Case Digest: Sy v. Fairland Knitcraft

G.R. No. 182915 : December 12, 2011

MARIALY O. SY, VIVENCIA PENULLAR, AURORA AGUINALDO, GINA ANIANO, GEMMA DELA PE, EFREMIA MATIAS, ROSARIO BALUNSAY, ROSALINDA PARUNGAO, ARACELIRUAZA, REGINA RELOX, TEODORA VENTURA, AMELIA PESCADERO, LYDIA DE GUZMAN, HERMINIA HERNANDEZ, OLIVIA ABUAN, CARMEN PORTUGUEZ, LYDIA PENNULAR, EMERENCIANA WOOD, PRISCILLAESPINEDA, NANCY FERNANDEZ, EVA MANDURIAGA, CONSOLACION SERRANO, SIONY CASILLAN, LUZVIMINDA GABUYA, MYRNA TAMIN, EVELYN REYES, EVA AYENG, EDNA YAP, RIZA DELA CRUZ ZUGA, TRINIDAD RELOX, MARLON FALLA, MARICEL OCON, and ELVIRA MACAPAGAL, Petitioners, v. FAIRLAND KNITCRAFT CO., INC., Respondent.

FACTS:


Fairland is a domestic corporation engaged in garments business, while Susan de Leon (Susan) is the owner/proprietress of Weesan Garments (Weesan).

The complaining workers are sewers, trimmers, helpers, a guard and a secretary who were hired by Weesan. They filed with the Arbitration Branch of the NLRC a Complaintfor underpayment and/or non-payment of wages, overtime pay, premium pay for holidays, 13th month pay and other monetary benefits against Susan/Weesan.

Weesan filed before the Department of Labor and Employment-National Capital Region (DOLE-NCR) a report on its temporary closure for a period of not less than six months. As the workers were not anymore allowed to work on that same day, they filed an Amended Complaint,and on March 13, 2003, another pleading entitled Amended Complaints and Position Paper for Complainants,to include the charge of illegal dismissal.

Labor Arbiter Reyes rendered his Decision dismissing the complaint for lack of merit. The workers filed their appeal which was granted by the NLRC. The NLRC however, denied both motions of Atty. Geronimo and Fairland for lack of merit.

Fairland and Susan thus filed their separate Petitions forCertioraribefore the CA. CAs First Division denied Fairlands petition.It affirmed the NLRCs ruling that the workers were illegally dismissed and that Weesan and Fairland are solidarily liable to them as labor-only contractor and principal, respectively.

Fairland filed its Motion for Reconsiderationas well as a Motion for Voluntary Inhibitionof Associate Justices Celia C. Librea-Leagogo and Regalado E. Maambong from handling the case. The Motion for Voluntary Inhibition was granted through a Resolution.

CAs Special Ninth Division reversedthe First Divisions ruling. It held that the labor tribunals did not acquire jurisdiction over the person of Fairland, and even assuming they did, Fairland is not liable to the workers since Weesan is not a mere labor-only contractor but a bona fide independent contractor.

Aggrieved, the workers filed before us their Petition for Review on Certiorari. Susan moved for reconsideration which was denied by the CA. Hence, she filed before this Court a Petition for Review on Certiorari which was denied in this Courts on technicality and for failure to sufficiently show any reversible error in the assailed judgment.

Susan and Fairland filed their respective Motions for Reconsideration. But before said motions could be resolved, the Court ordered the consolidation of Susans petition with that of the workers. Susans Motion for Reconsideration of this Courts Resolution in G.R No. 189658 is granted. Consequently, her Petition for Review on Certiorari is reinstated.

ISSUES:

In G.R. No. 189658, whether or not petitioner is a labor-only contractor acting as an agent of respondent Fairland? Whether or not the individual private respondents were illegally dismissed?

In G.R. No. 182915, whether or not the National Labor Relations Commission acquired jurisdiction over the [person of the] respondent? Whether or not respondent is solidarily liable with WEESAN GARMENT/ SUSAN DE LEON?

HELD:

LABOR LAW

"There is labor-only contracting when the contractor or subcontractor merely recruits, supplies or places workers to perform a job, work or service for a principal. In labor-only contracting, the following elements are present:

(a) 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

(b) The workers recruited and placed by such person are performing activities which are directly related to the principal business of the employer."

Suffice it to say that "[t]he presumption is that a contractor is a labor-only contractor unless such contractor overcomes the burden of proving that it has substantial capital, investment, tools and the like." As Susan/Weesan was not able to adduce evidence that Weesan had any substantial capital, investment or assets to perform the work contracted for, the presumption that Weesan is a labor-only contractor stands.

LABOR LAW


Article 283 of the Labor Code allows as a mode of termination of employment the closure or termination of business. "Closure or cessation of business is the complete or partial cessation of the operations and/or shut-down of the establishment of the employer. It is carried out to either stave off the financial ruin or promote the business interest of the employer." "The decision to close business [or to temporarily suspend operation] is a management prerogative exclusive to the employer, the exercise of which no court or tribunal can meddle with, except only when the employer fails to prove compliance with the requirements of Art. 283, to wit: a) that the closure/cessation of business is bona fide, i.e ., its purpose is to advance the interest of the employer and not to defeat or circumvent the rights of employees under the law or a valid agreement ; b) that written notice was served on the employees and the DOLE at least one month before the intended date of closure or cessation of business; and c) in case of closure/cessation of business not due to financial losses, that the employees affected have been given separation pay equivalent to month pay for every year of service or one month pay, whichever is higher."

It bears stressing that "[t]he burden of proving that x x x a temporary suspension is bona fide falls upon the employer." Clearly here, Susan/Weesan was not able to discharge this burden. The documents Weesan submitted to support its claim of severe business losses cannot be considered as proof of financial crisis to justify the temporary suspension of its operations since they clearly appear to have not been duly filed with the BIR. Weesan failed to satisfactorily explain why the Income Tax Returns and financial statements it submitted do not bear the signature of the receiving officers. Also hard to ignore is the absence of the mandatory 30-day prior notice to the workers.

G.R. No. 189658 is DENIED.

G.R. No. 182915 is GRANTED.

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