G.R. Nos. L-26712-16. December 27, 1969
UNITED CHRISTIAN MISSIONARY SOCIETY, UNITED CHURCH BOARD FOR WORLD MINISTERS, BOARD OF FOREIGN MISSION OF THE REFORMED CHURCH IN AMERICA, BOARD OF MISSION OF THE EVANGELICAL UNI…
TEEHANKEE, J.:
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 Act[1]
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.
On May 25, 1966, respondent System filed a Motion to Dismiss on
the ground that “the Social Security Commission has no power or 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:
“United Christian
Missionary Society ……………………………………… …P5,253.53
Board of Mission
of the Evangelical
United Brothers
Church………………………………………………….………7,
891. 74
United Church Board for World Ministers……………………………………12,353.75
Commission on Ecumenical Mission
&
Relations…………………………………………………………………………33,019. 36
Board of Foreign Mission of the Reformed
Church in America………………………………………………………………10, 928. 04
TOTAL ……P69,446. 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 upon 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:
“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 or
within such time as the Commission may prescribe. “Every employer required
to deduct and to remit such contribution shall be liable for their payment and
if any contribution is not paid to the System, as herein prescribed he shall
pay besides the contribution a penalty thereon of three per centum per month from the date the
contribution falls due until paid. x x “[2]
No discretion or
alternative is granted respondent Commission in 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 en 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.
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(l), 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 on
donation 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 condonations
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 stopped 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 scene 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 man, 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.
Concepcion, C.J., Reyes, Makalintal, Zaldivar, Sanchez,
Castro, and Fernando, JJ., concur.
Dizon and
Barredo, JJ., took
no part.
[1]
Republic Act No. 1161, as amended.
[2]
Emphasis supplied.
[3]
Section 2, Social Security Act; Roman
Catholic Archbishop vs. Social Security Commission, 1 SCRA 10 (January
20, 1961)
[4]
Roman Catholic Archbishop vs. Social
Security Commission fn. 3.
5
E. Rodriguez, Inc. vs. Collector of Internal Revenue, 28 SCRA 1119, 1130
and cases cited (July 31, 1969).
6
Fn. 3.7
7
The case referred to is Social
Security System, appellee vs. Woodworks, Inc.,
appellant, CA-G. R. No. 36668–R.
The Court of Appeals therein upheld the Commission’s ruling in its decision of October 20, 1969, Pursuant to its
decisions in two other appealed cases, Luzsteveco vs.
SSC, CA? G.R No. 38425-R, June 30, 2969 and Carmelo & Bauermann, Inc. vs.
SSS, CA-G.
R. No. 39250-R, August 14, 1969, although it remanded the records of the case
to the SSS to give the appellant an opportunity to go over the assessment
schedules for the purpose only of determining the exact amount of penalties
due.