FIRST DIVISION
[G.R. No. 207932. September 11, 2019.]
SMV ROCK GARDEN CORPORATION AND HENRY VARDELEON, petitioners, vs.ALEX G. FERRER, LUIS EMPUESTO, ALEX NARDO, JIMMY TABOTABO, JEFFREY FURING, MARLON MIER, JONEL ARMADA, MANUELA TUNDAG, JIMBOY TABOTABO, MIGUEL FERRER, PETER SORIANO, GUIRICO OLIMBA, JR., CRIS HALCON, RUDY ABAYGAR, ERNESTO PEREZ AND MARK ANTHONY LUYAW, respondents.
NOTICE
Sirs/Mesdames :
Please take notice that the Court, First Division, issued a Resolution datedSeptember 11, 2019which reads as follows:
"G.R. No. 207932 (SMV Rock Garden Corporation and Henry Vardeleon v. Alex G. Ferrer, Luis Empuesto, Alex Nardo, Jimmy Tabotabo, Jeffrey Furing, Marlon Mier, Jonel Armada, Manuela Tundag, Jimboy Tabotabo, Miguel Ferrer, Peter Soriano, Guirico Olimba, Jr., Cris Halcon, Rudy Abaygar, Ernesto Perez and Mark Anthony Luyaw). — This is a petition for review on certiorari1 under Rule 45 of the Rules of Court assailing the Decision 2 dated February 13, 2013 of the Court of Appeals (CA) in CA-G.R. SP No. 123949 and the subsequent CA Resolution 3 dated July 1, 2013 denying petitioners' motion for reconsideration. The CA, in these assailed rulings, affirmed the National Labor Relations Commission (NLRC) and the Labor Arbiter (LA) in finding petitioners to be engaged in labor-only contracting and are thusly, liable to respondents for their money claims.
Petitioner SMV Rock Garden Corporation, represented by petitioner Henry Vardeleon, is engaged in the business of manufacturing or fabricating tiles, hollow blocks and pebbles. Respondents, on the other hand, worked with petitioners as fabricators, helpers, laborers and hollow block makers.
On March 1, 2009, petitioners entered into a duly notarized Pakyaw Contract 4 with Ariel Tumangday (Tumangday) and Diogenes Inola (Inola). According to petitioners, they were enticed into hiring Tumangday and Inola upon their representation that they were capable, skilled and qualified to undertake the assigned project. Under this contract, Tumangday and Inola undertook to deliver 300,000 pieces of various blocks to be computed at certain prices. The entire project was to last for only five months.
Petitioners claim that the Pakyaw Contract listed for 42 personnel involved in the project. Of these, the names of only seven of the 16 respondents were mentioned, namely: (1) Alex Ferrer; (2) Luis Empuesto; (3) Alex Nardo; (4) Jimmy Tabotabo; (5) Jerry Furing; (6) Marlon Mier; and (7) Jonel Armada.
Petitioners allege that every week, payment for the work so far completed was handed over to Tumangday and Inola, who, in turn, paid each personnel their corresponding salaries.
On January 8, 2010, respondents filed before the LA a complaint 5 against petitioners for monetary claims, underpayment of wages, non-payment of salaries, overtime pay, holiday pay, holiday premium, rest day premium, service incentive leave pay and 13th month pay plus moral and exemplary damages and attorney's fees. Respondents alleged that they are merely labor-only contractors for petitioners, and that Tumangday and Inola are not legitimate independent contractors because they are not duly licensed by the Department of Labor and Employment (DOLE) Regional Office and have no substantial capital or investments in tools and equipment. 6 Respondents claimed that though they observed a daily (Mondays to Sundays) work schedule from 6 AM to 9 PM, they were not paid what was due them under labor standard laws. 7
For their part, petitioners prayed for the dismissal of the complaint, arguing that there is no employer-employee relationship between them and respondents. According to petitioners, the true employers of respondents are Tumangday and Inola, who are independent contractors and with whom they entered a contract entitled Pakyaw Contract. Petitioners attached a notarized July 16, 2009 Salaysay of other personnel which contained an admission that they are indeed employees of Tumangday and Inola, who paid for their salaries. 8 As such, the monetary claims of respondents have no basis. 9
On September 30, 2010, the LA rendered its Decision 10 finding Tumangday and Inola to be labor-only contractors and mere agents of petitioners. 11 The LA pointed to the lack of license from the DOLE Regional Office of Tumangday and Inola, as well as the lack of documents to show that they have sufficient tools and equipment and substantial capital. 12 Hence, the LA held petitioners liable for the payment of salary differentials and holiday pay, as well as 10% of the total award as attorney's fees. 13
The NLRC, on appeal, affirmed the LA in its Decision dated March 31, 2011. 14 The NLRC cited Article 106 of the Labor Code which provides the criteria in determining whether a contractor or sub-contractor is merely a labor-only contractor:
Art. 106. x x x.
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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. x x x.
The NLRC agreed with the LA's finding that there being no substantial evidence that Tumangday and Inola have substantial capital or investment in tools and equipment and that they are duly registered as independent contractors, the only conclusion availing is that they are labor-only contractors. It also ruled that notwithstanding petitioners' protestations of absence of liability for the respondents' claims on ground of absence of employer-employee-relationship, the Labor Code itself provides for their solidary liability in case of non-payment of mandated wages and benefits under Article 109, to wit:
Art. 109. Solidary liability. — The provisions of existing laws to the contrary notwithstanding, every employer or indirect employer shall be held responsible with his contractor or subcontractor for any violation of any provision of this Code. For purposes of determining the extent of their civil liability under this Chapter, they shall be considered as employers. (Underscoring supplied.)
The NLRC also found that applying Article 101 of the Labor Code, it is uncertain that the contract price for each piece of item made by the respondents is the fair and reasonable rate for lack of concrete showing that it underwent time and motion studies or is otherwise an approved industry standard. Thus, the award of salary differentials was proper.
As to the holiday pay, the NLRC found that respondents, as piece-rate workers, are entitled to holiday pay pursuant to Section 8 (b) of Rule IV Book III of the Omnibus Rules Implementing of the Labor Code (IRR) which provides:
Where a covered employee, is paid by results or output, such as payment on piece work, his holiday pay shall not be less than his average daily earnings for the last seven (7) actual working days preceding the regular holiday; Provided, However, that in no case shall the holiday pay be less than the applicable statutory minimum wage rate.
The NLRC cited Labor Congress of the Philippines v. NLRC, 15 where it was held that while "[t]he Rules Implementing the Labor Code exclude certain employees from receiving benefits such as nighttime pay, holiday pay, service incentive leave and 13th month pay, inter alia, 'field personnel and other employees whose time and performance is unsupervised by the employer, including those engaged on task or contract basis, purely commission basis, or those who are paid a fixed amount for performing work irrespective of the time consumed in the performance thereof[,]' x x x piece-rate workers do not fall within this group." Simply put, piece-rate workers are not covered by the exemption because they perform the work under the control and supervision of the employer.
Petitioners filed a motion for reconsideration, 16 which the NLRC granted in its June 17, 2011 Resolution. 17 The joint complaint was then ordered dismissed.
Respondents filed their own motion for reconsideration. 18 In its Resolution dated February 29, 2012, 19 the NLRC reversed its Resolution dated June 17, 2011 and reinstated its Decision dated March 31, 2011.
Petitioners thereafter filed a petition for certiorari under Rule 65 of the Rules of Court before the CA, docketed as CA G.R. SP No. 123949. 20 On February 13, 2013, the CA affirmed the February 29, 2012 Resolution of the NLRC finding Tumangday and Inola to be labor-only contractors. 21 Petitioners filed a motion for reconsideration, but the same was also denied. 22
Hence, this present petition which raises the primary question of whether petitioners are engaged in labor-only contracting.
We deny the petition.
The core issue in this case is whether there exists an employer-employee relationship between the parties. This issue is essentially a question of fact. We emphasize once again that the Court is not a trier of facts. We generally accord respect and even finality to factual findings of quasi-judicial bodies like the NLRC, particularly when they coincide with those of the LA and if supported by substantial evidence. 23 It is not the Court's function to assess and evaluate the evidence all over again. 24 While there are exceptions to this rule, none obtains in this case. 25
Petitioners, however, insist on a re-examination of the evidence on the basis of a supposed conflicting factual findings by the NLRC. Petitioners refer to the NLRC reversing itself twice: first, via its Resolution dated June 17, 2011 which vacated its earlier NLRC Decision dated March 31, 2011; and second, in its Resolution dated February 29, 2012 which reinstated the Decision dated March 31, 2011. We do not agree with petitioners. The NLRC, or any court for that matter, is never precluded from reconsidering its previous decision on second look when it finds meritorious grounds to serve the ends of justice.
Petitioners further insist that the Pakyaw Contract substantiates the status of Tumangday and Inola as independent contractors; that Tumangday and Inola provided the raw materials for the production of said tiles and blocks; and that Tumangday and Inola exercised control over respondents.
Again, We do not agree with petitioners and affirm the finding of the CA that Tumangday and Inola are mere labor-only contractors. As correctly held by the CA, there is labor-only contracting when the contractor or sub-contractor merely recruits, supplies or places workers to perform a job, work or service for a principal and when 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 which are directly related to the main business of the principal; or
ii) The contractor does not exercise the right to control the performance of the work of the contractual employee. 26 (Underscoring supplied.)
Respondents' work as tile/hollow block fabricators is clearly indispensable to the principal business of petitioners. Settled is the rule that where the employees are tasked to undertake activities usually desirable or necessary in the usual business of the employer, the contractor is considered as a "labor-only" contractor and such employees are considered as regular employees of the employer. 27
It is also telling that some of the respondents were repeatedly hired by petitioners. Records reveal that some of them have been working with petitioners as early as 2004, which contradicts the contention of petitioners that the so-called Pakyaw Contract was only for a period of five months.
There was also no evidence at all to prove that Tumangday and Inola are independent contractors. No license from the DOLE Regional Office was presented to show this fact, and quite significantly, there was also no evidence as to their capitalization or of their investment in tools, equipment or implements actually used in the performance or completion of the job, work, or service that they were contracted to render. The CA has likewise aptly observed that petitioners admitted an inclusion in the Pakyaw Contract that they would monitor the quality of work done by Tumangday and Inola, and that they would provide Tumangday and Inola with information and instruction to enable them to implement the work satisfactorily. Petitioners, therefore, had retained its right to control the manner, means, and end of the work to be performed.
Furthermore, We see no cogent reason as well to reverse the finding of the CA that respondents are entitled to salary differentials and holiday pay.
To ensure the payment of fair and reasonable wage rates, Article 101 of the Labor Code provides that "the Secretary of Labor shall regulate the payment of wages by results, including pakyao, piecework and other noontime work." The same statutory provision also states that the wage rates should be based, preferably, through time and motion studies, or those arrived at in consultation with representatives of workers' and employers' organizations. 28 As correctly pointed out by the NLRC in its Decision 29 dated March 31, 2011, Article 101 was not complied with. The contract price for each piece of item made by respondents was not shown to have undergone time and motion studies or was otherwise an approved industry standard.
As to whether respondents are entitled to holiday pay, the following provisions are relevant:
Art. 82. Coverage. — The provisions of [Title I] shall apply to employees in all establishments and undertakings whether for profit or not, but not to government employees, managerial employees, field personnel, members of the family of the employer who are dependent on him for support, domestic helpers, persons in the personal service of another, and workers who are paid by results as determined by the Secretary of Labor in appropriate regulations.
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"Field personnel" shall refer to non-agricultural employees who regularly perform their duties away from the principal place of business or branch office of the employer and whose actual hours of work in the field cannot be determined with reasonable certainty. 30
Under Article 82, "field personnel" on one hand and "workers who are paid by results" on the other hand, are not covered by the Title I provisions. The wordings of Article 82 of the Labor Code additionally categorize workers "paid by results" and "field personnel" as separate and distinct types of employees who are exempted from the Title I provisions of the Labor Code. 31
Meanwhile, the pertinent portion of Article 94 of the Labor Code and its corresponding provision in Rule II, Section 1 (e), of the IRR read:
Art. 94. Right to holiday pay. — (a) Every worker shall be paid his regular daily wage during regular holidays, except in retail and service establishments regularly employing less than (10) workers[.]
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Sec. 1. Coverage. — This Rule shall apply to all employees except:
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(e) Field personnel and other employees whose time and performance is unsupervised by the employer including those who are engaged on task or contract basis, purely commission basis, or those who are paid a fixed amount for performing work irrespective of the time consumed in the performance thereof.
Based on the foregoing, the general rule is that the holiday pay provision covers all employees. To be excluded from the coverage, an employee must be one of those expressly exempt. Under the IRR, exemption from the coverage of holiday pay refer to "field personnel and other employees whose time and performance is unsupervised by the employer including those who are engaged on task or contract basis[.]" Note that unlike Article 82 of the Labor Code, the IRR on holiday pay does not exclude employees "engaged on task basis" as a separate and distinct category from employees classified as "field personnel." Rather, these employees are altogether merged into one classification of exempted employees. 32
As early as 1987 in the case of Cebu Institute of Technology v. Ople, 33 the phrase "those who are engaged on task or contract basis" in the rule has already been interpreted to mean as follows:
The phrase x x x should however, be related with "field personnel" applying the rule on ejusdem generis that general and unlimited terms are restrained and limited by the particular terms that they follow x x x. Clearly, petitioner's teaching personnel cannot be deemed field personnel which refers to non-agricultural employees who regularly perform their duties away from the principal place of business or branch office of the employer and whose actual hours of work in the field cannot be determined with reasonable certainty. [Par. 3, Article 82, Labor Code of the Philippines]. Petitioner's claim that private respondents are not entitled to the service incentive leave benefit cannot therefore be sustained. 34
Thus, the payment of an employee on task or pakyaw basis alone is insufficient to exclude one from the coverage of holiday pay. They are exempted from the coverage of Title I (including the holiday pay) only if they qualify as "field personnel." The IRR therefore validly qualifies and limits the general exclusion of "workers paid by results" found in Article 82 from the coverage of holiday pay. 35
Here, respondents do not fall under the definition of field personnel under Article 82. As already established, respondents labored with a staggering work schedule under the control of petitioners in the means, manner, and end of the work to be performed. Since respondents cannot be considered "field personnel," then they are not exempted from the grant of holiday pay even as they were engaged on "pakyaw" or task basis.
Finally, We uphold the finding of the NLRC in its Resolution dated February 29, 2012 with regard to the nine respondents not listed in the Pakyaw Contract. The NLRC has sufficiently explained the situation in this wise:
The issue on the excluded nine (9) complaining workers is easy to resolve. We need only to note that in the SMV position paper (Rollo, p. 3) where they cited an affidavit (Rollo, pp. 32-33) which was signed by those whom they admit to be their employees, the names of four (4) of the nine (9) workers whom they deny appeared as signatory to the affidavit. On the other hand in paragraph 3 of the same SMV position paper, SMV admitted that the excluded nine (9) workers are members of Kapisanan sa Kapakanan ng Manggagawang Pilipino (KAKAMPI). So how can SMV now claim lacking relationship with this nine (9)? More so, when the seven (7) whom they recognized to be working with SMV as pakyaw workers were also members of KAKAMPI. 36
WHEREFORE, the instant petition is DENIED. The assailed Decision dated February 13, 2013 and Resolution dated July 1, 2013 of the Court of Appeals in CA-G.R. SP No. 123949 are hereby AFFIRMED.
SO ORDERED."
Very truly yours,
(SGD.) LIBRADA C. BUENADivision Clerk of Court
Footnotes
1.Rollo, pp. 3-29.
2.Id. at 37-53, penned by Associate Justice Socorro B. Inting, with the concurrence of Associate Justices Jose C. Reyes, Jr. (now a Member of the Court) and Mario V. Lopez.
3.Id. at 55-56.
4.Id. at 103-108.
5.Id. at 112-114.
6.Id. at 142-148.
7.Id. at 132-133.
8.Id. at 158-160.
9.Id. at 124-131.
10.Id. at 162-171.
11.Id. at 165.
12.Id. at 166.
13.Id. at 166-171.
14.Id. at 76-85.
15. G.R. No. 123938, May 21, 1998, 290 SCRA 509, 528.
16.Rollo, pp. 186-194.
17.Id. at 197-205.
18.Id. at 206-210.
19.Id. at 86-93.
20.Id. at 57-73.
21. Id. at 37-53.
22. Id. at 55-56.
23. New City Builders, Inc. v. NLRC, G.R. No. 149281, June 15, 1995, 490 SCRA 220, 226, citing Manila Water Company, Inc. v. Pena, G.R. No. 158255, July 8, 2004, 434 SCRA 53, 58.
24. Id., citing Stamford Marketing Corporation v. Julian, G.R. No. 145496, February 24, 2004, 423 SCRA 633.
25. Valencia v. Classique Vinyl Products Corporation, G.R. No. 206390, January 30, 2017, 816 SCRA 144.
26. Rollo, p. 47.
27. Aboitiz v. Dimapatoi, G.R. No. 148619, September 19, 2006, 502 SCRA 271, 287.
28. Velasco v. NLRC, G.R. No. 161694, June 26, 2006, 492 SCRA 686.
29. Rollo, pp. 76-85.
30. LABOR CODE, Art. 82.
31. David v. Macasio, G.R. No. 195466, July 2, 2014, 729 SCRA 67, 87.
32. Id. at 89.
33. G.R. No. L-58870, December 18, 1987, 156 SCRA 629.
34. Id. at 673-674.
35. David v. Macasio, supra note 31 at 69.
36. Rollo, pp. 90-91.