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THIRD DIVISION

January 24, 2018

G.R. No. 228087

H. VILLARICA PAWNSHOP, INC., HL VILLARICA PAWNSHOP, INC., HRV VILLARICA PAWNSHOP, INC. AND
VILLARICA PAWNSHOP,INC., Petitioners
vs.
SOCIAL SECURITY COMMISSION, SOCIAL SECURITY SYSTEM, AMADOR M. MONTEIRO, SANTIAGO
DIONISIO R. AG DEPP A, MA. LUZ N. BARROS-MAGSINO, MILAGROS N. CASUGA AND JOCELYN Q.
GARCIA, Respondents

DECISION

GESMUNDO, J.:

Condonation statutes-being an act of liberality on the part of the State-are strictly construed against the applicants
unless the laws themselves clearly state a contrary rule of interpretation.

This is a petition for review on certiorari under Rule 45 of the Rules of Court filed by petitioners H. Villarica
Pawnshop, Inc., HL Villarica Pawnshop, Inc., HRV Villarica Pawnshop, Inc. and Villarica Pawnshop, Inc.,
(petitioners) seeking to. reverse and set aside the Decision1 dated February 26, 2016 and Resolution2 dated
November 2, 2016, of the Court of Appeals (CA) in CA-G.R. SP No. 140916, which affirmed the Resolution3 dated
November 6, 2013, and Order4 dated January 21, 2015, of the Social Security Commission (SSC) denying
petitioners' claim for refund.

The Antecedents

Petitioners are private corporations engaged in the pawnshop business and are compulsorily registered with the
Social Security System (SSS) under Republic Act (R.A.) No. 8282,5 otherwise known as the Social Security Law of
1997.6

In 2009, petitioners paid their delinquent contributions and accrued penalties with the different branches of the SSS
in the following manner:

AMOUNT
DELINQUENCY PAID DATE
PETITIONER
PERIOD (Contribution and PAID
Penalty)

H. Villarica Pawnshop, Inc. Jan. 2006 - Oct. 2006 ₱1,461,640.24 Apr. 23, 2009

Jul. 2007 - Dec. 2007

Apr. 2007 - Jun. 2007 ₱710,199.08 May 1, 2009

Mar. 2008 - Dec. 2008

H.L. Villarica Pawnshop, Inc. Sept. 2005 - Dec. 2006 ₱2,544,525 .28 Jun. 20,2009
 HRV Villarica Pawnshop, Inc. Jan. 2009 - May 2009 ₱132, 176.32 May 18, 2009

Villarica Pawnshop, Inc. Mar. 2000 - Jun. 2000 ₱68,922.03 Feb.20, 2009
Jan. 2000 - Jun. 2000 ₱21,353.70 Feb.26,2009

Jan. 2005 - Aug. 2005 ₱699,850.34 Mar. 2, 2009

Jan. 1997 - Jan. 2009 ₱2,491,998.08 Apr. 7, 20097

On January 7, 2010, Congress enacted R.A. No. 9903, otherwise known as the Social Security Condonation Law of
2009, which took effect on February 1, 2010. The said law offered delinquent employers the opportunity to settle,
without penalty, their accountabilities or overdue contributions within six (6) months from the date of its effectivity.8

Consequently, petitioners thru its President and General Manager Atty. Henry P. Villarica, sent separate Letters,9 all
dated July 26, 2010, to the different branches of the SSS seeking reimbursement of the accrued penalties, which
they have paid in 2009, thus:

Amount Claimed
10
1. Diliman Branch ₱860,452.62
2. Manila Branch ₱1,005,805.2811
3. Caloocan Branch ₱5,376.3212
4. San Francisco Del Monte ₱3,119,400.15 13
Branch

Invoking Section 4 of R.A. No. 9903 and Section 2 (f) of the SSC Circular No. 2010-004 or the Implementing Rules
and Regulations of R.A. No. 9903 (IRR), petitioners claimed that the benefits of the condonation program extend to
all employers who have settled their arrears or unpaid contributions even prior to the effectivity of the law. 14

In a Letter15 dated August 16, 2010, the SSS - San Francisco Del Monte Branch denied petitioner Villarica
Pawnshop, Inc.'s request for refund amounting to ₱3,l 19,400.15 stating that there was no provision under R.A. No.
9903 allowing reimbursement of penalties paid before its effectivity. 16

In another Letter17 dated September 16, 2010, petitioner HRV Villarica Pawnshop, Inc. was likewise informed that its
application for the refund of the accrued penalty had been denied because R.A. No. 9903 does not cover
accountabilities settled prior to its effectivity. 18

In like manner, the applications for refund filed by petitioners H. Villarica Pawnshop, Inc. and HL Villarica Pawnshop,
Inc. were both denied in separate letters dated October 4, 201019 and October 15, 2010,20 respectively, for the same
reason of being filed outside the coverage of R.A. No. 9903.21

As a result, petitioners filed their respective Petitions22 before the SSC seeking reimbursement of the 3 % per month
penalties they paid in 2009 essentially claiming that they were entitled to avail of the benefits under R.A. No. 9903
by reason of equity because "one of the purposes of the law is to favor employers, regardless of the reason for the
non-payment of the arrears in contribution;" and that the interpretation of the SSS "is manifestly contrary to the
principle that, in enacting a statute, the legislature intended right and justice to prevail."

In its Answer23 dated March 14, 2012, the SSS prayed for the dismissal of the petitions for utter lack of merit. It 1âwphi1

maintained that petitioners were not entitled to avail of the condonation program under R.A. No. 9903 because they
were not considered delinquent at the time the law took effect in 2010; and that there was nothing more to condone
on the part of petitioners for they have settled their obligations even before the enactment of the law. The SSS
explained that the term "accrued penalties" had been properly defined as unpaid penalties under the IRR and,
considering that laws granting condonation constitute acts of benevolence on the part of the State, they should be
strictly construed against the applicant.24

The SSC Ruling

In its Resolution25 dated November 6, 2013, the SSC denied all the petitions for lack of merit. It ruled that petitioners
were not entitled to the benefits of the condonation program under R.A. No. 9903 in view of the full payment of their
unpaid obligations prior to the effectivity of the law on February 1, 2010. As petitioners did not have unpaid
contributions at the time the law took effect, the SSC held that there could be no remission or refund in their favor.
The dispositive portion of the said resolution states:
 WHEREFORE, all four (4) petitions filed by petitioners against the SSS are hereby DENIED for lack of
merit.

SO ORDERED.26

Petitioners filed a motion for reconsideration but it was denied by the SSC in an Order27 dated January 21, 2015.

Undeterred, petitioners appealed before the CA.

The CA Ruling

In its decision dated February 26, 2016, the CA affirmed the ruling of the SSC. It held that the intent of the
legislature in enacting R.A. No. 9903 was the remission of the three percent (3%) per month penalty imposed upon
delinquent contributions of employers as a necessary consequence of the late payment or non-remittance of SSS
contributions. The CA found that the IRR of R.A. No. 9903 used the word "unpaid" to emphasize the accrued
penalty that may be waived therein, thus, it presupposes that there was still an outstanding obligation at the time of
the effectivity of the law, which may be extinguished through remission. It highlighted that lawmakers did not include
within the sphere of R.A. No. 9903 those employers whose penalties have already been paid prior to its effectivity.
The CA added that it would be absurd for obligations that have already been extinguished to be subjected to
condonation.

Citing Mendoza v. People28 (Mendoza), the CA further ruled that there was no violation of the equal protection
clause because there was a substantial distinction between those delinquent employers who paid within the six ( 6)
month period from the effectivity of the law and those who paid outside of the said availment period. It underscored
that only the former class was expressly covered by R.A. No. 9903. The CA concluded that petitioners' stand, that
those who paid prior to the effectivity of R.A. No. 9903 can avail of the condonation and refund, would open the
floodgates to numerous claims for reimbursement before the SSS, which could lead to a depletion of its resources to
the detriment of the public's best interest. The fallo of the CA ruling reads:

WHEREFORE, foregoing considered, the instant petition is hereby DISMISSED. The Resolution dated
November 6, 2013 and the Order dated January 21, 2015 of the Social Security Commission in SSC
Case Nos. 11-19521-11, 11-19522-11, 11-19523-11 and 11-19524-11 are AFFIRMED.

SO ORDERED.29

Petitioners moved for reconsideration but it was denied by the CA in its resolution dated November 2, 2016. 30

Hence, this petition anchored on the following grounds:

A. WITH ALL DUE RESPECT, THE COURT OF APPEALS ERRED IN RULING THAT RA NO. 9903
DOES NOT INCLUDE PETITIONERS IN ITS COVERAGE, CONSIDERING THAT:

1. SECTION 4 OF RA NO. 9903 EXPRESSLY INCLUDES EMPLOYERS, SUCH AS

PETITIONERS, WHO SETTLED (THEIR) ARREARS IN CONTRIBUTIONS BEFORE THE
EFFECTIVITY OF THE LAW AND THUS, ARE ENTITLED TO A W AIYER OF THEIR
ACCRUED PENALTIES.

2. PRIOR TO RA NO. 9903, EMPLOYERS ARE REQUIRED TO SETTLE THEIR ARREARS IN

CONTRIBUTIONS SIMULTANEOUSLY WITH PAYMENT OF THE PENALTY, THUS
RENDERING IT IMPOSSIBLE FOR PETITIONERS TO PAY THEIR ARREARS WITHOUT PA
YING THE PENALTY

B. WITH ALL DUE RESPECT, THE COURT OF APPEALS ERRED IN RULING THAT RESPONDENT
SSC CORRECTLY INTERPRETED THE TERM 'ACCRUED' UNDER THE SSS CONDON A TI ON
LAW OF 2009 TO MEAN UNPAID. IF THIS INTERPRETATION WERE TO BE UPHELD, THOSE WHO
HA VE UNPAID ACCRUED PENAL TIES WOULD BE IN A BETTER POSITION THAN THOSE WHO
DECIDED TO SETTLE BOTH THE ARREARS IN CONTRIBUTION AND THE ACCRUED PENALTIES.
CERTAINLY, THE LAW NEVER INTENDED INJUSTICE.31

Petitioners argue that the last proviso of Section 4 of R. A. No. 9903 "clearly extends the benefit of the waiver" to
employers who have settled their arrears before the effectivity of the law, hence, to allow the refund of the
corresponding penalties paid;32 that the "equity provision" in Section 4 of R.A. No. 9903 should be interpreted to
include a refund of penalties already paid if such law is to be given any effect;33 and that a refund should be allowed
because there is no substantial distinction between employers who paid their accrued penalties before and after the
effectivity of the R.A. No. 9903.34

In its Comment, 35 the SSC counters that since petitioners have already paid their unremitted contributions and
accrued penalties before the effectivity of R.A. No. 9903, there is nothing left to be condoned or waived; that, at the
time of their payment, there was no remission of accrued penalty yet; that R.A. No. 9903 does not contain a
provision allowing the reimbursement of accrued penalty which was paid prior to its effectivity; that the CA correctly
interpreted the term "accrued penalty" to mean "unpaid" by using the definition provided in Section 1 ( d) of the IRR;
and that the ruling in Mendoza had already recognized that Congress refused to allow a sweeping, non-
discriminatory condonation to all delinquent employers when it provided a fixed period for the availment of the
condonation program under R.A. No. 9903.36

In its Comment,37 the SSS avers that the payments made by petitioners before the effectivity of R.A. No. 9903 are
valid payments which cannot be the subject of reimbursement; that petitioners are no longer considered delinquent
employers when R.A. No. 9903 took effect; that petitioners erroneously interpreted the "equity provision" to include a
right to a refund of penalties paid; and that laws granting condonation constitute an act of benevolence and should
be strictly construed against the applicant. 38

The Court's Ruling

The petition is bereft of merit.

Sections 2 and 4 of the R.A. No. 9903 specifically provide:

Section 2. Condonation of Penalty. - Any employer who is delinquent or has not remitted all
contributions due and payable to the Social Security System (SSS), including those with pending cases
either before the Social Security Commission, courts or Office of the Prosecutor involving collection of
contributions and/or penalties, may within six (6) months from the effectivity of this Act:

(a) remit said contributions; or

(b) submit a proposal to pay the same in installments, subject to the implementing rules and
regulations which the Social Security Commission may prescribe: Provided, That the delinquent
employer submits the corresponding collection lists together with the remittance or proposal to
pay installments: Provided, further, That upon approval and payment in full or in installments of
contributions due and payable to the SSS, all such pending cases filed against the employer
shall be withdrawn without prejudice to the refiling of the case in the event the employer fails to
remit in full the required delinquent contributions or defaults in the payment of any installment
under the approved proposal.

xxxx

Section 4. Ejfectivity of Condonation. - The penalty provided under Section 22 (a) of Republic Act No.
8282 shall be condoned by virtue of this Act when and until all the delinquent contributions are remitted
by the employer to the SSS: Provided, That, in case the employer fails to remit in full the required
delinquent contributions, or defaults in the payment of any installment under the approved proposal,
within the availment period provided in this Act, the penalties are deemed reimposed from the time the
contributions first become due, to accrue until the delinquent account is paid in full: Provided,further,
That for reason of equity, employers who settled arrears in contributions before the eff ectivity of this
Act shall likewise have their accrued penalties waived. [emphases supplied]

On the other hand, Sections 1 and 2 of the IRR of R.A. No. 9903 state:

Section 1. Definition of Terms. - Unless the context of a certain provision of this Circular clearly
indicates otherwise, the term:

xxx

(d) "Accrued penalty" refers to the unpaid three percent (3 % ) penalty imposed upon any delayed
remittance of contribution in accordance with Section 22 (a) of R.A. No. 1161, as amended.

Section 2. Who may avail of the Program. -Any employer who is delinquent or has not remitted all
contributions due and payable to the SSS may avail of the Program, including the following:

(a) Those not yet registered with the SSS;

(b) Those with pending or approved proposal under the Installment Payment Scheme of
the SSS (Circular No. 9-P) pursuant to SSC Resolution No. 380 dated 10 June 2002;

(c) Those with pending or approved application under the Program for Acceptance of
Properties Offered Through Dacion En Pago of the SSS (Circular No. 6-P) pursuant to
SSC Resolution No. 29 dated 16 January 2002;
 (d) Those with cases pending before the SSC, Courts or Office of the Prosecutor involving
collection of contributions and/or penalties;

(e) Those against whom judgment had been rendered involving collection of contributions
and/or penalties but have not complied with the judgment, and;

(f) Those who, before the effectivity of the Act, have settled all contributions but
with accrued penalty. [emphasis supplied]

Under R.A. No. 9903 and its IRR, an employer who is delinquent or has not remitted all contributions due and
payable to the SSS may avail of the condonation program provided that the delinquent employer will remit the full
amount of the unpaid contributions or would submit a proposal to pay the delinquent contributions in installment
within the six (6)-month period set by law.

Under Section 4 of R.A. No. 9903, once an employer pays all its delinquent contributions within the six month
period, the accrued penalties due thereon shall be deemed waived. In the last proviso thereof, those employers who
have settled their delinquent contributions before the effectivity of the law but still have existing accrued penalties
shall also benefit from the condonation program. In that situation, there is still something to condone because there
are existing accrued penalties at the time of the effectivity of the law. Section 1 (d) of the IRR defines accrued
penalties as those that refer to the unpaid three percent (3%) penalty imposed upon any delayed remittance of
contribution.

Accordingly, R.A. No. 9903 covers those employers who (1) have existing delinquent contributions and/or
(2) have accrued penalties at the time of its effectivity.

Evidently, there is nothing in R.A. No. 9903, particularly Section 4 thereof, that benefits an employer who has settled
their delinquent contributions and/or their accrued penalties prior to the effectivity of the law. Once an employer
pays all his delinquent contributions and accrued penalties before the effectivity of R.A. No. 9903, it cannot avail of
the condonation program because there is no existing obligation anymore. It is the clear intent of the law to limit the
benefit of the condonation program to the delinquent employers. 39

Also, the provisions of R.A. No. 9903 and its IRR state that employers may be accorded the benefit of having their
accrued penalties waived provided that they either remit their delinquent contributions or submit a proposal to pay
their delinquencies in installments (on the condition that there will be no default in subsequent payments) within the
"availment period" spanning six (6) months from R.A. No. 9903's effectivity.

The Court finds that employers who have paid their unremitted contributions and already settled their delinquent
contributions as well as their corresponding penalties before R.A. No. 9903's effectivity do not have a right to be
refunded of the penalties already paid, which shall be discussed in seriatim.

Verba legis interpretation of R.A. No. 9903

It is the duty of the Court to apply the law the way it is worded.40 Basic is the rule of statutory construction that when
the law is clear and unambiguous, the court is left with no alternative but to apply the same according to its clear
language.41 The courts can only pronounce what the law is and what the rights of the parties thereunder are.42
Fidelity to such a task precludes construction or interpretation, unless application is impossible or inadequate
without it. 43 Thus, it is only when the law is ambiguous or of doubtful meaning may the court interpret or construe its
true intent.44

Parenthetically, the "plain meaning rule" or verba legis in statutory construction enjoins that if the statute is clear,
plain and free from ambiguity, it must be given its literal meaning and applied without interpretation.45 This rule of
interpretation is in deference to the plenary power of Congress to make, alter and repeal laws as this power is an
embodiment of the People's sovereign will.46 Accordingly, when the words of a statute are clear and unambiguous,
courts cannot deviate from the text of the law and resort to interpretation lest they end up betraying their solemn
duty to uphold the law and worse, violating the constitutional principle of separation of powers.

Concomitantly, condonation or remission of debt is an act of liberality, by virtue of which, without receiving any
equivalent, the creditor renounces the enforcement of the obligation, which is extinguished in its entirety or in that
part or aspect of the same to which the remission refers.47 It is essentially gratuitous for no equivalent is received for
the benefit given.48 Relatedly, waiver is defined as a voluntary and intentional relinquishment or abandonment of a
known existing legal right, advantage, benefit, claim or privilege, which except for such waiver the party would have
enjoyed; the voluntary abandonment or surrender, by a capable person, of a right known by him to exist, with the
intent that such right shall be surrendered and such person forever deprived of its benefit; or such conduct as
warrants an inference of the relinquishment of such right; or the intentional doing of an act inconsistent with claiming
it.49 On the other hand, refund is an act of giving back or returning what was received. 50 In cases of monetary
obligations, a claim for refund exists only after the payment has been made and, in the act of doing so, the debtor
either delivered excess funds or there exists no obligation to pay in the first place. This right arises either by virtue of
solutio indebiti as provided for in Articles 2154 to 2163 of the Civil Code or by provision of another positive law, such
as tax laws or amnesty laws.51

A plain reading of Section 4 of R.A. No. 9903 shows that it does not give employers who have already settled their
delinquent contributions as well as their corresponding penalties the right to a refund of the penalties paid. What
was waived here was the amount of accrued penalties that have not been paid prior to the law's effectivity-it does
not include those that have already been settled.

The words "condoned", "waived" and "accrued" are unambiguous enough to be understood and directly applied
without any resulting confusion. As discussed earlier, the word "condonation" is the creditor's act of extinguishing an
obligation by renunciation and the word "waive" is an abandonment or relinquishment of an existing legal right. On
the other hand, the term "accrue" in legal parlance means "to come into existence as an enforceable claim."52 Thus,
the phrases "shall be condoned" and "shall likewise have their accrued penalties waived" under Section 4 of the
R.A. No. 9903 can only mean that, at the time of its effectivity, only existing penalties may be extinguished or
relinquished. No further interpretation is necessary to clarify the law's applicability.

Prospective application of R.A. No. 9903

Statutes are generally applied prospectively unless they expressly allow a retroactive application. It is a basic
principle that laws should only be applied prospectively unless the legislative intent to give them retroactive effect is
expressly declared or is necessarily implied from the language used. 53 Absent a clear contrary language in the text
and, that in every case of doubt, the doubt will be resolved against the retroactive operation of laws.54

Here, R.A. No. 9903 does not provide that, prior to its effectivity, penalties already paid are deemed condoned or
waived. What Section 2 of the law provides instead is an availment period of six (6) months after its effectivity within
which to pay the delinquent contributions for the existing and corresponding penalties to be waived or condoned.
This only means that Congress intends R.A. No. 9903 to apply prospectively only after its effectivity and until its
expiration.

Interpretation in favor of social justice

Even if there is doubt as to the import of the term "accrued penalties," condonation laws-especially those relating to
social security funds-are construed strictly against the applicants.

Social justice in the case of the laborers means compassionate justice or an implementation of the policy that those
who have less in life should have more in law. 55 And since it is the State's policy to "promote social justice and
provide meaningful protection to [SSS] members and their beneficiaries against the hazards of disability, sickness,
maternity, old age, death, and other contingencies resulting in loss of income or financial burden,"56 Court should
adopt a rule of statutory interpretation which ensures the financial viability of the SSS.

Here, the State stands to lose its resources in the form of receivables whenever it condones or forgoes the
collection of its receivables or unpaid penalties. Since a loss of funds ultimately results in the Government being
deprived of its means to pursue its objectives, all monetary claims based on condonation should be construed
strictly against the applicants. In the case of SSS funds, the Court in Social Security System v. Commission on
Audit57had emphatically explained in this wise:

THE FUNDS contributed to the Social Security System (SSS) are not only imbued with public interest,
they are part and parcel of the fruits of the workers' labors pooled into one enormous trust fund under
the administration of the System designed to insure against the vicissitudes and hazards of their
working lives. In a very real sense, the trust funds are the workers' property which they could turn to
when necessity beckons and are thus more personal to them than the taxes they pay. It is therefore
only fair and proper that charges against the trust fund be strictly scrutinized for every lawful and
judicious opportunity to keep it intact and viable in the interest of enhancing the welfare of their true and
ultimate beneficiaries. [emphasis supplied]

To this end, the Court upholds and abides by this canon of interpretation against applicants of the benefits of R.A.
No. 9903 as a recognition to the constitutional policies of freeing the people from poverty through policies that
provide adequate social services58 and affording full protection to labor.59 It is consistent with the congressional
intent of placing a primary importance in helping the SSS increase its funds through stimulating cash inflows by
encouraging delinquent employers to settle their accountabilities.60 Thus, R.A. No. 9903 shall be understood as not
to include a refund of penalties paid before its effectivity.

It is the essence of judicial duty to construe statutes so as to avoid such a deplorable result of injustice[[.61]] Simply
put, courts are not to give words meanings that would lead to absurd or unreasonable consequences.62 This is to
preserve the intention of Congress-the branch which possesses the plenary power for all purposes of civil
government. 63
Logically, only existing obligations can be extinguished either by payment, loss of the thing due, remission or
condonation, confusion or merger or rights, compensation, novation, annulment of contract, rescission, fulfillment of
a resolutory condition, or prescription. Interpreting R.A. No. 9903 in such a way that it extinguishes an obligation
which is already extinguished is simply absurd and unreasonable.

Rule-making power of the SSS

The SSS (through the SSC)64 is empowered to issue the necessary rules and regulations for the effective
implementation of R.A. No. 9903.65 Quasi-legislative power is exercised by administrative agencies through the
promulgation of rules and regulations within the confines of the granting statute and the doctrine of non-delegation
of powers from the separation of the branches of the government. 66

Accordingly, with the growing complexity of modem life, the multiplication of the subjects of governmental
regulations, and the increased difficulty of administering the laws, the rigidity of the theory of separation of
governmental powers has, .to a- large extent, been relaxed by permitting the delegation of greater powers by the
legislative and vesting a larger amount of discretion in administrative and executive officials, not only in the
execution of the laws, but also in the promulgation of certain rules and regulations calculated to promote public
interest.67 Stated differently, administrative agencies are necessarily authorized to fill in the gaps of a statute for its
proper and effective implementation. Hence, the need to delegate to administrative bodies-the principal agencies
tasked to execute laws in their specialized fields-the authority to promulgate rules and regulations to implement a
given statute and effectuate its policies.68

In the instant case, Section 30 of the R.A. No. 8282 and Section 5 of R.A. No. 9903 gave the SSS the power to
promulgate rules and regulations to define the terms of social security-related laws that may have a likelihood of
being subjected to several interpretations. This is exactly what the SSS did when it defined the term "accrued
penalties" to mean "unpaid penalties" so as to make it unequivocal and prevent confusion as to the applicability of
R.A. No. 9903. More importantly, since the ascription of the meaning of "unpaid penalties" to "accrued penalties"
bear a reasonable semblance and justifiable connection, it should not be disturbed and altered by the courts.

Delinquent contributions and penalties may be paid separately

There is no existing statutory or regulatory provision which requires the simultaneous or joint payment of
corresponding penalties along with the payment of delinquent contributions. Consequently, it is possible that a class
of employers who have settled their delinquent contributions but have not paid the corresponding penalties before
the effectivity of R.A. No. 9903, may exist. As adequately pointed out by the SSC:69

It is worthy to note that there is no provision in RA 8282, as amended, nor in any SSS Circular or Office
Order that requires employers to settle their arrears in contributions simultaneously with payment of the
penalty. On the contrary, in its sincere effort to be a partner in nation[-]building, along with the State's
declared policy to establish, develop, promote and perfect a sound and viable tax-exempt social
security system suitable to the needs of the Philippines, the SSS is empowered to accept, process and
approve applications for installment proposal evincing that employers are not required to settle their
arrears in contributions simultaneously with the payment of the penalty. [emphasis supplied]

The Court finds that the aforementioned assertion of the SSC is not without any legal basis as Section 4 (c) of the
R.A. No. 8282 provides:

Section 4. Powers and Duties of the Commission and SSS. –

xxxx

(6) To compromise or release, in whole or in part, any interest, penalty or any civil liability to SSS in
connection with the investments authorized under Section 26 hereof, under such terms and conditions
as it may prescribe and approved by the President of the Philippines; and xxx (emphasis supplied)

Based on the foregoing, the SSS-through the SSC-is authorized to address any act that may undermine the
collection of penalties due from delinquent employers subject only to the condition in Section 26 of the same law
that the potential revenues being compromised "are not needed to meet the current administrative and operational
expenses." Thus, petitioners' claim that "a class of employers who simply paid the arrears in contribution but did not
settle their penalties due does not exist"70 is erroneous.

There is no violation of the equal protection clause

There is a substantial distinction between employers who paid prior and subsequent to R.A. No. 9903's effectivity. 1âwphi1

The equal protection clause guarantees that no person or class of persons shall be deprived of the same protection
of laws which is enjoyed by other persons or other classes in the same place and in like circumstances.71 However,
the concept of equal protection does not require a universal application of the laws to all persons or things without
distinction; what it simply requires is equality among equals as determined according to a valid classification. 72

In other words, equal protection simply requires that all persons or things similarly situated should be treated alike,
both as to rights conferred and responsibilities imposed. 73 It does not forbid discrimination as to things that are
different. 74 Neither is it necessary that the classification be made with mathematical nicety.75 Congress is given a
wide leeway in providing for a valid classification; 76 especially when social or economic legislation is at issue. 77
Hence, legislative classification may properly rest on narrow distinctions, for the equal protection guaranty does not
preclude the legislature from recognizing degrees of evil or harm, and legislation is addressed to evils as they may
appear. 78

Correspondingly, the primordial duty of the Court is merely to apply the law in such a way that it shall not usurp
legislative powers by judicial legislation and that in the course of such application or construction, it should not make
or supervise legislation, or under the guise of interpretation, modify, revise, amend, distort, remodel, or rewrite the
law, or give the law a construction which is repugnant to its terms. 79 In enacting a law, it is the sole prerogative of
Congress-not the Judiciary-to determine what subjects or activities it intends to govern limited only by the provisions
set forth in the Constitution.

Significantly, petitioners have already paid not only their delinquent contributions but also their corresponding
penalties before the enactment and effectivity of R.A. No. 9903. Because of this observation, petitioners cannot
anymore be considered as "delinquent" under the purview of R.A. No. 9903 and are not within the class of
"delinquent employers."80 Simply put, they are not similarly situated with other employers who are delinquent at the
time of the law's effectivity. Accordingly, Congress may treat petitioners differently from all other employers who may
have been delinquent.

Verily, this Court cannot-in the guise of interpretation-modify the explicit language of R.A. No. 9903 in waiving the
collection of accrued penalties to also include claims for refund. It obviously violates the Trias Politica Principle
entrenched in the very fabric of democracy itself. While violation of the equal protection clause may be a compelling
ground for this Court to nullify an arbitrary or unreasonable legislative classification, it may not be used as a basis
to extend the scope of a law to classes not intended to be covered.81 Therefore, R.A. No. 9903, which waived
outstanding penalties, cannot be expanded to allow a refund of those which were already settled before the law's
effectivity.

Final note

Settling the contributions in arrears within the availment period only entitles delinquent employers to a remission of
their corresponding accrued and outstanding penalties-not a refund of the penalties which have already been paid.
There is nothing in R.A. No. 9903 which explicitly imposes or even implicitly recognizes a positive or natural
obligation on the part of the SSS to return the penalties which have already been settled before its effectivity.

It is absurd to revive obligations that have already been extinguished by payment or performance just to be re-
extinguished by condonation or remission so that it may create a resulting obligation on the basis of solutio indebiti.
More importantly, there is no violation of the equal protection clause because there is a substantial distinction in the
classes of employers. Therefore, the Court deems it fitting to deny petitioners' claim for refund for lack of substantial
and legal basis.

WHEREFORE, the petition is DENIED. The February 26, 2016 Decision and November 2, 2016 Resolution of the
Court of Appeals in CA-G.R. SP No. 140916 are AFFIRMED in toto.

SO ORDERED.

ALEXANDER G. GESMUNDO
Associate Justice

WE CONCUR:

LUCAS P. BERSAMIN
Associate Justice
Acting Chairperson

MARVIC MARIO VICTOR F. LEONEN FRANCIS H. JARDELEZA

Associate Justice Associate Justice
 (On Official Leave)
SAMUEL R. MARTIRES*
Associate Justice

ATTESTATION

I attest that the conclusions in the above Decisionhad been reached in consultation before the case was assigned to
the writer of the opinion of the Court’s Division.

LUCAS P. BERSAMIN
Associate Justice
Acting Chairperson

CERTIFICATION

Pursuant to the Section 13, Article VIII of the Constitution, I certify that the conclusions in the above Decision had
been reached in consultation before the case was assigned to the writer of the opinion of the Court’s Division.

MARIA LOURDES P.A. SERENO

Chief Justice

Footnotes
*
Designated additional Member per Raffle dated January 15, 2018.
**
On official leave.
1
Penned by Associate Justice Jhosep Y. Lopez·with Associate Justice Ramon R. Garcia and Associate
Justice Leoncia R. Dimagiba, concurring; rollo, pp. 49-60.
2
Id. at 62-63.
3
Id. at 251-254.
4
Id. at 275-278.
5
An Act Further Strengthening The Social Security System Thereby Amending For This Purpose, Republic
Act No. 1161, As Amended, Otherwise Known As The Social Security Law (May l, 1997).
6
Social Security Law, as amended (June 18, 1954).
7
Rollo, p. 325.
8
Section 4 of R.A. No. 9903.
9
Rollo, pp. 86-89.
10
Id. at 86
11
Id. at 87
12
Id. at 88.
13
Id. at 89.
14
Supra see note 10.
15
Rollo, p. 94.
16
Id.
17
Id. at 93
18
Id.
19
Id. at 90-9 l.
20
Id. at 92.
21
Supra see note 19.
22
Docketed as: SSC Case No. 11-19521-11 (H. Villarica Pawnshop, Inc. v. Social Security System, Amador
M. Monteiro and Santiago Dionisio R. Agdeppa), SSC Case No. 11-19522-11 (HL Villarica Pawnshop, Inc. v.
Social Security System and Ma. Luz N. Barros-Magsino ), SSC Case No. 11-19523-11 (HRV Villarica
Pawnshop, Inc. v. Social Security System and Milagros N. Casuga) and SSC Case No. 11-19524-11 (Villarica
Pawnshop, Inc. v. Social Security System and Jocelyn Q. Garcia); rollo, pp. 95- 162.
23
Id. at 163-169.
24
Id. at 167.
25
Id. at 251-254.
26
Id. at 254.
27
Id. at 275-278.
28
675 Phil. 759, 767(2011).
29
Rollo, p. 59.
30
Id. at 62-63.
31
Id. at21-22.
32
Id. at 23-25.
33
Id. at 26-33, 350-353.
34
Id. at 25.
35
Id. at 322-335; see Section 5 (b) of Republic Act No. 1161, as amended by Republic Act No. 8282, which
states that the [Social Security] Commission shall be deemed to be a party to any judicial action involving any
such decision, and may be represented by an attorney employed by the Commission, or when requested by
the Commission, by the Solicitor General or any public prosecutors.
36
Id. at 307-319.
37
Supra see note 35.
38
Rollo, pp. 322-333.
39
Mendoza v. People, 675 Phil. 759, 765-766 (2011).
40
Tawang Multi-Purpose Cooperative v. la Trinidad Water District, 661 Phil. 390, 400 (2011).
41
Security Bank and Trust Company v. Regional Trial Court, etc., et al., 331 Phil. 787, 793 (1996).
42
Abueva, et al. v. Wood, et al., 45 Phil. 612, 633 (1924).
43
Resins, Incorporated v. Auditor General, et al., 134 Phil. 697, 700 (1968).
44
Abella, et al. v. Commissioner of Internal Revenue, et al., 492 Phil. 303, 313 (2005).
45
Republic, etc. v. Lacap, etc., 546 Phil. 87, 99 (2007).
46
Cf. Opie v. Torres, et al., 354 Phil. 948, 966 (1998).
47
Dizon, etc. v. Court of Tax Appeals, et al., 576 Phil. 110, 133 (2008).
48
Tolentino, Commentaries and Jurisprudence on Civil Code of the Philipines, Vol. IV, 1991 ed., p. 353.
49
F.F. Cruz & Co., Inc. v. HR Construction Corp., 684 Phil. 330, 351 (2012).
50
See: United States v. Wurts, 303 U.S. 414 (1938).
51
See: Victorias Milling Co., Inc. v. Central Bank of the Philippins, 121 Phil. 451, 455 (1965).
 52
See: Molloy, et al. v. Meier, etc., et al., 679 N.W.2d 711 (2004).
53
Erectors, Inc. v. National Labor Relations Commission, et al., 326 Phil. 640, 646 (1996).
54
Yun Kwan Byung v. Philippine Amusement and Gaming Corporation, 623 Phil. 23, 43 (2009).
55
Agabon, et al. v. National Labor Relations Commission, et al., 485 Phil. 248, 306 (2004).
56
Section 2 ofR.A. No. 1161, as amended by R.A. No. 8282.
57
433 Phil. 946, 952 (2002).
58
Section 9, Article II of the Constitution.
59
Section 3, Article XIII of the Constitution.
60
See Hearing of the Senate Committee on Government Corporations and Public Enterprises Joint With
Senate Committee on Labor, Employment and Human Resources Development (Technical Working Group),
May 21, 2009, p. 9; see also: Hearing of the House of Representatives Committee on Government
Enterprises and Privatization, August 27, 2008, pp. 16-17.
61
Bello, et al. v. Court of Appeals, et al., 155 Phil. 480, 491 (1974 ).
62
Secretary of Justice, et al. v. Koruga, 604 Phil. 405, 416 (2009).
63
Kida, etc., et al. v. Senate, etc., et al., 675 Phil. 316, 361 (2011).
64
Sections 3 and 30 of R.A. No. 1161, as amended by R.A. No. 8282.
65
Section 5 of R.A. No. 9903.
66
Cawad, et al. v. Abad, etc., et al.,, 764 Phil. 705, 723 (2015).
67
Conference of Maritime Manning Agencies, Inc.. et al. v. Philippine Overseas Employment Administration,
et al., 313 Phil. 592, 606-607 (1995).
68
Gerochi, et al. v. Department of Energy, et al., 554 Phil. 563, 584 (2007).
69
Rollo, p. 314, citing: SS Circular No. 2011-002 (Issued on February 16, 2011).
70
Id. at 25.
71
Commissioner of Customs, et al. v. Hypermix Feeds Corporation, 680 Phil. 681, 693 (2012).
72
Bartolome v. Social Security System, et al., 746 Phil. 717, 730 (2014).
73
The Philippine Judges Association, etc., et al. v. Prado, etc., et al., 298 Phil. 502, 512-513 (1993).
74
Victoriano v. Elizalde Rope Workers' Union, et al., 158 Phil. 60, 87 ( 1974).
75
ABAKADA Gura Party List (formerly AASJS) Officers/Members, etc. v. Purisima, etc., et al., 584 Phil. 246,
270 (2008).
76
Central Bank (now Bangko Sentral ng Pilipinas) Employees Association, Inc. v. Bangko Sentral ng
Pilipinas, et al., 487 Phil. 531, 597 (2004).
77
City of Cleburne, Texas, et al. v. Cleburne Living Center, Inc., et al., 473 U.S. 432 (1985).
78
Anucension, et al. v. National Labor Union, et al., 170 Phil. 373, 392 (1977).
79
Corpuz v. People, 734 Phil. 353, 416, (2014).
80
Rollo. pp. 25-26.
81
Cf. Lopez, etc., et al. v. Court of Appeals, et al., 438 Phil. 351, 362 (2002) where it was stated that courts
may not, in the guise of interpretation, enlarge the scope of a statute and include therein situations not
provided or intended by the lawmakers.

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