Orion Water District vs. GSIS

A GSIS suit to collect unremitted employee premiums is cognizable by the regular courts and is excluded from mandatory administrative settlement under Section 66, Chapter 14, Book IV of Executive Order No. 292 where the complaint involves no dispute over the interpretation and application of a statute, contract, or agreement and impleads individual officers rather than solely government departments, bureaus, offices, agencies, or instrumentalities.

Orion Water District is a local water district organized as a government-owned and controlled corporation, with the Government Service Insurance System as the compulsory insurer of its employees under Republic Act No. 8291. Membership in the Government Service Insurance System is compulsory for all employees receiving compensation who have not reached compulsory retirement age, with the employer charged to deduct and remit contributions and the System empowered to demand and sue for unpaid premiums. Disputes solely between departments, bureaus, offices, agencies, and instrumentalities of the National Government, including government-owned and controlled corporations, arising from the interpretation and application of statutes, contracts, or agreements are otherwise directed to administrative settlement under Presidential Decree No. 242, now Chapter 14, Book IV of Executive Order No. 292.

Orion Water District is a local water district organized as a government-owned and controlled corporation. Its officers during the material period included Manager Bener E. Guzman, Head of Agency Ceferina Macdon, Finance Officer Yolanda S. Urbano, and Cashier Cecile B. Swim. As employer of members of the Government Service Insurance System, the District was required by law to deduct employees' personal shares in life and retirement premiums from their salaries and remit them to the System.

According to the Government Service Insurance System, the District and its officers failed and refused to pay, remit, or deliver those personal shares covering July 1993 to July 31, 2000, amounting to Five Hundred Fifty-One Thousand Four Hundred Seven Pesos and Sixteen Centavos (₱551,407.16). The System averred that it repeatedly demanded payment from the District through its Manager, who received the last demand letter on November 21, 2002. Despite receipt, no remittance of the arrearages followed.

Thereafter, Guzman resigned as General Manager in May 2006 and was replaced by Crispin Q. Tria, while Swim and Urbano had resigned from their respective posts sometime in 2000. On April 4, 2006, the System filed its collection complaint before the Regional Trial Court of Pasay City. The trial court found the motion to dismiss unmeritorious because defendants did not even allege a genuine dispute over the claim or that the controversy arose from the interpretation or application of the statutes, contracts, or agreements involved.

• Jurisdiction of the Secretary of Justice: Petitioner argued that the Regional Trial Court has no jurisdiction over the subject matter because GSIS and OWD are both government-owned and controlled corporations, so jurisdiction over disputes between them lies with the Secretary of Justice pursuant to Sections 66 to 70, Chapter 14, Book IV of E.O. No. 292.
• Administrative Settlement Procedure: Petitioner maintained that under the cited law, jurisdiction to settle disputes among government offices lies with the Department of Justice as represented by the Secretary of Justice, whose decision shall be appealable to the Office of the President and thereafter to the Court of Appeals by petition for review under Rule 43 of the Rules of Court.
• Error in Affirming RTC Orders: Petitioner contended that the Court of Appeals erred in upholding the RTC Orders dated March 28, 2008 and June 27, 2008 notwithstanding clear provisions of law allegedly depriving the trial court of jurisdiction.

• Administrative Settlement under E.O. No. 292: Whether the dispute, being between two government-owned and controlled corporations, must be administratively settled or adjudicated under Sections 66 to 70, Chapter 14, Book IV of E.O. No. 292 rather than litigated in court.
• RTC Jurisdiction under R.A. No. 8291: Whether the Regional Trial Court properly assumed jurisdiction over the GSIS complaint for collection of unremitted premium contributions pursuant to Section 41(w) of R.A. No. 8291 and the jurisdictional amount for civil actions.

• Administrative Settlement under E.O. No. 292: No. Sections 66 to 70 are inapplicable because the action does not involve interpretation and application of a statute, contract, or agreement and is not solely between government entities, individual officers having been impleaded.
• RTC Jurisdiction under R.A. No. 8291: Yes. The complaint for collection of unremitted contributions was properly instituted in the Regional Trial Court, which has jurisdiction where the demand exceeds ₱300,000.00 in the provinces or ₱400,000.00 in Metro Manila, as expressly authorized by Section 41(w).

• Administrative Settlement under E.O. No. 292: Not all controversies between government offices fall under Chapter 14, Book IV of E.O. No. 292. Construed in light of its precursor, Presidential Decree No. 242, the chapter prescribes only an administrative procedure for certain types of disputes arising from the interpretation and application of statutes, contracts, or agreements. By the ejusdem generis rule, the phrase "such as those arising from the interpretation and application of statutes, contracts or agreements" in Section 66 limits referral to administrative arbitration to matters similar or analogous to those expressly enumerated. The GSIS complaint is for collection of unremitted premium contributions which the employer is unequivocally mandated to deduct and remit; no obscure question of law or ambiguous contractual provision causing discord was shown. Even assuming coverage, the solely-between-government-entities requisite was unmet because OWD's officers — Manager Guzman, Head of Agency Macdon, Finance Officer Urbano, and Cashier Swim — were also impleaded, paralleling Philippine National Oil Company vs. CA where presence of a private party defeated application of P.D. No. 242.
• RTC Jurisdiction under R.A. No. 8291: Jurisdiction over subject matter is conferred by law and determined by the allegations in the complaint. The complaint seeks recovery of premium arrearages which the employer was bound to deduct and remit under Section 6(b) of R.A. No. 8291 within the first ten days of the succeeding calendar month, with priority over other obligations except salaries and wages, and with Section 7 imposing not less than two percent interest for delay at the employer's expense. Continued refusal gives rise to a cause of action, and Section 41(w) expressly empowers the Board to demand payment within thirty days from due date and, upon failure or refusal, to initiate necessary civil, criminal, or administrative suits before courts, tribunals, commissions, boards, or bodies of proper jurisdiction. The ₱551,407.16 demand fell within Regional Trial Court jurisdiction under Batas Pambansa Blg. 129, Section 19(8), as amended.

• Jurisdiction Determined by Allegations in the Complaint — Jurisdiction over the subject matter is conferred by law and determined by the allegations in the complaint, which comprise a concise statement of the ultimate facts constituting the plaintiff's cause of action. Applied to hold that the GSIS pleading, framed as recovery of statutorily required unremitted premiums, stated a collection cause cognizable by the Regional Trial Court.
• Compulsory GSIS Membership and Employer's Duty to Deduct and Remit — Membership in the GSIS is compulsory for all employees receiving compensation who have not reached compulsory retirement age, irrespective of employment status, and each employer shall remit directly to the GSIS the employees' and employers' contributions within the first ten days of the calendar month following the month to which the contributions apply, with priority over all obligations except salaries and wages. Delayed remittance bears interest of not less than two percent shouldered by the employer, and continued refusal supports suit. Applied to characterize OWD's non-remittance as breach of an unequivocal statutory duty rather than an interpretive dispute.
• GSIS Power to Sue for Indebtedness — Under Section 41(w) of R.A. No. 8291, the GSIS shall ensure collection or recovery of all indebtedness, including unpaid premiums or contributions from all obligors whether public or private, by demanding payment within thirty days from due date and instituting necessary actions before courts or tribunals of proper jurisdiction within thirty days from expiry of the demand period. Applied to sanction the filing of the collection complaint with the Regional Trial Court.
• Limited Scope of Administrative Settlement of Inter-Government Disputes; Ejusdem Generis — Sections 66 to 70, Chapter 14, Book IV of E.O. No. 292, lifted from P.D. No. 242, do not cover every controversy between government entities but only certain disputes such as those arising from the interpretation and application of statutes, contracts, or agreements, with other cases required to be similar or analogous under ejusdem generis, and only where the dispute is solely between or among departments, bureaus, offices, agencies, and instrumentalities including government-owned and controlled corporations. Applied to exclude a straightforward collection of unremitted contributions that presented no interpretive issue and that impleaded individual officers.

• "Basic as a hornbook principle is that jurisdiction over the subject matter of a case is conferred by law and determined by the allegations in the complaint which comprise a concise statement of the ultimate facts constituting the plaintiff's cause of action." — States the controlling test for subject-matter jurisdiction and anchors the conclusion that the collection allegations placed the case with the Regional Trial Court.
• "only prescribes an administrative procedure for the settlement of certain types of disputes between or among departments, bureaus, offices, agencies, and instrumentalities of the National Government, including [GOCCs], so that they need not always repair to the courts for the settlement of controversies arising from the interpretation and application of statutes, contracts or agreements." — Defines the limited reach of P.D. No. 242, carried into E.O. No. 292, and supports refusal to divest the regular courts of the collection suit.

• City of Dumaguete vs. Philippine Ports Authority, 671 Phil. 610, 629 (2011) — Cited as authority for the hornbook principle that subject-matter jurisdiction is conferred by law and determined by the allegations in the complaint.
• Philippine Veterans Investment Development Corporation (PHIVIDEC) vs. Judge Velez, 276 Phil. 439 (1991) — Followed to emphasize that P.D. No. 242, precursor of E.O. No. 292 provisions, applies only to certain types of inter-government disputes and does not intrude into regular court jurisdiction.
• Philippine National Oil Company vs. CA, 496 Phil. 506 (2005) — Followed for the rule that Section 1 of P.D. No. 242 does not apply where the controversy is not solely between government entities, as where a private citizen was a party alongside government agencies.

• Section 3, R.A. No. 8291 — Provides compulsory GSIS membership for employees receiving compensation below compulsory retirement age; applied to establish OWD employees' coverage and the employer's correlative duty.
• Section 6(b), R.A. No. 8291 — Imposes the employer's positive duty to remit employees' and employers' contributions directly to GSIS within the first ten days of the following calendar month with priority over other obligations except salaries and wages; applied to define OWD's breached obligation.
• Section 7, R.A. No. 8291 — Charges agencies delaying remittance interest as prescribed by the Board but not less than two percent simple interest per month, payable by the employers; applied to underscore liability for delayed remittance.
• Section 41(w), R.A. No. 8291 — Empowers GSIS to ensure collection of all indebtedness including unpaid premiums from public or private obligors and to institute proper civil, criminal, or administrative suits before courts or bodies of proper jurisdiction after demand; applied to authorize the RTC collection suit.
• Sections 66 to 70, Chapter 14, Book IV, E.O. No. 292 — Provide administrative settlement or adjudication of disputes solely between National Government departments, bureaus, offices, agencies, and instrumentalities including government-owned and controlled corporations, through the Secretary of Justice or Solicitor General with appeal to the President; held inapplicable for lack of interpretive dispute and solely-government character.
• Section 1, P.D. No. 242 — Precursor provision limiting administrative settlement to disputes solely between National Government entities arising from interpretation and application of statutes, contracts, or agreements; used to construe the scope of Section 66 of E.O. No. 292.
• Section 19(8), Batas Pambansa Blg. 129, as amended by R.A. No. 7691 — Confers Regional Trial Court jurisdiction in civil cases where the demand exceeds ₱300,000.00 outside Metro Manila or ₱400,000.00 in Metro Manila; applied to sustain RTC jurisdiction over the ₱551,407.16 claim.

Velasco, Jr., (Chairperson), Peralta, and Perez, JJ., concur. Jardeleza, J., on official business.