AIP Construction v. Marquina

FIRST DIVISION

[G.R. No. 229225. September 11, 2019.]

AIP CONSTRUCTION, ARNEL PIEL, AND RICHIE REYES, petitioners, vs.MICHAEL MARQUINA, PEDRO ARABIS, MARLO ARABIS, RICKY DELOS SANTOS, AND MARLITO ESPIRITU, respondents.

NOTICE

Sirs/Mesdames :

Please take notice that the Court, First Division, issued a Resolution datedSeptember 11, 2019which reads as follows:

"G.R. No. 229225 (AIP Construction, Arnel Piel, and Richie Reyes v. Michael Marquina, Pedro Arabis, Marlo Arabis, Ricky Delos Santos, and Marlito Espiritu). — Before a case for illegal dismissal could prosper, an employee must first prove, through substantial evidence, the fact of his/her dismissal by the employer.

This is a petition for review on certiorari assailing the Decision 1 dated July 29, 2016 and the Resolution 2 dated January 5, 2017 of the Court of Appeals (CA) in CA-G.R. SP No. 136745. The CA reversed the Decision 3 dated November 13, 2013 and the Resolution dated June 16, 2014 of the National Labor Relations Commission (NLRC), which affirmed the December 18, 2012 Decision 4 of the Labor Arbiter (LA). The CA declared that Michael Marquina (Michael), Pedro Arabis (Pedro), Marlo Arabis (Marlo), Ricky Delos Santos (Ricky), and Marlito Espiritu (Marlito) (collectively, respondents) are illegally dismissed regular employees of AIP Construction (AIPC).

AIPC is a subcontractor of bigger companies engaged in the business of construction. It hired respondents and assigned them to various projects with the following positions and salaries, viz.: 5

 

Name	Salary (Php)	Position	Date of Hire	Date of Dismissal
Michael Marquina	260/day	Foreman	2007	February 1, 2012
Pedro Arabis	220/day	Labor	2008	May 5, 2012
Marlo Arabis	220/day	Labor	February 1, 2011	May 5, 2012
Ricky Delos Santos	220/day	Labor	May 2, 2011	May 5, 2012
Marlito Espiritu	220/day	Labor	October 15, 2008	May 5, 2012

 

Michael alleged that on February 1, 2012, a certain Engineer Abner (Engr. Abner) and Engr. Richie Reyes (Engr. Richie), who are both employees of AIPC, advised him not to report for work anymore because his employment was already terminated without citing any ground therefor. Thus on May 3, 2012, he filed a complaint for illegal dismissal, regularization, underpayment of wages, non-payment of overtime pay, holiday pay, rest day premium, service incentive leave (SIL), and 13th month pay against AIPC, Arnel Piel (Arnel), and Engr. Richie (collectively, petitioners). On even date, Pedro, Marlo, Ricky, and Marlito also filed a complaint for underpayment of wages, non-payment of overtime pay, holiday pay, rest day premium, Service Incentive Leave (SIL), and 13th month pay against petitioners. Two days later, they were dismissed by Engrs. Abner and Richie for filing a case against AIPC. They asked for a notice of termination but Engr. Richie stated that he has to seek prior consent from AIPC. Hence, they amended their complaint to include illegal dismissal. 6

In their position paper, respondents alleged that they are regular employees of AIPC as they were hired continuously for quite a number of projects without any contract. 7 They work every day from 7:00 in the morning (7am) until 5:00 in the afternoon from Mondays to Fridays and 7am to 4:00 in the afternoon every Saturdays. They also work every other Sundays but are not given rest day pay. They claimed that their salary is below the minimum wage and that they are not paid overtime pay, holiday pay, SIL, and 13th month pay. 8 More, they were dismissed without procedural and substantive due process. Thus, they are entitled to reinstatement with full backwages and attorney's fees.

Petitioners countered that respondents are not regular employees but project employees. AIPC entered into project employment contracts with respondents, wherein they were assigned to carry out specific jobs or undertakings. 9 Respondents were not dismissed from work but went on absence without official leave. 10 Hence, they are not entitled to their monetary claims. Particularly, respondents were not underpaid taking into consideration the three meals a day that AIPC is providing them, which can be treated as facilities. 11

In its Decision 12 dated December 18, 2012, the LA dismissed the complaints for lack of merit. The LA ruled that: (1) respondents are project employees; (2) they failed to establish by substantial evidence that they were dismissed by respondents; (3) they failed to discharge their burden to prove that they rendered overtime work, holiday work, or rest day work; and (4) they were not underpaid because the meals provided by petitioners should be credited as part of their wages. 13

On appeal, the NLRC affirmed the ruling of the LA with modification, viz.:

WHEREFORE, all the foregoing premises considered, the assailed Decision is hereby AFFIRMED with Modification. Accordingly, respondent AIP Construction, is hereby held liable to pay complainants-appellants their respective separation pay amounting to a total of P51,090.00 as well as their respective monetary award consisting of salary differentials, 13th month [pay], Service Incentive Leave Pay in the aggregate amount of P168,731.18 as computed and discussed in the above pages of this Decision, plus ten percent (10%) of the total judgment award as attorney's fees.

The dismissal of the complaint for illegal dismissal stays AFFIRMED. 14

The NLRC held that respondents were not given employment contracts. There was also no proof that AIPC submitted any single project completion report with the Department of Labor and Employment (DOLE). However, respondents admitted that they were posted to different projects at different locations, making them project employees. 15 They failed to prove their claim of illegal dismissal because Engrs. Abner and Richie are their co-employees who have no power to dismiss them. The NLRC found that, "[a]ll told, complainants-appellants [respondents] failed to establish their dismissal with clear, positive and convincing evidence. Hence, We agree with the Labor Arbiter that there is no overt act of dismissal whether legal or illegal." 16 Considering this finding, the NLRC held that backwages cannot be awarded. 17

The NLRC ordered the reinstatement of respondents. Observing, however, that it is no longer feasible, the nature of construction being project-based, it instead directed the payment of separation pay based on respondents' one-month salary for each year of service. Per the identification cards of respondents, the duration of the projects ranges from three months to nine months, hence the NLRC deemed it equitable to peg each project for six months duration. Each respondent having at least two projects in one year. 18

Furthermore, in the absence of evidence that AIPC paid them labor benefits, the NLRC awarded respondents with salary differentials, 13th month pay, and SIL. Respondents' claims for holiday pay, overtime pay, and rest day premium were, meanwhile, rejected by the NLRC for their failure to prove their entitlement over the same. Similarly, the NLRC did not hold petitioners liable for exemplary and moral damages as there is no evidence of bad faith or malice on their part. Engrs. Richie and Arnel were also exonerated. Finally, the NLRC granted respondents attorney's fees since they were forced to litigate and enforced their valid claims.

The CA reversed the NLRC. The decretal portion of which reads:

WHEREFORE, the Petition for Certiorari is GRANTED. The Decision dated November 13, 2013 and Resolution dated June 16, 2014 issued by the Fourth Division of the National Labor Relations Commission in NLRC LAC No. 04-001315-13 are REVERSED and SET ASIDE. A new judgment is entered: (1) Declaring the illegal dismissal of Petitioners Michael Marquina, Pedro Arabis, Marlo Arabis, Ricky Delos Santos[,] and Marlito Espiritu; (2) Ordering AIP Construction to pay Petitioners Michael Marquina, Pedro Arabis, Marlo Arabis, Ricky Delos Santos[,] and Marlito Espiritu the following: (a) backwages computed from the time they were respectively dismissed up to the time of the finality of this decision; (b) separation pay at the rate of one month pay per year of service, as a consequence of their illegal dismissal; (3) Ordering AIP Construction to pay Petitioners Michael Marquina, Pedro Arabis, Marlo Arabis, Ricky Delos Santos[,] and Marlito Espiritu the following: (a) salary differentials, 13th month pay, service incentive leave pay[,] and; (4) Ordering AIP Construction to pay Petitioners Michael Marquina, Pedro Arabis, Marlo Arabis, Ricky Delos Santos and Marlito Espiritu attorney's fees equivalent to 10% of the total monetary award.

The labor arbiter is hereby ORDERED to make another recomputation conformably to the above directives.

SO ORDERED.19

The CA ruled that the findings of fact of the NLRC are not supported by substantial evidence. Respondents are not project employees. First, petitioners failed to present the employment contracts that they have been citing in their position paper, reply, and comment. The non-presentation gave rise to the presumption that the respondents were not informed of the nature and duration of their employment. Absent any other proof that the project employees were apprised of their status as such, they would be considered as regular employees pursuant to Section 3.3 (a) of the Guidelines Governing the Employment of Workers in the Construction Industry (Guidelines), otherwise known as Department Order No. 19-93 dated April 1, 1993. Second, petitioners failed to submit a report of an employee's termination to the nearest DOLE office every time an employment is terminated due to the completion of a project as required by the Guidelines. Third, respondents, as foreman and laborers, performed work usually necessary and desirable to construction. They were continuously rehired to the usual trade or business of AIPC. 20

The CA also held that respondents were dismissed without notice and hearing. It awarded them backwages, separation pay in lieu of reinstatement because the undertaking was already completed, salary differentials, 13th month pay, SIL, and attorney's fees. Conversely, it agreed with the NLRC that respondents are not entitled to overtime pay, rest day premium, holiday premium, moral damages, and exemplary damages. It also declared Engrs. Richie and Arnel not personally liable. 21

Petitioners sought reconsideration which was denied. Hence, they filed a petition (original petition) before Us raising substantially the same arguments found in their position paper before the LA.

Meanwhile, on April 19, 2017, petitioner Arnel filed a motion to admit amended petition for review on certiorari (amended petition), alleging that: (a) AIPC is not a corporation, as stated in the original petition, but a sole proprietorship with Arnel as the proprietor; and (b) Engr. Richie is no longer connected with AIPC, hence he will be dropped as one of the petitioners. 22 Respondents averred that the amendment to the petition is substantial because the real party-in-interest will be altered. They submit that the Court has no jurisdiction over the case because it is not filed by the real party-in-interest. 23

In sum, the issues before Us are: (1) whether the amended petition may change the name of AIPC from a corporation to a sole proprietorship; (2) whether respondents are project employees; (3) whether they were illegally dismissed; and (4) whether they are entitled to their monetary claims.

The petition is partly meritorious.

Preliminarily, We reiterate the rule that petitions under Rule 45 of the Rules of Court is limited only to errors or questions of law. The Court is a not a trier of facts. It will not review or disturb the factual findings of the appellate court save on certain instances, which are present in this case — the inference made by the CA is manifestly mistaken, and the findings of fact of the LA, NLRC, and the CA are conflicting. 24 The LA and the NLRC found that respondents are project employees who were not illegally dismissed, while the CA held the exact opposite, declaring respondents as regular employees whose services were terminated without cause.

We discuss the issues raised in seriatim.

I.

Given the circumstances in the case, the amended petition may change the name of AIPC into "Arnel Peil doing business under the name and style of AIP Construction."

In the first place, Arnel is not an additional party in the case. He is one of the petitioners in the original petition. He is also the proprietor of AIPC, which fact respondents do not dispute. A sole proprietorship does not possess a juridical personality separate and distinct from the owner of the enterprise. The sole proprietor or owner is personally liable for all the debts and obligations of the business. 25 In Stanley Fine Furniture v. Gallano, 26 We ruled that the proprietor of an enterprise is considered the real party-in-interest who has a standing to file a petition for review. 27 Hence, Arnel has the legal standing to file the original and the amended petitions. Any change in the name of the petitioner in the amended petition is a mere formality.

II.

Respondents are not project employees but regular employees of AIPC.

Project-based employment is defined in Article 294 of the Labor Code, as amended, as an employment which is fixed for a specific period or undertaking the completion or termination of which is determined at the time of the engagement of the employee. Employers claiming that their workers are project employees have the burden to prove the following requisites: (1) the employee was hired to carry out a specific project or undertaking; (2) the employee was notified of the duration and scope of the project at the time of engagement; and (3) the existence of the project. 28 Arnel failed to show any of the foregoing requisites.

Notably, Arnel did not present the employment contracts of respondents at any stage of the proceedings. Respondents also claimed that they did not sign an employment contract and that they immediately began working after they submitted their biodata and passed their interview. 29 In Omni Hauling Services, Inc. v. Bon, 30 We held that where no other evidence was offered, the absence of employment contracts raises a serious question on whether the employees were properly informed of their employment status as project employees at the time of their engagement. As such the presumption of regular employment should be accorded in favor of the employees pursuant to Article 294 of the Labor Code, as amended which provides that "any employee who has rendered at least one year of 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." 31 Here, the record shows that all of the respondents have rendered at least one year of service to AIPC at the time of their alleged dismissal from service. As foreman and laborers, they also performed tasks which are usually necessary and desirable to the usual trade or business of AIPC. Hence, the CA is correct in declaring that respondents are regular employees of AIPC.

III.

Respondents were not illegally dismissed.

Before the employer must bear the burden of proving that the termination of the services of an employee is for a valid or authorized cause, the employee must first establish by substantial evidence the fact of dismissal from service. If there is no dismissal, there can be no question as to the legality or illegality thereof. 32

Aside from their bare allegations, respondents failed to present impartial and independent evidence to prove the fact of their dismissal from service. There is also no proof that Engr. Richie and a certain Engr. Abner was authorized by Arnel to terminate the services of respondents. While the CA found that respondents were illegally dismissed, it failed to point out to any evidence on record as basis for its conclusion. Thus, We concur with the finding of the LA and the NLRC that respondents were not dismissed by petitioners in the absence of an overt act establishing the same.

Similarly, there is dearth of evidence supporting petitioners' claim that respondents abandoned their work. The elements of abandonment do not obtain in the case, which are: (1) that the employee failed to report for work or must have been absent without valid or justifiable reason; and (2) that there must be clear intention to sever the employer-employee relationship manifested by some overt acts. Also, abandonment is totally inconsistent with respondents' immediate filing of a complaint for illegal dismissal and their prayer for reinstatement. 33

Considering that there is neither illegal dismissal nor abandonment of work, the CA's award of backwages to respondents is improper and should be deleted. The proper action is to reinstate respondents to their former work. However, given the length of time that had passed since the start of the controversy in 2012, reinstatement is no longer possible and reasonable. Under the circumstances, it had become just and equitable for the Court instead to award respondents separation pay in an amount equivalent to one-month salary for every year of service, computed up to the time that respondents stopped working or on February 1, 2012 for Michael and May 5, 2012 for Pedro, Marlo, Ricky, and Marlito. 34

IV.

Respondents are entitled to salary differentials, 13th month pay, SIL, and attorney's fees equivalent to 10% of the total monetary award.

The NLRC and the CA are correct that the employer has the burden of proving its payment of labor standard benefits. The rationale being that the pertinent personnel files, payrolls, records, remittances and other similar documents which will show that overtime, differentials, SIL, and other claims of workers have been paid are not in the possession of the worker but in the custody and absolute control of the employer. 35 Arnel failed to discharge his burden. He did not present any evidence to establish his payment of the daily minimum wage, 13th month pay, and SIL.

As regards the claim for holiday pay, overtime pay, and rest day premium, respondents failed to show their entitlement. Other than their naked assertions, they did not submit proof that they actually worked during the holidays, their rest days, and beyond their eight-hour work period.

Likewise, moral and exemplary damages cannot be awarded in favor of respondents in view of Our finding that there was no illegal dismissal. Nonetheless, We sustain the grant of 10% attorney's fees. In Cosue v. Ferritz Integrated Development Corporation, 36 We held that attorney's fees may be recovered by an employee whose wages have been unlawfully withheld. There need not be a showing that the employer acted maliciously or in bad faith. Here, We determined that respondents were underpaid their wages.

In fine, We reverse the assailed Decision and Resolution of the CA insofar as it found that respondents were illegally dismissed and are entitled to backwages. We also note that since AIPC, the employer of respondents, is a sole proprietorship, its owner Arnel shall be personally liable for all the debts and obligation of the business.

WHEREFORE, premises considered, the petition for review on certiorari is PARTIALLY GRANTED. The Decision dated July 29, 2016 and the Resolution dated January 5, 2017 of the Court of Appeals in CA-G.R. SP No. 136745 are hereby AFFIRMED with MODIFICATION. The complaint for illegal dismissal of respondents against petitioners is DISMISSED for lack of merit. Respondents are entitled to reinstatement to their former positions without payment of backwages. However, since the reinstatement of respondents is unreasonable under the circumstances, petitioner Arnel Piel is ordered to pay respondents separation pay in an amount equivalent to one-month salary for every year of service, computed up to the time that respondents stopped working, or on February 1, 2012 for Michael Marquina and May 5, 2012 for Pedro Arabis, Marlo Arabis, Ricky Delos Santos, and Marlito Espiritu.

All other aspects of the Court of Appeals' Decision STANDS.

SO ORDERED."

Very truly yours,

(SGD.) LIBRADA C. BUENA

Division Clerk of Court

 

Footnotes

1.Rollo, pp. 12-25; penned by Associate Justice Ramon A. Cruz with the concurrence of Associate Justices Marlene Gonzales-Sison and Henri Jean Paul B. Inting (now a Member of this Court).

2.Id. at 83-84.

3.Id. at 234-252.

4.Id. at 178-189.

5.Id. at 13.

6.Id. at 13-14.

7.Id. at 133.

8.Id. at 120-123.

9.Id. at 106.

10.Id. at 100.

11.Id. at 113.

12.Id. at 178-189.

13.Id. at 185-189.

14.Id. at 251.

15.Id. at 240.

16.Id. at 241-242.

17.Id. at 242-243.

18.Id. at 243.

19.Id. at 23.

20. Id. at 19-21.

21. Id. at 21-23.

22. Id. at 319.

23. Id. at 628-629.

24. Pascual v. Burgos, G.R. No. 171722, January 11, 2016, 778 SCRA 189, 205-206, citing Medina v. Mayor Asistio, Jr., G.R. No. 75450, November 8, 1990, 191 SCRA 218.

25. Excellent Quality Apparel, Inc. v. Win Multi Rich Builders, Inc., G.R. No. 175048, February 10, 2009, 578 SCRA 272, 278, citing Schneeman, Angela. The Law of Corporations and Other Business Organizations. 4th ed. ThomPson. © 2007, p. 26.

26. G.R. No. 190486, November 26, 2014, 743 SCRA 306.

27. Id. at 317-318.

28. Minsola v. New City Builders, Inc., G.R. No. 207613, January 31, 2018, 853 SCRA 466, 479-480.

29. Rollo, p. 120.

30. G.R. No. 199388, September 3, 2014, 734 SCRA 270.

31. Id. at 279-280, citing Hanjin Heavy Industries and Construction Co., Ltd. v. Ibañez, G.R. No. 170181, June 26, 2008, 555 SCRA 537.

32. Doctor v. NII Enterprises, G.R. No. 194001, November 22, 2017, 846 SCRA 53, 67, citing MZR Industries v. Colambot, G.R. No. 179001, August 28, 2013, 704 SCRA 150.

33. Pu-od v. Ablaze Builders, Inc., G.R. No. 230791, November 20, 2017, 845 SCRA 387, 403, citing Ruben C. Jordan v. Grandeur Security & Services, Inc., G.R. No. 206716, June 18, 2014, 727 SCRA 36, 57-58.

34. Doctor v. NII Enterprises, G.R. No. 194001, November 22, 2017, 846 SCRA 53, 71, citing Dee Jay's Inn and Café v. Rañeses, G.R. No. 191823, October 5, 2016, 805 SCRA 143, 167, further citing Nightowl Watchman & Security Agency, Inc. v. Lumahan, G.R. No. 212096, October 14, 2015, 772 SCRA 638.

35. SLL International Cables Specialist v. National Labor Relations Commission, 4th Division, G.R. No. 172161, March 2, 2011, 644 SCRA 411, 420, citing Dansart Security Force & Allied Services Company v. Bagoy, G.R. No. 168495, July 2, 2010, 622 SCRA 694; G & M (Phils.), Inc. v. Cruz, G.R. No. 140495, April 15, 2005, 456 SCRA 215, 221; Villar v. National Labor Relations Commission, G.R. No. 130935, May 11, 2000, 331 SCRA 686.

36. G.R. No. 230664, July 24, 2017, 831 SCRA 605, 621-622, citing San Miguel Corporation v. Eduardo L. Teodosio, G.R. No. 163033, October 2, 2009, 602 SCRA 197, 216-217.