REYNALDO CANO CHUA,
doing G.R. No. 125837
business under the
name &
style PRIME MOVER
CONS-
TRUCTION
DEVELOPMENT, Present:
Petitioner,
PUNO,
J.,
- versus - Chairman,
AUSTRIA-MARTINEZ,
CALLEJO, SR.,*
TINGA, and
COURT OF APPEALS, SOCIAL CHICO-NAZARIO,
JJ.,*
SECURITY SYSTEM, ANDRES
PAGUIO, PABLO CANALE, RUEL
PANGAN, AURELIO PAGUIO, Promulgated:
ROLANDO TRINIDAD, ROMEO
TAPANG and CARLOS MALIWAT,
Respondents. October 6, 2004
x-------------------------------------------------------------------x
Tinga,
J.:
This is a petition for review of the Decision[1]
of the Court of Appeals in CA-G.R. CV No. 38269 dated 06 March 1996,
and its Resolution dated 30 July
1996 denying petitioner’s Motion for Reconsideration,[2] affirming
the Order of the Social Security Commission (SSC) dated 1 February 1995[3]
which held that private respondents were regular employees of the petitioner
and ordered petitioner to pay the
Social Security System (SSS) for its unpaid contributions, as well as penalty
for the delayed remittance thereof.
On 20 August 1985, private respondents Andres
Paguio, Pablo Canale, Ruel Pangan, Aurelio Paguio, Rolando Trinidad, Romeo
Tapang and Carlos Maliwat (hereinafter referred to as respondents) filed a Petition[4]
with the SSC for SSS coverage and contributions against petitioner Reynaldo
Chua, owner of Prime Mover Construction Development, claiming that they were
all regular employees of the petitioner in his construction business.[5]
Private respondents
claimed that they were assigned by petitioner in his various construction
projects continuously in the
following capacity, since the
period
indicated, and with
the corresponding basic salaries,[6]
to wit:
Andres Paguio Carpenter 1977 P
42/day
Pablo Canale Mason 1977 42/day
Ruel Pangan Mason 1979 39/day
Aurelio Paguio Fine grading 1979 42/day
Romeo Tapang Fine grading 1979 42/day
Rolando Trinidad Carpenter 1983 (Jan.)
39/day
Carlos Maliwat Mason 1977 42/day
Private respondents
alleged that petitioner dismissed all of them without justifiable grounds and
without notice to them and to the then Ministry of Labor and Employment. They further alleged that petitioner did not
report them to the SSS for compulsory coverage in flagrant violation of the
Social Security Act.[7]
In his Answer,[8]
petitioner claimed that private respondents had no cause of action against him,
and assuming there was any, the same was barred by prescription and
laches. In addition, he claimed that
private respondents were not regular employees, but project employees whose
work had been fixed for a specific project or undertaking the completion of
which was determined at the time of their engagement. This being the case, he concluded that said employees were not
entitled to coverage under the Social Security Act.[9]
Meanwhile, the SSS filed a Petition
in Intervention[10] alleging that it has an interest in the
petition filed by private respondents as it is charged with the implementation
and enforcement of the provisions of the Social Security Act. The SSS stated
that it is the mandatory obligation of every employer to report its employees
to the SSS for coverage and to remit the required contribution, including the
penalty imposed for late premium remittances.
On 01 February 1995, the SSC issued its Order[11]
which ruled in favor of private respondents. The SSC, relying on NLRC Case No.
RAB-III-8-2373-85,[12]
declared private respondents to be petitioner’s regular employees.[13] It ordered petitioner to pay the SSS the
unpaid SS/EC and Medicare
contributions plus penalty
for the delayed
remittance thereof, without
prejudice to
any other penalties
which may have accrued.[14] The SSC denied the Motion for
Reconsideration[15]
of petitioner for lack of merit.[16]
Petitioner elevated the matter to the
Court of Appeals via a Petition for Review.[17] He claimed that private respondents were
project employees, whose periods of employment were terminated upon completion
of the project. Thus, he claimed, no
employer-employee relation existed between the parties.[18] There being no employer-employee
relationship, private respondents are not entitled to coverage under the Social
Security Act.[19] In addition, petitioner claimed that private
respondents’ length of service did not change their status from project to
regular employees.[20]
Moreover, granting that private
respondents were entitled to coverage under the Act, petitioner claimed that
the SSC erred in imposing penalties since his failure to include private
respondents under SSS coverage was neither willful nor deliberate, but due to
the honest belief that project employees are not regular employees.[21] Likewise, he claimed that the SSC erred in
ordering payment of contributions and penalties even for long periods between
projects when private respondents were not working.[22]
Petitioner also questioned the failure
to apply the rules on prescription of actions and of laches, claiming that the case, being one for the
injury to the rights of the private respondents, should have been filed within
four (4) years from the time their cause of action accrued, or from the time they were hired as project
employees. He added that private respondents “went into a long swoon,
folded their arms and closed their eyes”[23]
and filed their claim only in 1985, or six (6) years or eight (8) years after
they were taken in by petitioner.[24]
In resolving the petition, the Court of
Appeals synthesized the issues in the petition, to wit: (1) whether private
respondents were regular employees of petitioner, and whether their causes of
action as such are barred by prescription or laches; (2) if so, whether
petitioner is now liable to pay the SSS contributions and penalties during the
period of employment.[25]
The Court of Appeals, citing Article 280
of the Labor Code,[26]
declared that private respondents were all regular employees of the petitioner
in relation to certain activities since they all worked either as masons,
carpenters and fine graders in petitioner’s various construction projects for
at least one year, and that their work was necessary and desirable to
petitioner’s business which involved the construction of roads and bridges.[27] It cited the case of Mehitabel Furniture
Company, Inc. v. NLRC,[28]
particularly the ruling therein which states:
By
petitioner’s own admission, the private respondents have been hired to work on
certain special orders that as a matter of business policy it cannot
decline. These projects are necessary
or desirable in its usual business or trade, otherwise they would not have
accepted …. Significantly, such special orders are not really seasonal but more
or less regular, requiring the virtually continuous services of the “temporary
workers.” The NLRC also correctly observed that “if we were to accept
respondent’s theory, it would have no regular workers because all of its orders
would be special undertakings or projects.” The petitioner could then hire
all its workers on a contract basis only and prevent them from attaining
permanent status….
Furthermore,
the NLRC has determined that the private respondents have worked for more than
one year in the so-called “special projects” of the petitioner and so fall
under the second condition specified in the above-quoted provision (Article
280, Labor Code).[29]
The Court of Appeals
rejected the claim of prescription, stating that the filing of private respondents’ claims was well
within the twenty (20)-year period provided by the
Social Security Act.[30] It found that the principle of laches could
not also apply to the instant case since delay could not be attributed to
private respondents, having filed the case within the prescriptive period, and
that there was no evidence that petitioner lacked knowledge that private
respondents would assert their rights.[31]
Petitioner filed a Motion for Reconsideration,[32]
claiming that the Court of Appeals overlooked (1) the doctrine that
length of service of a project employee is not the controlling test of
employment tenure, and (2) petitioner’s failure to place private respondents
under SSS coverage was in good faith.
The motion was denied for lack of merit.[33]
In the present Petition for
Review, petitioner again insists that private respondents were not regular,
but project, employees and thus not subject to SSS coverage. In addition, petitioner claims that assuming
private respondents were subject to SSS coverage, their petition was barred by
prescription and laches. Moreover,
petitioner invokes the defense of good faith, or his honest belief that project
employees are not regular employees
under Article 280 of the Labor Code.
Petitioner’s arguments are mere
reiterations of his arguments submitted before the SSC and the Court of
Appeals. More importantly, petitioner
wants this Court to review factual questions already passed upon by the SSC and
the Court of Appeals which are not cognizable by a petition for review under
Rule 45. Well-entrenched is the rule
that the Supreme Court’s jurisdiction in a petition for review is limited to
reviewing or revising errors of law allegedly committed by the appellate court,
the findings of fact being generally conclusive on the Court and it is not for
the Court to weigh evidence all over
again.[34]
Stripped of the
lengthy, if not repetitive, disquisition of the private parties in the case,
and also of the public respondents, on the nature of private respondents’
employment, the controversy boils down to one issue: the entitlement of private respondents to compulsory SSS
coverage.
The Social Security
Act was enacted pursuant to the policy of the government “to develop, establish
gradually and perfect a social security system which shall be suitable to the
needs of the laborers throughout the Philippines, and shall provide protection
against the hazards of disability, sickness, old age and death.”[35] It provides for compulsory coverage of all
employees not over sixty years of age and their employers.[36]
Well-settled is the
rule that the mandatory coverage of Republic Act No. 1161, as amended, is
premised on the existence of an employer-employee relationship, the essential
elements of which are: (a) selection and engagement of the employee; (b)
payment of wages; (c) the power of dismissal; and (d) the power of control with
regard to the means and methods by which the work is to be accomplished, with
the power of control being the most determinative factor.[37]
There is no dispute that private
respondents were employees of petitioner.
Petitioner himself admitted that they worked in his construction
projects,[38] although
the period of their employment was allegedly co-terminus with their phase of
work.[39] Even without such admission from petitioner,
the existence of an employer-employee relationship between the parties can
easily be determined by the application of the “control test,”[40]
the elements of which are enumerated above. It is clear that private
respondents are employees of petitioner, the latter having control over the
results of the work done, as well as the means and methods by which the same
were accomplished. Suffice it to say that regardless of the nature of their
employment, whether it is regular or project, private respondents are subject
of the compulsory coverage under the SSS Law, their employment not falling
under the exceptions provided by the law.[41] This rule is in accord with the Court’s
ruling in Luzon Stevedoring Corp. v. SSS[42]
to the effect that all employees, regardless of tenure, would qualify for
compulsory membership in the SSS, except those classes of employees
contemplated in Section 8(j) of the Social Security Act.[43]
This Court also finds no
reason to deviate from the finding of the Court of Appeals regarding the nature
of employment of private respondents.
Despite the insistence of petitioner that they were project employees,
the facts show that as masons, carpenters and fine graders in petitioner’s
various construction projects, they performed work which was usually necessary
and desirable to petitioner’s business which involves construction of roads and
bridges. In Violeta v. NLRC,[44]
this Court ruled that to be
exempted from the presumption of regularity of employment, the agreement
between a project employee and his employer must strictly conform to the
requirements and conditions under Article 280 of the Labor Code. It is not enough that an employee is hired
for a specific project or phase of work.
There must also be a determination of, or a clear agreement on, the
completion or termination of the project at the time the employee was engaged
if the objectives of Article 280 are to be achieved.[45]
This second requirement was not met in this case.
Moreover, while it may
be true that private respondents were
initially hired for specific projects or undertakings, the repeated re-hiring
and continuing need for their services over a long span of time—the shortest being
two years and the longest being eight—have undeniably made them regular
employees.[46] This Court has held that an employment
ceases to be co-terminus with specific projects when the employee is
continuously rehired due to the demands of
the employer’s business and re-engaged for many more projects without
interruption.[47] The Court likewise takes note of the fact
that, as cited by the SSC, even the National Labor Relations Commission in a
labor case involving the same parties, found that private respondents were
regular employees of the petitioner.[48]
Another cogent factor militates against the
allegations of the petitioner. In the
proceedings before the SSC and the Court of Appeals, petitioner was unable to
show that private respondents were appraised of the project nature of their
employment, the specific projects themselves or any phase thereof undertaken by
petitioner and for which private respondents were hired. He failed to show any document such as
private respondents’ employment contracts and employment records that would
indicate the dates of hiring and termination in relation to the particular
construction project or phases in which they were employed.[49] Moreover, it is peculiar that petitioner did
not show proof that he submitted reports of termination after the completion of
his construction projects, considering that he alleges that private respondents
were hired and rehired for various projects or phases of work therein.
Anent the issue of
prescription, this Court rules that
private respondents’ right to
file their claim had not yet prescribed at the time of the filing of their
petition, considering that a mere eight (8) years had passed from the time
delinquency was discovered or the proper assessment was made. Republic Act No.
1161, as amended, prescribes a period
of twenty (20) years, from the time the delinquency is known or assessment is
made by the SSS, within which to file a claim for non-remittance against
employers.[50]
Likewise, this Court
is in full accord with the findings of the Court of Appeals that private
respondents are not guilty of laches.
The principle of laches or “stale demands” ordains that the failure or
neglect, for an unreasonable and unexplained length of time, to do that which
by exercising due diligence could or should have been done earlier, or the
negligence or omission to assert a right within a reasonable time, warrants a
presumption that the party entitled to assert it either has abandoned it or
declined to assert it.[51] In the instant case, this Court finds no
proof that private respondents had failed or neglected to assert their right,
considering that they filed their claim within the period prescribed by law.
This Court finds no
merit in petitioner’s protestations of good faith. In United Christian
Missionary Society v. Social Security Commission,[52]
this Court ruled that good faith or bad faith is irrelevant for purposes of
assessment and collection of the penalty for delayed remittance of premiums,
since the law makes no distinction between an employer who professes good
reasons for delaying the remittance of premiums and another who deliberately
disregards the legal duty imposed upon him to make such remittance.[53] For the same reasons, petitioner cannot now
invoke the defense of good faith.
WHEREFORE, the Petition is
DENIED. The Decision and Resolution
of the Court of Appeals promulgated on 6 March 1996 and 30 July 1996
respectively, are AFFIRMED. Costs
against petitioner.
SO ORDERED.
DANTE
O. TINGA
Associate
Justice
WE
CONCUR:
Chairman
(On Leave)
MA. ALICIA
AUSTRIA-MARTINEZ ROMEO J. CALLEJO, SR.
Associate Justice Associate Justice
(On Leave)
MINITA V. CHICO-NAZARIO
I attest that the conclusions in the above Decision were reached in consultation before the case was assigned to the writer of the opinion of the Court’s Division.
REYNATO S. PUNO
Associate Justice
Chairman, Second Division
C E R T I F I C A T I O N
Pursuant to Section 13, Article VIII of the Constitution, it is hereby certified that the conclusions in the above decision were reached in consultation before the case was assigned to the writer of the opinion of the Court’s Division.
HILARIO
G. DAVIDE, JR.
Chief Justice
[1]Promulgated by the Sixth Division, penned by Associate Justice Antonio M. Martinez, with Associate Justices Pacita Canizares-Nye and Romeo J.
Callejo, Sr. (now Supreme Court Associate Justice) concurring; Rollo, pp. 31-38.
[12]Andres Paguio, et al. v. Reynaldo Cano
Chua, Decision of the NLRC-Third Division, promulgated on 29 November 1989.
[14]Id. at 71. The dispositive portion of the Order reads:
WHEREFORE, RPEMISES CONSIDERED, this
Commission finds and so holds that petitioners were regular employees of
respondent for the periods above-stated
and hereby orders respondent Reynaldo Cano Chua to pay the SSS the amount
of FIFTY EIGHT THOUSAND, FOUR HUNDRED
TWENTY THREE PESOS AND FIVE CENTAVOS (P58,423.05)
for petitioners’ unpaid SS/EC and Medicare contributions plus the amount
of TWO HUNDRED SIXTY NINE THOUSAND, SIX
HUNDRED FORTY PESOS AND SIXTY TWO CENTAVOS (P269,640.62) representing the 3% per month penalty for
delayed remittance thereof, computed as of November 30, 1994, without prejudice
to the collection of additional penalties that have accrued after said date,
pursuant to Section 22 (a) of the SS Law, as amended.
[26]Art. 280. Regular and casual
employment. — The provisions of written agreement to the contrary
notwithstanding and regardless of the oral agreement of the parties, an
employment shall be deemed to be regular where the employee has been
engaged to perform activities which are
necessary or desirable in the usual business or trade of the employer, except when the employment has been fixed for a specific
project or undertaking the completion or termination of which has been
determined at the time of the engagement of the employee or where the work or
services to be performed is seasonal in nature and the employment is for the
duration of the season.
An employment shall be deemed to be
casual if it is not covered by the preceding paragraph; Provided That, any
employee who has rendered at least one year of service, whether such service be
continuous or broken, shall be considered a regular employee with respect to
the activity in which he is employed and his employment shall continue while
such activity exists.
[30]Rollo, p. 37; Sec. 22(b) of the Social
Security Act, as amended, provides:
Sec. 22(b). The right to institute the necessary action
against the employer (for non-remittance of contributions) may be commenced
within 20 years from the time the delinquency is known or the assessment is made
by the SSS, as the case may be.
[34]Omandam v. Court of Appeals, G.R. No. 128750, January 18, 2001, 349 SCRA 483, 488, citing Bautista v.
Mangaldan Rural Bank, Inc., February 10, 1994, 230 SCRA 16.
[37]Social Security System v. Court of
Appeals G.R. No. 100388, 14 December
2000, 348 SCRA 1, 10-11; Section
8(d) of R.A. 1161, as amended, reads:
(d) Employee — Any
person who performs services for an employer in which either or both mental and
physical efforts are used and who receives compensation for such services,
where there is an employer-employee relationship; Provided, That a
self-employed professional shall be
both employee and employer at the same time. (As amended by Sec. 4, R.A. 2658 and Sec. 2, P.D. No. 1636, S-1979)
[38]Rollo, p.16.
[41]Section 8(j) provides for exceptions to
compulsory SSS Law coverage, to wit:
j.) Employment. — Any service performed by an
employee for his employer, except
1. Agricultural labor
when performed by a share or leasehold tenant or worker who is not paid any
regular daily wage or base pay and who does not work for an uninterrupted
period of at least six months in a year; (As amended by Sec. 4, R.A. 2658)
2. Domestic service in a private home;
3. Employment purely casual and not for the
purposes of occupation or business of the employer;
4. Service performed by an individual in the
employ of his son, daughter, or spouse, and service performed by a child under
the age of twenty-one years in the employ of his parents;
5. Service performed
on or in connection with an alien vessel by an employee if he is employed when
such vessel is outside the Philippines;
6. Service performed in the employ of the
Philippine Government or an instrumentality or agency thereof;
7. Service performed
in the employ of a foreign government or international organization, or their
wholly-owned instrumentality: Provided, however, That his exemption
notwithstanding, any foreign government, international organization, or their
wholly-owned instrumentality employing workers in the Philippines or employing
Filipinos outside of the Philippines may enter into an agreement with the Philippine
Government for the inclusion of
such employees in the SSS except those already covered by their respective
civil service retirement systems: Provided, further, That the terms of such
agreement shall conform with the provisions of this Act on coverage and amount of payment of contributions and
benefits: Provided, finally, That the provisions of this Act shall be
supplementary to any such agreement. (As amended by Sec. 1, R.A. 3839; Sec. 3,
R.A. 4857; and Sec. 5, P.D. No. 735, S-1975)
8. Such other services performed by temporary employees who may be excluded by regulation of the Commission. Employees of bona fide independent contractors shall not be deemed employees of the employer engaging the services of said contractors. (As amended by Sec. 5, P.D. No. 735, S-1975).
[48]Rollo, p. 69; Decision of the
NLRC-Third Division in NLRC Case No. RAB-III-8-2373-85 promulgated on 29
November 1989.
[50]Section 22(b), R.A. 1161, as
amended, in part reads:
…The
right to institute the necessary action against the employer may be commenced
within twenty 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. (As
amended by Sec. 15, P.D. No. 1636, S-1979).