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Aliviado v.

Procter & Gamble Philippines,


Inc.
G.R. No. 160506, 614 SCRA 563, March 9,
2010
FACTS:

Labor Arbiter: Dismissed the complaint;


there was no employer-employee
relationship
(EER) between petitioners and P&G, as the
former were employed by Promm-Gem
and

Petitioners worked as merchandisers of


respondent Procter & Gamble Philippines,
Inc.

SAPS.

(hereafter, P&G) from various dates,


allegedly starting as early as 1982 or as
late as June

1. Selection and engagement;

1991, to either May 5, 1992 or March 11,


1993.

3. Power of dismissal;

Petitioners signed employment


contracts with respondent Promm-Gem,
Inc. (Promm-Gem)
and Sales and Promotions Services (SAPS).
They were employed for five months at
time,
assigned to different stations in
supermarkets.
SAPS and Promm-Gem paid petitioners
wages and imposed disciplinary measures
on
petitioners when warranted.
P&G entered into contracts with SAPS
and Promm-Gem for the promotion of its
products. It
appears that petitioners were assigned to
promote P&Gs products.
In December 1991, petitioners filed a
complaint for regularization and other
money claims
against P&G. The complaint was later
amended to include charges of illegal
dismissal.

o Applied the four-fold test for EER:

2. Payment of wages;

4. Power of control.
o Declared Promm-Gem and SAPS
legitimate job contractors.
Petitioners appealed to the NLRC.
NLRC: Dismissed the appeal, affirmed
the Labor Arbiters Decision. Motion for
reconsideration denied.
Petitioners sought recourse with the
Court of Appeals via a petition for
certiorari under
Rule 65 of the Rules of Court.
CA: Denied the petition and affirmed
the NLRCs Decision with modification.
o P&G ordered to pay service incentive
leave pay to petitioners.
o Petitioners motion for reconsideration
was denied.
Hence, this petition for review by
certiorari under Rule 45 of the Rules of
Court.
ISSUES + RATIO:

Whether or not contracting out of a


companys core activities is allowed under
the Labor Code and its

o The contractor does not exercise the


right to control over the performance of
the

Implementing Rules. YES.

work of the contractual employee.

To be sure, the Labor Code and its


Implementing Rules do not prohibit job
contracting. The

Whether or not Promm-Gem is engaged in


labor-only contracting. NO; it is a
legitimate job

law allows contracting arrangements for


the performance of specific jobs, works or
services.

contractor.

Indeed, it is management prerogative


to farm out any of its activities, regardless
of
whether such activity is peripheral or core
in nature. However, in order for such
outsourcing to be valid, it must be made
to an independent contractor because the
current
labor rules expressly prohibit labor-only
contracting.
Labor-only contracting exists where the
contractor merely recruits, supplies or
places
workers to perform a job, work or service
for a principal. Moreover, any of the
following
elements must concur:
o The contractor or subcontractor does not
have substantial capital or investment
which relates to the job, work or service to
be performed and the employees
recruited, supplied or placed by such
contractor or subcontractor are performing
activities which are directly related to the
main business of the principal; or

It has substantial capital, as shown by


its financial statements.
o Authorized capital stock P1 million.
o Paid-in capital P500,000.
It has substantial investments in the
form of warehouses, office spaces, and
vehicles.
Promm-Gem has other clients aside
from P&G.
Promm-Gem provided its workers with
uniforms and materials. The latter were
considered
regular employees.
Whether or not SAPS is engaged in laboronly contracting. YES.
It does not have substantial capitalits
paid-in capital is only P31,250.
o Monthly payroll already totaled P44,561.
Its contracts with P&G were for six-month
periods. Its capital is not even sufficient
for one months payroll.
o SAPS failed to show that its paid-in
capital of P31,250.00 is sufficient for the
period
required for it to generate its needed
revenue to sustain its operations
independently.

Neither is there a showing of substantial


investment in tools, equipment or other
assets.
Furthermore, petitioners activities
which consisted of merchandising and
promotion of
P&G products are directly related to the
manufacturing business.
Considering that SAPS has no
substantial capital or investment and the
workers it recruited
are performing activities which are directly
related to the principal business of P&G,
the
Court found that SAPS is engaged in
labor-only contracting.
Whether or not an employer-employee
relationship exists between P&G and
petitioners. YES.
Where labor-only contracting exits, the
law establishes an EER between the
employer and
the employees of the contractor.
Rationale: to prevent circumvention of
labor laws.
The petitioners recruited by SAPS are
considered P&G employees. The
petitioners who
worked under Promm-Gem are not, since
the latter is a legitimate job contractor.
Whether or not petitioners (Promm-Gem
employees) were illegally dismissed. YES.
Promm-Gem dismissed petitioners for
grave misconduct and breach of trust
after they
sought regularization from P&G. PrommGem claimed that this assailed the
integrity of the

company as a legitimate and independent


promotion firm.
To be a just cause for dismissal,
misconduct (a) must be serious; (b) must
relate to the
performance of the employees duties;
and (c) must show that the employee has
become
unfit to continue working for the employer.
o In the instant case, petitionersemployees of Promm-Gem may have
committed an
error of judgment in claiming to be
employees of P&G, but it cannot be said
that they
were motivated by any wrongful intent in
doing so.
o Thus, petitioners are guilty only of
simple misconduct.
Meanwhile, loss of trust and confidence,
as a ground for dismissal, must be based
on the
willful breach of the trust reposed in the
employee by his employer.
o The erring employee must hold a
position of responsibility or of trust and
confidence. And, in order to constitute a
just cause for dismissal, the act
complained
of must be work-related and must show
that the employee is unfit to continue to
work for the employer.
o Here, the petitioners-employees of
Promm-Gem have not been shown to be
occupying positions of responsibility or of
trust and confidence. Neither is there any

evidence to show that they are unfit to


continue to work as merchandisers for

concerned petitioners. Hence, an award of


moral damages is called for.

Promm-Gem.

P&G is also liable for attorneys fees.

Whether or not petitioners (SAPS-P&G


employees) were illegally dismissed. YES.

Finally, all petitioners having been


illegally dismissed, they are entitled to
reinstatement

They were not afforded procedural due


process (two notice rule). They were
merely
verbally informed of the termination of
their services.
Petitioners were dismissed upon the
initiation of P&G. When the latter did not
renew its

with backwages.
DISPOSITION: Petition granted. Case
remanded to Labor Arbiter for
computation of backwages
and other benefits.
Aliviado v. Procter & Gamble Philippines,
Inc.

contract with SAPS, petitioners services


were automatically terminated evidently
because

(Motion to refer the case to the Supreme


Court en banc)

SAPS had no other clients.

G.R. No. 160506, 650 SCRA 400, June 6,


2011

Whether or not petitioners are entitled to


the payment of damages, costs, and
attorneys fees. YES.

ISSUE + RATIO:

With regard to the employees of


Promm-Gem, their dismissals were not
attended with bad
faith so as to warrant the award of moral
and exemplary damages.
As for P&G, the records show that it
dismissed its employees through SAPS in a
manner
oppressive to labor. The sudden and
peremptory barring of the concerned
petitioners from
work, and from admission to the work
place, after just a one-day verbal notice,
and for no
valid cause bellows oppression and utter
disregard of the right to due process of the

Whether or not the Court erred in ruling


that SAPS is a labor-only contractor. NO.
P&G claims that the Court should have
applied the four-fold test, specifically the
control test, in determining whether
SAPS is a legitimate job contractor or a
labor-only contractor.
This is incorrect. The control test is
only one of the ways to determine the
existence of labor-only contracting.
Pertinently, Department Order No. 1802 provides:
Section 5. Prohibition against labor-only
contracting. Labor only contracting is
hereby declared prohibited. For this
purpose, labor-only contracting shall refer
to an arrangement where the contractor or
subcontractor merely recruits, supplies or
places workers to perform a job, work or
service for a principal, and ANY of the

following elements are present: (i) The


contractor or subcontractor does not have
substantial capital or investment which
relates to
the job, work or service to be performed
and the employees recruited, supplied or
placed by such
contractor or subcontractor are performing
activities which are directly related to the
main
business of the principal; OR
(ii) [T]he contractor does not exercise the
right to control over the performance of
the work of the
contractual employee. (Emphasis
supplied)
In the case at bar, the Court already
concluded that (1) SAPS merely recruited
workers for
P&G, (2) it did not have substantial capital
or investment, and (3) the workers
performed
activities directly related to the business
of the principal.
Hence, SAPS may be considered a
labor-only contractor under D.O. 18-02,
Sec. 5 (i).
In Coca-Cola Bottlers Phils., Inc. v.
Agito, the Court ruled:
The law clearly establishes an employeremployee relationship between the
principal employer and
the contractors employee upon a finding
that the contractor is engaged in laboronly contracting. Article 106 of the Labor
Code categorically states: There is laboronly 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 persons are performing
activities which are directly related to the
principal business of such employer. Thus,
performing activities directly related to the
principal business of the employer is only
one of the two indicators that labor-only
contracting exists; the other is lack of
substantial capital or investment. The
Court finds that both indicators exist in the
case at bar. (Emphasis supplied)
DISPOSITION: Judgment affirmed.

42 SCRA 578 Labor Law Labor


Standards Regular
Employee Employer-employee
relationship Four Fold Test Servaa
started out as a security for the AgroCommercial Security Agency (ACSA) since
1987. The agency had a contract with TV
network RPN 9.
On the other hand, Television and
Production Exponents, Inc (TAPE). is a
company in charge of TV programming
and was handling shows like Eat Bulaga!
Eat Bulaga! was then with RPN 9. In 1995,
RPN 9 severed its relations with ACSA.
TAPE retained the services of Servaa as a
security guard and absorbed him. In 2000,
TAPE contracted the services of Sun Shield
Security Agency. It then notified Servaa
that he is being terminated because he is
now a redundant employee. Servaa then
filed a case for illegal Dismissal. The Labor
Arbiter ruled that Servaas dismissal is
valid on the ground of redundancy but
though he was not illegally dismissed he is
still entitled to be paid a separation pay
which is amounting to one month pay for
every year of service which totals to
P78,000.00. TAPE appealed and argued
that Servaa is not entitled to receive

separation pay for he is considered as a


talent and not as a regular employee; that
as such, there is no employee-employer
relationship between TAPE and Servaa.

Discontinuance issued to Servaa to notify


him that he is a redundant employee
evidenced TAPEs power to dismiss
Servaa.

The National Labor Relations Commission


ruled in favor of TAPE. It ruled that
Servaa is a program employee. Servaa
appealed before the Court of Appeals. The
Court of Appeals reversed the NLRC and
affirmed the LA. The CA further ruled that
TAPE and its president Tuviera should pay
for nominal damages amounting to
P10,000.00.

4. Whether or not the employer has the


power of control over the employee. The
bundy cards which showed that Servaa
was required to report to work at fixed
hours of the day manifested the fact that
TAPE does have control over him.
Otherwise, Servaa could have reported at
any time during the day as he may wish.
Therefore, Servaa is entitled to receive a
separation pay. On the other hand, the
Supreme Court ruled that Tuviera, as
president of TAPE, should not be held
liable for nominal damages as there was
no showing he acted in bad faith in
terminating Servaa. Regular Employee
Defined: One having been engaged to
perform an activity that is necessary and
desirable to a companys business.

ISSUE: Whether or not there is an


employee-employer relationship existing
between TAPE and Servaa.
HELD: Yes. Servaa is a regular employee.
In determining Servaas nature of
employment, the Supreme Court
employed the Four Fold Test:
1. Whether or not employer conducted the
selection and engagement of the
employee. Servaa was selected and
engaged by TAPE when he was absorbed
as a talent in 1995. He is not really a
talent, as termed by TAPE, because he
performs an activity which is necessary
and desirable to TAPEs business and that
is being a security guard. Further, the
primary evidence of him being engaged as
an employee is his employee identification
card. An identification card is usually
provided not just as a security measure
but to mainly identify the holder thereof as
a bona fide employee of the firm who
issues it.
2. Whether or not there is payment of
wages to the employee by the employer.
Servaa is definitely receiving a fixed
amount as monthly compensation. Hes
receiving P6,000.00 a month.
3. Whether or not employer has the power
to dismiss employee. The Memorandum of

ANGELINA FRANCISCO, Petitioner, versus


NATIONAL LABOR RELATIONS
COMMISSION, KASEI CORPORATION,
SEIICHIRO TAKAHASHI, TIMOTEO ACEDO,
DELFIN LIZA, IRENE BALLESTEROS,
TRINIDAD LIZA and RAMON ESCUETA,
Respondents., G.R. No. 170087, 2006 Aug
31.

FACTS:
1995, Petitioner was hired by Kasei
Corporation during its incorporation stage.
She was designated as Accountant and
Corporate Secretary and was assigned to
handle all the accounting needs of the

company. She was also designated as


Liaison Officer to the City of Makati to
secure business permits, construction
permits and other licenses for the initial
operation of the company.
Although she was designated as
Corporate Secretary, she was not
entrusted with the corporate documents;
neither did she attend any board meeting
nor required to do so. She never prepared
any legal document and never
represented the company as its Corporate
Secretary.
1996, petitioner was
designated Acting Manager. Petitioner was
assigned to handle recruitment of all
employees and perform management
administration functions; represent the
company in all dealings with government
agencies, especially with the BIR, SSS and
in the city government of Makati; and to
administer all other matters pertaining to
the operation of Kasei Restaurant which is
owned and operated by Kasei Corporation.
January 2001, petitioner was
replaced by a certain Liza R. Fuentes as
Manager. Kasei Corporation reduced her
salary, she was not paid her mid-year
bonus allegedly because the company was
not earning well. On October 2001,
petitioner did not receive her salary from
the company. She made repeated followups with the company cashier but she was
advised that the company was not earning
well. Eventually she was informed that she
is no longer connected with the company.
Since she was no longer paid her
salary, petitioner did not report for work
and filed an action for constructive
dismissal before the labor arbiter. Private
respondents averred that petitioner is not
an employee of Kasei Corporation. They
alleged that petitioner was hired in 1995
as one of its technical consultants on
accounting matters and act concurrently
as Corporate Secretary. As technical
consultant, petitioner performed her work

at her own discretion without control and


supervision of Kasei Corporation.
Petitioner had no daily time record and
she came to the office any time she
wanted and that her services were only
temporary in nature and dependent on the
needs of the corporation.
The Labor Arbiter found that
petitioner was illegally dismissed, NLRC
affirmed with modification the Decision of
the Labor Arbiter. On appeal, CA reversed
the NLRC decision. CA denied petitioners
MR, hence, the present recourse.

ISSUES:
1. WON there was an employer-employee
relationship between petitioner and
private respondent; and if in the
affirmative,
2. Whether petitioner was illegally
dismissed.

RULING:
1. Generally, courts have relied on
the so-called right of control test where
the person for whom the services are
performed reserves a right to control not
only the end to be achieved but also the
means to be used in reaching such end. In
addition to the standard of right-of-control,
the existing economic conditions
prevailing between the parties, like the
inclusion of the employee in the payrolls,
can help in determining the existence of
an employer-employee relationship.
There are instances when, aside
from the employers power to control the
employee, economic realities of the
employment relations help provide a
comprehensive analysis of the true
classification of the individual, whether as

employee, independent contractor,


corporate officer or some other capacity.
It is better, therefore, to adopt a
two-tiered test involving: (1) the
employers power to control; and (2) the
economic realities of the activity or
relationship.
The control test means that there is
an employer-employee relationship when
the person for whom the services are
performed reserves the right to control not
only the end achieved but also the
manner and means used to achieve that
end.
There has to be analysis of the
totality of economic circumstances of the
worker. Thus, the determination of the
relationship between employer and
employee depends upon the
circumstances of the whole economic
activity, such as: (1) the extent to which
the services performed are an integral
part of the employers business; (2) the
extent of the workers investment in
equipment and facilities; (3) the nature
and degree of control exercised by the
employer; (4) the workers opportunity for
profit and loss; (5) the amount of initiative,
skill, judgment or foresight required for
the success of the claimed independent
enterprise; (6) the permanency and
duration of the relationship between the
worker and the employer; and (7) the
degree of dependency of the worker upon
the employer for his continued
employment in that line of business. The
proper standard of economic dependence
is whether the worker is dependent on the
alleged employer for his continued
employment in that line of business
By applying the control test, it can
be said that petitioner is an employee of
Kasei Corporation because she was under
the direct control and supervision of Seiji
Kamura, the corporations Technical

Consultant. She reported for work


regularly and served in various capacities
as Accountant, Liaison Officer, Technical
Consultant, Acting Manager and Corporate
Secretary, with substantially the same job
functions, that is, rendering accounting
and tax services to the company and
performing functions necessary and
desirable for the proper operation of the
corporation such as securing business
permits and other licenses over an
indefinite period of engagement.
Respondent corporation had the power to
control petitioner with the means and
methods by which the work is to be
accomplished.
Under the economic reality test,
the petitioner can also be said to be an
employee of respondent corporation
because she had served the company for
6 yrs. before her dismissal, receiving
check vouchers indicating her
salaries/wages, benefits, 13th month pay,
bonuses and allowances, as well as
deductions and Social Security
contributions from. When petitioner was
designated General Manager, respondent
corporation made a report to the SSS.
Petitioners membership in the SSS
evinces the existence of an employeremployee relationship between petitioner
and respondent corporation. The coverage
of Social Security Law is predicated on the
existence of an employer-employee
relationship.
2. The corporation constructively
dismissed petitioner when it reduced her.
This amounts to an illegal termination of
employment, where the petitioner is
entitled to full backwages
A diminution of pay is prejudicial to
the employee and amounts to
constructive dismissal. Constructive
dismissal is an involuntary resignation
resulting in cessation of work resorted to
when continued employment becomes

impossible, unreasonable or unlikely;


when there is a demotion in rank or a
diminution in pay; or when a clear
discrimination, insensibility or disdain by
an employer becomes unbearable to an
employee. Petition is GRANTED.

CHAVEZ VS. NLRC


448 SCRA 478. January 17, 2005

FACTS
The respondent company, Supreme
Packaging, Inc. engaged the services of
the petitioner, Pedro Chavez, as truck
driver. The respondent company furnished
the petitioner with a truck. The petitioner
expressed to respondent Alvin Lee,
respondent companys plant manager, his
desire to avail himself of the benefits that
the regular employees were receiving
such as overtime pay, nightshift
differential pay, and 13th month pay,
among others. Although he promised to
extend these benefits to the petitioner,
respondent Lee failed to actually do so.
Petitioner filed a complaint for
regularization with the Regional Arbitration
Branch. Before the case could be heard,
respondent company terminated the
services of the petitioner. Consequently,
the petitioner filed an amended complaint
against the respondents for illegal
dismissal, unfair labor practice and nonpayment of overtime pay, nightshift
differential pay, and 13th month pay,
among others. The respondents, for their
part, denied the existence of an employeremployee relationship between the
respondent company and the petitioner.
They averred that the petitioner was an

independent contractor as evidenced by


the contract of service which he and the
respondent company entered into. The
relationship of the respondent company
and the petitioner was allegedly governed
by this contract of service.
The respondents insisted that the
petitioner had the sole control over the
means and methods by which his work
was accomplished. He paid the wages of
his helpers and exercised control over
them. As such, the petitioner was not
entitled to regularization because he was
not an employee of the respondent
company. The respondents, likewise,
maintained that they did not dismiss the
petitioner. Rather, the severance of his
contractual relation with the respondent
company was due to his violation of the
terms and conditions of their contract.

ISSUE:
whether or not there existed an employeremployee relationship between the
respondent company and the petitioner.

RULING:
Yes. There was an employer-employee
relationship in the case at bar.
The elements to determine the existence
of an employment relationship are: (1) the
selection and engagement of the
employee; (2) the payment of wages; (3)
the power of dismissal; and (4) the
employers power to control the
employees conduct. All the four elements
are present in this case.
Of the four elements of the employeremployee relationship, the control test is
the most important. Although the
respondents denied that they exercised

control over the manner and methods by


which the petitioner accomplished his
work, a careful review of the records
shows that the latter performed his work
as truck driver under the respondents
supervision and control. Their right of
control was manifested by the following
attendant circumstances:

person is defined and prescribed by law


and not by what the parties say it should
be.

1. The truck driven by the


petitioner belonged to respondent
company;

October 8, 2001

2. There was an express instruction


from the respondents that the truck shall
be used exclusively to deliver respondent
companys goods;
3. Respondents directed the
petitioner, after completion of each
delivery, to park the truck in either of two
specific places only, to wit: at its office in
Metro Manila at 2320 Osmea Street,
Makati City or at BEPZ, Mariveles, Bataan;
and
4. Respondents determined how,
where and when the petitioner would
perform his task by issuing to him gate
passes and routing slips.

These circumstances, to the Courts mind,


prove that the respondents exercised
control over the means and methods by
which the petitioner accomplished his
work as truck driver of the respondent
company. The contract of service
indubitably established the existence of an
employer-employee relationship between
the respondent company and the
petitioner. It bears stressing that the
existence of an employer-employee
relationship cannot be negated by
expressly repudiating it in a contract and
providing therein that the employee is an
independent contractor when, as in this
case, the facts clearly show otherwise.
Indeed, the employment status of a

PERPETUAL HELP CREDIT COOPERATIVE,


INC. (PHCCI) V. FABURADA

By: Aurea I. Gruyal


FACTS:
1 Private respondents Faburada et. al.
filed a complaint
against PHCCI for illegal dismissal,
premium pay, separation pay, wage
differential, moral damages and attorneys
fees.
2 PHCCI filed a motion to dismiss on the
ground that noemployeremployee
relationship exists since
privaterespondents are all members and
coowners of thecooperative. Also, private
respondents have not exhausted the
remedies provided in the coop by laws.
PHCCI also filed a supplemental motion to
dismiss
alledging that RA 6939, the Cooperative
Development Authority Law, requires
conciliation or mediation within the
cooperative before a resort to judicial
proceeding.
3.The Labor Arbiter ruled in favor of the
private respondents, holding that the case
is impressed with employer-employee
relationship and that the laws on
cooperatives is subservient to the Labor
Code. The NLRC affirmed.
ISSUE: WON there is an employeremployee relationship between the parties
and WON private respondents were
regular employees

HELD: YES.
RATIO:
Elements in determining existence of
employer-employee relationship:
1) Selection and engagement of the
worker or the power to hire
2) The power to dismiss
3) Payment of wages by whatever means
4) Power to control the workers conduct
The above elements are present here.
PHCCI through its Manager Mr. Edilberto
Lantaca, Jr. hired respondents as
Computer programmer and clerks. They
worked regular working hours, were
assigned specific duties, were paid regular
wages, and made to accomplish regular
time records, and worked under the
supervision of the manager.
Art. 280, Labor Code comprehends 3 kinds
of employees:
1)REGULAR EMPLOYEES or those whose
work is necessary or desirable to the usual
business of the employer
2)PROJECT EMPLOYEES or those
whoseemployment has been fixed for a
specificproject or undertaking the
completion ortermination 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
3)CASUAL EMPLOYEES or those who are
neither regular nor project employees
There are 2 separate instances whereby it
can be determined that an employment is
regular:

1)If the particular activity performed by


the employee is necessary or desirable in
the usual business or trade of the
employer
2)If the employee has been performing the
job for at least a year Private respondents
were rendering services necessary to the
day-to-day operations of
PHCCI. This alone qualified them as
regular employees. Moreover, all of them
except one worked with PHCCI for more
than 1 year.
That Faburada worked only on a part-time
basis does not mean that he is not a
regular employee .Regularity of
employment is not determined by the
number of hours one works but by the
nature and length of time one has been in
that particular job.

Lakas sa Industriya ng Kapatirang Haligi


ng AlyansaPinagbuklad
ng Promo ng Burlingame (LIKHA-PMPB) v.
Burlingame Corporation
Facts:
LIKHA-PMPB filed a petition for certification
election before the DOLE which they
sought to represent the rankand-file
promo employees of Burlingame
Corporation. They prayed to be recognized
to the CBA agent or in alternative a
certification consent election be held
among the rank-and-file promo
employees. Respondents filed a motion to
dismiss and averred that there is no
employeremployee relationship between it
and the petitioners
members. They further alleged that the
petitioners are

employees of F. Garil Manpower Services


(F. Garil) which
they presented a copy of its contract for
manpower
services with F. Garil. Med-Arbiter Parungo
dismissed the
petition for the lack of employer-employee
relationship.
The petitioners filed the appeal to the
secretary of Labor
which ordered the immediate conduct of a
certification of
election. A motion for reconsideration was
filed by the
respondent but was denied. The
respondent filed another
complaint before the CA which reversed
the decision of
the Secretary. The petitioners filed a
motion for
reconsideration but CA denied and hence
this petition.
Issue: Whether or not there is employeremployee
relationship between the petitioners and
Burlingame Co.?
W/N F. Garil is an independent contractor
or a labor-only
contractor?
Held:
Yes
The four fold test will show that
respondent is the
employer of the petitioner members. The
elements to determine existence of

employment relationship: a. the selection


and engagement of the employees; b. the
payment of wages; c. the power of
dismissal; and the employers power to
control the employees conduct. The most
important is the control of the employers
control of the employees conduct, not
only as to the result of the work to be
done, but also as to the means and
methods to accomplish it.
The contractual stipulations between
Burlington and F. Garil shows that any
personnel found to be inefficient,
troublesome, uncooperative, and not
observing the rules and regulations set
forth by Burlingame shall be reported to F.
Garil and may be replaced upon request.
This circumstance shows that Burlingame
has control andsupervision over workers
supplied by F. Garil. There is also an
implied provision on the replacement of
personnel carried upon the request by
Burlingame is the power to fire personnel.
F. Garil is not an independent contractor
since it did not carry a distinct business
free from the control and supervision of
Burlingame. The contractual stipulation of
between Burlingame and personnel
provided by F. Garil on the nonexistence of
employer-employee relationship has no
legal effect because it is contrary to law,
morals, good customs, public order or
public policy. F.Garil was engage only in
laboronly contracting and considered
merely as an agent of Burlingame.
Decision: Challenged decision of CA and
Resolution is reversed and set aside.The
decision of Secretary of Labor is
reinstated.
RUGA V. NLRC
FACTS:
Petitioners were the fishermen-crew
members of 7/B Sandyman II, one of
several fishing vessels owned and

operated by private respondent De


Guzman Fishing Enterprises which is
primarily engaged in the fishing business
with port and office at Camaligan,
Camarines Sur. Petitioners rendered
service aboard said fishing vessel in
various capacities, as follows: Alipio Ruga
and Jose Parma patron/pilot; Eladio
Calderon, chief engineer; Laurente Bautu,
second engineer; Jaime Barbin, master
fisherman; Nicanor Francisco, second
fisherman; Philip Cervantes and Eleuterio
Barbin, fishermen.
For services rendered in the conduct of
private respondent's regular business of
"trawl" fishing, petitioners were paid on
percentage commission basis in cash by
one Mrs. Pilar de Guzman, cashier of
private respondent. As agreed upon, they
received thirteen percent (13%) of the
proceeds of the sale of the fish-catch if the
total proceeds exceeded the cost of crude
oil consumed during the fishing trip,
otherwise, they received ten percent
(10%) of the total proceeds of the sale.
The patron/pilot, chief engineer and
master fisherman received a minimum
income of P350.00 per week while the
assistant engineer, second fisherman, and
fisherman-winchman received a minimum
income of P260.00 per week.
On September 11, 1983 upon arrival at
the fishing port, petitioners were told by
Jorge de Guzman, president of private
respondent, to proceed to the police
station at Camaligan, Camarines Sur, for
investigation on the report that they sold
some of their fish-catch at midsea to the
prejudice of private respondent.
Petitioners denied the charge claiming
that the same was a countermove to their
having formed a labor union and
becoming members of Defender of
Industrial Agricultural Labor Organizations
and General Workers Union (DIALOGWU)
on September 3, 1983.

During the investigation, no witnesses


were presented to prove the charge
against petitioners, and no criminal
charges were formally filed against them.
Notwithstanding, private respondent
refused to allow petitioners to return to
the fishing vessel to resume their work on
the same day, September 11, 1983.
On September 22, 1983, petitioners
individually filed their complaints for
illegal dismissal and non-payment of 13th
month pay, emergency cost of living
allowance and service incentive pay, with
the then Ministry (now Department) of
Labor and Employment, Regional
Arbitration Branch No. V, Legaspi City,
Albay. They uniformly contended that they
were arbitrarily dismissed without being
given ample time to look for a new job.
ISSUE/S:
Whether or not the fishermen-crew
members of the trawl fishing vessel 7/B
Sandyman II are employees of its owneroperator, De Guzman Fishing Enterprises,
and if so, whether or not they were
illegally dismissed from their employment.
HELD:
YES
We have consistently ruled that in
determining the existence of an employeremployee relationship, the elements that
are generally considered are the following
(a) the selection and engagement of the
employee; (b) the payment of wages; (c)
the power of dismissal; and (d) the
employers power to control the employee
with respect to the means and methods by
which the work is to be accomplished. The
employment relation arises from contract
of hire, express or implied. In the absence
of hiring, no actual employer-employee
relation could exist.

From the four (4) elements mentioned, We


have generally relied on the so-called
right-of-control test where the person for
whom the services are performed reserves
a right to control not only the end to be
achieved but also the means to be used in
reaching such end. The test calls merely
for the existence of the right to control the
manner of doing the work, not the actual
exercise of the right.
The case of Pajarillo vs. SSS, supra,
invoked by the public respondent as
authority for the ruling that a joint fishing
venture existed between private
respondent and petitioners is not
applicable in the instant case. There is
neither right of control nor actual exercise
of such right on the part of the boatowners in the Pajarillo case, where the
Court found that the pilots therein are not
under the orders of the boat-owners as
regards their employment; that they go
out to sea not upon directions of the boatowners, but upon their own volition as to
when, how long and where to go fishing;
that the boat-owners do not in any way
control the crew-members with whom the
former have no relationship whatsoever;
that they simply join every trip for which
the pilots allow them, without any
reference to the owners of the vessel; and
that they only share in their own catch
produced by their own efforts.
WHEREFORE, in view of the foregoing, the
petition is GRANTED. The questioned
resolution of the National Labor Relations
Commission dated May 30, 1985 is hereby
REVERSED and SET ASIDE. Private
respondent is ordered to reinstate
petitioners to their former positions or any
equivalent positions with 3-year
backwages and other monetary benefits
under the law. No pronouncement as to
costs.
SAN MIGUEL CORPORATION v. PROSPERO
ABALLA

G.R. No. 149011 June 28, 2005


Ponente: CARPIO-MORALES, J.:
FACTS: Petitioner San Miguel Corporation
(SMC) and Sunflower Multi-Purpose
Cooperative (Sunflower) entered into a
one-year Contract of Service and such
contract is renewed on a monthly basis
until terminated. Pursuant to this,
respondent Prospero Aballa rendered
services to SMC.
After one year of service, Aballa filed a
complaint before NLRC praying that they
be declared as regular employees of SMC.
On the other hand, SMC filed before the
DOLE a Notice of Closure due to serious
business losses. Hence, the labor arbiter
dismissed the complaint and ruled in favor
of SMC. Aballa then appealed before the
NLRC. The NLRC dismissed the appeal
finding that Sunflower is an independent
contractor.
On appeal, the Court of Appeals reversed
NLRCs decision on the ground that the
agreement between SMC and Sunflower
showed a clear intent to abstain from
establishing an employer-employee
relationship.
ISSUE: Whether or not Aballa and other
employees of Sunflower are employees of
SMC?
HELD: The test to determine the existence
of independent contractorship is whether
one claiming to be an independent
contractor has contracted to do the work
according to his own methods and without
being subject to the control of the
employer, except only as to the results of
the work. In legitimate labor contracting,
the law creates an employer-employee
relationship for a limited purpose, to
ensure that the employees are paid their
wages. The principal employer becomes
jointly and severally liable with the job
contractor, only for the payment of the

employees wages whenever the


contractor fails to pay the same. Other
than that, the principal employer is not
responsible for any claim made by the
employees. In labor-only contracting, the
statute creates an employer-employee
relationship for a comprehensive purpose:
to prevent a circumvention of labor laws.
The contractor is considered merely an
agent of the principal employer and the
latter is responsible to the employees of
the labor-only contractor as if such
employees had been directly employed by
the principal employer.
The Contract of Services between SMC
and Sunflower shows that the parties
clearly disavowed the existence of an
employer-employee relationship between
SMC and private respondents. The
language of a contract is not, however,
determinative of the parties relationship;
rather it is the totality of the facts and
surrounding circumstances of the case. A
party cannot dictate, by the mere
expedient of a unilateral declaration in a
contract, the character of its business,
whether as labor-only contractor or job
contractor, it being crucial that its
character be measured in terms of and
determined by the criteria set by statute.
What appears is that Sunflower does not
have substantial capitalization or
investment in the form of tools,
equipment, machineries, work premises
and other materials to qualify it as an
independent contractor. On the other
hand, it is gathered that the lot, building,
machineries and all other working tools
utilized by Aballa et al. in carrying out
their tasks were owned and provided by
SMC.
And from the job description provided by
SMC itself, the work assigned to Aballa et
al. was directly related to the aquaculture
operations of SMC. As for janitorial and
messengerial services, that they are
considered directly related to the principal

business of the employer has been


jurisprudentially recognized. Furthermore,
Sunflower did not carry on an independent
business or undertake the performance of
its service contract according to its own
manner and method, free from the control
and supervision of its principal, SMC, its
apparent role having been merely to
recruit persons to work for SMC.
All the foregoing considerations affirm by
more than substantial evidence the
existence of an employer- employee
relationship between SMC and Aballa.
Since Aballa who were engaged in shrimp
processing performed tasks usually
necessary or desirable in the aquaculture
business of SMC, they should be deemed
regular employees of the latter and as
such are entitled to all the benefits and
rights appurtenant to regular employment.
They should thus be awarded differential
pay corresponding to the difference
between the wages and benefits given
them and those accorded SMCs other
regular employees.
EPARWA SECURITY AND JANITORIAL
SERVICES VS LICEO DE CAGAYAN
UNIVERSITY
CARPIO,
FACTS:
On 1 December 1997, Eparwa and
LDCU, through their representatives,
entered into a Contract for Security
Services which states that LCDU
undertakes to pay P5,000 per guard, in
consideration of their services.

On 21 December 1998, 11 security


guards whom Eparwa assigned to LDCU
filed a complaint before the NLRC against
both Eparwa and LDCU for underpayment
of salary, legal holiday pay, 13th month
pay, rest day, service incentive leave,

night shift differential, overtime pay, and


payment for attorneys fees.

LDCU made a cross-claim and


prayed that Eparwa should reimburse
LDCU for any payment to the security
guards.

LA found that the security guards are


entitled to wage differentials and premium
for holiday and rest day work. The Labor
Arbiter also held Eparwa and LDCU
solidarily liable pursuant to Article 109 of
the Labor Code.

The NLRC held Eparwa and LDCU solidarily


liable for the wage differentials and
premium for holiday and rest day work but
did not require Eparwa to reimburse LDCU
for its payments to the security guards.
Upon an MR, the NLRC declared that
although Eparwa and LDCU are solidarily
liable to the security guards for the
monetary award, LDCU alone is ultimately
liable.

The CA reinstated the Labor


Arbiters decision. The appellate court
also allowed LDCU to claim reimbursement
from Eparwa.

ISSUE:

Is LDCU alone ultimately liable to the


security guards for the wage differentials
and premium for holiday and rest day
pay? - YES

HELD:

This Courts ruling in Eagle Security


Agency, Inc. v. NLRC[12] squarely applies
to the present case. In Eagle, we ruled
that
This joint and several liability of
the contractor and the principal is
mandated by the Labor Code to assure
compliance of the provisions therein
including the statutory minimum wage.
The contractor is made liable by virtue of
his status as direct employer. The
principal, on the other hand, is made the
indirect employer of the contractors
employees for purposes of paying the
employees their wages should the
contractor be unable to pay them.
In the case at bar, it is beyond
dispute that the security guards are the
employees of EAGLE. That they were
assigned to guard the premises of PTSI
pursuant to the latters contract with
EAGLE and that neither of these two
entities paid their wage and allowance
increases under the subject wage orders
are also admitted.
The solidary liability of PTSI and
EAGLE, however, does not preclude the
right of reimbursement from his co-debtor
by the one who paid. It is with respect to
this right of reimbursement that
petitioners can find support in the
aforecited contractual stipulation and
Wage Order provision.
The Wage Orders are explicit that
payment of the increases are to be
borne by the principal or client. To be
borne, however, does not mean that the
principal, PTSI in this case, would directly
pay the security guards the wage and
allowance increases because there is no
privity of contract between them. The
security guards contractual relationship is

with their immediate employer, EAGLE. As


an employer, EAGLE is tasked, among
others, with the payment of their wages.
On the other hand, there existed a
contractual agreement between PTSI and
EAGLE wherein the former availed of the
security services provided by the latter. In
return, the security agency collects from
its client payment for its security services.
This payment covers the wages for the
security guards and also expenses for
their supervision and training, the guards
bonds, firearms with ammunitions,
uniforms and other equipments,
accessories, tools, materials and supplies
necessary for the maintenance of a
security force.
Premises considered, the security
guards immediate recourse for the
payment of the increases is with their
direct employer, EAGLE. However, in order
for the security agency to comply with the
new wage and allowance rates it has to
pay the security guards, the Wage Orders
made specific provision to amend existing
contracts for security services by allowing
the adjustment of the consideration paid
by the principal to the security agency
concerned. What the Wage Orders require,
therefore, is the amendment of the
contract as to the consideration to cover
the service contractors payment of the
increases mandated. In the end, therefore,
ultimate liability for the payment of the
increases rests with the principal.
In view of the foregoing, the
security guards should claim the amount
of the increases from EAGLE. Under the
Labor Code, in case the agency fails to
pay them the amounts claimed, PTSI
should be held solidarily liable with EAGLE.
Should EAGLE pay, it can claim an
adjustment from PTSI for an increase in
consideration to cover the increases
payable to the security guards.

However, in the instant case, the


contract for security services had already
expired without being amended consonant
with the Wage Orders. It is also apparent
from a reading of a record that EAGLE
does not now demand from PTSI any
adjustment in the contract price and its
main concern is freeing itself from liability.
Given these peculiar circumstances, if PTSI
pays the security guards, it cannot claim
reimbursement from EAGLE. But in case it
is EAGLE that pays them, the latter can
claim reimbursement from PTSI in lieu of
an adjustment, considering that the
contract had expired and had not been
renewed.
For the security guards, the actual source
of the payment of their wage differentials
and premium for holiday and rest day
work does not matter as long as they are
paid. This is the import of Eparwa and
LDCUs solidary liability. Creditors, such as
the security guards, may collect from
anyone of the solidary debtors. Solidary
liability does not mean that, as between
themselves, two solidary debtors are liable
for only half of the payment.
LDCUs ultimate liability comes into
play because of the expiration of the
Contract for Security Services. There is
no privity of contract between the security
guards and LDCU, but LDCUs liability to
the security guards remains because of
Articles 106, 107 and 109 of the Labor
Code. Eparwa is already precluded from
asking LDCU for an adjustment in the
contract price because of the expiration of
the contract, but Eparwas liability to the
security guards remains because of their
employer-employee relationship. In lieu of
an adjustment in the contract price,
Eparwa may claim reimbursement from
LDCU for any payment it may make to the
security guards. However, LDCU cannot
claim any reimbursement from Eparwa for
any payment it may make to the security
guards.

COCA COLA BOTTLERS PHILS., INC.,


petitioner, vs. NATIONAL LABOR
RELATIONS COMMISSION and RAMON B.
CANONICATO, respondents.

fixtures and other interiors within the


aforestated covered areas.

DECISION

2. Except holidays which are rest days, the


Second Party will undertake daily the
following: 1) Sweeping, damp-mopping,
spot scrubbing and polishing of floors; 2)
Cleaning, sanitizing and disinfecting
agents to be used on commodes, urinals
and washbasins, water spots on chrome
and other fixtures to be checked; 3)
Cleaning of glass surfaces, windows and
glass partitions that require daily
attention; 4) Cleaning and dusting of
horizontal and vertical surfaces; 5)
Cleaning of fixtures, counters, panels and
sills; 6) Clean, pick-up cigarette butts from
sandburns and ashtrays and trash
receptacles; 7) Trash and rubbish disposal
and burning.

BELLOSILLO, J.:

This petition for certiorari under Rule 65 of


the Revised Rules of Court assails the 3
January 1995 decision[1] of the National
Labor Relations Commission (NLRC)
holding that private respondent Ramon B.
Canonicato is a regular employee of
petitioner Coca Cola Bottlers Phils. Inc.
(COCA COLA) entitled to reinstatement
and back wages. The NLRC reversed the
decision of the Labor Arbiter of 28 April
1994[2] which declared that no employeremployee relationship existed between
COCA COLA and Canonicato thereby
foreclosing entitlement to reinstatement
and back wages.

On 7 April 1986 COCA COLA entered into a


contract of janitorial services with Bacolod
Janitorial Services (BJS) stipulating[3]
among others -

That the First Party (COCA COLA) desires


to engage the services of the Second Party
(BJS), as an Independent Contractor, to
perform and provide for the maintenance,
sanitation and cleaning services for the
areas hereinbelow mentioned, all located
within the aforesaid building of the First
Party x x x x

1. The scope of work of the Second Party


includes all floors, walls, doors, vertical
and horizontal areas, ceiling, all windows,
glass surfaces, partitions, furniture,

In addition, the Second Party will also do


the following once a week, to wit: 1)
Cleaning, waxing and polishing of lobbies
and offices; 2) Washing of windows,
glasses that require cleaning; 3) Thorough
disinfecting and cleaning of toilets and
washrooms.

3. The Second Party shall supply the


necessary utensils, equipment and
supervision, and it shall only employ the
services of fifteen (15) honest, reliable,
carefully screened, cooperative and
trained personnel, who are in good faith,
in the performance of its herein
undertaking x x x x

4. The Second Party hereby guarantees


against unsatisfactory workmanship. Minor
repair of comfort rooms are free of charge
provided the First Party will supply the

necessary materials for such repairs at its


expense. As may be necessary, the
Second Party shall also report on such part
or areas of the premises covered by this
contract which may require repairs from
time to time x x x (italics supplied).

Every year thereafter a service contract


was entered into between the parties
under similar terms and conditions until
about May 1994.[4]

On 26 October 1989 COCA COLA hired


private respondent Ramon Canonicato as
a casual employee and assigned him to
the bottling crew as a substitute for
absent employees. In April 1990 COCA
COLA terminated Canonicato's casual
employment. Later that year COCA COLA
availed of Canonicato's services, this time
as a painter in contractual projects which
lasted from fifteen (15) to thirty (30) days.
[5]

On 1 April 1991 Canonicato was hired as a


janitor by BJS[6] which assigned him to
COCA COLA considering his familiarity
with its premises. On 5 and 7 March 1992
Canonicato started painting the facilities
of COCA COLA and continued doing so
several months thereafter or so for a few
days every time until 6 to 25 June 1993.[7]

Goaded by information that COCA COLA


employed previous BJS employees who
filed a complaint against the company for
regularization pursuant to a compromise
agreement,[8] Canonicato submitted a
similar complaint against COCA COLA to
the Labor Arbiter on 8 June 1993.[9] The
complaint was docketed as RAB Case No.
06-06-10337-93.

Without notifying BJS, Canonicato no


longer reported to his COCA COLA
assignment starting 29 June 1993. On 15
July 1993 he sent his sister Rowena to
collect his salary from BJS.[10] BJS
released his salary but advised Rowena to
tell Canonicato to report for work.
Claiming that he was barred from entering
the premises of COCA COLA on either 14
or 15 July 1993, Canonicato met with the
proprietress of BJS, Gloria Lacson, who
offered him assignments in other firms
which he however refused.[11]

On 23 July 1993 Canonicato amended his


complaint against COCA COLA by citing
instead as grounds therefor illegal
dismissal and underpayment of wages. He
included BJS therein as a co-respondent.
[12] On 28 September 1993 BJS sent him
a letter advising him to report for work
within three (3) days from receipt,
otherwise, he would be considered to have
abandoned his job.[13]

On 28 April 1994 the Labor Arbiter ruled


that: (a) there was no employer-employee
relationship between COCA COLA and
Ramon Canonicato because BJS was
Canonicato's real employer; (b) BJS was a
legitimate job contractor, hence, any
liability of COCA COLA as to Canonicato's
salary or wage differentials was solidary
with BJS in accordance with pars. 1 and 2
of Art. 106, Labor Code; (c) COCA COLA
and BJS must jointly and severally pay
Canonicato his wage differentials
amounting to P2,776.80 and his 13th
month salary of P1,068.00, including ten
(10%) percent attorney's fees in the sum
of P384.48. The Labor Arbiter also ordered
that all other claims by Canonicato against
COCA COLA be dismissed for lack of

employer-employee relationship; that the


complaint for illegal dismissal as well as all
the other claims be likewise dismissed for
lack of merit; and that COCA COLA and BJS
deposit P4,429.28 with the Department of
Labor Regional Arbitration Branch Office
within ten (10) days from receipt of the
decision.[14]

The NLRC rejected on appeal the decision


of the Labor Arbiter on the ground that the
janitorial services of Canonicato were
found to be necessary or desirable in the
usual business or trade of COCA COLA.
The NLRC accepted Canonicato's
proposition that his work with the BJS was
the same as what he did while still a
casual employee of COCA COLA. In so
holding the NLRC applied Art. 280 of the
Labor Code and declared that Canonicato
was a regular employee of COCA COLA
and entitled to reinstatement and
payment of P18,105.10 in back wages.[15]

On 26 May 1995 the NLRC denied COCA


COLA's motion for reconsideration for lack
of merit.[16] Hence, this petition,
assigning as errors: (a) NLRC's finding that
janitorial services were necessary and
desirable in COCA COLA's trade and
business; (b) NLRC's application of Art.
280 of the Labor Code in resolving the
issue of whether an employment
relationship existed between the parties;
(c) NLRC's ruling that there was an
employer-employee relationship between
petitioner and Canonicato despite its
virtual affirmance that BJS was a
legitimate job contractor; (d) NLRC's
declaration that Canonicato was a regular
employee of petitioner although he had
rendered the company only five (5)
months of casual employment; and, (e)
NLRC's order directing the reinstatement
of Canonicato and the payment to him of
six (6) months back wages.[17]

We find good cause to sustain petitioner.


Findings of fact of administrative offices
are generally accorded respect by us and
no longer reviewed for the reason that
such factual findings are considered to be
within their field of expertise. Exception
however is made, as in this case, when
the NLRC and the Labor Arbiter made
contradictory findings.

We perceive at the outset the disposition


of the NLRC that janitorial services are
necessary and desirable to the trade or
business of petitioner COCA COLA. But this
is inconsistent with our pronouncement in
Kimberly Independent Labor Union v.
Drilon[18] where the Court took judicial
notice of the practice adopted in several
government and private institutions and
industries of hiring janitorial services on
an "independent contractor basis." In this
respect, although janitorial services may

be considered directly related to the


principal business of an employer, as with
every business, we deemed them
unnecessary in the conduct of the
employer's principal business.[19]

This judicial notice, of course, rests on the


assumption that the independent
contractor is a legitimate job contractor so
that there can be no doubt as to the
existence of an employer-employee
relationship between contractor and the
worker. In this situation, the only pertinent
question that may arise will no longer deal
with whether there exists an employment
bond but whether the employee may be
considered regular or casual as to deserve
the application of Art. 280 of the Labor
Code.

It is an altogether different matter when


the very existence of an employment
relationship is in question. This was the
issue generated by Canonicato's
application for regularization of his
employment with COCA COLA and the
subsequent denial by the latter of an
employer-employee relationship with the
applicant. It was error therefore for the
NLRC to apply Art. 280 of the Labor Code
in determining the existence of an
employment relationship of the parties
herein, especially in light of our explicit
holding in Singer Sewing Machine
Company v. Drilon[20] that -

x x x x [t]he definition that regular


employees are those who perform
activities which are desirable and
necessary for the business of the
employer is not determinative in this case.
Any agreement may provide that one
party shall render services for and in
behalf of another for a consideration (no

matter how necessary for the latter's


business) even without being hired as an
employee. This is precisely true in the
case of an independent contractorship as
well as in an agency agreement. The Court
agrees with the petitioner's argument that
Article 280 is not the yardstick for
determining the existence of an
employment relationship because it
merely distinguishes between two kinds of
employees, i.e., regular employees and
casual employees, for purposes of
determining the right of an employee to
certain benefits, to join or form a union, or
to security of tenure. Article 280 does not
apply where the existence of an
employment relationship is in dispute.

In determining the existence of an


employer-employee relationship it is
necessary to determine whether the
following factors are present: (a) the
selection and engagement of the
employee; (b) the payment of wages; (c)
the power to dismiss; and, (d) the power
to control the employee's conduct.[21]
Notably, these are all found in the
relationship between BJS and Canonicato
and not between Canonicato and
petitioner COCA COLA. As the SolicitorGeneral manifested[22]-

In the instant case, the selection and


engagement of the janitors for petitioner
were done by BJS. The application form
and letter submitted by private
respondent (Canonicato) to BJS show that
he acknowledged the fact that it was BJS
who did the hiring and not petitioner x x x
x
BJS paid the wages of private respondent,
as evidenced by the fact that on July 15,
1993, private respondent sent his sister to

BJS with a note authorizing her to receive


his pay.
Power of dismissal is also exercised by BJS
and not petitioner. BJS is the one that
assigns the janitors to its clients and
transfers them when it sees fit. Since BJS
is the one who engages their services,
then it only follows that it also has the
power to dismiss them when justified
under the circumstances.
Lastly, BJS has the power to control the
conduct of the janitors. The supervisors of
petitioner, being interested in the result of
the work of the janitors, also gives
suggestions as to the performance of the
janitors, but this does not mean that BJS
has no control over them. The interest of
petitioner is only with respect to the result
of their work. On the other hand, BJS
oversees the totality of their performance.
The power of the employer to control the
work of the employee is said to be the
most the most significant determinant.
Canonicato disputed this power of BJS
over him by asserting that his
employment with COCA COLA was not
interrupted by his application with BJS
since his duties before and after he
applied for regularization were the same,
involving as they did, working in the
maintenance department and doing
painting tasks within its facilities.
Canonicato cited the Labor Utilization
Reports of COCA COLA showing his
painting assignments. These reports,
however, are not expressive of the true
nature of the relationship between
Canonicato and COCA COLA; neither do
they detract from the fact that BJS
exercised real authority over Canonicato
as its employee.
Moreover, a closer scrutiny of the reports
reveals that the painting jobs were
performed by Canonicato sporadically,
either in a few days within a month and

only for a few months in a year.[23] This


infrequency or irregularity of assignments
countervails Canonicatos submission that
he was assigned specifically to undertake
the task of painting the whole year round.
If anything, it hews closely to the assertion
of BJS that it assigned Canonicato to these
jobs to maintain and sanitize the premises
of petitioner COCA COLA pursuant to its
contract of services with the company.[24]
It is clear from these established
circumstances that NLRC should have
recognized BJS as the employer of
Canonicato and not COCA COLA. This is
demanded by the fact that it did not
disturb, and therefore it upheld, the
finding of the Labor Arbiter that BJS was
truly a legitimate job-contractor and could
by itself hire its own employees. The
Commission could not have reached any
other legitimate conclusion considering
that BJS satisfied all the requirements of a
job-contractor under the law, namely, (a)
the ability to carry on an independent
business and undertake the contract work
on its own account under its own
responsibility according to its manner and
method, free from the control and
direction of its principal or client in all
matters connected with the performance
of the work except as to the results
thereof; and, (b) the substantial capital or
investment in the form of tools,
equipment, machinery, work premises,
and other materials which are necessary
in the conduct of its business.[25]
It is to be noted that COCA COLA is not the
only client of BJS which has its roster of
clients like San Miguel Corporation,
Distileria Bago Incorporated, University of
Negros Occidental-Recolletos, University
of St. La Salle, Riverside College, College
Assurance Plan Phil., Inc., and Negros
Consolidated Farmers Association, Inc.[26]
This is proof enough that BJS has the
capability to carry on its business of
janitorial services with big establishments

aside from petitioner and has sufficient


capital or materials necessary therefor.
[27] All told, there being no employeremployee relationship between
Canonicato and COCA COLA, the latter
cannot be validly ordered to reinstate the
former and pay him back wages.
WHEREFORE, the petition is GRANTED.
The NLRC decision of 3 January 1995
declaring Ramon B. Canonicato a regular
employee of petitioner Coca Cola Bottlers
Phils., Inc., entitled to reinstatement and
back wages is REVERSED and SET ASIDE.
The decision of the Labor Arbiter of 28
April 1994 finding no employer-employee
relationship between petitioner and
private respondent but directing petitioner
Coca Cola Bottlers Phils., Inc., instead and
Bacolod Janitorial Services to pay jointly
and severally Ramon B. Canonicato
P2,776.80 as wage differentials, P1,068.00
as 13th month pay and P384.48 as
attorney's fees, is REINSTATED.
SO ORDERED.
San Miguel vs NLRC (2006) G.R. 147566
Facts:
On 16 October 1990, Rafael M. Maliksi
filed a complaint against the San Miguel
Corporation-Magnolia Division, herein
referred to as SMC and Philippine Software
Services and Education Center herein
referred to as PHILSSEC to compel the said
respondents to recognize him as a regular
employee. He amended the complaint on
12 November 1990 to include the charge
of illegal dismissal because his services
were terminated on 31 October 1990.
The complainant's employment record
indicates that he rendered service with
Lipercon Services from 1 April 1981 to
February 1982 as budget head assigned to
SMC-Beer Division, then from July 1983 to
April 1985 with Skillpower, Inc., as
accounting clerk assigned to SMC-

Magnolia Division, then from October 1988


to 1989 also with Skillpower, Inc. as acting
clerk assigned to SMC-Magnolia Finance,
and from October 1989 to 31 October
1990 with PHILSSEC assigned to Magnolia
Finance as accounting clerk. The
complainant considered himself as an
employee of SMC-Magnolia. Lipercon
Services, Skillpower, Inc. and PHILSSEC
are labor-only contractors and any one of
which had never been his employer. His
dismissal, according to him, was in
retaliation for his filing of the complaint for
regularization in service. His dismissal was
illegal there being no just cause for the
action. He was not accorded due process
neither was his dismissal reported to the
Department of Labor and Employment.
PHILSSEC disclaimed liability. As an entity
catering (sic) computer systems and
program for business enterprises, it has
contracted with SMC-Magnolia to
computerize the latter's manual
accounting reporting systems of its
provincial sales. PHILSSEC then conducted
a three phase analysis of SMC-Magnolia
set up: first the computer needs of the
firm was (sic) determined; then, the
development of computer systems or
program suitable; and, finally, set up the
systems and train the employees to
operate the same. In all these phases,
PHILSSEC uses its computer system and
technology and provided the necessary
manpower to compliment the transfer of
the technology to SMC-Magnolia.
Complainant Maliksi was one of those
employed by PHILSSEC whose principal
function was the manual control of data
needed during the computerization. Like
all assigned to the project, the
complainant's work was controlled by
PHILSSEC supervisors, his salary paid by
the agency and he reported directly to
PHILSSEC. The computerization

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