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PHILIPPINE SUPREME COURT DECISIONS

SECOND DIVISION

[G.R. No. 139946. November 27, 2002.]

RAMON J. FAROLAN, Petitioner, v. HON. COURT OF APPEALS, SOCIAL SECURITY COMMISSION, and SOCIAL SECURITY SYSTEM, Respondents.

D E C I S I O N


QUISUMBING, J.:


This is a petition for review of the decision 1 dated August 31, 1999, of the Court of Appeals, in C.A.-G.R. SP No. 48514, dismissing the petition for certiorari and prohibition filed by petitioner, and affirming in toto the order 2 dated June 9, 1998 of the Social Security Commission denying petitioner’s motion to dismiss the amended petition to revive judgment against Marinduque Mining and Industrial Corporation and its officers.chanrobles virtual law library

The antecedent facts of the case are as follows:chanrob1es virtual 1aw library

Cecilio T. Saludar and Carlos Porquez were employed at Marinduque Mining and Industrial Corporation (MMIC). They were dismissed from MMIC in 1984.

Saludar filed a claim for illegal dismissal with the Office of the Labor Arbiter. On the other hand, Porquez’s widow filed a claim for social security benefits with respondent Social Security Commission (SSC) docketed as SSC Case No. 8658.

On August 17, 1984, the Labor Arbiter decided in favor of Saludar and ordered his reinstatement and payment of backwages. The order became final on September 14, 1984. However, it was not executed as all the assets of MMIC had been foreclosed by the Philippine National Bank (PNB) and the Development Bank of the Philippines (DBP). These assets were subsequently acquired by Maricalum Mining Corporation (Maricalum) through a Deed of Transfer, while MMIC ceased its operation. Section 3 (1) of the Deed of Transfer provided that Maricalum shall assume MMIC’s liabilities due or owing to any other person. Thus:chanrob1es virtual 1aw library

Section 3.1. From and after the effectivity date, Maricalum shall be solely liable (I) . . .; (II) for any other liability due or owing to any other person (natural or corporate).

Pursuant to the above provision, this Court, in Maricalum Mining Corporation v. NLRC 298 SCRA 378 (1998), ordered Maricalum to reinstate and pay Saludar backwages, after he filed an action to revive judgment. We held that:chanrob1es virtual 1aw library

. . . The records show that Maricalum voluntarily absorbed Marinduque’s obligations to its employees. The NLRC found that when the Philippine National Bank (PNB) and Development Bank of the Philippines (DBP) transferred Marinduque’s assets to Maricalum, the Deed of Transfer contained the proviso that" (f)rom and after the effectivity date, Maricalum shall be solely liable for any liability due or owing to any other person (natural or corporate)." Marinduque’s liability to respondent Saludar for unpaid backwages adjudicated in RAB Case No. 06-0610-83 way back in 1984 became final when no appeal was interposed by it. This final judgment then formed part of the liabilities of Marinduque which Maricalum assumed in the Deed of Transfer. Thus, it is futile for Maricalum to deny liability it had voluntarily assumed. 3

Meanwhile, on August 28, 1986, in SSC Case No. 8658, respondent Social Security Commission issued a resolution in favor of Mrs. Porquez. Thus:chanrob1es virtual 1aw library

WHEREFORE, PREMISES CONSIDERED, this Commission finds and so holds that the respondent is held liable only for the SS contribution of the petitioner’s husband corresponding to his 12 months backwages.

The SSS is hereby directed to assess the SS contribution liability of the respondent based on his 12 months backwages at P14.00 a day within fifteen (15) days from receipt hereof, and furnish the respondent a copy of its assessment who is in turn directed to pay its said liability within thirty (30) days from receipt of the notice of assessment from the SSS. 4

The resolution became final on October 8, 1986, and entry of judgment was made on November 5, 1986. However, no execution was made within the five-year period from date of entry. Thus, on December 11, 1991, the Social Security System filed with the Social Security Commission a petition to revive judgment against MMIC.

As MMIC had already ceased operation, summons was not served upon it. On April 28, 1997, the SSS filed an amended petition to revive judgment impleading the responsible officers of MMIC, including petitioner Ramon J. Farolan. Summonses were served upon MMIC’s officers but they could not be located, except for petitioner who was served summons on December 11, 1997.

On December 17, 1997, petitioner filed a motion to dismiss, which was denied by the Social Security Commission in its orders 5 dated June 9, 1998. Petitioner elevated the case to the Court of Appeals via a petition for certiorari and prohibition on the ground of prescription and laches.

On August 31, 1999, the Court of Appeals rendered its decision, disposing of the case thus:chanrob1es virtual 1aw library

WHEREFORE, in view of all the foregoing, the instant petition is hereby DENIED for lack of merit, and the Order of the Social Security Commission dated June 9, 1998 in SSC Case No. 12-13757-91 is AFFIRMED in toto. 6

The Court of Appeals held that the amended petition to revive judgment was not barred by prescription. True, it was filed way beyond the ten-year period from date of entry of judgment. But the delay could not be attributed to the SSS, but to the cessation of the operation of MMIC, said the appellate court. Citing Camacho v. Court of Appeals, 287 SCRA 611 (1998), it held that where the cause of the delay was beyond the control of a prevailing party, prescription would not set in against him. Further, it said that based on the second paragraph of Section 22 (b) of Republic Act 1161, otherwise known as the Social Security Law, 7 the employee’s widow, Mrs. Porquez, had 20 years within which to file the necessary action against MMIC or its officers. Consequently, the period to file the amended petition to revive judgment has not yet prescribed.

Moreover, the Court of Appeals held that petitioner, as one of the officers of MMIC, could be held liable for employees’ claims, based on Valderrama v. NLRC, 256 SCRA 466, 475 (1996). In that case, we held that where the employer corporation is no longer existing and is unable to satisfy the judgment in favor of the employee, the officer should be held liable for acting on behalf of the corporation.chanrob1es virtua1 1aw 1ibrary

Lastly, the Court of Appeals held that the Deed of Transfer between MMIC and Maricalum did not exempt petitioner from liability, because said deed was made retroactive only up to October 1984. The claim of Porquez’s widow covered the period from September 1980 to August 1981, when MMIC was still in full operation.

Dissatisfied, petitioner Farolan filed the instant petition for review on certiorari averring that:chanrob1es virtual 1aw library

IT WAS GRAVE ERROR FOR THE COURT OF APPEALS TO IGNORE [OUR RULING IN MARICALUM MINING CORPORATION VS. NLRC, CECILIO T. SALUDAR, ET AL., 298 SCRA 378 (1998)] AND HOLD HEREIN PETITIONER ANSWERABLE FOR THE UNREMITTED 12 MONTHS’ WORTH OF SS PREMIUMS OF A LIKE EMPLOYEE OF THE MMIC, KNOWING FULL (SIC) WELL THAT SAID LIABILITY HAD BEEN ALREADY ASSUMED WITH JUDICIAL FINALITY BY MARICALUM MINING CORPORATION. 8

Petitioner argues that MMIC and its directors should not be held liable as it is Maricalum that is liable for the employees’ claim, following the Maricalum case. He contends that to rule otherwise is to contravene its rationale — that of valid contractual succession of employers’ interest under the Deed of Transfer between MMIC and Maricalum.

Respondents counter that petitioner’s claim is without basis in law and in fact. The adjudged liability in this proceeding pertains to the unremitted SSS contributions of the late Carlos Porquez for the period September 1980 to August 1981, which is outside the ambit of MMIC’s Deed of Transfer since said deed was made retroactive to October 1984 only. They emphasize that the adjudged liability became final and executory when MMIC was still in operation. Also, respondents assert that petitioner is raising said issue of transfer of assets and liabilities only now. According to them, petitioner cannot change the theory of his case on appeal.

The main issue before us is whether petitioner, as one of the directors of MMIC, should be held liable for the unremitted SSS contributions for the late Carlos Porquez. On this score, we are constrained to agree with petitioner that he should not be liable for said contributions.

The liability to pay the unpaid premium lies with Maricalum. This is so because when the Social Security Commission, on August 28, 1986, adjudged MMIC liable for the unpaid premiums, Maricalum had already absorbed all the assets and liabilities of MMIC pursuant to a deed of transfer, which was made retroactive to October 1984. Therefore, the judgment became part of MMIC’s liability transferred to Maricalum.chanrob1es virtua1 1aw 1ibrary

We cannot agree with the Court of Appeals that because the unpaid premiums referred to the period from September 1980 to August 1981, this should be the reckoning dates in determining the person liable for payment of the unpaid premiums. At that time, there was no final determination of this matter yet by the appropriate government agency, hence the liability did not yet accrue. It was only on October 6, 1986 that MMIC was finally declared liable.

Respondents’ assertion that it is too late for petitioner to raise the matter of transfer of liabilities is far from persuasive. Questions raised on appeal must be within the issues framed by the parties so as to bar the application of the doctrine that issues not raised in the lower court cannot be raised for the first time on appeal. 9 In this case, the matter of transfer of liabilities is not totally foreign to the main issue. It is a corollary issue, the resolution of which is vital to the question of whether petitioner should be held liable to pay the unpaid premiums. Besides, dismissal of appeals purely on technical grounds is frowned upon where the policy of the courts is to encourage hearings of appeals on their merits and the rules of procedure ought not to be applied in a very rigid, technical sense. 10

We note that during the pendency of this case, MMIC already paid the sum of P607.80 representing the unpaid monthly contributions for Carlos Porquez and consequently the Social Security Commission ordered on September 19, 2000 the termination of SSC Case No. 8658. A fortiori, SSC Case No. 12-13757-91, the petition to revive judgment in SSC Case No. 8658, was also terminated.

WHEREFORE, the instant petition is GRANTED. The decision dated August 31, 1999 of the Court of Appeals, in CA-G.R. SP No. 48514, is REVERSED and SET ASIDE. Petitioner is hereby discharged of any liability under SSC Case No. 12-13757-91. No pronouncement as to costs.chanrob1es virtua1 1aw 1ibrary

SO ORDERED.

Bellosillo, Acting C.J., Mendoza, Austria-Martinez and Callejo, Sr., JJ., concur.

Endnotes:



1. Rollo, pp. 110-115.

2. Records, pp. 83-87.

3. Maricalum Mining Corp. v. NLRC, 298 SCRA 378, 380 (1998).

4. Records, p. 9.

5. Id. at 83-87.

6. CA Rollo, p. 131.

7. Sec. 22 (b). . . .

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. See Rollo, p. 113.

8. Rollo, pp. 11-12.

9. Keng Hua Paper Products Co., Inc. v. Court of Appeals, 286 SCRA 257, 267 (1998).

10. Reyes, Jr. v. Court of Appeals, 328 SCRA 864, 868-869 (2000).

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