PPI Holdings, Inc. v. Argante

SECOND DIVISION

[G.R. No. 244424. July 20, 2022.]

PPI HOLDINGS, INC. (FORMERLY PHILIPPINE PIZZA, INC.), petitioner, vs.ALEX D. ARGANTE, respondent.

NOTICE

Sirs/Mesdames :

Please take notice that the Court, Second Division, issued a Resolution datedJuly 20, 2022which reads as follows:

"G.R. No. 244424 (PPI Holdings, Inc. (formerly Philippine Pizza, Inc.) v. Alex D. Argante). — This Court resolves a Petition for Review on Certiorari1 under Rule 45 of the Revised Rules of Court filed by petitioner PPI Holdings, Inc. (PPI) against respondent Alex D. Argante (Argante), seeking the reversal of the Decision 2 dated June 25, 2018 and the Resolution 3 dated January 18, 2019 rendered by the Court of Appeals (CA) in CA-G.R. SP Nos. 143712 and 143757. The assailed rulings denied the petition for certiorari4 filed by Consolidated Building Maintenance, Inc. (CBMI), which questioned the Decision 5 dated September 29, 2015 and the Resolution 6 dated October 30, 2015 of the National Labor Relations Commission (NLRC) that affirmed the Decision 7 dated March 31, 2015 of the Labor Arbiter (LA).

CBMI is a domestic corporation engaged in the business of providing facilities management and engineering services to various entities, one of which is PPI, a franchisee of the Pizza Hut chain of restaurants. 8

In June 2005, Argante applied and was subsequently hired as a service crew member by PPI. He was initially assigned at Pizza Hut-Farmers Branch in Cubao, Quezon City. Upon the expiration of his employment contract, he was told to proceed to the office of CBMI where he signed an employment contract. He then resumed his usual duties, but this time, he was assigned at Pizza Hut-Bistro E. Rodriguez Branch in Quezon City. Later, he was transferred to the Timog Branch, the North Edsa Branch, and eventually, to the Mall of Asia Branch. 9 SDAaTC

In March 2013, Argante did not report for work as he needed to take care of his wife's uncle's memorial services. After his wife's uncle's interment, he messaged the restaurant general manager, Anna Alcala (Alcala), to inform her that he will not be able to report back for work because he was exhausted. Alcala insisted that Argante resume his work. As instructed, Argante showed up for work but his frail physical condition prevented him from carrying out his duties. After a week of respite, Argante informed Alcala of his readiness to report for work and even asked for his schedule. 10 However, Alcala informed him that he is considered to have abandoned his work. Astounded, he immediately inquired at the human resource office of CBMI, only to be told that there is no existing abandonment charge against him. 11 Nevertheless, he was given a piece of paper to write his explanation.

Not long after, Argante received a notice of abandonment with a directive to submit his answer. In compliance, Argante went back to CBMI's office and submitted his written explanation. Not hearing back from CBMI, Argante went back to the office. There, he was informed that he can no longer return to work and that Alcala had refused to sign his clearance. Worse, he was asked to submit his resignation letter so that he could be issued a certificate of employment. 12

Disgruntled by the turn of events, Argante filed a complaint 13 before the LA for constructive/illegal dismissal, regularization, damages, and attorney's fees against PPI, CBMI, and their corporate officers. He alleged that he was a regular employee of PPI by operation of law, considering that he rendered work for more than eight years. 14

In its defense, CBMI asserted that it is an independent contractor as it has substantial capital and investments in the form of properties and equipment. It is also registered with the Department of Labor and Employment (DOLE) with a paid-up capital of P3,500,000.00. Being a legitimate job contractor, CBMI admitted that it was Argante's employer, having hired him to render services as crew/rider. In fact, it was CBMI that paid Argante's salary and remitted his government premiums for the Social Security System, Pag-IBIG, and the Philippine Health Insurance Corporation. 15

For its part, PPI denied the existence of an employer-employee relationship with Argante. It claimed that it entered into a contract of services with CBMI, whereby the latter undertook to provide personnel in charge for waitering, kitchen, sanitation, warehousing, delivery, and other allied services in its restaurants. PPI claims that Argante was assigned by CBMI as a delivery rider in one of its restaurants. 16

After due proceedings, the LA granted Argante's complaint and rendered a Decision as follows:

WHEREFORE, premises considered, this Office finds respondent PPI to have engaged in labor only contracting with co-respondent CBMI. As such complainant by operation of law became the regular employee of respondent PPI, in the given circumstances, and thus be held liable for illegally dismissing complainant herein, when it failed to reinstate or accept him back to his job for more than six months. Respondent PPI is thus ordered to reinstate complainant to his former position without loss of seniority rights plus payment of full backwages from 26 April 2013 until finality of this decision. acEHCD

Other claims are hereby dismissed for lack of merit.

SO ORDERED. 17

The LA found the existence of an employer-employee relationship between PPI and Argante. The LA likewise noted that the arrangement between PPI and CBMI constitutes labor-only contracting and imposed upon them solidary liability in favor of Argante's claim. 18

Considering its findings that PPI is the true employer of Argante, the LA ruled that the reason and manner by which Argante was terminated from work fell short of the requirements of the law. Hence, Argante was deemed to have been illegally dismissed. The LA subsequently ordered his reinstatement without loss of seniority rights, or privileges, with payment of full backwages. 19 The LA discussed this at length as follows:

Coming to the issue on whether or not complainant was constructively dismissed, this Office, noted that indeed complainant absented himself without filing the necessary leave of absence after the expiration of his granted leave. Complainant herein failed to present substantial evidence the necessity of extending his leave of absence. The death of the uncle of his wife, is not a valid excuse to have a one-week absence, as the deceased was not complainant's immediate relative. Considering that complainant's work was adjudged to be usually, necessary and desirable in respondent's PPI's business, naturally, a prolonged absence would definitely affect the operations of his employer, necessitating them to look for a substitute or a replacement, and make him undergo disciplinary measures. Complainant herein is not entirely blameless. He was not really barred for no reason from entering respondent PPI's business establishment. He was asked to report to CBMI as he incurred a prolonged and unauthorized absences. In fact, he acknowledged that he was asked to explain his unauthorized absences. However, after submitting his written explanation, neither CBMI nor PPI, issued a termination letter. He was just told by respondent CBMI that he can no longer return or be posted back to PPI, and this remained un-refuted, as respondent PPI stood firm that complainant is not their employee. On the other hand, respondent CMBI also failed to impose any penalty or post complainant to their other clients and this remained more than six months period, resulting to a constructive dismissal, as complainant last reported to work on March 2013, and at the time he instituted this complaint on 4 December 2013, complainant was still on floating status and remained floating, for more than six (6) months amounting to constructive dismissal.

Respondent CBMI, being found as a labor contractor, its principal, respondent PPI thus by operation of the law, became the direct employer of complainant herein. Complainant having worked for respondent PPI for eight continuous years has attained regular status of employment and as such could not be dismissed without due process of law. Complainant having been constructively and illegally dismissed by the respondents, as due process was not afforded properly to him, he is entitled to reinstatement to his former position without loss of seniority rights plus payment of full backwages from the time [he] was illegally dismissed on 25 March 2013 until finality of this decision. However, since complainant committed infraction by being absent without properly applying for a leave of absence and it was his first major offense in his eight (8) years of service, a month's suspension would have suffice as a penalty. His full backwages should reckon on 26 April 2013 until finality of this decision. 20

Aggrieved, PPI and CBMI filed their respective appeals to the NLRC.

On September 29, 2015, the NLRC issued its Decision 21 in this wise:

WHEREFORE, the Appeal filed by the Respondents is hereby DISMISSED for lack of merit. The Decision of the Labor Arbiter dated 31 March 2015 is hereby AFFIRMED.

SO ORDERED. 22

Agreeing with the LA, the NLRC brushed aside CBMI's claim of substantial capitalization and registration with DOLE to prove that it is not an independent contractor. The NLRC noted that Argante was directly hired by PPI in 2005 and paid the salary and benefits due him. PPI owned the equipment and facilities used by Argante and exercised control and supervision over Argante's work. Finally, the NLRC observed that PPI used its service contract with CBMI as a ploy to circumvent Argante's attainment of regular status of employment. 23 SDHTEC

Accordingly, PPI and CBMI separately moved to reconsider 24 but the same were denied in a Resolution 25 dated October 30, 2015, prompting them to file their respective appeals via petitions for certiorari with the CA. 26

On June 25, 2018, the CA rendered the questioned Decision, 27 thus:

WHEREFORE, premises considered, the consolidated Petitions are DENIED. The 29 September 2015 Decision and 30 October 2015 Resolution of the National Labor Relations Commission Sixth Division in NLRC LAC No. 05-001198-15 are AFFIRMED.

SO ORDERED. 28

According to the CA, CBMI failed to prove that it is an independent contractor because other than substantial capitalization and its registration with the DOLE, the totality of evidence points to PPI as the true employer of Argante, having wielded full control over the means and methods by which the latter performed his work.

PPI and CBMI both moved for reconsideration but the same were denied in the assailed Resolution 29 dated January 18, 2019.

Hence, this petition.

In seeking relief from this Court, PPI argues that Argante is not its employee, but that of CBMI. According to PPI, CBMI is a legitimate job contractor as it has substantial capitalization and has long been registered with the DOLE. Being an independent contractor, it was CBMI that hired Argante and exercised control over the means and methods by which Argante performed his work, including the imposition of disciplinary actions for violations of CBMI's rules and regulations. There being no employer-employee relationship between them, PPI claims that the solidary liability imposed by the labor tribunals as to Argante's claim of backwages does not have factual and legal bases.

Argante asserts that the CA was correct in affirming the labor tribunals' dispositions declaring him as illegally dismissed and ordering his reinstatement and payment of his money claims.

The Petition lacks merit.

The essential issue in the present case is the existence or non-existence of an employer-employee relationship between petitioner and respondent, as a result of the contracting arrangement between petitioner and CBMI. Needless to state, it is on the said determination that the other issue raised, i.e., whether respondent was illegally dismissed by petitioner and whether the latter is liable for monetary claims, hinge. 30 However, the "issue of whether or not an employer-employee relationship existed between petitioner and respondent is essentially a question of fact." 31 This Court is not a trier of facts and will not review the factual findings of the lower tribunals as these are generally binding and conclusive. 32 While there are recognized exceptions, 33 not one is applicable in this case.

Even if we entertain the instant petition, this Court is not inclined to depart from the uniform findings of the LA, the NLRC, and the CA. 34

To begin with, the outsourcing of services is not prohibited in all instances. 35 It finds basis under Article 106 36 of the Labor Code of the Philippines, which is further implemented by DOLE Order No. 18, Series of 2002 37 (DO 18-02).

Under Section 4 (a) of DO 18-02, legitimate labor contracting or subcontracting refers to an arrangement whereby a principal agrees to put out or farm out to a contractor or subcontractor the performance, or completion of a specific job, work, or service within a definite or predetermined period, regardless of whether such job, work, or service is to be performed, or completed within, or outside the premises of the principal. The "principal" refers to any employer who puts out or farms out a job, service, or work to a contractor or subcontractor. 38

On the other hand, labor-only contracting is a prohibited arrangement under Section 5 of DO 18-02, viz.:

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 [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 foregoing 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. 39

In this particular case, while CBMI was able to present documentary evidence showing the existence of a service contract with petitioner since 1999, which delineated the nature of their relationship and the obligations undertaken by each party, and that it is infused with substantial capital when it duly registered with the DOLE, the determining factor in the legitimacy of its business is the exercise of the power of control over the employees concerned. HESIcT

Here, the LA, NLRC, and CA unanimously found that it is petitioner, not CBMI, which wielded control over the performance of respondent's work. Not only was respondent assigned to petitioner's selected site but more importantly, petitioner supervised and evaluated respondent's accomplishment such that the latter recognized his production and competency by giving him various commendations. 40

Further, while it may be true that CBMI's area coordinators only visited biweekly to monitor the Pizza Hut Branch under their area of responsibility, this was done to ensure that petitioner's employees are regularly reporting for duty and that they have no complaints regarding their work at Pizza Hut. 41 In truth, respondent's day-to-day work is supervised and controlled by petitioner's managers, specifically: service crewing, cooking al dente pasta, and making doughs, all of which are connected in the principal business of petitioner. Likewise, it was petitioner that supplied the tools, equipment and means necessary for respondent to perform his job at Pizza Hut. Finally, respondent's length of service and the knowledge and skills that were taught by petitioner to respondent indicate that his work is necessary and desirable in petitioner's business. 42

Indeed, the badges of labor-only contracting are too glaring to ignore. Without doubt, it is petitioner that wielded the power of control over its employees, respondent included, which clearly shows that petitioner is the true employer of respondent. As such, whatever liability petitioner may have must be based on such status.

With respect to the issue of respondent's dismissal from employment, this Court likewise deems unnecessary to delve into the propriety of its factual review, considering that the labor tribunals and the CA are consistent in their findings that respondent was constructively dismissed from the service. Under the doctrine of conclusiveness of administrative findings of fact, the courts accord great weight and respect, if not finality and conclusiveness, to findings of fact of administrative bodies when such are supported by substantial evidence. The reason behind this is that administrative bodies are deemed specialists in their respective fields and can thus resolve the cases before them with more expertise and dispatch. 43 When such factual findings are affirmed by the appellate court, this Court has more reason to accord said findings with finality. 44

To restate, respondent took a week-long absence without filing the necessary application for leave after the expiration of his previously granted furlough. The demise of his wife's uncle is not a sufficient justification for his absence considering that the deceased is not even his immediate relative. Naturally, his prolonged absence affected the operations of his employer, constraining it to look for a reliever. As pointed out by the LA, respondent is not entirely blameless. He was asked to return to work even though he has incurred not only unauthorized absences but also prolonged leave. He even acknowledged it in his written explanation. Despite respondent's submission, CBMI failed to impose disciplinary measures but merely apprised respondent that he cannot be posted back to petitioner. Thus, while respondent was not dismissed from service, be was placed on floating status sometime in March 2013 and remained as such even after he instituted his labor complaint on December 4, 2013. caITAC

Although the Labor Code does not provide a specific provision for temporary "off-detail" or "floating status," this Court has consistently applied Article 292 (previously 286) of the Labor Code to set the period of employees' temporary "off-detail" or "floating status" to a maximum of six months, 45 thus:

ARTICLE 292 (previously 286). When employment not deemed terminated. — The bona-fide suspension of the operation of a business or undertaking for a period not exceeding six (6) months, or the fulfillment by the employee of a military or civic duty shall not terminate employment. In all such cases, the employer shall reinstate the employee to his former position without loss of seniority rights if he indicates his desire to resume his work not later than one (1) month from the resumption of operations of his employer or from his relief from the military or civic duty.

Having been off-detailed for more than the period allowed by law, respondent is considered to have been constructively dismissed. We quote, with approval, the discussion of the LA as follows:

Respondent CBMI, being found as a labor contractor, its principal, respondent PPI thus by operation of the law, became the direct employer of complainant herein. Complainant having worked for respondent PPI for eight continuous years has attained regular status of employment and as such could not be dismissed without due process of law. Complainant having been constructively and illegally dismissed by the respondents, as due process was not afforded properly to him, he is entitled to reinstatement to his former position without loss of seniority rights plus payment of full backwages from the time [he] was illegally dismissed on 25 March 2013 until finality of this decision. However, since complainant committed infraction by being absent without properly applying for a leave of absence and it was his first major offense in his eight (8) years of service, a month's suspension would have [sic] suffice as a penalty. His full backwages should reckon on 26 April 2013 until finality of this decision. 46 TAIaHE

Settled is the rule that an employee who is unjustly dismissed from work shall be entitled to reinstatement without loss of seniority rights and other privileges, and to his/her full backwages, inclusive of allowances and his/her other benefits, or their monetary equivalent computed from the time his/her compensation was withheld up to the time of actual reinstatement. If reinstatement is not possible, however, the award of separation pay is proper. 47

Backwages are granted on grounds of equity to workers for earnings lost due to their illegal dismissal from work. They are a reparation for the illegal dismissal of an employee based on earnings which the employee would have obtained, either by virtue of a lawful decree or order, as in the case of a wage increase under a wage order, or by rightful expectation, as in the case of one's salary or wage. The outstanding feature of backwages is, thus, the degree of assuredness to an employee that he would have had them as earnings had he/she not been illegally terminated from his/her employment. 48

Finally, considering that respondent was compelled to litigate to protect his rights and interests, attorney's fees of ten percent (10%) of the monetary award are likewise awarded. The legal interest of six percent (6%) per annum shall be imposed on all monetary grants from the finality of the Resolution until full payment.

FOR THESE REASONS, the Petition for Review on Certiorari is DENIED. The Decision dated June 25, 2018 and the Resolution dated January 18, 2019 of the Court of Appeals in CA-G.R. SP Nos. 143712 and 143757 are AFFIRMED. PPI Holdings, Inc. is ORDERED to reinstate Alex D. Argante to his former position without loss of seniority rights plus payment of full backwages from April 26, 2013 until finality of this Resolution, and attorney's fees of ten percent (10%) of the monetary award. These shall earn interest at the rate of six percent (6%) per annum from finality of this Resolution until full payment.

SO ORDERED."

By authority of the Court:

(SGD.) TERESITA AQUINO TUAZONDivision Clerk of Court

Footnotes

1. Rollo, pp. 10-51.

2. Penned by Associate Justice Ronaldo Roberto B. Martin, with Associate Justices Ricardo R. Rosario (now a member of this Court) and Eduardo B. Peralta, Jr., concurring; id. at 401-410.

3. Id. at 427-428.

4. CA rollo (SP No. 143712), pp. 2-33.

5. Penned by Commissioner Nieves E. Vivar-De Castro, with Presiding Commissioner Joseph Gerard E. Mabilog and Commissioner Isabel G. Panganiban-Ortiguerra, concurring; CA rollo (SP No. 143757), pp. 324-337.

6. Id. at 375-377.

7. Penned by Labor Arbiter Jonalyn M. Gutierrez; id. at 287-302.

8. Rollo, p. 12.

9. Id. at 472-473.

10. CA rollo (SP No. 143712), p. 37.

11. Rollo, pp. 292-293.

12. Id. at 293.

13. CA rollo (SP No. 143712), p. 571.

14. Rollo, p. 291.

15. Id. at 293-294.

16. Id. at 294.

17. Id. at 305.

18. Id. at 294-300.

19. Id. at 300-302.

20. Id. at 303-305.

21. Id. at 327-330.

22. Id. at 339.

23. Id. at 337-339.

24. CA rollo (SP No. 143757), pp. 339-358.

25. Id. at 375-377.

26. Id. at 3-33; CA rollo (SP No. 143712), pp. 2-33.

27. Rollo, pp. 401-410.

28. Id. at 409.

29. Id. at 427-428.

30. See Valencia v. Classique Vinyl Products Corporation, 804 Phil. 492, 503 (2017).

31. Legend Hotel (Manila) v. Realuyo, 691 Phil. 226, 236 (2012).

32. Cavite Apparel, Incorporated v. Marquez, 703 Phil. 46, 53 (2013).

33. These exceptions are: (1) when the conclusion is a finding 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 facts are conflicting; (6) when the Court of Appeals, in making its findings, went beyond the issues of the case and the same is contrary to the admissions of both appellant and appellee; (7) the findings of the Court of Appeals are: contrary to those of the trial court; (8) when the findings of fact 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; and (10) the findings of fact of the Court of Appeals is premised on the supposed absence of evidence and is contradicted by the evidence on record. (Pascual v. Burgos, 776 Phil. 167 (2016)).

34. Supra, note 30, at 504.

35. Daguinod v. Southgate Foods, Inc., G.R. No. 227795, February 20, 2019.

36. 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, 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 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.

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 person 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. (Emphasis supplied)

37. Rules Implementing Articles 106 to 109 of the Labor Code, as amended.

38. DO 18-02, Sec. 4 (d).

39. Supra note 35. (Emphasis supplied)

40. Rollo, p. 408.

41. Id.

42. Id. at 303.

43. Department of Health v. Nestle Philippines, Inc., G.R. No. 244242, September 14, 2020.

44. See Ramil v. Stoneleaf, Inc., G.R. No. 222416, June 17, 2020.

45. See Sebuguero v. NLRC, 318 Phil. 635, 647 (1995); and Agro Commercial Security Services Agency, Inc. v. NLRC, 256 Phil. 1182, 1188 (1989).

46. Id. at 304-305.

47. Luces v. Coca-cola Bottlers Phils., Inc., G.R. No. 213816, December 2, 2020.

48. Id.