G.R. No. 247471 , July 07, 2020
JOINT SHIP MANNING GROUP, INC., PHILIPPINE ASSOCIATION OF MANNING AGENCIES & SHIP MANAGERS, INC., FILIPINO ASSOCIATION FOR MARINERS’ EMPLOYMENT, INC., PHILIPPINE-JAPAN MANNING CONSULTATIVE COUNCIL, INC., INTERNATIONAL MARITIME ASSOCIATION OF THE PHILIPPINES, TOP EVER MARINE MANAGEMENT, TRANS-GLOBAL MARITIME AGENCY, INC., BARKO INTERNATIONAL INC., TARA TRADING SHIPMANAGEMENT, INC., CORP., CAPT. OSCAR D. ORBETA, MICHAEL J. ESTANIEL, CAPT. TEODORO B. QUIJANO AND CAPT. JUANITO G. SALVATIERRA, JR., PETITIONERS, VS. SOCIAL SECURITY SYSTEM AND THE SOCIAL SECURITY COMMISSION, REPRESENTED BY ITS PRESIDENT AND VICE CHAIRMAN, RESPECTIVELY, AURORA C. IGNACIO, RESPONDENTS.

FACTS

Petitioners, consisting of Manning Associations, Manning Agencies, and their Manning Directors and Presidents, filed a petition for certiorari and prohibition seeking to annul and declare as unconstitutional Section 9-B of Republic Act (R.A.) No. 11199, or the Social Security Act of 2018. The assailed provision mandates compulsory SSS coverage for all sea-based and land-based Overseas Filipino Workers (OFWs) and specifically provides that manning agencies are considered agents of their principals and are considered as employers of sea-based OFWs, making them jointly and severally or solidarily liable with their principals for any violation of the Act. Petitioners argue that the provision violates substantive due process and equal protection because it unreasonably discriminates against manning agencies of sea-based OFWs by treating them as employers and holding them jointly and severally liable, while recruitment agencies of land-based OFWs are not similarly treated. Petitioners also contend that the increased contribution rates for employers under R.A. No. 11199 are too high and would prejudice the shipping industry. They further assert that SSS coverage for sea-based OFWs is already provided by existing instruments like the 1988 Memorandum of Agreement, the 2006 Maritime Labour Convention, and the POEA Standard Employment Contract, making Section 9-B unnecessary.

ISSUE

Whether Section 9-B of R.A. No. 11199 is unconstitutional as it violates substantive due process and equal protection of rights.

RULING

The Supreme Court dismissed the petition and upheld the constitutionality of Section 9-B of R.A. No. 11199 . The Court ruled that petitioners failed to overcome the strong presumption of constitutionality of the law. On the procedural aspect, the Court found that petitioners had locus standi as they were directly affected by the assailed provision, which imposed solidary liability on them, and that the petition raised a constitutional issue of transcendental importance warranting judicial review.
On the substantive issues, the Court held that the equal protection clause was not violated. There is a substantial distinction between sea-based and land-based OFWs that justifies their differential treatment. Sea-based OFWs work under a single, standardized employment contract governed by the POEA, and their manning agencies have a direct and immediate relationship with them, acting as the local agent of the foreign principal. In contrast, land-based OFWs have varied employment arrangements, and their recruitment agencies do not have the same degree of control. The classification is germane to the law’s purpose of ensuring social security protection for OFWs. The imposition of joint and several liability on manning agencies is not new but is a reiteration of existing liabilities under the 2016 POEA Rules and the Migrant Workers Act.
The Court also ruled that there was no violation of substantive due process. The law is a valid exercise of the State’s police power to promote the general welfare and social justice. The compulsory coverage and increased contribution rates are reasonable means to achieve the law’s objective of strengthening the SSS fund and providing meaningful social security protection to OFWs. The Court noted that the obligation to remit SSS contributions for seafarers already existed prior to R.A. No. 11199 , as established in Sta. Rita v. Court of Appeals. The law merely codifies and reinforces this existing obligation to ensure compliance.