G.R. No. L-25779. May 30, 1975.
SOCIAL SECURITY SYSTEM, petitioner-appellee, vs. VALDERRAMA LUMBER MANUFACTURERS CO., INC., respondent-appellant.

FACTS

The Social Security System (SSS) filed a petition with the Social Security Commission for the collection of unpaid premiums from Valderrama Lumber Manufacturers Co., Inc., covering January 1960 to June 1963, totaling P62,410.53, plus penalties for late payment. Valderrama admitted the delinquency but attributed it to severe financial losses from floods and typhoons. It sought exemption from penalties and proposed to liquidate the principal delinquency through monthly installments.
The SSS objected, insisting on payment of the total obligation, including penalties amounting to P32,944.53 as of December 1963. The Social Security Commission, in its Resolution of August 3, 1965, ordered Valderrama to pay the total sum of P95,355.06 (principal plus penalties) under strict conditions, including payment in installments and the posting of a surety bond. The Commission denied Valderrama’s request for condonation of penalties, citing a prior resolution that it lacked express authority to grant such condonation under the Social Security Act.

ISSUE

Whether the Social Security Commission has the power to condone penalties for late payment of premium contributions.

RULING

No. The Supreme Court, citing its prior ruling in United Christian Missionary Society vs. Social Security Commission, held that the plain text and intent of the Social Security Act clearly rule out any discretionary authority for the Commission to condone, waive, or relinquish the 3% monthly penalty for late remittances. The law provides for no such express power. However, the Court noted the subsequent enactment of Presidential Decree No. 24 on October 19, 1972, which amended the Social Security Act. This Decree provided a six-month grace period for delinquent employers to remit unpaid contributions without incurring the penalty. The records showed that Valderrama had already paid a total of P79,389.40 as of August 1966, which covered its back premiums of P62,410.53 and a portion of the penalties. Having complied with the payment of the principal obligation and having filed the required forms, Valderrama was deemed to have met the conditions for condonation under P.D. No. 24. Consequently, any unpaid balance of the imposed penalties was remitted and condoned by virtue of the decree. As the back premiums were fully satisfied and the penalties condoned, the case was dismissed for being moot and academic.