Republic of the Philippines

COURT OF APPEALS
Manila

FIRST DIVISION

GLOBAL SKILLS PROVIDERS CA-G.R. SP No. 160352

MULTI-PURPOSE
COOPERATIVE and Members:
ALEJANDRO G. LUKBAN,
Petitioners, SALAZAR-FERNANDO, R.A.,
Chairperson,
GAERLAN, S.H., and
- versus - LEGASPI, G.F.D., JJ.

NATIONAL LABOR
RELATIONS COMMISSION, Promulgated:
FRANCISCO B. LAMEYRA,
JR., and RODOLFO ROSANA, August 28, 2019
Respondents.
x-------------------------------------x

TANDUAY DISTILLERS INC., CA-G.R. SP No. 160430

Petitioner,

-versus-

FRANCISCO B. LAMEYRA,
JR., RODOLFO C. ROSANA,
JR., GLOBAL SKILLS
PROVIDERS and MULTI-
PURPOSE COOPERATIVE,
and the NATIONAL LABOR
RELATIONS COMMISSION,
Respondents.
x---------- --------------------x
CA-G.R. SP Nos. 160352 & 160430
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DECISION

SALAZAR-FERNANDO, J.

Before this Court are consolidated Petitions for Certiorari under

Rule 65 of the 1997 Revised Rules of Civil Procedure assailing the
Decision1 dated September 27, 2018 and Resolution 2 dated December
21, 2018 of the National Labor Relations Commission (NLRC), Fourth
Division, in NLRC LAC No. 08-002884-18, NLRC CN RAB IV-09-01403-
16-L, entitled “FRANCISCO LAMEYRA, JR. and RODOLFO ROSANA,
JR., Complainants-Appellees, versus TANDUAY DISTILLERS, INC.,
GLOBAL SKILLS PROVIDERS AND MULTI-PURPOSE COOPERATIVE
and/or RICHARD TENG and ALEJANDRO LUKBAN, Respondents-
Appellants.”, the dispositive portions of which read:

Decision dated September 27, 2018

“WHEREFORE, the appeals filed by respondents Tanduay

Distillers, Inc. and Global Skills Providers and Multi-Purpose
Cooperative are DISMISSED for lack of merit.

SO ORDERED.”3

Resolution dated December 21, 2018

“WHEREFORE, the Motions for Reconsideration filed by

respondents Tanduay Distillers, Inc. (TDI) and Global Skills
Providers and Multipurpose Cooperative (GlobalPro)/Alejandro
Lukban are hereby DENIED for lack of merit.

No further motions of similar nature shall be entertained.”

SO ORDERED.”4

The facts are:

On September 26, 2016, private respondents Francisco B.

Lameyra, Jr. (Lameyra for brevity) and Rodolfo C. Rosana, Jr. (Rosana

1 Rollo (CA G.R. SP No. 160352), pp. 26-38.

2 Id., pp. 41-46.
3 Id., p. 37.
4 Id., p. 45.
CA-G.R. SP Nos. 160352 & 160430
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for brevity) filed a Complaint 5 for illegal dismissal, reinstatement,

backwages, underpayment of wages, moral damages, exemplary
damages, and attorney's fees against Tanduay Distillers Inc. (TDI for
brevity), Global Skills Providers Multi-Purpose Cooperative (GlobalPro
for brevity), Richard Teng, and Alejandro G. Lukban (Lukban for
brevity). GlobalPro and Lukban are the petitioners in CA-G.R. SP No.
160352 while TDI is the petitioner in CA-G.R. SP No. 160430.
GlobalPro is also named as one of the private respondents in CA-G.R.
SP No. 160430.

Private respondents Lameyra and Rosana alleged in their

Pinagsamang Simupaang Salaysay,6 which was made an integral part
of their Position Paper,7 that: private respondent Lameyra found out
from a friend that petitioner TDI was looking for a machine operator;
he coursed his application through petitioner GlobalPro; he was
oriented by petitioner GlobalPro about the company policies of
petitioner TDI; thereafter, he was instructed to report to the human
resources office of petitioner TDI; sometime in August 2014, he
started working at petitioner TDI's plant in Barangay Sala, Cabuyao,
Laguna; he was told that he would be placed under a six(6)-month
probationary period, although he was not asked to sign any contract;
he initially assumed the duties of a bottle feeder, under the direct
supervision of two (2) supervisors of petitioner TDI; after two (2) or
three (3) weeks as a bottle feeder, he was reassigned as a machine
operator; he was asked to sign a contract covering the period of
January 1, 2015 to December 31, 2015; he was subsequently asked
to sign another contract for the period of January 1, 2016 to
December 31, 2016; his official work schedule is from Monday to
Saturday, from 6:00 o'clock in the morning until 2:00 o'clock in the
afternoon; however, his actual work schedule is from 6:00 o'clock in
the morning until 6:00 o'clock in the evening; he was paid a daily
wage of Php315.00; on August 3, 2016, he and his fellow workers
received a Notice of Termination from petitioner GlobalPro, stating
that their employment would cease on August 31, 2016; allegedly,
the service agreement between petitioners TDI and GlobalPro was
pre-terminated; he was only required to work until August 31, 2016,
although he was given his salary for September 1, 2016 to
September 15, 2016 as his separation pay; he and his coworkers
were asked to sign Quitclaims in order to receive their separation
pay; and, he was given two (2) checks, one amounting to more than
5 Id., pp. 48-49.
6 Id., pp. 240-243.
7 Id., pp. 235-239.
CA-G.R. SP Nos. 160352 & 160430
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Php10,000.00 and another one for an amount exceeding

Php17,000.00.

Private respondents Lameyra and Rosana further stated that:

sometime in August 2012, private respondent Rosana found out that
there was a job opening at the Cabuyao plant of petitioner TDI; he
was told to apply through a manpower agency called “D Aguillo
Enterprises” (D Aguillo for brevity); he was accepted by D Aguillo and
was subsequently assigned to work at the plant of petitioner TDI; he
was assigned by the Head Supervisor of petitioner TDI as a cleaner
of a large tank, and was placed under the direct supervision of a
chemist of the company; after two (2) weeks, he was reassigned as a
blending operator; among his tasks include the blending of petitioner
TDI's alcoholic drinks, such as Rhum Light and Jamaica Rhum; in
December 2012, he was told that he will be transferred to another
agency; in January 2013, he was instructed to report to petitioner
GlobalPro; he was required to fill-up an application form and to
submit a medical certificate; after completing his requirements, he
was ordered to report back to petitioner TDI and resume his duties
as a blending operator; he had the same work schedule as private
respondent Lameyra; similarly, he was suddenly advised that his
employment with petitioner TDI is only up to August 31, 2016; he
was asked to sign a Quitclaim as a condition to receive his salary for
September 1, 2016 to September 15, 2016; and, he was given two
(2) checks, one amounting to more than Php21,000.00, and another
check for an amount exceeding Php17,000.00.

Petitioner TDI averred in its Position Paper 8 that: it is a

domestic corporation engaged in the manufacturing and sale of rum,
gin, vodka, and other spirits; it maintains a plant located at KM 13,
National Highway, Barangay Sala, Cabuyao, Laguna; petitioner
GlobalPro is a cooperative duly registered with the Cooperative
Development Authority (CDA) and accredited by the Department of
Labor and Employment (DOLE); it engaged the services of petitioner
GlobalPro for a one (1) year term from January 1, 2015 to December
31, 2015; it signed a Service Agreement with petitioner GlobalPro,
which states that the latter shall provide janitorial, housekeeping,
utility, maintenance, and other support services at its Cabuyao plant;
petitioner GlobalPro undertook to provide its service personnel with
appropriate tools, supplies, equipment, gear, transportation, facilities,
and personal protective equipment; it renewed its Service Agreement
8 Id., pp. 155-166.
CA-G.R. SP Nos. 160352 & 160430
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with petitioner GlobalPro for another year, or until December 31,

2016; effective August 31, 2016, petitioner GlobalPro voluntarily
terminated the extended Service Agreement and recalled its
employees; private respondent Rosana became a member of
GlobalPro on March 1, 2013; he was assigned by petitioner GlobalPro
to work at its Cabuyao plant by virtue of a Service Agreement dated
April 10, 2013; private respondent Rosana was tasked to perform
general maintenance services at the Cabuyao plant's Compounding
Department; private respondent Lameyra became a member of
petitioner GlobalPro on August 16, 2014; he signed a Service
Agreement with petitioner GlobalPro dated April 21, 2015; and, he
was assigned to perform general maintenance services at the
Cabuyao plant's Production Department.

Petitioner GlobalPro stated in its Position Paper 9 that: it is a duly

registered multi-purpose cooperative created primarily to enter into
project management contracts, service contracting, consulting
services, and various business opportunity & livelihood programs; it
operated under the concept of a cooperative as an autonomous
association of persons with a common bond of interest, who have
voluntarily joined together to achieve their social, economic, and
cultural needs and aspirations; private respondents Lameyra and
Rosana were members of the cooperative; it signed a Service
Agreement with petitioner TDI to provide janitorial, housekeeping,
utility, maintenance and other related services; private respondents
Lameyra and Rosana were deployed to petitioner TDI's Cabuyao
plant per their respective Service Agreements, which they both freely
signed; it paid for the salaries of private respondents Lameyra and
Rosana and remitted their mandatory deductions to the concerned
government agencies; it assigned supervisors to manage the work of
private respondents Lameyra and Rosana; the cooperative provided
its member-workers with the means and methods to conduct their
functions for petitioner TDI; private respondents Lameyra and
Rosana were briefed about the nature of the Service Agreement
between petitioners TDI and GlobalPro; for the best interest of the
cooperative and its members, it decided to terminate its Service
Agreement with petitioner TDI effective August 31, 2016; the
members of the cooperative assigned to petitioner TDI were given
their thirty(30)-day notices; DOLE was also informed of the
termination of the Service Agreement between petitioners TDI and
GlobalPro; on August 10, 2016, private respondents Lameyra and
9 Id., pp. 50-72.
CA-G.R. SP Nos. 160352 & 160430
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Rosana withdrew their membership from the cooperative; on August

15, 2016, private respondents Lameyra and Rosana executed
Quitclaims with the assistance of a representative from DOLE; on
even date, a separation pay of Php10,917.81 was paid to private
respondent Lameyra, while private respondent Rosana received a
separation pay of Php21,390.00; on September 17, 2016, private
respondents Lameyra and Rosana were paid Php17,583.12 and
Php17,063.31, respectively, for their last pay, 13 th month pay, and five
(5) days service incentive leave pay; and, private respondents
Lameyra and Rosana also executed Quitclaims corresponding to the
said payments.

Private respondents Lameyra and Rosana filed their Reply, 10

alleging that petitioner GlobalPro is a mere labor-only contractor.
Even if petitioner GlobalPro has substantial capital, they assert that
the cooperative failed to prove that it used its capital to fund the
performance of its contracted services. In addition, petitioner TDI
directly supervised them in the performance of their functions, which
were connected to the company's main business of producing
alcoholic beverages.

Petitioner TDI asserted in its Reply 11 that private respondents

Lameyra and Rosana admitted that they filed their respective job
applications with petitioner GlobalPro, and that they received their
Notice of Termination from the said cooperative. Hence, there is no
employer-employee relationship between petitioner TDI and private
respondents Lameyra and Rosana. The documentary evidence
presented by both petitioners TDI and GlobalPro prove that private
respondents Lameyra and Rosana were the employees of the latter.

Petitioner GlobalPro stated in its Reply 12 that it is a legitimate

job contractor. Private respondents Lameyra and Rosana were its
members-workers who were bound by their fixed period employment
contracts. They were released from employment after the
cooperative complied with the due process requirements of the Labor
Code. In addition, private respondents Lameyra and Rosana executed
Quitclaims which absolved the cooperative of any liability arising from
their employment.

10 Id., pp. 280-287.

11 Id., pp. 262-271.
12 Id., pp. 246-260.
CA-G.R. SP Nos. 160352 & 160430
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Petitioner GlobalPro filed its Rejoinder,13 reiterating its

arguments. Private respondents Lameyra and Rosana filed their
Rejoinder with Motion for Formal Hearing. 14 They argued that since
their version of the facts, with respect to who actually supervised
their work, is contrary to the allegations of petitioners TDI and
GlobalPro, it is best to conduct a formal hearing to allow the parties
to cross-examine each others' witnesses. In response, petitioner
GlobalPro filed its Comment/Opposition to Complainants' Rejoinder
with Motion for Formal Hearing.15 Petitioner GlobalPro stressed that
the conduct of cross-examination of witnesses in a labor case is
contrary to existing laws, since proceedings before the Labor Arbiter
are non-litigious in nature.

On May 8, 2018, the Labor Arbiter issued a Decision 16 finding

that private respondents Lameyra and Rosana were illegally
dismissed. The Labor Arbiter ordered their reinstatement as workers
of petitioner TDI, since petitioner GlobalPro failed to prove that it is
an independent job contractor. It was held that while petitioner
GlobalPro had substantial paid up capital of Php3,221,500.00,
Php3,795,000.00, and Php29,263,335.00 for the years 2013, 2014,
and 2015, respectively, it still failed to prove that it used its capital
directly for the purpose of the performance or completion of the
scope of works covered by the cooperative's Service Agreement with
petitioner TDI. The Labor Arbiter dispensed with the conduct of a
formal hearing and gave credence to the sworn statements of private
respondents Lameyra and Rosana over the Affidavits 17 of the
witnesses of petitioner TDI.

Aggrieved, petitioners TDI and GlobalPro filed their respective

Appeals18 challenging the Labor Arbiter's Decision. Private respondent
Lameyra and Rosana filed their Opposition to the respective
Appeals,19 to which petitioner GlobalPro filed its Reply.20

On September 27, 2018, public respondent NLRC, Fourth

13 Id., pp. 288-303.

14 Id., pp. 305-309.
15 Id., pp. 310-313.
16 Id., pp. 316-325.
17 Id., pp. 272-279.
18 Appeal of petitioner TDI, rollo (CA G.R. SP No. 160352) Vol. I, pp. 345-376; Memorandum of
Partial Appeal of petitioner GlobalPro, id., pp. 326-344.
19 Rollo (CA G.R. SP No. 160352) Vol. I, pp. 455-462.
20 Rollo (CA G.R. SP No. 160430) Vol. II, pp. 543-550.
CA-G.R. SP Nos. 160352 & 160430
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Division, issued the assailed Decision 21 which affirmed the ruling of

the Labor Arbiter. It was held that petitioner GlobalPro failed to prove
that it used its capital to fund the performance or completion of the
work contracted out. Public respondent NLRC compared it to “show
money”, since the financial assets of the cooperative are just used to
show that it has the assets to back up its purported independent
contracting operations. However, absent proof that such assets were
actually used to accomplish the job contracted, the essence of the
strict rules governing legitimate job contracting would be defeated.
As for the witnesses of petitioner TDI, it was held that their sworn
statements deserve scant consideration since the witnesses are
employees of the company. Thus, petitioner TDI has moral
ascendancy over them. Public respondent NLRC also appreciated the
willingness of private respondents Lameyra and Rosana to undergo a
formal trial in order to ferret out the truth. Conversely, petitioner
GlobalPro registered its strong opposition against holding a formal
trial. It was also held that private respondents Lameyra and Rosana
had been regularly performing work necessary or desirable in the
usual business of petitioner TDI for several years prior to the
execution of the company's Service Agreement with petitioner
GlobalPro.

Petitioners GlobalPro and TDI filed their respective Motions for

Reconsideration,22 essentially raising the same arguments. On
December 21, 2018, public respondent NLRC issued the assailed
Resolution23 denying the Motions for Reconsideration for lack of
merit.

Upon elevation of the case to this Court in separate Petitions for

Certiorari, private respondents Lameyra and Rosana in CA G.R. SP
No. 160352 filed their Comment with Manifestations and Motions to
Admit and to Consolidate.24 They also filed a similar Comment with
Manifestations and Motions to Admit and to Consolidate 25 in CA G.R.
SP No. 160430. Petitioner GlobalPro, in its capacity as a private
respondent in CA G.R. SP No. 160430, filed a Manifestation 26 stating
that the Petition for Certiorari in CA G.R. SP No. 160430 involves the
same parties and issues in CA G.R. SP No. 160352. On July 3, 2019,
21 Supra, note 1.
22 Motion for Reconsideration of petitioner GlobalPro, rollo (CA G.R. SP No. 160352), pp. 463-
475; Motion for Reconsideration of petitioner TDI, id., pp. 600-624.
23 Supra, note 2.
24 Rollo (CA G.R. SP No. 160352) Vol. I, pp. 626-636.
25 Rollo (CA G.R. SP No. 160430) Vol. II, pp. 737-748.
26 Rollo (CA G.R. SP No. 160430) Vol. III, pp. 1382-1384.
CA-G.R. SP Nos. 160352 & 160430
DECISION Page - 9 -

this Court's Former First Division issued a Resolution 27 consolidating

CA G.R. SP No. 160430 with CA G.R. SP No. 160352, subject to the
approval of the ponente of the latter case. On July 18, 2019, this
Court's Former Second Division issued a Resolution 28 approving the
consolidation of the two (2) cases.

In CA G.R. SP No. 160352, petitioner GlobalPro raised this sole

issue:

“THE ISSUE

Whether the NLRC, in rendering the assailed Decision and

denial Resolution, committed grave abuse of discretion
amounting to lack or excess of jurisdiction in so far (sic.)
as its adverse findings on GlobalPro are concerned,
particularly in holding that: (a) GlobalPro is not a
legitimate contractor but one engaged in labor-only
contracting since (i) it did not have substantial capital or
investment in the form of tools, equipment, machineries,
and work premises, (ii) private respondents performed
work which was directly related to the principal business
of TDI, (iii) it did not exercise the right to control over the
performance of the work of the private respondents, and
(iv) it failed to show that it is actually engaged in various
other services and has contracts with other clients besides
TDI; (b) private respondents were illegally dismissed; and
(c) GlobalPro failed to prove the existence of the requisites
of a valid quitclaim.”29

In CA G.R. SP No. 160430, petitioner TDI anchors its Petition

based on the following grounds:

“GROUNDS

I
PUBLIC RESPONDENT NLRC SERIOUSLY ERRED AND
COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING
TO LACK OR EXCESS OF JURISDICTION IN AFFIRMING
THE LABOR ARBITER'S FINDING THAT THE COMPANY AND
GLOBALPRO ARE ENGAGED IN LABOR-ONLY
CONTRACTING AND THAT THE COMPANY SHOULD
THEREFORE BE HELD LIABLE FOR PRIVATE
RESPONDENT'S SUPPOSED DISMISSAL FROM SERVICE:

27 Id., p. 1386.
28 Rollo (CA G.R. SP No. 160352) Vol. I, pp. 655-661.
29 Id., p. 12.
CA-G.R. SP Nos. 160352 & 160430
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THE FACTS, LAW AND EVIDENCE PRESENTED SUPPORT

THE CONCLUSION THAT THE COMPANY AND GLOBALPRO
WERE ENGAGED IN LEGITIMATE JOB CONTRACTING:

1. GLOBALPRO HAD PROVEN ITS SUBSTANTIAL

CAPITAL AND INVESTMENT AS REQUIRED BY LAW AS
WELL AS ITS CONTROL AND SUPERVISION OVER PRIVATE
RESPONDENTS[;]

2. PRIVATE RESPONDENTS ARE EMPLOYEES OF

GLOBALPRO AS EVIDENCED BY THE JOINT AFFIDAVITS
AND SINUMPAANG SALAYSAY PRESENTED BY THE
COMPANY AND GLOBALPRO[;]

II
PUBLIC RESPONDENT NLRC COMMITTED SERIOUS ERROR
AND GRAVE ABUSE OF DISCRETION IN DISREGARDING
PRIVATE RESPONDENTS' QUITCLAIMS WHICH WERE
KNOWINGLY AND VOLUNTARILY EXECUTED WITH THE
ASSISTANCE OF THE DOLE[.]”30

The petitions are bereft of merit.

After a meticulous review of the facts of the case, and a careful

perusal of the documents presented as well as the existing and
applicable law and jurisprudence on the matter, this Court finds that
public respondent NLRC did not err in affirming the Decision of the
Labor Arbiter.

Petitioners GlobalPro and TDI contend that: petitioner GlobalPro

complied with the required substantial capital for independent job
contractors; private respondents Lameyra and Rosana did not
perform works which are directly related to the principal business of
petitioner TDI; they were not illegally dismissed since petitioner
GlobalPro validly discontinued their services pursuant to their fixed-
period employment agreements; they voluntarily executed Quitclaims
which discharged petitioners TDI and GlobalPro from any claims or
causes of action; and, there is no employer-employee relationship
between petitioner TDI and private respondents Lameyra & Rosana. 31

On the other hand, private respondents Lameyra and Rosana

30 Rollo (CA G.R. SP No. 160430) Vol. I, pp. 13-14.
31 See Petitions for Certiorari of Petitioner GlobalPro, rollo (CA G.R. SP No. 160352) Vol. I, pp. 3-
24, and Petitioner TDI, rollo (CA G.R. SP No. 160430) Vol. I, pp. 3-52.
CA-G.R. SP Nos. 160352 & 160430
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posit that: petitioner GlobalPro is a labor-only contractor since their

true employer is petitioner TDI; they were illegally dismissed without
lawful cause; and, the signed Quitclaims do not necessarily bar them
from questioning the legality of their dismissal. 32

As a legal recourse, the special civil action of certiorari is a

limited form of review.33 It must not raise errors of judgment, but the
acts and circumstances showing grave abuse of discretion amounting
to lack or excess of jurisdiction.34 Grave abuse of discretion implies
such capricious and whimsical exercise of judgment as is equivalent
to lack of jurisdiction; or the exercise of power in an arbitrary or
despotic manner by reason of passion, prejudice, or personal
hostility.35 Where the issue or question involved affects the wisdom or
legal soundness of the decision, it is beyond the province of a special
civil action for certiorari.36 Under these parameters, this Court finds
that public respondent NLRC did not commit grave abuse of
discretion in dismissing the appeals of petitioners GlobalPro and TDI.

Well-settled is the rule that factual findings of labor officials,

who are deemed to have acquired expertise in matters within their
jurisdiction, are generally accorded not only respect but even finality
by the courts when supported by substantial evidence. 37 Both the
Labor Arbiter and public respondent NLRC found that petitioner
GlobalPro is engaged in labor-only contracting. This Court finds no
cogent reason to disturb their findings.

Permissible job contracting or subcontracting has been

distinguished from labor-only contracting such that permissible job
contracting or subcontracting refers to an arrangement whereby a
principal agrees to put out or farm out to a contractor or
subcontractor the performance or completion of a specific job, work,
or service within a definite or predetermined period, regardless of
whether such job, work, or service is to be performed or completed
within or outside the premises of the principal, while labor-only
contracting, on the other hand, pertains to an arrangement where
the contractor or subcontractor merely recruits, supplies, or places
32 See Comment of private respondents Lameyra and Rosana, rollo (CA G.R. SP No. 160352) Vol.
I, pp.626 to 636. A nearly identical Comment was likewise filed in CA G.R. SP No. 160430,
rollo (CA G.R. SP No. 160430) Vol. II, pp. 737-748.
33 Apostol v. Court of Appeals, G.R. No. 141854. October 15, 2008.
34 Philippine National Bank v. Gregorio, G.R. No. 194944. September 18, 2017.
35 Angeles v. Gutierrez, G.R. Nos. 189161 & 189173. March 21, 2012.
36 Land Bank of the Philippines v. Court of Appeals, G.R. No. 129368. August 25, 2003.
37 Bankard, Inc. v. National Labor Relations Commission, G.R. No. 171664. March 6, 2013.
CA-G.R. SP Nos. 160352 & 160430
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workers to perform a job, work, or service for a principal. 38 The test

is whether the independent contractor has contracted to do the work
according to its own methods and without being subject to the
principal’s control except only as to the results, it has substantial
capital, and it has assured 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 and
welfare benefits.39

Labor-only contracting is specifically prohibited under Article

106 of the Labor Code.40 Moreover, Executive Order No. 8141 was
recently issued by the incumbent President of the Republic, with the
following provision that explicitly prohibits labor-only contracting:

Section 2. Prohibition against Illegal Contracting or

Subcontracting. Contracting or subcontracting, when undertaken
to circumvent the worker’s right to security of tenure, self-
organization and collective bargaining, and peaceful concerted
activities pursuant to the 1987 Philippine Constitution, is hereby
strictly prohibited. xxx xxx xxx

To determine whether a contractor is engaged in labor-only

contracting or permissible job contracting, the totality of the facts
and the surrounding circumstances of the case are to be
considered.42 The legitimacy of a job contractor does not arise by
mere self-declaration in its service contracts. The totality of
circumstances must be taken into account to determine the true
nature of an entity purporting to be a legitimate job contractor. In the
case at bar, a cooperative whose members are “assigned” to work for
other companies claims that it is the true employer of its members.
In the first place, how can employees of a cooperative become
members of the same cooperative which allegedly employs them, and
which required them to subscribe to its preferred shares and to
38 Allied Banking Corporation v. Calumpang, G.R. No. 219435. January 17, 2018.
39 Spic N’ Span Services Corporation v. Paje, et. al., G.R. No. 174084. August 25, 2010.
40 Article 106. Contractor or Subcontractor.
xxx xxx xxx
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 person 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.
41 Executive Order No. 51. May 1, 2018. - Implementing Article 106 of the Labor Code of the
Philippines, as amended, to protect the right to security of tenure of all workers based on
social justice in the 1987 Philippine Constitution.
42 Petron Corporation v. Caberte et. al., G.R. No. 182255. June 15, 2015.
CA-G.R. SP Nos. 160352 & 160430
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contribute a part of their salary as their “capital share”? 43 The line

between employer and employee is therefore blurred since the
alleged employees of the cooperative are also its members. In
addition, the Application for Membership of the cooperative's
members states that they are “self-employed” workers, viz:

“I hereby manifest my desire to become a member of

GlobalPro Workers Cooperative. I fully understand and commit that
by becoming a member, I may be engaged by the cooperative to
any of its client-companies as a self-employed worker.
Consequently, I have accomplished the foregoing application for
membership. xxx xxx xxx”44

Hence, private respondents Lameyra and Rosana were not

assigned to petitioner TDI in their capacity as employees of petitioner
GlobalPro, but as so-called self-employed workers.

The very nature of petitioner GlobalPro as a self-proclaimed

legitimate job contracting cooperative is also suspect. In its amended
Articles of Cooperation,45 its primary purpose is described as follows:

“To enter into Project Management contracts, service contracting,

Consulting service, to offer business opportunities and livelihood
programs including but not limited to rental, sales, consumer
services & marketing, property management and develop0ment
(sic.), construction and fabrication[,] and to provide credit facilities
for economic and social upliftment.” 46 (Underscoring in the
original)

Curiously, petitioner GlobalPro is described in its Service

Agreement with petitioner TDI as a contractor “engaged in the
business of providing janitorial, housekeeping, maintenance, utility
services and other related support services to various offices and
business establishments xxx.”47 In its Service Contract with University
of the East Ramon Magsaysay Memorial Medical Center, Inc., it is
stated that petitioner GlobalPro is “engaged in the business of
providing maintenance, janitorial and technical services xxx.” 48
Petitioner GlobalPro also signed a Contract of Service with San Juan
De Dios Educational Foundation, Inc., stating that it is a cooperative
43 Rollo (CA G.R. SP No. 160352), pp. 395 (Membership and Subscription Agreement) and
p,.421 (Authorization to Deduct).
44 Id., p.397.
45 Id., pp. 76-78.
46 Id., p. 77.
47 Id., p. 378.
48 Id., p. 483.
CA-G.R. SP Nos. 160352 & 160430
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“whose members, composed of self-employed workers in various

activities such as, but not limited to production, manufacturing, office
administration, sales and promotion, transport and logistics, custodial
and janitorial, are authorized to engaged collectively in service
contracting, productivity and manpower services.”49 Petitioner
GlobalPro also executed numerous other service agreements with
other companies, with various descriptions of its nature and
purpose.50 It appears that the cooperative's purpose and nature are
molded to fit the needs of its clients, without regard to its primary
purpose as stated in its Articles of Cooperation. This is a glaring red
flag that strongly indicates that the cooperative is engaged in labor-
only contracting.

It must also be noted that private respondents Lameyra and

Rosana started working for petitioner TDI before the latter signed a
Service Agreement contract with petitioner GlobalPro, which became
effective on January 1, 2015. Private respondent Rosana started
working for petitioner TDI in 2012, while private respondent Lameyra
began working for the said company in 2014.

In Coca-Cola Bottlers Philippines, Inc. v. Dela Cruz, et. al., 51 the

Supreme Court quoted esteemed labor law professor Atty. Cezario
Azucena’s description of labor-only contracting, which perfectly
captures the relationship among the parties in the instant case, viz:

This trilateral relationship under a legitimate job contracting is

different from the relationship in a labor-only contracting situation
because in the latter, the contractor simply becomes an agent of
the principal; either directly or through the agent, the principal
then controls the results as well as the means and manner of
achieving the desired results. In other words, the party who would
have been the principal in a legitimate job contracting relationship
and who has no direct relationship with the contractor's
employees, simply becomes the employer in the labor-only
contracting situation with direct supervision and control over the
contracted employees. As Azucena astutely observed: in
labor-contracting, there is really no contracting and no
contractor; there is only the employer’s representative
who gathers and supplies people for the employer; labor-
contracting is therefore a misnomer. (Emphasis supplied)

Petitioners GlobalPro and TDI insist that the former should be

49 Id., p. 488.
50 Id., pp. 483-593.
51 Coca-Cola Bottlers Philippines, Inc. v. Dela Cruz, et. al., G.R. No. 184977. December 7, 2009;
citing Azucena’s The Labor Code with Comments and Cases, 5th ed., 2004, p. 261.
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considered as a legitimate job contractor since it has sufficient

capital and investment to exist as an independent contractor.
Substantial capital or investment refers to capital stocks and
subscribed capitalization in the case of corporations, tools,
equipment, implements, machineries, and work premises, actually
and directly used by the contractor or subcontractor in the
performance or completion of the job, work, or service contracted
out.52 Public respondent NLRC correctly observed that the capital of
petitioner GlobalPro is only “show money” if the cooperative does
not actually use its resources to ensure the performance of the
contracted job, as specified in the Service Agreement.

Moreover, possession of substantial capital or investment is not

enough. In Manila Memorial Park Cemetery v. Lluz, 53 the Supreme
Court held that labor-only contracting exists when 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:

1) 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,

2) The contractor does not exercise the right to control the

performance of the work of the contractual employee.

In Quintanar v. Coca-Cola Bottlers,54 the Supreme Court

reiterated that labor-only contracting exists when any of the two
aforementioned elements is present. Thus, even assuming that
petitioner GlobalPro has sufficient capital, it still did not exercise the
power to control the performance of the work of private respondents
Lameyra and Rosana. It must be noted that private respondent
Lameyra was assigned as a machine operator in petitioner TDI's
Cabuyao plant. Private respondent Rosana was tasked to blend the
alcoholic beverages produced by petitioner TDI. These tasks are
definitely not covered by “janitorial, housekeeping, utility,
52 Petron Corporation v. Caberte et. al., G.R. No. 182255. June 15, 2015; Garden of Memories
Park and Life Plan, Inc., et. al. v. National Labor Relations Commission, G.R. No. 160278.
February 8, 2012.
53 Manila Memorial Park Cemetery, Inc. v. Lluz, et. al., G.R. No. 208451. February 3, 2016; citing
Aliviado v. Procter and Gamble, G.R. No. 160506. June 6, 2011.
54 Quintanar v. Coca-Cola Bottlers, Philippines, Inc., G.R. No. 210565. June 28, 2016.
CA-G.R. SP Nos. 160352 & 160430
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maintenance and other related services”, as stated in the Service

Agreement between petitioners TDI and GlobalPro. Indeed, the
provision of janitorial and other maintenance services is not explicitly
stated in the primary purpose of petitioner GlobalPro in its Articles of
Cooperation. Private respondents Lameyra and Rosana were
instructed to perform tasks which were necessary and desirable to
petitioner TDI's business of producing alcoholic beverages, and they
were directly supervised by the employees of the company. If
petitioner GlobalPro's position that it supervised the work of private
respondents Lameyra and Rosana is to be believed, it would
necessarily mean that the cooperative was directly involved in the
performance of essential functions related to the company's primary
business.

The primary standard of determining regular employment is the

reasonable connection between the particular activity performed by
the employee in relation to the usual trade or business of the
employer.55 The standard, supplied by the law itself, is whether the
work undertaken is necessary or desirable in the usual business or
trade of the employer, a fact that can be assessed by looking into the
nature of the services rendered and its relation to the general
scheme under which the business or trade is pursued in the usual
course. It is distinguished from a specific undertaking that is divorced
from the normal activities required in carrying on the particular
business or trade.56

As for the Affidavits presented by petitioner TDI in support of

its allegation that private respondents Lameyra and Rosana were only
assigned as janitors, these sworn statements were all executed by
supervisory employees of the company. Petitioner TDI thus enjoys
moral ascendancy over them. Furthermore, D Aguillo issued a
Certification57 dated May 31, 2013 stating that private respondent
Rosana was a factory worker at the Compounding Department of
petitioner TDI from August 22, 2012 to January 22, 2013.

Petitioners GlobalPro and TDI posit that the employer-employee

relationship between the former and private respondents Lameyra
and Rosana was established by their duly-signed employment
contracts cum “Service Agreements”.58 Despite the fact that the
55 University of Santo Tomas (UST) v. Samahang Manggagawa ng UST, et. al., G.R. No. 184262.
April 24, 2017.
56 Basan, et. al. v. Coca-Cola Bottlers Philippines, G.R. Nos. 174365-66. February 4, 2015.
57 Rollo (CA G.R. SP No. 160352), p. 245.
58 Id., pp. 132-136.
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Service Contracts contain stipulations which are earmarks of

independent contractorship, they do not make it legally so. The
language of a contract is neither determinative nor conclusive of the
relationship between the parties.59 A party cannot dictate, by the
mere expedient of a unilateral declaration in a contract, the character
of its business, i.e., whether as labor-only contractor or job
contractor, it being crucial that its character be measured in terms of
and determined by the criteria set by statute. 60 Article 1700 of the
Civil Code declares:

Art. 1700. The relations between capital and labor are not merely
contractual. They are so impressed with public interest that labor
contracts must yield to the common good. Therefore, such
contracts are subject to the special laws on labor unions, collective
bargaining, strikes and lockouts, closed shop, wages, working
conditions, hours of labor and similar subjects.

A contract of employment is impressed with public interest. For

this reason, provisions of applicable statutes are deemed written into
the contract.61 The governing principle is that parties may not
contract away applicable provisions of law especially peremptory
provisions dealing with matters heavily impressed with public
interest. The law relating to labor and employment is clearly such an
area and parties are not at liberty to insulate themselves and their
relationships from the impact of labor laws and regulations by simply
contracting with each other.62

Neither can petitioner GlobalPro rely on its Certificate of

Registration63 issued by DOLE. It is not conclusive evidence that
petitioner GlobalPro is an independent contractor. The fact of
registration simply prevents the legal presumption of being a mere
labor-only contractor from arising.64

Finally, the Quitclaims65 signed by private respondents Lameyra

and Rosana do not absolve petitioners GlobalPro and TDI of liability.
Generally, the employee's waiver or quitclaim cannot prevent the
employee from demanding benefits to which he or she is entitled,
and from filing an illegal dismissal case. This is because a waiver or
59 San Miguel Corporation v. Semillano, et. al., G.R. No. 164257. July 5, 2010.
60 San Miguel Corporation v. Aballa, G.R. No. 149011.June 28, 2005.
61 Innodata Philippines, Inc. v. Quejada-Lopez, et. al., G.R. No. 162839. October 12, 2006.
62 Pakistan International Airlinies Corp. v. Ople, G.R. No. 61594. September 28, 1990.
63 Rollo (CA G.R. SP No. 160352), p. 378.
64 San Miguel Corporation v. Semillano, et. al., supra, note 59.
65 Rollo (CA G.R. SP No. 160352), pp. 413 (private respondent Rosana) and 442 (private
respondent Lameyra).
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quitclaim is looked upon with disfavor, and is frowned upon for being
contrary to public policy.66 The law does not consider as valid any
agreement to receive less compensation than what a worker is
entitled to recover nor prevent the laborer from demanding benefits
to which he or she is entitled. Quitclaims executed by the employees
are thus commonly frowned upon as contrary to public policy and
ineffective to bar claims for the full measure of the worker's legal
rights, considering the economic disadvantage of the employee and
the inevitable pressure upon the worker by financial necessity. 67 A
quitclaim is ineffective in barring recovery of the full measure of a
worker's rights, and the acceptance of benefits therefrom does not
amount to estoppel.68 Moreover, it is axiomatic that employer and
employee do not stand on equal footing, a situation which often
causes an employee to act out of need instead of any genuine
acquiescence to the employer.69

Social justice and full protection to labor guaranteed by the

fundamental law of the land is not some romantic notion, high in
rhetoric but low in substance. It is the avowed policy of the State to
accord utmost protection and justice to labor, a policy which the
courts are likewise sworn to uphold.70

WHEREFORE, premises considered, the consolidated Petitions

for Certiorari are hereby DENIED and ordered DISMISSED. The
assailed Decision dated September 27, 2018 and Resolution dated
December 21, 2018 of public respondent NLRC, Fourth Division, in
NLRC LAC No. 08-002884-18, NLRC CN RAB IV-09-01403-16-L are
hereby AFFIRMED.

SO ORDERED.

(Original Signed)
REMEDIOS A. SALAZAR-FERNANDO
Acting Presiding Justice
Chairperson
66 Dagasdas v. Grand Placement and General Services Corporation, G.R. No. 205727. January
18, 2017.
67 Varorient Shipping Co., Inc., et. al. v. Flores, G.R. No. 161934. October 6, 2010; More
Maritime Agencies, Inc. v. National Labor Relations Commission, G.R. No. 124927. May 18,
1999.
68 De Andres v. Diamond H Marine Services and Shipping Agency, Inc., et. al., G.R. No. 217345.
July 12, 2017.
69 Jaculbe v. Silliman University, G.R. No. 156934. March 16, 2007.
70 Marcopper Mining Corp. v. National Labor Relations Commission, G.R. No. 103525. March 29,
1996.
CA-G.R. SP Nos. 160352 & 160430
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WE CONCUR:

(Original Signed)
SAMUEL H. GAERLAN
Associate Justice

(Original Signed)
GERMANO FRANCISCO D. LEGASPI
Associate Justice

CERTIFICATION

Pursuant to Article VIII, Section 13 of the Constitution, it is

hereby certified that the conclusions in the above decision were
reached in consultation before the case was assigned to the writer of
the opinion of the Court.

(Original Signed)
REMEDIOS A. SALAZAR-FERNANDO
Acting Presiding Justice
Chairperson, First Division
bcs