Employers Beware: Belated Settlement May Not End Criminal Prosecution

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The Social Security System (SSS) is not precluded from computing the rightful contributions and penalties due despite its discovery after a lapse of time. It follows that the SSS may file criminal cases even after a contingency such as sickness or death or the denial of the grant of loan due to its non-payment, although said employer delinquency was belatedly discovered. The criminal complaint may be initiated by the SSS through its account officers or the affected employee-members themselves as in the case of our main characters this week.

Dismissed employees Tenorio and Salcedo (not their real names of course) worked as a foreman and assistant foreman for a real estate developer. Their employers, the officers and board of directors of EFG Development Corporation have deducted the SSS contributions of the employees from their wages. Tenorio learned about his unremitted contributions a month after he was dismissed from work and Chronic Persistent Asthma hit him hard, as he had to face another blow with SSS denying his sickness benefit because his contributions in the amount of P5,760 were not remitted for twelve months prior to the semester of his confinement. His fellow dismissed employee

Salcedo, who filed for a loan was likewise met with rejection because despite paying P11, 232 to his employers for his previous P10,000 loan, only P4,000 was remitted to SSS. His unremitted contributions amounted to P5,760 just the same.

Tenorio and Salcedo filed their complaints before the City prosecutor’s Office of Cagayan de Oro City for non-remittance of SSS premiums and non payment of loan despite deductions. EFG then remitted the contribution and loan payments after said complaints were filed but the investigating prosecutor found probable cause thus, three cases were filed against the board of directors and officers of EFG.

On appeal to the Regional State Prosecutor (RSP), the RSP ordered the City Prosecutor to desist from filing the case and withdraw the cases on the grounds that:

The presumption that the contributions are deemed misappropriated if the employer fails to remit to SSS 30 days from the date they became due has already been destroyed upon the full payment and remittance of the same;
Since Section 22 of RA 8282 (SS Act of 1997) allows the payment of 3 percent penalty for delayed remittance of contribution, considering its full payment, there is no more reason to prosecute.

The aggrieved employees went to the Department of Justice (DOJ) to ask for a reconsideration, however the DOJ did not take action so the Public Prosecutor which has control of the prosecution of all criminal cases sought for the withdrawal of the information it previously filed. The RTC presiding judge ordered the withdrawal of the cases.

The employees went up to the Court of appeals on a Petition for Certiorati and Mandamus to annul and set aside the trial court’s withdrawal of the criminal cases. The CA sided with the employees and reinstated the criminal cases against the employers.

The employers, however, appealed to the Supreme Court. Their main contention was, they did not fail to remit the SSS contributions, they only paid belatedly. They even repeatedly emphasized their admission of their delayed remittance of SSS but not non-remittance thereof. Thus, according to the employers, “the presumption of misappropriation in the SSS law is effectively rebutted. In view thereof, no criminal liability attaches to the

Petitioners (employers)”. The Solicitor General even supported the employers and contended that since the employers have fully paid, although they paid late, they can no longer be held liable under Section 28 (e) of RA 8282, the penal clause of the SS law. The SolGen concluded that in effect the petitioner-employers had no malicious intent to misappropriate their employees’ contributions.

The Supreme Court in deciding quoted the provisions of RA 8282 where in a gist, they enumerated the the elements of criminal liability under Section 22 (a) which include:

The employer failed to register its employees with the SSS;

The employer fails to deduct monthly contributions from the salaries and/or wages of its employees; and

Having deducted the SSS contributions and/or loan payments to SSS, the employer fails to remit these to the SSS.

The High Court affirmed the findings of the CA for non-remittance of contributions and loan payments. It noted that the employers only remitted the SSS wage deductions and loan payments after the filing of criminal complaints against them. The High Court laid in their decision that the facts do not denote a simple delay in payment, such failure to remit led to the denial of SSS benefits to the employees and it was only after the employers were threatened with a criminal liability that they remitted the long deducted SSS contributions and loan payments.

The Supreme Court however, did not end up indicting the employers as the only issue brought before it is the validity of withdrawing the criminal cases. It stressed that trial is still needed to prove the culpability of the accused employers such as extent and reason for the delay in the remittance, the date of actual remittance and such other circumstances. The trial court was ordered to hear the criminal cases and dispose of the cases with dispatch.

Simply put, despite settlement of the civil aspect of the case as when the employers paid the contributions and loan of their employees, criminal liability is not automatically extinguished. Criminal cases may still proceed against the delinquent employer.

Look! The wages you failed to pay the workers who mowed your fields are crying out against you. The cries of the harvesters have reached the ears of the Lord Almighty.–James 5:4

Reference: Robert Kua, Caroline N. Kua, and Ma. Teresita N. Kua vs. Gregorio Sacupayo and Maximiniano Panerio, G.R. No. 191237 September 24, 2014.

Atty. Russel L. Ma-ao
Legal Department
Luzon North I

Whatever you do, work at it with all your heart, as working for the Lord, and not for human masters. Colossians 3:23