EN BANC

[G.R. No. L-21223. August 31, 1966.]

PHILIPPINE BLOOMING MILLS CO., INC. (AS Employer), and

FRANCISCO TONG (As Assistant General Manager and Attorney-in-
Fact of SUSUMU SONODA, SENJI TANAKA, TAKASHAKO KUMAMOTO,
TITOSHI NAKAMURA, TETSUO KUDO, Employees), petitioners-
appellants, vs. SOCIAL SECURITY SYSTEM, respondent-appellee.

Demetrio B. Salem  for petitioners-appellants.

Solicitor General Edilberto Barot  and  Solicitor Camilo D. Quiason  for
respondent-appellee.

DECISION

BARRERA, J  : p

The facts of this case are not disputed:

The Philippine Blooming Mills Co., Inc., a domestic corporation, since the start
of its operations in 1957, has been employing Japanese technicians under a pre-
arranged contract of employment, the minimum period of which employment is 6
months and the maximum is 24 months.
From April 28, 1957, to October 26, 1958, the corporation had in its employ 6
Japanese technicians. In connection with the employment of these aliens, it sent an
inquiry to the Social Security System (SSS) whether these employees are subject to
compulsory coverage under the System, which inquiry was answered by the First
Deputy Administrator of the SSS, under date of August 29, 1957, as follows:
"SIR:
With reference to your letter of August 24, 1957, hereunder are our
answers to your queries:
"Aliens employed in the Philippines:
"Aliens who are employed in the Philippines shall also be compulsorily
covered. But aliens who are employed temporarily shall, upon their departure
from the Philippines, be entitled to a rebate of a proportionate amount of their
contributions; their employers shall be entitled to the same proportionate
rebate of their contributions in behalf of said aliens employed by them. (Rule I,
Sec. 3[d], Rules and Regulations.)"
 Starting September, 1957, and until the aforementioned Japanese employees
left the Philippines on October 26, 1958, the corresponding premium contributions
of the employer and the employees on the latter's memberships in the SSS were as
follows:
      Amount of Premiums  
        Contributed  
  SS Monthly      
Name Number Salary 2.5% 3.5% Total
      (Employee) (Employer)  
           
Susumu Sonoda 03-075177 P520.00 P175.00 P245.00 P420.00
Senji Tanaka 03-075178 520.00 175.00 245.00 420.00
Kahei Tanaka 307517 500.00 175.00 245.00 420.00
Takashiko          
Kumamoto 03-075180 500.00 175.00 245.00 420.00
Hitoshi Nakamura 03-075181 500.00 175.00 245.00 420.00
Tetsuo Kudo 03-075182 500.00 175.00 245.00 420.00
      ——— ——— ———
    T o t a l —  P1,050.00 P1,470.00 P2,520.00
On October 7, 1958, the Assistant General Manager of the corporation, on its
behalf and as attorney-in-fact of the Japanese technicians, filed a claim with the SSS
for the refund of the premiums paid to the System, on the ground of termination of
the members' employment. As this claim was denied, they filed a petition with the
Social Security Commission for the return or refund of the premiums, in the total
sum of P2,520.00, paid by the employer corporation and the 6 Japanese
employees, plus attorney's fees. This claim was controverted by the SSS, alleging
that Rule IX of the Rules and Regulations of the System, as amended, requires
membership in the System for at least 2 years before a separated or resigned
employee may be allowed a return of his personal contributions. Under the same
rule, the employer is not also entitled to a refund of the premium- contributions it
had paid.
After hearing, the Commission denied the petition for the reason that,
although under the original provisions of Section 3 (d) of Rule I of the Rules and
Regulations of the SSS, alien-employees (who are employed temporarily) and their
employers are entitled to a rebate of a proportionate amount of their respective
contributions upon the employees' departure from the Philippines, said rule was
amended by eliminating that portion granting a return of the premium-
contributions. This amendment became effective on January 14, 1958, or before
the employment of the subject-aliens terminated. The rights of covered employees
who are separated from employment, under the present Rules, are covered by
Rule IX which allows a return of the premiums only if they have been members for
at least 2 years.
It is this resolution of the Commission that is the subject of the present
appeal, appellants contending that the amendment of the Rules and Regulations of
the SSS, insofar as it eliminates the provision on the return of premium-
contributions, originally embodied in Section 3 (d) of Rule I, constituted an
impairment of obligations of contract. It is claimed, in effect, that when appellants-
employees became members in September, 1957 and paid the corresponding
premiums to the System, 1 it is subject to the condition that upon their departure
from the Philippines, these employees, as well as their employer, are entitled to a
rebate of a proportionate amount of their respective contributions.
The contention cannot be sustained. Appellants' argument is based on the
theory that the employees' membership in the System established contractual
relationship between the members and the System, in the sense contemplated and
protected by the constitutional prohibition against its impairment by law. But,
membership in this institution is not the result of a bilateral, consensual agreement
where the rights and obligations of the parties are defined by and subject to their
will. Republic Act 1161 requires compulsory coverage of employers and employees
under the System. It is actually a legal imposition, on said employers and
employees, designed to provide social security to the workingmen. Membership in
the SSS is, therefore, in compliance with a lawful exercise of the police power of the
State, to which the principle of non-impairment of the obligation of contract is not a
proper defense.
As pointed out by the Solicitor General, the issue that should be determined
in this case is whether, in implementing the SSS law and denying appellants' claim
for refund of their premium-contributions, due process was observed.
The Rules and Regulations promulgated by the SSS, pursuant to the rule-
making authority granted in Section 4(a) of Republic Act 1161, was duly approved
by the President on July 18, 1957, and published in the Official Gazette on
September 15, 1957. 2 These rules and regulations, among others, provide:
"I.
"DETERMINATION OF COMPULSORY COVERAGE
"3. The determination of whether an employer or an employee shall be
compulsorily covered shall be vested in the Commission. The following general
principles shall guide the Commission in deciding each case.
xxx xxx xxx
"(d) Aliens who are employed in the Philippines shall also be
compulsorily covered. But aliens who are employed temporarily and whose
visas are only for fixed terms shall, upon their departure from the Philippines
be entitled to a rebate of a proportionate amount of their contributions; their
employers shall be entitled to the same proportionate rebate of their
contributions in behalf of said aliens employed by them.
"XI.
"AMENDMENTS AND EFFECTIVITY
 "1. The Commission may, by appropriate resolution amend, repeal
revise and/or modify all or any part or parts of these Rules and Regulations, as
well as adopt any additional rule or rules whenever the need therefor should
arise. Any amendment and/or additional rule however, shall not take effect
until and after the corresponding resolution of the Commission has been
submitted to and approved by the President of the Philippines.
"2. These Rules and Regulations, any amendment thereof, or any
additional rule or rules subsequently adopted by the Commission, shall take
effect on the date they are approved by the President of the Philippines."

Rule I, Section 3(d) and Rule IX, however, were later amended, which
amendment was approved by the President on January 14, 1958, to read as follows:
"(d) Aliens who are employed in the Philippines shall also be
compulsorily covered. (Sec. 3, Rule I)
"EFFECT OF SEPARATION FROM EMPLOYMENT
"When an employee under compulsory coverage is separated from
employment, his employer's contribution on his account shall cease at the end
of the month of separation; but such employee may continue his membership
in the System and receive the benefits of the Act, as amended, in accordance
with these rules, if he continues paying the 6% monthly premiums
representing his as well as the employer's contribution, based on his monthly
salary at the time of his separation; but if at the time of his separation the
covered employee has been a member of the System for at least two years, he
shall have the option to choose any one of the following adjustments of his
membership in the System:
"1. A refund of an amount equivalent to his total contributions of two
and one-half per centum plus interests at the rate of three per centum per
annum, compounded annually;
xxx xxx xxx." (Rule IX)

These amended Rules were published in the November 10, 1958 issue of the
Official Gazette. 3
It is not here disputed that the Rules and Regulations of the SSS, having been
promulgated in implementation of a law, have the force and effect of a
statute; 4 that the amendment thereto, although approved by the President on
January 14, 1958, was published in the Official Gazette in November, 1958, or after
the employment of the Japanese technicians had ceased and the corresponding
claim for the refund of the premium-contributions was filed with the System. The
question pertinent to this case now is whether or not appellants are bound by the
amended Rules requiring membership for two years before a refund of the
premium-contributions may be allowed.
These rules and regulations were promulgated to provide guidelines to be
observed in the enforcement of the law. As a matter of fact, Section 3 of Rule I is
 merely an enumeration of the "general principles to (shall) guide the Commission"
in the determination of the extent or scope of the compulsory coverage of the law.
One of these guiding principles is paragraph (d) relied upon by appellants, on the
coverage of temporarily-employed aliens. It is not here pretended, that the
amendment of this Section 3(d) of Rule I, as to eliminate the provision granting to
these aliens the right to a refund of part of their premium-contributions upon their
departure from the Philippines, is not in implementation of the law or beyond the
authority of the Commission to do.
It may be argued, however, that while the amendment to the Rules may have
been lawfully made by the Commission and duly approved by the President on
January 14, 1958, such amendment was only published in the November 1958 issue
of the Official Gazette, and after appellants' employment had already ceased.
Suffice it to say in this regard, that under Article 2 of the Civil Code,  5 the date of
publication of laws in the Official Gazette is material for the purpose of determining
their effectivity, only if the statutes themselves do not so provide.
In the present case, the original Rules and Regulations of the SSS specifically
provide that any amendment thereto subsequently adopted by the Commission,
shall take effect on the date of its approval by the President. Consequently, the
delayed publication of the amended rules in the Official Gazette did not affect the
date of their effectivity, which is January 14, 1958, when they were approved by the
President. It follows that when the Japanese technicians were separated from
employment in October, 1958, the rule governing refund of premiums is Rule IX of
the amended Rules and Regulations, which requires membership for 2 years
before such refund of premiums may be allowed.
WHEREFORE, finding no error in the resolution of the Commission appealed
from, the same is hereby affirmed, with costs against the appellants. So ordered.
Concepcion, C.J., Dizon, Makalintal, J.P. Bengzon, Zaldivar, Sanchez and Castro,
JJ., concur.
J.B.L. Reyes, J., reserves his vote.
Regala, J., on leave, did not take part.
 

Footnotes
1.Appellants must be referring to their obligation to pay the premium-contribution, and
retain membership in the system.
2.Vol. 53. No. 17. p. 5588.
3.Volume 54, No. 31, p. 7388 of the Official Gazette.
4.U.S. vs. Tupasi Molina, 29 Phil. p. 119 cited in People vs. Que Po Lay, G.R. No. L-6791,
March 29, 1954.
 5.Art" 2, Laws shall take effect after fifteen days following the completion of their
publication in the Official Gazette, unless it is otherwise provided. . . . "
 

  (Philippine Blooming Mills Co., Inc. v. Social Security System, G.R. No. L-21223, [August 31,
|||

1966])