10. Leus vs St.

Scholastica’s College
GR No. 187226, January 28th 2015
Reyes, J.

Facts:
Petitioner Cheryll Santos Leus was an non-teaching employee of the Respondent, a
Catholic and sectarian institution of St. Scholastica’s College (SSCW) in Silang,
Cavite. Sometime in 2003, Leus and her boyfriend conceived a child out of wedlock,
and subsequently married the father of her child. Petitioner was directed by the
Respondent to explain why she should not be dismissed for engaging in pre-marital
sexual relations and getting pregnant which amounts to serious misconduct
unbecoming of an employee of a Catholic school. On 11 June 2003, Leus was
dismissed from her employment, prompting her to file a complaint for illegal
dismissal with the Labor Arbiter. SSCW argues that there was just cause to
terminate her employment and that the same is a valid excercise of SSCW’s
management prerogative. They maintained that engaging in pre-marital sex, and
getting pregnant as a result thereof, amounts to a disgraceful or immoral conduct,
which is a ground for the dismissal of an employee under the 1992 Manual of
Regulations for Private Schools.

The Labor Arbiter denied the complaint, ruling that as an employee of a Catholic
school, Leus’ pregnacy out of wedlock is considered as a disgraceful and immoral
conduct, and that she was expected to live up to the Catholic values taught by SSCW
to its students. The NLRC and the CA both affirmed the decision of the Labor Arbiter.

Issue: Whether or not pregnancy out of wedlock is a valid ground for dismissal of a
Catholic school employee.

Ruling:
No. The Supreme Court ruled that to constitute immorality, the circumstances of
each particular case must be holistically considered and evaluated in light of the
prevailing norms and conduct of society and of applicable laws. The Court does not
find any circumstance in this case which would lead the Court to conclude that the
petitioner committed a disgraceful or immoral conduct. It bears stressing that the
petitioner and her boyfriend, at the time they conceived a child, had no legal
impediment to marry. Indeed, even prior to her dismissal, the petitioner married
her boyfriend, the father of her child.

Admittedly, the petitioner is employed in an educational institution where the

teachings and doctrines of the Catholic Church, including that on pre-marital sexual
relations, is strictly upheld and taught to the students. That her indiscretion, which
resulted in her pregnancy out of wedlock, is anathema to the doctrines of the
Catholic Church. However, viewed against the prevailing norms of conduct, the
petitioner’s conduct cannot be considered as disgraceful or immoral; such conduct
is not denounced by public and secular morality. It may be an unusual arrangement,
but it certainly is not disgraceful or immoral within the contemplation of the law.To
stress, pre-marital sexual relations between two consenting adults who have no
impediment to marry each other, and, consequently, conceiving a child out of
wedlock, gauged from a purely public and secular view of morality, does not amount
to a disgraceful or immoral conduct under Section 94(e) of the 1992 MRPS.

12. PETRON CO. v. CABERTE

G.R. No. 182255
June 15, 2015
DEL CASTILLO, J.:

FACTS: Respondents were hired to work at Petron's Bacolod Bulk Plant as

LPG/Gasul fillers, maintenance crew, warehousemen, utility workers and tanker
receiving crew. For the periods from March 1, 1996 to February 28, 1999 and
November 1, 1996 to June 30, 1999, Petron and ABC, a labor contracting business
owned and operated by Caberte Sr., entered into a Contract for Services, Every time
Petron engages a new contractor, it would designate such new contractor as their
employer. Despite such arrangement, Petron exercised control and supervision over
their work, the performance of which is necessary and desirable in its usual trade
and business. Respondents contends that ABC is a mere labor-only contractor which
had no substantial capital and investment, and had no control over the manner and
method on how they accomplished their work. Thus, Petron is their true employer.
On July 1, 1999, however, Petron no longer allowed them to enter and work in the
premises of its Bacolod Bulk Plant. Hence, the complaints for illegal dismissal.

(LA Acosta) held that ABC is an independent contractor that has substantial capital
and that respondents were its employees.

NLRC affirmed the ruling of the Labor Arbiter after it found that ABC is not a mere
labor contractor but a legitimate independent contractor.

CA: since Petron did not comply with the requirements under the Labor Code when
it terminated their employment, respondents were illegally dismissed and therefore
entitled to their claims. It ruled that ABC is engaged in labor-only contracting
because: first, it did not have substantial capital or investment in the form of tools,
equipment, implements, machineries and work premises, actually and directly used
in the performance or completion of the job it contracted out from Petron; second,
the work assigned to respondents were directly related to Petron's business; and,
third, the nature of Petron's business requires it to exercise control over the
performance of respondents' work.

ISSUES:
1. Is ABC Contracting a mere labor-only contractor
2. Were the respondents illegally dismissed?

RULING:
1. YES. Labor-only contracting, a prohibited act, is an arrangement where the
contractor, who does not have substantial capital or investment in the form of tools,
equipment, machineries, work premises, among others, supplies workers to an
employer and the workers recruited are performing activities which are directly
related to the principal business of such employer. To determine whether a
contractor is engaged in labor-only contracting or permissible job contracting, "the
totality of the facts and the surrounding circumstances of the case are to be
considered." The law presumes a contractor to be a labor-only contractor and the
employees are not expected to prove the negative fact that the contractor is a labor-
only contractor.42 Thus, it is not respondents but Petron which bears the burden of
establishing that ABC is not a labor-only contractor but a legitimate independent
contractor.

Petron cannot place reliance on the contracts it entered into with ABC since these
are not determinative of the true nature of the parties' relationship. As held in Babas
v. Lorenzo Shipping Corporation,44 the character of the business, whether as labor-
only contractor or as a job contractor, should be determined by the criteria set by
statute and the parties cannot dictate by the mere expedience of a unilateral
declaration in a contract the character of their business.

To show that ABC has substantial capital or investment, Petron submitted, among
others, ABC's BIR Certificate of Registration, VAT Return, BIR Confirmation Receipt,
TIN, Individual Income Tax Return, Mayor's Permit and DTI Certificate of
Registration. However, the Court observes that these documents are not conclusive
evidence of ABC's financial capability. At most, they merely show that ABC is
engaged in business and licensed by the appropriate government agencies.

As for the financial statements presented, it appears that only the audited financial
statements of ABC for the years 1992, 1993 and 1994 were submitted. As aptly
observed by the CA, these documents cannot be given much credence considering
that the service contracts between Petron and ABC commenced in 1996 and ended
in 1999.

If at all, the bond was a convenient smoke screen to disguise the real nature of ABC's
employment as an agent of Petron.

Anent substantial investment in the form of equipment, tools, implements,

machineries and work premises, Petron likewise failed to show that ABC possessed
the same

"A finding that a contractor is a 'labor-only' contractor is equivalent to declaring

that there is an employer-employee relationship between the principal and the
employees of the supposed contractor, and the 'labor-only' contractor is considered
as a mere agent of the principal, the real employer."52 Accordingly in this case,
Petron is declared to be the true employer of respondents who are considered
regular employees in view of the fact that they have been regularly performing
activities which are necessary and desirable to the usual business of Petron for a
number of years.

2. YES, As the reason given by Petron dismissing respondents does not constitute a
just or authorized cause for termination, the latter are declared to have been
illegally dismissed.
14. CUSAP v. ADIDAS PHILIPPINES, INC, ET AL
G.R. No. 201494
July 29, 2015
BRION, J.:

FACTS: The complainants alleged that they were regular employees of Adidas after
having worked as promo girls and stockmen at the company's various rented outlets
for years, ranging from one year to seven years. After its contract with its former
distributor, World Sports, Inc. (WOSI) allegedly expired, it contracted9 JCA to be its
exclusive distributor nationwide for one year. JCA entered into a Promotional
Contract10 with PRIME to meet the promotional requirements in the distribution of
Adidas products. PRIME supposedly assigned the complainants to JCA for the
purpose. The complainants claimed that they were dismissed from employment on
December 9, 2002, when the service contract between PRIME and JCA was
terminated. They argued that Adidas was their real employer, not PRIME which,
they believed, was merely a recruitment agency supplying Adidas with manpower.
PRIME was being used, they further claimed, to conceal the actual employment
relationship between them and Adidas. Elaborating on their "muddled"
employment status in relation with Adidas, the complainants bewailed that JCA was
erroneously identified as "distributor" of Adidas products as no evidence showed
that JCA purchased the Adidas products they were selling. These circumstances,
complainants stressed, confirmed their position that JCA and PRIME were only
intermediaries of Adidas and were used to conceal Adidas' identity as their real
employer.

Adidas claimed it was PRIME who exercised control over their work; at most, the
supervision it exercised over the complainants was only to provide them guidelines
in aid of their marketing work. JCA prayed for the dismissal of the complaint as far
as it was concerned in view of what it claimed - its valid job contract with PRIME,
the complainants' employer. PRIME denied liability, contending that it hired the
complainants as contractual employees for its project with JCA to promote Adidas
products.

COMPULSORY ARBITRATION: Dismissed the complaint for lack of merit, holding

that PRIME was the complainants' employer as it was PRIME who hired them to
work under its Promotions Contract with JCA. LA Salinas found the complainants'
dismissal valid in view of the termination and nonrenewal of the contract.
CA: "We reached this conclusion based on records which showed PRIME has fulfilled
its obligations towards its employees as regards remittances to Philhealth, the SSS
and Pag-ibig."

It held that the rulings were supported by evidence establishing PRIME to be a

"legitimate job contractor" as it possessed substantial capital to finance its
promotions undertaking with JCA. CA found PRIME to be the complainants' and the
petitioner's employer as it was PRIME which (1) hired the complainants; (2) paid
their wages;29 (3) dismissed them upon the expiration of the contract for which they
were hired; and (4) exercised control over them with respect to the conduct of the
work to be performed.

ISSUES:
1. Is PRIME a labor only contractor?
2. Is there an employer-employee relationship between the petitioner and
Adidas?

RULING:
1. YES. we have reason to believe that PRIME, the supposed JCA subcontractor,
just assumed the act of paying the complainants' wages and benefits on
behalf of Adidas, indicating thereby that it was a mere agent of Adidas or a
labor-only contractor

"There is 'labor-only' contracting where the person supplying workers to an

employer does not have substantial capital or investment in the form of tools,
equipment, machineries, work premises, among others, and the workers
recruited and placed by such person are performing activities which are
directly related to the principal business of the employer. In such cases, the
person or intermediary shall be considered merely an agent of the employer
who shall be responsible to the workers in the same manner and extent as if
the latter were directly employed by him.

JCA relied principally on its promotional contract with PRIME to avoid

liability, saying that the terms of their service agreement demonstrate the
earmarks of an employer under the four-fold employer-employee
relationship test

The same thing is true with PRIME. It likewise offered no proof of how or in
what manner its purported substantial capital financed its "promotional and
inter-marketing business"41 with JCA, except to say that in the pursuit of its
business operations, "it has complied with all the requirements of law anent
the rights, privileges and benefits of its employees."

In the light of the complete absence of proof that PRIME applied its
"substantial capital or investment" in performing the promotional job it
contracted with JCA, we find credence in the petitioner's submission that the
 products she was selling remained to be the property and under the control
of Adidas; that it was Adidas who owned the warehouse where they were
stored; that leased the sales outlets from department stores; and that
provided regular training to her and to the other complainants. The record
shows that this particular claim by the petitioner had not been disputed by
either Adidas or JCA.

If in fact Adidas entered a distribution agreement with JCA, we wonder why

the products the petitioner and the other supposed "contractual employees"
were selling were retained and remained to be under the control of Adidas,
and also, why the proceeds of the sales went into Adidas' bank account. The
answer is because JCA itself is not an independent contractor.

2. YES. Petitioner and the complainants (who withdrew from the case) were
performing activities that were necessary to market the products that Adidas
itself manufactured. Petitioner had become an Adidas regular employee a
long time before she was supposedly made a "contractual employee" of
PRIME.

We hold that PRIME failed to satisfy the four-fold employer-employee

relationship test,5 making it a labor-only contractor under the law and the
rules. Like JCA, it was merely an agent of Adidas, notwithstanding the
quitclaims of some of the complainants in its favor. Adidas, therefore, is
petitioner's real employer who shall be responsible to her in the same
manner and extent as if she were directly employed by the company.51 In this
light, we find the petitioner to have been illegally dismissed, there being
obviously no valid cause to and absent due process in her dismissal.

16. GADIA, ET AL v. SYKES ASIA, INC./ CHUCK SYKES/ MIKE HINDS/ MICHAEL
HENDERSON
G.R. No. 209499
January 28, 2015
PERLAS-BERNABE, J.:

FACTS: Alltel, a United States-based telecommunications firm, contracted Sykes

Asia’s services to accommodate the needs and demands of Alltel clients for its
postpaid and prepaid services (Alltel Project). Thus, on different dates, Sykes Asia
hired petitioners as customer service representatives, team leaders, and trainers for
the Alltel Project. Alltel sent two (2) letters to Sykes Asia informing the latter that it
was terminating all support services provided by Sykes Asia related to the Alltel
Project. Sykes Asia sent each of the petitioners end-of-life notices, informing them of
their dismissal from employment due to the termination of the Alltel Project.
Petitioners filed separate complaints17 for illegal dismissal. Respondents averred
that petitioners were not regular employees but merely project-based employees.
LA: Petitioners are merely project-based employees, as their respective employment
contracts indubitably provided for the duration and term of their employment, as
well as the specific project to which they were assigned, i.e., the Alltel Project.

NLRC: Petitioners are regular employees but were validly terminated due to
redundancy. NLRC found that petitioners could not be properly characterized as
project-based employees, ratiocinating that while it was made known to petitioners
that their employment would be co-terminus to the Alltel Project, it was neither
determined nor made known to petitioners, at the time of hiring, when the said
project would end, be terminated, or be completed. in view of the cessation of the
Alltel Project, the NLRC found petitioners’ employment with Sykes Asia to be
redundant. Hence, legally dismissed.

CA: Reinstated LA’s ruling

ISSUE: Are the petitioners regular employees of Sykes?

RULING: NO.

Court extensively discussed how to determine whether an employee may be

properly deemed project-based or regular, to wit:
A project employee is assigned to a project which begins and ends at
determined or determinable times. Unlike regular employees who may only be
dismissed for just and/or authorized causes under the Labor Code, the services of
employees who are hired as “project[-based] employees” may be lawfully
terminated at the completion of the project.

According to jurisprudence, the principal test for determining whether

particular employees are properly characterised as “project[-based]
employees” as distinguished from “regular employees,” is whether or not the
employees were assigned to carry out a “specific project or undertaking,” the
duration (and scope) of which were specified at the time they were engaged
for that project. The project could either be (1) a particular job or undertaking that
is within the regular or usual business of the employer company, but which is
distinct and separate, and identifiable as such, from the other undertakings of the
company; or (2) a particular job or undertaking that is not within the regular
business of the corporation. In order to safeguard the rights of workers against the
arbitrary use of the word “project” to prevent employees from attaining a regular
status, employers claiming that their workers are project[-based] employees should
not only prove that the duration and scope of the employment was specified at the
time they were engaged, but also, that there was indeed a project. (Emphases and
underscoring supplied)

Verily, for an employee to be considered project-based, the employer must show

compliance with two (2) requisites, namely that: (a) the employee was assigned to
carry out a specific project or undertaking; and (b) the duration and scope of which
were specified at the time they were engaged for such project.

In this case, records reveal that Sykes Asia adequately informed petitioners of their
employment status at the time of their engagement, as evidenced by the latter’s
employment contracts which similarly provide that they were hired in connection
with the Alltel Project, and that their positions were “project-based and as such is
co-terminus to the project.”

CA correctly stressed that “[t]he law and jurisprudence dictate that ‘the duration of
the undertaking begins and ends at determined or determinable times’” while
clarifying that “[t]he phrase ‘determinable times’ simply means capable of being
determined or fixed.”

This caveat sufficiently apprised petitioners that their security of tenure with Sykes
Asia would only last as long as the Alltel Project was subsisting. In other words,
when the Alltel Project was terminated, petitioners no longer had any project to
work on, and hence, Sykes Asia may validly terminate them from employment.

Moreover, Sykes Asia duly submitted an Establishment Employment Report52 and

an Establishment Termination Report53 to the Department of Labor and
Employment Makati-Pasay Field Office regarding the cessation of the Alltel Project
and the list of employees that would be affected by such cessation.