Professional Documents
Culture Documents
011 A
011 A
DECISION
YNARES-SANTIAGO, J.:
Adelantar was eventually repatriated after nine (9) months and seven
(7) days of service. After almost a year of waiting with no work
forthcoming, Adelantar filed a complaint for illegal dismissal with
money claim against Pentagon International Shipping, Inc. with the
NLRC, docketed as NLRC NCR OFW (M) 99-05-0693.
The Labor Arbiter found that the dismissal of Adelantar was illegal.
Consequently, he ordered Pentagon to pay Adelantar the amount of
Dhs 24,738.00 representing the latters three (3) months basic salary
inclusive of overtime pay. All other claims were denied for lack of
merit.[3]
Adelantar appealed to the NLRC arguing that the Labor Arbiter erred
in granting backwages of only three (3) months and in not granting
attorneys fees, moral and exemplary damages and reinstatement.
The NLRC affirmed the Labor Arbiters decision and held that under
Section 10 of R.A. 8042, otherwise known as the Migrant Workers and
Overseas Filipinos Act of 1995, an illegally dismissed contract worker
is entitled to the salaries corresponding to the unexpired portion of
his contract, or for three (3) months for every year of the unexpired
term, whichever is less. Thus, the NLRC awarded backwages to
Adelantar equivalent to three (3) months of his basic salary, but
exclusive of overtime pay.[4]
II
III
The August 16, 1997 contract, i.e., the first contract, provided for an
unspecified period of employment with Adelantar, as Tug Master,
receiving a monthly salary, after his probationary period, of Dhs
5,890.00. This figure in Dirhams was used by the Labor Arbiter in
computing the award equivalent to three months salary or the amount
of Dhs 24,738.00 inclusive of fixed overtime. This was also used by
the NLRC when it affirmed the award equivalent to three months,
albeit, excluding the fixed overtime.
Proceeding from the premise that the first contract, providing for an
unlimited period of employment, is the applicable contract rather than
the POEA-sanctioned second contract, the Court of Appeals
concluded that Section 10 of R.A. No. 8042 is not applicable because
there will be no basis by which to determine the number of years
within which the grant of salaries will be based.[7] Stated differently,
Section 10 of R.A. No. 8042, or The Migrant Workers and Overseas
Filipinos Act of 1995, is not applicable in this case because said
provision only contemplates a fixed period of employment while the
first contract provides for an unlimited period of employment. Section
10 of R.A. No. 8042 provides:
In this respect, the Court of Appeals applied Article 279 of the Labor
Code[8] using principles of statutory construction to supplement the
omission in R.A. No. 8042 regarding the unlimited period of
employment. It ratiocinated that the Labor Code and R.A. No. 8042 are
statutes in pari materia.
The issue, therefore, is whether the Court of Appeals properly used as
basis Article 279 of the Labor Code in its award for backwages to
Adelantar.
The Court of Appeals erred when it adjudged the first contract as the
basis for Pentagons liability instead of the second contract, which is
in conformity with the POEAs Standard Employment Contract. As
such, there would have been no need to resort to statutory
construction where the rules and jurisprudence are clear.
xxxxxxxxx
SO ORDERED.
The petitioners alleged that their work as chicken dressers was necessary
and desirable in the usual business of the respondent, and added that
although they worked from 10:00 p.m. to 6:00 a.m., they were not paid
night-shift differential. They stressed that based on the nature of their work,
they were regular employees of the respondent; hence, could not be
dismissed from their employment unless for just cause and after due
notice. They asserted that the respondent GMC terminated their contract of
employment without just cause and due notice. They further argued that
the respondent could not rely on the nomenclature of their employment as
“temporary or casual.”
ISSUE: Whether or not the petitioners were regular employees of the
respondent GMC when their employment was terminated.
HELD: The SC held the petitioners were employees with a fixed period,
and, as such, were not regular employees. Article 280 of the Labor Code
comprehends three kinds of employees: (a) regular employees or those
whose work is necessary or desirable to the usual business of the
employer; (b) project employees or those whose employment has been
fixed for a specific project or undertaking the completion or termination of
which has been determined at the time of the engagement of the employee
or where the work or services to be performed is seasonal in nature and
the employment is for the duration of the season; and, (c) casual
employees or those who are neither regular nor project employees.
gest
Facts:
Members of the Private respondent union were dissatisfied with the terms
of a CBA with petitioner. The parties in this case were ordered by the Sec.
of Labor to execute a collective bargaining agreement (CBA) wherein.The
CBA allowed for the increase in the wages of the employees concerned.
The petitioner argues that if such increase were allowed, it would pass off
such to the consumers.
Facts:
Members of the Private respondent union were dissatisfied with the terms
of a CBA with petitioner. The parties in this case were ordered by the Sec.
of Labor to execute a collective bargaining agreement (CBA) wherein.The
CBA allowed for the increase in the wages of the employees concerned.
The petitioner argues that if such increase were allowed, it would pass off
such to the consumers.
DECISION
Factual Antecedents
When Leo reported for work to formally file his paternity leave, Allan
purportedly informed Leo that his employment was terminated due to his
absences. Leo, however, further alleged that he was asked to report to
Jobcrest on December 14, 2011 for his assignment to Sunpower.16 In their
defense, both Jobcrest and Allan denied terminating Leo's employment
from Jobcrest.17
Leilanie, on the other hand, alleged that when she reported for work at
Jobcrest on November 29, 2011, she was informed by one of the Jobcrest
personnel that she will be transferred to another client company. She was
likewise provided a referral slip for a medical examination, pursuant to her
new assignment.20
There being no amicable settlement of the matter among the parties, they
proceeded to file their respective position papers.24
Ruling of the LA
SO ORDERED.26
The LA found the capital of Jobcrest substantial enough to comply with the
requirements for an independent contractor, and that Jobcrest exercised
control over the petitioners' work.27 The LA likewise rejected the petitioners'
claim that they were illegally dismissed, ruling that the petitioners failed to
establish the fact of dismissal itself.28
Jobcrest partially appealed the LA's Decision dated July 3, 2012. Among its
arguments is the assertion that the petitioners refused to be reinstated.
Hence, they were considered constructively resigned from their
employment with Jobcrest, especially because they obtained a job
somewhere else. As an alternative relief, Jobcrest prayed that it be directed
to pay the petitioners' separation pay instead of reinstating them to their
former positions.29
The petitioners, on the other hand, attributed serious error on the LA for
ruling against their complaint.30
The NLRC reversed the LA's findings in its Decision31 dated April 24, 2013
and ruled favorably for the petitioners, viz.:
SO ORDERED.32
According to the NLRC, the contract between Jobcrest and Sunpower was
for the sole supply of manpower. The tools and equipment for the
performance of the work were for the account of Sunpower, which
supposedly contradicted the claim that Jobcrest has the required capital for
a legitimate contractor.33 The NLRC also disagreed that Jobcrest exercised
control over the petitioners and likewise gave more credence to the
petitioners' sworn statements, which narrate that Sunpower employees
allegedly supervised their work.34 Lastly, on the basis of the "Notice of
Administrative Charge/Explanation Slip" furnished to the petitioners, the
NLRC reversed the LA's ruling and held that the petitioners were illegally
dismissed from employment.35
Sunpower moved for the reconsideration of the NLRC's Decision dated
April 24, 2013.36 Unconvinced, the NLRC denied this motion in its
Resolution37 dated May 28, 2013 as follows:
SO ORDERED.38
As a result of the NLRC's ruling, Sunpower filed a petition for certiorari with
the CA, with a prayer for the issuance of an injunctive writ.39 Sunpower
attributed grave abuse of discretion, amounting to lack or excess of
jurisdiction, on the NLRC for holding that the petitioners were regular
employees of Sunpower despite evidence to the contrary.40 Sunpower also
disagreed that Jobcrest is a labor-only contractor, and further submitted
that the NLRC misinterpreted its Service Contract Agreement with
Jobcrest.41
Ruling of the CA
SO ORDERED.43
The CA ruled that Sunpower was able to overcome the presumption that
Jobcrest was a labor-only contractor, especially considering that the DOLE
Certificate of Registration issued in favor of Jobcrest carries the
presumption of regularity. In contrast with the NLRC ruling, the CA found
that the Service Contract Agreement between Sunpower and Jobcrest
specifically stated the job or task contracted out by stating that it was for
the performance of various business process services.44 The CA also held
that Jobcrest has substantial capital and as such, it was no longer
necessary to prove that it has investment in the form of tools, equipment,
machinery, and work premises.45
Consequently, the CA rejected the claim that the petitioners were illegally
dismissed from employment, especially in light of Jobcrest's earlier offer to
accept the petitioners' return to work.47
Following their receipt of the CA's Decision dated October 8, 2013, the
petitioners filed their Motions for Reconsideration and to Investigate the
Reviewer Who Recommended the Palpably Erroneous Decision.48The CA
firmly denied these motions in its Resolution49 dated January 13, 2014 for
failure to raise any substantial argument that would warrant the
reconsideration of its decision:
SO ORDERED.50
The petitioners are now before this Court, seeking to reverse and set aside
the CA's issuances, and to reinstate the NLRC's decision.51 The petitioners
insist that Jobcrest is a labor-only contractor, and that the DOLE Certificate
of Registration is not conclusive of Jobcrest's legitimate status as a
contractor.52 They further argue that, aside from lacking substantial capital,
Jobcrest only supplied manpower to Sunpower.53 These services, the
petitioners allege, are directly related and necessary to Sunpower's
business.54
DOLE Department Order (DO) No. 18-02, the regulation in force at the time
of the petitioners' assignment to Sunpower, reiterated the language of the
Labor Code:
ii) the contractor does not exercise the right to control over the
performance of the work of the contractual employee.
Preliminarily, the Court finds that there is no such burden resting on either
Sunpower or Jobcrest in this case. It is true that Sunpower maintained its
position that Jobcrest is a legitimate and independent contractor.62 But
since the petitioners do not dispute that Jobcrest was a duly-registered
contractor under Section 11 of DOLE DO No. 18-02,63 there is no operative
presumption that Jobcrest is a labor-only contractor.64
Conversely, the fact of registration with DOLE does not necessarily create
a presumption that Jobcrest is a legitimate and independent
contractor. The Court emphasizes, however, that the DOLE Certificate
of Registration issued in favor of Jobcrest is presumed to have been
issued in the regular performance of official duty.65 In other words, the
DOLE officer who issued the certificate in favor of Jobcrest is presumed,
unless proven otherwise, to have evaluated the application for registration
in accordance with the applicable rules and regulations.66 The petitioners
must overcome the presumption of regularity accorded to the official act of
DOLE, which is no less than the agency primarily tasked with the regulation
of job contracting.67
For the reasons discussed below, the Court is constrained to give more
weight to the substantiated allegations of Sunpower, as opposed to the
unfounded self-serving accusations of the petitioners.
The law and the relevant regulatory rules require the contractor to have
substantial capital or investment, in order to be considered a legitimate and
independent contractor. Substantial capital or investment was defined in
DOLE DO No. 18-02 as "capital stocks and subscribed capitalization in the
case of corporations, tools, equipment, implements, machineries and work
premises, actually and directly used by the contractor or subcontractor in
the performance or completion of the job, work or service contracted out."
DOLE initially did not provide a specific amount as to what constitutes
substantial capital. It later on specified in its subsequent issuance, DOLE
DO No. 18-A, series of 2011, that substantial capital refers to paid-up
capital stocks/shares of at least Php 3,000,000.00 in the case of
corporations.68 Despite prescribing a threshold amount under DO No. 18-A,
certificates of registration issued under DO No. 18-02, such as that of
Jobcrest, remained valid until its expiration.69
The records show that as early as the proceedings before the LA, Jobcrest
established that it had an authorized capital stock of Php 8,000,000.00,
Php 2,000,000.00 of which was subscribed, and a paid-up capital stock of
Php 500,000.00, in full compliance with Section 13 of the Corporation
Code.70 For the year ended December 31, 2011, the paid-up capital of
Jobcrest increased to Php 8,000,000.00,71 notably more than the
required capital under DOLE DO No. 18-A.72
The balance sheet submitted by Jobcrest for the year ending on December
31, 2010 also reveals that its total assets for the year 2009 amounted to
Php 11,280,597.94, and Php 16,825,271.30 for the year 2010, which
were comprised of office furniture, fixtures and equipment, land,
building, and motor vehicles, among others.73 As of December 31,
2012, the total assets for the years 2011 and 2012 also increased to Php
35,631,498.58 and Php 42,603,167.16, respectively.74
DOLE DO No. 18-02 and DO No. 18-A, as well as Article 106 of the Labor
Code itself, all use the conjunctive term "or" in prescribing that the
contractor should have substantial capital or investment. Having
established that Jobcrest had substantial capital, it is unnecessary for this
Court to determine whether it had sufficient investment in the form of tools,
equipment, machinery and work premises.
In Neri v. NLRC,77 the Court rejected the same argument put forward by the
petitioners, arid ruled that proof of either substantial capital or investment is
sufficient for purposes of determining whether the first element of labor-only
contracting is absent:
The agreement between Jobcrest and Sunpower also complied with the
statutory requirement of ensuring the observance of the contractual
employees' rights under the law. Specifically, paragraph 7 of the Service
Contract Agreement obligates Jobcrest to observe all laws, rules and
regulations pertaining to the employment of its employees.79
The control over the employees' performance of the work is, as the Court
ruled in some cases, usually manifested through the power to hire, fire, and
pay the contractor's employees,83 the power to discipline the employees
and impose the corresponding penalty,84 and more importantly, the actual
supervision of the employees' performance.85 On this point, the petitioners
claim that Sunpower employees supervised their work while in the
premises of Sunpower's own plant. They also disclaim the affidavits of
Sunpower employees, which denied exercising any form of supervision
over the petitioners,86 by alleging that these are self-serving assertions.
The petitioners also refute the veracity of the sworn statements of
Jobcrest's employees.87
Upon review of the records, the Court finds that the evidence clearly points
to Jobcrest as the entity that exercised control over the petitioners' work
with Sunpower. Upon the petitioners' assignment to Sunpower, Jobcrest
conducted a training and certification program, during which time, the
petitioners reported directly to the designated Jobcrest trainer.88 The
affidavit of Jobcrest's Operations Manager, Kathy T. Morales (Kathy),
states that operational control over Jobcrest employees was exercised to
make sure that they conform to the quantity and time specifications of the
service agreements with Jobcrest's clients. She narrated that manager and
shift supervisors were assigned to the premises of Sunpower, with the task
to oversee the accomplishment of the target volume of work. She also
mentioned that there is administrative control over Jobcrest employees
because they monitor the employees' attendance and punctuality, and the
employees' observance of other rules and regulations.89
The affidavit of Kathy was markedly corroborated by the sworn statement
of Jobcrest's On-site Supervisor, Allan, in which he affirmed that he directly
supervised the petitioners while they were stationed in Sunpower. He also
confirmed that during this period, he issued several memoranda to the
petitioners for violating rules and regulations, and provided their hourly
output performance assessment, which "determine[s] their fitness to
continue their employment with Jobcrest."90
The same conclusion holds for Leilanie. In her statement, Leilanie narrated
that she reported for work to the Jobcrest office on November 29, 2011
after giving birth to her second child. She also alleged in her affidavit that
similar to Leo, it was Noel who informed her of the disciplinary action
against her, through the service of a copy of the "Notice of Admin
Charge/Explanation Slip."92
The fact that the petitioners were working within the premises of Sunpower,
by itself, does not negate Jobcrest's control over the means, method, and
result of the petitioners' work.95 Job contracting is permissible "whether
such job, work, or service is to be performed or completed within or outside
the premises of the principal"96 for as long as the elements of a labor-only
contractor are not present. Since Jobcrest was a provider of business
process services, its employees would necessarily work within the
premises of its client companies in order for Jobcrest to perform its
contractual undertaking. Mere physical presence in Sunpower's plant does
not necessarily mean that Sunpower controlled the means and method of
the petitioners' work. The petitioners, despite working in Sunpower's plant
for most of the time, admit that whenever they file their leave application, or
whenever required by their supervisors in Jobcrest, they report to the
Jobcrest office. Designated on-site supervisors from Jobcrest were the
ones who oversaw the performance of the employees' work within the
premises of Sunpower.
Besides, while the Court repeatedly recognizes that there are employers
who abuse the system of subcontracting, we also acknowledge that
contracts for services does not necessarily provide "untrammeled
freedom" to the contractor in undertaking the engagement.97 What is
important, as incontrovertibly established in this case, is that the principal's
right to control is limited to the results of the work of the contractor's
employees.
The four-fold test is the established standard for determining the existence
of an employer-employee relationship:98 (a) the selection and engagement
of the employee; (b) the payment of wages; (c) the power of dismissal; and
(d) the power of control over the employee's conduct. Of the four elements,
the power of control is the most important.99 Having found that Jobcrest
exercised control over the petitioners' work, the Court is constrained to
determine whether the petitioners were regular employees of Jobcrest by
virtue of the three other elements of the four-fold test.
The Court further notes that on December 27, 2010 and January 25, 2011,
Leilanie and Leo were respectively confirmed as regular employees of
Jobcrest.104 Jobcrest did not even deny that the petitioners were their
regular employees. Consequently, the petitioners cannot be terminated
from employment without just or authorized cause.105
41. Noong December 14, 2011, ako [Leo Mago] ay tinawagan sa aking
cellular phone ng nagpakilalang Julie at taga HR ng JOBCREST
at ang sabi sa akin ay magreport umano ako sa opisina upang
ipadala sa SUNPOWER;
xxxx
SO ORDERED.
Held: no
In this case, the terms and conditions embodied in the security service
agreement between MERALCO and ASDAI expressly recognized ASDAI
as the employer of individual respondents.
Under the security service agreement, it was ASDAI which (a) selected,
engaged or hired and discharged the security guards; (b) assigned them to
MERALCO according to the number agreed upon; (c) provided the uniform,
firearms and ammunition, nightsticks, flashlights, raincoats and other
paraphernalia of the security guards; (d) paid them salaries or wages; and,
(e) disciplined and supervised them or principally controlled their
conduct. The agreement even explicitly provided that “[n]othing herein
contained shall be understood to make the security guards under this
Agreement, employees of the COMPANY, it being clearly understood that
such security guards shall be considered as they are, employees of the
AGENCY alone.” Clearly, the individual respondents are the employees of
ASDAI.
The clause that MERALCO has the right at all times to inspect the
guards of the agency detailed in its premises is likewise not indicative
of control as it is not a unilateral right. The agreement provides that the
agency is principally mandated to conduct inspections, without prejudice to
MERALCO’s right to conduct its own inspections.
Needless to stress, for the power of control to be present, the person for
whom the services are rendered must reserve the right to direct not only
the end to be achieved but also the means for reaching such end.[26] Not
all rules imposed by the hiring party on the hired party indicate that the
latter is an employee of the former.[27] Rules which serve as general
guidelines towards the achievement of the mutually desired result are not
indicative of the power of control.
Held: no
In this case, the terms and conditions embodied in the security service
agreement between MERALCO and ASDAI expressly recognized ASDAI
as the employer of individual respondents.
Under the security service agreement, it was ASDAI which (a) selected,
engaged or hired and discharged the security guards; (b) assigned them to
MERALCO according to the number agreed upon; (c) provided the uniform,
firearms and ammunition, nightsticks, flashlights, raincoats and other
paraphernalia of the security guards; (d) paid them salaries or wages; and,
(e) disciplined and supervised them or principally controlled their
conduct. The agreement even explicitly provided that “[n]othing herein
contained shall be understood to make the security guards under this
Agreement, employees of the COMPANY, it being clearly understood that
such security guards shall be considered as they are, employees of the
AGENCY alone.” Clearly, the individual respondents are the employees of
ASDAI.
The clause that MERALCO has the right at all times to inspect the
guards of the agency detailed in its premises is likewise not indicative
of control as it is not a unilateral right. The agreement provides that the
agency is principally mandated to conduct inspections, without prejudice to
MERALCO’s right to conduct its own inspections.
Needless to stress, for the power of control to be present, the person for
whom the services are rendered must reserve the right to direct not only
the end to be achieved but also the means for reaching such end.[26] Not
all rules imposed by the hiring party on the hired party indicate that the
latter is an employee of the former.[27] Rules which serve as general
guidelines towards the achievement of the mutually desired result are not
indicative of the power of control.
FACTS
The respondents alleged that as regular employees, they worked from 8:00
a.m. to 5:00 p.m. at petitioner’s premises using petitioner’s tools and
equipment and they received P250 per day. Eutiquio was employed as
carpenter-foreman from 1991-1999; Jay as carpenter from 1993-1999;
Felicisimo as carpenter from 1994-1999; and Leonardo, Sr. also as
carpenter from 1997-1999. According to respondents, they were dismissed
without just cause and due process; hence, their prayer for reinstatement
and full backwages. They also impleaded one Hermie Alejo, a relative of
the petitioner’s owner, as co-respondent in their complaint.
ISSUE
HELD
It also agreed that Eutiquio was not an independent contractor for he does
not carry a distinct and independent business, and he does not possess
substantial capital or investment in tools, equipment, machinery or work
premises.He works within petitioner’s premises using the latter’s tools and
materials, as admitted by petitioner. Eutiquio is also under petitioner’s
control and supervision. Attesting to this is petitioner’s admission that it
allowed respondents to use its facilities for the "proper implementation" of
job orders. Moreover, the Implementing Guidelines regulating attendance,
overtime, deadlines, penalties; providing petitioner’s right to fire employees
or "contractors"; requiring the carpentry division to join petitioner’s exercise
program; and providing rules on machine maintenance, all reflect control
and supervision over respondents.
Petition is denied.
Philippine Airlines v. NLRC and Stellar Industries (G.R. No. 125792)
Facts:
Petitioner PAL, a local air carrier, entered into a Service Agreement with
respondent Stellar, a domestic corporation engaged in the business of job
contracting janitorial services. Pursuant to the agreement, Stellar hired
workers to perform janitorial and maintenance services for PAL. Sometime
later, PAL informed Stellar that the service agreement between them would
no longer be renewed since the janitorial requirements were bidded to
other job contractors. Herein private respondents-workers filed complaints
against PAL and Stellar alleging they were illegally dismissed. The NLRC
tribunal affirming the Labor Arbiter held both PAL and Stellar liable to the
workers. On reconsideration, the NLRC tribunal held PAL solely liable
stating it was the employer of the workers for it engaged in labor-only
contracting with Stellar.
Issues:
Ruling: NO.
Applying the foregoing provision to the present case, the Court finds no
basis for holding that PAL engaged in labor-only contracting. In fact,
STELLAR claims that it falls under the definition of an independent job
contractor. Thus, it alleges that it has sufficient capital in the form of tools
and equipment and substantial capitalization as proven by its financial
statements. Further, STELLAR has clients other than petitioner.
(2) STELLAR, not PAL, was the employer of the individual private
respondents. A contract of employment existed between STELLAR and the
individual private respondents, proving that it was said corporation which
hired them. It was also STELLAR which dismissed them, as evidenced by
termination letter, which was signed by the vice president for operations
and comptroller of STELLAR. Likewise, they worked under STELLAR’s
own supervisors. STELLAR even had its own collective bargaining
agreement with its employees, including the individual private respondents.
Moreover, PAL had no power of control and dismissal over them.
DECISION
SANDOVAL-GUTIERREZ, J.:
The instant controversy stemmed from a complaint for illegal dismissal and
non-payment of benefits filed with the Labor Arbiter by Ricardo Bernardo,
Antonino Ceñidoza and Edgar Del Prado, Respondents, against
Grandspan Development Corporation, Petitioner, and/or its warehouse
manager, Manuel G. Lee, docketed as NLRC Case No. RAB-IV-11-4605-
92-RI.
Both parties filed their respective motions for reconsideration but were
denied by the NLRC in separate Resolutions dated April 28, 1995 and May
31, 1995.
Respondents then filed with this Court a petition for certiorari . Pursuant to
our ruling in St. Martin's Funeral Home v. NLRC,3 we referred the petition to
the Court of Appeals for its appropriate action and disposition.
Meantime, respondent Del Prado died and was substituted by his surviving
parent, Edgardo Del Prado.
"In the instant case, petitioners were assigned to the Truck Scaling
Materials Department of Grandspan. They worked in Grandspan's
premises using the materials, supplies and equipment of Grandspan. They
were under the supervision of Grandspan as to the manner and results of
their work, and performed services directly connected to the usual business
of respondent Grandspan for the fabrication of heavy structural
components. The memorandum dated 28 October 1992 (p. 75 Rollo)
dismissing the petitioners in fact emanated from Grandspan Materials
Manager Manuel G. Lee and is addressed to the Personnel Department of
Grandspan, albeit containing the self-serving claim that the employees-
petitioners were 'J. Narag Construction personnel'. Under the
circumstances, We rule that J. Narag was a labor-only contractor. While
petitioners were in J. Narag Construction's payroll, such fact does not per
se establish J. Narag Construction as an independent contractor, i.e., the
employer of the petitioners. x x x.
xxxxxx
The Office of the Solicitor General opines that petitioners were non-project
employees as they were assigned at Grandspan's Materials Department.
We agree. Moreover, if petitioners were truly project employees, private
respondents should have presented proof that they submitted to the
nearest public employment office a report of termination of service of their
project employees upon completion of the construction project, as required
by Policy Instruction No. 20. x x x.
In the case of petitioner Edgar del Prado, now deceased and represented
in this petition by his surviving parent Edgardo del Prado, reinstatement is
no longer possible, thus he should be paid separation pay equivalent to
one month salary for every year of service in addition to backwages
(International Phamaceuticals, Inc. v. NLRC, 287 SCRA 228).
SO ORDERED."
On October 8, 1999, petitioner filed a motion for reconsideration.
Respondents also filed a motion for reconsideration and/or clarification
praying that the Appellate Court's Decision be modified by awarding
respondent Del Prado his backwages.
The issue for our resolution is whether the Court of Appeals erred in
holding that respondents are employees of petitioner.
xxxxxx
Section 2.2 (e) of the Labor Department Order No. 19 expressly provides
that the report of termination is one of the indications of project
employment.6
Time and again, we held that failure of the employer to file termination
reports after every project completion with the nearest public employment
office is an indication that respondents were
We, therefore, uphold the finding of the Court of Appeals that respondents
are petitioner's regular employees. As such, they are entitled to security of
tenure and can only be dismissed for a just or authorized cause, as
provided by Article 279 of the Labor Code, as amended, thus:
Records show that respondents were not served by petitioner with notices,
verbal or written, informing them of the particular acts for which their
dismissal is sought. Neither were they required to give their side regarding
the alleged serious misconduct imputed against them.
Since respondents were illegally dismissed from work, they are entitled to
reinstatement without loss of seniority rights, full backwages, inclusive of
allowances, and other benefits or their monetary equivalent computed
from the time their compensation was withheld from them up to the
time of their actual reinstatement.10
However, the circumstances obtaining in this case do not warrant the
reinstatement of respondents. Antagonism caused a severe strain in the
parties' employer-employee relationship. Thus, a more equitable
disposition would be an award of separation pay equivalent to at least one
month pay, or one month pay for every year of service, whichever is higher,
(with a fraction of at least six (6) months being considered as one (1) whole
year),11 in addition to their full backwages, allowances and other benefits.12
SO ORDERED.
FACTS:
Petitioner entered into a construction contract with Prince David
Development Corporation for the construction of a 17-storey office and
residential condominium building. Petitioner engaged the services of
NiloLayno Builders to do the specialized concrete works, forms works and
steel rebars works. Pursuant to the contract, NiloLayno Builders hired
private respondents to perform work at the project.
After the completion of the phase for which NiloLayno Builders was
contracted, private respondents filed a complaint against petitioner and its
president (NGC Builder and Manuel Sy) for unfair labor practice, non-
payment of 13th month pay, service incentive leave, illegal dismissal and
severance pay, in lieu of reinstatement.
The Labor Arbiter ruled in favor of respondents, but dismissed the charges
for illegal dismissal including their prayers for back wages and unfair labor
practice and other monetary claims except their 13th month pay and
service incentive leave pay. It was also found that NiloLayno Builders was
a labor-only-contractor, thus private respondents were deemed employees
of the petitioner. Both parties appealed to the National Labor Relations
Commission, which affirmed the Labor Arbiter's decision with modification
that private respondents were illegally dismissed.
Under Section 8, Rule VIII, Book III, of the Omnibus Rules Implementing
the Labor Code, an independent contractor is one who undertakes "job
contracting," i.e., a person who: (a) carries on an independent business
and undertakes the contract work on his own account under his own
responsibility according to his own manner and method, free from the
control and direction of his employer or principal in all matters connected
with the performance of the work except as to the results thereof; and (b)
has substantial capital or investment in the form of tools, equipment,
machineries, work premises, and other materials which are necessary in
the conduct of the business. Jurisprudential holdingsare to the effect that in
determining the existence of an independent contractor relationship,
several factors may be considered, such as, but not necessarily confined
to, whether or not the contractor is carrying on an independent business;
the nature and extent of the work; the skill required; the term and duration
of the relationship; the right to assign the performance of specified pieces
of work; the control and supervision of the work to another; the employer's
power with respect to the hiring, firing and payment of the contractor's
workers; the control of the premises; the duty to supply premises, tools,
appliances, materials and labor; and the mode, manner and terms of
payment.
Thus, it was plain conjecture on the part of the Labor Arbiter, the NLRC and
the Court of Appeals to conclude that Nilo Layno Builders was a labor-only
contractor merely because it does not have investment in the form of tools
or machineries. They failed to appreciate the fact that Nilo Layno Builders
had substantial capitalization for it did not only provide labor to do the
specified project and pay their wages, but it furnished the materials to be
used in the construction.
In Neri v. NLRC, we held that the labor contractor which sufficiently proved
that it had substantial capital was not engaged in labor-only
contracting. Thus:
While there may be no evidence that it has investment in the form of tools,
equipment, machineries, work premises, among others, it is enough that it
has substantial capital, as was established before the Labor Arbiter as well
as the NLRC. In other words, the law does not require both substantial
capital and investment in the form of tools, equipment, machineries, etc.
This is clear from the use of the conjunction “or”. If the intention was to
require the contractor to prove that he has both capital and the requisite
investment, then the conjunction “and” should have been used.
The petitioners alleged that their work as chicken dressers was necessary
and desirable in the usual business of the respondent, and added that
although they worked from 10:00 p.m. to 6:00 a.m., they were not paid
night-shift differential. They stressed that based on the nature of their work,
they were regular employees of the respondent; hence, could not be
dismissed from their employment unless for just cause and after due
notice. They asserted that the respondent GMC terminated their contract of
employment without just cause and due notice. They further argued that
the respondent could not rely on the nomenclature of their employment as
“temporary or casual.”