MANILA – The Court of Appeals (CA) has ruled that a defunct rural bank or its liquidator, the Philippine Deposit Insurance Corp. (PDIC), is liable to pay the unremitted Social Security System (SSS) contributions of its employees before liquidation in 1991.
The appellate court said, however, that the Rural Bank of Magarao in Camarines Sur or PDIC are responsible only for PHP42,934.
The ruling, promulgated Aug. 16 and released Tuesday, reversed the November 2019 decision of the Naga Regional Trial Court Branch 25 which said the bank’s total outstanding obligation amounted to PHP434,804 to include unremitted SSS contributions after 1991.
“(I)t is clear that the rural bank’s obligation to remit contributions arising from employment had already ceased on Jan. 18, 1991 when the Monetary Board issued Board Resolution No. 49, ordering the rural bank’s liquidation, which effectively severed its employment relationship with its employees,” the CA said.
PDIC claimed that the closed bank cannot be held liable to pay penalties sought by the SSS as the imposition of such penalty would aggravate the rural bank’s financial condition.
In any case, the cash of the debt-laden bank is insufficient to fully cover the trust obligations, including the claim of SSS, the PDIC said.
Section 13 of the PDIC Charter provides that a bank placed under liquidation shall not reopen and be permitted to resume banking business while Section 12 states that banks closed by the Monetary Board shall no longer be rehabilitated.
Upon liquidation, the powers, functions and duties of the directors, officers and stockholders of the bank are terminated and they shall be barred from interfering in any way with the assets, records and affairs of the bank. (PNA)
