Republic of the
Supreme Court
|
MANDAUE GALLEON TRADE, INC. and/or
GAMALLOSONS TRADERS, INC., |
G.R. No. 159668 |
|
Petitioners, |
Present: |
|
|
|
|
- versus - |
YNARES-SANTIAGO,
J., Chairperson, AUSTRIA-MARTINEZ, CHICO-NAZARIO, NACHURA,
and |
|
|
REYES,
JJ. |
|
VICENTE ANDALES,
RESTITUTA SOLITANA,* ELPIDIO SUELTO, ET AL.,** Respondents.[1] |
Promulgated:
March
7, 2008 |
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D E C I S I O N
AUSTRIA-MARTINEZ, J.:
Before the Court is a Petition for
Review on Certiorari under Rule 45 of the Rules of Court assailing the
Decision[2]
dated
The facts:
Petitioners Mandaue
Galleon Trade, Inc. (MGTI) and Gamallosons Traders,
Inc.[4]
(GTI) are business entities engaged in rattan furniture manufacturing for
export, with principal place of business at Cabangcalan,
Respondent Vicente Andales[5]
(Andales) filed a complaint with the Labor Arbiter
(LA) against both petitioners for illegal dismissal and non-payment of 13th
month pay and service incentive leave pay. His other co-workers numbering 260 filed a
similar complaint against petitioner MGTI only.
The complainants alleged that MGTI
hired them on various dates as weavers, grinders, sanders and finishers; sometime
in August 1998, workers in the Finishing Department were told that they would
be transferred to a contractor and they were given Visitor Identification Cards
(IDs), while workers in the Weaving Department were told to look for work
elsewhere as the company had no work for them; sometime in September 1998,
workers in the Grinding Department were not allowed to enter the company
premises, while workers in the Sanding Department were told that they could no
longer work since there was no work available; workers who were issued IDs were
allowed to go inside the premises; and they were dismissed without notice and
just cause.
They further alleged that they are
regular employees of MGTI because: (a) they performed their work inside the
company premises in Cabangcalan, Mandaue
City; (b) they were issued uniforms by MGTI and were told to strictly follow
company rules and regulations; (c) they were under the supervision of MGTI's foremen, quality control personnel and checkers; (d)
MGTI supplied the materials, designs, tools and equipment in the production of
furniture; (e) MGTI conducts orientations on how the work was to be done and
the safe and efficient use of tools and equipment; (f) MGTI issues memoranda
regarding absences and waste of materials; and (g) MGTI exercises the power to
discipline them.
On the other hand, MGTI denied the
existence of employer-employee relationship with complainants, claiming that
they are workers of independent contractors whose services were engaged
temporarily and seasonally when the demands for its products are high and could
not be met by its regular workforce; the independent contractors recruited and
hired the complainants, prepared the payroll and paid their wages, supervised
and directed their work, and had authority to dismiss them. It averred that due to the economic crisis
and internal squabble in the company, the volume of orders from foreign buyers
dived; as a survival measure, management decided to retrench its employees; and
the substantial separation pay paid to retrenched employees caught the jealous
eyes of complainants who caused the filing of the complaint for illegal
dismissal.
On August 23, 1999, the LA rendered
a Decision[6]
holding that 183[7] complainants are regular
piece-rate employees of MGTI since they were made to perform functions which
are necessary to MGTI's rattan furniture
manufacturing business; the independent contractors were not properly
identified; the absence of proof that the independent contractors have work
premises of their own, substantial capital or investment in the form of tools,
equipment and machineries make them only labor contractors; and there was no
dismissal but only a claim for separation pay.
The LA ordered petitioners to take back complainants and directed it to
pay their 13th month pay in the total sum of P545,386.43.
Both parties appealed. On
Commission
(NLRC) rendered a Decision[8]
affirming the LA's finding of employer-employee relationship. It held that labor-only contracting and not
job-contracting was present since the alleged contractors did not have
substantial capital in the form of equipment, machineries and work
premises. The NLRC, however, did not
agree with the LA's finding that there was no dismissal. It held that complainants were constructively
dismissed when they were unilaterally transferred to a contractor to evade
payment of separation pay as a result of the retrenchment. Thus, it directed MGTI to pay complainants
separation pay of one month for every year of service based on the prevailing
minimum wage at the time of their dismissal, in addition to payment of 13th
month pay.
Both parties filed separate motions
for reconsideration[9]
but the NLRC denied them in a Resolution[10]
dated
On
On
On
After taking a second look at the petition and in consonance with
Article 283 of the Labor Code, We are computing the separation pay of the 183
private respondents at one-half month salary per year of service up to the
promulgation of this Amended Decision.
WHEREFORE,
petitioners' motion for reconsideration is PARTIALLY GRANTED. This Court's decision dated
SO ORDERED.[15]
On
Meanwhile, on
Respondents then filed with this
Court a Petition for Certiorari with Motion to Consolidate the Petition
with the present petition, assailing the
In the present petition, petitioners
raise the sole issue:
I
WHETHER OR NOT THE COURT OF APPEALS
COMMITTED GRAVE AND REVERSIBLE ERROR IN CONSIDERING THE RESPONDENTS AS
EMPLOYEES OF THE PETITIONERS ABSENT THE REQUISITES/ ELEMENTS IN THE
JURISPRUDENCE AS DETERMINATIVE FACTOR IN THE EXISTENCE OF EMPLOYER-EMPLOYEE
RELATIONSHIP.[21]
Petitioners
submit that respondents are employees of independent contractors who have their
own manpower, tools, equipment and capital; they did not have a hand in
respondents' recruitment and hiring, payment of wages, control and supervision,
and dismissal; and respondents did not have time cards or uniforms, nor were
they subjected to petitioner's company policies.
On the other
hand, respondents, in their Comment and Memorandum, assail the CA's Amended
Decision which reduced the separation pay from one month to one-half month,
claiming there was no justification to support such order. Moreover, they contend that they were denied
their day in court when the CA did not resolve their Motion for Reconsideration
of the Amended Decision. They aver that
since they were illegally dismissed, they are entitled to backwages
and not only separation pay.
The petition is
bereft of merit.
Factual findings
of quasi-judicial bodies like the NLRC, when adopted and confirmed by the CA
and if supported by substantial evidence, are accorded respect and even
finality by this Court.[22] The existence of an employer-employee
relationship is a factual matter that will not be delved into by this Court,
since only questions of law may be raised in petitions for review.[23] The Court has recognized several exceptions
to this rule, such as: (1) when the findings are grounded entirely on
speculation, surmises or conjectures; (2) when the inference made is manifestly
mistaken, absurd or impossible; (3) when there is grave abuse of discretion;
(4) when the judgment is based on a misapprehension of facts; (5) when the
findings of fact are conflicting; (6) when in making its findings, the CA went
beyond the issues of the case, or its findings are contrary to the admissions
of both the appellant and the appellee; (7) when the
findings are contrary to the trial court; (8) when the findings are conclusions
without citation of specific evidence on which they are based; (9) when the
facts set forth in the petition as well as in the petitioner’s main and reply
briefs are not disputed by the respondent; (10) when the findings of fact are
premised on the supposed absence of evidence and contradicted by the evidence
on record; and (11) when the CA manifestly overlooked certain relevant facts
not disputed by the parties, which, if properly considered, would justify a
different conclusion.[24] None of these
exceptions, however, has been convincingly shown by
petitioners to apply in the present case.
Article 106 of the Labor Code explains
the relations which may arise between an employer, a contractor and the
contractor’s employees thus:
ART.
106. Contractor or subcontractor. – Whenever an employer enters into a contract with
another person for the performance of the former’s
work, the employees of the contractor and of the latter’s subcontractor, if
any, shall be paid in accordance with the provisions of this Code.
In
the event that the contractor or subcontractor fails to pay the wages of his
employees in accordance with this Code, the employer shall be jointly and
severally liable with his contractor or subcontractor to such employees to the
extent of the work performed under the contract, in the same manner and extent
that he is liable to employees directly employed by him.
The
Secretary of Labor may, by appropriate regulations, restrict or prohibit the
contracting out of labor to protect the rights of workers established under
this Code. In so prohibiting or restricting, he may make appropriate
distinctions between labor-only contracting and job contracting as well as
differentiations within these types of contracting and determine who among the
parties involved shall be considered the employer for purposes of this Code, to
prevent any violation or circumvention of any provision of this Code.
There is
“labor-only” contracting where the person supplying workers to an employer does
not have substantial capital or investment in the form of tools, equipment,
machineries, work premises, among others, and the workers recruited and placed
by such persons are performing activities which directly related to the
principal business of such employer. In such cases, the person or intermediary
shall be considered merely as an agent of the employer who shall be responsible
to the workers in the same manner and extent as if the latter were directly
employed by him.
The first two
paragraphs of Article 106 set the general rule that a principal is permitted by
law to engage the services of a contractor for the performance of a particular
job, but the principal, nevertheless, becomes solidarily
liable with the contractor for the wages of the contractor’s employees. The third paragraph of Article 106, however,
empowers the Secretary of Labor to make distinctions between permissible job
contracting and “labor-only” contracting, which is a prohibited act further
defined under the last paragraph. A
finding that a contractor is a “labor-only” contractor is equivalent to
declaring that there is an employer-employee relationship between the principal
and the employees of the supposed contractor, and the “labor-only” contractor
is considered as a mere agent of the principal, the real employer.[25]
Sections 5 and
7 of the Rules Implementing Articles 106 to 109 of the Labor Code, as amended[26] (Implementing Rules), reinforce the rules in determining the existence
of employer-employee relationship between employer, contractor or
subcontractor, and the contractor’s or subcontractor’s employee, to wit:
Section 5. Prohibition against labor-only
contracting. – Labor-only contracting is hereby
declared prohibited. For this purpose, labor-only contracting shall refer to an
arrangement where the contractor or subcontractor merely recruits, supplies or
places workers to perform a job, work or service for a principal, and any of the following elements are [is]
present:
i)
The
contractor or subcontractor does not have substantial capital or investment
which relates to the job, work or service to be performed and the employees
recruited, supplied or placed by such contractor or subcontractor are
performing activities which are directly related to the main business of the
principal; or
ii) The
contractor does not exercise the right to control over the performance of the
work of the contractual employee.
The forgoing provisions shall be without prejudice
to the application of Article 248 (C) of the Labor Code, as amended.
“Substantial
capital or investment” refers to capital stocks and subscribed capitalization
in the case of corporations, tools, equipment, implements, machineries and work
premises, actually and directly used by the contractor or subcontractor in the
performance or completion of the job, work or service contracted out.
The “right to control” shall refer to the right
reserved to the person for whom the services of the contractual workers are
performed, to determine not only the end to be achieved, but also the manner
and means to be used in reaching that end.
Section 7. Existence of an employer-employee
relationship. – The contractor or subcontractor shall be
considered the employer of the contractual employee for purposes of enforcing
the provisions of the Labor Code and other social legislation. The principal,
however, shall be solidarily liable with the
contractor in the event of any violation of any provision of the Labor Code,
including the failure to pay wages.
The principal shall be deemed the employer of the
contractual employee in any of the following cases, as declared by a competent
authority:
a. where there is a labor-only contracting; or
b. where the contracting arrangement falls within
the prohibitions provided in Section 6 (Prohibitions) hereof.
Thus, based on Article 106 of the Labor Code and Sections 5 and 7 of the
Implementing Rules, “labor-only” contracting exists when the following criteria
are present: (1) where the contractor or subcontractor supplying workers to an
employer does not have substantial capital or investment in the form of tools,
equipment, machineries, work premises, among other things; and the workers
recruited and placed by the contractor or subcontractor are performing
activities which are directly related to the principal business of such
employer; or (2) where the contractor does not exercise the right to control
the performance of the work of the contractual employee.
In the present case, petitioners’ claim
that their contractors are independent contractors, and, therefore, this case
is one of permissible job contracting, is without basis.
First, respondents’ work as weavers,
grinders, sanders and finishers is directly related to MGTI's
principal business of rattan furniture manufacturing. Where the
employees are tasked to undertake activities usually desirable or necessary in
the usual business of the employer, the contractor is considered as a
“labor-only” contractor and such employees are considered as regular employees
of the employer.[27]
Second, MGTI was unable to present any proof that its contractors had substantial capital. There was no evidence pertaining to the contractors' capitalization; nor to their investment in tools, equipment or implements actually used in the performance or completion of the job, work, or service that they were contracted to render. The law casts the burden on the contractor to prove that it has substantial capital, investment, tools, etc. Employees, on the other hand, need not prove that the contractor does not have substantial capital, investment, and tools to engage in job-contracting.[28]
Thus, the
contractors are “labor-only” contractors since they do not have substantial
capital or investment which relates to the service performed and respondents
performed activities which were directly related to MGTI's
main business. MGTI, the principal
employer, is solidarily liable with the labor-only contractors, for
the rightful claims of the employees.
Under this set-up, “labor-only” contractors are deemed agents of the principal, MGTI, and the
law makes the principal responsible to the employees of the “labor-only” contractor as if the principal itself
directly hired or employed the employees.
In prohibiting “labor-only” contracting and creating an
employer-employee relationship between the principal and the supposed contractor’s
employees, the law intends to prevent employers from circumventing labor laws
intended to protect employees.
Hence, the Court sees no reason to
disturb the findings of fact of the NLRC and the CA.
Respondents' contention that the CA
erred in lowering the award of separation pay from one month to one-half month
for every year of service cannot prosper in the present petition. Whether right or wrong, the decision of the
CA on that matter had long become final and executory
with the dismissal of respondents' Petition for Certiorari, docketed as
G.R. No. 162227, assailing the reduction of the award of separation pay. Entry of judgment was made therein on
Nothing is more settled in the law than that a decision that
has acquired finality becomes immutable and unalterable and may no longer be
modified in any respect even if the modification is meant to correct erroneous
conclusions of fact or law and whether it will be made by the Court that
rendered it or by the highest Court of the land.[30] The doctrine is founded on considerations of
public policy and sound practice that, at the risk of occasional errors,
judgments must become final at some definite point in time.[31]
The only recognized exceptions to the general rule are the
correction of clerical errors, the so-called nunc pro tunc entries which cause no prejudice
to any party, void judgments, and whenever circumstances transpire after the
finality of the decision rendering its execution unjust and inequitable.[32] None of the exceptions are present in the
instant case.
The CA Amended Decision cannot be
considered by the Court as a void judgment, as it was rendered by a tribunal
with jurisdiction over the subject matter of the petition.[33]
Neither can respondents complain that
they were denied due process of law since they had the opportunity to be heard
when they assailed the reduction of separation pay in their Petition for Certiorari,
G.R. No. 162227, but bungled the same when they failed to comply with the basic
procedural requirements in filing the petition. Respondents cannot be allowed to resurrect a
cause lost thru negligence in properly pursuing their case.
WHEREFORE, the present
petition is DENIED for lack of merit.
SO ORDERED.
Associate Justice
WE
CONCUR:
CONSUELO YNARES-SANTIAGO
Associate
Justice
Chairperson
|
MINITA V.
CHICO-NAZARIO Associate Justice |
ANTONIO EDUARDO
B. NACHURA Associate Justice |
RUBEN T. REYES
Associate Justice
ATTESTATION
I attest that the conclusions in
the above Decision had been reached in consultation before the case was
assigned to the writer of the opinion of the Court’s Division.
CONSUELO YNARES-SANTIAGO
Associate Justice
Chairperson, Third Division
CERTIFICATION
Pursuant to Section 13, Article
VIII of the Constitution, and the Division Chairperson’s Attestation, it is
hereby certified that the conclusions in the above Decision had been reached in
consultation before the case was assigned to the writer of the opinion of the
Court’s Division.
REYNATO S. PUNO
Chief Justice
* Referred to as “Solana” in other parts of the record.
**
There were “183” complainants
who were awarded 13th month pay by the Labor Arbiter in his Decision
dated
[1] The
name of the Court of Appeals, as respondent, is deleted from the title, pursuant
to Section 4, Rule 45 of the Rules of Court.
[2] Penned
by Associate Justice Eliezer R. de los
[3]
[4] Referred to as “Gamollo Son’s Inc.” in other parts of the record. Records do not show any specific finding as to the liability of GTI to Andales. The findings of fact of the LA and the NLRC are focused only on MGTI. Pleadings filed by the parties in the present petition do not discuss the relationship of Andales to GTI.
[5] Omitted
as respondent in the Motion for Extension of Time filed by petitioners on
[6] CA
rollo, p. 275.
[7] Should be 182 because “Rebecca Gutib” is named twice in the list of winning complainants specifically enumerated in pp. 15-18 of the LA Decision, CA rollo, pp. 289-292.
[8] CA
rollo, p. 36.
[9]
[10]
[11]
[12]
[13]
[14]
[15] CA
rollo, pp. 524-525.
[16] Rollo, p. 3.
[17] CA
rollo, p. 529.
[18]
[19]
[20]
[21] Rollo, p. 21.
[22] Lazaro v. Court of
Appeals, 423 Phil. 554, 558 (2001); Spouses Garrido v. Court of Appeals, 421 Phil. 872, 881 (2001); Santos v. Spouses Reyes, 420 Phil. 313,
317 (2001); Yu Bun Guan v. Ong, 419 Phil. 845, 854 (2001); Fernandez v. Fernandez, 416 Phil. 322, 337 (2001); Nagkakaisang Kapisanan Kapitbahayan sa Commonwealth Avenue v. Court of Appeals, 414 Phil.
146, 153-154 (2001).
[23] Manila Water Company, Inc. v.
Pena, G.R. No. 158255, July 8,
2004, 434 SCRA 53, 58; Fleischer
Company, Inc. v. National Labor Relations Commission, 407 Phil. 391, 399
(2001).
[24] Asiatic Development
Corporation v. Brogada, G.R. No. 169136,
[25] Acevedo v. Advanstar Company, Inc., G.R. No. 157656, November 11, 2005, 474 SCRA 656, 666; Baguio v. National Labor Relations Commission,
G.R. Nos. 79004-08, October 4, 1991, 202 SCRA 465, 472-473.
[26] Department
Order No. 18-02 (2002).
[27] Manila Water Company, Inc.
v. Pena, supra
note 23, at 60-61; Guinnux Interiors, Inc. v. National Labor Relations
Commission, 339 Phil. 75, 79-80 (1997).
[28] 7K Corporation v. National
Labor Relations Commission, G.R.
No. 148490, November 22, 2006, 507 SCRA 509, 523; Coca-Cola Bottlers, Phils., Inc. v. Hingpit,
356 Phil. 90, 103 (1998); Guarin v. National
Labor Relations Commission, G.R. No. 86010,
[29] See Mayon
Estate Corporation v. Altura, G.R. No. 134462,
[30] Peña v. Government Service Insurance System, G.R No. 159520, September 19, 2006, 502 SCRA 383, 404; Siy v. National Labor Relations Commission, G.R. No. 158971, August 25, 2005, 468 SCRA 154, 161-162; Sacdalan v. Court of Appeals, G.R. No. 128967, May 20, 2004, 428 SCRA 586, 599.
[31] Social Security System v. Isip, G.R. No. 165417, April 3, 2007, 520 SCRA 310, 315; Cervantes v. Court of Appeals, G.R. No. 166755, November 18, 2005, 475 SCRA 562, 571; Mayon Estate Corporation v. Altura, supra note 29, at 386.
[32] Peña v. Government Service Insurance System, supra note 30; Siy v. National Labor Relations Commission, supra note 30, at 162; Sacdalan v. Court of Appeals, supra note 30.
[33] Pilapil v. Heirs of Maximino R. Briones, G.R. No. 150175, February 5, 2007, 514 SCRA 197; Gomez v. Concepcion, 47 Phil. 717, 722-723 (1925).