Dycaico vs SSS

Facts: Bonifacio Dycaico became a member of the SSS on January1980. In his

self-employed data record, he named Elena Dycaico and their 8 children as
beneficiaries. At that time, Bonifacio and Elena were living together but were not
married. Bonifacio retired on June 1989. He then began receiving his monthly pension
since then until he passed away on June 1997.

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.

Issue: Whether or not Elena Dycaico is considered a beneficiary?

Held: Yes. Motions for Reconsideration are bereft of merit.

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.

Ambassador Hotel, Inc. vs. SSS

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.

Immaculada Garcia vs. SSC

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.

Issue: Whether or not petitioner, as the only surviving director of Impact

Corporation, can be made solely liable for the corporate obligations of Impact
Corporation pertaining to unremitted SSS premium contributions and penalties.

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.

Santiago vs. Court of Appeals

United Christian Missionary Society vs. SSS

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.

ISSUE: Whether or not respondent Commission erred in ruling that it has no

authority under the Social Security Act to condone the penalty prescribed by law for
late premium remittances.

RULING: The Court found no error in the Commission's action.

The plain text and intent of the pertinent provisions of the Social Security Act clearly
rule out petitioners' posture that the respondent Commission should assume, as
against the mandatory imposition of the 3% penalty per month for late payment of
premium remittances, the discretionary authority of condoning, waiving or
relinquishing such penalty.

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 . . .

No discretion or alternative is granted respondent Commission in the enforcement of

the law's mandate that the employer who fails to comply with his legal obligation to
remit the premiums to the System within the prescribed period shall pay a penalty of
three 3% per month.
2. Petitioners contend that in the exercise of the respondent Commission's power of
direction and control over the system, as provided in Section 3 of the Act, it does have
the authority to condone the penalty for late payment.

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.

The order appealed from was affirmed.

Machuca Tile Co. vs. SSS

We affirm, in this appeal, the Resolution of the Social Security

Commission holding petitioner-appellant Machuca Tiles Company,

Inc. liable under Section 24(a) of the Social Security Act for the

payment of damages in the form of death benefits to the legal heirs

of its deceased employee, Eduardo Jungay, in the sum of P810.00

by virtue of its failure to make a timely report to the System during

the lifetime of said deceased that the latter was in its employ and

had qualified for compulsory coverage in the System.

FACTS: The deceased, Eduardo Jungay, was a former employee

of the petitioner and as such, qualified for compulsory coverage in

December 1961. He died on June 1962, whereupon a claim for

death benefits was filed with the System by the brother of the

deceased, as one of the legal heirs. The claim was duly processed

by the System's Claims Department, and in the course thereof, it

discovered that the deceased was reported by the petitioner for

coverage in the System only on September 1962, when the

premiums on this account were remitted to the System. After

processing of the claim, the Claims Department adjudicated the

sum of P810.00 as death benefits payable to the deceased's legal

heirs, but in view of the failure of the petitioner to report his

coverage prior to his death, the Acting Administrator of the Social

Security System declared the petitioner liable to pay to the said

heirs the amount of P810.00 as adjudicated by the Claims

Department. Hence petitioner filed the instant petition.

The Social Security Commission, after due hearing rendered its

Resolution affirming the Administrator's ruling declaring the

petitioner, rather than the System, legally liable for the payment of

death benefits to the deceased employee's legal heirs.

On appeal, petitioner contends that some months after the death

Eduardo Jungay, it had submitted and remitted the corresponding

premiums, including the sum of P28.80 representing the

deceased’s premiums from December 1961 to June, 1962, it would

not be just for respondent-appellee to receive and keep the

premiums paid for the deceased Jungay and still hold petitioner

liable for payment of the death benefits. Petitioner further contends

that since respondent was aware that Jungay's premiums were

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

payment of the death benefits.

The fallacy of petitioner's contentions lies in its failure to realize that

it has two distinct obligations under the Social Security Act, to wit,

the obligation of making a timely remittance of premiums under

Section 22 (a) and the obligation of making a timely report of its

employees' names and other personal data, including the social

security number assigned to each employee, for coverage, under

Section 24 (a).

Section 22 (a) thus requires the employer to make a timely

remittance of the premium contributions of both employer and

employee, under pain of being subject to payment of a 3% monthly

penalty:

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 to within such time as the

Commission may prescribe. Every employer required to deduct and

to remit such contributions shall be liable for their payment, and if

any contribution is not paid to the System, as herein prescribed, he

shall pay beside the contribution a penalty thereon of three per

centum per month from the date the contribution falls due until paid.

If deemed expedient and advisable by the Commission, the

collection and remittance of contributions shall be made quarterly

or semi-annually in advance, the contributions payable by the

employees to be advanced by their respective employers: Provided,

That upon separation of an employee, any premium so paid in

advance but not due shall be credited or refunded to his employer. 3

On the other hand, Section 24 (a) requires the timely report of

employees' names and personal data for coverage under the

System, under penalty of being liable for damages equivalent to the

benefits the employee or his heirs would have been entitled to

receive from the System had his name been reported on time by

the employer:

SEC. 24. Employment records and reports. — (a) Each employer

shall report immediately to the System the names, ages, civil status,

occupations, salaries and dependents of all his employees, who

are in his employ and who are or may, later be subject to

compulsory coverage: Provided, That if an employee subject to

compulsory coverage should die or become sick or disabled

without the System having previously received a report about him

from his employer, the said employer shall pay to the employee or

his legal heirs damages equivalent to the benefits to which said

employee would have been entitled had his name been reported on

time by the employer to the System. 4

The posthumous remittance of the deceased employee's premiums

served but to extinguish petitioner's liability therefor and to free it

from the imposition of the 3% monthly penalty from the date the

contribution falls due until actually paid. These accrued premiums

were legally due to the System as the contribution of both employer

and employee under Sections 18 and 19 of the Act and the death of

the employee did not extinguish petitioner's liability to remit the

same. There is no justification, consequently, for petitioner's claim

that respondent should be held in estoppel for having retained them.

As this Court has held in upholding the amendment on January 14,

1958 of the System's Rules, eliminating the provision for rebate of a

proportionate amount of the premiums paid on behalf of temporarily

employed alien technicians upon their departure from the

Philippines and allowing such rebate only if they have been

members for at least two years, "membership in this institution is

not the result of a bilateral, consensual agreement where the rights

and obligations of the parties are defined by and subject to their will.
Republic Act 1161 requires compulsory coverage of employers and

employees under the System. It is actually a legal imposition, on

said employers and employees, designed to provide social security

to the workingmen. Membership in the SSS is, therefore, in

compliance with a lawful exercise of the police power of the State,

to which the principle of non-impairment of the obligation of

contract is not a proper defense." 5

Petitioner's separate mandatory liability under Section 24 (a) of the

Act for failure to make a timely report of the employee's name and

personal data for coverage under the system therefore remains and

must be enforced. It is obvious that the Act attaches greater

importance to this requirement and obligation of the employer than

that of timely remittance of the premiums. For failure to make such

report in fact excludes the employee from the System's coverage

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

by the employer to the System." Where the employer has, however,

timely and properly reported the employee's name for coverage but

has failed or refused to pay or remit the premiums, such failure or

refusal, by express provision of the Act in Section 22 (b) "shall not

prejudice the right of the covered employee to the benefits of the

coverage." The Act, in such cases as above stated, exacts the

lesser liability of payment of the delinquent premiums with a 3%

monthly penalty. Thus, in a similar case, this Court brushed aside

6

the employer's contention that its failure to make such a report was

due to the deceased employee's refusal to have his share of the

monthly premiums deducted from his salary and upheld the Social

Security Commission's jurisdiction to enforce the mandatory

provisions of Section 24 (a) against the employer.

Petitioner's invoking of the ruling of this Court in a commercial

insurance case that acceptance by the insurer of insurance

7

premiums with full knowledge of the facts entitling it to treat the

policy as no longer in force estops it from claiming forfeiture, has no

application to the case at bar. In said case, liability of the insurer

had not yet attached when it collected premiums for a policy that it

had issued under circumstances which it knew rendered the policy

void, and therefore it could not invoke in bad faith the policy's nullity

against a subsequent claim of loss under the policy. Here, the

mandatory liability of the employer in place of the System for the

social security benefits due to the deceased employee had already

been incurred, and its posthumous payment of the accrued

premiums was but in discharge of a separate and distinct liability

therefor. Petitioner's solace lies in that its contributions to the

System and its discharging of its liabilities under the Act, will have

helped subsidize the cause of social security to protect not only its

own employees but the general membership of the System against

the hazards of disability, sickness, old age and death in line with

the Constitutional mandate to promote social justice and to insure

the well-being and economic security of all the people. 8

One last item. Payment by petitioner of the death benefits in the

sum of P810.00 awarded to the legal heirs of the deceased

employee under the Social Security Commission's Resolution of

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
9

bear legal interest of six (6%) per cent per annum from June 4,

1965, date of receipt of said Resolution by petitioner. 10

ACCORDINGLY, the Resolution appealed from is hereby affirmed,

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.