Case Summary (G.R. No. 158131)
Applicable Law
The legal framework for this case includes Republic Act No. 1161 (Social Security Act of 1954) and Republic Act No. 8282 (amendments to RA 1161), particularly provisions regarding the employer's obligation to remit contributions and the penalties for non-compliance.
Factual Background
The Martels, serving as directors of SENCOR, failed to remit contributions totaling P6,936,435.80 from January 1991 to May 1997. Upon their offer to assign property for debt settlement, the SSS withdrew a prior complaint but retained the right to revive it if no settlement occurred. After further non-compliance, the SSS filed a new complaint against the Martels and others for contributions due from February 1991 to October 2000, amounting to P21,148,258.30.
Initial Prosecutorial Findings
The Pasay City Prosecutor's Office found probable cause to indict the Martels, rejecting their argument that a compromise converted the criminal liability into a civil obligation. They argued that the original criminal liability was consummated before any offer of settlement was made. This conclusion led to an indictment for violations of the Social Security Act.
Department of Justice Ruling
The Department of Justice (DOJ) reversed the prosecutor’s findings, determining that a compromise existed due to the withdrawal of the initial complaint and the offer of property. They argued that this created a new creditor-debtor relationship which extinguished the original criminal obligation.
Court of Appeals Decision
The Court of Appeals upheld the DOJ’s determination, concluding that the DOJ’s interpretation of a compromise agreement was within its purview and did not constitute grave abuse of discretion. The appellate court asserted that it lacked the power to determine whether probable cause existed for prosecution.
Issues on Appeal
The central issue before the Supreme Court was whether the concept of novation could abate the prosecution of the Martels under the Social Security Act. The petitioner contended that the relationship formed did not extinguish their criminal liability.
Supreme Court Ruling
The Supreme Court ruled against the application of novation. They clarified that the relationship between SENCOR and the SSS stemmed from a statutory obligation rather than a true contractual one that could be altered. Furthermore, the Martels' failure to comply with the original obligation and the condition for the proposed property assignment meant that no effective compromise existed.
Novation and Criminal Liability
Novation generally requires a prior enforceable obligation that is modified or replaced. The Court distinguished pr
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The Case
- This case involves a petition for review filed by the Social Security System (SSS) against the Decision dated 17 October 2002 and Resolution dated 5 May 2003 of the Court of Appeals.
- The Court of Appeals affirmed the ruling of the Department of Justice (DOJ) which dismissed SSS's complaint against respondents Jose V. Martel, Olga S. Martel, and five others for violations of the Social Security Act regarding non-remittance of contributions.
- The initial complaint was for non-payment of contributions amounting to P6,936,435.80 for the period from January 1991 to May 1997.
- Following negotiations, the complaint was withdrawn, but a second complaint was filed for non-remittance of contributions totaling P21,148,258.30 from February 1991 to October 2000.
The Facts
- Respondents Jose V. Martel and Olga S. Martel are directors of Systems and Encoding Corporation (SENCOR), with Jose serving as Chairman of the Board.
- SENCOR is mandated by RA 1161, as amended by RA 8282, to remit monthly contributions to SSS.
- In 1998, SSS filed a complaint against the Martels and others for non-payment of contributions, which led to an offer from the Martels to assign property in Tagaytay City as payment.
- This offer was accepted conditionally by SSS, leading to the withdrawal of the initial complaint but with the right to revive it if no settlement occurred.
- In December 2001, the Martels proposed computer-relate