COLLECTION OF UNREMITTED SS CONTRIBUTIONS,
INTERESTS AND PENALTIES
EMPLOYER – EMPLOYEE RELATIONS
CONDONATION LAW – R.A. 9903;
Republic Act No. 9903 AN ACT GRANTING THE SOCIAL
SECURITY SYSTEM A ONE - TIME AUTHORITY TO CONDONE
PENALTIES ON UNREMITTED OR DELINQUENT
CONTRIBUTIONS BY EMPLOYERS Be it enacted by the Senate
and House of Representatives of the Philippines in Congress
assembled:
Section 1. Short Title. - This Act shall be known as the "Social
Security Condonation Law of 2009".
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filed against the employer shall be withdrawn without prejudice to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.
Section 3. Installment Proposal. - In the event that a delinquent
employer chooses to submit an installment proposal, the SSS shall
give due course to approve and grant the same, subject to the
implementing rules and regulations as the Social Security
Commission shall prescribe: Provided, That the employer shall
remit, upon submission of the installment proposal, a down
payment of not less than five percent (5%) of its total contribution
delinquency: Provided, further, That the employer shall remit the
balance thereof in equal monthly installments within a period not
exceeding forty - eight (48) months from the date of approval of
the proposal: Provided, finally, That the installment payments shall
bear an interest of three percent (3%) per annum.
Section 4. Effectivity 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 effectivity of this Act
shall likewise have their accrued penalties waived.
Section 5. Implementing Rules and Regulations. - Within thirty
(30) days after the effectivity of this Act, the Social Security
Commission shall issue the necessary rules and regulations for the
effective implementation of this Act.
Section 6. Separability Clause. - In the event that any provision of
this Act is declared unconstitutional, the validity of the other
provisions shall not be affected by such declaration.
Section 7. Repealing Clause. - All Jaws, decrees, orders, rules and
regulations and other issuances or parts thereof which are
inconsistent with the provisions of this Act are hereby repealed or
modified accordingly. Section 8. Effectivity. - This Act shall take
effect fifteen (15) days following its publication in the Official
Gazette or in at least two (2) newspapers of general circulation.
SECTION 19 – EMPLOYER’S CONTRIBUTION;
E. Sources of Funds — Employment Records and Reports;
Section 19. Employer's Contributions. — (a) Beginning as of
the last day of the month when an employee's compulsory
coverage takes effect and every month thereafter during his
employment, his employer shall pay, with respect to such covered
employee, the employer's contribution in accordance with the
schedule indicated in section eighteen of this Act. Notwithstanding
any contract to the contrary, an employer shall not deduct, directly
or indirectly, from the compensation of his employees covered by
the SSS or otherwise recover from them the employer's
contributions with respect to such employees.
(b) The remittance of such contributions by the employer shall
be supported by a quarterly collection list to be submitted to the
SSS at the end of each calendar quarter indicating the correct ID
number of the employer, the correct names and SS numbers of the
employees and the total contributions paid for their account during
the quarter. (As amended by Sec. 13, P.D. No. 1636, S-1979)
SECTION 19 – A; CONTRIBUTION OF SELF – EMPLOYED
MEMBER;
E. Sources of Funds — Employment Records and Reports;
Section 19-A. Contributions of the Self-employed. — The
contributions to the SSS of the self-employed shall be determined
in accordance with section eighteen of this Act: Provided, That the
average monthly net earnings declared by the self-employed at the
time of his registration with the SSS shall be considered as his
monthly compensation and he shall pay both the employer and
employee contributions.
Net earnings as understood under this section shall be the net
income from his business or profession as reflected in the income
tax return for the immediately preceding year, excluding rental
income, dividend, interest investments and the like or all types of
incomes which are not derived from his business registered with
the SSS or from the practice of his profession.
The average monthly net earnings declared by the self-employed
member at the time of his registration shall remain the basis of his
monthly salary credit, unless he makes, at the start of the year,
another declaration of his average monthly net earnings based on
his income tax returns for the immediately preceding year, in
which case such latest declaration becomes the new basis of his
monthly salary credit. (As amended by Sec. 14, P.D. No. 1636, S-
1979)
SECTION 22 – REMITANCE OF CONTRIBUTIONS FOR
EMPLOYED MEMBERS;
E. Sources of Funds — Employment Records and Reports;
Section 22. Remittance of Contributions. — (a) The
contribution imposed in the preceding section shall be remitted to
the SSS within the first seven days of each calendar month
following the month for which they are applicable or within such
time as the Commission may prescribe. Every employer required
to deduct and to remit such contributions shall be liable for their
payment and if any contribution is not paid to the SSS as herein
prescribed, he shall pay besides the contribution a penalty thereon
of three per cent per month from the date the contribution falls
due until paid. If deemed expedient and advisable by the
Commission, the collection and remittance of contributions shall be
made quarterly or semi-annually in advance, the contributions
payable by the employees to be advanced by their respective
employers: Provided, That upon separation of an employee, any
contribution so paid in advance but not due shall be credited or
refunded to his employer. (As amended by Sec. 12, P.D. No. 24,
S-1972)
(b) The contributions payable under this Act in cases where an
employer refuses or neglects to pay the same shall be collected by
the SSS in the same manner as taxes are made collectible under
the National Internal Revenue Code, as amended. Failure or
refusal of the employer to pay or remit the contributions herein
prescribed shall not prejudice the right of the covered employee to
the benefits of the coverage.
The right to institute the necessary action against the employer
may be commenced within twenty years from the time the
delinquency is known or the assessment is made by the SSS, or
from the time the benefit accrues, as the case may be. (As
amended by Sec. 15, P.D. No. 1636, S-1979)
(c) Should any person, natural or juridical, default in any
payment of contributions, the Commission may also collect the
same in either of the following ways:
(1) By an action in court, which shall hear and dispose of the
case in preference to any other civil action, or
(2) By issuing a warrant to the Sheriff of any province or city
commanding him to levy upon and sell any real and personal
property of the debtor. The Sheriff's sale by virtue of said warrant
shall be governed by the same procedure prescribed for executions
against property upon judgments by a court of record.
(d) The last complete record of monthly contributions paid by
the employer or the average of the monthly contributions paid
during the past three years as of the date of filing of the action for
collection shall be presumed to be the monthly contributions
payable by and due from the employer to the SSS for each of the
unpaid month, unless contradicted and overcome by other
evidence: Provided, That the SSS shall not be barred from
determining and collecting the true and correct contributions due
the SSS even after full payment pursuant to this paragraph, nor
shall the employer be relieved of his liability under section twenty-
eight of this Act. (As amended by Sec. 12, P.D. No. 24, S-1972
and Sec. 11, P.D. No. 1202, S-1977)
(e) For purposes of this Section, any employer who is
delinquent or has not remitted all the monthly contributions due
and payable may within six months from the issuance of this
Executive Order remit said contributions to the SSS and submit the
corresponding collection lists herefore without incurring the
prescribed three per cent penalty. In case the employer fails to
remit to the SSS the said contributions within the six months grace
period, the penalty of three per cent shall be imposed from the
time the contributions first became due as provided in paragraph
(a) of this section. (As amended by Sec. 12, P.D. No. 24, S-1972;
Sec. 6, P.D. No. 177, S-1973; and Sec. 4, E.O. No. 28, S-1986)
Section 22-A. Remittance of Contributions of Self-employed. —
Self-employed members shall remit their monthly contributions
quarterly on such dates and schedules, as the Commission may
specify through rules and regulations.
The penalty of three per cent per month for late payments
provided for in paragraph (a) of section twenty-two of this Act and
the manner of collection of contributions specified in paragraphs
(b), (c) and (d) of section twenty-two of this Act are also
applicable to the collection of penalties and contributions of the
covered self-employed. (As amended by Sec. 16, P.D. No. 1636,
S-1979)
LEGAL ASSESSMENT;
SS CONTRIBUTIONS NOT PUBLIC FUNDS;
EMPLOYER’S NON REMITTANCE SHALL NOT PREJUDICE
EMPLOYEE’S RIGHT TO BENEFIT;
Employees of companies with delinquent SSS or GSIS
contributions are still entitled to benefits and services under the
Employees’ Compensation Program in the event of work-connected
sickness, injuries, or death.
This was recently clarified by Employees’ Compensation
Commission Executive Director Stella Zipagan-Banawis allaying
fears of workers that they may not be able to receive EC benefits if
their employers are negligent in their obligation in remitting social
security contributions for their employees.
“The coverage of a worker under the ECP starts at the first day
that he started his employment in a certain company. If something
happens to him on the first day of his job and it was proven as
work-related, then he is qualified for EC benefits even he is not yet
enrolled under Social Security System (SSS) or Government
Service Insurance System (GSIS)”, Banawis said.
Article 196 (b) of Presidential Decree No. 626, otherwise known as
The State Insurance Fund and the Employees’ Compensation
Program states that failure or refusal of the employer to pay the
prescribed contributions shall not prejudice the right of the
employee or his dependents to EC benefits.
“Furthermore, the law also states that the employer is liable to the
System for the lump sum equivalent to the EC benefits to which an
employee or his dependents may be entitled if a work-related
sickness, injury, disability, or death occurs before the System
receives any report of the name of the involved employee,” she
further explained.
PENALTY;
CASE:
UNITED CHRISTIAN MISSIONARY SOCIETY vs. SOCIAL
SECURITY COMMISSION, 141 PHIL 633, 30 SCRA 982,
(1969)FACTS: In this appeal from an order of the Social Security
Commission, we uphold the Commission's Order dismissing the
petition before it, on the ground that in the absence of an express
provision in the Social Security Act1 vesting in the Commission the
power to condone penalties, it has no legal authority to condone,
waive or relinquish the penalty for late premium remittances
mandatorily imposed under the Social Security Act.
The five petitioners originally filed on November 20, 1964 separate
petitions with respondent Commission, contesting the social
security coverage of American missionaries who perform religious
missionary work in the Philippines under specific employment
contracts with petitioners. After several hearings, however,
petitioners commendably desisted from further contesting said
coverage, manifesting that they had adopted a policy of
cooperation with the Philippine authorities in its program of social
amelioration, with which they are in complete accord. They instead
filed their consolidated amended petition dated May 7, 1966,
praying for condonation of assessed penalties against them for
delayed social security premium remittances in the aggregate
amount of P69,446.42 for the period from September, 1958 to
September, 1963.
In support of their request for condonation, petitioners alleged that
they had labored under the impression that as international
organizations, they were not subject to coverage under the
Philippine Social Security System, but upon advice by certain
Social Security System officials, they paid to the System in
October, 1963, the total amount of P81,341.80, representing their
back premiums for the period from September, 1958 to
September, 1963. They further claimed that the penalties assessed
against them appear to be inequitable, citing several resolutions of
respondent Commission which in the past allegedly permitted
condonation of such penalties.
authority to condone penalties for late premium remittance, to
which petitioners filed their opposition of June 15, 1966, and in
turn, respondent filed its reply thereto of June 22, 1966.
Respondent Commission set the Motion to Dismiss for hearing and
oral argument on July 20, 1966. At the hearing, petitioners'
counsel made no appearance but submitted their Memorandum in
lieu of oral argument. Upon petition of the System's Counsel, the
Commission gave the parties a further period of fifteen days to
submit their Memorandum consolidating their arguments, after
which the motion would be deemed submitted for decision.
Petitioners stood on their original memorandum, and respondent
System filed its memorandum on August 4, 1966.
On September 22, 1966, respondent Commission issued its Order
dismissing the petition, as follows:
Considering all of the foregoing, this Commission finds,
and so holds, that in the absence of an express provision
in the Social Security Act vesting in the Commission the
power to condone penalties, it cannot legally do so. The
policy enunciated in Commission Resolution No. 536, series
of 1964, cited by the parties, in their respective pleadings,
has been reiterated in Commission Resolution No. 878,
dated August 18, 1966, wherein the Commission adopting
the recommendation of the Committee on Legal Matters
and Legislation of the Social Security Commission ruled
that it "has no power to condone, waive or relinquish the
penalties for late premium remittances which may be
imposed under the Social Security Act."
WHEREFORE, the petition is hereby dismissed and
petitioners are directed to pay the respondent System,
within thirty (30) days from receipt of this Order, the
amount of P69,446.42 representing the penalties payable
by them, broken down as follows:

On May 25, 1966, respondent System filed a Motion to Dismiss on

the ground that "the Social Security Commission has no power or

United Christian Missionary Society
Board of Mission of the Evangelical United Brothers
Church
United Church Board for World Ministers
Commission on Ecumenical Mission & Relations
Board of Foreign Mission of the Reformed Church in
America
SEC 22. Remittance of premiums. — (a) The contributions
P5,253.53
imposed in the preceding sections shall be remitted to the
System within the first seven days of each calendar month
7,891.74
following the month for which they are applicable or within
such time as the Commission may prescribe. "Every
12,353.75 employer required to deduct and to remit such contribution
shall be liable for their payment and if any contribution is
33,019.36 not paid to the system, as herein prescribed, he shall pay
besides the contribution a penalty thereon of three per
10,928.04 centum per month from the date the contribution falls due
until paid . . .2

TOTAL P No discretion or alternative is granted respondent Commission in

69,446.42
Upon failure of the petitioners to comply with this Order
within the period specified herein, a warrant shall be
issued to the Sheriff of the Province of Rizal to levy and
sell so much of the property of the petitioners as may be
necessary to satisfy the aforestated liability of the
petitioners to the System.
This Court is thus confronted on appeal with this question of first
impression as to whether or not respondent Commission erred in
ruling that it has no authority under the Social Security Act to
condone the penalty prescribed by law for late premium
remittances.
We find no error in the Commission's action.
1. The plain text and intent of the pertinent provisions of the Social
Security Act clearly rule out petitioners' posture that the
respondent Commission should assume, as against the mandatory
imposition of the 3% penalty per month for late payment of
premium remittances, the discretionary authority of condoning,
waiving or relinquishing such penalty.
The pertinent portion of Section 22 (a) of the Social Security Act
peremptorily provides that:
the enforcement of the law's mandate that the employer who fails
to comply with his legal obligation to remit the premiums to the
System within the prescribed period shall pay a penalty of three
3% per month. The prescribed penalty is evidently of a punitive
character, provided by the legislature to assure that employers do
not take lightly the State's exercise of the police power in the
implementation of the Republic's declared policy "to develop,
establish gradually and perfect a social security system which shall
be suitable to the needs of the people throughout the Philippines
and (to) provide protection to employers against the hazards of
disability, sickness, old age and death."3 In this concept, good faith
or bad faith is rendered irrelevant, since the law makes no
distinction between an employer who professes good reasons for
delaying the remittance of premiums and another who deliberately
disregards the legal duty imposed upon him to make such
remittance. From the moment the remittance of premiums due is
delayed, the penalty immediately attaches to the delayed premium
payments by force of law.
2. Petitioners contend that in the exercise of the respondent
Commission's power of direction and control over the system, as
provided in Section 3 of the Act, it does have the authority to
condone the penalty for late payment under Section 4 (1),
whereby it is empowered to "perform such other acts as it may
deem appropriate for the proper enforcement of this Act." The law
does not bear out this contention. Section 4 of the Social Security
Act precisely enumerates the powers of the Commission. Nowhere
from said powers of the Commission may it be shown that the
Commission is granted expressly or by implication the authority to
condone penalties imposed by the Act.
3. Moreover, the funds contributed to the System by compulsion of
law have already been held by us to be "funds belonging to the
members which are merely held in trust by the
Government."4 Being a mere trustee of the funds of the System
which actually belong to the members, respondent Commission
cannot legally perform any acts affecting the same, including
condonation of penalties, that would diminish the property rights
of the owners and beneficiaries of such funds without an express
or specific authority therefor.
4. Where the language of the law is clear and the intent of the
legislature is equally plain, there is no room for interpretation and
construction of the statute. The Court is therefore bound to uphold
respondent Commission's refusal to arrogate unto itself the
authority to condone penalties for late payment of social security
premiums, for otherwise we would be sanctioning the
Commission's reading into the law discretionary powers that are
not actually provided therein, and hindering and defeating the
plain purpose and intent of the legislature.
5. Petitioners cite fourteen instances in the past wherein
respondent Commission had granted condonation of penalties on
delayed premium payments. They charge the Commission with
grave abuse of discretion in not having uniformly applied to their
cases its former policy of granting condonation of penalties. They
invoke more compelling considerations of equity in their cases, in
that they are non-profit religious organizations who minister to the
spiritual needs of the Filipino people, and that their delay in the
payment of their premiums was not of a contumacious or
deliberate defiance of the law but was prompted by a well-founded
belief that the Social Security Act did not apply to their
missionaries.
The past instances of alleged condonation granted by the
Commission are not, however, before the Court, and the unilateral
conclusion asserted by petitioners that the Commission had
granted such condonations would be of no avail, without a review
of the pertinent records of said cases. Nevertheless, assuming
such conclusion to be correct, the Commission, in its appealed
Order of September 22, 1966 makes of record that since its
Resolution No. 536, series of 1964, which it reiterated in another
resolution dated August 18, 1966, it had definitely taken the legal
stand, pursuant to the recommendation of its Committee on Legal
Matters and Legislation, that in the absence of an express
provision in the Social Security Act vesting in the Commission the
power to condone penalties, it "has no power to condone, waive or
relinquish the penalties for late premium remittances which may
be imposed under the Social Security Act."
6. The Commission cannot be faulted for this correct legal position.
Granting that it had erred in the past in granting condonation of
penalties without legal authority, the Court has held time and
again that "it is a well-known rule that erroneous application and
enforcement of the law by public officers do not block subsequent
correct application of the statute and that the Government is never
estopped by mistake or error on the part of its
agents."5 Petitioners' lack of intent to deliberately violate the law
may be conceded, and was borne out by their later withdrawal in
May, 1966 of their original petitions in November, 1964 contesting
their social security coverage. The point, however, is that they
followed the wrong procedure in questioning the applicability of the
Social Security Act to them, in that they failed for five years to pay
the premiums prescribed by law and thus incurred the 3% penalty
thereon per month mandatorily imposed by law for late payment.
The proper procedure would have been to pay the premiums and
then contest their liability therefor, thereby preventing the penalty
from attaching. This would have been the prudent course,
considering that the Act provides in Section 22 (b) thereof that the
premiums which the employer refuses or neglects to pay may be
collected by the System in the same manner as taxes under the
National Internal Revenue Code, and that at the time they
instituted their petitions in 1964 contesting their coverage, the
Court had already ruled in effect against their contest three years
earlier, when it held in Roman Catholic Archbishop vs. Social
Security Commission6 that the legislature had clearly intended to
include charitable and religious institutions and other non-profit
institutions, such as petitioners, within the scope and coverage of
the Social Security Act.
7. No grave abuse of discretion was committed, therefore, by the
Commission in issuing its Order dismissing the petition for
condonation of penalties for late payment of premiums, as claimed
by petitioners in their second and last error assigned. Petitioners
were duly heard by the Commission and were given due
opportunity to adduce all their arguments, as in fact they filed
their Memorandum in lieu of oral argument and waived the
presentation of an additional memorandum. The mere fact that
there was a pending appeal in the Court of Appeals from an
identical ruling of the Commission in an earlier case as to its lack
of authority to condone penalties does not mean, as petitioners
contend, that the Commission was thereby shorn of its authority
and discretion to dismiss their petition on the same legal
ground.7 The Commission's action has thus paved the way for a
final ruling of the Court on the matter.
ACCORDINGLY, the order appealed from is hereby affirmed,
without pronouncement as to costs.
SSC NO POWER TO CONDONE PENALTY;
CASE: SSS vs. VALDERRAMA LUMBER MANUFACTURERS CO.
INC. L – 25779, (1975), 64 SCRA 255
FACTS: Appeal from the Resolution of the Social Security
Commission dated August 3, 1965, in its Case No. 422, ordering
respondent-appellant to pay the sum of P32,944.53 for back
premiums and penalties from January, 1960, to June, 1963, and
providing for the conditions for the payment thereof.
The factual background of the case is as follows:
On April 30,1964, petitioner-appellee Social Security System (SSS
for short) filed a petition with the Social Security Commission
against respondent-appellant Valderrama Lumber Manufacturers
Co., Inc., for the collection of unpaid SSS premiums covering the
period from January, 1960 up to June, 1963, inclusive, in the total
sum of P62,410.53, and for issuance of a warrant commanding the
Sheriff of Davao City to levy upon and sell any real and personal
property of the respondent-appellant for the satisfaction of all its
back premiums, plus penalties for late payment thereof.
Respondent-appellant filed its answer, denying the material
allegations of the petition. Issues having been joined, the parties
presented their respective evidence.
At the trial, herein respondent-appellant admitted the existence of
its premium delinquency. It averred, however, that it was due to
the tremendous losses it incurred during the many floods and
typhoons that visited its place of business. Respondent-appellant
sought, therefore, exemption from the penalties for late payment
of premiums and requested the Social Security Commission that it
be allowed to liquidate its premium delinquency of P62,410.53 by
a monthly remittance of P6,000.00 to the herein petitioner-
appellee beginning January, 1965, until fully paid. The proposal
was objected to by the SSS.
The SSS, in its opposition alleges that respondent-appellant's plan
of payment covers only its premium delinquency of P62,410.53,
without including the penalties thereon in the amount of
P32,944.53 computed as of December 7, 1963. A counter-proposal
was instead presented by the SSS under which respondent-
appellant shall liquidate its premium delinquency of P62,410.53
and the penalties thereon computed in the amount of P32,944.53,
or the total sum of P95,355.06 in ten (10) equal monthly
installments to start from February of 1965. In addition,
respondent-appellant shall have to put up a surety bond equivalent
to its total obligation on or before February 28, 1965, and failure
of the respondent-appellant to pay any of the installment
payments shall make all remaining installments due and
demandable, or shall serve as ground for the forfeiture of the
bond, without any further notice. Further, the penalties falling due
after December 7, 1963, shall have to be settled by the
respondent-appellant within sixty (60) days after the payment of
the last and final monthly installment.
With the foregoing uncontroverted facts and conditions, the Social
Security Commission rendered its Resolution of August 3, 1965,
declaring respondent-appellant Valderrama Lumber Manufacturers
Co., Inc. indebted to petitioner-appellee SSS in the amount of
P62,410.53 as unpaid premiums, plus P32,944.53 as the monthly
3% penalty for late payment of premiums (Sec. 22 (a), Social
Security Act), computed as of December 7, 1963, or a total
obligation of P95,355.06, and providing therein certain terms and
conditions to insure faithful payment of the obligation, as follows:
(1) That respondent (Valderrama Lumber
Manufacturers Co., Inc.) shall liquidate its principal
obligation and penalties in the total amount of
P95,355.06 in twelve (12) equal monthly
installments, exclusive of the current premiums,
the first installment to be paid within fifteen (15)
days from its receipt hereof,
(2) That within the same period of fifteen (15)
days, respondent shall put up a surety bond to
answer for the faithful compliance of its obligation
from a Surety firm acceptable to the System
(SSS), for an amount equivalent to its total
obligations;
(3) That failure of respondent to pay on time any
of the installments due and demandable shall be a
ground for the forfeiture of the bond in favor of
petitioner (SSS) without further notice;
(4) That the corresponding SSS Forms R-3 and R-4
shall be submitted to the System for every
installment made; and
(5) That claims of respondent's employees arising
by virtue of the law , as amended, shall be settled
by said respondent within five (5) from receipt of
demand.
Respondent-appellant's motion for reconsideration having been
denied, the herein appeal was perfected, questioning that part of
the Resolution which relates to the imposition of the penalties (in
the amount of P32,944.53) and the conditions for the payment of
the principal obligation as well as the penalties imposed.
Respondent-appellant maintains that the Social Security
Commission erred in declaring itself without power to condone
penalties for late payments of premiums or premium delinquency
even in admittedly meritorious cases.
The particular portion of the Resolution of the Social Security
Commission dated August 3, 1965, being questioned by
respondent-appellant is the following:têñ.£îhqwâ£
While this Commission is not unmindful of the
plight of the respondent, it cannot condone the
penalties due in the instant case in view of
Resolution No. 536, series of 1964, wherein this
Commission declared that henceforth there shall be
no condonation of penalties for lack of any express
authority therefore in the law. For this reason,
respondent's request for the condonation of the
penalties in the amount of P32,944.53 as of
December 7, 1963, cannot be granted.
There is no denying that there is no express authority to, condone
penalties in the Social Security Act of 1954; neither is there any
express prohibition against condonation of penalties. However,
respondent-appellant vigorously maintains that the Social Security
Commission has the Power to condone penalties and should have,
in this particular case, condoned the penalties assessed in the
amount of P32,944.53 because said penalties all accrued before
the passage of Resolution No. 536 on April 1, 1964.
Respondent-appellant likewise maintains that the Social Security
Commission erred in imposing conditions for payment which are
not countenanced by the law and, therefore unconstitutional, such
as the putting up of a surety bond to answer for the faithful
compliance of the total obligation; that the failure of respondent-
appellant to pay on time any of the installments due and
demandable shall be a ground for the forfeiture of the surety bond
in favor of petitioner-appellee without further notice; and the
claims of the employees of respondent-appellant shall be settled
by said respondent-appellant within five (5) from receipt of
demand.
Petitioner-appellee, thru the Office of the Solicitor General, on the
other hand, maintains that the Resolution of the Social Security
Commission, dated August 3, 1965, denying respondent- authority to condone, waive or relinquish the 3% penalty per
appellant's prayer for condonation of the penalties imposed against month for late remittances of premium payments.
it in the amount of P32,944.53, is anchored mainly on a point of
law — for actually the Social Security Commission, either in the However, mention must be made of Presidential Decree No. 24,
exercise of its quasi-judicial function or for that matter under its amending certain sections of R.A. No. 1161, as amended,
general powers to control the SSS and in the proper enforcement otherwise known as The Social Security Act of 1954. This decree,
of the Social Security Act, does not really have the authority or issued and promulgated on October 19, 1972, by the President,
jurisdiction under the Social Act, as amended, to condone penalties pursuant to Proclamation No. 1081, dated September 21, 1972,
for late payment of premiums. Petitioner-appellee reasons out that and General Order No. 1, dated September 22, 1972, provides,
the penalty of 3% a month under the provision of Sec. 22 (a) of among others, for the condonation of penalties for late payment of
the Social Security Act automatically attaches to the late SSS premiums under certain conditions.
remittance of premium contributions without any exception. The
law has precisely termed it as penalty and it should be imposed as
The pertinent provision of Presidential Decree No. 24, amending
such to serve as a deterrent to covered employers, such as the
Sec. 22 (e) of the Social Security Act, provides as
herein respondent-appellant, not to fail in remitting on time their
follows:têñ.£îhqwâ£
premium contributions. To hold otherwise is certainly untenable
and absurd.
(e) For purpose of this section, any employer who
is delinquent or has not remitted all the monthly
Petitioner-appellee, likewise, maintains that the terms and
contributions due and payable may within six (6)
conditions imposed to guarantee the religious and faithful payment
months from approval of this amendatory act remit
of the total obligation of the respondent-appellant are not only
said contributions to the SSS and submit the
justified and reasonable under the law but are even advantageous
corresponding collection lists therefor without
to the latter, for the Social Security Commission could have chosen
incurring the prescribed three per cent penalty. In
to order the respondent-appellant to liquidate its obligations in one
case the employer fails to remit to the SSS the
whole lump sum by issuing a warrant to the Sheriff of Davao City
said contributions within the six months grace
to levy upon and sell any real and personal property of said
period, the penalty of three per cent shall be
respondent-appellant as prayed for by petitioner-appellee.
imposed from the time the contributions first
However, the Social Security Commission considering the plight
became due as provided in paragraph (A) of this
and predicament of respondent-appellant allowed it to settle its
section.
obligations on installment basis under the terms and conditions
under question.
Respondent-appellant having already paid to the SSS the total
amount of P79,389.40 as of August 26, 1966, against its back
The legal issue thus presented is whether or not the Social
premiums of P62,410.53, and a portion of the penalties thereon
Security Commission is empowered to condone penalties for late
assessed and imposed (Respondent-appellant's Reply to Comment
payment of premium contributions to the Social Security System.
dated January 12, 1973, pp. 48-50, Rollo), and having likewise
This issue was resolved by this Court in United Christian Missionary
filed the required SSS Forms, said respondent-appellant has more
Society, et al., vs. Social Security Commission and Social Security
than met the required conditions under Presidential Decree No. 24.
System, L-26712-16, December 27, 1969; 30 SCRA 982, 987,
where it was held that the plain text and intent of the pertinent
provisions of the Social Security Act clearly rules out petitioner's ACCORDINGLY, any unpaid balance of the penalties for late
posture that the respondent Commission has discretionary payment of premiums in the amount of P32,944.53 as imposed in
the appealed Resolution of August 3, 1965, must be deemed
remitted and condoned, under and by virtue of the terms of
Presidential Decree No. 24 above quoted. Since the total back
premiums claimed by the petitioner-appellee have already been
fully satisfied, and respondent-appellant has been relieved from
paying the balance of the prescribed penalties for late payment
thereof, the present case is hereby dismissed for having been
rendered moot and academic. No costs.
RAMON J. FAROLAN vs. CA,SSC & SSS, GR 139946, (2002),
393 SCRA 128; FACTS: This is a petition for review of the
decision1 dated August 31, 1999, of the Court of Appeals, in C.A.-
G.R. SP No. 48514, dismissing the petition for certiorari and
prohibition filed by petitioner, and affirming in toto the
order2 dated June 9, 1998 of the Social Security Commission
denying petitioner's motion to dismiss the amended petition to
revive judgment against Marinduque Mining and Industrial
Corporation and its officers.
The antecedent facts of the case are as follows:
Cecilio T. Saludar and Carlos Porquez were employed at
Marinduque Mining and Industrial Corporation (MMIC). They were
dismissed from MMIC in 1984.
Saludar filed a claim for illegal dismissal with the Office of the
Labor Arbiter. On the other hand, Porquez's widow filed a claim for
social security benefits with respondent Social Security
Commission (SSC) docketed as SSC Case No. 8658.
On August 17, 1984, the Labor Arbiter decided in favor of Saludar
and ordered his reinstatement and payment of backwages. The
order became final on September 14, 1984. However, it was not
executed as all the assets of MMIC had been foreclosed by the
Philippine National Bank (PNB) and the Development Bank of the
Philippines (DBP). These assets were subsequently acquired by
Maricalum Mining Corporation (Maricalum) through a Deed of
Transfer, while MMIC ceased its operation. Section 3 (1) of the
Deed of Transfer provided that Maricalum shall assume MMIC's
liabilities due or owing to any other person. Thus:
Section 3.1. From and after the effectivity date, Maricalum shall be
solely liable (I) xxx; (II) for any other liability due or owing to any
other person (natural or corporate).
Pursuant to the above provision, this Court, in Maricalum Mining
Corporation vs. NLRC, 298 SCRA 378 (1998), ordered Maricalum
to reinstate and pay Saludar backwages, after he filed an action to
revive judgment. We held that:
…The records show that Maricalum voluntarily absorbed
Marinduque's obligations to its employees. The NLRC found that
when the Philippine National Bank (PNB) and Development Bank of
the Philippines (DBP) transferred Marinduque's assets to
Maricalum, the Deed of Transfer contained the proviso that "(f)rom
and after the effectivity date, Maricalum shall be solely liable for
any liability due or owing to any other person (natural or
corporate)." Marinduque's liability to respondent Saludar for
unpaid backwages adjudicated in RAB Case No. 06-0610-83 way
back in 1984 became final when no appeal was interposed by it.
This final judgment then formed part of the liabilities of
Marinduque which Maricalum assumed in the Deed of Transfer.
Thus, it is futile for Maricalum to deny liability it had voluntarily
assumed.[3]
Meanwhile, on August 28, 1986, in SSC Case No. 8658,
respondent Social Security Commission issued a resolution in favor
of Mrs. Porquez. Thus:
WHEREFORE, PREMISES CONSIDERED, this Commission finds and
so holds that the respondent is held liable only for the SS
contribution of the petitioner's husband corresponding to his 12
months backwages.
The SSS is hereby directed to assess the SS contribution liability of
the respondent based on his 12 months backwages at P14.00 a
day within fifteen (15) days from receipt hereof, and furnish the
respondent a copy of its assessment who is in turn directed to pay
its said liability within thirty (30) days from receipt of the notice of
assessment from the SSS.4
The resolution became final on October 8, 1986, and entry of
judgment was made on November 5, 1986. However, no execution
was made within the five-year period from date of entry. Thus, on
December 11, 1991, the Social Security System filed with the
Social Security Commission a petition to revive judgment against
MMIC.
As MMIC had already ceased operation, summons was not served
upon it. On April 28, 1997, the SSS filed an amended petition to
revive judgment impleading the responsible officers of MMIC,
including petitioner Ramon J. Farolan. Summonses were served
upon MMIC's officers but they could not be located, except for
petitioner who was served summons on December 11, 1997.
On December 17, 1997, petitioner filed a motion to dismiss, which
was denied by the Social Security Commission in its order5 dated
June 9, 1998. Petitioner elevated the case to the Court of Appeals
via a petition for certiorari and prohibition on the ground of
prescription and laches.
On August 31, 1999, the Court of Appeals rendered its decision,
disposing of the case thus:
WHEREFORE, in view of all the foregoing, the instant petition is
hereby DENIED for lack of merit, and the Order of the Social
Security Commission dated June 9, 1998 in SSC Case No. 12-
13757-91 is AFFIRMED in toto.6
The Court of Appeals held that the amended petition to revive
judgment was not barred by prescription. True, it was filed way
beyond the ten-year period from date of entry of judgment. But
the delay could not be attributed to the SSS, but to the cessation
of the operation of MMIC, said the appellate court. Citing Camacho
vs. Court of Appeals, 287 SCRA 611 (1998), it held that where the
cause of the delay was beyond the control of a prevailing party,
prescription would not set in against him. Further, it said that
based on the second paragraph of Section 22 (b) of Republic Act
1161, otherwise known as the Social Security Law,7 the
employee's widow, Mrs. Porquez, had 20 years within which to file
the necessary action against MMIC or its officers. Consequently,
the period to file the amended petition to revive judgment has not
yet prescribed.
Moreover, the Court of Appeals held that petitioner, as one of the
officers of MMIC, could be held liable for employees' claims, based
on Valderrama vs. NLRC, 256 SCRA 466, 475 (1996). In that case,
we held that where the employer corporation is no longer existing
and is unable to satisfy the judgment in favor of the employee, the
officer should be held liable for acting on behalf of the corporation.
Lastly, the Court of Appeals held that the Deed of Transfer
between MMIC and Maricalum did not exempt petitioner from
liability, because said deed was made retroactive only up to
October 1984. The claim of Porquez's widow covered the period
from September 1980 to August 1981, when MMIC was still in full
operation.
Dissatisfied, petitioner Farolan filed the instant petition for review
on certiorari averring that:
IT WAS GRAVE ERROR FOR THE COURT OF APPEALS TO IGNORE
[OUR RULING IN MARICALUM MINING CORPORATION VS. NLRC,
CECILIO T. SALUDAR, ET AL., 298 SCRA 378 (1998)] AND HOLD
HEREIN PETITIONER ANSWERABLE FOR THE UNREMITTED 12
MONTHS' WORTH OF SS PREMIUMS OF A LIKE EMPLOYEE OF THE
MMIC, KNOWING FULL (SIC) WELL THAT SAID LIABILITY HAD
BEEN ALREADY ASSUMED WITH JUDICIAL FINALITY BY
MARICALUM MINING CORPORATION.8
Petitioner argues that MMIC and its directors should not be held
liable as it is Maricalum that is liable for the employees' claim,
following the Maricalum case. He contends that to rule otherwise is
to contravene its rationale – that of valid contractual succession of
employers' interest under the Deed of Transfer between MMIC and
Maricalum.
Respondents counter that petitioner's claim is without basis in law
and in fact. The adjudged liability in this proceeding pertains to the
unremitted SSS contributions of the late Carlos Porquez for the
period September 1980 to August 1981, which is outside the ambit
of MMIC's Deed of Transfer since said deed was made retroactive
to October 1984 only. They emphasize that the adjudged liability
became final and executory when MMIC was still in operation. Also,
respondents assert that petitioner is raising said issue of transfer
of assets and liabilities only now. According to them, petitioner
cannot change the theory of his case on appeal.
The main issue before us is whether petitioner, as one of the
directors of MMIC, should be held liable for the unremitted SSS
contributions for the late Carlos Porquez. On this score, we are
constrained to agree with petitioner that he should not be liable for
said contributions.
The liability to pay the unpaid premium lies with Maricalum. This is
so because when the Social Security Commission, on August 28,
1986, adjudged MMIC liable for the unpaid premiums, Maricalum
had already absorbed all the assets and liabilities of MMIC
pursuant to a deed of transfer, which was made retroactive to
October 1984. Therefore, the judgment became part of MMIC's
liability transferred to Maricalum.
We cannot agree with the Court of Appeals that because the
unpaid premiums referred to the period from September 1980 to
August 1981, this should be the reckoning dates in determining
the person liable for payment of the unpaid premiums. At that
time, there was no final determination of this matter yet by the
appropriate government agency, hence the liability did not yet
accrue. It was only on October 6, 1986 that MMIC was finally
declared liable.
Respondents' assertion that it is too late for petitioner to raise the
matter of transfer of liabilities is far from persuasive. Questions
raised on appeal must be within the issues framed by the parties
so as to bar the application of the doctrine that issues not raised in
the lower court cannot be raised for the first time on appeal.9 In
this case, the matter of transfer of liabilities is not totally foreign to
the main issue. It is a corollary issue, the resolution of which is
vital to the question of whether petitioner should be held liable to
pay the unpaid premiums. Besides, dismissal of appeals purely on
technical grounds is frowned upon where the policy of the courts is
to encourage hearings of appeals on their merits and the rules of
procedure ought not to be applied in a very rigid, technical
sense.10
We note that during the pendency of this case, MMIC already paid
the sum of P607.80 representing the unpaid monthly contributions
for Carlos Porquez and consequently the Social Security
Commission ordered on September 19, 2000 the termination of
SSC Case No. 8658. A fortiori, SSC Case No. 12-13757-91, the
petition to revive judgment in SSC Case No. 8658, was also
terminated.
WHEREFORE, the instant petition is GRANTED. The decision dated
August 31, 1999 of the Court of Appeals, in CA-G.R. SP No. 48514,
is REVERSED and SET ASIDE. Petitioner is hereby discharged of
any liability under SSC Case No. 12-13757-91. No pronouncement
as to costs.
GOVERNMENT CONTRIBUTIONS AND GUARANTEE SECS. 21
& 22;
SEC. 21. Government Guarantee. -- The benefits prescribed in this
Act shall not be diminished and to guarantee said benefits the
Government of the Republic of the Philippines accepts general
responsibility for the solvency of the SSS.
"SEC. 22. Remittance of Contributions. -- (a) The contributions
imposed in the preceding Section shall be remitted to the SSS
within the first ten (10) days of each calendar month following the
month for which they are applicable or within such time as the
Commission may prescribe. Every employer required to deduct and
to remit such contributions shall be liable for their payment and if
any contribution is not paid to the SSS as herein prescribed, he
shall pay besides the contribution a penalty thereon of three
percent (3%) per month from the date the contribution falls due
until paid. If deemed expedient and advisable by the Commission,
the collection and remittance of contributions shall be made
quarterly or semi-annually in advance, the contributions payable
by the employees to be advanced by their respective
employers: Provided, That upon separation of an employee, any
contribution so paid in advance but not due shall be credited or
refunded to his employer.
"(b) The contributions payable under this Act in cases where an
employer refuses or neglects to pay the same shall be collected by
the SSS in the same manner as taxes are made collectible under
the National Internal Revenue Code, as amended. Failure or
refusal of the employer to pay or remit the contributions herein
prescribed shall not prejudice the right of the covered employee to
the benefits of the coverage.
"The right to institute the necessary action against the employer
may be commenced within twenty (20) years from the time the
delinquency is known or the assessment is made by the SSS, or
from the time the benefit accrues, as the case may be.
"(c) Should any person, natural or juridical, default in any payment
of contributions, the Commission may also collect the same in
either of the following ways:
"1. By an action in court, which shall hear and dispose of
the case in preference to any other civil action; or
"2. By issuing a warrant to the Sheriff of any province or
city commanding him to levy upon and sell any real and
personal property of the debtor. The Sheriff's sale by virtue
of said warrant shall be governed by the same procedure
prescribed for executions against property upon judgments
by a court of record.
"(d) The last complete record of monthly contributions paid by the
employer or the average of the monthly contributions paid during
the past three (3) years as of the date of filing of the action for
collection shall be presumed to be the monthly contributions
payable by and due from the employer to the SSS for each of the
unpaid month, unless contradicted and overcome by other
evidence: Provided, That the SSS shall not be barred from
determining and collecting the true and correct contributions due
the SSS even after full payment pursuant to this paragraph, nor
shall the employer be relieved of his liability under Section Twenty-
eight of this Act.
"SEC. 22-A. Remittance of Contributions of Self-Employed
Member. - Self-employed members shall remit their monthly
contributions quarterly on such dates and schedules as the
Commission may specify through rules and regulations: Provided,
That no retroactive payment of contributions shall be allowed,
except as Provided in this Section.
SECTION 23 – METHOD OF COLLECTION & PAYMENT;
SEC. 23. Method of Collection and Payment. - The SSS shall
require a complete and proper collection and payment of
contributions and proper identification of the employer and the
employee. Payment may be made in cash, checks, stamps,
coupons, tickets, or other reasonable devices that the Commission
may adopt.
SECTION 24 – EMPLOYMENT RECORDS & REPORTS;
SEC. 24. Employment Records and Reports. - (a) Each employer
shall immediately report to the SSS the names, ages, civil status,
occupations, salaries and dependents of all his employees who are
subject to compulsory coverage: Provided, That if an employee
subject to compulsory coverage should die or become sick or
disabled or reach the age of sixty (60) without the SSS having
previously received any report or written communication about him
from his employer, the said employer shall pay to the SSS
damages equivalent to the benefits to which said employee
member would have been entitled had his name been reported on
time by the employer to the SSS, except that in case of pension
benefits, the employer shall be liable to pay the SSS damages
equivalent to the accumulated pension due as of the date of
settlement of the claim or to the five (5) years' pension, including
dependents' pension: Provided, further, That if the contingency
occurs within thirty (30) days from the date of employment, the
employer shall be relieved of his liability for damages: Provided,
further, That any person or entity engaging the services of an
independent contractor shall be subsidiarily liable with such
contractor for any civil liability incurred by the latter under this
Act: Provided, finally, That the same person or entity engaging the
services of an independent contractor shall require such contractor
to post a surety bond to guarantee the payment of the worker's
benefits.
"(b) Should the employer misrepresent the true date of
employment of the employee member or remit to the SSS
contributions which are less than those required in this Act or fail
to remit any contribution due prior to the date of contingency,
resulting in a reduction of benefits, the employer shall pay to the
SSS damages equivalent to the difference between the amount of
benefit to which the employee member or his beneficiary is
entitled had the proper contributions been remitted to the SSS and
the amount payable on the basis of contributions actually
remitted: Provided, That if the employee member or his
beneficiary is entitled to pension benefits, damages shall be
equivalent to the accumulated pension due as of the date of
settlement of the claim or to the five (5) years' pension, whichever
is higher, including dependents' pension.
"In addition to the liability mentioned in the preceding paragraphs
(a) and (b) hereof, the employer shall also be liable for the
corresponding unremitted contributions and penalties thereon.
"(c) The records and reports duly accomplished and submitted to
the SSS by the employer or the member, as the case may be, shall
be kept confidential by the SSS except in compliance with a
subpoena duces tecum issued by the Court, shall not be divulged
without the consent of the SSS President or any official of the SSS
duly authorized by him, shall be presumed correct as to the data
and other matters stated therein, unless the necessary corrections
to such records and reports have been properly made by the
parties concerned before the right to the benefit being claimed
accrues, and shall be made the basis for the adjudication of the
claim. If as a result of such adjudication the SSS in good faith pays
a monthly pension to a beneficiary who is inferior in right to
another beneficiary or with whom another beneficiary is entitled to
share, such payments shall discharge the SSS from liability unless
and until such other beneficiary notifies the SSS of his claim prior
to the payments.
"(d) Every employer shall keep true and accurate work records for
such period and containing such information as the Commission
may prescribe, in addition to an "Annual Register of New and
Separated Employees" which shall be secured from the SSS
wherein the employer shall enter on the first day of employment or
on the effective date of separation, the names of the persons
employed or separated from employment, their SSS numbers, and
such other data that the Commission may require and said annual
register shall be submitted to the SSS in the month of January of
each year. Such records shall be open for inspection by the SSS or
its authorized representatives quarterly or as often as the SSS
may require.
"The SSS may also require each employer to submit, with respect
to the persons in his employ, reports needed for the effective
administration of this Act.
"(e) Each employer shall require, as a condition to employment,
the presentation of a registration number secured by the
prospective employee from the SSS in accordance with such
procedure as the SSS may adopt: Provided, That in case of
employees who have been assigned registration numbers by virtue
of a previous employment, such numbers originally assigned to
them should be used for purposes of this Section: Provided,
further, That the issuance of such registration numbers by the SSS
shall not exempt the employer from complying with the provisions
of paragraph (a) of this Section.
"(f) Notwithstanding any law to the contrary, microfilm, or non-
erasable optical disk and other similar archival media copies of
original SSS records and reports, duly certified by the official
custodian thereof, shall have the same evidentiary value as the
originals and be admissible as evidence in all legal proceedings.
"(g) Notwithstanding any law to the contrary, local government
units shall, prior to issuing any annual business license or permit,
require submission of certificate of SSS coverage and compliance
with the provisions of this Act: Provided, That the certification or
clearance shall be issued by the SSS within five (5) working days
from receipt of the request.
SEC. 24-A. Report and Registration of the Self-Employed Member.
- Each covered self-employed person shall, within thirty (30) days
from the first day he started the practice of his profession or
business operations register and report to the SSS his name, age,
civil status, and occupation, average monthly net income and his
dependents.
MISREPRESENTATION BY EMPLOYER OR NON –
REMITTANCE OF PROPER CONTRIBUTION;
DATA CORRECTION MEMBER;
DAMAGES;