INSULAR LUMBER COMPANY, PETITIONER AND APPELLANT, VS. SOCIAL SECURITY SYSTEM, RESPONDENT AND APPELLEE.

In August 1957 petitioner became a compulsory member of the Social
Security System. Pedro Primavera (now deceased), its employee on a
daily wage basis and a member of the System, was on sick leave with pay
until September 1957 when, having exhausted all sickness benefits due
him, he was on leave without pay.

On October 14, 1957 , petitioner informed the Social Security
System that Primavera, though covered by the System, did not pay the
premium for the month of September 1957 when he was on sick leave
without pay and sought its advice on the matter. The System, through
its Deputy Administrator, Higinio E. Francisco, informed petitioner
that it had acted correctly in not paying the employer’s contribution
of 3-1/2% for the month aforesaid and that, as soon as Primavera
reported back to work, his wages would again be subject to contribution
to the System.

In another letter dated November 3, 1958 , Deputy Administrator
Francisco, clarifying Circular No. 21 of the System, stated, among
other things, that for employees paid on daily rate or piecework, the
employee’s 2-1/2% and the employer’s 3-1/2% premiums “are based on
salary actually earned by the employee”.

Subsequently, however, the System, through its Chief, Adjudication
Division, presented to petitioner its Bill No. 293 demanding from the
latter the sum of P3.48 representing the 3-1/2% employer’s share of the
premium due from its employee, Pedro Primavera, for the month of
September 1957, said amount being based on Primavera’s average monthly
salary of P99.583. Petitioner questioned the correctness of the demand
on the ground that Primavera had no earnings during the month in
question and that Circular No. 21 could not be applied retroactively,
but the system replied, through its Chief, Adjudication Division, that
the Company’s obligation under Resolution No. 139, series of 1958 of
the Social Security Commission to remit to the System its 3-1/2 %
contribution, exists as long as the employer-employee relationship is
not terminated.

A formal petition was filed by petitioner on January 31, 1959 with
the Social Security Commission to annul the ruling of the System in
connection with its liability for the sum of P3.48 as premium
corresponding to its employee, Pedro Primavera, for the month of
September 1957, but after due hearing, the Social Security Commission
denied the petition. Hence the present appeal.

The issue of whether or not social security premium corresponding
to a period when a covered employee is on sick leave without pay should
be paid by the employer was already resolved in Elizalde Rope Factory,
Inc., vs. Social Security Commission, G. R. No. L-15163, prom. Feb. 28, 1962 .

It appears that in the Elizalde case, the laborers of the Elizalde
Rope Factory, Inc. went on strike on September 17, 1957 . Edilberto
Tupas, a laborer, was one of the strikers. The strike ended in the
middle of February 1958. From October 1957 to January 1958, the period
of time the strike lasted, the rope factory did not pay to the Social
Security Commission any premium for Edilberto Tupas. In February 1958
it resumed and continued to pay the premium until 6 May 1958 when
Edilberto Tupas died.

Upon these facts we held:

“Although during a strike the worker renders no
work or service and receives no compensation, yet his relationship as
employee with his employer is not severed or dissolved.” “Section 18
and 19 or Republic Act No. 1161, as amended, do not require that the
employer’s 3-1/2% and employee’s 2-1/2 contributions be based on the
latters monthly compensation actually earned or received by the
employee covered by the Social Security System. They only provide that
after an employee is compulsorily covered by the System he and his
employer will contribute to pay the premium every month during his
employment.”

In fact, in the earlier case of The Insular Life Assurance Co. ,
Ltd. et al., vs. Social Security Commission, G. R. No. L-16350, Dec.
28, 1961 , we rad already held as follows:

“The first question is whether or not payment of
compensation to an employee is a requirement to his employer’s
liability for social security contributions. Petitioner claims that
such payment is a requisite because the compensation is the basis of
computation of the premiums and contributions. Petitioner also claims
that such payment is a requirement in the United States , citing1 the
case of Magruder vs. Yellow Cab Co., 152 A.L.R. 516.”

“The
above arguments can not be sustained. We have held in the ease of Roman
Archibishop of Manila vs. Social Security System, 110 Phil., 616, that
payment of contributions by an employer is compulsory during its
coverage, and in accordance with the provisions of Section 9 of the
Social Security Act, coverage is determined solely by the existence of
an employer-employee relationship. While an employee is on leave, even
without pay, he is still an employee of his employer, their contract of
employment has not yet terminated. So much so that the employee may
still return to work and the employer is still bound to accept him.-
His responsibility as an employee still exists. He is still entitled to
the benefits of the System as a member thereof and is still’ liable to
pay premiums when he returns. Consequently, his employer is still
liable to pay his contribution to the Commission on account of its
employee who is on leave without pay.”

“With respect to the
case of Magruder vs. Yellow Cab Co., supra, relied upon by the
petitioner-appellant, we agree with the Solicitor General and with the
Commission that the decision therein is not applicable to this case. As
correctly observed by the Commission we did not adopt the American
method of collecting contributions to the System. Our method is
different, for while in the United States , contributions are treated
as taxes, collectible only when the employee is paid his salary or
wage, in our country, we consider such contributions as premiums
collectible even when the employee is not actually paid his wage or
salary.”

In view of all forgoing, the resolutions appealed from are hereby affirmed, with costs.

Bengzon, C. J., Padilla, Bautista Angelo, Labrador , Concepcion , Reyes, J. B.L., Barrera, Paredes, Regala and Makalintal, JJ., concur.