ACQUITTAL OF COMPANY PRESIDENT FROM CRIMINAL CASE DOES NOT EXTINGUISH THE CIVIL LIABILITY OF COMPANY FOR UNPAID SSS CONTRIBUTIONS WITHOUT THE TRIAL COURT DECLARING ON THE CONTRARY

Acquittal of company President from the criminal case does not extinguish the civil liability of the company since the RTC did not declare in its judgment that the fact from which the civil liability might arise did not exist.

Ambassador Hotel, Inc. vs. Social Security System
G.R. No. 194137, June 21, 201

Facts:

The SSS filed a complaint with the City Prosecutor’s Office of Quezon City against Ambassador Hotel, Inc. (Ambassador Hotel) and its officers for non-remittance of SSS contributions and penalty liabilities for the period from June 1999 to March 2001 in the aggregate amount of P769,575.48.

After preliminary investigation, the City Prosecutor’s Office filed an Information before the RTC charging Ambassador Hotel, Inc.’s Yolanda Chan (Yolanda), as President and Chairman of the Board and its Treasurer and Head of the Finance Department, with violation of Section 22(a), in relation to Section 22(d) and Section 28(e) of Republic Act (R.A.) No. 1161, as amended by R.A. No. 8282. Only Yolanda was arrested. Upon arraignment, she pleaded not guilty. Thereafter, trial ensued.

Maria Rezell De Ocampo (De Ocampo) was assigned to investigate the account of Ambassador Hotel. In the course of her investigation, she discovered that the hotel was delinquent in its payment of contributions for the period from June 1999 to March 2001, as an examination of the hotel’s records revealed that its last payment was made in May 1999. Thereafter, De Ocampo prepared a delinquency assessment and a billing letter for Ambassador Hotel. She visited Ambassador Hotel, where a certain Guillermo Ciriaco (Ciriaco) assisted her. De Ocampo then informed Ciriaco of the hotel’s delinquency. She showed him the assessment, billing letter, and letter of authority. De Ocampo also requested for the records of previous SSS payments, but the same could not be produced. Thus, she told Ciriaco that Ambassador Hotel had to comply with the said request within fifteen (15) days.

The Cluster Legal Unit issued a final demand letter to Ambassador Hotel. De Ocampo sent the final demand letter to Ambassador Hotel via registered mail. She also returned to the hotel to personally serve the said letter.

De Ocampo concluded that based on the actual assessment and documents submitted, the unpaid contributions of Ambassador Hotel from June 1999 to March 2001 amounted to P303,459.00. On the other hand, Simeon Nicolas Chan (Simeon) testified that he was the President of Ambassador Hotel from 1971 until he was replaced in 1998; and that on April 25, 1998, her daughter, Yolanda, became the President of the hotel pursuant to Board Resolution No. 7, series of 1998.

For their part, the defense alleged that Yolanda was elected as President of Ambassador Hotel on April 25, 1998. Simeon, however, prevented her from assuming her office and performing her functions as President. Consequently, she filed a case for grave coercion and grave threats against Simeon and his allies.

Accordingly, Yolanda argued that because she was not performing the functions as the President of Ambassador Hotel from April 25, 1998 until April 10, 2001, she could not be held criminally liable for the non-payment of SSS contributions from June 1999 to March 2001.

RTC Ruling:

The RTC held that Yolanda could not be held criminally liable for the non-payment of SSS contributions because she was not performing the duties of the hotel’s president from June 1999 to March 2001.

It opined that Yolanda could not be considered as the managing head of the hotel within the purview of Section 28(f) of R.A. No. 8282; thus, she was not criminally accountable. The RTC, however, ruled that the acquittal of Yolanda did not absolve Ambassador Hotel from its civil liabilities.

Thus, the RTC concluded that Ambassador Hotel must pay SSS in the amount of P584,804.00 as contributions for SSS Medicare and Employee Compensation, including 3% penalties thereon.

Aggrieved, Ambassador Hotel filed an appeal insofar as the civil liability is concerned. It alleged that the RTC did not acquire jurisdiction over its person because it was not a party in the said case.

Books by Atty. Elvin Villanueva

CA Ruling:

The CA affirmed in toto the R TC ruling. It held that the payment of SSS contributions is mandatory and its non-payment results in criminal prosecution. The appellate court stated that every criminal liability carries with it civil liability. As Ambassador Hotel neither waived nor reserved its right to institute a separate civil case, it was deemed instituted in the criminal case.

The CA opined that the acquittal of Yolanda did not extinguish the civil action against Ambassador Hotel as the R TC did not declare that the fact from which the civil liability might arise did not exist. Moreover, it underscored that Ambassador Hotel was not deprived of due process as its directors and officers were informed numerous times regarding its delinquency and the pending case filed against it.

The CA concluded that Ambassador Hotel was given every opportunity to contest its obligation with the SSS yet it did nothing. Ambassador Hotel moved for reconsideration, but its motion was denied.

Hence, the petition.

Issue/s:

Whether or not acquittal of the company President extinguishes the civil liability of the company for the SSS contributions

Whether or not acquittal of the company President from criminal case deprives the court of jurisdiction on the civil liability if the company is not impleaded in the criminal action

SC Ruling:

The SC did not find merit in the petition.

The SC ruled that it is a basic rule that when a criminal action is instituted, the civil action for the recovery of civil liability arising from the offense charged shall be deemed instituted with the criminal action unless the offended party waives the civil action, reserves the right to institute it separately, or institutes the civil action prior to the criminal action.

Necessarily, when the Information was filed with the R TC, the civil action against Ambassador Hotel for the recovery of civil liability arising from the non-remittance of SSS contributions was deemed instituted therein. Further, 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.

When Yolanda was acquitted in the criminal case because it was proven that she did not perform the functions of the president from June 1999 to March 2001, it did not result in the dismissal of the civil case against Ambassador Hotel. The RTC did not declare in its judgment that the fact from which the civil liability might arise did not exist. Thus, the civil action, deemed impliedly instituted in the criminal case, remains.

The SC held that it is a well-settled rule that the jurisdiction of a court depends upon the state of facts existing at the time it is invoked, and if the jurisdiction once attaches to the person and subject matter of the litigation, the subsequent happening of events, although they are of such a character as would have prevented jurisdiction from attaching in the first instance, will not operate to oust jurisdiction already attached.

Also, it is fundamental that 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 the trial, much less by the trial judge’s personal appraisal of the affidavits and exhibits attached by the fiscal to the record of the case without hearing the parties and their witnesses nor receiving their evidence at a proper trial.

The more logical and orderly approach is for the court to determine 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. Once jurisdiction attaches, it shall not be removed from the court until the termination of the case.