SSS V CA

SOCIAL SECURITY SYSTEM, petitioner, vs. ATLANTIC GULF AND PACIFIC COMPANY OF MANILA, INC.
and SEMIRARA COAL CORPORATION, respondents. Facts: Sometime in 2000, Atlantic informed the SSS in writing of its premiums and loan amortization delinquencies covering the period from January to May 2000 amounting to P7.3 Million. AG&P proposed to pay its said arrears by end of 2000, but requested for the condonation of all penalties. In turn, SSS suggested 2 options, either to pay by installment or through "dacion en pago". AG&P chose to settle its obligation with the SSS through dacion en pago of its 5,999 sq. m. property with an appraised value of about P80 Million. SSS proposes to carve-out from the said property an area sufficient to cover plaintiffs delinquencies. AG&P, however, is not amenable to subdivide its Baguio property; AG&P then made another proposal to SSS. This time, offering as payment a portion of its lot in Batangas. In addition, SSS informed AG&P of its decision to include other companies within the umbrella of DMCI group with arrearages with the SSS. In the process of elimination of the companies belonging to the DMCI group with possible outstanding obligation with the SSS, it was only SEMIRARA which was left with outstanding delinquencies with the SSS. Thus, SEMIRARAs inclusion in the proposed settlement through dacion en pago; As a result of the approval of the dacion en pago, posting of contributions and loan amortization to individual member accounts, both for AG&P and SEMIRARA employees, was effected immediately thereafter. Thus, the benefits of the member-employees of both companies were restored; To effect the property transfer, a Deed of Assignment has to be executed between the plaintiffs and the defendant. Because of SSS failure to come up with the required Deed of Assignment to effect said transfer, AG&P prepared the draft and submitted it to the Office of the Vice-President. From its original submission of the Deed of Assignment in July 2001 to its re-submission in December 2001, and SSS returning of the revised 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. On February 28, 2003, or more than a year after the approval of AG&Ps proposal, defendant sent the revised copy of the Deed of Assignment to AG&P. However, the amount of the plaintiffs 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; AG&P 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 defendants name was solely attributable to the SSS. The trial court granted SSSs motion and dismissed private respondents complaint. The pertinent portions of the assailed order are as follows: Observingly, the running dispute between plaintiffs and defendant originated from the disagreement as to the amount of unpaid contributions and the amount of the penalties imposed appurtenant thereto. The alleged dacion en pago is crystal clear manifestation of offering a special form of payment which to the mind of the court will produce effect only upon acceptance by the offeree and the observance and compliance of the required formalities by the parties. No matter in what form it may be, still the 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. WHEREFORE, the Court having no jurisdiction over the subject matter of the instant complaint, the motion is granted and this case is hereby ordered DISMISSED.
The Court of Appeals reversed. The appellate court thus held that the subject of the complaint is no longer the payment of the premium and loan amortization delinquencies, as well as the penalties appurtenant thereto, but the enforcement of the dacion en pago. The action then is one for specific performance which falls under the jurisdiction of the Regional Trial Court. Issue: Which body 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: RTC. CA decision affirmed. Ratio: At the outset, it is well to restate the rule that what determines the nature of the action as well as the tribunal or body which has jurisdiction over the case are the allegations in the complaint. The pertinent provision of law detailing the jurisdiction of the Commission is Section 5(a) of 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 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..." Dispute is defined as "a conflict or controversy." 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. 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 evinces its consent to the dacion en pago. In Vda. de Jayme v. Court of Appeals, the Court ruled significantly as follows: 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. As such, the essential elements of a contract of sale, namely, consent, object certain, and cause or consideration must be present. In its modern 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 considered as the purchase price. In any case, common consent is an essential prerequisite, be it sale or novation, to have the effect of totally extinguishing the debt or obligation. The controversy, instead, lies in the non-implementation 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 estimation beyond the competence of the Commission.

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SOCIAL SECURITY SYSTEM, petitioner, vs. ATLANTIC GULF AND PACIFIC COMPANY OF MANILA, INC.

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