The Supreme Court affirmed that corporate officers can be held criminally liable for a corporation’s failure to remit Social Security System (SSS) contributions. This decision underscores the responsibility of corporate leaders to ensure compliance with social security laws. The ruling emphasizes that non-remittance is a violation of law. As such, good faith or lack of intent are not valid defenses. Ultimately, the decision reinforces the protection of employees’ rights to social security benefits and ensures corporate accountability in fulfilling these obligations.

The Price of Neglect: Holding Corporate Officers Accountable for SSS Violations

This case revolves around Jorge B. Navarra, the President and Chairman of the Board of Directors of Far East Network of Integrated Circuits Subcontractors Corporation (FENICS). FENICS failed to remit its employees’ SSS contributions from July 1997 to June 2000. This failure led to a criminal charge against Navarra for violating Section 22(a), in relation to Section 28(h) and (f), of Republic Act No. 8282 (RA 8282), also known as the Social Security Act of 1997. The core legal question is whether a corporate officer can be held criminally liable for a corporation’s failure to remit SSS contributions.

The prosecution presented evidence that FENICS, as a registered employer with the SSS, failed to remit contributions deducted from its employees’ salaries. Account Officer Felicula B. Argamosa’s investigation revealed a total unpaid obligation of P10,077,656.24. Despite numerous demands, FENICS did not settle its delinquencies, prompting the SSS to file an Affidavit-Complaint against Navarra and other board members. Critically, Navarra offered to pay the delinquent remittances in installments, even providing postdated checks. However, one check was dishonored, and the installment plan never materialized. This history of attempted settlements later became a key point in the court’s assessment.

Navarra argued that while he was the President and Chairman of the Board, he did not have direct custody of the SSS contributions. He claimed the Human Resources Department was responsible for handling these matters. Further, he contended that FENICS had already shut down during the period of the alleged delinquencies. He stated that the company’s business declined, leading to a cessation of operations and, consequently, an inability to pay SSS contributions. However, the Regional Trial Court (RTC) and later the Court of Appeals (CA) found these arguments unconvincing.

The RTC found Navarra guilty, sentencing him to imprisonment and ordering him to pay the unpaid obligation plus monthly interest. The RTC noted that Navarra’s claim of FENICS’s shutdown was inconsistent with his attempts to settle the SSS delinquencies. The court viewed Navarra’s letter proposing a restructuring of FENICS’s account as an implied admission of guilt. The CA affirmed the RTC’s decision, emphasizing that Navarra’s failure to raise objections to the Information earlier constituted a waiver of any defects. The CA also highlighted that corporate officers could be held liable, especially since FENICS had been dissolved. Furthermore, the appellate court stated that the attempted compromise with SSS, which never materialized, did not extinguish criminal liability.

The Supreme Court, in its decision, underscored the mandatory nature of remitting SSS contributions. It emphasized that Section 22(a) of RA 8282 requires employers to remit contributions promptly. Any deviation from this requirement can lead to both monetary sanctions and criminal prosecution. The court quoted Section 22(a) of RA 8282:

Section 22. Remittance of Contributions. – (a) The contributions imposed in the preceding section shall be remitted to the SSS within the first ten (10) 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 contributions shall be liable for their payment and if any contribution is not paid to the SSS as herein prescribed, he shall pay besides the contribution a penalty thereon of three percent (3%) per month from the date the contribution falls due until paid.

The Court also cited Section 28(f) of RA 8282, which explicitly holds managing heads, directors, or partners of an association, partnership, corporation, or any other institution liable for offenses committed by the entity. This provision reinforces the principle of corporate accountability. Importantly, the Court noted that the punishable acts under RA 8282 are considered mala prohibita. This means that the defenses of good faith and lack of criminal intent are immaterial. The focus is on whether the act was committed, not on the intent behind it. The Supreme Court emphasized that factual findings of the lower courts, when supported by evidence, are generally deemed final and conclusive.

In essence, the Supreme Court’s decision clarified the extent of responsibility of corporate officers. They are duty-bound to ensure remittance of employee’s SSS contributions. The failure of the corporation to remit SSS contributions is a punishable offense. The President and Chairman of the Board of Directors carries the highest accountability. The decision serves as a reminder for corporate leaders to prioritize compliance with social security laws, protecting the rights and benefits of their employees.

This ruling aligns with the broader policy of ensuring social security coverage for Filipino workers. By holding corporate officers liable for non-remittance of SSS contributions, the Court seeks to prevent abuse and negligence in fulfilling these obligations. The decision reinforces the importance of prompt and accurate remittance of SSS contributions, as these funds are crucial for providing social security benefits to employees and their families.

FAQs

What was the key issue in this case?	The key issue was whether Jorge B. Navarra, as President and Chairman of the Board of Directors of FENICS, could be held criminally liable for the corporation’s failure to remit SSS contributions.
What law did Navarra violate?	Navarra was charged with violating Section 22(a), in relation to Section 28(h) and (f), of Republic Act No. 8282, also known as the Social Security Act of 1997.
What was the SSS’s claim against FENICS?	The SSS claimed that FENICS failed to remit its employees’ SSS contributions from July 1997 to June 2000, resulting in unpaid obligations amounting to P10,077,656.24.
What was Navarra’s defense?	Navarra argued that he did not have direct custody of the SSS contributions and that FENICS had already shut down during the period of the alleged delinquencies.
What did the Regional Trial Court (RTC) rule?	The RTC found Navarra guilty, sentencing him to imprisonment and ordering him to pay the unpaid obligation plus monthly interest.
What did the Court of Appeals (CA) rule?	The CA affirmed the RTC’s decision, emphasizing that Navarra’s failure to raise objections to the Information earlier constituted a waiver of any defects and that corporate officers could be held liable.
What is the significance of Section 28(f) of RA 8282?	Section 28(f) explicitly holds managing heads, directors, or partners of an association, partnership, corporation, or any other institution liable for offenses committed by the entity.
What does mala prohibita mean in this context?	Mala prohibita means that the punishable acts under RA 8282 are offenses because they are prohibited by law, regardless of intent or good faith.
What was the Supreme Court’s final ruling?	The Supreme Court affirmed the CA’s decision, holding Navarra criminally liable for the corporation’s failure to remit SSS contributions, emphasizing the mandatory nature of remitting SSS contributions and corporate accountability.

The Supreme Court’s ruling serves as a clear message to corporate officers regarding their responsibilities under the Social Security Act. The decision reinforces the importance of compliance with social security laws and the accountability of corporate leaders in ensuring that employees’ contributions are remitted promptly and accurately. Failure to do so can lead to severe consequences, including criminal liability.

For inquiries regarding the application of this ruling to specific circumstances, please contact ASG Law through contact or via email at frontdesk@asglawpartners.com.

Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
Source: Jorge B. Navarra vs. People of the Philippines, G.R. No. 224943, March 20, 2017