THIRD DIVISION
G.R. No. 214667, December 03, 2018
LINGNAM RESTAURANT, Petitioner, v. SKILLS & TALENT EMPLOYMENT POOL, INC., AND JESSIE COLASTE, Respondents.
D E C I S I O N
PERALTA, J.:
This is a petition for review on certiorari of the Decision1 of the Court of Appeals dated December 20, 2013 in CA-G.R. SP No. 129856, reversing and setting aside the Decision of the National Labor Relations Commission (NLRC) dated January 31, 2013 and its Resolution dated March 27, 2013, and reinstating the Decision of the Labor Arbiter dated September 26, 2012, finding respondent Jessie Colaste illegally dismissed from employment.
The facts are as follows:
Respondent Skills & Talent Employment Pool, Inc. (STEP) is a domestic corporation engaged in manpower management and technical services, and one of its clients is petitioner Lingnam Restaurant, a business enterprise owned and operated by Liberty C. Nacion. In a contract2 of employment, respondent Jessie Colaste is a project employee of respondent STEP assigned to work with petitioner Lingnam Restaurant as assistant cook.
On May 21, 2008, Jessie Colaste filed with the Labor Arbiter an Amended Complaint3 for illegal dismissal against Lingnam Restaurant and STEP.
In his Position Paper,4 Jessie Colaste alleged that on December 21, 2006, he started working at Lingnam Restaurant as an assistant cook/general utility with a salary of P350.00 a day. He worked six days a week, eight hours a day on two shifts.
On March 5, 2008, at about 10:00 a.m., Colaste reported to the main office of STEP at Ortigas Center, Pasig City. He was informed by one Katherine R. Barrun that his contract with Lingnam Restaurant had expired. He was given a clearance form to be signed by his supervisor at Lingnam Restaurant. However, he reported for work as usual at Lingnam Restaurant from 2:00 p.m. to 10:00 p.m.
On March 6, 2008, he was on day-off. On March 7, 2008, he reported for work at Lingnam Restaurant at Greenhills, San Juan City, Metro Manila. However, the Chief Cook told him not to punch in his time card because he was already terminated from work. After a few minutes, the Chief Cook handed him the telephone, and Supervisor Philipp Prado of the main office of Lingnam Restaurant was on the line and told him, "finish contract ka na, hindi kana pwede pumasok sa trabaho mo, tanggal ka na." Hence, Jessie Colaste filed this case for illegal dismissal against Lingnam Restaurant and STEP, and prayed for reinstatement, payment of backwages and other employment benefits, moral and exemplary damages and ten percent (10%) attorney's fees based on his total judgment award.
In its Position Paper5 dated August 8, 2008, Lingnam Restaurant denied that it is the employer of complainant Jessie Colaste and alleged that STEP is Colaste's real employer. Hence, it is not liable for the claims and causes of action of Colaste, and that the complaint should be dismissed insofar as it is concerned.
STEP filed a Request for Clarification and Cautionary Entry of Appearance6 dated July 25, 2008, stating that it had not been served with any summons and a copy of the complaint. It prayed that the entry of appearance of its counsel be duly noted and that STEP'S inclusion in the hearing and/or participation in the case be clarified.
In a Decision7 dated September 15, 2008, Labor Arbiter Felipe P. Pati dismissed the complaint for lack of merit. He ruled that Jessie Colaste's real employer is STEP because it directly exercised all powers and responsibilities over Colaste. The Labor Arbiter also dismissed Colaste's money claims for lack of merit.
Jessie Cohiste appealed from the Labor Arbiter's decision before the NLRC. In a Resolution8 dated September 24, 2009, the NLRC remanded the case to the arbitration branch of origin for further proceedings as the Labor Arbiter failed to rule on the issue of illegal dismissal.
Jessie Colaste submitted a Memorandum,9 narrating the same facts as in his Position Paper. He reiterated that he was paid P350.00 per day until his illegal dismissal. Hence, he contended that he was underpaid from August 28, 2007 to March 2008 because the minimum wage for the said dates up to June 13, 2008 was already P362.00 per day. Aside from underpayment of salary, he was also not paid his benefits such as premium pay for work performed during Sundays, holiday pay, premium pay for holiday and 13th month pay. He was likewise not paid his five days' salary for work performed from March 1, 2008 to March 5, 2008.
STEP filed a Cautionary Pleading,10 manifesting the lack of service of summons upon it. Nevertheless, it alleged that it is an independent contractor engaged in the business of rendering management and technical services. One of its project employees is complainant Jessie Colaste who was assigned as kitchen helper at Lingnam Restaurant, one of STEP's clients. STEP averred that Colaste's employment was co-terminus and dependent upon its contract with Lingnam Restaurant, and STEP has the right to transfer Colaste to another assignment, project or client. In 2002, STEP and Lingnam Restaurant entered into an agreement wherein the former would provide the latter with manpower to perform activities related to the operation of its restaurant business. However, in 2007, Lingnam Restaurant reneged in paying the agreed contract salary of the manpower staff detailed at its business establishment or areas of operation. STEP was compelled to use its funds to pay the manpower staff until the time Lingnam Restaurant's total unpaid obligation amounted to P2,907,690.55 covering the period from March 2007 up to February 19, 2008. Hence, in February 2008, STEP ceased its manpower services to Lingnam Restaurant. Aside from assailing the lack of service of summons, STEP also argued that the complaint for illegal dismissal has no cause of action, since Jessie Colaste is still on floating status and has yet to be enlisted to its other business clients within a period of six months. STEP alleged that it did not terminate complainant's services. Hence, it prayed that the complaint be dismissed for lack of merit.
Meanwhile, Lingnam Restaurant filed anew its Position Paper,11 stating that it is a franchisor of the business establishment Lingnam Restaurant. The franchisee who hired and retained complainant Jessie Colaste was Ms. Liberty Nacion at its franchise business establishment at Shaw Boulevard, Mandaluyong City. It was at the said business establishment that Jessie Colaste rendered services through STEP. Thus, it is not liable for any claims or causes of action of Jessie Colaste.
In a Decision12 dated September 26, 2012, Labor Arbiter Pablo A. Gajardo, Jr. held that Lingnam Restaurant was guilty of illegal dismissal. The Labor Arbiter ruled that complainant Jessie Colaste's job as assistant cook is necessary and desirable to the restaurant business of Lingnam Restaurant; thus, he is considered as a regular employee of Lingnam Restaurant. Moreover, the Labor Arbiter found that Colaste was not paid his salary in accordance with applicable wage orders. The dispositive portion of the Decision reads:
WHEREFORE, premises considered, judgment is hereby rendered as follows:Lingnam Restaurant appealed from the Decision of the Labor Arbiter before the NLRC. In a Decision14 dated January 31, 2013, the NLRC reversed and set aside the Decision of the Labor Arbiter. The fallo of the Decision reads:SO ORDERED.13
- Declaring respondent Lingnam Restaurant guilty of illegal dismissal;
- Ordering respondent Lingnam Restaurant to immediately reinstate complainant to his former position without loss of seniority rights, privileges and other benefits;
- Directing respondent Lingnam Restaurant to pay complainant his full backwages in the amount of P624,020.81 (computed till promulgation only) from the time he was dismissed on March 5, 2008; salary differential in the sum of P10,042.76; unpaid salary for March 1-5, 2008, P1,810.00; 13th month pay for 2006, 2007 and 2008; P10,235.90 and 10% attorney's fees, P64,610.95;
- Dismissing all other claims for lack of merit; and
- Dismissing the instant complaint as against respondent Skills & Talent Employment Pool, Inc. for not being served with the Summons.
WHEREFORE, the foregoing having been duly considered, the assailed decision is hereby SET ASIDE and a new one is hereby promulgated as follows:The NLRC held that STEP is an independent contractor providing manpower services to Lingnam Restaurant. An employer-employee relationship existed between STEP and Jessie Colaste, who was assigned to one of STEP's clients, Lingnam Restaurant. As Colaste had been employed with STEP for more than a year and performing duties necessary and desirable to its trade and business, he is considered a regular employee. The failure of STEP to assign Colaste to its other business clients after the lapse of six months rendered him constructively dismissed.SO ORDERED.15
- Dismissing the complaint for illegal dismissal against Lingnam Restaurant;
- Holding respondent Skills & Talent Employment Pool, Inc. liable for constructive dismissal of complainant due to their failure to assign complainant to other business clients after the lapse of six months;
- Ordering respondent Skills & Talent Employment Pool, Inc. to immediately reinstate complainant to a position equal to his former position without loss of seniority rights, privileges and other benefits; pay him his full backwages commencing from March 5, 2008 up to finality; and to pay for the other monetary awards contained in the assailed decision plus adjusted attorney's fees.
WHEREFORE, the petition is GRANTED. The Decision and Resolution promulgated on January 31, 2013 and on March 27, 2013, respectively, of the NLRC are REVERSED and SET ASIDE. The Decision dated September 26, 2012 of the Labor Arbiter is REINSTATED and AFFIRMED.19Lingnam Restaurant's motion for reconsideration was denied for lack of merit by the Court of Appeals in its Resolution20 dated September 24, 2014.
The main issue is whether or not the Court of Appeals erred in setting aside the decision of the NLRC and in reinstating the decision of Labor Arbiter Gajardo, Jr. or, stated otherwise, whether or not the Court of Appeals correctly ruled that respondent STEP is engaged in labor-only contracting; hence, petitioner Lingnam Restaurant is the employer of complainant-respondent Jessie Colaste and it is liable for Colaste's illegal dismissal.
- THE COURT OF APPEALS ERRED IN ALLOWING HEREIN PETITIONER LINGNAM RESTAURANT TO BE JOINED AS RESPONDENT IN CA-G.R. SP NO. 129856, DESPITE THE FACT THAT THE PETITION FOR CERTIORARI FILED IN THE COURT OF APPEALS BY SKILLS & TALENT EMPLOYMENT POOL, INC. CONTAINED NO ALLEGATION OF CLAIM AND NO PRAYER FOR RELIEF AGAINST LINGNAM RESTAURANT.
- THE COURT OF APPEALS ERRED IN NOT DECLARING THE PETITION FOR CERTIORARI IN CA-G.R. SP NO. 129856 FILED IN THE COURT OF APPEALS BY SKILLS & TALENT EMPLOYMENT POOL, INC. AS BEING INSUFFICENT IN FORM AND SUBSTANCE WITH RESPECT TO LINGNAM RESTAURANT, THEREBY PLACING LINGNAM RESTAURANT IN A POSITION WHERE IT CANNOT INTELLIGENTLY IDENTIFY AND DISCERN THE MATTERS WHICH OUGHT TO BE ADDRESSED OR COMMENTED TO IN THE PETITION FOR CERTIORARI, AND THEREFORE VIOLATING THE RIGHT TO DUE PROCESS OF LINGNAM RESTAURANT.
- THE COURT OF APPEALS ERRED IN SETTING ASIDE THE PORTION OF THE NLRC DECISION DATED JANUARY 31, 2013 AND NLRC RESOLUTION DATED MARCH 27, 2013 WHICH DISMISSED THE CASE AGAINST LINGNAM RESTAURANT AND IN REVIEWING THE ALLEGED LIABILITY OF LINGNAM RESTAURANT TO JESSIE COLASTE, DESPITE THE FACT THAT THE DISMISSAL OF THE CASE AGAINST LINGNAM RESTAURANT HAS BECOME FINAL AND EXECUTORY.
- THE COURT OF APPEALS VIOLATED THE RULE THAT A PARTY WHO DOES NOT APPEAL CANNOT OBTAIN AFFIRMATIVE RELIEFS, WHEN IT SET ASIDE THE NLRC DECISION DATED JANUARY 31, 2013 AND NLRC RESOLUTION DATED MARCH 27, 2013 IN FAVOR OF JESSIE COLASTE AND AGAINST LINGNAM RESTAURANT, DESPITE THE FACT THAT SAID JESSIE COLASTE DID NOT APPEAL THEREFROM AND HAD NEVER PARTICIPATED IN THE COURT OF APPEALS PROCEEDINGS.21
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.The applicable implementing rules contained in Rule VIII-A,23 Book III of the Amended Rules To Implement The Labor Code define contracting or subcontracting and labor-only contracting as follows:
SECTION 4. Definition of Basic Terms. - The following terms as used in these Rules shall mean:As stated by the Court in PCI Automation Center, Inc. v. NLRC,24 the legitimate job contractor provides services, while the labor-only contractor provides only manpower. The legitimate job contractor undertakes to perform a specific job for the principal employer, while the labor-only contractor merely provides the personnel to work for the principal employer.25
(a) "Contracting" or "subcontracting" refers to an arrangement whereby a principal agrees to put out or farm out with 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.
x x x x
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 are present:The foregoing provisions shall be without prejudice to the application of Article 248 (c) of the Labor Code, as amended.
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.
"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 ma nr and means to be used in reaching that end.
x x x x
SECTION 7. Existence of an Employer-Employee Relationship. The contractor or subcontractor shall be considered the employer of the contractual employee for purposes of enforcing the provisions of the Labor Code and other social legislation. The principal, however, shall be solidarily liable with the contractor in the event of any violation of any provision of the Labor Code, including the failure to pay wages.
The principal shall be deemed the employer of the contractual employee in any of the following cases, as declared by a competent authority:(a) where there is labor-only contracting; or
(b) where the contracting arrangement falls within the prohibitions provided in Section 6 (Prohibitions) hereof.
Very truly yours, (SGD) WILFREDO V. LAPITAN Division Clerk of Court |
Endnotes:
1 Penned by Associate Justice Hakim S. Abdulwahid (Chairperson) of the Special Sixth Division of the Court of Appeals, with Associate Justices Manuel M. Barrios and Socorro B. Inting (Members) concurring; rollo, pp. 29-41.
2Rollo, pp. 87-98.
3 CA rollo, p. 72.
4Id. at 74-80.
5Rollo, pp. 82-86.
6 CA rollo, p. 103.
7Rollo, pp. 123-129.
8Id. at 130-134.
9 CA rollo, pp. 113-116.
10Id. at 132-137.
11Id. at 128-131.
12 Rollo, pp. 64-77.
13Id. at 75-77.
14Id. at 45-59.
15Id. at 57.
16Id. at 62-63.
17Id. at 34-35.
18Id. at 29-41.
19Id. at 40.
20Id. at 42.
21Id. at 15-16.
22Alaska Milk Corp. v. Ponce, G.R. Nos. 228412 & 228439, July 26, 2017.
23 Per DOLE Order No. 18-02 dated February 21, 2002. (Emphases ours)
24 322 Phil. 536 (1996).
25Id. at 550.
26Supra note 9.
27Rollo, pp. 87-89.
28Id. at 90-95.
29 See Jardin v. National Labor Relations Commission, 383 Phil. 187, 199 (2000).
30Audion Electric Co., Inc. v. National Labor Relations Commission, 367 Phil. 620, 633 (1999).
31Id.
32Rollo, pp. 159-165.