G.R. No. 254596-97 - Barretto vs. Amber Golden Pot Restaurant

Petitioners—Lesther S. Barretto, Ronn Vincent H. Arevalo, Richard Irish O. Tominez, Andy L. Valdemor, Roland Quezon, Ryan Raph B. Victoria, and Joey A. Hernandez—alleged they were hired as riders by Amber Golden Pot Restaurant Corporation (Amber) on various dates between 2010 and 2014.
Respondents include Amber, its corporate officer Rhoda Fernandez, and Ablebodies Manpower Services, Inc. (AMSI), a labor contractor allegedly responsible for supplying workers.

On April 30, 2016, Amber and AMSI entered into a Project Agreement where AMSI was to provide workers for food and related staff services at Amber’s various branches.
The Agreement detailed the types of positions to be filled (riders among others), an administrative fee of 10% of the gross amounts payable, and obligations regarding benefits, remittances, and deductions.
Petitioners contend that they were hired and placed to work directly for Amber despite the existence of the Project Agreement, as they had already been employed by Amber prior to its execution.

Petitioners claim they were dismissed on May 19, 2017 without just cause or due process.
Some petitioners alleged they were forced to sign a resignation letter which they refused, evidencing a lack of voluntary termination.
They also alleged that their salaries did not include overtime pay, 13th month pay, and other benefits, and that respondents made unauthorized deductions (notably for meals).
As relief, petitioners sought reinstatement to their former positions with full backwages, payment/refund of unauthorized deductions, and additional monetary awards including moral and exemplary damages and attorney’s fees.

The Labor Arbiter ruled on April 16, 2018 that petitioners were illegally dismissed and ordered Amber to reinstate them and pay backwages computed from the date of dismissal, as well as refund amounts for illegal deductions for meals.
The NLRC, in its Decision dated September 10, 2018, affirmed the Labor Arbiter’s ruling in toto, relying on findings including:

Evidence that petitioners performed functions integral to Amber’s business despite the contractual arrangement.
The fact that petitioners were employed before Amber entered into the Project Agreement with AMSI, and that Amber exercised effective control over their work.

On February 13, 2020, the CA partially granted the petitions of Amber and AMSI; it reversed and set aside most of the NLRC and Labor Arbiter rulings except for the order on the refund of meal deductions.
The CA concluded that AMSI was a legitimate, duly registered labor contractor with evidence of substantial capital and its own recruitment and supervisory processes, thereby determining that petitioners were not illegally dismissed.
Moreover, the CA noted that petitioners had been given a new work assignment by AMSI (though petitioners contended they refused such assignment), which further supported its finding of non-illegal dismissal.

Petitioners argued that the totality of the circumstances proved that labor-only contracting was in effect—that AMSI lacked the substantial capital and independent control required under the law, and that in reality Amber was the direct employer exercising control over their work.
AMSI and Amber countered by asserting that AMSI met registration, capital, and supervisory requirements, and that petitioners’ alleged dismissal was merely a result of receiving a new work assignment after the expiration of the Project Agreement.
The issues ultimately centered on the authenticity of the employer-employee relationship, the validity of the alleged dismissal, and the legality of the deductions made from petitioners’ salaries.

Whether the CA erred in determining that AMSI was a legitimate labor contractor rather than a labor-only contractor, thereby concluding that petitioners were employees of AMSI and not of Amber.
Whether the CA erred in ruling that petitioners were not illegally dismissed, particularly given allegations of termination without notice, due process, or proper cause.
Whether the CA’s decision to allow only the refund for the illegal meal deductions (and not the full array of claims including backwages, reinstatement, and additional benefits) was proper in light of the factual and legal findings.