Title
Orion Water District vs. Government Service Insurance System
Case
G.R. No. 195382
Decision Date
Jun 15, 2016
GSIS sued OWD for unremitted employee premiums; RTC jurisdiction upheld as case was a straightforward collection, not requiring administrative settlement under E.O. No. 292.
jurisdiction
officers
local water district

Case Summary (G.R. No. 130439)

Factual Background

GSIS filed a Complaint for Collection of Sum of Money and Damages on April 4, 2006 against OWD and its officers, alleging that they repeatedly failed and refused to pay, remit, or deliver the employees’ personal share in the premiums of their life and retirement policies for the covered period. GSIS alleged that the last demand letter was received by OWD’s Manager on November 21, 2002, yet OWD did not remit the premium arrearages.

During the pendency of the case, Guzman resigned as General Manager in May 2006 and was replaced by Crispin Q. Tria. Swim and Urbano also resigned from their respective positions sometime in 2000.

RTC Proceedings: Motion to Dismiss and Denials

OWD responded by filing a Motion to Dismiss on March 13, 2007, arguing that the RTC lacked subject matter jurisdiction. It contended that since both GSIS and OWD were GOCCs, disputes between them should be administratively settled through the Secretary of Justice, pursuant to Sections 66 to 70, Chapter 14, Book IV of E.O. No. 292, with further appeal to the Office of the President and then to the CA under Rule 43.

On March 28, 2008, the RTC denied the motion, reasoning that OWD had not even alleged that it was disputing the claim, or that a dispute or controversy had arisen from the interpretation or application of the statutes, contracts, or agreements involved. The RTC later denied OWD’s Motion for Reconsideration in an order dated June 27, 2008.

CA Proceedings: Petition for Certiorari and Affirmance

OWD, represented by General Manager Tria, then filed a petition for certiorari with the CA on September 22, 2008, alleging grave abuse of discretion on the part of the RTC in issuing the March 28, 2008 and June 27, 2008 orders, and insisting that the RTC had no jurisdiction.

On October 14, 2010, the CA affirmed the RTC. It ruled that Sections 66 to 70 of E.O. No. 292 were inapplicable because the dispute was not solely between GOCCs. The CA further held that R.A. No. 8291—particularly Section 41(w)—expressly sanctioned the filing of the complaint in the RTC.

When OWD moved for reconsideration, the CA denied it on January 24, 2011, prompting the instant Supreme Court petition.

The Parties’ Contentions in the Supreme Court

OWD maintained that the CA erred in upholding the RTC orders despite alleged clear statutory provisions that the RTC lacked subject matter jurisdiction. OWD reiterated its position that the controversy should have been administratively settled through the Secretary of Justice under E.O. No. 292, Sections 66 to 70, because the parties involved were GOCCs.

GSIS, through the record sustained by the CA, defended the RTC’s exercise of jurisdiction over the civil action for collection based on R.A. No. 8291, asserting that the complaint sought recovery of unremitted premium contributions mandated by law and thus properly cognizable by the regular courts.

Legal Basis and Reasoning of the Supreme Court

The Court reaffirmed a foundational procedural doctrine: jurisdiction over the subject matter is conferred by law and is determined by the allegations in the complaint, specifically the concise statement of the ultimate facts constituting the plaintiff’s cause of action.

Applying that principle, the Court examined GSIS’s complaint and characterized it as one aimed at recovering premium arrearages on GSIS life and retirement policies of employees, arising from the employer’s statutory duty to deduct and remit contributions. The Court emphasized the legal character of GSIS membership as compulsory for employees receiving compensation who had not reached compulsory retirement age. It then relied on Section 6(b) of R.A. No. 8291, which imposes a positive duty on each employer to remit employees’ and employers’ contributions within the first ten days of the following month, with delayed remittance giving rise to liability for interest under Section 7. The Court reasoned that continued refusal to remit creates a cause of action for GSIS to institute the appropriate action in a court or tribunal of proper jurisdiction to recover unremitted contributions.

The Court also cited Section 41(w) of R.A. No. 8291, which empowers GSIS to demand payment within a thirty-day period and, upon failure or refusal, to initiate proper criminal, civil, administrative, or otherwise actions before courts, tribunals, commissions, boards, or bodies of proper jurisdiction. On this basis, the Court held that GSIS properly instituted its complaint in the RTC, which has civil jurisdiction for claims exceeding the statutory thresholds under Batas Pambansa Blg. 129, as amended by R.A. No. 7691.

On the jurisdictional argument anchored on E.O. No. 292, the Court rejected OWD’s reliance. It stressed that not all controversies among government offices or instrumentalities fall within the administrative settlement mechanism under E.O. No. 292, Book IV, Chapter 14. The Court traced the framework to P.D. No. 242, explaining that it applies only to particular instances of disputes among government offices. Under Section 1 of P.D. No. 242, the administrative procedure applies only to disputes “solely between or among” national government departments, bureaus, offices, agencies, and instrumentalities arising from the interpretation and application of statutes, contracts, or agreements, subject to enumerated exclusions such as cases already pending in court at the time of effectivity.

The Court further relied on PHIVIDEC v. Judge Velez, which explained that the administrative procedure prescribes a mechanism for settlement of certain types of disputes between or among government bodies so that they need not always resort to courts, but it does not intrude into the jurisdiction of regular courts. The Court noted that later codification in E.O. No. 292 changed language but not the scope in a manner that would broaden the mechanism beyond the original limits.

The Court then analyzed Section 66 of E.O. No. 292 itself, emphasizing that the administrative settlement applies to disputes, claims, and controversies “solely between or among” the departments, bureaus, offices, agencies, and instrumentalities of the national government, including GOCCs, and that such disputes must relate to the interpretation and application of statutes, contracts, or agreements (or similarly analogous matters) under the ejusdem generis approach to the statutory phrasing. The Court held that GSIS’s complaint did not concern the interpretation of a law, contract, or agreement between government agencies. It sought enforcement of an unequivocal statutory command: the employer’s duty to deduct and remit contributions to GSIS. The Court concluded that the legal obligations were clear and undisputed in the sense that OWD’s refusal to remit, despite repeated notices, was the basis for the civil action for collection.

Even assuming the dispute could be analogized to instances contemplated by Section 66, the Court stated that the case still did not qualify because Section 66 requires that the controversy be solely between and among the relevant national government offices and instrumentalities, including GOCCs. The Court stressed that the presence of officials of OWD as defendants meant the case was not solely between GSIS and OWD, thereby failing the statutory “solely between” limitation. The Court relied on Philippine National Oil Company v. CA, where it held that P.D. No. 242 did not apply despite the involvement of multiple government agencies because a private individual’s standing could not be ignored, and the provision explicitly required disputes solely between or among government bodies. By analogy, the Court treated the inclusion of OWD officials in the complaint as another factor defeating the “solely” requirement under the administrative settlement

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