Title
Navarra vs. People
Case
G.R. No. 224943
Decision Date
Mar 20, 2017
Corporate president convicted for failing to remit P10M SSS contributions, upheld by courts despite claims of financial difficulties and settlement attempts.
conviction
prompt remittance
objections prior to arraignment

Case Summary (G.R. No. 224943)

Factual Background

An Information dated January 18, 2001 was filed before the RTC charging petitioner with violation of Section 22(a), in relation to Section 28(h) and (f), of RA 8282. The Information alleged that petitioner, as a member of the board of directors of FENICS, conspiring with others, willfully and unlawfully failed and refused to remit and pay to the SSS the SS/Medicare/EC contributions withheld from employees’ salaries, the counterpart contributions of FENICS, and salary or calamity loan payments due to SSS, notwithstanding demands.

The prosecution evidence showed that petitioner served as President and Chairman of FENICS from 1995 to 2000. Between 1999 and 2002, eleven FENICS employees filed separate complaints with the SSS, Alabang Branch, for the non-remittance of their SSS contributions. SSS Account Officer Felicula B. Argamosa investigated and verified that FENICS failed to remit the employees’ contributions from July 1997 to June 2000, resulting in total unpaid obligations amounting to P10,077,656.24, excluding the three percent (3%) monthly penalty mandated by law.

Despite demands, FENICS did not pay, prompting SSS to file an Affidavit-Complaint with the Office of the City Prosecutor of Muntinlupa City. During the pendency of preliminary investigation, petitioner sent a letter dated October 25, 2000 offering to pay in installments the delinquent remittances from July 1997 to September 2000, attaching two postdated checks of P500,000.00 each and committing to pay the balance through 48 equal monthly installments. The first check was encashed, but the second was dishonored because it was drawn against a closed account; petitioner ignored the SSS notice of dishonor and also failed to complete the monthly installment payments.

While the criminal case was pending at trial, petitioner sent another letter dated April 25, 2003, proposing restructuring of FENICS’s SSS account. The SSS rejected the proposal. Petitioner then defended himself by asserting that although he was President and Chairman of the Board, he had never had custody of the employees’ SSS contributions, which he claimed were handled by FENICS’s Human Resources Department. He further maintained that FENICS had already shut down during the time of the alleged delinquencies, and thus employees could not have worked and there could have been no wages or salaries from which SSS contributions could be sourced.

Trial Court Proceedings and RTC Findings

The RTC, in a Decision dated March 13, 2013, convicted petitioner beyond reasonable doubt of the offense charged. It sentenced him to suffer an indeterminate penalty of four (4) years and two (2) months of prision correccional, as minimum, to twenty (20) years of reclusion temporal, as maximum. It also ordered him to pay the SSS the unpaid obligation of P9,577,656.24, plus three percent (3%) monthly interest reckoned from July 1997 until fully paid.

The RTC rejected petitioner’s theory that FENICS had already shut down. It found the asserted shutdown unpersuasive, reasoning that if such claim were true, petitioner should have raised it upon receipt of the SSS’s initial demand letter and before the case was filed in court. The RTC also considered petitioner’s own conduct: his letters proposing to amicably settle FENICS’s SSS delinquencies were inconsistent with a claim that no contributions could have been due because operations had already ceased. The RTC additionally treated petitioner’s April 25, 2003 letter, sent during the pendency of the criminal case, as an implied admission of the delinquencies and, by extension, of liability.

Appellate Review: Issues Raised and CA Disposition

Petitioner appealed to the Court of Appeals, asserting, among others, that the Information was defective for failing to properly charge a criminal offense; that he could not be held liable under Section 28(h) because the employer, FENICS, should have been charged; that the prosecution failed to establish that the private complainants were in fact FENICS employees; and that his criminal liability was extinguished by his compromise agreement with the SSS.

In its Decision dated October 29, 2015, the CA affirmed petitioner’s conviction in toto. The CA held that petitioner’s failure to raise any objections to the Information prior to arraignment constituted a waiver of defects, especially those that could not be raised for the first time on appeal. It further ruled that because FENICS is a corporation, its failure to remit employees’ SSS contributions subjects its officers, such as petitioner, to criminal liability, even assuming FENICS had already been dissolved. It also found that documentary evidence established the status of the private complainants as FENICS employees. The CA treated petitioner’s letters dated October 25, 2000 and April 25, 2003 as admissions of guilt. Finally, the CA concluded that there was no effective compromise since the SSS did not assent; and even assuming a compromise existed, it could not extinguish petitioner’s criminal liability.

Petitioner’s motion for reconsideration was denied by the CA in a Resolution dated May 19, 2016, prompting the petition for review on certiorari.

Legal Issues Considered by the Supreme Court

The Supreme Court resolved a single issue: whether the CA correctly upheld petitioner’s conviction for violation of Section 22(a), in relation to Section 28(h) and (f), of RA 8282. Implicitly, the case also addressed petitioner’s renewed challenge to the validity of the Information and his substantive defenses on corporate liability, proof of employment, and alleged extinguishment of criminal liability through compromise.

Supreme Court’s Reasoning on the Petition’s Merits

The Supreme Court held that the petition had no merit. On petitioner’s procedural challenge, the Court noted that petitioner assailed the Information’s validity on the ground that it allegedly did not charge a criminal offense. However, the Court stressed that petitioner had failed to raise the issue prior to arraignment. The records showed that he only raised it after conviction by the RTC and while the case was already on appeal before the CA. The Court agreed with the CA that petitioner’s failure to object before entering his plea amounted to a waiver. It also held that objections to the Information cannot be raised for the first time on appeal because they concern matters of form or substance that should have been timely contested.

On the substantive issue, the Supreme Court read the Information as charging petitioner—at the relevant time—as President and Chairman of FENICS’s Board of Directors. The prosecution theory was that petitioner caused or, by law, was responsible for FENICS’s failure and/or refusal to remit employees’ SSS contributions to the SSS during July 1997 to June 2000.

The Court then discussed Section 22(a) of RA 8282, emphasizing that prompt remittance of SSS contributions is mandatory. Under the provision, the employer required to deduct and remit contributions becomes liable for both the contributions due and a penalty of three percent (3%) per month from the date the contributions fall due until paid. The Court observed that noncompliance subjects the employer not only to monetary sanctions but also to criminal prosecution if the employer fails to register employees, deduct monthly contributions from employees’ wages, or remit employees’ contributions and/or loan payments after deducting them from salaries or wages.

The Court also relied on Section 28(f) of

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