the complaint pursuant to
Section5(a)ofRepublicAct(R.A.)No.8282.SSSmaintainstheCommissionsjurisdictionoveralldisputesarisingfromtheprovisionsof
R.A.No.1161,amendedbyR.A.No.8282totheexclusionoftrialcourts.6
The main issue in this case pertains to which body has jurisdiction to entertain a controversy arising from the nonimplementation of a
dacionenpagoagreeduponbythepartiesasameansofsettlementofprivaterespondentsliabilities.
Attheoutset,itiswelltorestatetherulethatwhatdeterminesthenatureoftheactionaswellasthetribunalorbodywhichhasjurisdiction
overthecasearetheallegationsinthecomplaint.7
ThepertinentprovisionoflawdetailingthejurisdictionoftheCommissionisSection5(a)ofR.A.No.1161,asamendedbyR.A.No.8282,
otherwiseknownastheSocialSecurityActof1997,towit:
SEC. 5. Settlement of Disputes. (a) Any dispute arising under this Act with respect to coverage, benefits, contributions and
penaltiesthereonoranyothermatterrelatedthereto,shallbecognizablebytheCommission,andanycasefiledwithrespectthereto
shallbeheardbytheCommission,oranyofitsmembers,orbyhearingofficersdulyauthorizedbytheCommissionanddecided
within the mandatory period of twenty (20) days after the submission of the evidence. The filing, determination and settlement of
disputesshallbegovernedbytherulesandregulationspromulgatedbytheCommission.
The law clearly vests upon the Commission jurisdiction over "disputes arising under this Act with respect to coverage, benefits,
contributionsandpenaltiesthereonoranymatterrelatedthereto..."Disputeisdefinedas"aconflictorcontroversy."8
From the allegations of respondents complaint, it readily appears that there is no longer any dispute with respect to respondents
accountability to the SSS. Respondents had, in fact, admitted their delinquency and offered to settle them by way of dacion en pago
subsequently approved by the SSS in Resolution No. 270s. 2001. SSS stated in said resolution that "the dacion en pago proposal of
AG&PCo.ofManilaandSemiraraCoalsCorporationtopaytheirliabilitiesinthetotalamountofP30,652,710.71asof31March2001by
offeringtheir5.8ha.propertylocatedinSanPascual,Batangas,be,asitishereby,approved.."9Thisstatementunequivocallyevincesits
consenttothedacionenpago.InVda.deJaymev.CourtofAppeals,10theCourtruledsignificantlyasfollows:
Dacionenpagoisthedeliveryandtransmissionofownershipofathingbythedebtortothecreditorasanacceptedequivalentofthe
performanceoftheobligation.Itisaspecialmodeofpaymentwherethedebtoroffersanotherthingtothecreditorwhoacceptsitas
equivalentofpaymentofanoutstandingdebt.Theundertakingreallypartakesinonesenseofthenatureofsale,thatisthecreditor
is really buying the thing or property of the debtor, payment for which is to be charged against the debtors debt. As such, the
essentialelementsofacontractofsale,namely,consent,objectcertain,andcauseorconsiderationmustbepresent.Initsmodern
concept, what actually takes place in dacion en pago is an objective novation of the obligation where the thing offered as an
accepted equivalent of the performance of an obligation is considered as the object of the contract of sale, while the debt is
consideredasthepurchaseprice.Inanycase,commonconsentisanessentialprerequisite,beitsaleornovation,tohavetheeffect
oftotallyextinguishingthedebtorobligation.11
The controversy, instead, lies in the nonimplementation of the approved and agreed dacion en pago on the part of the SSS. As such,
respondents filed a suit to obtain its enforcement which is, doubtless, a suit for specific performance and one incapable of pecuniary
estimationbeyondthecompetenceoftheCommission.12Pertinently,theCourtruledinSingsonv.IsabelaSawmill,13asfollows:
IndeterminingwhetheranactionisonethesubjectmatterofwhichisnotcapableofpecuniaryestimationthisCourthasadoptedthe
criterionoffirstascertainingthenatureoftheprincipalactionorremedysought.Ifitisprimarilyfortherecoveryofasumofmoney,
the claim is considered capable of pecuniary estimation, and whether jurisdiction in the municipal courts or in the courts of first
instancewoulddependontheamountoftheclaim.However,wherethebasicissueissomethingotherthantherighttorecovera
sum of money, where the money claim is purely incidental to, or a consequence of, the principal relief sought, this Court has
consideredsuchactionsascaseswherethesubjectofthelitigationmaynotbeestimatedintermsofmoney,andarecognizable
exclusivelybycourtsoffirstinstance(nowRegionalTrialCourts).14
Infine,theCourtfindsthedecisionoftheCourtofAppealsinaccordwithlawandjurisprudence.
WHEREFORE,thepetitionisDENIED.TheDecisiondated31August2006oftheCourtofAppealsEleventhDivisioninCAG.R.CVNo.
83775AFFIRMED.
Letthecaseberemandedtothetrialcourtforfurtherproceedings.
SOORDERED.
Quisumbing,ChairpersonCarpioMorales,ChicoNazaio,Velasco*,Jr.,JJ.,concur.

Footnotes
*AsreplacementofJusticeArturoD.BrionwhoinhibitedhimselfperAdministrativeCircularNo.842007.

1Rollo,pp.2049Dated12February2007.
2Id.at5560PennedbyAssociateJusticeElviJohnS.AsuncionwiththeconcurrenceofAssociateJusticesJoseCatralMendoza

andSesinandoE.Villon.
3Id.at79.
4Id.at108109.
5Id.at5960.
6Id.at33,41.
7Domalsinv.Valenciano,G.R.No.158687,25January2006,480SCRA114,133.
8BlacksLawDictionary(6thed.,1990)at472.
9Rollo,p.80.
10G.R.No.128669,4October2002,390SCRA380.
11Vda.deJaymev.CourtofAppeals,G.R.No.128669,4October2002,390SCRA380,392393.
12SeeRussellv.Vestil,G.R.No.119347,17March1999,304SCRA738,744745.
13No.L27343,28February1979,88SCRA623.
14Id.at637638.
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