MANILA MEMORIAL PARK v.

LLUZ (2016) six days a week for eight hours daily and were paid
P250 per day.
[J. Carpio]
On 26 June 2007, respondents filed a Complaint for
Summary and Doctrine: regularization and Collective Bargaining Agreement
benefits against Manila Memorial and Ward Trading.
In order to determine whether there exists an employer- On 6 August 2007, respondents filed an amended
employee relationship between Manila Memorial and complaint to include illegal dismissal, underpayment of
respondents, relevant provisions of the labor law and rules 13th month pay, and payment of attorney's fees.
must first be reviewed. Article 106 of the Labor Code states:
Respondents alleged that they asked Manila Memorial
Art. 106. Contractor or subcontractor. Whenever an employer
enters into a contract with another person for the performance
to consider them as regular workers within the
of the former's work, the employees of the contractor and of appropriate bargaining unit established in the collective
the latter's subcontractor, if any, shall be paid in accordance bargaining agreement by Manila Memorial and its
with the provisions of this Code. union, the Manila Memorial Park Free Workers Union
(MMP Union). Manila Memorial refused the request
In the event that the contractor or subcontractor fails to pay
since respondents were employed by Ward Trading,
the wages of his employees in accordance with this Code, the
an independent labor contractor. Thereafter,
employer shall be jointly and severally liable with his
contractor or subcontractor to such employees to the extent respondents joined the MMP Union. The MMP Union,
of the work performed under the contract, in the same manner on behalf of respondents, sought their regularization
and extent that he is liable to employees directly employed by which Manila Memorial again declined. Respondents
him. then filed the complaint. Subsequently, respondents
were dismissed by Manila Memorial. Thus,
The Secretary of Labor and Employment may, by appropriate
respondents amended the complaint to include the
regulations, restrict or prohibit the contracting-out of labor to
protect the rights of workers established under this Code. In prayer for their reinstatement and payment of back
so prohibiting or restricting, he may make appropriate wages.
distinctions between labor-only contracting and job
Meanwhile, Manila Memorial sought the dismissal of
contracting as well as differentiations within these types of
the complaint for lack of jurisdiction since there was no
contracting and determine who among the parties involved
shall be considered the employer for purposes of this Code, employer-employee relationship. Manila Memorial
to prevent any violation or circumvention of any provision of argued that respondents were the employees of Ward
this Code. Trading.
I. FACTS: The Labor Arbiter dismissed the complaint for failing
This is a petition for review on certiorari assailing the to prove the existence of an employer-employee
Decision of the Court of Appeals. relationship.

On 23 February 2006, petitioner Manila Memorial Park The NLRC reversed the Labor Arbiter's findings. The
Cemetery, Inc. entered into a Contract of Services with NLRC ruled that Ward Trading was a labor-only
respondent Ward Trading and Services. The Contract contractor and an agent of Manila Memorial.
of Services provided that Ward Trading, as an The CA affirmed the ruling of the NLRC. The CA
independent contractor, will render interment and found the existence of an employer-employee
exhumation services and other related work to Manila relationship between Manila Memorial and
Memorial in order to supplement operations at Manila respondents.
Memorial Park, Paranaque City.
II. ISSUES:
Among those assigned by Ward Trading to perform
services at the Manila Memorial Park was respondent Whether or not an employer-employee relationship exists
Ezard Lluz, among others. Lluz and the others worked between Manila Memorial and respondents for the latter to
be entitled to their claim for wages and other benefits
III. RATIONALE: Section 11 of Department Order No. 18-02, which
mandates registration of contractors or subcontractors
It is clear from these provisions that contracting
with the DOLE, states:
arrangements for the performance of specific jobs or
services under the law and its implementing rules are Section 11. Registration of Contractors or
allowed. However, contracting must be made to a Subcontractors. - Consistent with authority of the
legitimate and independent job contractor since labor Secretary of Labor and Employment to restrict or
rules expressly prohibit labor-only contracting. prohibit the contracting out of labor through appropriate
regulations, a registration system to govern contracting
Labor-only contracting exists when the contractor or
arrangements and to be implemented by the Regional
subcontractor merely recruits, supplies or places
Office is hereby established.
workers to perform a job, work or service for a principal
and any of the following elements are present: The Registration of contractors and subcontractors
shall be necessary for purposes of establishing an
1) the person supplying workers to an employer does
effective labor market information and monitoring.
not have substantial capital or investment in the
form of tools, equipment, machineries, work Failure to register shall give rise to the presumption
premises, among others; that the contractor is engaged in labor-only contracting.
2) and the workers recruited and placed by such IV. DISPOSITIVE:
person are performing activities which are directly
For failing to register as a contractor, a presumption arises
related to the principal business of such employer.
that one is engaged in labor-only contracting unless the
In such cases, the person or intermediary shall be contractor overcomes the burden of proving that it has
considered merely as an agent of the employer who substantial capital, investment, tools and the like.
shall be responsible to the workers in the same manner In this case, Manila Memorial failed to adduce evidence to
and extent as if the latter were directly employed by prove that Ward Trading had any substantial capital,
him. investment or assets to perform the work contracted for.
Thus, the presumption that Ward Trading is a labor-only
In the present case, Manila Memorial entered into a contractor stands. Consequently, Manila Memorial is
Contract of Services with Ward Trading, a single deemed the employer of respondents. As regular employees
proprietorship owned by Emmanuel Mayor Ward with of Manila Memorial, respondents are entitled to their claims
business address in Las Piñas City on 23 February for wages and other benefits as awarded by the NLRC and
2006. In the Contract of Services, it was provided that affirmed by the CA.
Ward Trading, as the contractor, had adequate Petition is DENIED. Decision dated 21 January 2013 and the
workers and substantial capital or investment in the Resolution dated 17 July 2013 of the Court of Appeals is
form of tools, equipment, machinery, work premises AFFIRMED.
and other materials which were necessary in the
conduct of its business.
However, a closer look at the Contract of Services
reveals that Ward Trading does not have substantial
capital or investment in the form of tools, equipment,
machinery, work premises and other materials since it
is Manila Memorial which owns the equipment used in
the performance of work needed for interment and
exhumation services.