Consolidated Building Maintenance v. Asprec
REITERATIONFacts
The Antecedents: Consolidated Building Maintenance, Inc. (CBMI) provided janitorial and other allied services to Philippine Pizza, Inc. (PPI), including kitchen, delivery, and sanitation services. Respondents Rolando Asprec, Jr. and Jonalen Bataller alleged they were regular employees of PPI, with Asprec starting in January 2001 and Bataller in March 2008. They claimed that after their contracts with PPI expired, they were advised to go on leave and then signed contracts with CBMI, but continued to perform their duties at the same PPI branch. CBMI, however, maintained that Asprec and Bataller were its employees and were investigated for an attempted theft incident on July 23, 2010, involving a delivery by one Jessie Revilla. Asprec claimed he was suspended and dismissed due to this incident, while Bataller stated she was busy with customers and did not notice the excess delivery, but was subsequently asked to report to PPI's head office and was not allowed to return to work. Procedural History: On November 12, 2010, Asprec and Bataller filed a complaint against CBMI and its HR Manager Sarah Delgado (petitioners) for constructive illegal dismissal, illegal suspension, and non-payment of separation pay, later amending it to implead PPI and seek reinstatement, moral and exemplary damages, and attorney's fees. The Labor Arbiter (LA) ruled in favor of the respondents, finding them to be regular employees of PPI and holding CBMI and PPI solidarily liable for illegal dismissal. The National Labor Relations Commission (NLRC) modified this, finding the respondents to be regular employees of CBMI and dropping PPI from the case, ordering CBMI to pay backwages and separation pay. Both parties appealed to the Court of Appeals (CA). The CA denied CBMI's petition, reinstated the LA's decision, and held CBMI liable as a labor-only contractor and thus an agent of PPI, making PPI solidarily liable. The Petition: Consolidated Building Maintenance, Inc. and Sarah Delgado filed a petition for review on certiorari under Rule 45 of the Rules of Court, seeking to annul the CA's decision and resolution. They argued that the CA erred in holding CBMI as a labor-only contractor, in concluding that the respondents were illegally dismissed, and in awarding backwages, moral damages, exemplary damages, and attorney's fees. The core issues presented to the Supreme Court were whether CBMI is a labor-only contractor and whether the respondents were illegally dismissed and thus entitled to their monetary claims.
Issue(s)
Whether or not the Court of Appeals gravely erred in holding that CBMI is a labor-only contractor. Whether or not the Court of Appeals gravely erred in holding that the respondents were illegally dismissed. Whether or not the Court of Appeals gravely erred in awarding backwages in favor of the respondents. Whether or not the Court of Appeals gravely erred in awarding moral damages, exemplary damages, and attorney's fees to the respondents.
Ruling
The petition is partly meritorious. The Supreme Court reversed and set aside the decision of the Court of Appeals and reinstated the Resolution of the National Labor Relations Commission insofar as it holds petitioner Consolidated Building Maintenance, Inc. liable for the money claims of respondents Rolando Asprec, Jr. and Jonalen Bataller. Respondents are entitled to interest on the monetary awards at the rate of six percent (6%) per annum from the date of finality of the Decision until fully paid.
Ratio Decidendi
On the status of CBMI as a labor-only contractor: The Court found that CBMI is a legitimate independent contractor. It noted that CBMI is a duly registered contractor with the DOLE, possessing substantial capital as evidenced by its assets and paid-up capital, which exceeded the required amount for substantial capital. Furthermore, CBMI maintained the "right of control" over the respondents, as demonstrated by its sole authority to hire, supervise, discipline, suspend, or terminate its employees, including those assigned to PPI. The contracts of service between CBMI and PPI explicitly imposed upon CBMI the obligation to provide personnel, tools, and equipment, and to manage the hiring, payroll, and supervision of its employees. CBMI also dictated the manner and means by which the respondents performed their tasks, and maintained the sole power to determine their place of assignment and transfer. On the legality of the dismissal: The Court affirmed the NLRC's finding that the dismissal was illegal due to the extended period of preventive suspension. CBMI, as the employer, had the power to impose preventive suspension pending investigation. However, the Omnibus Rules Implementing the Labor Code explicitly states that preventive suspension should not exceed 30 days. In this case, the respondents were suspended from August 5 to 19, 2010 (15 days), and then placed on "temporary lay-off status" from August 20, 2010, to February 20, 2011 (six months). This extended suspension, which exceeded the 30-day limit without reinstatement or payment of wages during the extension, rendered the suspension illegal and amounted to constructive dismissal. CBMI's claim of "floating status" due to reduced demand from PPI was unsubstantiated and lacked compliance with the mandatory one-month notice requirement to both the employees and the DOLE. On the award of backwages: The Court reinstated the NLRC's ruling, which ordered CBMI to pay backwages and separation pay. However, the Supreme Court's decision modified the monetary awards by reinstating the NLRC's order for backwages and separation pay, and imposing a 6% interest per annum on monetary awards from the finality of the decision. On the award of moral damages, exemplary damages, and attorney's fees: The CA's award of moral and exemplary damages was implicitly set aside by reinstating the NLRC's resolution, which did not include these damages. The NLRC's award of attorney's fees was also reinstated.
Main Doctrine
A contractor is deemed a legitimate independent contractor if it possesses substantial capital or investment and exercises the right of control over the performance of the work of its employees. The absence of registration with the DOLE creates a presumption of labor-only contracting, but this presumption can be rebutted by evidence of substantial capital and control. An extended preventive suspension beyond 30 days without reinstatement or payment of wages renders the suspension illegal and amounts to constructive dismissal.