GR 125837; (October, 2004) (Digest)
G.R. No. 125837; October 6, 2004
Reynaldo Cano Chua, doing business under the name & style Prime Mover Construction Development, petitioner, vs. Court of Appeals, Social Security Commission, Social Security System, Andres Paguio, Pablo Canale, Ruel Pangan, Aurelio Paguio, Rolando Trinidad, Romeo Tapang and Carlos Maliwat, respondents.
FACTS
Private respondents, working as carpenters, masons, and fine graders, filed a petition with the Social Security Commission (SSC) against petitioner Reynaldo Chua, owner of Prime Mover Construction Development. They alleged they were his regular employees since 1977, continuously assigned to various construction projects, and were dismissed without cause or notice. They claimed Chua failed to report them for compulsory SSS coverage. Chua countered that they were project employees, hired for specific construction undertakings, and thus not entitled to SSS coverage. He also argued the action was barred by prescription and laches.
The SSC ruled in favor of the private respondents, declaring them regular employees based on a prior NLRC case and ordering Chua to pay unpaid SSS contributions plus penalties. The Court of Appeals affirmed this decision. Chua elevated the case to the Supreme Court via a petition for review.
ISSUE
The primary issue is whether private respondents are regular employees entitled to compulsory SSS coverage, making petitioner liable for unpaid contributions and penalties.
RULING
The Supreme Court denied the petition and affirmed the lower courts’ rulings. The legal logic rests on the application of Article 280 of the Labor Code, which defines regular employment. The Court held that private respondents, performing tasks necessary and desirable to petitioner’s construction business repeatedly and for extended periods (since 1977), were regular employees. Their repeated rehiring for petitioner’s successive projects belied the claim of being merely project-based; they were effectively part of a work pool from which petitioner drew workers for his continuous construction activities. This established an employer-employee relationship.
Consequently, as regular employees, they were compulsorily coverable under the Social Security Act. The employer’s mandatory duty to report them and remit contributions is not negated by the employer’s good faith belief they were project employees. The Court also rejected the prescription defense, citing Section 22(b) of the Social Security Law, which provides a twenty-year prescriptive period for the SSS to collect contributions from the time the delinquency is known. The cause of action had not prescribed. Petitioner was thus correctly held liable for the unpaid contributions and the prescribed penalties for delayed remittance.