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AMBASSADOR HOTEL v. SOCIAL SECURITY SYSTEM

FACTS:

The case involves a petition for review on certiorari seeking to reverse and set aside the decision of the Court of Appeals (CA) which affirmed the decision of the Regional Trial Court (RTC) in a case for non-payment of Social Security System (SSS) contributions.

The SSS filed a complaint against Ambassador Hotel, Inc. and its officers for non-remittance of SSS contributions and penalty liabilities. Yolanda Chan, the president and chairman of the board of Ambassador Hotel, and Alvin Louie Rivera, the treasurer and head of the finance department, were charged with violation of the law. Yolanda was arrested and pleaded not guilty.

The prosecution presented evidence through the testimonies of Maria Rezell C. De Ocampo, an accounts officer of SSS, and Simeon Nicolas Chan, the former president of Ambassador Hotel. They provided details of the investigation conducted and the non-payment of contributions by the hotel.

The defense presented Yolanda, Atty. Laurenao Galon, Michael Paragas, and Norman D. Cordon as witnesses. Yolanda argued that she was not performing her duties as president during the period in question and thus should not be held criminally liable.

The RTC ruled that Yolanda could not be held criminally liable for the non-payment of contributions but held Ambassador Hotel liable for its civil liabilities. The CA affirmed the RTC ruling, stating that the payment of SSS contributions is mandatory and its non-payment results in criminal prosecution. Ambassador Hotel filed a petition for review on certiorari.

The petitioner argued that the RTC did not acquire jurisdiction over it, as it was not a party in the case and no summons was issued against it. It also claimed that it was deprived of due process and that the RTC had no right to render an adverse decision against it. The SSS countered that the RTC had jurisdiction over Ambassador Hotel through its managing head, Yolanda. The SSS argued that the civil liability of Ambassador Hotel was deemed instituted in the criminal case and that the hotel had been given sufficient notice of its delinquency and the pending case against it.

ISSUES:

  1. Whether Ambassador Hotel is obligated to remit SSS contributions.

  2. Whether the jurisdiction over Ambassador Hotel can be acquired by arresting its managing head, director, or partner.

  3. Whether the civil action against Ambassador Hotel for the recovery of civil liability arising from the non-remittance of SSS contributions was properly instituted in the criminal case filed against Yolanda.

  4. Whether the jurisdiction of the RTC over Ambassador Hotel was terminated when Yolanda was acquitted in the criminal case.

  5. Whether Ambassador Hotel failed to remit its SSS contributions from June 1999 to March 2001 in the amount of P584,804.00.

  6. If so, whether Ambassador Hotel is liable to pay the said amount to the SSS plus interest at the legal rate of six percent (6%) per annum.

RULING:

  1. Yes, Ambassador Hotel is obligated to remit SSS contributions. Under Section 8(c) of R.A. No. 8282, an employer is defined as "any person, natural or juridical, domestic or foreign, who carries on in the Philippines any trade, business, industry, undertaking, or activity of any kind and uses the services of another person who is under his orders as regards the employment, except the Government and any of its political subdivisions, branches or instrumentalities, including corporations owned or controlled by the Government." Ambassador Hotel, as a juridical entity, is still bound by the provisions of R.A. No. 8282.

  2. Yes, jurisdiction over Ambassador Hotel can be acquired by arresting its managing head, director, or partner. Under Section 28(f) of R.A. No. 8282, if the act or omission penalized by the law is committed by a corporation, its managing head, directors, or partners shall be liable to the penalties provided in the law. To acquire jurisdiction over the corporation in a criminal case, its head, directors, or partners must be served with a warrant of arrest. The law 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.

  3. The civil action against Ambassador Hotel for the recovery of civil liability arising from the non-remittance of SSS contributions was properly instituted in the criminal case filed against Yolanda. The civil action is deemed impliedly instituted in the criminal case if the offended party waives the civil action, reserves the right to institute it separately, or institutes the civil action prior to the criminal action. In this case, when the Information was filed with the RTC, the civil action against Ambassador Hotel was deemed instituted therein.

  4. The jurisdiction of the RTC over Ambassador Hotel was not terminated when Yolanda was acquitted in the criminal case. The extinction of the penal action does not carry with it the extinction of the civil action, unless the extinction proceeds from a declaration in a final judgment that the fact from which the civil liability might arise did not exist. In this case, the RTC did not declare in its judgment that the fact from which the civil liability might arise did not exist. Therefore, the civil action, deemed impliedly instituted in the criminal case, remains.

  5. The Court finds that there is preponderance of evidence that Ambassador Hotel failed to remit its SSS contributions from June 1999 to March 2001 in the amount of P584,804.00.

  6. Consequently, Ambassador Hotel is liable to pay the said amount to the SSS plus interest at the legal rate of six percent (6%) per annum.

PRINCIPLES:

  • Prompt remittance of SSS contributions is mandatory, and failure to comply subjects the employer to monetary sanctions and criminal prosecution. (Section 22(a) of R.A. No. 8282)

  • A corporation can be held liable for the non-remittance of SSS contributions, and its managing head, directors, or officers shall suffer the personal criminal liability. (Section 28(f) of R.A. No. 8282)

  • Jurisdiction over a corporation in a criminal case can be acquired by arresting its managing head, director, or partner. (Section 28(f) of R.A. No. 8282)

  • Extinction of the penal action does not carry with it the extinction of the civil action, unless the extinction proceeds from a declaration in a final judgment that the fact from which the civil liability might arise did not exist.

  • The jurisdiction of a court in criminal cases is determined by the allegations of the information or criminal complaint and not by the result of the evidence presented at trial.

  • Once jurisdiction attaches to the person and subject matter of the litigation, subsequent events, even if they would have prevented jurisdiction from initially attaching, will not operate to oust jurisdiction already attached.

  • The court determines jurisdiction by the allegations in the information or criminal complaint, as supported by the affidavits and exhibits attached therein, and not by the evidence at trial.

  • Failure to remit SSS contributions can result in liability to pay the unpaid amount plus interest.

  • The burden of proof lies on the party claiming that the contributions have been paid or that another party should be accountable for the non-payment.