Case Summary (G.R. No. 166250)
Procedural Background
- On 12 June 2003, SSS filed a petition-complaint with the SSC (SSC Case No. 6-15507-03) seeking to compel Asiapro Cooperative or, alternatively, Stanfilco to register as employer, report its owner-members as covered employees, and remit corresponding SSS contributions.
- Asiapro Cooperative answered with a Motion to Dismiss, contending lack of an employer-employee relationship and thus lack of SSC jurisdiction.
- SSC denied the Motion to Dismiss by Orders dated 17 February and 16 September 2004.
- Asiapro Cooperative elevated those Orders to the Court of Appeals via a Petition for Certiorari (CA-G.R. SP No. 87236), which granted relief and set aside the SSC Orders on 5 January 2006; its Resolution of 20 March 2006 denied reconsideration.
- SSS and SSC then filed a Petition for Review on Certiorari under Rule 45 before the Supreme Court.
Applicable Law
• 1987 Philippine Constitution (decision date post-1990)
• Republic Act No. 1161, as amended by RA No. 8282 (Social Security Act of 1997) – Sections 5 (settlement of disputes), 9 (compulsory coverage)
• 1997 SSS Revised Rules of Procedure – Rule III, Section 1 (jurisdiction)
• Republic Act No. 6938 (Cooperative Code of the Philippines) – Articles 16, 38, 39
Issues Presented
- Whether the SSC has jurisdiction over the petition-complaint concerning compulsory SSS coverage of Asiapro’s owner-members.
- Whether Asiapro Cooperative is estopped from questioning SSC jurisdiction after invoking it by filing an Answer with Motion to Dismiss.
Jurisdiction of the Social Security Commission
• Section 5(a) of RA 8282 and Section 1, Rule III of the 1997 SSS Rules expressly grant SSC cognizance of “any dispute arising under this Act with respect to coverage, benefits, contributions and penalties thereon or any other matter related thereto.”
• The petition-complaint alleges that Asiapro’s owner-members are employees subject to compulsory coverage; on its face, therefore, the dispute lies within exclusive SSC jurisdiction.
• A defendant’s challenge in an Answer or Motion to Dismiss does not oust a tribunal of jurisdiction once properly invoked by the complaint.
• Compulsory coverage presupposes an employer-employee relationship; the SSC may inquire into that relationship as incident to its jurisdiction, without deferring to the National Labor Relations Commission (NLRC), since Article 217(a)(6) of the Labor Code excludes Social Security coverage disputes from NLRC jurisdiction.
Nature of the Employer-Employee Relationship
• The Supreme Court may resolve conflicting factual findings when exceptions apply—in this case, conflicting findings on the employment relationship between Asiapro and its owner-members.
• The established test for an employment relationship comprises four elements:
- Selection and engagement of the worker
- Payment of wages
- Power of dismissal
- Power of control (the control test being paramount)
Application of the Fourfold Test
- Selection and Engagement: The service contracts grant Asiapro exclusive discretion to accept, engage, discipline, and remove its owner-members and team leaders assigned to Stanfilco.
- Payment of Wages: Shares in the “service surplus,” although termed differently, are equivalent to wages not lower than prevailing labor standards and wage orders, paid by Asiapro to its owner-members for services rendered.
- Power of Dismissal: The cooperative retains authority to investigate, discipline, and remove owner-members under the service contracts.
- Power of Control: Asiapro maintains sole control over the manner and means of performing contracted services, including supervision, standards, and methods.
All four elements—most critically the control test—are satisfied, establishing that Asiapro is the employer and its owner-members are employees.
Inval
Case Syllabus (G.R. No. 166250)
Facts of the Case
- Petitioners: Republic of the Philippines represented by the Social Security Commission (SSC) and the Social Security System (SSS), a government corporation created under Republic Act No. 1161, as amended by Republic Act No. 8282.
- Respondent: Asiapro Cooperative, a multi-purpose cooperative organized under Republic Act No. 6938, registered with the Cooperative Development Authority on 23 November 1999 (Registration Certificate No. 0-623-2460).
- Asiapro’s by-laws classify its owners-members into (a) regular members entitled to full membership rights, and (b) associate members without voting rights.
- Primary objectives of the cooperative: provide savings and credit facilities and develop livelihood services for owners-members.
- Asiapro entered into Service Contracts with Stanfilco (a DOLE Philippines division) under which owners-members rendered services and received shares in a “service surplus” instead of wages.
- Owners-members sought SSS registration as self-employed and aligned contributions with combined employer-employee shares to comply with Section 19-A of RA 1161, as amended.
- On 26 September 2002, SSS’s Vice-President for Mindanao Division informed Asiapro that it functioned as a manpower contractor and therefore an employer obligated to register and remit contributions for its owners-members.
- Asiapro’s counsel replied on 9 October 2002, denying employer status on grounds that owners-members are the cooperative itself. A follow-up demand was sent on 21 October 2002, which Asiapro ignored.
- On 12 June 2003, SSS filed SSC Case No. 6-15507-03 before the SSC, seeking to compel Asiapro or, alternatively, Stanfilco to register as employer, report owners-members as employees, and remit necessary SSS contributions.
Proceedings Before the SSC
- Asiapro filed an Answer with a Motion to Dismiss, contending absence of employer-employee relationship and lack of SSC jurisdiction. Stanfilco filed an Answer with Cross-claim.
- SSC issued an Order on 17 February 2004 denying Asiapro’s Motion to Dismiss. Asiapro’s motion for reconsideration was likewise denied on 16 September 2004.