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 GREEDY 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 is the 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, this will give rise to civil, criminal and
administrative cases against the Office of the Court Administrator (OCA)
that has the primary duty to pay mandatory taxes and compulsory
premiums of all incumbent Judges and court personnel.

By common sense, even a non-lawyer knew that an incumbent

government employee's salaries and benefits can be withheld for a fixed
period subject to the pertinent CSC rules and regulations but no
government official can withhold the mandatory taxes and compulsory
premiums while the government employee is still in the government office
who is not separated from service. 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. This is supported by:

1. Section 25 of Rule XIV of the Administrative Code of 1987 that

provides:

SEC. 25. The period within which a public officer or employee charged is
placed under preventive suspension shall not be considered part of the
actual penalty of suspension imposed upon the employee found guilty.

Clearly, service of the preventive suspension cannot be credited as

service of penalty. To rule otherwise is to disregard above-quoted
Sections 24 and 25 of the Administrative Code of 1987 and render
nugatory the substantial distinction between, and purposes of imposing

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preventive suspension and suspension as penalty (Quimbo v. Gervacio,
G.R. No. 155620, August 9, 2005); and

2. Rule 10, Section 53 (c ) of 2011 Revised Civil Service Rules and

Regulations on effects of exoneration on certain Penalties that provides:

In case the penalty imposed is suspension, he/she shall immediately be

reinstated to his/her former post without loss of seniority rights and with
payment of back salaries and all benefits which would have accrued as if
he/she has not been illegally suspended.

Clearly, a preventive suspension is not a penalty thus it necessitates the

payment of payroll premiums and taxes of respondent Judge all
throughout the duration of the probe of administrative case until the
finality of the Decision. And because a suspension as a penalty is subject
to appeal, there must be payment of payroll premiums and taxes during
its duration, if any and if ever, prior to the rendition of final Decision
because it is dependent upon the outcome of the administrative case, so
if the respondent was exonerated eventually, there was no suspension as
a penalty to speak of thus it presupposes the payment of payroll
premiums and taxes of respondent Judge all the time, from the start of
probe, during appeal, and definitely prior to finality of Decision.

Also, there is a penalty of fine in lieu of dismissal imposed upon

Judges in administrative cases involving Grave Offenses, there is no
reason for the Office of the Court Administrator to withhold their
payroll premiums and taxes that has no legal basis whatsoever
because they are still judicial employees during the duration of the
probe where they were placed in a preventive suspension with a fixed
duration of ninety (90) days under the Civil Service Rules and
Regulations.

An inquiry of Ex Judge Mario Melchors case before the Supreme Court

will be able to help the BIR, GSIS, PHILHEALTH and PAG-IBIG in
strengthening their collections that will redound for the welfare of our
country and to the benefit of its people pursuant to the WHEREAS
CLAUSES of the charter and statute creating BIR, GSIS, PHILHEALTH
and PAG-IBIG.

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On the inquiry of the non-payments of Ex Judge Mario Melchor's
mandatory withholding taxes and compulsory premiums involving his
released salaries and benefits which were withheld for a long time, from
2006 to 2014, 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
are 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 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
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 ninety (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.

In the dispositive portion of the Decision of the consolidated cases of Ex

Judge Julia Reyes, it was stated:

WHEREFORE, Judge Julia A. Reyes, Presiding Judge, Metropolitan Trial

Court, Branch 69, Pasig City, is DISMISSED from the service with
forfeiture of all retirement benefits except accrued leave credits, if
any, and with prejudice to re-employment in any branch of the government
including government-owned or controlled corporations.

Inquiries for the investigation:

1. Are there payments of the mandatory withholding taxes to the BIR and
the compulsory premiums to GSIS, PHILHEALTH and PAG-IBIG in Ex

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Judge Reyes case from December 14, 2004 until September 17, 2009,
the period she is still SC employee who is not separated from service?

2. In case of non-payments of the mandatory withholding taxes and

compulsory premiums of an incumbent Judge whose salaries and
benefits were withheld, are the OCA officials administratively and
criminally liable under the BIR, GSIS, PHILHEALTH and PAG-IBIG laws?

3. What happened to the withheld gross salaries and benefits of Ex Judge

Julia Reyes from December 14, 2004 until September 17, 2009 when the
Decision did not provide that these gross salaries and benefits are
forfeited in favor of the government?

4. Forfeiture of withheld salaries and benefits of a Judge is not one of the

penalties provided under the CSC Rules and Regulations and Revised
Rules of Court, what is the basis of keeping them and I or taking them
away from the dismissed Ex Judge Julia Reyes after the rendition of the
Supreme Courts Decision?

5. Where do the intended payments of Ex Judge Julia Reyes mandatory

withholding taxes and compulsory premiums go?

6. Assuming that the payments for BIR, GSIS, PHILHEALTH and PAG-
IBIG were stolen, who will shoulder the unpaid mandatory withholding
taxes and compulsory premiums of an incumbent Judge?

In the Decision of the consolidated cases of Ex Judge Julia Reyes, it was

stated:

XXX Records show that Judge Reyes whereabouts have remained

unknown. She was issued an Authority to Travel to the United States for
the period from November 16 to 30, 2004. She appears to have left the
country in December 2004 but there is no record showing that she sought
the Courts permission therefor or filed any leave of absence for
December 2004. XXX

Noticeable in the above quoted portion of the Decision is the non-

dropping of Ex Judge Julia Reyes from the rolls because she left the
country to unknown destination during the pendency of her administrative
cases. One of the analyses is the "intent to gain" of the withheld salaries
and allowances of Ex Judge Julia Reyes by unidentified person or persons
because in non-lifting her preventive suspension after 90 days, Ex Judge
Julia Reyes continued to receive her salaries and allowances for her office
while she is not reporting to work since Congress and DBM have budget

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for her plantilla until she is dismissed from the service. If there is an "intent
to gain" in Ex

Judge Julia Reyes case, this presupposes a modus operandi for graft and
corruption or thievery for a long time in OCA perhaps unknown to SC
Justices, who rely in good faith the presumption of regular performance of
duties by OCA officials and employees. However, if OCA has knowledge
of this, and diverted the withheld salaries and allowances of Ex Judge
Julia Reyes into SC savings and spent it to something else that is
unknown to SC Justices because they did not check the judiciarys budget
in detail, this is a Technical Malversation by concerned OCA officials
within the jurisdiction of Ombudsman.

Article VI, Section 25. (1) The Congress may not increase the
appropriations recommended by the President for the operation of the
Government as specified in the budget. The form, content, and manner of
preparation of the budget shall be prescribed by law.

(2) No provision or enactment shall be embraced in the general

appropriations bill unless it relates specifically to some particular
appropriation therein. Any such provision or enactment shall be limited in
its operation to the appropriation to which it relates

(3) The procedure in approving appropriations for the Congress shall

strictly follow the procedure for approving appropriations for other
departments and agencies.

(4) A special appropriations bill shall specify the purpose for which it is
intended, and shall be supported by funds actually available as certified
by the National Treasurer, or to be raised by a corresponding revenue
proposal therein.

(5) No law shall be passed authorizing any transfer of appropriations;

however, the President, the President of the Senate, the Speaker of the
House of Representatives, the Chief Justice of the Supreme Court,
and the heads of Constitutional Commissions may, by law, be
authorized to augment any item in the general appropriations law
for their respective offices from savings in other items of their
respective appropriations.

(6) Discretionary funds appropriated for particular officials shall be

disbursed only for public purposes to be supported by appropriate
vouchers and subject to such guidelines as may be prescribed by law.

(7) If, by the end of any fiscal year, the Congress shall have failed to
pass the general appropriations bill for the ensuing fiscal year, the general
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appropriations law for the preceding fiscal year shall be deemed re-
enacted and shall remain in force and effect until the general
appropriations bill is passed by the Congress ( 1987 Philippine
Constitution).

The Arias doctrine exempts all heads of offices to the criminal acts
committed by their subordinates.

In Arias vs. Sandiganbayan, 180 SCRA 309, 315-316, the Supreme

Court, aware of the dire consequences that a different rule could bring,
has aptly concluded: We would be setting a bad precedent if a head of
office plagued by all too common problems dishonest or negligent
subordinates, overwork, multiple assignments or positions, or plain
incompetence is suddenly swept into a conspiracy conviction simply
because he did not personally examine every single detail,
painstakingly trace every step from inception, and investigate the
motives of every person involved in a transaction before affixing his
signature as the final approving authority. All heads of offices have to
rely to a reasonable extent on their subordinates and on the good faith
of those who prepare bids, purchase supplies, or enter into
negotiations. There has to be some added reason why he should
examine each voucher in such detail. Any executive head of even small
government agencies or commissions can attest to the volume of
papers that must be signed. There are hundreds of documents, letters,
memoranda, vouchers, and supporting papers that routinely pass
through his hands. The number in bigger offices or departments is even
more appalling. The Supreme Court is aware of an observation made
by this Court in People vs. Rodis 105 Phil. 1294 citing Samson vs.
Court of Appeals, 103 Phil. 277 to the effect that a person may be so
held liable as a co-principal if he, be an act of reckless imprudence, has
brought about the commission of estafa through falsification, or
malversation through falsification, without which (reckless negligence)
the crime could not have been accomplished. When, however, that
infraction consists in the reliance in good faith, albeit misplaced, by a
head of office on a subordinate upon whom the primary responsibility
rests, absent a clear case of conspiracy, the Arias doctrine must be
held to prevail.

Ex Judge Julia Reyes may not be able to recover her withheld salaries
and allowances due to estoppel: (1) leaving the country without returning
during the pendency of her administrative cases that showed
abandonment of her office; (2) laches because until now, she has no
claim over her withheld salaries and allowances. Where should be the
withheld salaries and allowances of Ex Julia Reyes go? Logically, it

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should go back to National Treasury for appropriation by Congress and
for the release by DBM.

However, since there was no demand from Congress, the Supreme Court
cannot be faulted if it retained the same for disposal just like the legal
fees.

Pertinent data can be obtained from OCA by OCJ, Ombudsman, DOJ,

BIR, GSIS, PHILHEALTH and PAG-IBIG for a joint investigation are:

1. Compilation of SC Resolutions withholding the salaries and benefits of

Judges and court employees due to pending administrative cases for the
last 10 years to 20 years;

2. Compilation of SC Decisions involving Judges and court employees

whose salaries and benefits were withheld for the last 10 years to 20
years; Compilation of the OCA - FMO financial records on withheld
salaries and benefits as well as the released salaries and benefits of the
Judges and court employees involved in the administrative cases for the
last 10 years to 20 years;

3. Compilation of proofs of remittances of the payments for BIR, GSIS,

PHILHEALTH and PAG-IBIG involving the Judges and court employees
whose salaries and benefits were withheld until the resolution of the
administrative cases for the last 10 years to 20 years;

4. Compilation of the proofs as to what did the OCA-FMO, for the last 10
years to 20 years, do with respect to the withheld salaries and benefits of
Judges and court employees when:

(a) the administrative case resulted in the dismissal of a Judge or a court

employee;

(b) when there is separation from service other than dismissal ex. transfer
or resignation of a Judge or a court employee before the resolution
of the administrative case;

(c) when there is a sanction imposed that is not dismissal of a Judge or a

court employee;

(d) when there is exoneration of a Judge or court employee in the

administrative case.

The following are the reasons why it is the Office of the Court
Administrator (OCA) not the Supreme Court (SC) as an employer that is
liable for the non-remittance of compulsory premiums:

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1. SC 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;

2. OCA is the attached office of SC that has sole and primary duty to
remit the compulsory premiums of SC employee in a SC Circular. While
it is the SC that is considered as the employer of Judges and court
employees, it is OCA that has the sole work and primary duty to remit
the compulsory premiums of incumbent Judges and court personnel for
GSIS, PHILHEALTH and PAG-IBIG. SC is different from the Office of
the Court Administrator, an attached office to the former created by
virtue of P.D. No. 828 as amended, whose functions and works are
outlined in Circular 3091. If the OCA is remiss with its duty in remitting
the compulsory premiums of Judges and court personnel, upon a
complaint by the aggrieved person or agency, the SC can take the
necessary action including holding the officials of the OCA
administratively and criminally liable. So as the sun was created to
provide light to mankind, the Supreme Court was created to give justice
to everyone thus it is the OCA that should be properly complained
before the SC, the employer, because the non-payments of compulsory
premiums of an employee of SC by OCA can be considered as Gross
Misconduct, Gross Ignorance of the Law, Gross Incompetence and
Gross Negligence;

3. SC did not issue any order or resolution not to pay or remit the
compulsory premiums during the pendency of the administrative cases of
Judges and court employees placed in a preventive suspension;

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4. It was OCA that construed the withholding of back salaries during a
preventive suspension of a SC employee to be the entire salary not the
net salary. Such wrong interpretation is Gross ignorance of the law,
Gross incompetence and Gross negligence because common sense
dictates, it is the withholding of net salaries only in a legal or illegal
preventive suspension in the CSC rules and regulations because of the
payments of compulsory premiums to GSIS, PHILHEALTH, PAG-IBIG,
National Internal Revenue Code (NIRC) as provided by special laws;

5. SC as an employer is not similar to other government employers

referred to in RA No. 7875, RA No. 8291, RA No. 9679 and NIRC, it has
many legal shields before the SC Justices it can be held administratively
and criminally liable e.g. Doctrine of Exhaustion of Administrative
Remedies. The adoption of the illegal recommendation, wrong
recommendation, false recommendation and slanted recommendation of
OCA in the Supreme Court is not a defense because it will make its
officials above the law that will render meaningless the constitutional
command that a public office is a public trust. Public officers and
employees must at all times be accountable to the people, serve them
with utmost responsibility, integrity, loyalty, and efficiency, act with
patriotism and justice and lead modest lives (Article XI, Section 1, 1987
Philippine Constitution). That the OCAs work is only recommendatory is
not an excuse and is not a shield from administrative and criminal liabilities
under the Constitution and criminal statutes. The doctrine of exhaustion of
administrative remedies does not apply to the officials of OCA thus they
can be sued successfully for his illegal recommendation, wrong
recommendation, false recommendation and slanted recommendation in
any administrative at SC. An incumbent Justice of SC cannot be sued
administratively and criminally before impeachment according to the
Constitution and jurisprudences but not the incumbent officials of OCA.
There is an unwritten rule that an incumbent Judge cannot sue an
incumbent Justice of SC but this does not apply to an official of OCA;

6. SC has inherent auto-correction of errors committed by OCA because

its principal reason for existence is to give justice to everyone under the
Constitution and statutes. SC is expected to correct the grave errors
committed by OCA in not remitting the compulsory premiums in the end
including holding the responsible OCA officials and /or employees
administratively and criminally liable. In this sense, no personal injury will
be suffered by those employees whose compulsory contributions were
unremitted in SC that does not reward an illegal act but punish an illegal
act because it decides according to the facts and the laws as a court of
law and justice. An incumbent SC Justice has an inherent auto-correction
of a wrong Decision or a wrong Resolution, for among many reasons, to
prevent manifest injustice, this is another shield from an administrative or
criminal suit. In fact, an uncontested and uncontroverted illegal, wrong,
false and slanted Decision or Resolution of SC will become a part of the
law of the land and it is denominated as a Supreme Error but still the
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ponente of it will not incur an administrative or criminal liability because of
the failure to exhaust the judicial or administrative remedies in SC. But
there is no such thing as Supreme Erroneous Recommendation by OCA
that must at all times be accountable to the people, serve them with
utmost responsibility, integrity, loyalty, and efficiency, act with
patriotism and justice and lead modest lives under the Constitution. What
more, good faith can be invoked only when there is the absence of
manifest bias and partiality, gross ignorance of the law, gross
incompetence, gross negligence and dereliction of duties on the part of
the officials of OCA that must present convincing proofs of good faith to
controvert the documentary proofs of bad faith adduced against it;

7. Additional support is the jurisprudence of 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. 200702-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.

PERTINENT GSIS, PHILHEALTH, PAG-IBIG AND BIR LAWS

RA N0. 8291 provides:

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.

(b) Whoever shall obtain or receive any money or check invoking any
provision of this Act or any agreement thereunder, without being entitled
thereto with the intent to defraud any member, any employer, the GSIS,
or any third party, 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 by imprisonment of not less than six (6) years and one (1)
day to twelve (12) years, or both, at the discretion of the court.

(C) Whoever fails or refuses to comply with the provisions of this Act or
with the rules and regulations adopted by the GSIS 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 by imprisonment of not less than
six (6) years and one (1) day to twelve (12) years, or both, at the
discretion of the court.
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(d) 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, or who fails or refuses or delays by more than thirty (30)
days from the time such amount becomes due and demandable, or to
deduct the monthly contributions of the employee shall, upon conviction
by final judgment, suffer the penalties of imprisonment from six (6)
months and one (1) day to six (6) years, and a fine of not less than Three
thousand pesos (P3,000.00) but not more than Six thousand pesos
(P6,000.00), and in addition shall suffer absolute perpetual disqualification
from holding public office and from practicing any profession or calling
licensed by the government.

(e) Any employee or member who receives or keeps fund or property

belonging, payable or deliverable to the GSIS and appropriates the
same, or takes or misappropriates or uses the same to any purpose
other than that authorized by this Act, or permits another person to take,
misappropriate or use said fund or property by expressly consenting
thereto, or through abandonment or negligence, or is otherwise guilty of
the misappropriation of said fund or property, in whole or in part, shall
suffer the penalties provided in Article 217 of the Revised Penal Code,
and in addition shall suffer absolute perpetual disqualification from
holding public office and from practicing any profession or calling
licensed by the government.

(f) Any employee, who after deducting the monthly contribution or loan
amortization from a member's compensation, fails to remit the same to
the GSIS within thirty (30) days from the date they should have been
remitted under Section 6(a) shall be presumed to have misappropriated
such contribution or loan amortization and shall suffer the penalties
provided in Article 315 of the Revised Penal Code, and in addition shall
suffer absolute perpetual disqualification from holding public office and
from practicing any profession or calling licensed by the government.

(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,
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

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perpetual disqualification from holding public office and from practicing
any profession or calling licensed by the government.

(h) The officers and/or personnel referred to in paragraph (g) of this

section shall be liable not only criminally but also civilly to the GSIS or to
the employee or member concerned in the form of damages, including
surcharges and interests.

(i)For the charges or complaints referred to in paragraph (g) of this

Section, the liabilities therein set forth shall be construed as waiver of the
State of its immunity from suit, hence, the above-mentioned officials
and/or personnel may not invoke the defense of non-suability of the State.

(j) Failure of the Members of the GSIS Board, including the chairman
and the vice-chairman, to comply with the provisions of paragraph (w) of
Section 41 hereof, shall subject them to imprisonment of not less than
six (6) months nor more than one (1) year or a fine of not less than Five
thousand pesos (P5,000.00) nor more than Ten thousand pesos
(P10,000.00) without prejudice to any civil or administrative liability
which may also arise therefrom. Criminal actions arising from violations
of the provisions of this Act may be commenced by the GSIS or by the
aggrieved member, either under this Act or, in appropriate cases, under
the Revised Penal Code.

RA 7875 as amended states:

SECTION 20. Payment of NHIP Premium Contributions

The members monthly contribution shall be deducted and withheld

automatically by the employer from the formers salary, wage or earnings.

The employers counterpart in the payment of contribution shall not in any

manner be charged to the employee.

The monthly premium contribution of employed members shall be

remitted by the employer on or before the tenth (10th) calendar day of
the month following the applicable month for which the payment is due
and applicable. The remittance of premium contribution by the employer
shall be supported by a Quarterly Remittance List to be submitted to the
Corporation not later than fifteen (15) calendar days after the end of
each calendar quarter. The failure of the employer to remit the required
contribution and to submit the required remittance list shall make the
employer liable for reimbursement of payment of a properly filed claim in
case the concerned employee or his/her dependent/s avails of NHIP
benefits, without prejudice to the imposition of other penalties as
provided for in this Rules.

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For government agencies, it shall be mandatory and compulsory for the
employers to include the payment of contributions in their annual
appropriations. The use of said funds other than for the purpose of
remitting NHIP contributions will hold the erring government employers
liable under the pertinent provisions of the Revised Penal Code.

XXX XXX XXX

SECTION 162. Failure/Refusal to Remit Contributions Any employer or

officer authorized to collect contributions who, after collecting or deducting
the monthly contributions due from his/its employees, fails or refuses to
remit said contributions to the Corporation within thirty (30) days from the
date they become due shall be presumed to have misappropriated such
contribution and shall suffer the penalties hereunder indicated and those
provided for in Article 315, par 1 (b) of the Revised Penal Code on
Swindling. The fine shall be in addition to the outstanding applicable
contribution receivable from the employer and shall be multiplied by the
total number of employees of the firm.

SECTION 164. Institution as Offender - If any of the acts or omissions

provided in the preceding section be committed by an association,
partnership, corporation or any other institution, its managing directors or
partners or president or general manager and/or any other persons
responsible for the commission of the said act shall be liable for the
penalties provided for in this Rules and other laws for the offense.

Rule XII of IRR of RA 9679, states:

Section 1. Penalty Clause. Pursuant to Section 25 of RA 9679, refusal or

failure without lawful cause or with fraudulent intent to comply with the
provisions of said law and these Rules, particularly with respect to
registration of employees, collection and remittance of employee-savings
as well as the required employer contributions, or the correct amount
due, within the time set under these Rules or the policies and guidelines

adopted by the Board, or specific call or extension made by the Fund

Management, shall constitute an offense punishable by a fine of not less
that, but not more than twice, the amount involved or imprisonment of
not more than six (6) years, or both such fine and imprisonment, in the
discretion of the Court, apart from the civil liabilities and/or obligations of
the offender or delinquent.

PENALTIES FOR LATE FILING OF TAX RETURNS

A. For late filing of Tax Returns with Tax Due to be paid, the following
penalties will be imposed upon filing, in addition to the tax due:

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1. Surcharge

NIRC SEC. 248. - Civil Penalties.

(A) There shall be imposed, in addition to the tax required to be paid, a

penalty equivalent to twenty-five percent (25%) of the amount due, in the
following cases:

Failure to file any return and pay the tax due thereon as required under
the provisions of this Code or rules and regulations on the date
prescribed; or Unless otherwise authorized by the Commissioner, filing a
return with an internal revenue officer other than those with whom the
return is required to be filed; or

Failure to pay the deficiency tax within the time prescribed for its payment
in the notice of assessment; or

2. Failure to pay the full or part of the amount of tax shown on any return
required to be filed under the provisions of this Code or rules and
regulations, or the full amount of tax due for which no return is required to
be filed, on or before the date prescribed for its payment of Interest.

NIRC SEC. 249. Interest. -

(A) In General. - There shall be assessed and collected on any unpaid

amount of tax, interest at the rate of twenty percent (20%) per annum, or
such higher rate as may be prescribed by rules and regulations, from the
date prescribed for payment until the amount is fully paid.
Compromise

NIRC SEC. 255. Failure to File Return, Supply Correct and Accurate
Information, Pay Tax Withhold and Remit Tax and Refund Excess Taxes
Withheld on Compensation. - Any person required under this Code or by
rules and regulations promulgated thereunder to pay any tax make a
return, keep any record, or supply correct the accurate information, who
willfully fails to pay such tax, make such return, keep such record, or
supply correct and accurate information, or withhold or remit taxes
withheld, or refund excess taxes withheld on compensation, at the time or
times required by law or rules and regulations shall, in addition to other
penalties provided by law, upon conviction thereof, be punished by a fine
of not less than Ten thousand pesos (P10,000) and suffer imprisonment
of not less than one (1) year but not more than ten (10) years.

Any person who attempts to make it appear for any reason that he or
another has in fact filed a return or statement, or actually files a return or
statement and subsequently withdraws the same return or statement after
securing the official receiving seal or stamp of receipt of internal revenue
14
office wherein the same was actually filed shall, upon conviction therefor,
be punished by a fine of not less than Ten thousand pesos (P10,000) but
not more than Twenty thousand pesos (P20,000) and suffer imprisonment
of not less than one (1) year but not more than three (3) years.

In addition, Revenue Memorandum Order (RMO) No. 19-2007 provides

for the Consolidated Revised Schedule of Compromise Penalties for
Violations of the National Internal Revenue Code (NIRC).

NIRC SEC. 255 Failure to file and/or pay any internal revenue tax at the
time or times required by law or regulation Fine of not less than P10,000
and imprisonment of not less than one (1) year but not more than 10
years. If the amount of tax unpaid XXX XXX

B. For late filing of Tax Returns with NO Tax Due to be paid, the
compromise penalty will be imposed upon filing of the Tax Return based
on the following:

1. For violations of the NIRC provisions which are subject to compromise,

the reference is found in page 2 of Annex A of RMO No. 19-2007.

TAX CODE SEC NATURE OF VIOLATION CRIMINAL PENALTY

IMPOSED AMOUNT OF COMPROMISE

NIRC SEC. 255 Failure to make/file/submit any return or supply correct

information at the time or times required by law or regulation Fine of not
less than P10,000 and imprisonment of not less than one (1) year but not
more than ten (10) years If gross annual sales, earnings or receipts; or
gross estate or gift XXX XXX

2. For violations of the NIRC provisions which may be the subject of

criminal actions, Section 250 of the NIRC will apply as follows:
NIRC SEC. 250. Failure to File Certain Information Returns. - In the case
of each failure to file an information return, statement or list, or keep any
record, or supply any information required by this Code or by the
Commissioner on the date prescribed therefor, unless it is shown that
such failure is due to reasonable cause and not to willful neglect, there
shall, upon notice and demand by the Commissioner, be paid by the
person failing to file, keep or supply the same, One thousand pesos
(1,000) for each failure: Provided, however, That the aggregate amount to
be imposed for all such failures during a calendar year shall not exceed
Twenty-five thousand pesos (P25,000).

C. For late filing of Statements I Reports required to be filed with NO Tax

Due to be paid, the compromise penalty will be imposed upon filing of the
Tax Return based on the following:

15
NIRC SEC. 275. Violation of Other Provisions of this Code or Rules and
Regulations in General. - Any person who violates any provision of this
Code or any rule or regulation promulgated by the Department of
Finance, for which no specific penalty is provided by law, shall, upon
conviction for each act or omission, be punished by a fine of not more
than One thousand pesos (P 1,000) or suffer imprisonment of not more
than six (6) months, or both.

Going back to Ex Judge Mario Melchors case, his administrative case

stemmed when a financial audit conducted by the Fiscal Monitoring
Division of the Office of the Court Administrator (OCA) from March 14 to
20, 2006, on the books of account of then Clerk of Court of
the Regional Trial Court, Branch 16, Naval, Biliran (RTC), Atty. Mario N.
Melchor, Jr. showed shortages of massive amounts from various funds
collected and handled by him totaling to P1,939,547.80 including his
failure to remit numerous cash bonds collected from the cases, amounting
to P715,84I.00 to LBP. He was relieved from his duties and
responsibilities as the accountable officer per Memorandum No. 01-2006
dated March 17, 2006. In his Comment dated April 3, 2006, he readily
admitted the findings of the audit team and apologized for his negligence.
He explained that the collected bail bonds from various cases were used
to defray the cost of the hospitalization expenses of his child. He pleaded
for compassionate justice and humanitarian consideration citing
"humanely error in discretion. He likewise informed the OCA that he
already restituted the shortages totaling P796, 841. In its Memorandum
dated October 3, 3007, the OCA informed the Supreme Court that it has
received a letter dated August 1, 2007 from him disclosing his compliance
with the directive of the Court by depositing the shortage. He further
informed the OCA that he had assumed office as Municipal Circuit Trial
Collli (MCTC) Judge of Calubian San Isidro, Leyte on December 29,
2006, but had yet to receive his initial salary for lack of clearance from the
Financial Management Office. He prayed that the administrative case
against him be considered closed and terminated. In its Report dated
February 24, 2012, the OCA recommended for his dismissal for gross
neglect of duty, gross dishonesty and gross misconduct. The Supreme
Court adopted OCAs recommendation and dismissed him from service
with forfeiture of retirement benefits. It held that Administrative Circular No.
3-200035 equally requires that the aggregate total of the deposit slips for
any particular month should always be equal to, and tally with, the total
collections for that month as reflected in the Monthly Report of Collections
and Deposits and Cash Book. Evidently, the accounting of the total
collections and remittances did not tally in this case. SC Circular Nos. 13-
92 and 5-93, as incorporated into the 2002 Revised Manual for Clerks of
Court, likewise provide the guidelines for the accounting of court funds. All
fiduciary collections shall be deposited immediately by the Clerk of Court
concerned, upon receipt thereof, with an authorized government
depository bank. In SC Circular No. 5-93, the Land Bank was designated
as the authorized government depository.36 Furthermore, Section B( 4) of

16
Circular No. 50-9537 directs that "all collections from bailbonds, rental
deposits and other fiduciary collections shall be deposited within twenty
four (24) hours by the Clerk of court concerned, upon receipt thereof, with
the Land Bank of the Philippines, in the name of the court as instructed in
Circular No. 13-92." Court personnel tasked with collections of court funds,
such as clerk of court and cash clerks, should deposit immediately with the
authorized government depositories the various funds they have collected.
Being the custodian of court funds and revenues, it was respondents
primary responsibility to immediately deposit the funds received by his
office with the Land Bank and not to keep the same in his custody. By
failing to properly remit the cash collections constituting public funds, he
violated the trust reposed in him as the disbursement officer of the
Judiciary. Delayed remittance of cash collections constitutes gross neglect
of duty because this omission deprives the court of interest that could
have been earned if the amounts were deposited in the authorized
depository bank. It should be stressed that clerks of court are required by
SC Circular No. 13-92 to withdraw interest earned on deposits, and to
remit the same to the account of the JDF within two (2) weeks after the
end of each quarter. Delay in the remittance of court funds in the period
required casts a serious doubt on the court employee's trustworthiness
and integrity. As held In Re: Report on the Judicial and Financial Audit of
RTC-Br. 4, Panabo, Davao Del Norte and Office of the Court Administrator
v. Recio, failure of the Clerk of Court to remit the court funds is tantamount
to gross neglect of duty, dishonesty and grave misconduct prejudicial to
the best interest of the service. His promotion as a judge during the
pendency of this case cannot be considered by the Court either as a
mitigating or an exculpatory circumstance to excuse him from any
administrative liability. A judge is still bound by the same principle
enshrined in Section 1, Article XI of the Constitution, which states that a
public office is a public trust, and all public officers and employees must at
all times be accountable to the people, serve them with utmost
responsibility, integrity, loyalty, and efficiency, act with patriotism and
justice, and lead modest lives. The demand for moral uprightness is more
pronounced for the members and personnel of the Judiciary who are
involved in the dispensation of justice. The conduct of court members and
personnel must not only be characterized with propriety and decorum but
must also be above suspicion, for any act of impropriety can seriously
erode or diminish the people's confidence in the Judiciary. As front
liners in the administration of justice, they should live up to the strictest
standards of honesty and integrity in the public service. Thus, his
current position in the judiciary will not merit any leniency from the
Court.

In the same vein, the Supreme Court does not agree with his contention
that the withholding of his salary as a judge was already penalty in itself.
It was a mere precautionary measure and not in any way a form of
penalty as he would still be compensated for actual service rendered.
The FMO OCA was directed to process and release the withheld salary

17
and other benefits he may be entitled for his service as Municipal Trial
Court judge until the promulgation of this decision.

Other inquiries of Ex Judge Mario Melchor's administrative case are:

1. Why was Clerk Mario Melchor nominated and appointed as a Judge

despite of his grave offenses that disqualified him for nomination and
appointment?

2. Who should be held administratively and criminally liable for the

nomination and appointment of Judge Mario Melchor?

3. Why was Judge Mario Melchor allowed to work for many years instead
of placing him under preventive suspension pending resolution due to
his grave offenses?

4. Who should be held administratively and criminally liable for not

placing Judge Mario Melchor under preventive suspension despite of
his grave offenses?

5. Why it took very long years, in violation of the Constitution, for the
resolution of Judge Mario Melchor's case?

6. Who should be held administratively liable for the very delayed

resolution of Judge Mario Melchor's case?

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