G.R. No. L-24883 October 31, 1969
MACHUCA TILE CO., INC., petitioner, vs. SOCIAL SECURITY SYSTEM, respondent.

FACTS

The deceased, Eduardo Jungay, was an employee of petitioner Machuca Tiles Company, Inc. and qualified for compulsory Social Security System (SSS) coverage in December 1961. He died on June 17, 1962. A claim for death benefits was filed by his legal heirs. During processing, the SSS discovered that the petitioner reported the deceased for coverage only on September 5, 1962, after his death, when the corresponding premiums were remitted. The SSS Claims Department adjudicated P810.00 as death benefits to the legal heirs. However, the Acting Administrator of the SSS declared the petitioner liable to pay this amount to the heirs due to its failure to report the employee’s coverage prior to his death. The Social Security Commission affirmed this ruling, directing the petitioner to pay the heirs the sum as damages under Section 24(a) of the Social Security Act. The petitioner appealed, contending it was unjust for the SSS to retain the premiums paid for the deceased after his death and still hold the petitioner liable for the benefits, and that the SSS should be estopped.

ISSUE

Whether the petitioner employer is liable to pay the death benefits to the legal heirs of its deceased employee due to its failure to make a timely report of the employee’s coverage to the Social Security System.

RULING

Yes. The Supreme Court affirmed the Resolution of the Social Security Commission. The Court held that under the Social Security Act, an employer has two distinct obligations: (1) the obligation to make timely remittance of premiums under Section 22(a), and (2) the obligation to make a timely report of employees’ names and data for coverage under Section 24(a). The petitioner’s posthumous remittance of premiums extinguished its liability for those premiums and the associated penalty, but did not extinguish its separate and mandatory liability under Section 24(a) for failure to timely report. This liability is for damages equivalent to the benefits the employee or heirs would have received had the employee been reported on time. The acceptance and retention of the late premium payments by the SSS does not create an estoppel, as membership in the SSS is a compulsory legal imposition under the state’s police power, not a consensual contract. The Court modified the Commission’s resolution by ordering the petitioner to pay legal interest of six percent per annum on the P810.00 from June 4, 1965, until actual payment.