Philippine Supreme Court Jurisprudence

Philippine Supreme Court Jurisprudence > Year 2012 > February 2012 Decisions > [G.R. No. 160278, February 08, 2012] GARDEN OF MEMORIES PARK AND LIFE PLAN, INC. AND PAULINA T. REQUIÑO, PETITIONERS, VS. NATIONAL LABOR RELATIONS COMMISSION, SECOND DIVISION, LABOR ARBITER FELIPE T. GARDUQUE II AND HILARIA CRUZ, RESPONDENTS. :

This is a petition for review under Rule 45 of the Rules of Court seeking nullification of the June 11, 2003 Decision^[1] and October 16, 2003 Resolution^[2] of the Court of Appeals (CA), in CA-G.R. SP No. 64569, which affirmed the December 29, 2000 Decision^[3] of the National Labor Relations Commission (NLRC). The NLRC agreed with the Labor Arbiter (L.A.) in finding that petitioner Garden of Memories Memorial Park and Life Plan, Inc. (Garden of Memories) was the employer of respondent Hilaria Cruz (Cruz), and that Garden of Memories and petitioner Paulina Requiño (Requiño), were jointly and severally liable for the money claims of Cruz.

The Facts

Petitioner Garden of Memories is engaged in the business of operating a memorial park situated at Calsadang Bago, Pateros, Metro-Manila and selling memorial Plan and services.

Respondent Cruz, on the other hand, worked at the Garden of Memories Memorial Park as a utility worker from August 1991 until her termination in February 1998.

On March 13, 1998, Cruz filed a complaint^[4] for illegal dismissal, underpayment of wages, non-inclusion in the Social Security Services, and non-payment of legal/special holiday, premium pay for rest day, 13th month pay and service incentive leave pay against Garden of Memories before the Department of Labor and Employment (DOLE).

Upon motion of Garden of Memories, Requiño was impleaded as respondent on the alleged ground that she was its service contractor and the employer of Cruz.

In her position paper,^[5] Cruz averred that she worked as a utility worker of Garden of Memories with a salary of P115.00 per day. As a utility worker, she was in charge, among others, of the cleaning and maintenance of the ground facilities of the memorial park. Sometime in February 1998, she had a misunderstanding with a co-worker named Adoracion Requiño regarding the use of a garden water hose. When the misunderstanding came to the knowledge of Requiño, the latter instructed them to go home and not to return anymore. After three (3) days, Cruz reported for work but she was told that she had been replaced by another worker. She immediately reported the matter of her replacement to the personnel manager of Garden of Memories and manifested her protest.

Cruz argued that as a regular employee of the Garden of Memories, she could not be terminated without just or valid cause. Also, her dismissal was violative of due process as she was not afforded the opportunity to explain her side before her employment was terminated.

Cruz further claimed that as a result of her illegal dismissal, she suffered sleepless nights, serious anxiety and mental anguish.

In its Answer,^[6] Garden of Memories denied liability for the claims of Cruz and asserted that she was not its employee but that of Requiño, its independent service contractor, who maintained the park for a contract price. It insisted that there was no employer-employee relationship between them because she was employed by its service contractor, Victoriana Requiño (Victoriana), who was later succeeded by her daughter, Paulina, when she (Victoriana) got sick. Garden of Memories claimed that Requiño was a service contractor who carried an independent business and undertook the contract of work on her own account, under her own responsibility and according to her own manner and method, except as to the results thereof.

In her defense, Requiño prayed for the dismissal of the complaint stating that it was Victoriana, her mother, who hired Cruz, and she merely took over the supervision and management of the workers of the memorial park when her mother got ill. She claimed that the ownership of the business was never transferred to her.

Requiño further stated that Cruz was not dismissed from her employment but that she abandoned her work.^[7]

On October 27, 1999, the LA ruled that Requiño was not an independent contractor but a labor-only contractor and that her defense that Cruz abandoned her work was negated by the filing of the present case.^[8] The LA declared both Garden of Memories and Requiño, jointly and severally, liable for the monetary claims of Cruz, the dispositive portion of the decision reads:

WHEREFORE, premises considered, respondents Garden of Memories Memorial [P]ark and Life Plan, Inc. and/or Paulina Requiño are hereby ordered to jointly and severally pay within ten (10) days from receipt hereof, the herein complainant Hilaria Cruz, the sums of ?72,072 (P198 x 26 days x 14 months pay), representing her eight (8) months separation pay and six (6) months backwages; P42,138.46, as salary differential; P2,475.00, as service incentive leave pay; and P12,870.00 as 13th month pay, for three (3) years, or a total sum of P129,555.46, plus ten percent attorney’s fee.

Complainant’s other claims including her prayer for damages are hereby denied for lack of concrete evidence.

SO ORDERED.^[9]

Garden of Memories and Requiño appealed the decision to the NLRC. In its December 29, 2000 Decision, the NLRC affirmed the ruling of the LA, stating that Requiño had no substantial capital or investments in the form of tools, equipment, machineries, and work premises, among others, for her to qualify as an independent contractor. It declared the dismissal of Cruz illegal reasoning out that there could be no abandonment of work on her part since Garden of Memories and Requiño failed to prove that there was a deliberate and unjustified refusal on the part of the employee to go back to work and resume her employment.

Garden of Memories moved for a reconsideration of the NLRC decision but it was denied for lack of merit.^[10]

Consequently, Garden of Memories and Requiño filed before the CA a petition for certiorari under Rule 65 of the Rules of Court. In its June 11, 2003 Decision, the CA dismissed the petition and affirmed the NLRC decision. Hence, this petition, where they asserted that:

The Public Respondents National Labor Relations Commission and Court of Appeals committed serious error, gravely abused their discretion and acted in excess of jurisdiction when they failed to consider the provisions of Section 6 (d) of Department Order No. 10, Series of 1997, by the Department of Labor and Employment, and then rendered their respective erroneous rulings that:

I

PETITIONER PAULINA REQUIÑO IS ENGAGED IN LABOR-ONLY CONTRACTING.

II

THERE EXISTS AN EMPLOYER-EMPLOYEE RELATIONSHIP BETWEEN RESPONDENT CRUZ AND PETITIONER GARDEN OF MEMORIES.

III

RESPONDENT HILARIA CRUZ DID NOT ABANDON HER WORK.

IV

THERE IS [NO] BASIS IN GRANTING THE MONETARY AWARDS IN FAVOR OF THE RESPONDENT CRUZ DESPITE THE ABSENCE OF A CLEAR PRONOUNCEMENT REGARDING THE LEGALITY OR ILLEGALITY OF HER DISMISSAL.^[11]

The petitioners aver that Requiño is the employer of Cruz as she (Requiño) is a legitimate independent contractor providing maintenance work in the memorial park such as sweeping, weeding and watering of the lawns. They insist that there was no employer-employee relationship between Garden of Memories and Cruz. They claim that there was a service contract between Garden of Memories and Requiño for the latter to provide maintenance work for the former and that the “power of control,” the most important element in determining the presence of such a relationship was missing. Furthermore, Garden of Memories alleges that it did not participate in the selection or dismissal of Requiño’s employees.

As to the issue of dismissal, the petitioners denied the same and insist that Cruz willfully and actually abandoned her work. They argue that Cruz’s utterances “HINDI KO KAILANGAN ANG TRABAHO” and “HINDI KO KAILANGAN MAGTRABAHO AT HINDI KO KAILANGAN MAKI-USAP KAY PAULINA REQUIÑO,” manifested her belligerence and disinterest in her work and that her unexplained absences later only showed that she had no intention of returning to work.

The Court finds no merit in the petition.

At the outset, it must be stressed that the jurisdiction of this Court in a petition for review on certiorari under Rule 45 of the Rules of Court is limited to reviewing errors of law, not of fact. This is in line with the well-entrenched doctrine that the Court is not a trier of facts, and this is strictly adhered to in labor cases.^[12]  Factual findings of labor officials, who are deemed to have acquired expertise in matters within their respective jurisdictions, are generally accorded not only respect but even finality, and bind the Court when supported by substantial evidence. Particularly when passed upon and upheld by the CA, they are binding and conclusive upon the Court and will not normally be disturbed.^[13] This is because it is not the function of this Court to analyze or weigh all over again the evidence already considered in the proceedings below; or reevaluate the credibility of witnesses; or substitute the findings of fact of an administrative tribunal which has expertise in its special field.^[14]

In the present case, the LA, the NLRC, and the CA are one in declaring that petitioner Requiño was not a legitimate contractor. Echoing the decision of the LA and the NLRC, the CA reasoned out that Requiño was not a licensed contractor and had no substantial capital or investment in the form of tool, equipment and work premises, among others.

Section 106 of the Labor Code on contracting and subcontracting provides:

Article 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 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 are 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.[Underscoring provided]

In the same vein, Sections 8 and 9, DOLE Department Order No. 10, Series of 1997, state that:

Sec. 8. Job contracting. – There is job contracting permissible under the Code if the following conditions are met:

(1) The contractor carries on an independent business and undertakes the contract work on his own account under his own responsibility according to his own manner and method, free from the control and  direction  of  his  employer  or  principal  in  all

matters connected with the performance of the work except as to the results thereof; and

(2) The contractor has substantial capital or investment in the form of tools, equipment, machineries, work premises, and other materials which are necessary in the conduct of his business.

Sec. 9. Labor-only contracting. – (a) Any person who undertakes to supply workers to an employer shall be deemed to be engaged in labor-only contracting where such person:

(1)  Does not have substantial capital or investment in the form of tools, equipment, machineries, work premises and other materials; and

(2) The workers recruited and placed by such persons are performing activities which are directly related to the principal business or operations of the employer in which workers are habitually employed.

(b) Labor-only contracting as defined herein is hereby prohibited and the person acting as contractor shall be considered merely as an agent or intermediary 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.

(c) For cases not falling under this Article, the Secretary of Labor shall determine through appropriate orders whether or not the contracting out of labor is permissible in the light of the circumstances of each case and after considering the operating needs of the employer and the rights of the workers involved. In such case, he may prescribe conditions and restrictions to insure the protection and welfare of the workers.”

On the matter of labor-only contracting, Section 5 of Rule VIII-A of the Omnibus Rules Implementing the Labor Code, provides:

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 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 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.

X x x x

Thus, in determining the existence of an independent contractor relationship, several factors may be considered, such as, but not necessarily confined to, whether or not the contractor is carrying on an independent business; the nature and extent of the work; the skill required; the term and duration of the relationship; the right to assign the performance of specified pieces of work; the control and supervision of the work to another; the employer’s power with respect to the hiring, firing and payment of the contractor’s workers; the control of the premises; the duty to supply premises, tools, appliances, materials and labor; and the mode, manner and terms of payment.^[15]

On the other hand, there is labor-only contracting where: (a) 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 (b) the workers recruited and placed by such person are performing activities which are directly related to the principal business of the employer.^[16]

The Court finds no compelling reason to deviate from the findings of the tribunals below. Both the capitalization requirement and the power of control on the part of Requiño are wanting.

Generally, the presumption is that the contractor is a labor-only contracting unless such contractor overcomes the burden of proving that it has the substantial capital, investment, tools and the like.^[17] In the present case, though Garden of Memories is not the contractor, it has the burden of proving that Requiño has sufficient capital or investment since it is claiming the supposed status of Requiño as independent contractor. ^[18] Garden of Memories, however, failed to adduce evidence purporting to show that Requiño had sufficient capitalization. Neither did it show that she invested in the form of tools, equipment, machineries, work premises and other materials which are necessary in the completion of the service contract.

Furthermore, Requiño was not a licensed contractor. Her explanation that her business was a mere livelihood program akin to a cottage industry provided by Garden of Memories as part of its contribution to the upliftment of the underprivileged residing near the memorial park proves that her capital investment was not substantial. 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.^[19] Obviously, Requiño is a labor-only contractor.

Another determinant factor that classifies petitioner Requiño as a labor-only contractor was her failure to exercise the right to control the performance of the work of Cruz. This can be gleaned from the Service Contract Agreement^[20]  between Garden of Memories and Requiño, to wit:

x x x x

NOW THEREFORE, premises considered, the parties hereto have hereunto agreed on the following terms and conditions:

1.   That the Contractor shall undertake the maintenance of the above-mentioned works in strict compliance with and subject to all the requirements and standards of GMMPLPI.

2.   Likewise, the Contractor shall perform all other works that may from time to time be designated by GMMPLPI thru its authorized representatives, which work is similar in nature to the responsibilities of a regular employee with a similar function.

3.   The contract price for the labor to be furnished or the service to be rendered shall be THIRTY-FIVE THOUSAND (P35,000.00) PESOS per calendar month, payable as follows:

(a)  Eight Thousand Seven Hundred Fifty Thousand  (P8,750.00) Pesos payable on every 7th, 15th, 23rd and 30th of the month.

4.     The period of this Contract shall be for Three (3) months from Feb 1, – April 30, 1998 and renewable at the option of the Management.

5.   It is expressly recognized that this contract was forged for the purpose of supplying the necessary maintenance work and in no way shall the same be interpreted to have created an employer-employee relationship.

Xxxx [Underscoring supplied]

The requirement of the law in determining the existence of independent contractorship is that the contractor should undertake the work on his own account, under his own responsibility, according to his own manner and method, free from the control and direction of the employer except as to the results thereof.^[21] In this case, however, the Service Contract Agreement clearly indicates that Requiño has no discretion to determine the means and manner by which the work is performed. Rather, the work should be in strict compliance with, and subject to, all requirements and standards of Garden of Memories.

Under these circumstances, there is no doubt that Requiño is engaged in labor-only contracting, and is considered merely an agent of Garden of Memories. As such, the workers she supplies should be considered as employees of Garden of Memories. Consequently, the latter, as principal employer, is responsible to the employees of the labor-only contractor as if such employees have been directly employed by it.^[22]

Notably, Cruz was hired as a utility worker tasked to clean, sweep and water the lawn of the memorial park. She performed activities which were necessary or desirable to its principal trade or business.  Thus, she was a  regular employee of Garden of Memories and cannot be dismissed except for just and authorized causes.^[23]

Moreover, the Court agrees with the findings of the tribunals below that respondent Cruz did not abandon her work but was illegally dismissed.

As the employer, Garden of Memories has the burden of proof to show the employee's deliberate and unjustified refusal to resume his employment without any intention of returning.^[24] For abandonment to exist, two factors must be present: (1) the failure to report for work or absence without valid or justifiable reason; and (2) a clear intention to sever employer-employee relationship, with the second element as the more determinative factor being manifested by some overt acts.^[25] It has been said that abandonment of position cannot be lightly inferred, much less legally presumed from certain equivocal acts.^[26] Mere absence is not sufficient.^[27]

In this case, no such intention to abandon her work can be discerned from the actuations of Cruz. Neither were there overt acts which could be considered manifestations of her desire to truly abandon her work. On the contrary, her reporting to the personnel manager that she had been replaced and the immediate filing of the complaint before the DOLE demonstrated a desire on her part to continue her employment with Garden of Memories. As correctly pointed out by the CA, the filing of the case for illegal dismissal negated the allegation of abandonment.

WHEREFORE, the petition is DENIED. The June 11, 2003 Decision of the Court of Appeals in CA-G.R. SP No. 64569 and its October 16, 2003 Resolution are hereby AFFIRMED.

SO ORDERED.

Velasco, Jr., (Chairperson), Peralta, Abad, and Perlas-Bernabe, JJ., concur.

Endnotes:

---

^[1] Rollo, pp. 133-142. Penned by Justice Marina L. Buzon and concurred in by Justice Rebecca De Guia-Salvador and Associate Justice Rosmari D. Carandang.

^[2] Id. at 148-149.

^[3] Id. at 86-99.

^[4] Id. at 40.

^[5] Id. at 41-46.

^[6] Id. at 58-60.

^[7] Id. at 48-52.

^[8] Id. at 66-72.

^[9] Id. at 72.

^[10] Id. at 108.

^[11] Id. at 25-26.

^[12] Dealco Farms, Inc. v. National Labor Relations Commission, G.R. No. 153192, January 30, 2009, 577 SCRA 280, 292.

^[13] G & M (Phils.), Inc. v. Cruz, 496 Phil. 119, 121 (2005).

^[14] Maritime Factors, Inc. v. Hindang, G.R. No. 151993, October 19, 2011.

^[15] New Golden City Builders & Development Corp. v. Court of Appeals, 463 Phil. 821, 829 (2003).

^[16] Neri v. National Labor Relations Commission, G.R. Nos. 97008-09, July 23, 1993, 224 SCRA 717, 721.

^[17] 7K Corporation v. National Labor Relations Commission, G.R. No. 148490, November 22, 2006, 507 SCRA 509, 523.

^[18] Coca-Cola Bottlers Phils., Inc. v. Agito, G.R. No. 179546, February 13, 2009, 579 SCRA 445, 465.

^[19] Section 5, Rule VIII-A of the Omnibus Rules Implementing the Labor Code.

^[20] CA rollo, pp. 88-89.

^[21] Section 8 of Department of Labor and Employment (DOLE) Department Order No. 10, Series of 1997.

^[22] San Miguel Corporation v. MAERC Integrated Services, Inc., 453 Phil. 543, 567 (2003).

^[23] Section 2, Rule I, Book V of the Labor Code.

^[24] E, G & I Construction Corporation v. Sato, G.R. No. 182070, February 16, 2011; Aboitiz Haulers, Inc. Dimapatoi, G. R.  No. 148619, September 19, 2006, 502 SCRA 271, 291.

^[25] Aboitiz Haulers, Inc. Dimapatoi, G. R.  No. 148619, September 19, 2006, 502 SCRA 271, 291.

^[26] Hda. Dapdap v. National Labor Relations Commission, 348 Phil. 785, 791-792 (1998).

^[27] E, G & I Construction Corporation v. Sato, supra note 24.