1 For The First Kind of Regular Employee, As The Court Failed To Emphasize
1 For The First Kind of Regular Employee, As The Court Failed To Emphasize
1 For The First Kind of Regular Employee, As The Court Failed To Emphasize
(28 in total)
October 22, 2014| Brion, J. | Rights of Contractual Employees
Digester: Mercado, Carlo Robert
SUMMARY: A group of 28 janitorial and maintenance employees were
terminated by their employer, an independent contractor, after its contract
with Robinsons expired. These employees are regular employees who are
entitled to various benefits, including the right against security of tenure, as
they may only be dismissed with the proper substantial and procedural
requirements.
DOCTRINE: DO 18-02 grants contractual employees all the rights and
privileges due a regular employee, including the following:
(a) safe and healthful working conditions;
(b) labor standards such as service incentive leave, rest days, overtime pay,
holiday pay, 13th month pay and separation pay;
(c) social security and welfare benefits;
(d) self-organization, collective bargaining and peaceful concerted action;
and
(e) security of tenure
FACTS:
The twenty-eight (28) respondents were employees of petitioner FVR
Skills and Services Inc., an independent contractor engaged in the
business of providing janitorial and other manpower services. As early as
1998, some of the respondents have already been employed by the
company
April 2008: SKILLEX entered into contract with Robinsons to supply
janitorial and manpower services to Robinsons Place Ermita Mall from
January to December 2008
o Halfway through the contract, SKILLEX asked each
individual respondent to execute contracts indicating that
their employment will be terminated after December 31,
2008
As Robinsons no longer extended their contract with SKILLEX, the
respondents were dismissed as they were deemed project employees and
their project was already been completed. They thus filed illegal
dismissal cases
LA: respondents were project employees, thus after the contract with
Rob, their contracts will be terminated. Money claims (wage differential
and holiday pay) were granted
The Commission: reversed LA. They are regular employees, (some as far
back as 1998), therefore were illegally dismissed. Added separation pay
to the money claims
CA: Affirmed The Commission. In addition, it ruled the contracts the
individual employees signed had no binding effect and that Rana
(president) and Burgos (general manager) solidarily liable for the money
claims
RULING: Petition denied, except that the solidary liability of Rana and
Burgos was removed.
W/N respondents are regular employees YES. In both possible kinds of
regular employees
Article 280 (now 294) of the Labor Code determines WON an employee
is regular or project employee
There are two kinds of regular employees: (1) those who were engaged
to perform activities which are usually necessary or desirable in the usual
business or trade of the employer; and (2) those casual employees who
became regular after one year of service, whether continuous or broken,
but only with respect to the activity for which they have been hired
o These two are different from a project employee, or one
whose employment was fixed for a specific project or
undertaking, whose completion or termination had been
determined at the time of engagement.
[First kind of regular] Test of determining W/N regular employee 1:
reasonable connection between the particular activity performed by the
employee and the employers business or trade by considering the nature
of the work performed and its relation to the scheme of the particular
business, or the trade in its entirety.
o In the case at hand, the respondents work as janitors, service
crews and sanitation aides, are necessary or desirable to the
petitioners business
[Second kind of regular] Also, the respondents, even before the contract
with Robinsons, were already under the petitioners employ. They had
been doing the same type of work and occupying the same positions
from the time they were hired and until they were dismissed in January
2009.
W/N the officers (Rana and Burgos) are liable solidarily with the
company - NO
The respondents failed to show and prove gross negligence or bad faith
on part of Rana and Burgos
NOTES:
Article280.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 usually
necessary or desirable in the usual business or trade of the employer, except
where 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 service 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 service, whether such service is 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
DO 18-02 grants contractual employees all the rights and privileges due
a regular employee, including the following:
(a) safe and healthful working conditions;
(b) labor standards such as service incentive leave, rest days, overtime
pay, holiday pay, 13th month pay and separation pay;
(c) social security and welfare benefits;
(d) self-organization, collective bargaining and peaceful concerted
action; and
(e) security of tenure
2009, May 5: Both Arlene and Fuji sign a non-renewal contract, which
stipulates that her contract will no longer be renewed after its expiration
on May 31, 2009. It also provided that the parties release each other from
liabilities and responsibilities under the contract.
o In consideration of the contract, she acknowledges receiving
$18,050:
Her monthly salary from March-May 2009,
Year-end bonus,
mid-year bonus, and
separation pay.
o In her signature, however, she affixes U.P.she is under
protest.
[LA] May 6: Arlene files a complaint for illegal dismissal and attorneys
fees with the LA, alleging that she was forced to sign the non-renewal
contract when Fuji came to know of her illness.
o She says her salaries and other benefits for March and April
2009 were withheld when she refused to sign.
o She claims she had no other choice but to sign. It was only
when she signed that the above amount was given.
September 10: LA dismisses Arlenes complaint, concluding that Arlene
was not Fujis employee but an independent contractor, after applying the
four-fold test (see note #1). She appeals to the NLRC.
[NLRC] 2010, March 5: NLRC holds that Arlene was a regular
employee with respect to the activities for which she was employed since
she continuously rendered services that were deemed necessary and
desirable to Fujis business.
o NLRC reverses LA decision and orders payment of
backwages.
o Both parties file separate MRs, but NLRC denies, finding no
merit.
[CA] Both file separate petitions for certiorari to CA, which are later
consolidated.
o Disposition: NLRC decision affirmed, also ordering
reinstatement, in addition to payment of backwages and
benefits, moral and exemplary damages, attorneys fees, and
legal interest of 12% per year.
o Held: Arlene is a regular employee, and the successive
renewals of her fixed-term contract resulted in regular
employment.
Apart from Arlenes illegal dismissal, the manner of her dismissal was
effected in an oppressive approach with her salary and other benefits
being withheld until May 5, 2009, when she had no other choice but to
sign the non-renewal contract. Thus, there was legal basis for the Court
of Appeals to modify the National Labor Relations Commissions
decision.
NOTES:
Four-fold test
o (a) the selection and engagement of the employee;
o (b) the payment of wages;
o (c) the power of dismissal; and
o (d) the employers power to control the employee on the
means and methods by which the work is accomplished.
If this control test is satisfied, then the person is an
employee; else, independent contractor.
Stringer: news correspondent who is retained on a part-time basis to
report on events in a particular place.
Labayog v. MY San Biscuits: fixed-term contracts valid as the employees
knew they were being hired as mixers, packers, and machine operators
only for a specific period.
Caparoso v. Court of Appeals: fixed-term contracts upheld the validity of
the fixed-term contract of employment. Caparoso and Quindipan claimed
they were dismissed illegally but there was no evidence of vitiation of
consent. Also, there was no proof that the employers used such contracts
to prevent workers regularization.
Art. 106. Contractor or subcontractor. Whenever an employer enters into
a contract with another person for the performance of the formers work,
the employees of the contractor and of the latters subcontractor, if any,
shall be paid in accordance with the provisions of this Code. X x x
The Secretary of Labor and Employment 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.
pay, damages, and attorneys fees against Polyfoam and Natividad Cheng
(manager).
Concepcion alleged that he was hired as an all around factory worker
and served for almost 6 years. On January 14, 2000, he allegedly
discovered that his time card was not in the rack and was later informed
that he could no longer punch his time card.
When he protested to the supervisor, the latter told him that the
management had dismissed him due to an infraction of a company rule.
Cheng refused to face him.
Concepcions counsel later wrote a letter to the manager requesting that
Concepcion be readmitted to work, but the request was unheeded. Thus,
the illegal dismissal complaint.
Gramaje filed a Motion for Intervention claiming to be the real employer
of Concepcion.
Polyfoam and Cheng filed a Motion to Dismiss on the grounds that the
NLRC has no jurisdiction over the case, because of the absence of
employer-employee relationship between them and that the money
claims had already prescribed.
LA Adolfo Babiano issued Order 12 granting Gramajes motion for
intervention (she is an indispensable party) and denied Polyfoams
motion to dismiss as the lack of employee-employer relationship is only
a matter of defense.
Polyfoam insisted that NLRC had no jurisdiction for Concepcion was not
their employee. They also fault Concepcion for naming Cheng as a partydefendant considering she is not even a director of the company.
In her Position Paper, Gramaje claimed that PA Gramaje Employment
Services is a legitimate job contractor who provided manpower needs of
Polyfoam. Concepcion was hired as a packer and assigned to
Polyfoam. She argued that he was not dismissed from employment, but
he just stopped coming to work.
LA Padolina rendered a decision finding respondent to have been
illegally dismissed and held that Polyfoam and PAGES are solidarily
liable for the money claims.
NLRC modified the LA decision by exonerating Polyfoam from liability
and deleted the awards of backwages, 13th month pay, damages, and
attorneys fees. Gramaje is an independent contractor and the employees
assigned to Polyfoam were still under the control and supervision of
Gramaje who had its own office equipment, tools, and substantial capital
and supplied the plastic containers and carton boxes used by her
employees in performing their duties. They also found sufficient
evidence to prove that it was Gramaje who paid the wages and benefits
(SSS).
NLRC: no illegal dismissal since respondent was not notified that he had
been dismissed nor was he prevented from returning to his work.
Reinstatement could not be given because of strained relations between
the parties.
CA: agreed with LAs conclusion that Gramaje is not a legitimate job
contractor but only a labor only contracter because:
o Gramaje failed to present its Audited Financial Statement (would
show financial standing and ownership equipment)
o Gramaje failed to present a single copy of the purported contract
with Polyfoam
o Her licences appeared to be spurious
o She was not registered with DOLE as a private recruitment agency
o She only presented 1 SSS Quarterly Collection List whose
authenticity is doubtful
Also, they were represented by one law firm though they used different
lawyers. This gives the impression that this was only a scheme to avoid
the employee-employer relationship. Thus, respondent was indeed
Polyfoams employee. This relationship can onlyso be seen by its
exercise of supervision over the work of the respondent (Polyfoams
Mga Alituntunin at Karampatang Parusa), the length he had worked for
Polyfoam and its direct firimg of the respondent.
Petitioners filed a petition for certiorari.
FACTS
1. Norkis Trading, a domestic corporation engaged in the business of
manufacturing and marketing of Yamaha motorcycles and multi-purpose
vehicles. Petitioners were hired as Operators and Welders assogned in the
operation of industrial and welding machines owned and used by Norkis
Trading
2. The respondents were regarded by Norkis as members of PASAKA, a
cooperative organized under the Cooperative Code of the Philippines, which
was deemed an independent contractor deployed to render serices for Norkis
even though they have been working there for many years.However, the
respondents believe that they were regular employees.
3. The respondents filed a complaint for labor-only contracting and nonpayment of minimum wage and overtime pay with the DOLE against Norkis
Trading and PASAKA. This filing of complaint allegedly led to their
suspension, as they were served by PASAKA with memoranda charging them
with a violation of the rule against commission of acts injurious or prejudicial
to the interest or welfare of the cooperative.
4. On August 16, 1999, the respondent s received another set of memoranda
from PASAKA, charging them with the following violations of the
cooperatives rules and regulations:
a. Serious misconduct or willful disobedience of superiors
instructions or orders
b. Gross and habitual neglect of duties by abandoning work without
permission
c. absences without filing a leave of absence
d. wasting time or loiterinf on companys time or leaving their post
temporarily
5. PASAKA informed the respondents of their 15 day suspension, which was
extended for another 15 days, thus, they filed a complaint for illegal
suspension against Norkis Trading and PASAKA
6. When they were about to report back to work, they were informed by
PASAKA that they will be transferred Porta Coeli Industrial Corporation, the
sister company of Norkis Trading, as washers of Multicab vehicles.
7. The respondents opposed this transfer as it would amount to demotion
from being skilled workers to utility workers. Thus, they amended their
complaint for illegal suspension to include the charge od unfair labor
practice, illegal dismissal, damages and attorneys fees
8. The Labor Arbiter dismissed the complaint for lack of merit and directed
the respondents to report back to PASAKA. The LA also ruled that the
respondents failed to prove with convincing evidence that they were
dismissed from employment.
9. Meanwhile, DOLE ruled that PASAKA was engaged in labor-only
contracting, as it failed to prove that it has substantial capital. Moreover, the
machineries, equipment, supplies and even the supervisors of the respondents
were from Norkis Trading.
10. The DOLE order was assailed before the CA which affirmed the decision
of DOLE. It subsequently denied the MR filed
11. On appeal to the NLRC, the judgment of the LA was affirmed with
modification. It ruled that the LA had no jurisdiction over the dispute because
th respondentd were not employees but members of PASAKA, thus, it was an
intra-corporate dispute.
12. The CA, acting on the petition for certiorari, reversed the decision of the
NLRC and ordered the reinstatement of the respondents, or pay their
backwagses. It considered the finding of DOLE that PASAKA was engaged
in Labor-only contracting, thus, ruled that the resoondents were illegally
dismissed.
ISSUE 1
Whether or not the CA erred in disregarding the factual findings of the LA
and the NLRC -- NO
HELD
1. The court ruled that factual findings of labor officials may be examined
when there is a showing that they were arrived at arbitrarily or in disregard of
evidenceon record. Although the factual findings of labor officials, who are
deemed to have acquired expertise, are generally accorded respect and
finality, these findings are not infallible
2. It is within the expanded jurisdiction of the CA to review the findings of
NLRC. It has been held that the CA can take cognizance of a petition for
certiorari if it finds that the NLRC committed grave abuse of discretion by
capriciously, whimsically, or arbitrarily disregarding evidence which are
material to or decisive of the controversy (Cocomangas Hotel Beach Resort
v. Visca)
ISSUE 2
Whether or not PASAKA is a mere labor-only contractor YES
HELD
1.Labor-only contracting is a prohibited act where the contractor or
subcontractor merely recruits, supplies, or places workers to perform a job,
work, or service for a principal. The elements are the ff:
a. the contractor or subcontractor does not have substantial capital or
investment to actually perform the job, work, or service under it own
account and responsibility
b. the employees recruited, supplied or placed by such contractor or
subcontrcator perform activities which are directly related to the
main business of the principal.
2. The Court differentiated labor-only contracting with from legitimate job
contracting, which is an arrangement whereby a principal agrees to put out
or farm out with the contractor or subcontractor the performance or
completion of a specific job, work, or service within a definite or
predetermined period, regardless of whether subh job, work, or service is to
HELD
1. See Art. 106-109 of the Labor Code, on solidary liability of contractor and
principal (as in lantarang one full page copy-paste ang ponente dito LOL)
2. The ruling in Eagle Security Agency v. NLRC squarely applies to the
present case. The ponencia then proceeds to copy 2 pages worth of the
decision [In that case, Eagle is the contractor while PTSI is the principal]
This joint and several liability of the contractor and the principal is
mandated by the Labor Code to assure compliance of the provisions
therein including the statutory minimum wage
The contractor is made liable by virtue of his status as direct
employer. The principal, on the other hand, is made the indirect
employer of the contractors employees for purposes of paying the
employees their wages should the contractor be unable to pay them.
This joint and several liability facilitates, if not guarantees, payment
of the workers performance of any work, task, job or project. In the
end ultimate liability for the payment of the increases rests with
the principal
If PTSI pays the security guards, it cannot claim reimbursement from
EAGLE. But in case it is EAGLE that pays them, the latter can claim
reimbursement from PTSI
3. As applied in this case
For the security guards, the actual source of the payment of their
wage differentials and premium for holiday and rest day work does
not matter as long as they are paid. This is the import of Eparwa and
LDCUs solidary liability.
LDCUs ultimate liability comes into play because of the expiration
of the Contract for Security Services. There is no privity of contract
between the security guards and LDCU, but LDCUs liability to the
security guards remains because of Articles 106, 107 and 109 of the
Labor Code
Eparwa may claim reimbursement from LDCU for any payment it
may make to the security guards. However, LDCU cannot claim any
reimbursement from Eparwa for any payment it may make to the
security guards
DISPO
Set aside CA decision. Reinstate NLRC, where LDCU may ask Eparwa from
reimbursement