GR 236331; (September, 2020) (Digest)
G.R. No. 236331 & G.R. No. 236332, September 14, 2020
RNB Garments Philippines, Inc. v. Ramrol Multi-Purpose Cooperative, et al. / Ramrol Multi-Purpose Cooperative v. Myrna D. Desacada, et al.
FACTS
RNB Garments Philippines, Inc. (RNB), a garment manufacturer, engaged the services of Ramrol Multi-Purpose Cooperative (RMPC) to produce garments. Respondents, performing tasks as sewers, trimmers, and quality control staff, were engaged through RMPC. In October 2011, RNB stopped loading RMPC’s sewing line, citing minimal orders from its principal vendor. This led to the lay-off or dismissal of the respondents. They filed complaints for illegal dismissal against both RNB and RMPC.
The Labor Arbiter (LA) ruled in favor of the respondents, declaring them regular employees of RNB, not RMPC, finding RMPC to be a labor-only contractor. The LA held the dismissal illegal and ordered reinstatement with full backwages. The National Labor Relations Commission (NLRC) affirmed. The Court of Appeals (CA) dismissed the subsequent petitions, upholding the findings of the LA and NLRC.
ISSUE
The primary issue is whether an employer-employee relationship existed between RNB and the respondents, making RNB liable for illegal dismissal.
RULING
The Supreme Court denied the petitions and affirmed the CA decision. The Court upheld the finding that RMPC was a labor-only contractor, making RNB the statutory employer of the respondents. The legal logic rests on the established criteria for determining labor-only contracting under Article 106 of the Labor Code. A contractor is deemed engaged in labor-only contracting if it merely recruits and supplies workers to a principal, and the workers perform tasks directly related to the principal’s main business. Here, RMPC lacked substantial capital or investment in tools and equipment. The respondents performed work—sewing garments—that was clearly directly related to RNB’s principal business of garment manufacturing. Furthermore, they worked within RNB’s premises using its machines, indicating RNB’s control over their work.
Since RMPC was a labor-only contractor, RNB, as the principal, is deemed the employer of the respondents. Consequently, RNB is responsible for the termination of their employment. The Court found the dismissal illegal. RNB’s claim of business losses due to “minimal loading” was not substantiated by sufficient and convincing evidence, such as audited financial statements, to justify the termination. The cessation of work for more than six months constituted constructive dismissal. Therefore, RNB is liable for reinstatement and payment of full backwages, salary differentials, and other monetary awards. The awards shall earn legal interest at 6% per annum from finality of judgment until full satisfaction.