Lo v. Court of Appeals
REITERATIONFacts
The Antecedents: Private respondent Gregorio Luguibis was employed as a mechanic by Jose Lo from April 22, 1953, at Polangui Rice Mill, Inc., and later at Polangui Bijon Factory. His employment continued until 1970 when he resigned due to illness. In 1978, the management of these factories was transferred to Jose Lo's son, petitioner Rafael Lo, and his sister, Leticia Lo. Petitioner Rafael Lo took over the rice mill, renaming it Rafael Lo Rice and Corn Mill. In 1981, private respondent was rehired by Jose Lo as a mechanic, with a daily wage, and continued working until August 11, 1984, when he suffered an accident that forced him to retire. Procedural History: In 1985, private respondent filed for retirement benefits with the Social Security System (SSS), but his application was denied as SSS records showed he became a member only in 1983, with contributions remitted from October 1983 to September 1984. Believing that SSS contributions had been deducted from his salary since 1957, private respondent filed a petition with the Social Security Commission (SSC) against Jose Lo and petitioner Rafael Lo. The SSC ruled in favor of private respondent, ordering Jose Lo and Rafael Lo to remit unpaid contributions and penalties for specific periods. Petitioner Rafael Lo filed a petition for review with the Court of Appeals, which affirmed the SSC decision, with a slight modification on the period of contributions for Rafael Lo. The Court of Appeals denied his motion for reconsideration, leading to the present petition for review. The Petition: Petitioner Rafael Lo seeks review of the Court of Appeals' decision, arguing that the claims have prescribed and that the findings of fact were based on a misapprehension of facts and unsupported by evidence, constituting grave abuse of discretion.
Issue(s)
Whether the claims for unpaid SSS contributions have prescribed. Whether the findings of fact by the Court of Appeals are supported by substantial evidence and free from grave abuse of discretion.
Ruling
The petition is DISMISSED and the decision of the Court of Appeals is AFFIRMED.
Ratio Decidendi
On the issue of prescription: The Court held that the prescriptive period for an employer's failure to remit SSS contributions is governed by Section 22(b), paragraph 2 of Republic Act No. 1161, as amended, which provides for a twenty (20) year prescriptive period. This period commences 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. The Court clarified that this applies to administrative and civil actions against an employer for failure to remit contributions. In this case, private respondent discovered the delinquency only after his separation from employment in September 1984, as deductions were made from his salary monthly, making it impossible for him to know of the non-remittance prior to that. Therefore, the prescriptive period commenced in 1985 when the complaint was filed, less than one year after the discovery of the violation. The Court also noted that even if the prescriptive period began to run earlier, the 20-year period under P.D. 1636 (effective January 1, 1980) would apply, as the original prescriptive period had not yet expired when P.D. 1636 took effect, effectively extending it. The argument that the Civil Code provisions on divisible obligations should apply was rejected due to the clear language of R.A. 1161. On the issue of findings of fact and grave abuse of discretion: The Court affirmed the findings of the Social Security Commission and the Court of Appeals that private respondent was a regular employee of Jose Lo from September 1957 to September 1970 and of Rafael Lo Rice and Corn Mill from January 1981 to September 1984. The appellate court's decision was based not solely on Leticia Lo's testimony, which it found not very credible, but on the totality of evidence considered by the SSC. The SSC's conclusion was reached after a thorough consideration of all evidence presented, including the testimonies of Gregorio Luguibis and Jesus Balingasa, which were found to be explicit, clear, and corroborated. In contrast, the evidence presented by the opposing party regarding the dates of Luguibis' employment was inconsistent. The Court reiterated its ruling that in reviewing administrative decisions, findings of fact must be respected if supported by substantial evidence, and it is not the role of the reviewing court to re-weigh evidence or substitute its judgment for that of the administrative agency, unless there is grave abuse of discretion, fraud, or error of law. The Court found sufficient basis for the conclusion that private respondent was an employee when compulsory SSS coverage took effect.
Main Doctrine
The prescriptive period for an employer's failure to remit SSS contributions commences 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, and not necessarily from the date the obligation to pay accrued, especially when the employee could not have known of the delinquency.