328 Phil. 756
PANGANIBAN, J.:
"WHEREFORE, judgment is hereby rendered: (1) finding the respondents Shoppers Gain Supermart (SGS Marketing Corporation) and/or James Tan, Jack Tan and Jerry Tan to be guilty of labor only contracting; (2) ordering the respondents Shoppers Gains Supermart (SGS Marketing Corp.) and/or James Tan, Jack Tan and Jerry Tan, and Respondents (manpower agencies) Lipercon Services, Inc.; Golden Services, Inc.; Versatile Consultative and Radium Multi Resources to pay jointly and severally complainants the following:On appeal, the respondent NLRC affirmed the labor arbiter in the assailed Decision, with the following disposition:[3]
a) One (1) month backwages as a consequence of the illegal closure in the amount of P3,068.00 for each of the 34 complainants; (excluding Benilda Pableo) in the total amount of P104,312.00;
b) Separation pay of one (1) month for every year of service (including complainant Pablito Esmas), in lieu of reinstatement as regular workers considering that reinstatement is no longer feasible due to the closure of the business of Shoppers Gain Supermarket in the following amounts of:
1. Warlito Acquiadan P18,408.00
xxx xxx xxx
c) Underpayment of wages, unpaid salaries, 5 days service incentive leave with pay, proportionate 13th month pay and cash bond in the amount of P400.00 refund of Teresita Pangahin, in the following amounts of: [amounts omitted];
d) Ten (10%) Percent attorney's fees in the amount of P59,501.32 based on the total judgment award of P595,013.22;
(3) Dismissing the complaint for unfair labor practice for lack of evidence."
"WHEREFORE, premises considered, the assailed decision is hereby affirmed with the modification that the amount of 13th month and service incentive leave pay already paid to the employees recruited and hired by respondent Lipercon Services, Inc. should be deducted from the amount due them as stated in the assailed decision."
Hence, this recourse.
I.
"Public respondent gravely abused its discretion when it affirmed that there exist an employer-employee relationship between petitioner Corporation and respondents;II.
"Public Respondent gravely abused its discretion when it declared respondents illegally dismissed by petitioner Corporation;III.
"Public Respondent gravely abused its discretion in affirming that Pablito Esmas was not paid his separation pay without discussing said issue in the body of the decision;IV.
"Public respondent gravely abused its discretion in holding petitioner Corporation liable for backwages, separation pay, underpayment, and attorney's fees;V.
"Public respondent gravely abused its discretion in holding individual petitioner(s) James Tan, Jerry Tan, and Jack Tan jointly and severally liable with Petitioner Corporation for the above mentioned monetary obligations.;"
"It is likewise our considered view that respondents manpower agencies were "labor only" contractors, who had acted as mere suppliers of manpower for respondent SGS. Prescinding on this finding, it is the unavoidable conclusion that employer-employee relations existed between complainants and respondent SGS. As held by the Supreme Court in the case of Industrial Timber Corporation vs. NLRC, 169 SCRA 341, thus:On the other hand, petitioners -- citing Singer Sewing Machine Company vs. Drilon, et al.,[7]-- argue that performance of "activities which are desirable and necessary for the business of the employer" is not determinative of the existence of employer-employee relationships. In said case, this Court specifically stated:
'Hence, a finding that a contractor is a "labor only" contractor is equivalent to a finding that there exists an employer-employee relationship between the owner of the project and the employees of the "labor only" contractor since that relationship is defined and prescribed by the law itself.'
Suffice it for us to point out that despite the admission of respondent manpower agencies that herein complainants were their contractual employees assigned only to respondent SGS and that they have direct control and supervision over their work performance including payment of wages, the obvious fact remains that complainants were employees of respondent SGS as provided by law more particularly under Articles 106 and 107, and Section(s) 8 and 9 of Rule VIII of Book III of the Omnibus Rules Implementing the Labor Code. It must be so for the simple reason that all respondent agencies are "labor only" contractors. As such, they are agents of respondent SGS and the latter assumes responsibility of an employer. Thus, the contention of respondent SGS that complainants were (not) its employees because it did not have control over them is untenable. It is not denied that all complainants had worked within the premises of respondent and not within the premises of each respondent agency. As such, complainants must have been subjected to at least the same control and supervision that respondent exercised over any other person physically within its premises or rendering services for it. It is quite unbelievable that complainants would be allowed to work within the premises without being subjected to a substantial measure of control and supervision, whether in respect of the manner in which they discharged their functions, or in respect of the end results of their functions or activities or both.
Moreover, it appears that complainants' work had (become) regular in nature. Aside from the fact that complainants(') job(s) as cashier, bagger, sales lady, merchandiser, check-out personnel, printer/film and warehouseman is directly related to the day-to-day operation of the respondent supermarket, they have also rendered more than one year of service doing the same job in respondent. Apparently, their assignment had become for an indefinite period or for unstated period of time. As such, they have become regular employees who may not be dismissed except for a just cause. It is not difficult to see that to uphold the contractual agreement between the respondent SGS and the different manpower agencies would in effect be to permit employers to avoid the necessity of hiring regular or permanent employees to enable them to keep their employees indefinitely on a temporary or casual status, thus to deny them security of tenure in their jobs. Article 106 of the Labor Code is precisely designed to prevent such a result. (PBC vs. NLRC, 146 SCRA 347)."
"The Court finds the contention of the respondents that the union members are employees under Article 280 of the Labor Code to have no basis. The definition that regular employees are those who perform activities which are desirable and necessary for the business of the employer is not determinative in this case. Any agreement may provide that one party shall render services for and in behalf of another for a consideration (no matter how necessary for the latter's business) even without being hired as an employee. This is precisely true in the case of an independent contractorship as well as in an agency agreement. The Court agrees with the petitioner's argument that Article 280 is not the yardstick for determining the existence of an employment relationship because it merely distinguishes between two kinds of employees, i.e. regular employees and casual employees, for purposes of determining the right of an employee to certain benefits, to join or form a union, or to security of tenure. Article 280 does not apply where the existence of an employment relationship is in dispute."Citing various decisions[8] of this Court, petitioners essay that "the existence of employer-employee relationship is determined by four (4) elements, namely: (1) selection and engagement of the employees; (2) the payment of wages; (3) the power of dismissal; and (4) the power to control employees' conduct."
"Art. 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 accordance with the above provision, petitioner corporation is deemed the direct employer of the private respondents and thus liable for all benefits to which such workers are entitled, like wages, separation benefits and so forth. There is no denying the fact that private respondents' work as merchandisers, cashiers, baggers, check-out personnel, sales ladies, warehousemen and so forth were directly related, necessary and vital to the day-to-day operations of the supermarket; their jobs involved normal and regular functions in the ordinary business of the petitioner corporation. Given the nature of their functions and responsibilities, it is improbable that petitioner did not exercise direct control over their work. Moreover, there is no evidence -- as in fact, petitioners do not even allege -- that aside from supplying the manpower, the labor agencies have "substantial capital or investment in the form of tools, equipment, machineries, work premises, among others."
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 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 persons 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)
"Art. 283. Closure of establishment and reduction of personnel. -- The employer may also terminate the employment of any employee due to the installation of labor saving devices, redundancy, retrenchment to prevent losses or the closing or cessation of operation of the establishment or undertaking unless the closing is for the purpose of circumventing the provisions of this Title, by serving a written notice on the workers and the Ministry of Labor and Employment at least one (1) month before the intended date thereof. In case of termination due to the installation of labor saving devices or redundancy, the worker affected thereby shall be entitled to a separation pay equivalent to at least his one (1) month pay or to at least one (1) month pay for every year of service, whichever is higher. In case of retrenchment to prevent losses and in case of closures or cessation of operations of establishment or undertaking not due to serious business losses or financial reverses, the separation pay shall be equivalent to one (1) month pay or at least one-half (½) month pay for every year of service, whichever is higher. A fraction of at least six (6) months shall be considered one (1) whole year." (Emphasis added)The non-renewal of petitioner corporation's lease contract and its consequent closure and cessation of operations may be considered an event beyond the control of petitioners, in the nature of a force majeure situation. As such it amounts to a just cause for termination of the private respondents. However, as the latter are deemed by law to have been employees of the petitioner corporation, they are entitled to receive separation pay equivalent to one (1) month pay or at least one-half (½) month pay for every year of service, whichever is higher, on account of such termination due to closure.
"Anent the contention of respondent SGS that complainants were sufficiently notified of the closure by reason of the notice posted in the bulletin board 30 days prior to the closure is untenable. The law is very clear than an employer who seeks to terminate the employment of its employee must notify him in writing at least 30 days before the intended dismissal. The requisite of notice is intended to inform the employee concerned of the employer's intent to dismiss him and the reason for the proposed dismissal. Since the notice posted in the bulletin board cannot be considered compliance with the notice required by law, it follows that the dismissal is illegal."Inasmuch as the dismissal had been tainted with illegality, the monetary award for backwages, separation pay and attorney's fees, as modified by public respondent NLRC, are justified. Besides, the matter of establishing the bases for the awards constitute factual issues, and as a rule, the factual findings of the labor tribunals are not disturbed by the Supreme Court, particularly where both the labor arbiter and the NLRC are in agreement.[10]
"After petitioner Corporation closed its supermarket business, it applied with the City Hall of Manila for a business retirement. On January 10, 1991 the office of the City Treasurer of Manila through Asst. City Treasurer Victor B. Endriga approved the business retirement of respondent company.WHEREFORE, there being no clear showing of any grave abuse of discretion on the part of respondent NLRC, the petition must be as it is hereby DISMISSED, with costs against petitioners.
Consequently, the contract of the agency employers were likewise terminated."[13]