Consolidated Building Maintenance v. Asprec, G.R. No.

[ G.R. No. 217301, June 06, 2018 ] http://elibrary.judiciary.gov.ph/dtSearch/dtisapi6.dll?cmd=getdoc&DocI...
SECOND DIVISION
[ G.R. No. 217301, June 06, 2018 ]
CONSOLIDATED BUILDING MAINTENANCE, INC. AND SARAH
DELGADO, PETITIONERS, VS. ROLANDO ASPREC, JR. AND
JONALEN BATALLER, RESPONDENTS.
DECISION
REYES, JR., J:
Before this Court is a petition for review on certiorari[1] under Rule 45 of the Rules of Court
seeking to annul and set aside the Decision[2] of the Court of Appeals (CA) in CA-G.R. SP
No. 123429 dated November 15, 2013, and Resolution[3] dated March 4, 2015, denying the
motion for reconsideration thereof. The assailed decision denied the petition for certiorari
filed by Consolidated Building Maintenance, Inc. (CBMI) and its Human Resource Manager
Sarah Delgado (collectively referred to as the petitioners) assailing the Resolution [4] dated
September 28, 2011 of the National Labor Relations Commission (NLRC) and reinstated the
Decision[5] dated June 27, 2011 of the Labor Arbiter (LA).
The Antecedent Facts
CBMI is a corporation engaged in the business of providing janitorial, kitchen, messengerial,

elevator maintenance and allied services to various entities.[6] Among CBMI's clients is
Philippine Pizza, Inc.-Pizza Hut (PPI). For PPI, CBMI provides kitchen, delivery, sanitation
and other related services pursuant to contracts of services, which are valid for one-year
periods.[7] Records reveal that contracts of services were executed between PPI and CBMI in
the years 2000[8] and from 2002 until 2010.[9]
Rolando Asprec, Jr. (Asprec) and Jonalen Bataller (Bataller) (collectively referred to as the
respondents) alleged that they are regular employees of PPI, the former having commenced
work as a "Rider" in January 2001 and the latter as "team member/slice cashier" in March
2008, both assigned at PPI's Pizza Hut, Marcos Highway, Marikina City Branch.
In his Sinumpaang Salaysay dated February 8, 2011, Asprec averred that after the expiration
of his contract on November 4, 2001, PPI advised him to go on leave for one (1) month and
ten (10) days. Thereafter, he was called for an interview by PPI's Area Manager, Rommel
Blanco. After passing the same, he was told to proceed to the office of CBMI where he
signed a contract. Asprec stated that except for the fact that the payslips were then issued by
CBMI, work proceeded as usual with him being assigned at the same branch and performing
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his usual duties as "Rider/Production Person."[10]
Bataller had a similar experience as she narrated in her Sinumpaang Salaysay dated February
8, 2011. She related that before the expiration of her employment contract, she was informed
by Pizza Hut Restaurant Manager Jun Samar that as a precondition for continued
employment, she had to "submit first a resignation letter, had to pass through CBMI, and
after six months she should go on vacation for one month." Thereafter, she was interviewed
by PPI General Manager Edilberto Garcia. Bataller advanced that after she passed the
interview, PPI prepared her documents and then forwarded the same to CBMI. She then
resumed employment in December 2008 until July 23, 2010, with her being assigned at the
same branch, performing her usual duties, and receiving the same salary.[11]
On the other hand, CBMI posited that the respondents are its employees. CBMI claimed that
the respondents were investigated based on an Incident Report by PPI's Store Manager Karl
Clemente of an attempted theft on July 23, 2010. On which date, one Jessie Revilla (Revilla)
supposedly delivered an excess of two boxes to PPI's slice booth at the Light Rail Train
(LRT) Santolan, Pasig Station, which the respondents failed to report.
Anent the incident, Asprec asserted that he has no knowledge of such actions by Revilla and
claimed that the same is outside his responsibility as a "production person." Nonetheless,
Asprec claimed that on account of the incident, he has been suspended for eight days and
then was eventually dismissed.[12]
On the other hand, Bataller, who was manning the slice booth at the LRT Santolan, Pasig
Station on the day of the incident, claimed that when Revilla brought the three boxes of pizza
which she ordered, she was busy attending to customers and thus did not notice that there has
been an excess in the delivery. Nonetheless, she posited that immediately upon discovery, she
called Revilla but the latter was already far from the station and as such could no longer go
back. Revilla allegedly went back to get the two extra pizza boxes later that day.
Bataller likewise submitted that she has informed the area manager of the incident, but was
thereafter asked to proceed to PPI's Marcos Highway branch. There, she was interviewed
along with Asprec and Revilla, and then told to report to the head office. Starting July 24,
2010, she was allegedly no longer allowed to return to work.[13]
On November 12, 2010, the respondents filed their Complaint against the petitioners for
constructive illegal dismissal, illegal suspension, and non-payment of separation pay. [14]
In their Complaint, the respondents argued two points: first, that their transfer from PPI to
CBMI constituted labor-only contracting and was a mere scheme by PPI to prevent their
regularization; and second, that they were illegally dismissed without cause and due process
of law.[15]
On December 20, 2010, the respondents amended their Complaint by impleading PPI and
including a prayer for reinstatement and payment of moral and exemplary damages and
attorney's fees.[16]
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Ruling of the LA
The LA rendered a Decision[17] on June 27, 2011, granting respondents' complaint in this
wise:
WHEREFORE, premises considered, the respondent companies are hereby found

liable for having illegally dismissed [the respondents] and are hereby ordered TO
REINSTATE them to their former positions without loss of seniority rights and
TO PAY to EACH of the [respondents] their backwages from July 26, 2010 up to
the date of actual reinstatement, which as of the date of this decision is
P121,000.00 and P100,000.00 each as moral damages; P50,000.00 each as
exemplary damages plus ten percent (10%) of the totality of the awards as and for
attorney's fees.
All other claims and charges are dismissed for lack of merit.
SO ORDERED.[18]
In its decision, the LA applied the four-fold test and ruled that the respondents are employees
of PPI. Consequently, the LA held that the arrangement between CBMI and PPI constitutes
labor-only contracting and imposed upon them solidary liability for the respondents'
claim.[19]
The LA ruled that as the employer, the burden is upon PPI to prove that the dismissal was
based on a just cause and that there has been compliance with procedural due process, which
it failed to do. Thus, the LA concluded that the respondents have been illegally dismissed. [20]
With this ruling, the petitioners and PPI appealed to the NLRC.[21]
Ruling of the NLRC
On September 28, 2011, the NLRC rendered its Resolution[22] affirming with modification
the LA's Decision dated June 27, 2011. The dispositive portion of the resolution reads:
WHEREFORE, premises considered, the appeal filed by [PPI] is GRANTED and

is hereby DROPPED as party to the case.
CBMI's appeal is DISMISSED. [The petitioners] are ordered to pay the

[respondents] the following:
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1. backwages computed from August 20, 2010 up to the finality of this decision,
and,
2. separation pay equivalent to one month's pay for every year of service, and
3. 10% attorney's fees based on the total judgment award.
SO ORDERED.[23]
In contrast with the finding of the LA, the NLRC held that the respondents are regular
employees of CBMI. In so ruling, the NLRC relied heavily on the employment contract and
CBMI's admission of the respondents' employment.[24] In this regard, and considering that
there is no allegation of under payment or non-payment of wages, the NLRC ordered PPI to
be dropped from the case.
Both the petitioners and the respondents filed their respective motions for partial
reconsideration[25] but they were denied by the NLRC in its Resolution[26] dated November
29, 2011.
The parties herein separately filed their appeal via petitions for certiorari with the CA.[27]
In their Petition,[28] the petitioners alleged, among others, that the NLRC gravely abused its
discretion in awarding backwages, separation pay, and attorney's fees despite the absence of
finding that the respondents have been illegally dismissed.
On the other hand, the respondents in their petition claimed that the totality of evidence
presented proves that they are the regular employees not of CBMI but of PPI. They asserted
that their transfer to CBMI was a mere ploy to prevent their regularization, this bolstered by
the fact that even after they signed with CBMI, they remained to be under the direct
supervision of PPI.[29]
Ruling of the CA
On November 15, 2013, the CA rendered the herein assailed Decision[30] denying the
petition for certiorari, to wit:
IN VIEW OF ALL THESE, the Petition is DENIED. The assailed Resolutions of

[NLRC] are SET ASIDE. The Decision of the [LA] is REINSTATED.
SO ORDERED.[31]
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The CA held that the NLRC erred in dropping PPI as a party to the case, as contrary to its
findings, CBMI failed to prove that it was an independent contractor, or was engaged in
permissible job contracting.
According to the CA, the totality of the circumstances surrounding the case established that it
was PPI and not CBMI which has the discretion and control over the manner and method by
which the respondents' works are to be accomplished.
Furthermore, considering that the respondents performed tasks which are necessary and
desirable to the usual trade or business of PPI, and use tools and equipment of the latter in
their work, the CA concluded that CBMI falls under the definition of a "labor only
contractor," which is prohibited under Article 106 of the Labor Code. Hence:
Being a labor-only contractor, CBMI was deemed to be an agent of Pizza Hut,

which in tum, was therefore, the principal of CBMI. Concomitantly, an employer-
employee relationship was created between Pizza Hut as principal, and private
respondents as employees. Pizza Hut, as a result is solidarity liable with
petitioners for private respondents' claims. x x x.[32] (Citations omitted)
As agent of PPI, the CA ruled that it is incumbent upon the petitioners to prove that the
dismissal was for a just and valid cause which it failed to do, accordingly, the CA concluded
that the dismissal is illegal and the respondents are entitled to their money claims. [33]
Petitioners sought a reconsideration[34] of the November 15, 2013 Decision but the CA
denied it in its Resolution[35] dated March 4, 2015.
Issues
In the instant petition, the petitioners submit the following issues for this Court's resolution:
I.
WHETHER OR NOT THE HONORABLE CA GRAVELY AND SERIOUSLY
ERRED IN THE APPLICATION OF LAW AND JURISPRUDENCE WHEN IT
HELD THAT CBMI IS A LABOR-ONLY CONTRACTOR.
II.
HELD THAT THE RESPONDENTS WERE ILLEGALLY DISMISSED.
III.
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AWARDED BACKWAGES IN FAVOR OF THE RESPONDENTS.
IV.
AWARDED MORAL DAMAGES, EXEMPLARY DAMAGES, AND
ATTORNEY'S FEES TO THE RESPONDENTS.[36]
In sum, the issues to be resolved by this Court in the instant case are the following: first,
whether or not the respondents are employees of CBMI; and second, whether or not the
respondents have been illegally dismissed and as such entitled to their monetary claims.
Ruling of the Court
The petition is partly meritorious.
Initially, it must be said that the issues of whether CBMI is an independent contractor, and
the matter of respondents' employment status are questions of fact that are not the proper
subjects of a petition for review under Rule 45 of the Rules of Court. However, considering
the variance between the factual determination of the LA and the CA on the one hand, and
the NLRC on the other, this case presents an exception for the Court to re-evaluate the
evidence on record.[37]
The resolution of the first issue hinges on the determination of the status of CBMI, i.e.,
whether or not it is a labor-only contractor or an independent contractor.
In support of its position that it is engaged in legitimate job contracting, CBMI attached for
the Court's reference, its Certificate of Registration[38] with the Department of Labor and
Employment (DOLE). Furthermore, it cites that it has been in operation for almost 50 years,
counting various institutions among its clients.
Under the premises and based on the evidence presented by the parties, the Court is inclined
to sustain the position of CBMI that it is an independent contractor.
Labor-only contracting is defined by Article 106 of the Labor Code of the Philippines, as an
arrangement where a person, who does not have substantial capital or investment, supplies
workers to an employer to perform activities which are directly related to the principal
business of such employer. Furthermore, jurisprudence instructs that the existence of an
independent contract relationship may be indicated by several factors, viz.:
[S]uch as, but not necessarily confined to, whether the contractor was carrying on
an independent business; the nature and extent of the work; the skill required; the
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term and duration of the relationship; the right to assign the performance of
specified pieces of work; the control and supervision of the workers; the power of
the employer with respect to the hiring, firing and payment of the workers of the
contractor; the control of the premises; the duty to supply premises, tools,
appliances, materials and labor; and the mode, manner and terms of payment.[39]
The issue in this case being the status of the respondents, the pertinent Department Order
(DO) implementing the aforecited provision of the Labor Code is DOLE DO No. 18-02,
Series of 2002, the regulation in force at the time the respondents were hired and assigned to
PPI.[40]
DO No. 18-02 reiterates the prohibition against labor-only contracting, viz.:
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:
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 the
performance of the work of the contractual employee.
xxxx
From the foregoing, it is clear that job contracting is not absolutely prohibited. Indeed, an
employer is allowed to farm out the performance or completion of a specific job, work or
service, within a definite or specified period, and regardless of whether the said task is to be
performed or completed within or outside its premises. Job contracting is deemed legitimate
and permissible when the contractor has substantial capital or investment, and runs a business
that is independent and free from control by the principal. Further, in Norkis Trading Co.,
Inc. v. Gnilo,[41] it is required that "the agreement between the principal and the contractor or
subcontractor assures the contractual employees' entitlement to all labor and occupational
safety and health standards, free exercise of the right to self-organization, security of tenure,
and social welfare benefits."[42] The absence of any of these elements results in a finding that
the contractor is engaged in labor-only contracting.
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In addition to the foregoing, DO No. 18-02 requires that contractors and subcontractors be
registered with the DOLE Regional Offices. The system of registration has been established
under the DO to regulate and monitor contracting arrangements.[43] It is imposed to ensure
that those contractors operate in accordance with law and its guiding principles. [44]
But unlike the elements of substantial capital or investment and control, the absence of
registration merely gives rise to the presumption that the contractor is engaged in labor-only
contracting.[45] Conversely, in the absence of evidence to the contrary, flowing from the
presumption of regularity in the performance of official functions, the existence of
registration in favor of a contractor is a strong badge of legitimacy in favor of the contractor.
It is not disputed that CBMI is a duly licensed labor contractor by the DOLE.[46] As the
primary agency tasked to regulate job contracting, DOLE is presumed to have acted in
accordance with its mandate and after due evaluation of rules and regulations in its
registration of CBMI.[47] The Certificate of Registration issued by DOLE recognizes CBMI
as an independent contractor as of February 13, 2008, and regards the validity of the latter's
registration as such until February 14, 2011,[48] well within the period relevant to this appeal.
In this light, it then becomes incumbent upon the respondents to rebut the presumption of
regularity to prove that CBMI is not a legitimate contractor as determined by the DOLE,
which they failed to do.[49]
While the Certificate of Registration offered as evidence pertains only to a period of three
years from February 13, 2008 until February 14, 2011, case law dictates that the status of
CBMI may be evaluated on the basis of the corporation's activities and status prior to their
registration.[50]
In this case, the Court finds that CBMI has established compliance with the requirements of
legitimate job contracting previously cited.
Per documentary evidence attached by CBMI, the company's total assets at the time of filing
of the respondents' complaint before the NLRC in 2010 amounted to Php 84,351,349.00.[51]
Based on its attached Audited Financial Statements for the years 2008 and 2009, its total
assets, which consists of cash, receivables, and property and equipment, amounted to Php
79,203,902.00[52] and Php 76,189,554.00,[53] respectively.
Likewise from the records, as of December 2010, CBMI has an authorized capital stock of
1,000,000.00 shares, half of which or 500,000.00 have been subscribed.[54] Its retained
earnings for the years 2009 and 2010 consists of Php 6,433,525.00 and Php 10,988,890.00,
respectively.[55] Incidentally, for the years 2005 to 2007 and 2012, CBMI's paid-up capital
amounted to Php 3,500,000.00,[56] which is even beyond by the standard set by the DOLE
D.O. No. 18-A, series of 2011, of what constitutes "substantial capital."[57]
Clearly, CBMI has substantial capital to maintain its manpower business. From the evidence
adduced by CBMI, it is also clear that it runs a business independent from the PPI. Based on
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its registration with the Securities and Exchange Commission (SEC), CBMI has been in
existence since 1967;[58] and has since provided a variety of services to entities in various
fields, such as banking, hospitals, and even government institutions. CBMI counts among its
clients, De La Salle University (DLSU), Philippine National Bank (PNB), Smart
Communications, Inc., SM Supermalls, and the United States (US) Embassy. In the case of
the US Embassy for instance, CBMI has been a service contractor for seven years.[59]
Above all, CBMI maintains the "right of control" over the respondents. For purposes of
determining whether a job contractor is engaged in legitimate contracting or prohibited labor-
only contracting, DO No. 18-02, defines the "right of control" as:
[T]he 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
manner and means in achieving that end.[60]
From these, it can readily be inferred that the element of control that is determinative of an
employer-relationship "does not merely relate to the mutually desirable result intended by the
contractual relationship; they must have the nature of dictating the means and methods to be
employed in attaining the result."[61] Nonetheless, as the Court emphasized in Almeda, et al.
v. Asahi Glass Philippines, Inc.,[62] "[t]he power of control refers merely to the existence of
the power and not to the actual exercise thereof. It is not essential for the employer to
actually supervise the performance of duties of the employee; it is enough that the former has
a right to wield the power."[63]
The contract of service, while of itself is not determinative of the relationship between the
parties, nonetheless provides useful leads into the relationship between the principal on the
one hand, and the job contractor on the other.[64] In this case, the "Contract of Services"
between CBMI and PPI for the year 2000, imposes upon the former the obligation to provide
not only the necessary personnel to perform "kitchen, busing, rider/delivery, and sanitation
services" but as well to provide tools and equipment necessary for the rendition of such
services.[65] Also, it is understood under the agreement that upon deployment, the personnel
are already qualified and possessed of the necessary skills for their assigned tasks.[66]
Pertinently, the said contract provides for the following:
V. HIRING AND PAYROLL
The INDEPENDENT CONTRACTOR shall be responsible for the hiring,

supervision, discipline, suspension, or termination of its own employees,
including those assigned to the CLIENT. The employees of the INDEPENDENT
CONTRACTOR shall be under its own payroll. The INDEPENDENT
CONTRACTOR shall ensure the proper and prompt payment of each employee's
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wages and contributions to the SSS, Pag-Ibig and to other agencies as may be
required under the law.
VI. SUPERVISION OF THE INDEPENDENT CONTRACTOR'S PERSONNEL
The INDEPENDENT CONTRACTOR shall provide coordinators/supervisors,

such that there shall be at least one (1) coordinator/supervisor in each place of
business of the CLIENT as listed in ANNEX A of the CONTRACT. The
coordinator/supervisor shall direct the performance of the services rendered by
the INDEPENDENT CONTRACTOR's employees. The coordinator/supervisor
shall, likewise, ensure that the agreed number of personnel is on site and that the
qualities of services are maintained at the agreed standards.[67]
The same obligations have been imposed upon CBMI, albeit differently worded, under its
Contract of Services with PPI for the years 2002,[68] 2003,[69] 2004,[70] 2006,[71] 2007,[72]
and 2008.[73] For the year 2009[74] and 2010,[75] the Contract of Services further detailed
these provisions, in that the contract provided that CBMI has the "sole authority to control
and direct the performance of the details of the work of its employees." Further, that any
complaints or reports regarding the performance, misconduct, or negligence of the persons so
deployed shall be made in writing and addressed by PPI to CBMI, the latter having the sole
authority to discipline its employees.[76]
Without necessarily touching on the respondents' status prior to their employment with
CBMI, in the instant controversy, the petitioners' control over the respondents is manifested
by the fact that they wield and exercise the following powers over them: "selection and
engagement, payment of wages, dismissal, and control over the employees' conduct."[77]
It is indisputable from the respondents' employment contracts[78] that they were hired by
CBMI.[79] It was also the latter who assigned respondents at PPI's Marcos Highway Branch
after they were briefed of company policies and their duties.[80] It is also CBMI who pays the
respondents their salaries, and remits premiums to PhilHealth and Social Security System. [81]
The nature of CBMI's agreement with PPI requires the former to assign employees to
perform specific services for the latter.[82] CBMI deploys employees already equipped of the
skills based on the specific service demanded by PPI to be accomplished. Ultimately, the
training necessary to acquire the skills essential to perform the duties of a rider for Asprec,
and as a team member for Bataller, have been provided for by CBMI. Simply, the manner in
which respondents perform their task are all dictated by CBMI, the sole concern of PPI being
the result, i.e., what and how many items are to be produced and where to deliver the same.
Noteworthy, CBMI maintains the sole power to determine respondents' place of assignment
and their transfer from one work assignment to another.[83] CBMI's manner of deployment
and its choice as to who will be assigned for a specific task or location does not require the
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approval or acceptance of PPI.[84]
Moreover, it is evident from how this controversy unfolded that CBMI maintains the power
to discipline the respondents. In accordance with the terms of the 2010 Contract of Services,
an Incident Report[85] was prepared by PPI's Store Manager who then submitted the same to
CBMI. Pursuant to its power of supervision over the respondents, CBMI initiated the
investigation[86] and on the basis thereof imposed upon the respondents preventive
suspension from August 5 to 19, 2010.[87] It may not be amiss to point out that the
respondents' participation in these proceedings is indicative of their recognition of CBMI's
disciplinary authority over them.[88]
All these, without doubt indicate that CBMI possesses the power of control over the
respondents; which in turn supports the conclusion that CBMI carries a business independent
of PPI.
With respect to the respondents' dismissal, the Court affirms the decision of the NLRC.
CBMI, as the employer has the power to impose discipline upon the respondents who are its
employees, which includes the imposition of the preventive suspension pending
investigation.[89] However, as correctly noted by the NLRC, the extension of the period of
suspension by the CBMI is unwarranted under the attendant circumstances.
Section 4, Rule XIV of the Omnibus Rules Implementing the Labor Code is explicit in that
the period of preventive suspension should not exceed 30 days, after which, the employee
must be reinstated and paid the wages and other benefits due, viz.:
SECTION 4. Period of suspension. - No preventive suspension shall last longer

than 30 days. The employer shall thereafter reinstate the worker in his former or
in a substantially equivalent position or the employer may extend the period of
suspension provided that during the period of extension, he pays the wages and
other benefits due to the worker. In such case, the worker shall not be bound to
reimburse the amount paid to him during the extension if the employer decides,
after completion of the hearing, to dismiss the worker.
To recall, in this case, after the conduct of administrative hearing, the respondents have been
suspended by CBMI for a period of 15 days or from August 5 to 19, 2010.[90] Thereafter,
allegedly due to the reduced need of PPI and on account of the incident subject of
investigation, respondents have been placed on "temporary-lay-off status" for a period of six
months or from August 20, 2010 until February 20, 2011.[91] Succinctly, respondents have
been under preventive suspension for more than the maximum period allowed by law,
without any word as to the result of the investigation, and without having been reinstated to
their former or to a substantially equivalent position, which thus renders the period of
extended suspension illegal. It bears to stress albeit at the risk of repetition, the Omnibus
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Rules Implementing the Labor Code requires that the employer act within the 30-day period
of preventive suspension by concluding the investigation either by absolving the respondents
of the charges or meting corresponding penalty if liable. Otherwise, the employer must
reinstate the employee, or extend the period of suspension provided the employee's wages
and benefits are paid in the interim.[92] Failure by the employer to comply with these, the
preventive suspension is deemed illegal as it amounts to a constructive dismissal. [93]
In an attempt to justify its action, CBMI alleged that the respondents were merely placed
under "floating status," due to a decline in the demand of PPI for respondents' services.
According to CBMI, the placing of respondents in a "floating status" due to unavailability of
work has long been recognized as a valid exercise of management prerogative.[94] In support
thereof, CBMI cites Article 286[95] of the Labor Code, to wit:
ART. 286. When employment not deemed terminated. - The bona-fide suspension
of the operation of a business or undertaking for a period not exceeding six (6)
months, or the fulfillment by the employee of a military or civic duty shall not
terminate employment. In all such cases, the employer shall reinstate the
employee to his former position without loss of seniority rights if he indicates his
desire to resume his work not later than one (1) month from the resumption of
operations of his employer or from his relief from the military or civic duty.
In the case of Sebuguero, et al. v. NLRC,[96] the term "lay-off" or what is also referred to as
retrenchment is defined as:
[T]he termination of employment initiated by the employer through no fault of the

employee's and without prejudice to the latter, resorted to by management during
periods of business recession, industrial depression, or seasonal fluctuations, or
during lulls occasioned by lack of orders, shortage of materials, conversion of the
plant for a new production program or the introduction of new methods or more
efficient machinery, or of automation. Simply put, it is an act of the employer of
dismissing employees because of losses in the operation of a business, lack of
work, and considerable reduction on the volume of his business, a right
consistently recognized and affirmed by this Court.[97] (Citations omitted)
When a "lay-off" is permanent, it amounts to dismissal. However, when the same is

temporary, it is regarded as a mere suspension of the employment status of the employee. [98]
Notably, while the Court recognizes lay-off as an exercise of management prerogative,
jurisprudence requires that the same must be attended by good faith and that notice must be
given to the employees concerned and the DOLE at least one (1) month prior to the intended
date of lay-off or retrenchment.[99]
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Article 286 of the Labor Code, as cited by CBMI, likewise contemplates lay-off, particularly
that which is temporary in nature, and as such must be for a period not exceeding six months.
In which case, apart from causes attributable to the employer, the temporary suspension of
employment may also be on account of the employee's performance of military or civic duty.
To the Court, CBMI's claim that the suspension falls under Article 286 of the Labor Code is a
mere afterthought to justify its extension of respondents' period of preventive suspension. For
one, the equivocal wording of the notice evinces the real reason behind the extended period
of suspension, i.e., the attempted stealing incident. The notices dated August 23, 2010 to the
respondents read:
CBMI would like to inform you that due to the reduced needs of its client for your
services, and because of the incident that happened last July 2010, your
assignment as Team Member PH Marcos H-way have been subjected to further
investigation.
Meanwhile, the management has no option but to place you on temporary lay off
or status effective August 20, 2010 until February 20, 2011. Further, CBMI will
expedite effort to process your employment as soon as there is available project
that fits your qualification and expertise.
In view thereof, please coordinate with the undersigned for possible transfer of
assignment.[100] (Emphasis Ours)
The said conclusion is bolstered by the fact that other than its bare allegation, CBMI failed to
adduce evidence to prove that there has indeed been a reduction in the demand of PPI for the
services it provides. Likewise, PPI, despite having all the opportunity to do so, did not
corroborate CBMI's submission. In addition, CBMI also failed to comply with the mandatory
one-month notice requirement. The law requires that notice be given one month prior to the
intended date of lay-off. In this case, the notice to the respondents dated August 23, 2010 has
been sent via registered mail on August 20, 2010, for an intended period of lay-off starting
August 20, 2010 to February 20, 2011. The records are bereft of proof that CBMI furnished a
copy of the said notice to the DOLE.
Considering the dire consequences of "lay-off" to an employee, jurisprudence places upon

the employer the burden to prove with sufficient and convincing evidence the justification
therefor, and as well compliance with the parameters set forth by law.[101] On account of
CBMI's failure to discharge this burden in this case, the Court views that the extended period
of suspension is illegal, which thus entitles the respondents to their money claims.
WHEREFORE, in consideration of the foregoing disquisitions, the petition is PARTLY

GRANTED. Accordingly, the Decision dated November 15, 2013 of the Court of Appeals in
CA-G.R. SP No. 123429, is hereby REVERSED and SET ASIDE. The Resolution dated
13 of 19 3 Mar 2020, 00:42

September 28, 2011 of the National Labor Relations Commission in NLRC NCR Case No.
11-15889-10 and NLRC NCR Case No. 11-16067-10 insofar as it holds petitioner
Consolidated Building Maintenance, Inc. liable for the money claims of respondents Rolando
Asprec, Jr. and Jonalen Bataller is hereby REINSTATED.
In addition, respondents Rolando Asprec, Jr. and Jonalen Bataller are entitled to interest on
the monetary awards at the rate of six percent (6%) per annum from the date of finality of
this Decision until fully paid.
SO ORDERED.
Carpio, (Chairperson), Peralta, Perlas-Bernabe, and Caguioa, JJ., concur.
[1] Rollo, pp. 3-67.
[2] Penned by Associate Justice Michael P. Elbinias, with Associate Justices Isaias P.
Dicdican and Nina G. Antonio-Valenzuela, concurring; id. at 73-94.
[3] Id. at 96-97.
[4] Id. at 402-408.
[5] Id. at 335-350.
[6] Id. at 6.
[7] Id. at 8.
[8] Id. at 150-154.
[9] Id. at 155-214.
[10] Id. at 302-303.
[11] Id. at 312-314.
[12] Id. at 404.
[13] Id. at 74-75.
[14] Id. at 258-263.
14 of 19 3 Mar 2020, 00:42

[15] Id. at 340.
[16] Id. at 264-269.
[17] Id. at 335-350.
[18] Id. at 350.
[19] Id. at 342-346, 349.
[20] Id. at 346-347.
[21] Id. at 351-400.
[22] Id. at 402-409.
[23] Id. at 408.
[24] Id. at 405.
[25] Id. at 410-433.
[26] Id. at 460-462.
[27] Id. at 467-504; 505-525.
[28] Id. at 467-504.
[29] Id. at 519-520, 522.
[30] Id. at 73-93.
[31] Id. at 93.
[32] Id. at 86.
[33] Id. at 87, 92.
[34] Id. at 98-117.
[35] Id. at 96-97.
15 of 19 3 Mar 2020, 00:42

[36] Id. at 19-20.
[37] Royale Homes Marketing Corp. v. Alcantara, 739 Phil. 744, 755-756 (2014); South East
International Rattan, Inc., et al. v. Coming, 729 Phil. 298, 300 (2014); Norkis Trading Co.,
Inc. v. Gnilo, 568 Phil. 256, 265 (2008).
[38] Rollo, p. 133.
[39] Coca-Cola Bottlers Phils., Inc. v. Agito, et al., 598 Phil. 909, 928 (2009), citing San
Miguel Corp. v. Maersk Integrated Services, Inc., 453 Phil. 543, 566-567 (2003).
[40] Leo V. Mago and Leilani E. Colobong v. Sunpower Philippines Manufacturing Limited,
G.R. No. 210961, January 24, 2018; Superior Packaging Corp. v. Balagsay, et al., 697 Phil.
62, 71-72 (2012). See DOLE Philippines, Inc. v. Esteva, 538 Phil. 817 (2006).
[41] 568 Phil. 256 (2008).
[42] Rollo, pp. 92-93.
[43] D.O. No. 18-02, Series of 2002, Sections 11 and 12.
[44] Id. at Section 1.
[45] Id. at Section 11.
[46] Rollo, p. 133.
[47] Leo V. Mago and Leilani E. Colobong v. Sunpower Philippines Manufacturing Limited,
supra note 40; Gallego v. Bayer Philippines, Inc., et al., 612 Phil. 250, 261-262 (2009).
[48] Rollo, p. 133.
[49] Sasan, Sr., et al. v. NLRC, 4th Div., et al., 590 Phil. 685, 704 (2008).
[50] Almeda, et al., v. Asahi Glass Philippines, Inc., 586 Phil. 103, 106 (2008).
[51] Rollo, p. 220.
[52] Id. at 229.
[53] Id. at 232.
16 of 19 3 Mar 2020, 00:42

[54] Id. at 222.
[55] Id. at 220.
[56] Id. at 224, 227, 534.
[57] Per Sec. 3(i) of D.O. 18-A, series of 2011, "substantial capital" refers to paid-up capital
stocks/shares of at least Three Million Pesos (Php3,000,000.00) in case of corporations.
[58] Rollo, p. 121.
[59] Id. at 141; Neri v. National Labor Relations Commission, 296 Phil. 610 (1993).
[60] DOLE D.O. No. 18-02, Series of 2002, Section 5.
[61] Tongko v. The Manufacturers Life Insurance Co. (Phils.). Inc., et al., 655 Phil. 384, 402
(2011).
[62] 586 Phil. 103 (2008).
[63] Id. at 113.
[64] Coca-Cola Bottlers Phils., Inc. v. Dela Cruz, et al., 622 Phil. 886, 905 (2009).
[65] Rollo, p. 150.
[66] Id. at 151.
[67] Id.
[68] Id. at 155-160.
[69] Id. at 161-166.
[70] Id. at 167-171.
[71] Id. at 173-177.
[72] Id. at 178-182.
[73] Id. at 183-187.
17 of 19 3 Mar 2020, 00:42

[74] Id. at 194-204.
[75] Id. at 205-214.
[76] Id. at 197, 207-208.
[77] See Philippine Airlines, Inc. v. NLRC, 358 Phil. 919, 934-935 (1998).
[78] Rollo, pp. 233-235.
[79] Id. at 404-405.
[80] Id. at 32, 236-237.
[81] Id. at 238-341.
[82] Supra notes 68-75.
[83] Rollo, p. 9.; Alilin, et al. v. Petron Corporation, 735 Phil. 509, 528 (2014); South Davao
Development Company, Inc. v. Gamo, 605 Phil. 604, 613 (2009).
[84] Rollo, p. 141; Neri v. National Labor Relations Commission, supra note 59, at 618-619.
[85] Rollo, p. 242.
[86] Id. at 243-244.
[87] Id. at 250-251.
[88] Id. at 245-249; 252-253.
[89] Omnibus Rules Implementing the Labor Code, Rule XIV, Section 3.
[90] Rollo, pp. 250-251.
[91] Id. at 254-255.
[92] Genesis Transport Service, Inc., et al. v. Unyon ng Malayang Manggagawa ng Genesis
Transport, et al., 631 Phil. 350, 359 (2010).
[93] Mandapat v. Add Force Personnel Services, Inc., et al., 638 Phil. 150, 156 (2010).
18 of 19 3 Mar 2020, 00:42

[94] Rollo, p. 48.
[95] Now Article 301, per Department Advisory No. 01, Renumbering the Labor Code of the
Philippines, as Amended, Series of 2015; pursuant to Section 5 of Republic Act No. 10151,
entitled "An Act Allowing the Employment of Night Workers, thereby Repealing Articles
130 and 131 of Presidential Decree Number Four Hundred Forty-Two, as amended,
otherwise known as The Labor Code of the Philippines," July 26, 2010.
[96] 318 Phil. 635 (1995).
[97] Id. at 646.
[98] Lopez v. Irvine Construction Corp., et al., 741 Phil. 728, 740 (2014).
[99] Id. at 741.
[100] Id. at 254-255.
[101] Lopez v. Irvine Construction Corp., et al., supra note 98.
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[ G.R. No. 217301, June 06, 2018 ] http://elibrary.judiciary.gov.ph/dtSearch/dtisapi6.dll?cmd=getdoc&DocI...

The Antecedent Facts

CBMI is a corporation engaged in the business of providing janitorial, kitchen, messengerial,

1 of 19 3 Mar 2020, 00:42

his usual duties as "Rider/Production Person."[10]

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WHEREFORE, premises considered, the respondent companies are hereby found

Ruling of the NLRC

WHEREFORE, premises considered, the appeal filed by [PPI] is GRANTED and

CBMI's appeal is DISMISSED. [The petitioners] are ordered to pay the

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IN VIEW OF ALL THESE, the Petition is DENIED. The assailed Resolutions of

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Being a labor-only contractor, CBMI was deemed to be an agent of Pizza Hut,

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ERRED IN THE APPLICATION OF LAW AND JURISPRUDENCE WHEN IT

Ruling of the Court

The petition is partly meritorious.

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DO No. 18-02 reiterates the prohibition against labor-only contracting, viz.:

Section 5. Prohibition against labor-only contracting. Labor-only contracting is

i. The contractor or subcontractor does not have substantial capital or

7 of 19 3 Mar 2020, 00:42

8 of 19 3 Mar 2020, 00:42

V. HIRING AND PAYROLL

The INDEPENDENT CONTRACTOR shall be responsible for the hiring,

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VI. SUPERVISION OF THE INDEPENDENT CONTRACTOR'S PERSONNEL

The INDEPENDENT CONTRACTOR shall provide coordinators/supervisors,

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approval or acceptance of PPI.[84]

SECTION 4. Period of suspension. - No preventive suspension shall last longer

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[T]he termination of employment initiated by the employer through no fault of the

When a "lay-off" is permanent, it amounts to dismissal. However, when the same is

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Considering the dire consequences of "lay-off" to an employee, jurisprudence places upon

WHEREFORE, in consideration of the foregoing disquisitions, the petition is PARTLY

13 of 19 3 Mar 2020, 00:42

Carpio, (Chairperson), Peralta, Perlas-Bernabe, and Caguioa, JJ., concur.

[1] Rollo, pp. 3-67.

[3] Id. at 96-97.

[4] Id. at 402-408.

[5] Id. at 335-350.

[8] Id. at 150-154.

[9] Id. at 155-214.

[10] Id. at 302-303.

[11] Id. at 312-314.

[12] Id. at 404.

[13] Id. at 74-75.

[14] Id. at 258-263.

14 of 19 3 Mar 2020, 00:42

[15] Id. at 340.

[16] Id. at 264-269.

[17] Id. at 335-350.

[18] Id. at 350.

[19] Id. at 342-346, 349.

[20] Id. at 346-347.

[21] Id. at 351-400.

[22] Id. at 402-409.