FIRST DIVISION
[G.R. No. 212580. December 2, 2020.]
UNIVERSAL ROBINA CORP., petitioner,vs. ALFREDO JUMAO-AS, CRIS PEÑAREDONDO, RICARDO HINAGPIS, PETRONILO LACHICA, JR., DARLY SAMBAJON, WILBERT DOCTOR, and MARIA TABAYAN, respondents.
NOTICE
Sirs/Mesdames :
Please take notice that the Court, First Division, issued a Resolution datedDecember 2, 2020which reads as follows:
"G.R. No. 212580 (Universal Robina Corp.,Petitioner,v. Alfredo Jumao-As, Cris Peñaredondo, Ricardo Hinagpis, Petronilo Lachica, Jr., Darly Sambajon, Wilbert Doctor, and Maria Tabayan,Respondents). — This is a Petition for Review 1 under Rule 45 of the Rules of Court, seeking to reverse and set aside the Decision 2 dated 21 October 2013 and Resolution 3 promulgated 09 May 2014 by the Court of Appeals (CA) in CA-G.R. SP No. 121103. The CA reversed the Decision dated 13 October 2010 and Resolution dated 13 June 2011, issued by the National Labor Relations Commission (NLRC) in NLRC Case Nos. RAB-IV 07-00684-09-L, 07-00685-09-L, 07-00686-09-L, 07-00688-9-L and 07-00717-09-L. 4
Antecedents
Sometime in 2007, petitioner Universal Robina Corporation (URC) and Best Link Resources, Inc. (Best Link) executed a two-year Toll-Packing Agreement (the Agreement), wherein the latter undertook to perform toll-packing/shrink-wrapping requirements of URC, particularly the following activities:
• Carton feeding
• Palletizing (stacking per pallet)
• Regluing of cartons
• Align feed products from filing machine
• Align products coming from cooling tunnel
• Cut straw into 10s
• Pack finished goods and straw to cartons (10 cups/case and 10 pcs. Straw)
• Carton taping of packed finished products into carton sealer 5
Pursuant thereto, Best Link hired several employees, including respondents Alfredo Jumao-as, who was employed as a line leader from 20 January 2008, Cris Peñaredondo and Wilfredo Doctor, DIMAC operators from 07 July 2007 and 27 June 2007, respectively, Ricardo Hinagpis, a palletizer from 20 June 2007, Petronilo Lachica, Jr., an operator from 14 February 2008, Darly Sambahon, a machine operator from 03 April 2007, and Maria Tabayan, a final inspector from 20 February 2008 (respondents, collectively). 6
On 30 June 2009, however, respondents, along with their co-employees, were dismissed by Best Link in view of the expiration of the Agreement. Claiming their termination to be illegal, respondents filed a complaint before the Labor Arbiter (LA) against URC and Best Link.
Respondents argued they were URC's regular employees. They had been working for URC for the past two (2) years performing tasks necessary and desirable in its usual business or trade of manufacturing bottled beverages. On the other hand, they claimed Best Link was a labor-only contractor as it lacked substantial capital or investment and did not exercise control over them. As such, URC, as their true employer, should be held solidarily liable with Best Link for illegal dismissal.
URC, for its part, denied the existence of an employer-relationship between it and respondents. According to URC, Best Link is a well-known legitimate job contractor, 7 duly licensed by the Department of Labor and Employment (DOLE) and the Securities and Exchange Commission (SEC). It has served some of the leading companies in the Philippines, such as Proserve, Monde Nissin, Purefoods Hormel, Corp., Monterey Foods Corp., and UFC Philippines. 8 It has substantial capital to comply with the Agreement, as proven by its financial statements, showing that it had total assets of Php22,193,630.00 and Php24,024,540.96 in 2007 and 2008, respectively. 9
In addition, URC averred that Best Link itself acquired the necessary items to perform the toll-packing service. 10 It was also Best Link that hired respondents to be its project employees for the Agreement's duration. In line with this, Best Link duly informed respondents of their status when they signed their fixed-term employment contracts, noting that their employment was coterminous with the Agreement. 11 Best Link likewise controlled and supervised respondents' performances and conduct, without URC's intervention, except only as to the results, as can be proven by respondents' time cards, identification cards, uniforms, pictures, hospital bills paid for by Best Link, performance appraisal reports, and disciplinary actions imposed upon them by Best Link. 12
URC further maintained that Best Link provided for respondents' use four-pallet trucks, blades of labeling machines, three cutting machines, glue guns, maintenance tools, industrial fans, electric stoves, employees' locker rooms, and housekeeping materials. 13
Ruling of the LA
On 30 March 2010, the LA issued its Decision, the dispositive part of which reads:
WHEREFORE, premises considered, the herein 18 prevailing complainants are declared regular employees of URC dismissed illegally without just cause and due process.
Corollarily, respondents URC and Best Link are ordered jointly and severally to reinstate the following complainants to their respective former positions with full backwages reckoned from date of dismissal up to date of actual reinstatement which backwages as of March 29, 2010 already amounts in aggregate to P1,255,176.00 computed and broken down as follows:
xxx xxx xxx
The complaint of Erwin Bongalon is dismissed without prejudice for failure to prosecute.
The complaints of all other complainants are dismissed on the ground of settlement.
All other claims are dismissed for lack of basis.
SO ORDERED. 14
Ruling of the NLRC
On appeal, the NLRC issued the Decision dated 13 October 2010, reversing and setting aside the LA ruling. 15
Petitioners moved for reconsideration, but the NLRC denied the same in its Resolution dated 13 June 2011. 16 Hence, petitioners filed a petition for certiorari with the CA.
Ruling of the CA
In the now assailed Decision, the CA set aside the NLRC's rulings on the ground of grave abuse of discretion. The dispositive portion of the assailed Decision reads:
We SET ASIDE the Decision dated 13 October 2010, and the Resolution dated 13 June 2011, of the National Labor Relations Commission in NLRC Case Nos. RAB-IV 07-00684-09-L, 07-00685-09-L, 07-00686-09-L, 07-00688-09-L, and 07-00717-09-L, and ORDER respondent Universal Robina Corporation as follows:
1) to reinstate petitioners Alfredo Jumao-as, Cris Peñaredondo, Ricardo Hinagpis, Petronila Lachica, Jr., Darly Sambajon, Wilbert Doctor, and Maria Tayaban immediately without loss of seniority rights and other privileges, full backwages, inclusive of allowances, and other benefits or their monetary equivalent computed from the time of their illegal dismissal up to the time of their actual reinstatement.
2) to pay petitioners backwages;
3) to pay petitioners P25,000.00 each, as moral damages;
4) to pay petitioners ten percent of the total sum due, as attorney's fees.
This case is REMANDED to the Labor Arbiter for computation, within 30 days from receipt of this Decision, of petitioners' backwages and other benefits, and attorney's fees.
IT IS SO ORDERED. 17
The CA held that respondents sufficiently established, contrary to the NLRC's finding, all elements of labor-only contracting. Essentially, the CA found that Best Link lacked substantial capital to perform toll-packing services on its own account and responsibility. In contrast, respondents performed activities directly related to the main business of URC. 18
Considering that Best Link was adjudged to be a labor-only contractor, the CA held that URC was solidarily liable for the illegal termination of respondents, who were deemed as regular employees and hence, entitled to security of tenure. 19
Best Link and URC filed a motion for reconsideration, 20 but the same was denied. Feeling aggrieved, URC solely filed the present petition.
Ruling of the Court
The petition lacks merit.
It bears stating at the outset that questions of fact are for the labor tribunals to resolve as only errors of law are generally reviewed in petitions for review on certiorari under Rule 45 of the Rules of Court. 21 Corollarily, factual findings of administrative or quasi-judicial bodies, including labor tribunals, are accorded much respect by this Court, as they are specialized to rule on matters falling within substantial evidence. 22 However, when the findings of the Labor Arbiter or the NLRC are inconsistent with that of the CA, such as in this case, the Court may need to do its own review of the evidence and circumstances to determine which of them should be preferred as more conformable to evidentiary facts. 23
In the instant case, whereas the NLRC found URC to be engaged in permissible job contracting, the CA affirmed the Labor Arbiter's finding that URC is deemed the respondents' employer since Best Link is a labor-only contractor. After scrutiny of the facts and evidence on hand, the Court sustains the CA, not only because the present petition is devoid of any evidence to support it, but also the CA did not commit any reversible error in affirming the findings of the Labor Arbiter.
Outsourcing of services is not prohibited in all instances. Article 106 of the Labor Code of the Philippines provides the legal basis for legitimate labor contracting. This provision is further implemented by DOLE Order No. 18, Series of 2002 (DO 18-02). 24 Upon the other hand, labor-only contracting is expressly prohibited under Section 5 of DO 18-02, thus:
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.
Labor laws give businesses management prerogative to farm out any of its activities, regardless of whether such activity is peripheral or core in nature. However, for such outsourcing to be valid, it must be made to an independent contractor because the current labor rules expressly prohibit labor-only contracting. 25
In distinguishing between permissible job contracting and prohibited labor-only contracting, the totality of the facts and the surrounding circumstances of the case are to be considered. 26 The nature of the work performed must be viewed from a perspective of the business or trade in its entirety and not on a confined scope. 27 As a general rule, however, a contractor is presumed to be a labor-only contractor, unless such contractor overcomes the burden of proving that it has the substantial capital, investment, tools and the like, 28 albeit registration of the company with the DOLE prevents the legal presumption of being a mere labor-only contractor from arising. 29
In the instant case, the facts and evidence on hand overwhelmingly show that Best Link is a labor-only contractor. As aptly emphasized by the CA, the primary purpose of Best Link, as stated in its articles of incorporation, is to contract, enlist, and recruit workers to be supplied for local work. 30 This is substantial evidence that Best Link is engaged in labor-only contracting. As the Court spelled out in PCI Automation Center, Inc. v. National Labor Relations Commission, 31 a legitimate job contractor provides services, while a labor-only contractor provides manpower only. Whereas the legitimate job contractor undertakes to perform a specific job, the labor-only contractor merely provides the personnel to work for the principal employer.
After further scrutiny, the Court likewise concurs with the CA that Best Link failed to meet the substantial-capital requirement for legitimate independent contractors under the law and the rules. Even conceding for the sake of argument that Best Link may have been a financially viable company during the existence of the Agreement, it cannot be gainsaid that it had substantial investment in the form of equipment, tools, implements, machineries and work premises needed for it to perform the job demanded by the Agreement. As found by the CA, Best Link and URC even expressly agreed that the latter would be the one to provide the tools and equipment for the services to be rendered by Best Link at URC's Calamba, Laguna beverage plant. URC has failed to refute this finding of the CA:
To further bolster its claim, respondent Best Link presented check vouchers, sales invoices, delivery receipts, and official receipts for items it allegedly bought, to be sued in the toll-packing service. These items were: four hand pallets, stamp pad ink, stamp pad, two bundy clocks, two time recorders six, steel lockers, and time cards. It is our opinion that these items are hardly the substantial investments necessary to carry out the toll-packing services. Most of these items were meant for the monitoring of personnel attendance, and storage of personnel items. Also, four hand pallets were for the use of only one part of the service process, which was the transfer of the products from the toll-packing machine to the truck area.
Further, from the description of the toll-packing procedure under the scope of operations, it is apparent that apart from premises and human resources, the toll-packing procedure would entail the use of the following: packaging machine, palletizing equipment, carton sealers, adhesives, disposition tags, cleaning tools, cartons, rolls of straw, plastic wraps, and recording supplies. Of these items, respondent Best Link purchased only the hand pallets. The stamp pad ink, stamp pad, two bundy clocks, two time recorders, six steel lockers, and time cards, while understandably necessary for the monitoring of personnel concerns, storage of personal effects, and included in the recording of product output, are not the fundamental capital investments required by law.
A reading of the Toll Packing Agreement, particularly the provision entitled "Contractor's Premises and Facilities," shows that while the parties agreed that the packing/shrink wrapping requirements shall be performed using respondent Best Link's equipment and manpower, it was stated that it was the respondent URC that would provide respondent Best Link with materials to [conduct] its toll-packing service. x x x 32
From the foregoing, the Court sees no merit in URC's contention that the presence of Best Link's substantial capital no longer requires it to identify which part of its assets was devoted to the toll-packing services it entered into with URC. Section 5 of DO 18-02 provides the contractor or subcontractor's lack of substantial capital or investment, which relates to the job, work or service, as one of the elements of labor-only contracting.
URC claims the CA misapprehended the facts when it concluded that toll-packing entails the use of complicated or costly machines and pieces of equipment, which Best Link did not have. 33 It avers that toll-packing service involves sorting, packing, casing, pouching, polybagging, and preparing for distribution of manufactured goods. To URC, these acts simply require segregation and grouping of products without complicated machines since they have already been pre-packed and sealed by URC.
The Court is not persuaded.
It bears pointing out that URC is not merely a small enterprise; It is one of the leading producers and distributors of food and beverage products nationwide. Its operation, being broad in scope, indubitably demands the use of machines and pieces of equipment to facilitate the production of its items and sorting and packaging of its finished products. If it were true that there were no machines involved in the toll-packing services, as URC claims, there would have been no need to hire some of petitioners herein. However, Best Link engaged the services of petitioners Cris Peñaredondo and Wilfredo Doctor as DIMAC operators from 7 July 2007 and 27 June 2007, respectively. Meanwhile, petitioner Petronilo Lachica, Jr. served as an operator from 14 February 2008 while petitioner Darly Sambahon was hired as machine operator since 3 April 2007.
Contrary to what URC wants to impress upon this Court, toll-packing service does not merely entail segregation and grouping of finished products. As admitted in the petition, toll-packing involves carton feeding, re-gluing of cartons and carton taping of packed, finished products into a carton sealer. 34 Necessarily, these activities require the use of a carton feeder machine, a carton gluing device, and a carton sealer, all of which Best Link did not provide.
With the foregoing, the CA correctly held the absence or lack of sufficient investment in the necessary equipment and materials sufficiently establishes that Best Link merely provided the manpower to URC for its toll-packing activities. 35
As far as the second element of labor-only contracting is concerned, every activity performed by respondents was indispensable to URC's beverage business. Even if it were true that toll-packing is not related to the manufacturing of bottled products, it is nevertheless vital to facilitate the distribution of URC's products.
There being labor-only contracting in this case, the principal employer is considered the direct employer of the employees. 36 Verily, Best Link is only a labor-only contractor, thus, a mere agent of URC, the real employer of respondents herein. 37 And considering that respondents had been working for two (2) years already before their termination, they had become, by force of law, regular employees who enjoy security of tenure. Hence, they can only be dismissed for just or authorized causes under the law. 38
In this case, respondents were terminated due to the expiration of the Agreement between URC and Best Link, which cannot justify their dismissal. Consequently, respondents are entitled under the law to reinstatement, without loss of seniority rights and other privileges, and with payment of full backwages. Should reinstatement is no longer feasible, they shall be entitled to full backwages and separation pay at one month's pay for every year of service. 39
The CA's award of moral damages and attorney's fees are likewise sustained, being supported by the facts and the law of the case. As aptly explained by the CA, moral damages may be awarded since the dismissal was done in bad faith, facilitated through a labor-only scheme for the purpose of circumventing the laws on regularization of workers. 40 Attorney's fees are likewise warranted since respondents were forced to litigate to protect their interests. 41
Notably, however, the CA failed to impose legal interest. Applying the principles laid down in the seminal case of Nacar v. Gallery Frames, 42 the total monetary award to be received by respondents should earn legal interest of 6% per annum computed from finality of this resolution until full satisfaction thereof. 43
WHEREFORE, premises considered, the instant Petition for Review is hereby DENIED. The Decision promulgated 21 October 2013 and Resolution promulgated 09 May 2014 by the Court of Appeals (CA) in CA-G.R. SP No. 121103 are AFFIRMED with MODIFICATION in that legal interest of six percent (6%) per annum shall be additionally imposed on the total monetary awards to be computed from the finality of this Resolution until its full satisfaction.
The petitioner's motion to resolve its petition for review on certiorari dated July 7, 2014, for reasons stated therein, is NOTED.
SO ORDERED."
By authority of the Court:
(SGD.) LIBRADA C. BUENADivision Clerk of Court
by:
MARIA TERESA B. SIBULODeputy Division Clerk of Court
Footnotes
1.Rollo, pp. 9-35.
2.Id. at 37-54, Annex "A."; penned by Associate Justice Nina G. Antonio-Valenzuela and concurred in by Associate Justices Isaias P. Dicdican and Michael P. Elbinias of the Court of Appeals, Manila.
3.Id. at 56-57, Annex "B."
4.Id. at 52; copy of NLRC Decision and Resolution not attached.
5.Id. at 13.
6.Id. at 38-39.
7.Id. at 39.
8.Id. at 13 and 44.
9.Id. 89-90.
10.Id. at 47.
11.Id. at 40.
12.Id. at 40.
13.Id.
14.Id. at 40-41; LA Decision not attached.
15.Id. at 41; NLRC Decision not attached; see p. 5 of the CA Decision.
16.Id.; NLRC Resolution not attached; see p. 5 of the CA Decision.
17.Id. at 52-53.
18.Id. at 46-49.
19.Id. at 50-51.
20.Id. at 11; Copy of motion not attached; see p. 3 of the Petition for Review.
21. See Quintanar v. Coca-Cola Bottlers, Philippines, Inc., G.R. No. 210565, 28 June 2016, 794 SCRA 654 [Per J. Mendoza].
22. See Multinational Shipmanagement, Inc. v. Briones, G.R. No. 239793, 27 January 2020 [Per C.J. Peralta].
23.SeePortuguez v. GSIS Family Bank, G.R. No. 169570, 02 March 2007, 546 Phil. 140-158 (2007); 517 SCRA 309 [Per J. Chico-Nazario].
24.SeeDaguinod v. Southgate Foods, Inc., G.R. No. 227795 (Formerly UDK-15556), 20 February 2019 [Per J. Caguioa].
25.SeeAliviado v. Procter & Gamble Phils., Inc., G.R. No. 160506, 06 June 2011, 665 Phil. 542-562 (2011); 614 SCRA 563 [Per J. Del Castillo].
26.Supra, at note 24.
27.Supra, at note 21.
28.SeeAllied Banking Corporation v. Calumpang, G.R. No. 219435, 17 January 2018 [Per J. Velasco, Jr.].
29.Supra at note 24.
30.Rollo, pp. 48-49.
31. G.R. No. 115920, 29 January 1996, 322 Phil. 536-551 (1996) [Per J. Puno].
32.Id. at 47-48.
33.Id. at 24.
34.Id. at 13.
35.Id. at 48.
36.Supra at note 31.
37.Supra at note 28.
38.Petron Corporation v. Caberte, G.R. No. 182255, 759 Phil. 353-372 (2015); 15 June 2015 [Per J. Del Castillo].
39.SeeCusap v. Adidas Philippines, Inc., G.R. No. 201494, 29 July 2015, 707 SCRA 646 [Per J. Brion].
40.Rollo, p. 52.
41.SeeAlva v. High Capacity Security Force, Inc., G.R. No. 203328, 08 November 2017 [Per J. Reyes, Jr.].
42. G.R. No. 189871, 13 August 2013, 716 Phil. 267-283 (2013) [Per C.J. Peralta].
43.Prime Stars International Promotion Corp. v. Baybayan, G.R. No. 213961, 22 January 2020 [Per J. Inting].