Primary Holding

The Supreme Court upheld that as the only surviving director of the now-dissolved Impact Corporation, Immaculada L. Garcia was liable for unpaid Social Security System (SSS) contributions and penalties imposed under the Social Security Law.

Background

Impact Corporation, a manufacturer of aluminum tube containers, experienced financial difficulties in 1978, leading to labor unrest and eventual cessation of operations. Despite collecting SSS contributions from its employees, the company failed to remit them. The SSS pursued legal actions to recover the unremitted contributions.

Facts

• 1. Impact Corporation deducted SSS contributions from employee salaries but failed to remit them due to financial difficulties.
• 2. The company's assets were sold off, and it ceased operations, leaving liabilities unpaid.
• 3. The Social Security Commission declared Garcia and other directors liable for unremitted contributions and penalties.
• 4. Garcia argued that she ceased being a director in 1982 and was not involved in company operations.

Arguments of the Petitioners

• 1. Only managing heads, not ordinary directors, are liable under the Social Security Law.
• 2. She ceased to be a director in 1982 and had no managerial role in the company.
• 3. Liability for unpaid contributions falls solely on the corporation, not individual directors.
• 4. The corporation's financial issues constituted a fortuitous event absolving her of liability.

Arguments of the Respondents

• 1. The Social Security Law holds directors liable for unremitted contributions.
• 2. Garcia was a director during the period when contributions were collected but not remitted.
• 3. The corporation's dissolution does not absolve directors from liability.
• 4. Failure to remit contributions undermines the SSS system and violates public policy.

Issues

• 1. Can Garcia, as a director, be personally held liable for unremitted SSS contributions?
• 2. Does Section 28(f) of the Social Security Law apply only to managing heads or also to directors in general?
• 3. Does the corporation’s financial collapse constitute a fortuitous event exempting Garcia from liability?

Ruling

• 1. The Supreme Court ruled that Garcia, as a director during the relevant period, was liable for the unremitted contributions and penalties.
• 2. Section 28(f) of the Social Security Law clearly includes directors, not just managing heads, as personally liable for violations.
• 3. The corporation's financial difficulties did not absolve Garcia of liability for statutory violations.

Doctrines

• 1. Social Security Law (Section 28(f)): Directors or officers of a corporation are liable for SSS violations.
• 2. Piercing the Corporate Veil: Corporate officers may be held personally liable when the corporate entity is used to evade legal obligations.
• 3. Statutory Construction: The clear and unambiguous provisions of the Social Security Law must be applied as written.

Key Excerpts

• 1. "The sympathy of the law on social security is toward its beneficiaries. This Court will not turn a blind eye on the perpetration of injustice."
• 2. "When the law is unambiguous and unequivocal, application, not interpretation, is imperative."

Precedents Cited

• 1. Laguna Transportation Co., Inc. v. Social Security System (107 Phil. 833): Highlighted that corporate fiction cannot be used to subvert justice.
• 2. Uichico v. NLRC (339 Phil. 242): Reinforced the principle of corporate officer liability in specific circumstances.

Statutory and Constitutional Provisions

• 1. Social Security Law: Sections 18, 19, 22, 28(f)
• 2. Corporation Code: Section 31, governing the liability of corporate directors and officers.