G.R. No. 160278 - Garden of Memories Park and Life Plan, Inc. vs. National Labor Relations Commission

Petitioner Garden of Memories Memorial Park and Life Plan, Inc. operates a memorial park at Calsadang Bago, Pateros, Metro-Manila and engages in selling memorial plans and related services.
Respondent Hilaria Cruz was employed as a utility worker responsible for tasks such as cleaning, sweeping, and watering the lawns of the memorial park.
Cruz worked at the park from August 1991 until her termination in February 1998.

In February 1998, a misunderstanding occurred between Cruz and a co-worker, Adoracion RequiAo, regarding the use of a garden water hose.
Following the incident, Paulina RequiAo, who was later impleaded as a respondent, instructed the workers to go home and not to return, resulting in the eventual replacement of Cruz.
Upon her return, Cruz learned about her replacement, reported the issue to the personnel manager, and protested the decision.
Cruz subsequently filed a complaint on March 13, 1998, alleging illegal dismissal, underpayment of wages, non-inclusion in the Social Security system, and non-payment of several additional benefits including legal/special holiday pay, premium pay for rest day, 13th month pay, and service incentive leave pay.

Garden of Memories asserted that Cruz was not its employee but rather employed by RequiAo, portraying her as an independent service contractor engaged in maintenance work.
In its defense, RequiAo maintained that Cruz had been hired by her mother, Victoriana RequiAo, and that she only took over the management and supervision when her mother became ill.
Cruz countered by asserting her status as a regular employee of Garden of Memories, emphasizing entitlement to due process and protection from dismissal without just cause.

At the labor arbiter (LA) level, it was ruled on October 27, 1999, that RequiAo was not an independent contractor but a labor-only contractor.
The LA declared both Garden of Memories and RequiAo jointly and severally liable for the monetary claims of Cruz, quantifying separation pay, backwages, salary differential, service incentive leave pay, and 13th month pay.
The National Labor Relations Commission (NLRC) affirmed the LA’s decision on December 29, 2000, citing lack of substantial capital/investment by RequiAo, and held that there was no proof of abandonment of work by Cruz.
Garden of Memories and RequiAo challenged the decision before the Court of Appeals (CA) via a petition for certiorari under Rule 65, asserting errors regarding the interpretation of Section 6(d) of DOLE Department Order No. 10, Series of 1997 and the nature of the employment relationship.

The Service Contract Agreement between Garden of Memories and RequiAo stipulated that the contractor was to perform maintenance work under strict compliance with Garden of Memories’ standards, explicitly negating the creation of an employer-employee relationship.
Evidence from the contractual document and the practices followed established that RequiAo failed to exercise the right to control over the performance of the work, and that she lacked substantial capital or investment—elements required for an independent contracting relationship.

Whether Hilaria Cruz was genuinely employed by Garden of Memories or by RequiAo as an independent contractor.
The proper inquiry into whether the contractual arrangement amounted to labor-only contracting, thereby making Garden of Memories the principal employer.

Whether the dismissal of Cruz was carried out legally or amounted to an illegal dismissal.
Whether the allegation that Cruz abandoned her work is supported by sufficient evidence and meets the strict requirements to prove abandonment.

Whether the lower courts correctly applied the relevant provisions of the Labor Code, particularly Section 106 on contracting and subcontracting, and the DOLE Department Order No. 10, Series of 1997.
Whether the power of control and the substantial capital/investment tests were properly considered in determining the independent contractor status versus labor-only contracting.

Whether Garden of Memories, in claiming that RequiAo was an independent contractor, met its burden of proving that RequiAo had substantial capital, investment, and the right to control over the performance of the work.