Case Digest

for
Social
Legislation
Neil Bryan N. Moninio
M6

School Year 2016

1. ANTONIO TAN, DANILO DOMINGO and ROBERT LIM VS. AMELITO BALLENA
et. Al. G.R. No. 168111
July 4, 2008
The factual and procedural antecedents of the case are as follows:
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 Joint 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 administrative
officer, respectively.
The Complaint-Affidavit alleged that the company did not regularly report the
respondent employees for membership 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 their Joint Counter-Affidavit, petitioners Tan
and Domingo blamed the economic distress that beset their company for their failure to
timely pay and update the monthly SSS contributions of the employees. They alleged
that the company's dire situation became even more aggravated when the buildings and
equipment of Footjoy were destroyed by fire on 4 February 2001. This incident
eventually led to the cessation of the company's operations. Because of this, some of
the company's employees tried to avail themselves of their SSS benefits but failed to do
so. It was then that the employees filed their complaint. Petitioners Tan and Domingo
thereafter underlined their good faith and lack of criminal culpability when they
acknowledged their fault and demonstrated their willingness to pay their obligations by
executing a memorandum of agreement with the SSS.
DOJ favored herein Petitioners, thus, Respondents claimed that the DOJ committed
grave abuse of discretion amounting to lack or excess of jurisdiction in finding that no
probable cause existed to charge petitioners Tan, Domingo and Lim with violations of
the SSS Law; that the allegation of petitioners' failure to report respondents to the SSS
for coverage is not supported by evidence; and that charges [for the violation] of a
special law such as the Social Security Act can be overcome by a show of good faith
and lack of intent to commit the same.
CA reversed the contention of DOJ. In reversing the DOJ resolutions, the Court of
Appeals ruled that the agency acted with grave abuse of discretion when it committed a
palpable mistake in dismissing the charges against petitioners. The appellate court
found that petitioners were indeed remiss in their duty to remit the respondents' SSS
contributions in violation of Section 28(h) of the Social Security Law. The petitioners'
claim of good faith and the absence of criminal intent should not have been considered,
as these were evidentiary in nature and should thus be more properly proved in a trial.
Furthermore, the appellate court declared that said defenses are unavailing in crimes
punishable by a special law, which are characterized as mala prohibita. In these crimes,

it is enough that they were done freely and consciously and that the intent to commit the
same need not be proved.
RULING:
This Court finds no fault in the assailed actions of the Court of Appeals.
After carefully reviewing the records of this case, we agree with the Court of Appeals'
findings that there was indeed probable cause to indict petitioners for the offenses
charged.
In a preliminary investigation, a full and exhaustive presentation of the parties' evidence
is not required, but only such as may engender a well-grounded belief that an offense
has been committed and that the accused is probably guilty thereof. Certainly, it does
not involve the determination of whether or not there is evidence beyond reasonable
doubt pointing to the guilt of the person. Only prima facie evidence is required; or that
which is, on its face, good and sufficient to establish a given fact, or the group or chain
of facts constituting the party's claim or defense; and which, if not rebutted or
contradicted, will remain sufficient. Therefore, matters of evidence are more
appropriately presented and heard during the trial.
In the present case, petitioners were charged with violations of the SSS Law for their
failure to either promptly report some of the respondents for compulsory
coverage/membership with the SSS or remit their SSS contributions and loan
amortizations. In support of their claims, respondents have attached unto their Joint
Complaint-Affidavit a summary of their unreported and unremitted SSS contributions, as
gathered from the SSS Online Inquiry System, and a computation of their unreported
and unremitted SSS contributions.
On the part of the petitioners, they have not denied their fault in not remitting the SSS
contributions and loan payments of the respondents in violation of Section 28,
paragraphs (e), (f) and (h) of the SSS Law. Instead, petitioners interposed the defenses
of lack of criminal intent and good faith, as their failure to remit was brought about by
alleged economic difficulties, and they have already agreed to settle their obligations
with the SSS through a memorandum of agreement to pay in installments. 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 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' admission 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.
Applicable SSS Provisions:
SEC. 9. Coverage. - (a) Coverage in the SSS shall be compulsory upon all
employees not over sixty (60) years of age and their employers: x x x Provided,

finally, That nothing in this Act shall be construed as a limitation on the right of
employers and employees to agree on and adopt benefits which are over and
above those provided under this Act.
SEC. 10. Effective Date of Coverage. - Compulsory coverage of the employer
shall take effect on the first day of his operation and that of the employee on the
day of his employment: x x x.
SEC. 22. Remittance of Contributions. -- (a) The contribution imposed in the
preceding section shall be remitted to the SSS within the first ten (10) days of
each calendar month following the month for which they are applicable or within
such time as the Commission may prescribe. Every employer required to deduct
and to remit such contributions shall be liable for their payment and if any
contribution is not paid to the SSS as herein prescribed, he shall pay besides the
contribution a penalty thereon of three percent (3%) per month from the date the
contribution falls due until paid. If deemed expedient and advisable by the
Commission, the collection and remittance of contributions shall be made
quarterly or semi-annually in advance, the contributions payable by the
employees to be advanced by their respective employers: Provided, That upon
separation of an employee, any contribution so paid in advance but not due shall
be credited or refunded to his employer.
(b) The contributions payable under this Act in cases where an employer refuses
or neglects to pay the same shall be collected by the SSS in the same manner as
taxes are made collectible under the National Internal Revenue Code, as
amended. Failure or refusal of the employer to pay or remit the contributions
herein prescribed shall not prejudice the right of the covered employee to the
benefits of the coverage.
The right to institute the necessary action against the employer may be
commenced within twenty (20) years from the time the delinquency is known or
the assessment is made by the SSS, or from the time the benefit accrues, as the
case may be.
(c) Should any person, natural or juridical, defaults in any payment of
contributions, the Commission may also collect the same in either of the following
ways:
1. By an action in court, which shall hear and dispose of the case in
preference to any other civil action; x x x.
SEC. 24. Employment Records and Reports. (b) Should the employer misrepresent the true date of employment of the
employee member or remit to the SSS contributions which are less than
those required in this Act or fail to remit any contribution due prior to the
date of contingency, resulting in a reduction of benefits, the employer shall
pay to the SSS damages equivalent to the difference between the amount
of benefit to which the employee member or his beneficiary is entitled had
the proper contributions been remitted to the SSS and the amount payable
on the basis of the contributions actually remitted:

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 (P5,000.00) 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: Provided, That, where the violation
consists in failure or refusal to register employees or himself, in case of
the covered self-employed, or to deduct contributions from the employees'
compensation and remit the same to the SSS, the penalty shall be a fine
of not less Five thousand pesos (P5,000.00) nor more than Twenty
thousand pesos (P20,000.00) and imprisonment for not less than six (6)
years and one (1) day nor more than twelve (12) years.
(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.
(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 of the Revised Penal Code.

2. IMMACULADA
COMMISSION
SECURITY

L. GARCIA v. SOCIAL SECURITY

LEGAL AND COLLECTION, SOCIAL
SYSTEM,

G.R. No. 170735 December 17, 2007

Facts: Petitioner Immaculada L. Garcia, et.al. were directors of Impact Corporation.

Impact Corporation started encountering financial problems. Impact Corporation filed
with the Securities and Exchange Commission (SEC) a Petition for Suspension of
Payments. The company is directed to pay all the entitled workers unpaid wages,
unpaid 13th month pay and to remit to the Social Security System loan amortizations
and SSS premiums previously deducted from the wages of the workers. The Social
Security System (SSS), through its Legal and Collection Division (LCD), filed a case
before the SSC for the collection of unremitted SSS premium contributions withheld by
Impact Corporation from its employees. Petitioner avers that under the aforesaid
provision, the liability does not include liability for the unremitted SSS premium
contributions.

Issue: WON petitioner can be made solely liable for the corporate obligations of Impact
Corporation pertaining to unremitted SSS premium contributions and penalties
therefore.

Held: Clearly, a simplistic interpretation of the law is untenable. It is a rule in statutory

construction that every part of the statute must be interpreted with reference to the
context, i.e., that every part of the statute must be considered together with the other
parts, and kept subservient to the general intent of the whole enactment.[23] The liability
imposed as contemplated under the foregoing Section 28(f) of the Social Security Law
does not preclude the liability for the unremitted amount. Relevant to Section 28(f) is
Section 22 of the same law Petitioner Immaculada L. Garcia, as sole surviving director
of Impact Corporation is hereby ORDERED to pay for the collected and unremitted SSS
contributions of Impact Corporation. The case is REMANDED to the SSS for
computation of the exact amount and collection thereof.

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

FACTS:
Petitioner was accused of failing to remit the compulsory contributions of
respondent spouses to respondent Social Security System (SSS).
Prior to this, on March 27, 2000 (before the filing of the Information), respondent
spouses had filed a labor case for illegal dismissal and nonpayment of overtime pay,
holiday pay, holiday premium pay, service incentive leave and 13 th month pay against
Ever-Ready Phils., Inc. and its officers Joseph Thomas Co, William Co, Wilson Co and
petitioner.
On September 29, 2000, labor arbiter (LA) Ernesto S. Dinopol rendered a decision
dismissing the complaint for lack of merit. He held that respondent spouses had
voluntarily left the company as shown by the deeds of release and quitclaim they
executed. They were also not entitled to their monetary claims under Article 82 of the
Labor Code because they were field personnel of the company.
In a resolution dated May 31, 2001, it affirmed the decision of the LA and ruled that the
respondent spouses, as sales representatives, were independent contractors.
Therefore, there was no employer-employee relationship between the parties. This
NLRC resolution attained finality on December 20, 2001.

ISSUE:
Whether or not the respondent spouses were entitled to coverage under RA 1161?

Held:
The final and executory 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.

Well-settled is the rule that the mandatory coverage of RA 1161, as amended, is

premised on the existence of an employer-employee relationship. There being no
employer-employee relationship, respondent spouses were not entitled to coverage
under RA 1161, as amended, and petitioner should not be penalized under said law.

4. ROMARICO J. MENDOZA, v. PEOPLE OF THEPHILIPPINES, G.R. No. 183891

FACTS:
Romarico J. Mendoza is the president of Summa Alta Tierra Industries, Inc.
(SATII) who is required to remit the Social Security System (SSS) premium contributions
of his employees.
The monthly premium contributions of SATII employees to SSS which petitioner
admittedly failed to remit covered the period August 1998 to July 1999 amounting
toP421,151.09 inclusive of penalties.
After petitioner was advised by the SSS to pay the above-said amount, he
proposed to settle it over a period of 18 months which proposal the SSS approved by
Memorandum of September 12, 2000.
Despite the grant of petitioners request for several extensions of time to settle the
delinquency in installments, petitioner failed, hence, his indictment.
Petitioner sought to exculpate himself by explaining that during the questioned period,
SATII shut down due to the general decline in the economy.]
The trial court finds the petitioner guilty and ordered to pay the Social Security System
the unpaid premium contributions of his employees including the penalties in the sum
of P421, 151.09.
The Court of Appeals affirmed the trial courts decision, by Decision of July March
5, 2007, it noting that the Social Security Act is a special law, hence, lack of criminal
intent or good faith is not a defense in the commission of the proscribed act.
Issue: Whether or not the managing head or president or general manager of a
corporation is not among those specifically mentioned as liable in the above-quoted
Section 28(f).
HELD:
Remittance of contribution to the SSS under Section 22(a) of the Social Security
Act is mandatory. Failure to comply with the law being malum prohibitum, intent to
commit it or good faith is immaterial.
The provision of the law being clear and unambiguous, petitioners interpretation that a
proprietor, as he was designated in the Information, is not among those specifically

mentioned under Sec. 28(f) as liable, does not lie. For the word connotes management,
control and power over a business entity.
The term managing head in Section 28(f) is used, in its broadest connotation, not to any
specific organizational or managerial nomenclature. To heed petitioners reasoning
would allow unscrupulous businessmen to conveniently escape liability by the creative
adoption of managerial titles.

5. Chua vs. Court of Appeals, G.R. No. 125837, October 6, 2004.

Facts:
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:
Whether or not the private respondents are entitled to compulsory SSS coverage.
Held:
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. FRANCISCO U. NAGUSARA, MARQUITO L. PAMILARA, and DIOSCORO D.

CRUZ, petitioners, vs. THE NATIONAL LABOR RELATIONS COMMISSION,
LORENZO DY AND OTHERS, and ISAYAS AMURAO, respondents. G.R. No.
117936-37

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 premium pay for holiday and rest day.
On June 29, 1988, Labor Arbiter Felipe T. Garduque II issued a decision holding that the
termination of petitioners services was illegal. It, however, found petitioners claim for
overtime pay, legal holiday pay and premium pay for holiday and rest day to be
unfounded. All other money claims are hereby dismissed for lack of merit.
On appeal, the NLRC dismissed the complaint on the ground that there was no
employer-employee relationship between petitioners and respondent Dy. It held that
respondent Dy was only an indirect employer of petitioners as they were actually
employed by respondent Amurao whom respondent Dy sub-contracted to provide labor
for his construction project. It also declared that petitioners were not illegally dismissed.

Issue: Whether petitioners were illegally dismissed, thus entitled to benefits?

Held:
We are not convinced. respondent Dy merely presented his own affidavit and that of
respondent Amurao stating that petitioners were drinking within the premises by the
owner of Solmac. He did not present any other witness to substantiate the statements
contained in the affidavits.
Dismissal is the ultimate penalty that can be meted to an employee. For dismissal to be
legal, it must be based on just cause which must be supported by clear and convincing
evidence.
As a rule, employees who are illegally dismissed are entitled to backwages and
reinstatement to their former position without loss of seniority rights. There are
instances, however, where reinstatements is no longer viable as where the business of
the employer has closed, or where the relations between the employer and the

employee have been so severely strained that it is not advisable to order reinstatement,
or where the employee decides not to be reinstated. In such events, the employer will
instead be ordered to pay separation pay.
The court hereby order the private respondent to pay petitioners their separation pay
and backwages.

7. ELENA P. DYCAICO v. SOCIAL SECURITY SYSTEM and

SOCIAL SECURITY COMMISSION

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 passed
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 members could be made beneficiaries. The SSC promulgated its Resolution affirming the denial of
the petitioners claim. The SSC refuted the petitioners contention that primary beneficiaries need not be legitimate
family members 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.
Issue: W/N there is a violation of the equal protection clause of the Constitution.
Held: Yes. Classifying dependent spouses and determining their entitlement to survivors pension based on whether
the marriage was contracted before or after the retirement of the other spouse bears no relation to the achievement of
the policy objective of the law. Indeed, the SC does not find substantial distinction between spouses whose
assignment as a beneficiary was made after the marriage and spouses whose assignment as a beneficiary was made
before the marriage. The statute violates equal protection clause when it grants surviving pensions only to the
spouses belonging to the former case and not to than the latter. 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 members were contracted prior to the latters
retirement; and
(2) Those dependent spouses whose respective marriages to SSS members 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 12-B(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 latters 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 latters

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.

8. REY GARCESA v MARIETTA E. LAGUARDIA, SILVERIO ERIC LOZANA and

PEOPLE OF THE PHILIPPINES
FACTS:
Petitioner Rey Garcesa filed a case against MARIETTA E. LAGUARDIA and ERIC E.
LOZANA involving several complaints for violation of Sections 18, 19, and 20of
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.
Upon order of the trial court, petitioner then filed several amended criminal complaints
for violation of Sections 28and 44 of Republic Act No. 7875, also for the non-deduction
and non-remittance of petitioners SSS and Medicare contributions covering the period
from January 1999 to November 2000. These amended complaints were likewise
similarly worded except for the months these allegedly happened.
The MTC issued an Order dismissing 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.
The RTC rendered a Decision affirming the Order of dismissal of the MTC.
The appellate court affirmed the actions taken by the RTC.

Issue: Is nonpayment of medicare contribution a criminal offense in Antique in 1999 and

2000?
Held:
The Court of Appeals is DIRECTED to reinstate the petition and continue without delay
the proceedings as the facts and the law would warrant.

On the issues of nonpayment of medicare contributions as a criminal offense and the

need for the conformity of the prosecutor to appeal a case, we note that these two
issues are raised as issues before the Court of Appeals. We shall not preempt the
appellate court on these.

9. SONIA MACEDA and GEMMA MACEDA-MACATANGAY v. ENCARNACION DE

GUZMAN VDA. DE MACATANGAY
481 SCRA 415 (2006), THIRD DIVISION
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,
Bonifacios mother, and his illegitimate children, on the ground that the Kasunduan is a
proof that Sonia is not dependent upon Bonifacio for support.
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
ofCivil Procedure. In her affidavit, Sonia explains that they resorted to service by mail
due to the distant addresses of Encarnacions lawyer in Lopez, Quezon and Sonias
counsel in Lucena City, thereby making personal service impracticable.
ISSUE:
Whether or not the distant addresses made the personal service impracticable making
the service by mail valid
HELD:
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
itselfbegins 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 11.
In the case at bar, the address of Encarnacions counsel is Lopez, Quezon, while
Sonias counsels 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 Sonias
petition, if Sonias 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 counsels
thoughtlessness in not explaining why Encarnacion were not personally served copies
of the petition.

G.R. No. 173846

February 2, 2011

10. JOSE MARCEL PANLILIO, ERLINDA PANLILIO, NICOLE MORRIS and MARIO T.
CRISTOBAL, Petitioners,
vs.
REGIONAL TRIAL COURT, BRANCH 51, CITY OF MANILA, represented by HON.
PRESIDING JUDGE ANTONIO M. ROSALES; PEOPLE OF THE PHILIPPINES; and
the SOCIAL SECURITY SYSTEM, Respondents.
FACTS:
Jose Marcel Panlilio, ErlindaPanlilio, Nicole Morris and Marlo Cristobal (petitioners), as
corporate officers of Silahis International Hotel, Inc. (SIHI), filed with the Regional Trial
Court (RTC) of Manila, Branch 24, a petition for Suspension of Payments and
Rehabilitation. The RTC of Manila, Branch 24, issued an Order staying all claims
against SIHI upon finding the petition sufficient in form and substance. At the time,
however, of the filing of the petition for rehabilitation, there were a number of criminal
charges pending against petitioners in Branch 51 of the RTC of Manila. These criminal
charges were initiated by respondent Social Security System (SSS) and involved
charges of Estafa. Consequently, petitioners filed with the RTC of Manila, Branch 51, a
Manifestation and Motion to Suspend Proceedings. Petitioners argued that the stay
order issued by Branch 24 should also apply to the criminal charges pending in Branch
51. Petitioners, thus, prayed that Branch 51 suspend its proceedings until the petition
for rehabilitation was finally resolved but Branch 51 issued an Order denying petitioners
motion to suspend the proceedings. It ruled that the stay order issued by Branch 24 did
not cover criminal proceedings. Branch 51 then denied the motion for reconsideration
filed by petitioners. Petitioners filed a petition for certiorari with the CA assailing the
Order of Branch 51 but the CA issued a Decision denying the petition. Hence petitioners
filed before the Supreme Court a petition for review on certiorari.
ISSUE:
Whether or not the suspension of "all claims" as an incident to a corporate rehabilitation
also includes the suspension of criminal charges filed against the corporate officers of
the distressed corporation.
RULING:

No, the criminal charges are not included.

The Supreme Court DENIED the petition and AFFIRMED the Decision of the Court of
Appeals. The Regional Trial Court of Manila, Branch 51, was ORDERED to proceed
with the criminal cases filed against petitioners.
In Rosario v. Co24 (Rosario), a case of recent vintage, the issue resolved by the Court
was whether or not during the pendency of rehabilitation proceedings, criminal charges
for violation of Batas PambansaBilang 22 should be suspended and it was ruled that
the filing of the case for violation of B.P. Blg. 22 is not a "claim" that can be
enjoined within the purview of P.D. No. 902-A. True, although conviction of the
accused for the alleged crime could result in the restitution, reparation or indemnification
of the private offended party for the damage or injury he sustained by reason of the
felonious act of the accused, nevertheless, prosecution for violation of B.P. Blg. 22 is a
criminal action.
A criminal action has a dual purpose, namely, the punishment of the offender and
indemnity to the offended party. The dominant and primordial objective of the criminal
action is the punishment of the offender. The civil action is merely incidental to and
consequent to the conviction of the accused. The reason for this is that criminal actions
are primarily intended to vindicate an outrage against the sovereignty of the state and to
impose the appropriate penalty for the vindication of the disturbance to the social order
caused by the offender. On the other hand, the action between the private complainant
and the accused is intended solely to indemnify the former.
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.