By Atty. Julius Gregory B. Delgado
EDWARD AÑONUEVO VS. CBK POWER COMPANY, LTD., ET AL., G.R. NO. 235534 (JANUARY 23, 2023):
A DETERMINATION THAT AN ENTITY IS A LABOR-ONLY CONTRACTOR AUTOMATICALLY RESULTS TO A
FINDING OF EMPLOYER-EMPLOYEE RELATIONSHIP BETWEEN THE WORKER AND THE PRINCIPAL
Petitioner Edward Aňonuevo alleges that on or about July 10, 2008, he was engaged by
respondent CBK Power Company, Ltd. To work as maintenance technician at CBK’s Power Plant in
Kalayaan, Laguna. According to Aňonuevo, he was supposedly instructed and made to process his
employment with Rolpson Enterpise (“Rolpson”), one of CBK’s manpower providers. On July 14, 2008,
petitioner Aňonuevo started to work at the Power Plant under the Quality Management System
Department. On June 15, 2010, petitioner Aňonuevo was allegedly informed by CBK that from then on,
he would be receiving his salary from TCS Manpower Services, Inc. (“TCS”). Thereafter, on March 9,
2011, he was allegedly required to sign two employment contracts; one, from the period of June 16,
2019 to November 15, 2010; and a contract for the period of November 16, 2010 to April 15, 2011. On
December 14, 2012, TCS informed petitioner Aňonuevo at CBK will be terminated effective December
31, 2012 in view of the expiration of the service between TCS and CBK. On December 19, 2012,
petitioner Aňonuevo supposedly reported for work but was escorted out of CBK’s premises since he was
supposedly no longer allowed inside CBK premises as he had already been terminated from
employment.
Petitioner Aňonuevo filed a case for Illegal Dismissal arguing that Rolpson and TCS are only
labor-only contractors. He also alleged that he was performing activities which are usually necessary and
desirable in CBK’s electric power generation business, namely: monitoring and reporting on activities of
CBK’s contractors in rehabilitating old and flooded turbines and in repairing the generator of another
turbine; performing various IT jobs; safety patrol duties, and computer drawing. For the respondents,
they averred that CBK is a duly registered and existing partnership in the business of power production
and was awarded contract for operating the Kalayaan, Botocan and Caliraya Power Plants owned by
National Power Corporation. Respondents also averred that petitioner Aňonuevo was performing non-
core business functions. The Labor Arbiter, National Labor Relations Commission and the Court of
Appeals all had it for respondents CBK, et al.
On Petitioner for Review under Rule 45, the Supreme Court reversed and set aside the ruling of
the Court of Appeals. The Court ruled that there was grave abuse of discretion amounting to lack or in
excess of jurisdiction on the part of the NLRC when it affirmed the ruling of the Labor Arbiter. The
Supreme Court held found the existence of labor-only contracting. The Court held that being prohibited
as it is a circumvention of labor laws, the burden of proving that Rolpson and TCS are not labor-only
contractors rests on CBK. The Supreme Court held that CBK failed to present Rolpson’s Certificate of
Registration with the Department of Labor and Employment (DOLE) under the then DOLE Department
Order No. 18-A. There being no Certificate of Registration, a presumption arises that Rolpson is engaged
in labor-only contracting. This presumption arises unto Rolpson unless it can overcome the burden by
proving that it has substantial capital, investment, tools, and the like. In this case, CBK failed to adduce
proof that Rolpson has these criteria. Thus, the Supreme Court concluded that a finding that a
contractor is a labor-only contractor is equivalent to a declaration that there is an employer-employee
relationship between the principal and the workers of the labor-only contractor.
Regarding the other manpower agency TCS, the Court found it anomalous that while petitioner
Aňonuevo’s services was transferred from Rolpson to TCS on June 16, 2010, the TCS’s Certificate of
Registration was only in 2011. The Court held that this should be taken against TCS, as there is no basis
to give the Certificate of Registration a retroactive effect. Hence, the Court effectively ruled that when
petitioner Aňonuevo started working supposedly under TCS, the latter is presumed to be a labor-only
contractor.
About TCS meeting the criteria of a legitimate job contractor, the Supreme Court held that while
it has Php3,000,000.00 paid-up capital, there is no proof that TCS’s capital was related to the job or
service it undertook to perform under its contract with CBK. In any event, the Court held that proof of
substantial capital does not make an entity immune to a finding of labor-only contracting when there is
showing that control over the worker lies with the principal not with the contractor. The Court held:
“As regards the Daily Time Records, an examination of the same shows that the
signatures appearing on the spaces beside the phrases ‘checked by,’ ‘certified by,’ and
‘client’s signature’ are all the same. This bolsters Aňonuevo’s claim in his Petition that his
Daily Time Records were certified not by TCS but by CBK. The Court notes that neither CBK
nor TCS refuted this allegation in their Comments.
On the other hand, Aňonuevo submitted copies of his email correspondence with
CBK’ s officers and employees and reports that he prepared showing that it was the latter
who gave him orders and reviewed his work, without any interference from Retarino. The
record also bears out that it was CBK who prepared the schedule of Aňonuevo’s on-call
duty.”
Hence, the Supreme Court established that it is CBK which exercised control over petitioner
Aňonuevo. The Supreme Court ordered the reinstatement of petitioner Aňonuevo without loss of
seniority, payment of backwages, damages and attorney’s fees. The Court also ordered payment of
separation pay in the amount of one month salary for every year of service if reinstatement is no longer
feasible.