SSS vs. Atlantic Gulf

G.R. No. 175952 April 30, 2008 SSS vs.  ATLANTIC GULF AND PACIFIC COMPANY OF MANILA, INC. and SEMIRARA COAL CORPORATION TINGA, J.:   Facts: On February 13, 2004, Atlantic Gulf and Pacific Company of Manila, Inc. and Semirara Coal Corporation (SEMIRARA) filed a complaint for specific performance and damages against SSS before the RTC of Batangas City. The complaint alleged that in 2000, Atlantic Gulf informed the SSS in writing of its premiums and loan amortization delinquencies covering the period from January 2000 to May 2000 amounting to P7.3 Million. Atlanta Gulf proposed to pay its said arrears by end of 2000, but requested for the condonation of all penalties In turn, SSS suggested 2 options to AG&P, either to pay by installment or through dacion en pago Atlanta Gulf chose to settle its obligation with the SSS through dacion en pago of its 5,999 sq.m. property situated in Baguio City  with an appraised value of about P80.0 Million.  SSS proposes to carve-out from the said property an area sufficient to cover Atlanta Gulf’s delinquencies. However, Atlanta was not not amenable to subdivide the Baguio property Atlanta Gulf then made another proposal to SSS. This time, offering as payment a portion of its 58,153 sqm lot in F.S. Sebastian, Sto. Nio, San Pascual, Batangas.  In addition, SSS informed Atlanta Gulf of its decision to include other companies within the umbrella of DMCI group with arrearages with the SSS.  In the process of elimination only SEMIRARA was left with outstanding delinquencies with the SSS. Thus, SEMIRARAs inclusion in the proposed settlement through dacion en pago; Atlanta Gulf was directed by the SSS to submit documents, such as TCTs, Tax Declaration, and the proposed subdivision plan. On April 4, 2001, SSS, in its Resolution approved Atlanta Gulf’s proposal to settle its and SEMIRARAs delinquencies through dacion en pago, amounted to P29,261,902.45.  As a result of the approval of the dacion en pago, posting of contributions and loan amortization to individual member accounts was effected immediately thereafter. Thus, the benefits of the member-employees of both companies were restored From the time of the approval of Atlanta Gulf’s proposal up to the present, it P has religiously remitted the premium contributions and loan amortization of its member-employees to the defendant; To effect the property transfer, a Deed of Assignment has to be executed. Because of SSS failure to come up with the required Deed of Assignment to effect said transfer, Atlanta Gulf prepared the draft and submitted it to the Office of the Vice-President NCR thru SSS Baclaran Branch.  However, SSS failed to take any action on said Deed of Assignment causing Atlanta Gulf to re-submit it to the same office Atlanta Gulf was also consistent in its regular follow ups with SSS as to the status of its submitted Deed of Assignment; On February 28, 2003, or more than a year after the approval of the proposal, SSS sent the revised copy of the Deed of Assignment. However, the amount of obligation appearing in the approved Deed of Assignment has ballooned from P29,261,902.45 to P40,846,610.64 allegedly because of the additional interests and penalty charges assessed on plaintiffs outstanding obligation from April 2001, the date of approval of the proposal, up to January 2003 Atlanta Gulf demanded for the waiver and deletion of the additional interests on the ground that delay in the approval of the deed and the subsequent delay in conveyance of the property in SSS’ name was solely attributable to it ; hence, to charge would be unreasonable. Atlanta Gulf and SEMIRARA maintain their willingness to settle their alleged obligation of P29,261,902.45 to SSS. However, SSS refused to accept the payment through dacion en pago, unless they also pay the additional interests and penalties being charged SSS moved for the dismissal of the complaint for lack of jurisdiction and non-exhaustion of administrative remedies. RTC of Batangas granted SSSs motion and dismissed the complaint. According to the trial court the dispute between the parties was directly related to the collection of SSS contributions. RA 1161 as amended by R.A. 8282, specifically provides that any dispute arising under the said Act shall be cognizable by the Commission and any case filed with respect thereto shall be heard by the Commission. Hence, a procedural process mandated by a special law. The trial court believes that the subject matter is the payment of contributions and the corresponding penalties which are within the ambit of Sec. 5 (a) of R.A. No. 1161, as amended by R.A. No. 8282. Therefore the trial court having no jurisdiction over the subject matter of the instant complaint. Consequently, Atlanta Gulf filed an appeal before the CA alleging that the trial court erred in its pronouncement that it had no jurisdiction over the subject matter of the complaint and in granting the motion to dismiss. CA reversed the decision of RTC and ordered the trial court to proceed with the civil case. CA held that the subject of the complaint is no longer the payment of the premium, loan amortization delinquencies and penalties but the enforcement of the dacion en pago pursuant to SSS Resolution No. 270. The action then is one for specific performance which case law holds is an action incapable of pecuniary estimation falling under the jurisdiction of the RTC. SSS filed a MR to the CA but was denied  ISSUE: Whether or not RTC has jurisdiction to entertain a controversy arising from the non-implementation of a dacion en pago agreed upon by the parties as a means of settlement of private respondents liabilities?   HELD: Yes. The pertinent provision of law detailing the jurisdiction of the Commission is Section 5(a) of R.A. No. 1161, as amended by R.A. No. 8282, otherwise known as the Social Security Act of 1997, to wit: SEC. 5. Settlement of Disputes. (a) Any dispute arising under this Act with respect to coverage, benefits, contributions and penalties thereon or any other matter related thereto, shall be cognizable by the Commission, and any case filed with respect thereto shall be heard by the Commission, or any of its members, or by hearing officers duly authorized by the Commission and decided within the mandatory period of twenty (20) days after the submission of the evidence. The filing, determination and settlement of disputes shall be governed by the rules and regulations promulgated by the Commission. The law clearly vests upon the Commission jurisdiction over disputes arising under this Act with respect to coverage, benefits, contributions and penalties thereon or any matter related thereto. However in the case, there was no longer any dispute with respect to Atlanta’s accountability to the SSS. Atlanta Gulf had admitted their delinquency and offered to settle them by way of dacion en pago subsequently approved by the SSS in Resolution No. 270-s. 2001. SSS stated in said resolution that the dacion en pago proposal of AG&P Co. of Manila and Semirara Coals Corporation to pay their liabilities in the total amount of P30,652,710.71 as of 31 March 2001 by offering their 5.8 ha. property located in San Pascual, Batangas, be, as it is hereby, approved. This statement unequivocally shows its consent to the dacion en pago. Therefore, the controversy, lies in the non-implementation of the approved and agreed dacion en pago on the part of the SSS. As such, Atlanta Gulf filed a suit to obtain its enforcement which is a suit for specific performance and one incapable of pecuniary estimation beyond the competence of the Commission. In Singson v. Isabela Sawmill, the Court held as follows: In determining whether an action is one the subject matter of which is not capable of pecuniary estimation this Court has adopted the criterion of first ascertaining the nature of the principal action or remedy sought. If it is primarily for the recovery of a sum of money, the claim is considered capable of pecuniary estimation, and whether jurisdiction in the municipal courts or in the courts of first instance would depend on the amount of the claim. However, where the basic issue is something other than the right to recover a sum of money, where the money claim is purely incidental to, or a consequence of, the principal relief sought, this Court has considered such actions as cases where the subject of the litigation may not be estimated in terms of money, and are cognizable exclusively by courts of first instance (now Regional Trial Courts).   NOTES: Dacion en pago is the delivery and transmission of ownership of a thing by the debtor to the creditor as an accepted equivalent of the performance of the obligation. It is a special mode of payment where the debtor offers another thing to the creditor who accepts it as equivalent of payment of an outstanding debt. The undertaking really partakes in one sense of the nature of sale, that is the creditor is really buying the thing or property of the debtor, payment for which is to be charged against the debtors debt.