ALMEDA ET AL VS ASAHI GLASS

FACTS: This a complaint for illegal dismissal with claims for moral and
exemplary damages and attorneys fees filed by Almeda, et al against Asahi Glass
and San Sebastian Allied Services, Inc. SSASI.
Petitioners alleged that Asahi and SSASI entered into a service contract
whereby SSASI undertook to provide Asahi with the necessary manpower for its
operations. Pursuant to such a contract, SSASI employed petitioners Randy
Almeda, Edwin Audencial, Nolie Ramirez and Ernesto Calicagan as glass cutters,
and petitioner Reynaldo Calicagan as Quality Controller, all assigned to work for
respondent. Asahi terminated its service contract with SSASI, which in turn,
terminated the employment of petitioners on the same date. Believing that SSASI
was a labor-only contractor, and having continuously worked as glass cutters and
quality controllers for the respondent - functions which are directly related to its
main line of business as glass manufacturer - for three to 11 years, petitioners
asserted that they should be considered regular employees of the Asahi; and that
their dismissal from employment without the benefit of due process of law was
unlawful.
Asahi claimed that petitioners were employees of SSASI and were merely
assigned by SSASI to work for respondent to perform intermittent services pursuant
to an Accreditation Agreement. SSASI averred that it was the one who hired
petitioners and assigned them to work for respondent on occasions that the latters
work force could not meet the demands of its customers. Eventually, however,
respondent ceased to give job orders to SSASI, constraining the latter to terminate
petitioners employment.
ISSUE: Whether or not Almeda et al are employees of Asahi Glass even they were
originally hired by San Sebastian Allied Services.
HELD Yes. Almeda, et al are employees of Asahi Glass.
Permissible job contracting or subcontracting refers to an arrangement whereby
a principal agrees to put out or farm out to a contractor or subcontractor the
performance or completion of a specific job, work or service within a definite or
predetermined period, regardless of whether such job, work or service is to be
performed or completed within or outside the premises of the principal. A person is
considered engaged in legitimate job contracting or subcontracting if the following
conditions concur:
(a) The contractor or subcontractor carries on a distinct and independent
business and undertakes to perform the job, work or service on its own
account and under its own responsibility according to its own manner and
method, and free from the control and direction of the principal in all
matters connected with the performance of the work except as to the
results thereof;

(b) The contractor or subcontractor has substantial capital or investment;

and
(c) The agreement between the principal and contractor or subcontractor
assures the contractual employees entitlement to all labor and occupational
safety and health standards, free exercise of the right to self-organization,
security of tenure, and social and welfare benefits.
On the other hand, labor-only contracting, a prohibited act, is an arrangement in
which the contractor or subcontractor merely recruits, supplies or places workers to
perform a job, work or service for a principal. In labor-only contracting, the
following elements are present:
(a) The contractor or subcontractor does not have substantial capital or
investment to actually perform the job, work or service under its own
account and responsibility;
(b) The employees recruited, supplied or placed by such contractor or
subcontractor is performing activities which are directly related to the
main business of the principal.
In labor-only contracting, the statutes create an employer-employee relationship
for a comprehensive purpose: to prevent circumvention of labor laws. The
contractor is considered as merely the agent of the principal employer and the
latter is responsible to the employees of the labor-only contractor as if such
employees are directly employed by the principal employer. Therefore, if SSASI
was a labor-only contractor, then respondent shall be considered as the employer of
petitioners who must bear the liability for the dismissal of the latter, if any.
An important element of legitimate job contracting is that the contractor has
substantial capital or investment, which respondent failed to prove.
Furthermore, the Court is unconvinced by respondents argument that petitioners
were performing jobs that were not directly related to respondents main line of
business. Respondent is engaged in glass manufacturing. One of the petitioners
served as a quality controller, while the rest were glass cutters. The only excuse
offered by respondent - that petitioners services were required only when there was
an increase in the markets demand with which respondent could not cope - only
prove even more that the services rendered by petitioners were indeed part of the
main business of respondent. It would mean that petitioners supplemented the
regular workforce when the latter could not comply with the markets demand;
necessarily, therefore, petitioners performed the same functions as the regular
workforce. The indispensability of petitioners services was fortified by the length
and continuity of their performance, lasting for periods ranging from three to 11
years.

More importantly, the Court finds that the crucial element of control over
petitioners rested in respondent. The power of control refers to the authority of the
employer to control the employee not only with regard to the result of work to be
done, but also to the means and methods by which the work is to be accomplished.
It should be borne in mind that the power of control refers merely to the
existence of the power and not to the actual exercise thereof. It is not essential
for the employer to actually supervise the performance of duties of the
employee; it is enough that the former has a right to wield the power.
Petitioners followed the work schedule prepared by respondent. They were required
to observe all rules and regulations of the respondent pertaining to, among other
things, the quality of job performance, regularity of job output, and the manner and
method of accomplishing the jobs. Other than being the one who hired petitioners,
there was absolute lack of evidence that SSASI exercised control over them or their
work.
SSASI is a labor-only contractor; hence, it is considered as the agent of
respondent. Respondent is deemed by law as the employer of petitioners.
Equally unavailing is respondents stance that its relationship with petitioners
should be governed by the Accreditation Agreement stipulating that petitioners
were to remain employees of SSASI and shall not become regular employees of the
respondent. A party cannot dictate, by the mere expedient of a unilateral declaration
in a contract, the character of its business, i.e., whether as labor-only contractor or
as job contractor, it being crucial that its character be measured in terms of and
determined by the criteria set by statute

AKLAN VS SAN MIGUEL CORP, BMA PHIL ASIA

FACTS: Respondent BMA Philasia, Inc. (BMA) is a domestic corporation engaged
in the business of transporting and hauling of cargoes, goods, and commodities of
all kinds. Petitioners are the former employees of respondent BMA at respondent
San Miguel Corporations (SMC) warehouse in Pasig City. They were hired under
fixed-term contracts beginning October 1999. July 2001, petitioners went to DOLE
to file a complaint against BMA for underpayment of wages and non-payment of
premium pay for rest day, 13th month pay, and service incentive leave pay. BMA
agreed to a settlement with some of the complaints for underpayment wages. BMA
also refused to settle the claim of other complaints.
October 2001, petitioners held a strike at the warehouse premises to protest BMAs
refusal to pay the claim for underpayment of the rest of the workers which disrupted
the business operations of private respondents, prompting BMA to terminate their
services.
Petitioners alleged that they were illegally dismissed after filing a complaint for
underpayment of wages and non-payment of benefits before the DOLE; they were
terminated after staging a peaceful picket to protest the non-payment of their
claims. According to them, BMA is a labor-only contractor. SMC was not only the
owner of the warehouse and equipment used by BMA, it was their true
employer. The manner and means by which they performed their work were
controlled by SMC through its Sales Logistic Coordinator who was overseeing their
performance everyday.
The Labor Arbiter and finds that the SMC and BMA are jointly and severally liable
for the non-payment of the said incentives.
Private respondent SMC maintained that it had no employer-employee relationship
with petitioners who were hired and supervised exclusively by BMA pursuant to a
warehousing and delivery agreement in consideration of a fixed monthly fee. SMC
argued that BMA is a legitimate and independent contractor, duly registered with
the Securities and Exchange Commission (SEC) as a separate and distinct
corporation with substantial capitalization, investment, equipment, and tools. It
submitted documentary evidence proving that BMA engaged the services of
petitioners, paid for their wages and benefits, and exercised exclusive control and
supervision over them.
The NLRC affirmed the decision of the Labor Arbiter, CA reversed and set aside
the decisions of the NLRC hence this case.

ISSUE: Whether or not SMC have an employee-employer relationship with the

petitioners.
HELD: SC held that SMC showed that under their contract, BMA provided
delivery trucks, drivers, and helpers in the storage and distribution of SMC
products. On a day-to-day basis, after the routes were made by SMC salesmen, they
would book the orders they obtained. In turn, BMAs Schedular Planner, detailed at
the Pasig Warehouse, downloaded these booked orders from the computer and
processed the necessary documents to be forwarded to the Warehouse Checker, also
an employee of BMA. SMC contended that petitioners were dismissed by BMA for
staging a two-hour strike without complying with the mandatory requirements for a
valid strike. As a result, BMA had to come up with ways and means in order to
avoid the disruption of delivery operations.
A finding that a contractor is a "labor-only" contractor, as opposed to permissible
job contracting, 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.
Both the Labor Arbiter and the NLRC found that the employment contracts of
petitioners duly prove that an employer-employee relationship existed between
petitioners and BMA.
In its ruling, the NLRC considered the following elements to determine the
existence of an employer-employee relationship: (1) the selection and engagement
of the workers; (2) power of dismissal; (3) the payment of wages by whatever
means; and (4) the power to control the workers conduct. All four elements were
found by the NLRC to be vested in BMA.
Petitioners argue mainly that their employer is, in fact, respondent SMC, not
respondent BMA. They contend that BMA is a labor-only contractor and SMC, as
their true employer, should be held directly liable for their money claims, but the
facts of the case belies the contention of the petitioner thus the SC held that SMC
should not be held liable for the money claims of the petitioner.