Company boss gets up to 20 yrs for not remitting SSS funds

MANILA, Philippines – This should serve as a warning to all employers. The Supreme Court has sentenced the president of a corporation from 4 to 20 years in prison for failing to remit P400,000 worth in contributions of his employees to the Social Security System.

In seven-page decision, the high court through Associate Justice Conchita Carpio-Morales dismissed the argument raised by Romarico J. Mendoza, President of Summa Alta Tierra Industries Inc. (SATII) that his failure to remit the contributions of his employees from August 1998 to July 1999 was due to the general decline in the economy and that he had intended to remit them in time.

He added that some contributions of his employees were paid through his personal funds and that he was economically useful given his academic credentials, having graduated from a prime university in Manila and being a reputable businessman.

He also said that being President of the corporation or a proprietor, he was not one of those enumerated under Section 28 of the Social Security Act of 1997, which provided that those who were liable would include 1) managing head; 2) directors; or 3) partners for offenses committed by a juridical person.

But the high court pointed out that the term “managing head” was used in its broadest term to include his designation or someone who has control and power over a business entity.

“To heed petitioner’s reasoning would allow unscrupulous businessmen to conveniently escape liability by the creative adoption of managerial titles,” the high court said.

The high court added that Mendoza could not also use as a defense “good faith” in Special Laws such as the Social Security Act because intent to commit or good faith was immaterial.

“Remittance of contribution to the SSS under Section 22 (a) of the Social Security Act is mandatory…In this concept, good faith or bad faith is rendered irrelevant since the law makes no distinction between an employer who professes good reasons for delaying the remittance of premiums and another who deliberately disregards the legal duty imposed upon him to make such remittance.”

“From the moment the remittance of premiums due is delayed, the penalty immediately attaches to the delayed premium payments by force of law,” the high court said.

The Iligan City regional trial court Branch 4 sentenced Mendoza to 6 years and 1 day to 8 years imprisonment pursuant to Section 28(e) of the Social Security Act which was also affirmed by the Court of Appeals.

But the high court said the proper penalty should be under Section 28 (h) of the same law which provides that “any employer who after deducting monthly contributions or loan amortizations from his employee’s compensation, fails to remit the said deductions to the SSS within 30 days from the date they became due shall be presumed to have misappropriated such contributions or loan and shall suffer the penalties provided in Article 315 of the Revised Penal Code.”

Article 315 provides that the penalty should be “x x x prision correccional in its maximum period to prision mayor in its minimum period, if the amount of the fraud is over 12,000 pesos but does not exceed 22,000 pesos; and if such amount exceeds the latter sum, the penalty provided in this paragraph shall be imposed in its maximum period, adding one year for each additional 10,000 pesos; but the penalty which may be imposed shall not exceed twenty years. In such cases, and in connection with the accessory penalties which may be imposed and for the purpose of the other provisions of this Code, the penalty shall be termed prision mayor or reclusion temporal, as the case may be.”

Considering the amount involved, the high court said the proper penalty should be four years to 20 years imprisonment. –Tetch Torres, INQUIRER.net