ANSWER TO INQUIRIES ON THE NON-PAYMENT OF MANDATORY

WITHHOLDING TAXES AND NON-REMITTANCE OF COMPULSORY

PREMIUMS OF DISMISSED JUDGES BY THE OFFICE OF THE
COURT ADMINISTRATOR: RULE OF LAWLESS MEN?

BY JUDGE ELIZA B. YU, LLM, DCL

In OCA vs. Judge Melchor, AM No. P-06-2227, August 19, 2014, the
withheld salaries and benefits of Judge Mario Melchor were released to him
after dismissing him from service. The point of inquiry: Were there
payments of the mandatory withholding taxes to the BIR and the
compulsory payments of the premiums to the GSIS, PHILHEALTH and
PAG-IBIG during the withholding of Judge Mario Melchor's salaries and
benefits while his administrative case is pending until their release to him?
Consequently, if there are no payments of the withholding taxes and
compulsory premiums of now Ex Judge Mario Melchor made by the Office
of the Court Administrator, the same will give rise to administrative, civil
and criminal liabilities provided under RA No. 7875, RA No. 8291, RA No.
9679 and RA No. 8424.

To reiterate another administrative case, the paper with title INQUIRIES

ON THE NON-PAYMENT OF MANDATORY WITHHOLDING TAXES AND
NON-REMITTANCE OF COMPULSORY PREMIUMS OF DISMISSED
JUDGES: RULE OF GREEDY MEN? called for re-examination of other
administrative cases similar to the case of former Judge Mario Melchor, to
quote:

On the possibility of the non-payments of Judge Mario Melchor's

mandatory withholding taxes and compulsory premiums involving his
released salaries and benefits which were withheld for a long time due to
his pending administrative case, in case there were non-payments by the
Office of the Court Administrator, after proper verification, to BIR, GSIS,
PHILHEALTH and PAG-IBIG, logically, there may be other similar non-
payments involving similarly situated or nearly similarly situated Judges
and Court employees, sanctioned or exonerated in the end of the
administrative case by the Supreme Court, within the past ten (10) years to
twenty (20) years that the legal team of the BIR, GSIS, PHILHEALTH and
PAG-IBIG with the aid of the Ombudsman and DOJ can look into, inquire
and investigate in order to take the appropriate and necessary action.

An example of the above is the case of Pros. Romana Reyes vs. Judge
Julia Reyes A.M. No. MTJ-06-1623 , September 18, 2009: The Supreme
Court preventively suspended Judge Julia Reyes effective immediately
and until further orders, by Resolution of December 14, 2004 in A.M. No.
04-12-335-MeTC, Re: Problem Besetting MeTC, Branch 69, Pasig City.
Consequently, Judge Julia Reyes salaries and benefits were withheld until
the termination of her administrative cases. From December 14, 2004 until

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September 17, 2009, Judge Julia Reyes was an incumbent Judge whose
salaries and benefits were withheld. On September 18, 2009, Judge Julia
Reyes was dismissed from service. Preventive suspension should not
exceed 90 days beyond that is illegal under our Constitution, CSC Rules
and SC jurisprudences. Corollary, the withholding of Judge Julia Reyes
salaries and benefits should not exceed ninety (90) days, beyond that is
illegal that entitled her the full net salaries and benefits whatever be the
outcome of the administrative case.

The pendency of the administrative cases cannot be a ground for the non-
remittance of the compulsory premiums to GSIS, PHILHEALTH and PAG-
IBIG because preventive suspension is not a penalty but only a
precautionary measure. To suspend the payments of compulsory premiums
of SC employee can be considered as a penalty that is contrary to the
nature of a preventive suspension. XXX

If the preventive suspension is illegal from the start, for among many
reasons, on the lack of due process, there is no legal basis and factual
basis to withhold the salaries and allowances of the Judge or court
employee by the Office of the Court Administrator, more so, not for it to
remit the compulsory premiums when a judge or court employee is still an
employee of the Supreme Court because an illegal act is void, it produces
no legal effect as supported by jurisprudences like Rubio Jr. vs. Paras,
GR No. 156047, April 12, 2005; Lubaton vs. Judge Lazaro, AM No.
RTJ-12-2320, September 2, 2013; Garcia v. Molina et al., G.R. No.
157383, August 10, 2010; Garcia v. Executive Secretary, GR No. L-
19748, September 13, 1962; Layno Sr. vs. Sandiganbayan 136 SCRA
536.

In OCA v. Mendoza , No. P-14-3257 , July 22, 2015, respondent

Mendoza again requested for the release of his salaries and allowances.
However, in a letter dated 25 February 2014 byAtty. Lilian C. Barribal-Co,
OCA Chief of Office, FMO, to the Court Administrator, she stated that
their office could not recommend the release of Mendozas salaries and
allowances because he still had unsubmitted financial reports. On 8 April
2014, Atty. Sumpo reported that, in compliance with the 20 February
2014 Order of their office, Mendoza submitted the financial reports on (1)
Judiciary Development Fund (JDF) up to February2014; (2) Special
Allowance for the Judiciary Fund (SAJ) up to February2014; (3) Fiduciary
Fund (FF) up to February 2014; (4) Sheriffs Trust Fund(STF) up to
February 2014; and (5) General Fund (GF) up to the first quarter of 2014.
The Supreme Court directed the Finance Division, FMO-OCA to release
respondent Mendoza's withheld salaries and allowances considering his
submission of the required reports after withholding the fine imposed
upon him in this Decision. Were there payments of compulsory premiums
and mandatory withholding taxes

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during the period of the withholding of the salaries and allowances of the
respondent court employee as provided by special laws since payments of
Compulsory premiums of respondent court employee are determined solely
by the existence of employer-employee relationship and the withheld
salaries and allowances of respondent court employee are not tax-free?

In SAMABAHU v. Judge Untalan, A.M. No. RTJ-13-2363, February 25,

2015, the Makati RTC Judge was placed in a preventive suspension during
the duration of the investigation, and he was exonerated from the
administrative case, were there payments of the compulsory premiums and
mandatory withholding taxes as provided by special laws?

According to the Office of the Court Administrator, Finance and

Management Office, there are no payments of compulsory premiums and
mandatory withholding taxes of all withheld salaries and allowances of
Judges and court personnel based on the ground of standing policy by its
office only contrary to special laws and jurisprudences. The standing policy
defense of the Office of the Court Administrator was not supported by any
law or jurisprudence.

A review of the withholding of salaries and allowances of Judges and court

personnel are the following:

ADMINISTRATIVE CIRCULAR NO. 2-2000

GUIDELINES ON WITHHOLDING OF SALARIES AND OTHER

MONETARY BENEFITS OR SET-OFF AGAINST SALARIES OF
ALLEGEDLY ERRONEOUSLY RELEASED MONETARY BENEFITS.

The Office of the Chief Justice has received complaints from judges, as well
as court officials and employees, of what they consider unjust and unfair
withholding of their salaries and other monetary benefits allegedly for failure
to comply with some administrative orders, circulars, or directives of the
Supreme Court or the Office of the Court Administrator, or for pendency of
administrative cases.

Of late, too, there have been complaints of the withholding of salary checks
allegedly to set off or refund some monetary benefits, such as 13th month
bonus, alleged to have been erroneously released to the Judge, court
officials or employees concerned.

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The aforementioned withholding or set-off or deduction, as the case may
be, may be well-founded; and complaints may likewise have some merit.
Thus, specific guidelines on the matter must be provided to avoid
misunderstanding.

Accordingly, henceforth,

1. No withholding of salaries and other monetary benefits, such as

bonuses, may be unilaterally done by the Office of the Court Administrator
for failure to comply with administrative orders, circulars, and the like, or for
any infraction or misfeasance which the Office of the Court Administrator
may deem sufficient cause for the withholding. The Office of the Court
Administrator shall first require the offending judge, court official or
employees to show cause within a non-extendible period of five (5) days
from notice why his salary or other monetary benefits should not be
withheld by reason of any of such causes.

If no explanation is filed or if the explanation is unsatisfactory, the Office of

the Court Administrator shall forthwith make a report and recommendation
to the Court for its appropriate disposition of the matter.

2. Neither may the Office of the Court Administrator unilaterally withhold

salary checks of judges and court officials and employees as a means to
set off or enforce refund for monetary benefits claimed to have been
erroneously or even illegally released to them. The Office of the Court
Administrator shall first require the judge, court official or employee
concerned to show cause within a non-extendible period of five (5) days
from notice why a set off should not be resorted to. If no explanation is
filed or if the explanation is unsatisfactory, the Office of the Court
Administrator must make a report and recommendation to the Court. The
latter has the exclusive power to order the set-off or refund and,
accordingly, authorize the deduction form the salaries the amount
erroneously or illegally released.

This Administrative Circular shall take effect on May 1, 2000.

Promulgated this 12th day of April 2000 in Baguio City.

[Sgd.] HILARIO G. DAVIDE, JR

Chief Justice

In OCA CIRCULAR NO. 18 -2013 dated 8 February 2013 signed by Court

Administrator Jose Midas P. Marquez: XXX
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10. Non-crediting of salaries and allowances which are directed to be
withheld shall only be for a period of six (6) months. Thereafter, the name
of the judge or court personnel shall already be excluded from the
payroll.

XXX XXX XXX

In OCA CIRCULAR NO. 59-2013 dated 6 May 2013 signed by Court

Administrator Jose Midas P. Marquez: XXX

5. The salaries and benefits of the concerned official or employee

shall be withheld without prior notice to avoid overpayment in case of
incurrence of one (1) day vacation leave without pay to be spent abroad or
in excess of thirty (30) calendar days vacation leave without pay to be spent
within the Philippines, including the period of the extension thereof. The
release of the withheld salaries and benefits shall be directed only upon the
applicant's submission of a certification issued by the Executive Judge (for
those in the Office of the Clerk of Court), or the Presiding Judge (for those
in the court branches), or the Clerk of Court as delegated by the Executive
Judge l Presiding Judge in writing, stating that the applicant has reported
back to work. Said certification shall be accompanied by the applicant's
DTR, if applicable. In the case of judges, the release of salaries and
benefits shall be effected upon submission of a certification executed by the
concerned judge stating that he/she has reported back to work.

XXX XXX XXX

The following are the general principles:

1. Payment of compulsory premiums is solely determined by the

existence of employer employee relationship.

The payment of contributions by an employer is compulsory during its

coverage, and in accordance with the provisions of Section 9 of the Social
Security Act, coverage is determined solely by the existence of an
employer-employee relationship. While an employee is on leave, even
without pay, he is still an employee of his employer, their contract of
employment has not yet terminated. So much so that the employee may
still return to work and the employer is still bound to accept him. His
responsibility as an employee still exists. He is still entitled to the benefits of
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the System when he returns. Consequently, his employer is still liable to
pay his contributions to the Commission on account of its employee who is
on leave without pay (Insular Lumber Co. vs. SSS, G.R. No. L-17623,
Jan. 31, 1963; Roman Archbishop of Manila vs. SSS, G.R. No. L-15045,
Jan. 20, 1961; Insular Life Assurance Co., Ltd., et al. vs. SSS, G.R. No.
L-16359, Dec. 28, 1961). In Franklin Baker Company of the Philippines
v. SSS, G.R. No. L-17361, April 29, 1968, the ruling of the Commission
adopting the "theoretical salary" basis assailed by petitioner under the
second issue raised by it in this appeal reads as follows: Neither does the
absence of compensation for the employee for a particular month militate
against the adoption of a theoretical salary upon which the premium
contributions are to be based. In such cases, this Commission has adopted
the policy that where an employee does not earn any compensation for a
particular month, the basis for his premium contributions shall be the salary
for the month immediately preceding the wageless month or, in case of a
variable wage earner, then, it shall be his daily rate of compensation
multiplied by the number of days in which he would have worked for that
wageless month (Circulars Nos. 21 and 24). The adoption of such a
theoretical salary is justified on the ground that during the period when the
employer-employee relationship subsists, there is a legal obligation to remit
premium contributions to the System for the benefit of the employee.
Petitioner contends that the adoption of the so-called "theoretical salary"
basis is beyond the authority and competence of the Social Security
Commission, as it is not justified by the Social Security Act (R. A. 1161, as
amended by Act 1792), particularly section 19 thereof which defines the
employer's obligation to contribute to the System. This section provides:
SEC. 19. Employer's contribution. Beginning as of the last day of the
month immediately preceding the month when an employee's compulsory
coverage takes effect and every month thereafter during his employment,
his employer shall pay, with respect to such covered employee in his
employ, a monthly contribution equal to three and a half per centum of the
monthly compensation of said covered employee. Notwithstanding any
contract to the contrary, an employer shall not deduct, directly or indirectly,
from the compensation of his employees covered by the System or
otherwise recover from them the employer's contribution with respect to
such employees. (As amended by Section 11, R.A. 1792). Since the
deceased employee, Tomas Zamora, received no compensation for the
period in question, petitioner maintains that the imposition of a 3-1/2%
monthly contribution upon the employer on the basis of the monthly
"theoretical" compensation is in effect a deviation from or an amendment of
the statute, which only Congress can make, We do not think this view is
correct. The obligation of the employer to contribute its share to the System
is effective during the existence of the employer-employee relationship.
This is already settled in several cases (supra), and implicit in the provision
afore-quoted which says that the employer shall pay the 3-1/2%
contribution "beginning as of the last day of the month immediately
preceding the month when an employee's compulsory coverage takes
effect and every month thereafter during his employment ...." The time
6
when an employee may not be actual receiving compensation, as when he
is on sick leave without pay, is not excepted. Obviously, inasmuch as the
obligation to contribute does not cease during that period, a reasonable
basis for computing the amount of the contribution must be adopted; and
the one prescribed by the Commission in its circulars Nos. 21 and 24 and
applied in the case at bar is reasonable, both on legal and actuarial
considerations. It does not amount to legislation, but merely implementation
of the existing statute. The provisions of the Social Security Act should be
liberally construed in favor of those seeking its benefits. "Any interpretation
which would defeat rather than promote the ends for which the Social
Security Act was enacted should be eschewed (See also Jalotjot v.
Marinduque Iron Mines Agents, Inc., G.R. No. L-19587, May 31, 1965;
SSS v. CA et al., G.R. No. 100388, December 14, 2000).

2. There is a personal liability for the non-remittance of compulsory

premiums.

Although as a rule, the officers and members of a corporation are not

personally liable for acts done in the performance of their duties, this rule
admits of exceptions, one of which is when the employer corporation is no
longer existing and is unable to satisfy the judgment in favor of the
employee, the officers should be held liable for acting on behalf of the
corporation. x x x. The rationale cited by respondents in the two preceding
paragraphs need not have been applied because the personal liability for
the unremitted SSS premium contributions and the late penalty thereof
attaches to the petitioner as a director of Impact Corporation during the
period the amounts became due and demandable by virtue of a direct
provision of law. Petitioners defense that since Impact Corporation suffered
irreversible economic losses, and by reason of fortuitous events, she
should be absolved from liability, is also untenable. The evidence adduced
totally belies this claim. A reference to the copy of the Petition for
Suspension of Payments filed by Impact Corporation on 18 March 1983
before the SEC contained an admission that: [I]t has been and still is
engaged in business and has been and still is engaged in the business of
manufacturing aluminum tube containers and in brief, it is an on-going,
viable, and profitable enterprise which has sufficient assets and actual and
potential income-generation capabilities. The foregoing document negates
petitioners assertion and supports the contention that during the period
involved Impact Corporation was still engaged in business and was an
ongoing, viable, profitable enterprise. In fact, the latest SSS form RIA
submitted by Impact Corporation is dated 7 May 1984. The assessed SSS
premium contributions and penalty are obligations imposed upon Impact
Corporation by law, and should have been remitted to the SSS within the
first 10 days of each calendar8 month following the month for which
7
they are applicable or within such time as the SSC prescribes. This Court
also notes the evident failure on the part of SSS to issue a judgment in
default against Ricardo de Leon, who was the vice-president and officer of
the corporation, upon his non-filing of a responsive pleading after
summons was served on him. As can be gleaned from Section 11 of the
SSS Revised Rules of Procedure, the Commissioner is mandated to
render a decision either granting or denying the petition. Under the
aforesaid provision, if respondent fails to answer within the time
prescribed, the Hearing Commissioner may, upon motion of petitioner, or
motu proprio, declare respondent in default and proceed to receive
petitioners evidence ex parte and thereafter recommend to the
Commission either the granting or denial of the petition as the evidence
may warrant. On a final note, this Court sees it proper to quote verbatim
respondents prefatory statement in their Comment: The Social Security
System is a government agency imbued with a salutary purpose to carry
out the policy of the State to establish, develop, promote and perfect a
sound and viable tax exempt social security system suitable to the needs
of the people throughout the Philippines which shall promote social justice
and provide meaningful protection to members and their beneficiaries
against the hazards of disability, sickness, maternity, old-age, death and
other contingencies resulting in loss of income or financial burden. The
soundness and viability of the funds of the SSS in turn depends on the
contributions of its covered employee and employer members, which it
invests in order to deliver the basic social benefits and privileges to its
members. The entitlement to and amount of benefits and privileges of the
covered members are contribution-based. Both the soundness and viability
of the funds of the SSS as well as the entitlement and amount of benefits
and privileges of its members are adversely affected to a great extent by
the non-remittance of the much-needed contributions. 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. This Court cannot and will not
allow itself to be made an instrument nor be privy to any attempt at the
perpetration of injustice. Following the doctrine laid down in Laguna
Transportation Co., Inc. v. Social Security System, this Court rules that
although a corporation once formed is conferred a juridical personality
separate and distinct from the persons comprising it, it is but a legal fiction
introduced for purposes of convenience and to subserve the ends of
justice. The concept cannot be extended to a point beyond its reasons and
policy, and when invoked in support of an end subversive of this policy, will
be disregarded by the courts (Garcia v. SSS Collection et al, GR No,
170735, December 17, 2007).

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3. When employer may not be criminally liable for violation of GSIS
law.

MANILA - The Sandiganbayan has convicted a former regional secretary of

the Department of Agrarian Reform (DAR) - Autonomous Region in Muslim
Mindanao (ARMM) for failure to remit the employer's share to the
Government Service and Insurance System (GSIS) and Home
Development Mutual Fund (Pag-IBIG) amounting to over P2.5 million. In a
35-page Joint Decision, the anti-graft court found Datu Guimid Matalam,
who concurrently served as then ARMM vice governor, guilty beyond
reasonable doubt of violation of the Government Service Insurance System
Act for failure to remit P2,418,577.33 to GSIS and P149,100 to Pag-IBIG
from January 1997 to June 1998. Also convicted were DAR-ARMM cashier
Ansarry Lawi and accountant Naimah Unte. They were each sentenced to
suffer the penalty of one year to three years imprisonment, P20,000 fine,
and absolute perpetual disqualification from holding public office and from
practicing any profession licensed by the government. Matalam was also
found guilty of violation of the Pag-IBIG Universal Coverage Law, and was
imposed a P190,506 fine and directed to pay a penalty of 3% per month of
the amounts payable computed from the date the contributions fell due and
until full payment. The Sandiganbayan ruled that Matalam, Lawi and Unte
are accountable officers such that their refusal or delay in the payment,
turnover, remittance or delivery of GSIS premiums within 30 days from the
time that the same shall have been due and demandable constitutes a
violation of the law. The prosecution established as early as April 23, 1998,
the GSIS Cotabato branch already sent a letter to Matalam informing him
that the loan privileges of its members were temporarily suspended in view
of the unremitted government share of premiums from January 1997 to
December 1997. Six Statements of Account of GSIS Compulsory
Contributions Due and Payable as of June 30, 1998 amounting to
P2,418,577.33 were also sent to Matalam. Officials and records from the
Department of Budget and Management (DBM) and Landbank of the
Philippines also confirmed that a total of P12,113,242 was credited to the
account of DAR-ARMM from September 1997 to January 1998 under its
FUND 101 where remittances of the government shares for GSIS and Pag-
IBIG Fund are deposited. The anti-graft court ruled that the restrictive
definition of the word "employer" under the Pag-IBIG Fund Law holds that
the head of office or agency has the obligation to remit the contributions.
The prosecution proved that from January 1997 to June 1998, the former
DAR regional secretary failed to remit P149,100, which became due and
demandable as of July 1998, inclusive of penalties and charges. The
Sandiganbayan said there was "no justifiable reason for such failure to
remit having been presented and considering too that money for that
purpose was already received and available" (Ex-DAR exec convicted for

9
non-remittance of GSIS, Pag-IBIG premiums, ABS-CBNnews.com, posted
at 06/19/2015 4:10 PM).

Word employer is repeatedly mentioned not only in PAG-IBIG law but also
in GSIS law, to quote:

SECTION 3. Compulsory Membership. Membership in the GSIS shall

be compulsory for all employees receiving compensation who have not
reached the compulsory retirement age, irrespective of employment
status, except members of the Armed Forces of the Philippines and the
Philippine National Police, subject to the condition that they must settle
first their financial obligation with the GSIS, and contractuals who have
no employer and employee relationship with the agencies they serve.

Except for the members of the judiciary and constitutional commissions

who shall have life insurance only, all members of the GSIS shall have
life insurance, retirement, and all other social security protection such as
disability, survivorship, separation, and unemployment benefits. XXX
XXX

SECTION 5 Contributions. (a) It shall be mandatory for the member and

the employer to pay the monthly contributions specified in the following
schedule: XXX XXX

(b) The employer shall include in its annual appropriation the necessary
amounts for its share of the contributions indicated above, plus any
additional premiums that may be required on account of the hazards or
risks of its employees' occupation.

(c) It shall be mandatory and compulsory for all employers to include the
payment of contributions in their annual appropriations. Penal sanctions
shall be imposed upon employers who fail to include the payment of
contributions in their annual appropriations or otherwise fail to remit the
accurate/exact amount of contributions on time, or delay the remittance of
premium contributions to the GSIS. The heads of offices and agencies shall
be administratively liable for non-remittance or delayed remittance of
premium contributions to the GSIS.

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SECTION 6. Collection and Remittance of Contributions. (a) The
employer shall report to the GSIS the names of all its employees, their
corresponding employment status, positions, salaries and such other
pertinent information, including subsequent changes therein, if any, as may
be required by the GSIS; the employer shall deduct each month from the
monthly salary or compensation of each employee the contribution payable
by him in accordance with the schedule prescribed in the rules and
regulations implementing this Act.

(b) Each employer shall remit directly to the GSIS the employees' and
employers' contributions within the first ten (10) days of the calendar month
following the month to which the contributions apply. The remittance by the
employer of the contributions to the GSIS shall take priority over and above
the payment of any and all obligations, except salaries and wages of its
employees.

SECTION 7. Interests on Delayed Remittances. Agencies which delay

the remittance of any and all monies due the GSIS shall be charged
interests as may be prescribed by the Board but not less than two percent
(2%) simple interest per month. Such interest shall be paid by the
employers concerned. XXX XXX

Based on the foregoing, among other accountable officers, it is the head of

the employer as the head of the national government office in-charged with
collection and remittance of GSIS premiums who is criminally liable, to
quote:

SECTION 52. Penalty. (a) Any person found to have participated directly
or indirectly in the commission of fraud, collusion, falsification, or
misrepresentation in any transaction with the GSIS whether for him or for
some other persons, shall suffer the penalties provided for in Article 172 of
the Revised Penal Code. XXX

(g) The heads of the offices of the national government, its political
subdivisions, branches, agencies and instrumentalities, including
government-owned or controlled corporations and government financial
institutions, and the personnel of such offices who are involved in the
collection of premium contributions, loan amortization and other accounts
due the GSIS who shall fail, refuse or delay the payment, turnover,
remittance or delivery of such accounts to the GSIS within thirty (30) days
from the time that the same shall have been due and demandable shall,

11
upon conviction by final judgment, suffer the penalties of imprisonment of
not less than one (1) year nor more than five (5) years and a fine of not less
than Ten thousand pesos (P10,000.00) nor more than Twenty thousand
pesos (P20,000.00), and in addition shall suffer absolute perpetual
disqualification from holding public office and from practicing any profession
or calling licensed by the government.

Please note that this criminal principle may not apply to the Chief Justice
and Supreme Court Justices due to the inherent principle of auto-
correction, among others. The illegal jurisprudences are deemed legal
unless abandoned by the Honorable Supreme Court En Banc.

For one, the Supreme Court as employer is among the national offices
exempted for violation of RA No. 8291 because of Art. VIII, Section 5 and
Section 6, 1987 Philippine Constitution and P.D. No. 828, Section 6 that it
granted the Office of the Court Administrator, a national office within the
definition of GSIS law, the sole duty and responsibility to remit the
compulsory GSIS premiums. By parity of reasoning is the case of People
vs. Castillo et al., Criminal Cases Nos. 27824-28, February 9, 2012,
Sandiganbayan held with finality that E.O. No. 190 series of 1999 directed
the DBM to remit directly GSIS contributions of the LGUs to GSIS. The
accused should not be liable for failure of municipality to remit the subject
GSIS premiums contributions because the duty to remit said premiums
during said period is lodged with DBM. In Garcia vs. SSS, G.R. No.
170735, December 17, 2007, 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. This Court cannot and will not allow itself to be
made an instrument nor be privy to any attempt at the perpetration of
injustice." The same principle applies to the non-payments of premiums to
PAG-IBIG and PHILHEALTH as well as to the non-payments of
withholding taxes to BIR involving Judges and court personnel whose
salaries and allowances have been withheld legally or illegally by OCA that
has the sole duty and responsibility to remit them to the concerned
government agencies.

In RE: COMPLAINT OF JUDGE ROWENA NIEVES A. TAN FOR LATE

REMITTANCE BY THE SUPREME COURT OF HER TERMINAL LEAVE
PAY TO GSIS TO APPLY FOR PAYMENT OF HER SALARY LOAN TO
SAID AGENCY, A.M. No. 2007-02-SC, February 10, 2010 on the late
remittance of the terminal leave pay of a Judge by the Supreme Court to
the Government Service Insurance System (GSIS), the SC Justices are not
made liable but the OCA employees.

12
A few re-reading of Section 52 (g) of Republic Act No. 8291, the head of the
office of the national government does not refers to the Chief Justice or to
the Acting Chief Justice under the ejusdem generis statutory construction.
Their offices have no personnel involved in remitting the GSIS compulsory
premiums. In City of Manila et al. v. Emtite, G.R. No. L24776, June 28,
1974, it is this kind of phraseology in a statute or any written document
which precisely calls for the application of the doctrine of "ejusdem generis"
in construing the import of the general phrase used. For under the maxim of
"ejusdem generis" which means "of the same kind, class or nature", when
general words follow an enumeration of particular cases, such words apply
only to cases of the same kind as those expressly mentioned. Thus, when
broad expressions are used, such as, "and all others" or "any others" these
are usually to be restricted to persons or things of the same kind or class
with those specifically named in the preceding words. In our jurisdiction, this
Court in Ollada vs. Court of Tax Appeals, et al. 99 Phil. 604, 610 applied
the rule of "ejusdem generis" to construe the purview of a general phrase
"other matters" appearing after an enumeration of specific cases decided by
the Collector of Internal Revenue and appealable to the Court of Tax
Appeals found in section 7, paragraph 1, of Republic Act No. 1125, and it
held that in order that a matter may come under said general clause, it is
necessary that it belongs to the same kind or class of cases therein
specifically enumerated. In Mutuc vs. Commission on Elections, L-32717,
November 26, 1970, 36 SCRA 228, 232, the rule of "ejusdem generis" was
once more applied to construe a provision of the Constitutional Convention
Act of 1970 (R.A. 6132) which made it unlawful for candidates "to purchase,
produce, request or distribute sample ballots, or electoral propaganda
gadgets such as pens, lighters, fans (of whatever nature), flashlights,
athletic goods or materials, wallets, bandanas, shirts, hats, matches,
cigarettes, and the like, whether of domestic or foreign origin," and the Court
held that under the doctrine of "ejusdem generis" the phrase "and the like"
applies to things or gadgets of the kind specifically enumerated, and that
consequently the use of a taped jingle for campaign purposes is not within
the general clause. All the above imply shows that contrary to the
assertions of the intervenors, in the case now before Us, the Appellate
Court correctly applied the rule of "ejusdem generis" in construing the
easement in question thereby holding that the clause "any and all other
persons whomsoever" embraces only "those who are privy to the owners of
the dominant estate, lots 1 and 2 Plan Pcs-2672" and excludes "the
indiscriminate public from the enjoyment of the right-of-way easement."

Section 52 (d) of Republic Act No. 8291 has similar groupings, namely , the
treasurer, finance officer, cashier, disbursing officer, budget officer or other
official or employee who fails to include in the annual budget the amount
corresponding to the employer and employee contributions XXX, the Chief
Justice or the Acting Chief Justice is not among their group, Section 5(c) of
the same Act that It shall be mandatory and compulsory for all employers
to include the payment of contributions in their annual appropriations. Penal
sanctions shall be imposed upon employers who fail to include the payment
13
of contributions in their annual appropriations or otherwise fail to remit the
accurate/exact amount of contributions on time, or delay the remittance of
premium contributions to the GSIS. The heads of offices and agencies shall
be administratively liable for non-remittance or delayed remittance of
premium contributions to the GSIS refer to them enumerated in Section 52
(d) of Republic Act No. 8291 not to the Chief Justice or Acting Chief Justice.
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. Because the law must not be
read in truncated parts, its provisions must be read in relation to the whole
law. The statute's clauses and phrases must not, consequently, be taken as
detached and isolated expressions, but the whole and every part thereof
must be considered in fixing the meaning of any of its parts in order to
produce a harmonious whole. Consistent with the fundamentals of statutory
construction, all the words in the statute must be taken into consideration in
order to ascertain its meaning (Land Bank of the Philippines v. AMS
Farming Corporation, G.R. No. 174971. October 15, 2008, 569 SCRA
154, 183; Mactan-Cebu International Airport Authority v. Urgello, G.R.
No. 162288. April 4, 2007, 520 SCRA 515, 535; Smart Communications,
Inc. vs. The City of Davao, G.R. No. 155491, September 16, 2008, 565
SCRA 237, 247-248).

Also, penal provisions have strictissimi juris construction, the strictest

letter of the law. Since, remittance of GSIS compulsory premiums is not a
duty of the Office of the Chief Justice or the Office of the Acting Chief
Justice, therefore, the head of national office does not refer to either of
them for the Chief Justice or Acting Chief Justice to be criminally liable as
provided by Republic Act No. 8291.

4. Failure to remit compulsory premiums is Grave Misconduct.

The intentional failure or neglect to remit timely GSIS contributions

constitutes grave misconduct and carries the penalty of dismissal on the
first instance under Section 46(A)(3) of the Revised Rules on
Administrative Cases in the Civil Service.

5. The right to receive income not the actual receipt determines

when to include the amount in gross income in the payment of
mandatory withholding taxes.

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The method of withholding tax at source is a procedure of collecting income
tax sanctioned by the National Internal Revenue Code. Section 53 (c) of
which, provides: Return and Payment - Every person required to deduct and
withhold any tax under this section shall make return thereof, for the
payment of the tax, shall pay the amount withheld to the officer of the
Government of the Philippines authorized to receive it. Every such person is
made personally liable for such tax, and is indemnified against the claims
and demands of any person for the amount of any payments made in
accordance with the provision of this section. In the afore-cited provision of
law, the withholding agent is explicitly made personally liable for the income
tax withheld under Section 54. In Phil. Guaranty Co., Inc. vs.
Commissioner of Internal Revenue, the Court, has ratiocinated: The law
sets no condition for the personal liability of the withholding agent to attach.
The reason is to compel the withholding agent to withhold the tax under all
circumstances. In effect, the responsibility for the collection of the tax as well
as the payment thereof is concentrated upon the person over whom the
Government has jurisdiction. Thus, the withholding agent is constituted the
agent both the government and the taxpayer. With respect to the collection
and/or withholding of the tax, he is the Governments agent. In regard to the
filing of the necessary income tax return and the payment of the tax to the
Government, he is the agent of the taxpayer. The withholding agent,
therefore, is no ordinary government agent especially because under
Section 53 (c) he is held personally liable for the tax he is duty bound to
withhold; whereas, the Commissioner of Internal Revenue and his deputies
are not made liable to law. On the other hand, under the accrual basis
method of accounting, income is reportable when all the events have
occurred that fix the taxpayers right to receive the income, and the amount
can be determined with reasonable accuracy. Thus, it is the right to receive
income, and not the actual receipt, that determines when to include the
amount in gross income. Gleanable from this notion are the following
requisites of accrual method of accounting, to wit: (1) that the right to receive
the amount must be valid, unconditional and enforceable, i.e., not
contingent upon future time; (2) the amount must be reasonably susceptible
of accurate estimate; and (3) there must be a reasonable expectation that
the amount will be paid in due course (Filipinas Synthetic Fiber
Corporation v. CA et al., G.R. Nos. 118498 & 124377, October 12,
1999). In contrast, gross revenue covers money or its equivalent actually or
constructively received, including the value of services rendered or articles
sold, exchanged or leased, the payment of which is yet to be received. This
is in consonance with the International Financial Reporting Standards,
which defines revenue as the gross inflow of economic benefits (cash,
receivables, and other assets) arising from the ordinary operating activities
of an enterprise (such as sales of goods, sales of services, interest,
royalties, and dividends), which is measured at the fair value of the
consideration received or receivable. As aptly stated by the RTC:
[R]evenue from services rendered is recognized when services have been
performed and are billable. It is recorded at the amount received or
expected to be received. Under Section E [17] of the Statements of

15
Financial Accounting Standards No. 1 (Ericsson Telecommunications,
Inc. v. City of Pasig, G.R. NO. 176667, November 22, 2007).

Preventive suspension is not a penalty but only a precautionary measure

under the law. The Judge placed in a preventive suspension legal or illegal
earned income that was withheld by the Office of the Court Administrator.
This income is subject to withholding tax under the special law. When the
preventively suspended Judge is exonerated, the withheld salaries and
allowances are released to him as a gross income subject to taxation.
Also, the Office of the Court Administrator cannot forfeit these salaries and
allowances since forfeiture is not among the administrative penalty
imposable to a Judge under the Civil Service Rules and Regulations as
well as the Revised Rules of Court. Thus, the Office of the Court
Administrator can only withheld the net salaries of the Judge, not the gross
salaries due to the payments of compulsory premiums and mandatory
withholding taxes under RA No. 7875, RA No. 8291, RA No. 9679 and RA
No. 8424. Retroactive suspension as a penalty as a convenient excuse to
evade the payments of compulsory premiums and mandatory taxes is
prohibited by Civil Service Rules and Regulations as well as Revised
Rules of Court.

6. When a defense of the lack of knowledge of the unpaid withholding

taxes failed?

Both Bolding and McMillan allege an absence of willfulness because they

lacked knowledge as to the nonpayment of the taxes. The burden of proof
on this issue, as on other elements of plaintiffs' claims and the
Government's counterclaims for the unpaid balance of the assessments,
was upon plaintiffs, requiring them to show that the Commissioner's
determinations were erroneous citing Liddon v. United States, 448 F.2d
509, 513-14 (5th Cir. 1971), cert. denied, 406 U.S. 918, 92 S.Ct. 1769, 32
L.Ed.2d 117 (1972); Psaty v. United States, 442 F.2d 1154, 1159-60 (3rd
Cir. 1971); Lesser v. United States, 368 F.2d 306, 310 (2d Cir. 1966) (en
banc); Fitzgerald v. United States, 407 F.Supp. 1132 (E.D.Ky.1976). The
record fails to support Bolding's claim that he lacked knowledge of the
unpaid payroll taxes.

7. Employers personal liability for non-payment of withholding taxes

with a reckless disregard of the facts.

The taxes withheld from wages commonly are referred to as withholding

taxes or trust-fund taxes. When the employer makes a withholding-tax
deposit, the employer also must remit a matching FICA tax payment for
each employee. Employers typically remit withholding-tax deposits on a
16
semiweekly or monthly basis. The IRS requires each employer to file a
withholding-tax return, which the IRS uses to track deposits and to
calculate the employer's withholding tax liability. Most employers are
required to file a withholding-tax return each quarter (Form 941). The IRS
permits seasonal employers to account for the taxes by filing one return
annually (Form 943). For some of the tax periods at issue in this case
Village Turf filed quarterly returns and for some it filed annual returns.
Withheld taxes are credited to the employee regardless of whether the
employer pays them to the Government. Because the employer is not
required to pay over the funds upon their collection, the withheld amounts
can "be a tempting source of ready cash to a failing corporation. . . ." citing
Slodov v. Unites States, 436 U.S. 238, 243 (1978). To prevent misuse of
the funds, the IRS not only will hold the employer liable for any unpaid
withholding taxes, but it also can assess a personal penalty, equal to the
amount of the unpaid taxes, on any person who is responsible for the
employer's failure to pay the taxes (Godfrey v. United States, 748 F.2d
1568, 1574-75 (Fed. Cir. 1984); 6672). Even in the absence of actual
knowledge, a person is liable if he acts with a reckless disregard of the
facts and obvious and known risks that presently-due withholding taxes
are not being paid citing Bolding, 565 F.2d at 672, 674; Godfrey, 748
F.2d at 1577. A responsible person may not "immunize himself from the
consequences of his actions by wearing blinders which will shut out all
knowledge of the liability for and the nonpayment of its withholding taxes"
citing Bolding, 565 F.2d at 674. For example, a person acts with
reckless disregard if he fails to "investigate or to correct
mismanagement after being notified that withholding taxes have not
been duly remitted" citing Godfrey, 748 F.2d at 1578 (quoting Mazo,
591 F.2d 1151).

The Office of the Chief of the Justice initiated the investigation on these
matters, and the Supreme Court En Banc acted accordingly by requiring
the concerned officials of the Office of the Court Administrator to submit
their answers and memoranda since last year.

8. There is disbarment due to Gross Ignorance of the Law in Giving

Advice.

Respondent Atty. Leonuel Mas, in giving advice that directly contradicted a

fundamental constitutional policy, showed disrespect for the Constitution
and gross ignorance of basic law. Worse, he prepared spurious documents
that he knew were void and illegal. By making it appear that de Mesa
undertook to sell the property to complainant and that de Mesa thereafter
sold the property to Gonzales who made the purchase for and in behalf of
complainant, he falsified public documents and knowingly violated the Anti-
Dummy Law. Respondents misconduct did not end there. By advising
complainant that a foreigner could legally and validly acquire real estate in
the Philippines and by assuring complainant that the property was
17
alienable, respondent deliberately foisted a falsehood on his client. He did
not give due regard to the trust and confidence reposed in him by
complainant. Instead, he deceived complainant and misled him into parting
with P400,000 for services that were both illegal and unprofessional.
Moreover, by pocketing and misappropriating the P3.8 million given by
complainant for the purchase of the property, respondent committed a
fraudulent act that was criminal in nature. Respondent spun an intricate
web of lies. In the process, he committed unethical act after unethical act,
wantonly violating laws and professional standards (Keld Stemmerik,
represented by Attys. Herminio. Liwanag and Winston P.L. Esguerra
vs. Atty. Leonuel N. Mas, A.C. No. 8010, June 16, 2009).

9. Adoption of false, slanted and misleading recommendation by the

Office of the Court Administrator exonerates the Supreme Court.

The Supreme Court Justices who adopt a false, slanted and misleading
recommendation by the Office of the Court Administrator and the Integrated
Bar of the Philippines are not administratively, civilly and criminally liable.
Indeed, as a matter of public policy, not every error or mistake committed by
judges in the performance of their official duties renders them
administratively liable. Only errors that are tainted with fraud, corruption or
malice may be the subject of disciplinary actions. For administrative liability
to attach, respondent must be shown to have been moved by bad faith,
dishonesty, hatred or some other similar motive (Atty. Lacurom v. Judge
Tienzo, 561 Phil. 376, 382-383 (2007), citing Dr. Cruz v. Judge Iturralde,
450 Phil. 77, 85 (2003); Planas v. Reyes, A.M. No. RTJ-05-1905,
February 23, 2005, 452 SCRA 146, 155). To constitute gross ignorance of
the law, it is not enough that the subject decision, order or actuation of the
judge in the performance of his official duties is contrary to existing law and
jurisprudence but, most importantly, he must be moved by bad faith, fraud,
dishonesty, or corruption. Good faith and absence of malice, corrupt
motives or improper considerations, are sufficient defenses in which a
judge charged with ignorance of the law can find refuge. However, good
faith in situations of fallible discretion inhered only within the parameters of
tolerable judgment and does not apply where the issues are so simple and
the applicable legal principles evident and basic as to be beyond possible
margins of error (Officers and Members of the IBP, Baguio-Benguet
Chapter v. Pamintuan, A.M. No. RTJ-02-1691, November 19, 2004, 443
SCRA 87, 110; Ong v. Rosete, A.M. No. MTJ-04-1538, October 22, 2004,
441 SCRA 150, 159; Pesayco v. Layague, A.M. No.RTJ-04-1889,
December 22, 2004, 447 SCRA 450, 460; Dadizon v. Asis, A.M. No.
RTJ-03-1760, January 5, 2004, 419 SCRA 456, 463-464; Zuo v. Cabebe,
A.M. OCA No. 03-1800-RTJ, November 26, 2004, 444 SCRA 382, 391;
Balsamo v. Suan, A.M. No. RTJ-01-1656, September 17, 2003, 411
SCRA 189, 200; Dantes v. Caguioa, A.M. No. RTJ-05-1919, June 27,
2005, 461 SCRA 236, 246).

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