G.R. No. L-24883. October 31, 1969
MACHUCA TILE CO., INC., PETITIONER, VS. SOCIAL SECURITY SYSTEM, RESPONDENT.
TEEHANKEE, J.:
We affirm, in this appeal, the Resolution of the Social Security Commission
holding petitioner-appellant Machuca Tiles Company,
Inc. liable under Section 24(a) of the Social Security Act for the payment of
damages in the form of death benefits to the legal heirs of its deceased
employee, Eduardo Jungay, in the sum of P810.00 by virtue of its
failure to make a timely report to the System during the lifetime of said
deceased that the latter was in its employ and had qualified for compulsory
coverage in the System.
The undisputed facts of the case are thus related in the appealed
Resolution: “The deceased, Eduardo Jungay, was a former employee of the petitioner and as
such, qualified for compulsory coverage in December 1961. He died on June 17, 1962, whereupon a claim for death benefits was
filed with the System by Prudencio Jungay, a brother of the deceased, as one of the legal
heirs. The claim was duly processed by
the System’s Claims Department, and in the course thereof, it discovered that
the deceased was reported by the petitioner for coverage in the System only on September 5, 1962, when the premiums
on this account were remitted to the System.
After processing of the claim, the Claims Department adjudicated the sum
of P810.00 as death benefits payable to the deceased’s legal heirs, namely: Prudencio, Rogelio, Tranquilino,
and Patricio, all surnamed Jungay, but in view of the
failure of the petitioner to report his coverage prior to his death on June 17,
1962, the Acting Administrator of the Social Security System declared the
petitioner liable to pay to the said heirs the amount of P810.00 as adjudicated
by the Claims Department. Taking
exception to this ruling, the petitioner filed the instant petition.”[1]
The Social Security Commission, after due hearing rendered its
Resolution of May 18, 1965 affirming the Administrator’s ruling declaring the
petitioner, rather than the System, legally liable for the payment of death
benefits to the deceased employee’s legal heirs, as follows:
“WHEREFORE, PREMISES CONSIDERED, the petition should be, as it is
hereby, denied. Within fifteen (15) days
from its receipt hereof, the petitioner is directed to pay to the legal heirs
of the deceased, Eduardo Jungay, whose names are set
out hereinabove, the sum of EIGHT HUNDRED TEN PESOS (P810.00) as damages
equivalent to the death benefits which the legal heirs would have received had
the name of the deceased been reported to the System on time, pursuant to
Section 24(a) of the law, conformably with the Administrator’s ruling which is
hereby affirmed, and to submit to the System proof of such payment.”[2]
On appeal, petitioner in its lone assignment of error contends
that since some months after the death on June 17, 1962 of its employee,
Eduardo Jungay, it had submitted on September 5, 1962
to the System its report on its Employees and remitted the corresponding
premiums, including the sum of P28.80 representing the deceased Jungay’s premiums from December, 1961 to June, 1962, it
would not be just for respondent-appellee to receive
and keep the premiums paid for the deceased Jungay
and still hold petitioner liable for payment of the death benefits. Petitioner further contends that since
respondent was aware that Jungay’s premiums were paid
only after his death but did not return nor even offer to return the same,
respondent should be held in estoppel and liable for
the payment of the death benefits.
The fallacy of petitioner’s contentions lies in its failure to
realize that it has two distinct obligations under the Social Security Act, to
wit, the obligation of making a timely remittance of premiums under
Section 22(a) and the obligation of making a timely report of its
employees’ names and other personal data, including the social security number
assigned to each employee, for coverage, under Section 24(a).
Section 22(a) thus requires the employer to make a timely
remittance of the premium contributions of both employer and employee, under
pain of being subject to payment of a 3% monthly penalty:
“SEC. 22. Remittance
of Premiums. — (a) The contributions imposed in the preceding sections shall
be remitted to the System within the first seven days of each calendar month
following the month for which they are applicable to 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 System, as herein
prescribed, he shall pay beside the contribution a penalty thereon of three per
centum 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 premium so paid in advance but not due shall be
credited or refunded to his employer.”[3]
On the other hand, Section 24(a) requires
the timely report of employees’ names and personal data for coverage under the
System, under penalty of being liable for damages equivalent to the benefits
the employee or his heirs would have been entitled to received from the System
had his name been reported on time by the employer:
“SEC. 24. Employment
records and reports. — (a) Each employer shall report immediately to the
System the names, ages, civil status, occupations, salaries and dependents of
all his employees, who are in his employ and who are or may later be subject to
compulsory coverage: Provided, That if an employee subject to compulsory
coverage should die or become sick or disabled without the System having
previously received a report about him from his employer, the said employer
shall pay to the employee or his legal heirs damages equivalent to the benefits
to which said employee would have been entitled had his name been reported on
time by the employer to the System.”[4]
The posthumous remittance of the deceased employee’s premiums
served but to extinguish petitioner’s liability therefor
and to free it from the imposition of the 3% monthly penalty from the date the
contribution falls due until actually paid.
These accrued premiums were legally due to the System as the contribution
of both employer and employee under Sections 18 and 19 of the Act and the death
of the employee did not extinguish petitioner’s liability to remit the
same. There is no justification, consequently,
for petitioner’s claim that respondent should be held in estoppel
for having retained them. As this Court
has held in upholding the amendment on January 14, 1958 of the System’s Rules,
eliminating the provision for rebate of a proportionate amount of the premiums
paid on behalf of temporarily employed alien technicians upon their departure
from the Philippines and allowing such rebate only if they have been members for at least two years,
“membership in this institution is not the result of a bilateral,
consensual agreement where the rights and obligations of the parties are
defined by and subject to their will.
Republic Act 1161 requires compulsory coverage of employers and
employees under the System. It is
actually a legal imposition, on said employers and employees, designed to
provide social security to the workingmen.
Membership in the SSS is, therefore, in compliance with a lawful
exercise of the police power of the State, to which the principle of
non-impairment of the obligation of contract is not a proper defense.”[5]
Petitioner’s separate mandatory liability under Section 24(a) of
the Act for failure to make a timely report of the employee’s name and personal
data for coverage under the system therefore remains and must be enforced. It is obvious that the Act attaches greater
importance to this requirement and obligation of the employer than that of
timely remittance of the premiums. For
failure to make such report in fact excludes the employee from the
System’s coverage and the Act therefore shifts to the erring employer the
responsibility of paying the social security benefits “to which the
employee or his heirs would have been entitled had his name been reported on
time by the employer to the System.” Where the employer has, however,
timely and properly reported the employee’s name for coverage but has failed
or refused to pay or remit the premiums, such failure or refusal, by express
provision of the Act in Section 22(b) “shall not prejudice the right of
the covered employee to the benefits of the coverage.” The Act, in such
cases as above stated, exacts the lesser liability of payment of the delinquent
premiums with a 3% monthly penalty. Thus,
in a similar case,[6]
this Court brushed aside the employer’s contention that its failure to make
such a report was due to the deceased employee’s refusal to have his share of the monthly premiums deducted
from his salary and upheld the Social Security Commission’s jurisdiction to
enforce the mandatory provisions of Section 24(a) against the employer.
Petitioner’s invoking of the ruling of this Court in a commercial
insurance case[7]
that acceptance by the insurer of insurance premiums with full knowledge of the
facts entitling it to treat the policy as no longer in force estops it from claiming forfeiture, has no application to
the case at bar. In said case, liability
of the insurer had not yet attached when it collected premiums for a policy
that it had issued under circumstances which it knew rendered the policy void,
and therefore it could not invoke in bad faith the policy’s nullity against a
subsequent claim of loss under the policy.
Here, the mandatory liability of the employer in place of the System for
the social security benefits due to the deceased employee had already been
incurred, and its posthumous payment of the accrued premiums was but in
discharge of a separate and distinct liability therefor. Petitioner’s solace lies in that its
contributions to the System and its discharging of its liabilities under the
Act, will have helped subsidize the cause of social security to protect not
only its own employees but the general membership of the System against the
hazards of disability, sickness, old age and death in line with the
Constitutional mandate to promote social justice and to insure the well-being
and economic security of all the people.[8]
One last item. Payment by
petitioner of the death benefits in the sum of P810.00 awarded to the legal
heirs of the deceased employee under the Social Security Commission’s
Resolution of May 18, 1965
has been delayed pending this unjustified appeal. It is only just and in accordance with law[9]
that the sum due said heirs bear legal
interest of six (6%) per cent
per annum from June 4, 1965, date of receipt of said Resolution by petitioner.[10]
ACCORDINGLY, the Resolution appealed from is hereby
affirmed, with the modification that petitioner shall pay the legal heirs of
the deceased Eduardo Jungay six (6%) per cent interest per annum on the sum
of P810.00 from June 4, 1965 until the date of actual payment.
Concepcion, C.J., Reyes, J.B.L., Dizon, Makalintal, Sanchez,
Castro, and Fernando, JJ., concur.
Zaldivar and Barredo,
JJ., did not take
part.
[1]
Rec. on Appeal, pp. 9-10.
[2]
Idem. pp. 16-17.
[3]
Rep. Act 1161, as amended by Sec. 13, Rep. Act 2658.
[4]
Rep. Act 1161, as amended by Sec. 15, Rep. Act 1792.
[5]
Phil. Blooming Mills, Inc. et al. vs. SSS, 17 SCRA 1077, 1080; (1966), cf. Roman Catholic
Archbishop vs. SSS, 1 SCRA 10
(1961).
[6]
Poblete Construction Co. v. Asiain et al., 20 SCRA 1143 (1967).
[7]
Que Chee Gan v. Law Union & Roces Ins. Co., 98 Phil. 85.
[8]
Archbishop of Manila vs. SSS,
fn. 5.
[9]
Art. 2209, Civil Code.
[10]
Rec. on Appeal, p. 18.