Sss Case Digests 2u185u

Kristine Marciana L. Laplana

Agrarian Law and Social Legislation (Tue,8-10 pm)

1. Tan v. Ballena, G.R. No. 168111, July 4, 2008 Facts: This is an appeal before the Supreme Court regarding a decision of the Court of Appeals dated 30 September 2004 and 9 May 2005, respectively, in CA-G.R. SP No. 79101. The appellate court's Decision set aside the Resolutions of the Department of Justice (DOJ) dated 19 March 2002 and 9 August 2002, and reinstated the Final Resolution5 of the Provincial Prosecutor in I.S. Nos. 01-03-1007, 01-04-1129 and 01-04-1130, which ordered the filing of two (2) informations against petitioners Antonio Tan, Danilo Domingo and Robert Lim. The appellate court's Resolution denied petitioners' Motion for Reconsideration. Petitioners Antonio Tan, Danilo Domingo and Robert Lim were officers of Footjoy Industrial Corporation (Footjoy), a domestic corporation engaged in the business of manufacturing shoes and other kinds of footwear, prior to the cessation of its operations sometime in February 2001. On 19 March 2001, respondent Amelito Ballena and one hundred thirty-nine (139) other employees of Footjoy, filed a t Complaint-Affidavit before the Office of the Provincial Prosecutor of Bulacan against the company and petitioners Tan and Domingo in their capacities as owner/president and istrative officer, respectively. Ballena and the other employees alleged that that the company did not regularly report the respondent employees for hip at the Social Security System (SSS) and that it likewise failed to remit their SSS contributions and payment for their SSS loans, which were already deducted from their wages in violation of Sections 9, 10, 22 and 24, paragraph (b) of Republic Act No. 1161, as amended by Republic Act No. 8282;9 as well as Section 28, paragraphs (e), (f), and (h) thereof, in relation to Article 315 of the Revised Penal Code. Further, the herein petitioners itted their fault and pleaded good faith and lack of criminal liability. The Assistant Provincial Prosecutor found probable cause and filed an information with violations of the above-mentioned sections of the SSS Law but dismissed the charge for the violation of the RPC as such is deemed included in the SSS Law. However, the information was ordered to be dismissed the Department of Justice for lack of probable cause. It was also dismissed by the CA on appeal for not complying with the verification and certification requirement as not all original petitioners signed the same. The decision was subsequently reversed upon Motion for Reconsideration thus this petition. Issue and Ruling: Whether or not the not g of the all original petitioners in the certification and verification justifiably caused the dismissal of the case? No. It is a well-settled principle that rules of procedure are mere tools designed to facilitate the attainment of justice. Their strict and rigid application, which would result in technicalities that tend to frustrate rather than promote substantial justice, must always be eschewed. On the requirement of a certification of non-forum shopping, the well-settled rule is that all the petitioners must sign the certification of non-forum shopping. The reason for this is that the persons who have signed the certification cannot be presumed to have the personal knowledge of the other non-g petitioners with respect to the filing or non-filing of any action or claim the same as or similar to the current petition. The rule, however, its of an exception and that is when the petitioners show reasonable cause for failure to personally sign the certification. The petitioners must be able to convince the court that the outright dismissal of the petition would defeat the istration of justice.In the case at bar, counsel for the respondents disclosed that most of the respondents who were the original complainants have since sought employment in the neighboring towns of Bulacan, Pampanga and Angeles City. Only the one hundred eighty (180) signatories were then available to sign the amended Petition for Certiorari and the

accompanying verification and certification of non-forum shopping. Considering the total number of respondents in this case and the elapsed period of almost two years since the filing of the t Complaint Affidavit on 19 March 2001 and the filing of the amended petition on 13 March 2003, we hold that the instant case sufficiently falls under the exception to the aforesaid rule. Thus, the Court of Appeals cannot be said to have erred in overlooking the above procedural error. Whether or not lack of criminal culpability and good faith are valid defences in violations of the SSS Law? No. As held by the Court of Appeals, the claims of good faith and absence of criminal intent for the petitioners' acknowledged non-remittance of the respondents' contributions deserve scant consideration. The violations charged in this case pertain to the SSS Law, which is a special law. As such, it belongs to a class of offenses known as mala prohibita. The law has long divided crimes into acts wrong in themselves called acts mala in se; and acts which would not be wrong but for the fact that positive law forbids them, called acts mala prohibita. This distinction is important with reference to the intent with which a wrongful act is done. The rule on the subject is that in acts mala in se, the intent governs; but in acts mala prohibita, the only inquiry is, has the law been violated? When an act is illegal, the intent of the offender is immaterial. Thus, the petitioners' ission in the instant case of their violations of the provisions of the SSS Law is more than enough to establish the existence of probable cause to prosecute them for the same.

2. Garcia v. Social Security commission Legal and Collection, Social Security System, G.R. No. 170735, December 17, 2007 Facts: This is petition for review on Certiorari under Rule 45 of the Rules of Court is assailing the 2 June 2005 Decision1 and 8 December 2005 Resolution2 both of the Court of Appeals in CAG.R. SP No. 85923. the appellate court affirmed the --- Order and --- Resolution both of the Social Security Commission (SSC) in SSC Case No. 10048, finding Immaculada L. Garcia (Garcia), the sole surviving director of Impact Corporation, petitioner herein, liable for unremitted, albeit collected, SSS contributions. Petitioner is one of the directors of Impact Corporation, a corporation engaged in the business of manufacturing aluminum tube containers and operated two factories. One was a "slug" foundry-factory located in Cuyapo, Nueva Ecija, while the other was an Extrusion Plant in Cainta, Metro Manila, which processed the "slugs" into aluminum collapsible tubes and similar containers for toothpaste and other related products. The corporation has financial problems in 1978. On 3 July 1985, the Social Security System (SSS), through its Legal and Collection Division (LCD), filed a case before the SSC for the collection of unremitted SSS contributions withheld by Impact Corporation from its employees. The SSC directed the System to check if Impact Corporation had leviable properties to which the investigating team of respondent SSS manifested that the Impact Corporation had already been dissolved and its assets disposed of. The petitioner was also held liable as a director, she argued that she is just a stockholder thus this petition. Issue and Ruling: Whether or not petitioner should be held liable?

Yes. Section 28(f) of the Social Security Law provides the following: (f) If the act or omission penalized by this Act be committed by an association, partnership, corporation or any other institution, its managing head, directors or partners shall be liable to the penalties provided in this Act for the offense. Section 28(f) of the Social Security Law imposes penalty on: (1) the managing head; (2) directors; or (3) partners, for offenses committed by a juridical person. The said provision does not qualify that the director or partner should likewise be a "managing director" or "managing partner." The law is clear and unambiguous. Petitioner cannot use as defense the non-liability of direction under the Corporation Law as the SSS Law is an exception as provided in Section 28(f) of the Social Security Law. 3. Nely T. Co v. People of the Philippines, Social Security System, Office of the Solicitor General and Spouses Jose and Mercedes Lim, G.R. No. 160265, July 13, 2009 Facts: This is a petition for review on certiorari1 of the May 15, 2003 and October 6, 2003 resolutions of the Court of Appeals (CA) in CA-G.R. SP No. 69510. An Information charging petitioner Nely T. Co with violation of Section 22(d) in relation to Section 28(e) of RA3 1161on the basis of the complaint of respondent spouses Jose and Mercedes Lim, who claimed to be petitioner’s employees. Petitioner was accused of failing to remit the compulsory contributions of respondent spouses to respondent Social Security System (SSS). A motion to quash was filed by petitioner arguing that the facts alleged did not constitute an offense as the respondents are not her employees as held in NLRC case involving the same parties. Issue and Ruling: Whether or not the herein respondent can seek coverage of the SSS Law even without an employer-employee relationship? No. Well-settled is the rule that the mandatory coverage of RA 1161, as amended, is premised on the existence of an employer-employee relationship. The RTC committed grave abuse of discretion when it refused to grant petitioner’s motion to quash the Information. Simply said, any conviction for violation of the SSS law based on the erroneous premise of the existence of an employer-employee relationship would be a transgression of petitioner’s constitutional rights. Further, the final and executor NLRC decision (to the effect that respondent spouses were not the employees of petitioner) was binding on this criminal case for violation of RA 1161, as amended pursuant to the principle of res judicata. 4. Mendoza v. People, G.R. No. 183891, October 19, 2011 Facts: Romarico Mendoza (petitioner) is a company boss/employer convicted for violating a special law known as the Social SecurityCondonation Law of 2009 for non-remittance of the Social Security Service (SSS) contributions to his employees. The offense is criminal in nature. Nevertheless, Mendoza itted his fault, as he said, he acted in good faith. The herein respondent also contended that as alleged in the information he is only a proprietor, not a director so he cannot be held personally liable pursuant to Section 28(f) of the Social Security Law which imposes penalty on: (1) the managing head; (2) directors; or (3) partners, for offenses committed by a juridical person. Issue and Ruling: Whether or not petitioner can be held liable even if he is only tagged as a proprietor?

Yes. The term "managing head" in Section 28(f) is used, in its broadest connotation, not to any specific organizational or managerial nomenclature. To heed petitioner’s reasoning would allow unscrupulous businessmen to conveniently escape liability by the creative adoption of managerial titles. While the Court affirms the appellate court’s decision, there is a need to modify the penalty imposed on petitioner. The appellate court affirmed the trial court’s imposition of penalty on the basis of Sec. 28(e) of the Social Security Act which reads: Sec. 28. Penal Clause. ─ (e) Whoever fails or refuses to comply with the provisions of this Act or with the rules and regulations promulgated by the Commission, shall be punished by a fine of not less than Five thousand pesos (P5,0000.00) nor more than Twenty thousand pesos (P5,000.00) nor more than Twenty thousand pesos (P20,000.00), or imprisonment for not less than six (6) years and one (1) day nor more than twelve (12) years or both, at the discretion of the court. x x x The proper penalty for this specific offense committed by petitioner is, however, provided in Section 28 (h) of the same Act which reads: Sec. 28. Penal Clause – (h) Any employer who after deducting the monthly contributions or loan amortizations from his employee’s compensation, fails to remit the said deductions to the SSS within thirty (30) days from the date they became due shall be presumed to have misappropriated such contributions or loan amortizations and shall suffer the penalties provided in Article Three hundred fifteen [Art. 315] of the Revised Penal Code. Decision of the Court of Appeals affirmed. 5. Chua v. CA, G.R. No. 125837, October 6, 2004. This is a petition for review of the Decision1 of the Court of Appeals in CA-G.R. CV No. 38269 dated 06 March 1996, and its Resolution dated 30 July 1996 denying petitioner’s Motion for Reconsideration,2 affirming the Order of the Social Security Commission (SSC) dated 1 February 19953 which held that private respondents were regular employees of the petitioner and ordered petitioner to pay the Social Security System (SSS) for its unpaid contributions, as well as penalty for the delayed remittance thereof. On August 20, 1985, private respondents Andres Paguio, Pablo Canale, Ruel Pangan, Aurelio Paguio, Rolando Trinidad, Romeo Tapang and Carlos Maliwat filed a petition with the SSC for SSS coverage and contributions against petitioner Reynaldo Chua, owner of Prime Mover Construction Development, claiming that they were all regular employees of the petitioner in his construction business. Private respondents alleged that petitioner dismissed all of them without justifiable grounds, and without notice to them and to the then Ministry of Labor and Employment. They further alleged that petitioner did not report them to the SSS for compulsory coverage in flagrant violation of the Social Security Act. Petitioner claimed that private respondents were not regular employees, but project employees whose work had been fixed for a specific project or undertaking the completion of which was determined at the time of their engagement. This being the case, he concluded that said employees were not entitled to coverage under the Social Security Act. Petitioner also claimed that the case has prescribed. The Court of Appeals ruled in favor of the private respondents. Issue and Ruling: Whether or not the private respondents are entitled to compulsory SSS coverage. Yes. Well-settled is the rule that the mandatory coverage of Republic Act No. 1161, as amended, is premised on the existence of an employer-employee relationship, the essential

elements of which are: (a) selection and engagement of the employee; (b) payment of wages; (c) the power of dismissal; and (d) the power of control with regard to the means and methods by which the work is to be accomplished, with the power of control being the most determinative factor. The existence of an employer-employee relationship between the parties can easily be determined by the application of the “control test.”

It is clear that private respondents are employees of petitioner, the latter having control over the results of the work done, as well as the means and methods by which the same were accomplished. Suffice it to say that regardless of the nature of their employment, whether it is regular or project, private respondents are subject of the compulsory coverage under the SSS Law, their employment not falling under the exceptions provided under Section 8(j) of the Social Security Act. In addition, private respondents’ right to file their claim had not yet prescribed at the time of the filing of their petition. Republic Act No. 1161, as amended, prescribes a period of twenty (20) years, from the time the delinquency is known or assessment is made by the SSS, within which to file a claim for non-remittance against employers. 6. Nagusara vs. NLRC, G.R. No. 117936-37. May 20, 1998 Facts: This is a petition to annul he resolution of the National Labor Relations Commission (NLRC) dated December 27, 1991 and its order dated September 29, 1994 in NLRC NCR Case No, 127287-82 & 12-7481-82. On December 31, 1982, petitioners filed a complaint against respondent Lorenzo Dy for illegal dismissal, unfair labor practice and non-payment of overtime pay, legal holiday pay and pay for holiday and rest day which was decided in favour of the petitioners stating that they were illegally dismissed and ordered respondent Dy to reinstate them. The decision also awarded to petitioners backwages and other money claims. Respondent Dy assailed the decision contending that there was no employer-employee relationship and that respondent Amurao was the real employer of petitioners because he was the one who hired them in fulfillment of his obligation to provide manpower for respondent Dys construction project thus they cannot be held liable. Issue and Ruling: Whether or not there is an employer-employee relationship? Yes. The Court held that the sub-contract between respondent Dy and respondent Amurao was merely a subterfuge to avoid respondent Dys obligations to petitioners. The records show that respondent Amurao was not a legitimate job contractor engaged in the business of contracting out services to clients. A legitimate job contractor is one who: (1) carries on an independent business and undertakes the contract work on his own under his own responsibility according to his own manner and method, free from the control and direction of his employer or principal in all matters connected with the performance of the work except as to the results thereof; and (2) has substantial capital or investment in the form of tools, equipment, machineries, work premises, and other materials which are necessary in the conduct of his business.[15] Respondent Amurao did not satisfy both requirements. It appears, instead, that respondent Amurao was also an employee of respondent Dy who was tasked to screen and to supervise the workers at respondent Dys construction project at Solmac. It is clear from the foregoing that petitioners were employees of respondent Dy.

We reject respondent Amuraos submission that petitioners were project employees. The principal test for determining whether an employee is a project employee or a regular employee is whether or not the project employee was assigned to carry out a specific project or undertaking, the duration and scope of which were specified at the time the employee was engaged for that project.[16] In the case at bar, it does not appear that respondent Dy informed petitioners at the time of their engagement about the specific project or undertaking for which they were hired, as well as the duration and scope of such project. Besides, the records show that petitioners, as carpenters, were performing activities necessary or desirable in respondent Dys business of making steel frames, windows, doors and other construction works thus considered as regular employees under Article 280 of the Labor Code. 7. Dycaico v. SSS, G.R. No. 161357, November 30, 2005 Facts: Bonifacio S. Dycaico became a member of the SSS on January 24, 1980. In his self-employed data, he named the petitioner, Elena P. Dycaico, and their 8 children as his beneficiaries. At that time, Bonifacio and Elena lived together as husband and wife without the benefit of marriage. In June 1989, Bonifacio was considered retired and began receiving his monthly pension from the SSS. He continued to receive the monthly pension until he ed away on June 19, 1997. A few months prior to his death, however, Bonifacio married the petitioner on January 6, 1997. Shortly after Bonifacios death, the petitioner filed with the SSS an application for survivors pension. Her application, however, was denied on the ground that under the Social Security Law she could not be considered a primary beneficiary of Bonifacio as of the date of his retirement. The petitioner filed with the SSC a petition alleging that the denial of her survivors pension was unjustified. She contended that Bonifacio designated her and their children as primary beneficiaries in his SSS Form RS-1 and that it was not indicated therein that only legitimate family could be made beneficiaries. The SSC promulgated its Resolution affirming the denial of the petitioners claim. The SSC refuted the petitioner’s contention that primary beneficiaries need not be legitimate family by citing the definitions of primary beneficiaries and dependents. Aggrieved, the petitioner filed with the CA a petition for review of the SSCs February 6, 2002 Resolution. In the assailed Decision, the appellate court dismissed the petition. The CA declared that since the petitioner was merely the common-law wife of Bonifacio at the time of his retirement, his designation of the petitioner as one of his beneficiaries in the SSS Form RS-1 in 1980 is void. The CA further observed that Bonifacios children with the petitioner could no longer qualify as primary beneficiaries because they have all reached 21 years of age. Issue and Ruling: Whether or not Dycaico can be considered as a beneficiary. Yes. As illustrated by the petitioners case, the proviso as of the date of his retirement in Section 12-B(d) of Rep. Act No. 8282 which qualifies the term primary beneficiaries results in the classification of dependent spouses as primary beneficiaries into two groups: (1) Those dependent spouses whose respective marriages to SSS were contracted prior to the latters retirement; and (2) Those dependent spouses whose respective marriages to SSS were contracted after the latters retirement. Underlying these two classifications of dependent spouses is that their respective marriages are valid. In other words, both groups are legitimate or legal spouses. The distinction between them lies solely on the date the marriage was contracted. The petitioner belongs to the second group of dependent spouses, i.e., her marriage to Bonifacio was contracted after his retirement. As

such, she and those similarly situated do not qualify as primary beneficiaries under Section 12B(d) of Rep. Act No. 8282 and, therefore, are not entitled to survivors pension under the same provision by reason of the subject proviso. Further, the classification of dependent spouses on the basis of whether their respective marriages to the SSS member were contracted prior to or after the latter’s retirement for the purpose of entitlement to survivors pension does not rest on real and substantial distinctions. It is arbitrary and discriminatory. It is too sweeping because the proviso as of the date of his retirement, which effectively disqualifies the dependent spouses whose respective marriages to the retired SSS member were contracted after the latter’s retirement as primary beneficiaries, unfairly lumps all these marriages as sham relationships or were contracted solely for the purpose of acquiring benefits accruing upon the death of the other spouse. Petition granted. The proviso "as of the date of his retirement" in Section 12-B(d) of Rep. Act No. 8282 is declared VOID for being contrary to the due process and equal protection clauses of the Constitution. 8. Garcesa v. Laguardia, G.R. No. 161234, April 27, 2007 Facts: This appeal seeks to reverse and set aside the Court of Appeals Resolution dated July 31, 2002, which dismissed petitioners appeal; and another dated November 5, 2003, which denied his motion for reconsideration, in CA-G.R. SP No. 71764. The appellate court dismissed the appeal of the petitioner on the ground of lack of compliance with Section 11, Rule 13, and Section 2, Rule 42 of the 1997 Revised Rules of Civil Procedure. The case involves several complaints for violation of Sections 18, 19, and 20 of Presidential Decree No. 1519,as amended, for the non-deduction and non-remittance of petitioners contributions to the Social Security System (SSS) covering the period from January 1999 to November 2000. The complaints filed by petitioner on August 13, 2001 were docketed as Criminal Cases Nos. 7479, 7483 and 7484 in the Municipal Trial Court (MTC) of San Jose, Antique. Except for the months of July and August of 1999, in which Criminal Cases Nos. 7483 and 7484 were allegedly committed, the three informations filed against Marietta E. Laguardia and Silverio Eric Lozana, for violations of Sections 18, 19, and 20 of P.D. No. 1519. The petitioner filed a motion to dismiss alleging that six weeks after the original complaints were filed in court, the respondents paid all the s required by Rep. Act No. 7875. Thereafter, the MTC issued an Orderdismissing the cases on the ground that there was no showing in the record that the coverage by the National Health Insurance Program had been made compulsory in the Province of Antique. Issue and Ruling: Whether or not in 1999 and 2000 in the Province of Antique nobody could be criminally prosecuted for non-payment of Medicare contributions The issues of nonpayment of medicare contributions as a criminal offense and the need for the conformity of the prosecutor to appeal a case are raised as issues before the Court of Appeals. The court did not pre-empt on the issue. However, it ruled that dismissal of appeals purely on technical grounds is frowned upon. In the exercise of its equity jurisdiction, we may even stay an order of such kind of dismissal, especially in this case where petitioners appeal appears worthy of the Court of Appeals full consideration prima facie on the merits. Here, the Court of Appeals could have easily required the parties to submit additional documents as might have been necessary in the interest of substantial justice, it was wrong for the Court of Appeals to peremptorily dismiss the petition for failure to explain why ed mail was resorted to, and for failure of the petitioner to attach to the petition other pleadings and material portions of the records. 9. Maceda v. Macatangay, G.R. No. 164947, January 31, 2006 Facts: Spouses Sonia Maceda and Bonifacio Macatangay, executed a Kasunduan whereby they agreed to live separately. Bonifacio soon lived with his common law wife Carmen Jaraza. When

Bonifacio died, Sonia claimed for his Social Security System (SSS) benefit, which was granted to her. However, the Social Security Commission (SSC) later ordered. Sonia to refund the benefits in favor of Encarnacion De Guzman Macatangay, Bonifacio‘s mother, and his illegitimate children, on the ground that the Kasunduan is a proof that Sonia is not dependent upon Bonifacio for . Sonia filed a petition for review before the Court of Appeals (CA). However, the same was dismissed due to their failure to explain why they failed to personally serve copies of the petition to Encarnacion which is required in Section 11, Rule 13 of the 1997 Rules of Civil Procedure. In her affidavit, Sonia explains that they resorted to service by mail due to the distant addresses of Encarnacion‘s lawyer in Lopez, Quezon and Sonia‘s counsel in Lucena City, thereby making personal service impracticable. Issue and Ruling: Whether or not the distant addresses made the personal service impracticable making the service by mail valid? If only to underscore the mandatory nature of this innovation to our set of adjective rules requiring personal service whenever practicable, Section 11 of Rule 13 then gives the court the discretion to consider a pleading or paper as not filed if the other modes of service or filing were not resorted to and no written explanation was made as to why personal service was not done in the first place. The exercise of discretion must, necessarily consider the practicability of personal service, for Section 11 itself begins with the clause “whenever practicable”. The Court thus take this opportunity to clarify that under Section 11, Rule 13 of the 1997 Rules of Civil Procedure, personal service and filing is the general rule, and resort to other modes of service and filing, the exception. Henceforth, whenever personal service or filing is practicable, in the light of the circumstances of time, place and person, personal service or filing is mandatory. Only when personal service or filing is not practicable may resort to other modes be had, which must then be accompanied by a written explanation as to why personal service or filing was not practicable to begin with. In adjudging the plausibility of an explanation, a court shall likewise consider the importance of the subject matter of the case or the issues involved therein, and the prima facie merit of the pleading sought to be expunged for violation of Section In the case at bar, the address of Encarnacion‘s counsel is Lopez, Quezon, while Sonia‘s counsel‘s is Lucena City. Lopez, Quezon is 83 kilometers away from Lucena City. Such distance makes personal service impracticable. As in Musa v. Amor, a written explanation why service was not done personally “might have been superfluous.” Without preempting the findings of the Court of Appeals on the merits of Sonia‘s petition, if Sonia‘s allegations of fact and of law therein are true and the outright dismissal of their petition is upheld without giving them the opportunity to prove their allegations, Sonia would be deprived of her rightful death benefits just because of the Kasunduan she forged with her husband Bonifacio which contract is, in the first place, unlawful. The resulting injustice would not be commensurate to Sonia‘ counsel‘s “thoughtlessness” in not explaining why Encarnacion were not personally served copies of the petition. 10. Panlilio v. RTC, G.R. No. 173846, February 2, 2011 Facts: The petitioners are corporate officers of Silahis International Hotel,Inc. (SIHI) who have filed a petition for Suspension of Payments and Rehabilitation before a commercial court. However, at the time of the filing of the petition for rehabilitation by the Silahis Hotel, there were a number of criminal charges pending against the corporate officers for violation of the SSS law. Subsequently, the officers filed with the criminal court a motion to suspend proceedings arguing that the stay order issued by the commercial court should also apply to the criminal cases then

pending. The criminal court ruled against the petitioners on the ground that the Stay Order issued by the commercial court does not cover the prosecution of criminal offenses. On appeal, the Court of Appeals confirmed the criminal court’s ruling. Hence, the petitioners filed a petition for review on certiorari before the Supreme Court. Issue and Ruling: Does the suspension of “all claims” as an incident to a corporate rehabilitation also contemplate the suspension of criminal charges filed against the corporate officers of the distressed corporation? No. Corporate rehabilitation connotes the restoration of the debtor to a position of successful operation and solvency, if it is shown that its continued operation is economically feasible and its creditors can recover more, by way of the present value of payments projected in the rehabilitation plan, if the corporation continues as a going concern than if it is immediately liquidated. It contemplates a continuance of corporate life and activities in an effort to restore and reinstate the corporation to its former position of successful operation and solvency, the purpose being to enable the company to gain a new lease on life and allow its creditors to be paid their claims out of its earnings A principal feature of corporate rehabilitation is the suspension of claims against the distressed corporation. The rehabilitation of SIHI and the settlement of claims against the corporation is not a legal ground for the extinction of petitioners’ criminal liabilities. There is no reason why criminal proceedings should be suspended during corporate rehabilitation, more so, since the prime purpose of the criminal action is to punish the offender in order to deter him and others from committing the same or similar offense, to isolate him from society, reform and rehabilitate him or, in general, to maintain social order. As correctly observed in Rosario, it would be absurd for one who has engaged in criminal conduct could escape punishment by the mere filing of a petition for rehabilitation by the corporation of which he is an officer. The prosecution of the officers of the corporation has no bearing on the pending rehabilitation of the corporation, especially since they are charged in their individual capacities. Such being the case, the purpose of the law for the issuance of the stay order is not compromised, since the appointed rehabilitation receiver can still fully discharge his functions as mandated by law. It bears to stress that the rehabilitation receiver is not charged to defend the officers of the corporation. If there is anything that the rehabilitation receiver might be remotely interested in is whether the court also rules that petitioners are civilly liable. Such a scenario, however, is not a reason to suspend the criminal proceedings, because as aptly discussed in Rosario, should the court prosecuting the officers of the corporation find that an award or indemnification is warranted, such award would fall under the category of claims, the execution of which would be subject to the stay order issued by the rehabilitation court. The penal sanctions as a consequence of violation of the SSS law, in relation to the revised penal code can therefore be implemented if petitioners are found guilty after trial. However, any civil indemnity awarded as a result of their conviction would be subject to the stay order issued by the rehabilitation court. Only to this extent can the order of suspension be considered obligatory upon any court, tribunal, branch or body where there are pending actions for claims against the distressed corporation. Congress has recently enacted Republic Act No. 10142, or the Financial Rehabilitation and Insolvency Act of 2010. Section 18 thereof explicitly provides that criminal actions against the individual officer of a corporation are not subject to the Stay or Suspension Order in rehabilitation proceedings. Furthermore, the Court pointed out that Congress has recently enacted Republic Act No. 10142, or the Financial Rehabilitation and Insolvency Act of 2010 where Section 18 thereof

explicitly provides that criminal actions against the individual officer of a corporation are not subject to the Stay or Suspension Order in rehabilitation proceedings.

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