G.R. No. 18034 - Buenaventura vs. Ramos

Petitioner, New Golden City Builders and Development Corporation, a construction business, entered into a contract on April 4, 1995, with Prince David Development Corporation for the construction of a 17-storey office and residential condominium building along Katipunan Road, Loyola Heights, Quezon City.
As part of fulfilling the contract, petitioner engaged the services of Nilo Layno Builders to perform specialized concrete works, form works, and steel rebars works for a total contract price of P5 Million.
Nilo Layno Builders, acting as a labor contractor, subsequently hired private respondents to execute the specialized work at the project site.

Shortly after the completion of the commissioned phase (circa 1996), the private respondents filed a complaint with the Arbitration Branch of the National Labor Relations Commission (NLRC).
The complaint asserted claims of:

On August 30, 1999, Labor Arbiter Felipe Garduque rendered a decision classifying Nilo Layno Builders as a labor-only contractor, thereby deeming private respondents as employees of petitioner.
The decision ordered petitioner and its president, Manuel Sy, to provide alternate work or, failing compliance, to award separation pay based on years of service; however, monetary claims like premium pay and damages were dismissed or withdrawn.

Both parties appealed to the NLRC where, on March 19, 2001, the NLRC affirmed with modification the Labor Arbiter’s decision:

Private respondents were declared illegally dismissed.
Petitioner was ordered to reinstate the private respondents and pay their full backwages from the dates of dismissal to reinstatement.
The award for 13th month pay and service incentive leave pay was also affirmed.

Petitioner’s motion for reconsideration was denied on May 10, 2001, prompting the filing of a special civil action for certiorari with the Court of Appeals.
On February 29, 2002, the Court of Appeals denied the petition for certiorari, sustaining the NLRC’s modified decision.

Petitioner brought the petition for review under Rule 45 of the Rules of Court, alleging grave abuse of discretion by the NLRC and Court of Appeals on several counts:

Arguing that private respondents were not entitled to backwages beyond April 7, 2000.
Asserting that no employer-employee relationship existed between petitioner and the private respondents because they were not employed by a legitimate independent labor contractor.
Claiming that Nilo Layno Builders fully met the legal requirements to be considered an independent contractor, not a labor-only contractor.

The proper classification of Nilo Layno Builders as either “independent contractor” or “labor-only contractor.”
The existence of an employer-employee relationship between petitioner and the private respondents for purposes of wage payment.

Whether Nilo Layno Builders should be classified as an independent contractor or a labor-only contractor.
The sufficiency of evidence regarding the contractor’s use of substantial capital versus investment in tools, equipment, and other implements as required by law.

Whether an employer-employee relationship existed between petitioner and the private respondents, despite the latter being hired by Nilo Layno Builders.
The limited nature of such a relationship, particularly with respect to ensuring timely payment of wages.

Whether the NLRC and the Court of Appeals gravely abused their discretion by relying on conjectures and assumptions rather than uncontroverted evidence in reaching their decisions.
The extent of petitioner’s liability for backwages and separation pay in view of the alleged lack of an employment relationship.

Whether petitioner can be held jointly and severally liable with Nilo Layno Builders for statutory wage claims as provided under Articles 106 and 107 of the Labor Code.