Case Digest (G.R. No. L-15163) Core Legal Reasoning Model
Core Legal Reasoning Model
Facts:
The case, Elizalde Rope Factory, Inc. vs. Social Security Commission, was decided on February 28, 1962, by the Supreme Court of the Philippines under G.R. No. L-15163. The petitioner, Elizalde Rope Factory, Inc., was involved in a labor dispute in which its workers, including Edilberto Tupas, went on strike from September 17, 1957, until mid-February 1958. During the duration of the strike, the factory failed to remit the required Social Security premiums for Tupas, who was a covered worker. Although the strike ceased in February 1958, Tupas did not return to work; he died shortly after on May 6, 1958. The Social Security Commission sent bill No. 138 to the factory, demanding payment for Tupas' unpaid premiums amounting to P10.27 for the duration of the strike, arguing that despite the strike, the employer’s obligation to pay premiums must be upheld. In a response dated July 23, 1958, the factory contended that, since Tupas was not working during the strike and consequently
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Case Digest (G.R. No. L-15163) Expanded Legal Reasoning Model
Expanded Legal Reasoning Model
Facts:
- Strike and Employment Details
- On 17 September 1957, the laborers of the Elizalde Rope Factory, Inc. went on strike.
- Edilberto Tupas, a laborer, actively participated in the strike.
- The strike continued until the middle of February 1958, during which normal operations were affected.
- Payment of Social Security Premiums
- During the strike period (October 1957 to January 1958), no premium was remitted to the Social Security Commission for Edilberto Tupas.
- In February 1958, the rope factory resumed operations and continued to pay the premium until 6 May 1958, when Tupas died.
- The lapse in payment during the strike period became the subject of dispute.
- Communications and Clarifications
- On 16 July 1958, the Social Security Commission issued Bill No. 138 to the factory demanding P10.27, representing the employer's contribution for the unpaid period.
- On 23 July 1958, the rope factory responded, contending that for the months October, November, and December 1957, since Tupas was on strike and received no wages, no employer premium should be paid. It offered to pay only P0.82 for May 1958 as underpaid premium.
- A subsequent letter by the Commission on 4 November 1958 declared the strike “not unlawful” and reiterated its demand for the full amount.
- Issuance of Circular and Memorandum
- Annex A – Circular No. 21 (dated 15 October 1958) provided that:
- Employer contributions (3½%) are to be paid every month as long as the employee's membership in the Social Security System isn’t terminated—even if the employee is not receiving wages.
- The 3½% contribution is based on the employee’s earnings from the previous month.
- The 2½% employee contribution, though unpaid during non-earning periods, would be deducted later.
- Annex B – A memorandum dated 28 October 1958 from the Legal Staff of the Commission recommended:
- Requiring the factory to pay the 3½% contribution for Tupas for the strike months, based on his August 1957 earnings.
- Similar treatment for other strikers concerning their respective contributions, including computation of the 2½% based on earnings prior to the strike.
- Administrative and Judicial Proceedings
- On 2 December 1958, the rope factory formally requested that the Commission reconsider its ruling concerning the employer’s premium obligation.
- The Social Security Commission, by Resolution No. 41 (received on 16 January 1959), denied the request for reconsideration.
- The case was subsequently elevated to appeal to challenge the said resolution.
- Contentions of the Parties
- Petitioner (Elizalde Rope Factory, Inc.) argued that:
- Since the employee was on strike, he was not performing services nor was he receiving compensation.
- As a result, he ceased to be an "employee" (as defined by law), and thus, the employer was not obligated to pay the 3½% contribution for that period.
- During the strike, the relationship between employer and employee was effectively severed.
- Respondent (Social Security Commission) maintained that:
- The employment relationship was not terminated by the strike, which is simply a form of protest.
- The statutory obligation for premium payment continued, as the employee remained within the coverage of the Social Security System.
- The contribution should be based on the wages immediately preceding the period in question, pursuant to Circular No. 21.
- Statutory Framework
- Section 18 of Republic Act No. 1161 (as amended by Republic Act No. 1792) mandates the deduction and withholding of 2½% of an employee’s monthly compensation for Social Security.
- Section 19 of the same act requires the employer to remit a monthly contribution of 3½% on behalf of the employee.
- These provisions were interpreted to require continuous premium payments so long as the employee is compulsorily covered by the system, regardless of fluctuations in actual wage payments (e.g., during a strike).
Issues:
- Whether the employer (Elizalde Rope Factory, Inc.) is obligated to pay the Social Security premium for a period during which a covered worker, Edilberto Tupas, was on strike.
- Does a strike, wherein the employee does not render services or receive wages, effectively terminate the employment relationship for Social Security purposes?
- Can the absence of wages during the strike exonerate the employer from its statutory obligation to pay the 3½% contribution?
- What is the proper interpretation of the statutory provisions (Sections 18 and 19 of RA No. 1161) in relation to periods when an employee is on strike?
Ruling:
- (Subscriber-Only)
Ratio:
- (Subscriber-Only)
Doctrine:
- (Subscriber-Only)