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Document 2
Document 2
A few months before he died, or on January 6, 1997, only then he married the
petitioner. Upon Bonifacio's death, the petitioner filed with the SSS an application
for survivor's pension. Her application was denied on the ground that under Section
12-B(d) of RA 8282, she could not be considered a primary beneficiary of Bonifacio
as of the date of his retirement.
In the November 2005 decision, the proviso "as of the date of his retirement" was
struck down for violating the due process and equal protection clauses of the
Constitution. SC ruled that the proviso violates the equal protection clause of the
Constitution because it impermissibly discriminates against those dependent spouses
whose respective marriages to the SSS members were contracted after the latter's
retirement. Accordingly, the SC ruled that the SSS cannot deny the claim of petitioner
Elena Dycaico for survivors pension on the basis of this invalid proviso.
SSS filed its Motion for Reconsideration, stating the the possibility of some
unscrupulous members who might contract spurious marriage after the contingency
(retirement) to enable their spouse[s] to claim the benefits under RA 8282. SSS also
argued that, like the beneficiary in a life insurance policy, the beneficiary must have
an insurable interest upon the occurrence of the contingency. In the case of the
petitioner, she was only the common-law spouse of Bonifacio when he retired, which
was the contingent event, according to the SSS, and, therefore, no insurable interest
existed.
On the other hand, the SSC contends that the proviso does not violate the equal
protection clause of the Constitution because it is applied uniformly and equally
to all dependent spouses of SSS members who contracted their respective
marriages after the latter's retirement. Furthermore, the SSC adds that RA 8282
respects the sanctity of marriage as an institution and, consequently, provides that
only the legitimate spouse is classified and is entitled to support. The petitioner could
not have qualified as a primary beneficiary notwithstanding her designation as such
by Bonifacio because she was not his legal spouse at that time.
The burden is on the SSS to prove that marriages contracted after retirement were so
entered for an illicit purpose or solely for the purpose of receiving the benefits under
RA 8282. The outright disqualification of surviving spouses whose respective
marriages to the SSS members were valid, although contracted after the latter's
retirement, from entitlement to the survivorship pension by reason of the proviso "as
of the date of his retirement" in Section 12B(d) is repugnant not only to the due
process and equal protection clauses of the Constitution, but also to its social justice
policy. SSS and SSC pointed out the fact that Bonifacio designated the petitioner as
one of his beneficiaries, together with their children, they were not married at that
time, hence the designation is void. However, it should be pointed out that the
petitioner's entitlement to the survivor's pension does not arise from such designation.
Rather, her entitlement to survivorship pension is based on the fact that, at the time of
Bonifacio's death, she was his dependent spouse. In other words, regardless of the
said invalid designation, the petitioner was the dependent spouse of Bonifacio by
reason of their valid marriage to each other.
Retirement and death benefits, including the survivor's pension, in RA 8282 are
property interest protected by the due process clause of the Constitution. As the
dependent spouse of Bonifacio entitled by law to receive support from him, the
petitioner has indubitably acquired a property interest in the survivor's pension.
FACTS: SSS filed a complaint against Ambassador Hotel, Inc. and its officers for
non-remittance of SSS contributions and penalty liabilities for the period from June
1999 to March 2001 in the aggregate amount of ₱769,575.48 charging Ambassador
Hotel, Inc.'s Yolanda Chan, as President and Chairman of the Board; and Alvin Louie
Rivera, as Treasurer and Head of the Finance Department, with violation of the
provisions of (Section 22(a), in relation to Section 22(d) and Section 28(e)) R.A. No.
8282. Only Yolanda was arrested. Upon arraignment, she pleaded not guilty.
Thereafter, trial ensued. Ambassador Hotel argued that it has a separate and distinct
personality from its officers such as Yolanda; that it was neither a party to the
criminal case nor was summons issued against it, hence, the RTC did not acquire
jurisdiction over it. The SSS countered that under R.A. No. 8282, employers,
including juridical entities, that violate their obligation to remit the SSS contributions
shall be criminally liable and that in cases of corporations, it is the managing head that
shall be the one criminally responsible. It argued that since Yolanda, as President of
Ambassador Hotel, was properly arrested, the RTC acquired jurisdiction over it. The
SSS added that the acquittal of Yolanda did not extinguish the civil liability of the
hotel because it was deemed instituted in the criminal action. Further, it highlighted
that Ambassador Hotel was given sufficient notice of its delinquency and the pending
case against it.
ISSUE: Whether or not the corporation can invoke separate judicial entity to escape
its liability for non-payment of SSS contributions.
RULING: No, a corporation cannot invoke its separate judicial entity to escape its
liability for nonpayment of SSS contributions. The corporation is invested by law
with a personality separate and distinct from its officers and directors. This corporate
veil enjoyed by the corporation and its officers is pierced when made personally liable
by specific provision of law.
In this regard, Section 28 (f) of R.A. No. 8282 explicitly provides that "if the act or
omission penalized by this Act be committed by an association, partnership,
corporation or any other institution, its managing head, directors or partners shall be
liable to the penalties provided in this Act for the offense." Even when the employer
is a corporation, it shall still be held liable for the non-remittance of SSS contributions.
It is, however, the head, directors or officers that shall suffer the personal criminal
liability. To acquire jurisdiction over the corporation in a criminal case, its head,
directors or partners must be served with a warrant of arrest. Naturally, a juridical
entity cannot be the subject of an arrest because it is a mere fiction of law; thus, an
arrest on its representative is sufficient to acquire jurisdiction over it. To reiterate, the
law specifically disregards the separate personality between the corporation and its
officers with respect to violations of R.A. No. 8282; thus, an arrest on its officers
binds the corporation.
Facts: This is petition for review assailing the Decision and Resolution both of the
Court of Appeals and the Social Security Commission (SSC) , finding petitioner
Immaculada Garcia, the sole surviving director of Impact Corporation, liable for
unremitted SSS contributions.
Petitioners were directors of Impact Corporation. The corporation was engaged in the
business of manufacturing aluminum tube containers and operated two factories. One
located in Cuyapo, Nueva Ecija, while the other was in Cainta, Metro Manila.
Records show that around 1978, Impact Corporation started encountering financial
problems. By 1980. In March 1983, Impact Corporation filed with the Securities and
Exchange Commission (SEC) a Petition for Suspension of Payments. On May 1985,
the union of Impact Corporation filed a Notice of Strike with the Ministry of Labor
which was followed by a declaration of strike. Subsequently, the Ministry of Labor
certified the labor dispute for compulsory arbitration to the National Labor Relations
Commission (NLRC).
The Ministry of Labor directed the company to pay all the entitled workers unpaid
wages, unpaid 13th month pay and to remit to the Social Security System loan
amortizations and SSS premiums previously deducted from the wages of the workers.
On July 1985, the Social Security System (SSS), through its Legal and Collection
Division (LCD), filed a case before the SSC for the collection of unremitted SSS
premium contributions withheld by Impact Corporation from its employees.
Ruling: Yes. Under Section 22(a), every employer is required to deduct and remit
such contributions penalty which refers to the 3% penalty that automatically attaches
to the delayed SSS premium contributions. It is a cardinal rule in statutory
construction that in interpreting the meaning and scope of a term used in the law, a
careful review of the whole law involved, as well as the intendment of the law, must
be made.
Nowhere in the provision or in the Decision can it be inferred that the persons liable
are absolved from paying the unremitted premium contributions. Basic is the rule that
a corporation is invested by law with a personality separate and distinct from that of
the persons composing it as well as from that of any other legal entity to which it may
be related. A corporation is a juridical entity with legal personality separate and
distinct from those acting for and in its behalf and, in general, from the people
comprising it. Following this, the general rule applied is that obligations incurred by
the corporation, acting through its directors, officers and employees, are its sole
liabilities. A director, officer, and employee of a corporation are generally not held
personally liable for obligations incurred by the corporation. Being a mere fiction of
law, however, there are peculiar situations or valid grounds that can exist to warrant
the disregard of its independent being and the lifting of the corporate veil. This
situation might arise when a corporation is used to evade a just and due obligation or
to justify a wrong, to shield or perpetrate fraud, to carry out other similar unjustifiable
aims or intentions, or as a subterfuge to commit injustice and so circumvent the law.
The aforesaid provision states: SEC. 31. Liability of directors, trustees or officers. -
Directors or trustees who willfully and knowingly vote for or assent to patently
unlawful acts of the corporation or who are guilty of gross negligence or bad faith in
directing the affairs of the corporation or acquire any personal or pecuniary interest in
conflict with their duty as such directors, or trustees shall be liable jointly and
severally for all damages resulting therefrom suffered by the corporation, its
stockholders or members and other persons. The situation of petitioner, as a director
of Impact Corporation when said corporation failed to remit the SSS premium
contributions falls exactly under the fourth situation. Section 28(f) of the Social
Security Law imposes a civil liability for any act or omission pertaining to the
violation of the Social Security Law, to wit: (f) If the act or omission penalized by this
Act be committed by an association, partnership, corporation or any other institution,
its managing head, directors or partners shall be liable to the penalties provided in this
Act for the offense.
In fact, criminal actions for violations of the Social Security Law are also provided
under the Revised Penal Code. The Social Security Law provides, in Section 28
thereof, to wit: (h) Any employer who, after deducting the monthly contributions or
loan amortizations from his employees’ compensation, fails to remit the said
deductions to the SSS within thirty (30) days from the date they became due shall be
presumed to have misappropriated such contributions or loan amortizations and shall
suffer the penalties provided in Article Three hundred fifteen of the Revised Penal
Code. (i) Criminal action arising from a violation of the provisions of this Act may be
commenced by the SSS or the employee concerned either under this Act or in
appropriate cases under the Revised Penal Code.
Petitioner Garcia was ordered to pay for the collected and unremitted SSS
contributions of Impact Corporation.
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 Act1 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.
FACTS: The five petitioners originally filed 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 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 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 and in turn,
respondent filed its reply.
Respondent Commission issued its Order dismissing the petition. The Commission
held 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 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 . . .
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.
Inc. liable under Section 24(a) of the Social Security Act for the
the lifetime of said deceased that the latter was in its employ and
death benefits was filed with the System by the brother of the
deceased, as one of the legal heirs. The claim was duly processed
petitioner, rather than the System, legally liable for the payment of
premiums paid for the deceased Jungay and still hold petitioner
paid only after his death but did not return nor even offer to return
the same, respondent should be held in estoppel and liable for the
it has two distinct obligations under the Social Security Act, to wit,
Section 24 (a).
penalty:
within the first seven days of each calendar month following the
month for which they are applicable to within such time as the
centum per month from the date the contribution falls due until paid.
receive from the System had his name been reported on time by
the employer:
shall report immediately to the System the names, ages, civil status,
from his employer, the said employer shall pay to the employee or
employee would have been entitled had his name been reported on
from the imposition of the 3% monthly penalty from the date the
and employee under Sections 18 and 19 of the Act and the death of
and obligations of the parties are defined by and subject to their will.
Republic Act 1161 requires compulsory coverage of employers and
Act for failure to make a timely report of the employee's name and
personal data for coverage under the system therefore remains and
and the Act therefore shifts to the erring employer the responsibility
of paying the social security benefits "to which the employee or his
heirs would have been entitled had his name been reported on time
timely and properly reported the employee's name for coverage but
the employer's contention that its failure to make such a report was
monthly premiums deducted from his salary and upheld the Social
had not yet attached when it collected premiums for a policy that it
void, and therefore it could not invoke in bad faith the policy's nullity
helped subsidize the cause of social security to protect not only its
the hazards of disability, sickness, old age and death in line with
May 18, 1965 has been delayed pending this unjustified appeal. It
is only just and in accordance with law that the sum due said heirs
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bear legal interest of six (6%) per cent per annum from June 4,
with the modification that petitioner shall pay the legal heirs of the
deceased Eduardo Jungay six (6%) per cent interest per annum on
the sum of P810.00 from June 4, 1965 until the date of actual
payment.