LILIA LOPEZ-JISON AS OWNER OF HDA. DOÑA LILIA, PETITIONER, VS. THE SOCIAL SECURITY COMMISSION AND FELIPE DIACAMOS, RESPONDENTS.

Lopez-Jison versus Social Security Commission

The Case

This is a petition for prohibition filed by Lilia Lopez-Jison, the owner and operator of Hacienda Doña Lilia in Negros Oriental, against the Social Security Commission and her former employee Felipe Diacamos. She asks the Supreme Court to stop the Commission from enforcing a final judgment that, she says, she has already fully paid. The case matters because it shows how a final and executory decision of the Social Security Commission is satisfied, and how a later law condoning penalties can dissolve the very claim a party is still pressing.

Procedural History

Felipe Diacamos filed a complaint with the Social Security Commission against Lilia Lopez-Jison, seeking unpaid premium payments, penalties, and damages equivalent to the retirement benefits he would have received had he been reported for coverage on time. The Commission rendered a decision in his favor, ordering the System to compute the liabilities and bill the employer. The employer filed a petition for relief from judgment with the Commission. To forestall the public auction of her personal properties, which the Provincial Sheriff of Negros Oriental had levied upon, she paid the amounts due under the writ of execution. She then protested the Commission's demand for a further sum and brought this petition for prohibition directly to the Supreme Court. The Court required the respondents to comment, and the Commission instead filed a manifestation. The Court then dismissed the petition.

Facts

Felipe Diacamos was an employee of Hacienda Doña Lilia. He complained to the Social Security Commission that his employer had not reported him for social security coverage on time, and he asked for the unpaid premiums, the penalties, and damages equal to the retirement benefits he would have received from the System had he been reported promptly.

The Commission ruled that Diacamos was a covered employee from June 1960 until his retirement in December 1979. It held the employer liable for the contributions for that period, for the penalty of three percent per month for late payment, and for damages equivalent to the retirement benefits. It ordered the System to compute the liabilities and to bill the employer, who was given thirty days from notice of assessment to pay.

The liability was computed as follows: one thousand nine hundred thirty-four pesos for social security contributions, four hundred thirty-nine pesos for Medicare contributions, one hundred thirty-one pesos and sixty centavos for employees' compensation contributions, and eight thousand nine hundred twelve pesos and thirty-eight centavos in penalties, for a total of eleven thousand four hundred sixteen pesos and ninety-eight centavos. While her petition for relief was pending, and to prevent the auction sale of her levied properties, the employer paid on May 29, 1985 the contribution liabilities of two thousand five hundred four pesos and sixty centavos and the sum of eleven thousand four hundred sixteen pesos and ninety-eight centavos, computed as of December 26, 1984. Because payment came only on May 29, 1985, the System billed her a balance of penalty of three hundred seventy-three pesos and seventy-two centavos. She protested, and brought this petition.

Issues

• Whether or not the petition for prohibition should lie to restrain the Social Security Commission from further enforcing a final judgment that the petitioner claims has been fully satisfied.
• Whether or not the petitioner remains liable for the balance of the penalty billed by the System after her payment.

Applicable Provisions

The decision refers to the penalty for late payment of contributions imposed by the Social Security Commission, in these terms:

Not having reported the petitioner for coverage to the SSS, the respondent is hereby held liable for the payment of the contributions corresponding to the petitioner's aforesaid period of employment, the penalty of three percent per month imposed for late payment of SSS contributions and for damages equivalent to the retirement benefits which the petitioner would have been entitled to receive from the SSS had he been reported on time for SSS coverage.

This is the penalty that generated the disputed balance, and it is the penalty later condoned.

The decision also invokes Executive Order Number 28 of July 16, 1986, in these terms:

Executive Order No. 28 on July 16, 1986 which provides for the condonation of the 3% penalty imposed on delinquent employers.

This executive order wiped out the penalty that remained unpaid, and it is the reason the Commission abandoned its claim.

Ruling

On the first issue, the Court did not grant the writ. The petition for prohibition was dismissed, because the relief it sought had become unnecessary. The Commission filed a manifestation stating that, in view of Executive Order Number 28, which condoned the three percent penalty on delinquent employers, the System was no longer pursuing its claim against the petitioner. The Commission attached statements of premiums receivable and of penalties receivable showing a zero balance. There was, in short, nothing left to prohibit.

On the second issue, the balance of penalty of three hundred seventy-three pesos and seventy-two centavos was effectively extinguished. The condonation removed the penalty imposed on delinquent employers, and with it the residual billing that the petitioner had protested. The Court therefore found no further liability to enforce and dismissed the petition.

Doctrine

A final decision of the Social Security Commission is enforced through the assessment and billing of the employer's contributions, penalties, and damages, and once the judgment is fully satisfied the employer may invoke the courts to stop further execution. But a petition for prohibition is a preventive remedy, and it will not issue where the respondent has already abandoned the claim and nothing remains to be restrained.

The penalty of three percent per month for late payment of contributions is a penal imposition on delinquent employers, and it may be condoned by executive order. When the penalty is condoned, the employer's residual liability for that penalty is extinguished, and any assessment built on it falls with it.

Disposition

The Supreme Court dismissed the petition for prohibition, since the Social Security System, by reason of the condonation of penalties under Executive Order Number 28, was no longer pursuing any claim against the petitioner.

Remember This

Memorize this line: the three percent monthly penalty on delinquent employers may be condoned by executive order, and once condoned the employer's residual penalty liability disappears. Examiners use this case to test the effect of a supervening condonation on a final judgment of the Social Security Commission, and to remind you that prohibition lies only where there is something left to prohibit.