Ambassador Hotel v. Social Security System
REITERATIONFacts
The Antecedents: Ambassador Hotel, Inc. (Ambassador Hotel) and its officers were charged with non-remittance of Social Security System (SSS) contributions and penalties for the period of June 1999 to March 2001, amounting to P769,575.48. The SSS filed a complaint after discovering the delinquency through an examination of the hotel's records, which indicated the last payment was made in May 1999. Despite assessments, billing letters, and demand letters, the hotel failed to fully comply with its obligations. Procedural History: The City Prosecutor's Office of Quezon City filed an Information on January 28, 2004, charging Ambassador Hotel, Inc., its President Yolanda Chan, and Treasurer Alvin Louie Rivera with violation of R.A. No. 1161, as amended by R.A. No. 8282. Only Yolanda was arrested and pleaded not guilty. The Regional Trial Court (RTC), Branch 218, Quezon City, acquitted Yolanda of criminal liability, finding she was not performing her presidential duties during the period in question. However, the RTC held Ambassador Hotel civilly liable for P584,804.00. Ambassador Hotel appealed the civil liability ruling, arguing the RTC lacked jurisdiction over its person. The Court of Appeals (CA) affirmed the RTC's decision in its entirety, holding that the civil liability was deemed instituted with the criminal case and that Ambassador Hotel had not been deprived of due process. The CA denied Ambassador Hotel's motion for reconsideration. The Petition: Ambassador Hotel filed a petition for review on certiorari under Rule 45 of the Rules of Court, seeking to reverse the CA's decision. The hotel argued that the RTC did not acquire jurisdiction over its person because it was not a party to the criminal case and no summons was issued to it. It further contended that it was deprived of due process. The SSS countered that under R.A. No. 8282, the arrest of the managing head (Yolanda, as President) was sufficient to acquire jurisdiction over the corporation, and that the civil liability of the hotel was deemed instituted with the criminal action, surviving Yolanda's acquittal.
Issue(s)
Whether or not the lower court acquired jurisdiction over the person of the petitioner (Ambassador Hotel, Inc.). Whether or not petitioner was deprived of due process when the lower court declared it liable to respondent SSS even though it is not a party to the case. Whether or not the decision rendered by the lower court declaring petitioner liable to respondent Social Security System for alleged unremitted SSS contributions is valid.
Ruling
The petition is bereft of merit. The July 29, 2010 Decision and October 18, 2010 Resolution of the Court of Appeals in CA-G.R. CV No. 87948 are affirmed with modification that the judgment award shall earn interest at the rate of six percent (6%) per annum from the date of finality until fully paid.
Ratio Decidendi
On the issue of jurisdiction over the petitioner: The Court held that jurisdiction over Ambassador Hotel, a juridical entity, was acquired through the arrest of its managing head, Yolanda Chan, as provided under Section 28(f) of R.A. No. 8282. This provision makes the managing head, directors, or partners personally liable for the offenses committed by the corporation. The arrest of Yolanda, the President, was sufficient to confer jurisdiction over both her person and the corporation. The Court emphasized that a juridical entity cannot be arrested, hence the arrest of its representative is the legal mechanism to establish jurisdiction. No separate service of summons was required for the hotel as the law deems it included in the criminal action through its managing head. The Court reiterated that jurisdiction attaches at the time of the filing of the case and is not divested by subsequent events, such as the acquittal of the officer, as long as the fact from which civil liability might arise did not cease to exist. On the issue of denial of due process: The Court found that Ambassador Hotel was not deprived of due process. The SSS had informed the hotel of its delinquency multiple times even before the case was filed. During the trial, its directors and officers were notified, and its own lawyer testified on its behalf. Ambassador Hotel was given ample opportunity to present its defense and controvert the prosecution's evidence. The Court noted that the hotel's defense focused on Yolanda's inability to perform her duties, which, while negating her criminal liability, did not justify the non-payment of SSS contributions. The hotel failed to present evidence of remittance or to squarely address its obligation, thus failing to discharge its burden of proof. On the validity of the decision declaring petitioner liable: The Court affirmed the validity of the RTC's decision holding Ambassador Hotel civilly liable. The Court reiterated that the payment of SSS contributions is mandatory under R.A. No. 8282. The prosecution, through the testimony of De Ocampo and supporting documents, established Ambassador Hotel's failure to remit contributions from June 1999 to March 2001. The hotel's defense did not sufficiently controvert this evidence. The Court found a preponderance of evidence showing the hotel's failure to remit contributions amounting to ₱584,804.00. The acquittal of Yolanda did not extinguish the civil liability of Ambassador Hotel because the RTC did not declare that the fact from which the civil liability might arise did not exist. The civil action for recovery of contributions was deemed instituted with the criminal action.
Main Doctrine
A corporation's separate juridical personality does not shield it from liability for non-remittance of SSS contributions; its managing head, directors, or partners are personally liable under R.A. No. 8282. Jurisdiction over the corporation in a criminal case is acquired through the arrest of its managing head, and this jurisdiction, once attached, is not divested by subsequent events, such as the acquittal of the officer, which do not negate the existence of the civil liability.