SUMMARY: KMU v. Aquino (G.R. No. 210500. April 2, 2019)

The Supreme Court (SC) en banc recently denied for lack of merit the Petition for Certiorari and Prohibition filed by the labor group Kilusang Mayo Uno, et al., to annul the Social Security System (SSS) premium hike, which took effect in January 2014. It likewise denied petitioners’ prayer for a temporary restraining order and/or writ of preliminary injunction.

In a 37-page decision penned by Justice Marvic M. V. F. Leonen, the SC declared valid the following issuances: (1) Resolution No. 262-s, 2013, dated April 19, 2013, of the Social Security Commission (SSC) providing for an increase in the SSS members’ contribution rate from 10.4% to 11% and the maximum monthly salary credit from P15,000 to P16,000 subject to the approval of the President of the Philippines; (2) Resolution No. 711-s. 2013, dated September 20, 2013, of the SSC, approving, among others, the foregoing increases; and (3) Circular No. 2013-010, dated October 2, 2013, issued by the SSS, through its President and Chief Executive Officer Emilio S. De Quiros, Jr., providing for the revised schedule of contributions that would be in effect in January 2014. Per the circular, the employer and employee shall equally shoulder the 0.6% increase in contributions. Thus, the employer would pay a contribution rate of 7.37% (from 7.07%); the employee, 3.63% (from 3.33%).

The SC stressed that collateral attacks on a presumably valid law are NOT ALLOWED and that petitioners in this case are collaterally attacking the validity of Social Security Act (RA 8282) by putting in issue not only the validity of the exercise of respondents SSS and SSC’s power under the said law but also the validity of the delegation of power to the SSC under the said law to fix the contribution rate by claiming the said delegation to be incomplete in all its terms and conditions. The SC held that not only is the Social Security Act complete in its terms but it also contains a sufficient standard for the SSC to fix the monthly contribution rate and the minimum and maximum monthly salary credits. It found that Section 18 in relation to Section 4 (a) of the Social Security Act has vested the necessary powers in the SSC to fix the minimum and maximum amounts of monthly salary credits and the contribution rate. It likewise found the legislature has specified the factors that should be considered—“actual calculations and rates of benefits”—in Section 18 of the Social Security Act as well as required the approval of the President of the Philippines as an additional limit to the SSC’s rate fixing power. “To question the use of ‘actual calculations’ as [a] factor for fixing rates is to question the policy or wisdom of the legislature, which is a co-equal branch of the government,“ the SC declared.
As to petitioners’ argument that that the increase in contribution is in violation of Section 4(b) of the of the Social Security Act providing that increases in benefits shall not require any increase in the rate of contribution, the SC ruled “that an examination of the provision and the assailed issuances reveals that the questioned increase in contribution rate was not solely for the increase in members’ benefits, but also to extend actuarial life….To disregard the actuarial soundness of the reserves would be to go against the policy of the law on maintaining a sustainable social security system,” referring to the policy laid down in Section 2 of the Social Security Act.

The SC also held the increases reflected in the assailed issuances to be a valid exercise of police power as they are reasonably necessary to observe the constitutional mandate of promoting social justice under the Social Security Act. “Given the past increases since the inception of the law, the contribution rate increase of 0.6% applied to the corresponding monthly salary credit does not scream of unreasonableness or injustice.”

It ruled that respondents were only complying with their duties under the Social Security Act and that there was no showing they went beyond their powers under the law amounting to lack of or in excess of their jurisdiction. Nor did it find grave abuse of respondents’ discretion as petitioner’s claims are unsubstantiated.

The SC likewise found the petition to suffer several procedural infirmities, including the impleading of the then incumbent president.

SOURCE: GR No. 210500, Kilusang Mayo Uno v. Aquino III, April 2, 2019. SC Declares Valid 2014 SSS Premium Hike. July 22, 20190

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