A SALE DOCUMENT PROMISING TO SELL THE EQUIPMENT WHICH WAS NOT FULFILLED CANNOT ESTABLISH OWNERSHIP FOR PURPOSES OF VALID JOB CONTRACTING

Manila Memorial Park Cemetery, Inc. vs. Lluz

G.R. No. 208451, February 3, 2016

Facts:

Manila Memorial Park Cemetery, Inc. (Manila Memorial) entered into a Contract of Services with respondent Ward Trading and Services (Ward Trading).   The Contract of Services provided that Ward Trading, as an independent contractor, will render interment and exhumation services and other related work to Manila Memorial in order to supplement operations at Manila Memorial Park, Parañaque City. Among those assigned by Ward Trading to perform services at the Manila Memorial Park were respondents Ezard Lluz, Norman Corral, ErwinFugaban, Valdimar Balisi, Emilio Fabon, John Mark Aplicador, Michael Curioso, Junlin Espares, and Gavino Farinas (respondents). Respondents filed a Complaint for regularization and Collective Bargaining Agreement benefits.  Subsequently, respondents filed an amended complaint to include illegal dismissal and money claims.

Manila Memorial refused the request since respondents were employed by WardTrading, an independent labor contractor.  Thereafter, respondents joined the MMP Union.  The MMP Union, on behalf of respondents, sought their regularization which Manila Memorial again declined.   Respondents then filed the complaint.  Subsequently, respondents were dismissed by Manila Memorial.  Thus, respondents amended the complaint to include the prayer for their reinstatement and payment of back wages.

LA Ruling:

The Labor Arbiter dismissed the complaint for failing to prove the existence of an employer-employee relationship. Respondents appealed to the NLRC.

NLRC Ruling:

The NLRC reversed the Labor Arbiter’s findings.  The NLRC ruled that Ward Trading was a labor-only contractor and an agent of Manila Memorial. Manila Memorial filed a Motion for Reconsideration which was denied.

Thereafter, Manila Memorial filed an appeal with the CA. 

CA Ruling:

The CA affirmed the ruling of the NLRC. The CA found the existence of an employer-employee relationship between Manila Memorial and respondent. Manila Memorial then filed a Motion for Reconsideration which was denied. Hence, the petition.

Issue/s:

Whether or not there was ER-EE between respondents and Manila Mamorial.

SC Ruling:

The SC did not find merit in the petition.

The SC held that contracting arrangements for the performance of specific jobs or services under the law and its implementing rules are allowed.  However, contracting must be made to a legitimate and independent job contractor since labor rules expressly prohibit labor-only contracting.

A closer look at the Contract of Services reveals that Ward Trading does not have substantial capital or investment in the form of tools, equipment, machinery, work premises and other materials since it is Manila Memorial which owns the equipment used in the performance of work needed for interment and exhumation services. The pertinent provision in the Contract of Services which shows that Manila Memorial owns the equipment: “The COMPANY shall [sell] to the contractor the COMPANY owned equipment in the amount of ONE MILLION FOUR HUNDREDTHOUSAND PESOS ONLY (Php1,400,000.00) payable in two (2) years xxx”

Just by looking at the provision, it seems that the sale was a regular business transaction between two parties.  However, Manila Memorial did not present any evidence to show that the sale actually pushed through or that payments were made by Ward Trading to prove an ordinary arms length transaction. Manila Memorial even retained the right to control the performance of the work of the employees concerned.

For failing to register as a contractor, a presumption arises that one is engaged in labor-only contracting unless the contractor overcomes the burden of proving that it has substantial capital, investment, tools and the like. Thus, the presumption that Ward Trading is a labor-only contractor stands. Consequently, Manila Memorial is deemed the employer of respondents. As regular employees of Manila Memorial, respondents are entitled to their claims for wages and other benefits as awarded by the NLRC and affirmed by the CA.