Polyfoam-RGC International, Corporation and Precilla A. Gramaje

vs.

Edgardo Concepcion

G.R. No. 172349 / June 30, 2012

Jerold I. Saddi

SPLAWBUS 34

Nature:

Petition for review on certiorari under Rule 45 of the Rules of Court

Assails the CA’s decision on reversing the NLRC’s decision and reinstating the LA’s decision.

Facts/Background (1):

Edgardo Concepcion alleged that he was hired by the petitioner company as an “all-around” factory worker for almost 6 years.

He allegedly discovered that his time card was not in the rack and was informed by the security guard that he could no longer punch his time card

He protested to his supervisor and he told him that the management decided to dismiss him due to infraction of company rules.

Company Manager Cheng refused to face him

Respondent’s counsel wrote requesting that respondent be re-admitted to work.

Request unheeded

Facts/Background (2):

February 8, 2000 – respondent filed a complaint for illegal dismissal for:

a. Non-payment of wages

b. Premium pay for rest day

c. Separation pay

d. Service incentive leave

e. 13th month pay

f. Damages

g. Attorney’s fees

Facts/Background (3):

Gramaje filed a Motion for Intervention on April 28, 2000

Polyfoam filed a Motion to Dismiss on the grounds of:NLRC has no jurisdiction because of the absence of employer-employee relationship between Polyfoam and respondent and that money claim has already prescribed.

LA issed an order granting Gramaje’s motion and denying Polyfoam and Cheng’s motion to dismiss as the lack of ee-er relationship is only a defense.

LA rendered a decision finding respondent to have been illegally dismissed and holding Gramaje/Pages solidary liable to his money claims. (260,093.21)

Gramaje was not enrolled in as employment agency in the registry of DOLE

Respondednt performed a job directly related to the main business

Facts/Background (4):

NLRC modified the LA’s decision by exonerating Polyfoam from liability for respondent’s claims

Gramaje was ordered to pay separation pay of 1 month salary for every year of service from April 21, 1996 up to the rendition of the decision ( 58,500.00)

NLRC found out that Gramaje to be an independent contractor and were assigned to Polyfoam but remained under the supervision of Gramaje.

Gramaje had it’s subtantial capital, own office, equipment, tools etc.

Gramaje paid respondent’s wages and benefits and reported the latter to SSS as covered employee

As to illegal dismissal, respondent was not notified that he had been dismissed nor was he prevented from returning to his work.

Facts/Background (5):

Respondent elevated case to the CA in a special civil action for certiorari

Decision was granted and the decision of the NLRC was reversed and the decision of the LA was reinstated.

CA agreed with LA that Gramaje was not a legitimate contractor but only a “labor-only” contractor.

Failed to present Audited Financial Statement

Failed to present of the purported contract

License issued by DOLE was suprious

Not registered with DOLE as private recruitment agency

Presented only 1 SSS Quarterly Collection List whose authenticity is doubtful.

Issues:

1. Whether or not Gramaje is an independent job contractor

2. Whether or not an employer-employee relationship exist between Polyfoam and respondent

3. Whether or not respondent was illegally dismissed from employment

(1) Held:

1. NO. Gramaje is a Labor-Only Contractor.

* Elements of Labor-Only Contracting (DO No. 18-02,series of 2002)

a. Labor-only contracting refers to an agreement where the contractor or sub contractor merely recruits, supplies or places workers to perform a JOB, WORK, SERVICE for a PRINCIPAL.

b. And any of the following elements are present:a. The contractor or sub-contractor does NOT have substantial capital or

investment which relates to the job or work.

b. The workers recruited or supplied are performing activities which are directly related to the main business of the PRINCIPAL, and

c. The contractor does NOT exercise the right to control the performance of the work of the contractual employee.

(2) Held:

Yes. There was an employer-employee relationship exist between respondent and Polyfoam because a finding that a contractor is a “labor-only” contractor is equivalent to declaring that there is an employer-employee relationship. (Aklan vs. San Miguel Corp. GR 168537)

(3) Held:

Yes. Respondent was illegally dismissed from employment because petitioners failed to show any valid or authorized cause under the Labor Code. Respondent was not afforded “due process.”

Ruling:

Petition for review on certiorari was denied and the decision of the CA affirming the decision of the LA was affirmed.

Ratio Decidendi: Art. 106 of the Labor 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.

Meaning of Substantial Capital:

1. Refers to capital stock and subscribed capitalization in the case of corporation

2. Refers to tools, equipment, implements, machineries, and work premises ACTUALLY and DIRECTLY used by the contractor or subcontractor in the performance or completion of the work, service or job contracted out.

Meaning of Control:

1. Refers to the right reserved to the person for whom the services of the CONTRACTUAL WORKERS are performed.

2. This is to determine NOT ONLY THE END to be achieved, but also the manner and the means to be used in reaching the end.