Social Security System v. Atlantic Gulf and Pacific Company
REITERATIONFacts
The Antecedents: Atlantic Gulf and Pacific Company of Manila, Inc. (AG & P) and Semirara Coal Corporation (SEMIRARA) filed a complaint against the Social Security System (SSS) for specific performance and damages. AG & P had delinquencies in premiums and loan amortizations amounting to P7.3 Million in 2000. SSS proposed two options: installment or dacion en pago. AG & P chose dacion en pago, offering a property in Baguio City, but SSS proposed carving out an area, which AG & P rejected. AG & P then offered a portion of its lot in Batangas, and SEMIRARA was included due to its outstanding delinquencies. SSS, in Resolution No. 270 dated April 4, 2001, approved the dacion en pago to settle the delinquencies of AG & P and SEMIRARA, which amounted to P29,261,902.45 as of March 31, 2001. The approval led to the restoration of benefits for member-employees. AG & P consistently remitted contributions and loan amortizations. However, SSS failed to act on the Deed of Assignment for over a year. When SSS finally sent a revised Deed of Assignment on February 28, 2003, the obligation amount had ballooned to P40,846,610.64 due to additional interests and penalties assessed from April 2001 to January 2003. AG & P demanded the waiver of these additional charges, citing SSS's delay. AG & P and SEMIRARA remained willing to pay the original amount of P29,261,902.45, but SSS refused to accept unless the additional interests and penalties were also paid. Procedural History: The Regional Trial Court (RTC) of Batangas City, Branch 3, dismissed the complaint upon SSS's motion, ruling that it lacked jurisdiction over the subject matter as the dispute concerned the collection of contributions and penalties, which are cognizable by the Social Security Commission (SSC) under Republic Act No. 1161, as amended by R.A. No. 8282. The RTC found that the dacion en pago was merely a form of payment for contributions and penalties. The private respondents' motion for reconsideration was denied. On appeal, the Court of Appeals (CA) reversed the RTC's decision, holding that the subject of the complaint was the enforcement of the dacion en pago, an action for specific performance incapable of pecuniary estimation, thus falling under the RTC's jurisdiction. SSS's motion for reconsideration was denied by the CA. The Petition: SSS filed a Petition for Review on Certiorari before the Supreme Court, insisting on the SSC's exclusive jurisdiction over the dispute pursuant to Section 5(a) of R.A. No. 8282.
Issue(s)
Whether the Regional Trial Court has jurisdiction over a complaint for specific performance to enforce a dacion en pago agreement for the settlement of SSS delinquencies. Whether the dispute falls under the exclusive jurisdiction of the Social Security Commission as a matter arising under the Social Security Act.
Ruling
The Supreme Court denied the petition, affirming the decision of the Court of Appeals. The case was remanded to the trial court for further proceedings.
Ratio Decidendi
On the jurisdiction of the Regional Trial Court: The Court held that the nature of the action is determined by the allegations in the complaint. In this case, the private respondents' complaint sought the enforcement of an approved dacion en pago agreement, which was a special mode of payment agreed upon to settle their delinquencies. The Court reiterated the ruling in Singson v. Isabela Sawmill that where the basic issue is something other than the right to recover a sum of money, and the money claim is purely incidental to the principal relief sought, the action is considered one where the subject of litigation may not be estimated in terms of money and is cognizable by the Regional Trial Courts. The core of the dispute was not the existence of the delinquency or the amount of contributions, but the SSS's failure to implement the agreed-upon dacion en pago. Therefore, the action was one for specific performance, which is incapable of pecuniary estimation. On the exclusive jurisdiction of the Social Security Commission: The Court clarified that while Section 5(a) of R.A. No. 1161, as amended by R.A. No. 8282, vests jurisdiction upon the Commission over "disputes arising under this Act with respect to coverage, benefits, contributions and penalties thereon or any matter related thereto," this pertains to disputes where there is still a conflict or controversy regarding these matters. In the present case, the private respondents had admitted their delinquencies and had reached an agreement with SSS for a dacion en pago, which was approved by SSS. The controversy arose not from the existence or amount of the debt, but from the SSS's failure to implement the agreed settlement. The Court emphasized that dacion en pago is a special mode of payment that involves the delivery and transmission of ownership of a thing by the debtor to the creditor as an accepted equivalent of the performance of an obligation, requiring mutual consent. Once agreed upon and approved, the enforcement of such an agreement, especially when one party fails to act, becomes a matter of specific performance, not a dispute over contributions or penalties that falls within the SSC's exclusive jurisdiction.
Main Doctrine
A dispute arising from the non-implementation of an agreed dacion en pago, which is a special mode of payment constituting an objective novation of the obligation, is an action for specific performance that is incapable of pecuniary estimation and falls under the exclusive jurisdiction of the Regional Trial Court, not the Social Security Commission.