Beruflich Dokumente
Kultur Dokumente
The petitioners argue that the circumstances of the case did not warrant the
relaxation of the rules of procedure in order to allow the submission of the
memorandum and the affidavit of Tabingo to the LA and the NLRC. They contend
that the respondent had sought to introduce in the proceedings before the LA
Tabingos memorandum dated December 10, 1999 addressed to the Accounting
Department stating that the "gross revenue from all publications
was P36,022,624.07, while net revenue was P32,551,890.58";27 that Tabingos
affidavit was meant to validate her memorandum; that such pieces of evidence
sought to prove that MMPIs target gross sales had been met, and would then
entitle the respondent to her claims of commissions and special incentives; that
the LA actually considered but did not give any weight or value to Tabingos
memorandum in resolving the respondents claims; that any affidavit from
Tabingo that the respondent intended to introduce would be merely corroborative
of the evidence already presented, like the table purportedly showing MMPIs
gross revenue for 1999; and that such evidence was already considered by the
NLRC in resolving the appeal.28
The important issue is whether or not the respondent was entitled to the
commissions and the incentive bonus being claimed.
Ruling
The appeal is partly meritorious.
The grant of a bonus or special incentive, being a management prerogative, is not
a demandable and enforceable obligation, except when the bonus or special
incentive is made part of the wage, salary or compensation of the employee, 29 or
is promised by the employer and expressly agreed upon by the parties. 30 By its
very definition, bonus is a gratuity or act of liberality of the giver, 31 and cannot be
considered part of an employees wages if it is paid only when profits are realized
or a certain amount of productivity is achieved. If the desired goal of production or
actual work is not accomplished, the bonus does not accrue.
Due to the nature of the bonus or special incentive being a gratuity or act of
liberality on the part of the giver, the respondent could not validly insist on the
schedule proposed in her memorandum of April 5, 1999 considering that the grant
of the bonus or special incentive remained a management prerogative. However,
the Court agrees with the CAs ruling that the petitioners had already exercised
the management prerogative to grant the bonus or special incentive. At no
instance did Yap flatly refuse or reject the respondents request for commissions
and the bonus or incentive. This is plain from the fact that Yap even "bargained"
with the respondent on the schedule of the rates and the revenues on which the
bonus or incentive would be pegged. What remained contested was only the
schedule of the rates and the revenues. In her initial memorandum of February
25, 1999, the respondent had suggested the following schedule, namely: (a)
0.05% outright commission on total revenue of P28-P29 million; (b) 0.075%
on P30-P34 million; (c) 0.1% on P35-P38 million; (d) 0.1% on P39-P41 million
pesos; and (f) 0.1% on P41 million or higher, but Yap had countered by revising
the schedule to start at 0.1% as outright commissions on a total revenue of P35P38 million, and the special incentive bonus to start at revenues of P35-P38
million. Moreover, on December 8, 1999, Yap sent to the respondent a
memorandum entitled Re: Formalization of my handwritten approval of 1999
Incentive scheme dated 25 February 1999. Such actuations and actions by Yap
indicated that, firstly, the petitioners had already acceded to the grant of the
special incentive bonus; and, secondly, the only issue still to be threshed out was
at which point and at what rate the respondents outright commissions and the
special incentive bonus for the sales staff should be given.
For sure, Yaps memorandum dated December 8, 1999, aside from being the
petitioners categorical admission of the grant of the commissions and the bonus
or incentives, laid down the petitioners own schedule of the commissions and the
bonus or incentives,32 to wit:
Re: Formalization of my handwritten approval of 1999 incentive scheme dated 25
February 1999
1999 Incentive Scheme for Group Publisher
P35-38 M
P39-41 M
P41 M
.05%
.075%
up 1%
P35-38 M
P39-41 M
P41 M up
P8,500.00 each
P10,000.00 each
P10,000.00 each
+ incentive trip abroad
Concerning the remand of the case to the NLRC for reception of additional
evidence at the instance of the respondent, we hold that the CA committed a
reversible error. Although, as a rule, the submission to the NLRC of additional
evidence like documents and affidavits is not prohibited, so that the NLRC may
properly consider such evidence for the first time on appeal, 33 the circumstances
of the case did not justify the application of the rule herein.
The additional evidence the respondent has sought to be admitted (i.e., Tabingos
affidavit executed on October 14, 2002) was already attached to the pleadings
filed in the NLRC, and was part of the records thereat. Its introduction was
apparently aimed to rebut the petitioners claim that its gross revenue was
only P31,947,677.00 and did not reach the minimum P35 million necessary for the
grant of the respondents outright commissions and the special incentive bonus
for the sales staff (inclusive of the respondent). Tabingos affidavit corroborated
her memorandum to the Accounting Department dated December 10, 1999
stating that MMPIs revenue for 1999 wasP36,216,624.07.341wphi1
Confronted with the conflicting claims on MMPIs gross revenue realized in 1999,
the question is which evidence must be given more weight?
The resolution of the question requires the re-examination and calibration of
evidence.35 Such re-examination and calibration, being of a factual nature,
ordinarily lies beyond the purview of the Courts authority in this appeal. Yet,
because the documents are already before the Court, we hereby treat the
situation as an exception in order to resolve the question promptly and finally
instead of still remanding the case to the CA for the reevaluation and calibration.
We start by observing that the degree of proof required in labor cases is not as
stringent as in other types of cases.36 This liberal approach affords to the
employee every opportunity to level the playing field in which her employer is
pitted against her. Here, on the one hand, were Tabingos memorandum and
affidavit indicating that MMPIs revenues in 1999 totaled P36,216,624.07, and, on
the other, the audit report showing MMPIs gross revenues amounting to
only P31,947,677.00 in the same year. That the audit report was rendered by the
auditing firm of Punongbayan & Araullo did not make it weightier than Tabingos
memorandum and affidavit, for only substantial evidence that amount of
relevant evidence which a reasonable mind might accept as adequate to justify a
conclusion37 was required in labor adjudication. Moreover, whenever the
evidence presented by the employer and that by the employee are in equipoise,
the scales of justice must tilt in favor of the latter. 38For purposes of determining
whether or not the petitioners gross revenue reached the minimum target of P35
million, therefore, Tabingos memorandum and affidavit sufficed to positively
establish that it did, particularly considering that Tabingos memorandum was
made in the course of the performance of her official tasks as a traffic clerk of
MMPI. In her affidavit, too, Tabingo asserted that her issuance of the
memorandum was pursuant to MMPIs year-end procedures, an assertion that the
petitioners did not refute. In any event, Tabingos categorical declaration in her
affidavit that "[because] of that achievement, as part of the Sales and Traffic Team
of MMPI, in addition to my other bonuses that year, I received P8,500.00 in gift
certificates as my share in the Group Incentive for the Sales and Traffic Team for
gross advertising revenue of P35 to P38 million xxx,"39 aside from the petitioners
not refuting it, was corroborated by the 1999 Advertising Target sent by the
respondent to Yap on December 2, 1999, in which the respondent reported a gross
revenue of P36,216,624.07 as of December 1, 1999. 40
Accordingly, the Court concludes that the respondent was entitled to her 0.05%
outright commissions and to the special incentive bonus of P8,500.00 based on
MMPI having reached the minimum target of P35 million in gross revenues paid in
"bartered goods and cash in direct proportion to percentage of cash and bartered
goods revenue for the year," as provided in Yaps memorandum of December 8,
1999.41
WHEREFORE, the Court REVERSES AND SETS ASIDE the amended decision
promulgated on November 19, 2003; ENTERS a new decision granting respondent
Margaret A. Defensors claim for outright commissions in the amount of P 181,083
.12 and special incentive bonus of P8,500.00, or a total of 1!189,583.12; and
DIRECTS petitioner Mega Magazine Publications, Inc. to pay the costs of suit.
SO ORDERED.
the said personnel or by third parties, whether or not such injury, death or claim
by third parties, whether or not such injury, death or claim arises out of, or in any
way connected with, the performance of personnel's duties.
The CLIENT shall have the right to report to the CONTRACTOR and protest any
untoward act, negligence, misconduct, malfeasance or nonfeasance of the said
personnel and the contractor alone shall have the right to discipline the said
personnel.
The CONTRACTOR shall fully and faithfully comply with the provisions of the New
Labor Code, as well as with other laws, rules and regulations, pertaining to the
employment of labor which is now existing or which hereafter be promulgated or
enacted.
In relation to the Service Agreement, Golden Rock, on April 26, 2010, engaged the
services of respondent Dalag as a factory worker to be assigned at petitioner's
factory. For this purpose, respondents inked a five-month Employment Contract
For Contractual Employees (Employment Contract)5 that reads:
EMPLOYMENT CONTRACT FOR CONTRACTUAL EMPLOYEES Dear Mr./Ms. Richard
Dalag,
[Golden Rock] hire(s) you as a contractual worker/employee to work at WM MFG
under these conditions:chanRoblesvirtualLawlibrary
1) You will hold the position as (sic) Factory Worker.
2) Your employment as a CONTRACTUAL EMPLOYEE takes effect on April 26, 2010
to Sept. 26, 2010. You will receive a salary of P328.00 per day payable
weekly/15'h (sic) day monthly of the calendar month.
xxxx
7) Your employment as a CONTRACTUAL EMPLOYEE may be terminated at any
time for any cause, which may arise due to inability to learn and undertake duties
and responsibilities of the position you are being employed for, inefficiency,
violation of company rules, policies and regulations, personnel reduction and
recession business. In either event, you will be given a notice of termination
during your working hours/day.
The company undertakes to pay your compensation for the days actually worked
and the company shall not be liable for the period of the contract not run for any
separation pay.
Notwithstanding the five-month duration stipulated in the contract, respondent
Dalag would allege in his complaint for illegal dismissal6 that on August 7, 2010,
one of WM MFCs security guards prevented him from going to his work station
and, instead, escorted him to the locker room and limited his activity to
withdrawing his belongings therefrom. Having been denied entry to his work
station without so much as an explanation from management, Dalag claimed that
he was illegally dismissed, his employment having been terminated without either
notice or cause, in violation of his right to due process, both substantive and
procedural.
Dalag further claimed that his assignment at WM MFG as side seal machine
operator was necessary and desirable for the company's plastic manufacturing
business, making him a regular employee entitled to benefits under such
classification.7 He likewise alleged that WM MFG and Golden Rock engaged in the
illegal act of labor-only contracting based on the following circumstances: that all
the equipment, machine and tools that he needed to perform his job were
furnished by WM MFG; that the jobs are to be performed at WM MFCs workplace;
and that he was under the supervision of WM MFCs team leaders and supervisors.
The complaint, docketed as LAC No. 03-000673-11, was lodged against WM MFG,
Golden Rock, Jocelyn Hernando (Hernando), Watson Nakague (Nakague) and Pablo
Ong (Ong), the latter three individuals as officers of the impleaded companies. In
their joint position paper, therein respondents argued that Dalag was not
dismissed and that, on the contrary, it was he who abandoned his work. They
offered as proof WM MFG's memos8 addressed to Dalag, which ordered him to
answer within 24-hours the accusations relating to the following alleged
infractions: gross negligence, qualified theft, malicious mischief, incompetence,
grave misbehaviour, insubordination, dishonesty, and machine sabotage. 9 Based
on the memos and the affidavits submitted by his former co-workers, 10 Dalag
repeatedly failed to immediately report to management the breakdowns of the
side-seal machine he was assigned to operate; that he did not report that the
machine's thermocouple wire and conveyor belt needed repair, causing the
damage on the belt to worsen and for the wire to eventually break; and that he
pocketed spare parts of petitioner's machines without company management's
consent.
Memo 2010-19 dated August 7, 2010, the final memo WM MFG attempted to
serve Dalag, pertinently reads:11
Samakaluwid, matapos ang isinagawang imbestigasyon tungkol sa mga
insidenteng kinasangkutan mo. Napagdesisyunan na ng Management na
magbaba ng Final Decision na ikaw ay patawan ng suspension at pinagrereport sa
Golden Rock Agency, ito ay clahil sa mga alegasyon na nagpapatunay na ikaw ay
nagkasala at lumabag sa Patakaran ng kumpanyang ito.
Dalag, however, allegedly refused to receive the memos, and instead turned his
back on his superiors, informing them that he will no longer return, and then
walked away. And on that very same day, WM MFG, through a letter addressed to
Golden Rock, informed the manpower company of its intention to exercise its right
to ask for replacement employees under the Service Agreement. As per the letter,
WM MFG no longer needed Dalag's services.12
The parties would later file their respective replies in support of the allegations
and arguments raised in their position papers.13
Decision17 in NLRC NCR CASE NO. 08-11002-10, which granted his appeal in the
following wise:
WHEREFORE, in view of the foregoing premises, the appeal of the complainant is
GRANTED. The assailed Decision dated January 24, 2011 is hereby REVERSED and
SET ASIDE. Judgment is now rendered declaring complainant to have been
illegally terminated from employment. Respondents W.M Manufacturing, Inc., et.
al., are hereby ordered to reinstate immediately complainant to his former
position without loss of seniority rights and privileges computed from the time he
was actually dismissed or his compensation withheld up to the time of actual
reinstatement, which as of the decision, amounted to a total of One Hundred
Seven Thousand Seven Hundred Thirty-Nine and 73/100 Pesos (P107,739.73), as
computed by the NLRC Computation Unit, exclusive of the complainant's unpaid
wages from August 4-6, 2010, in the amount of P1,212.00 as previously awarded.
All other claims are hereby dismissed for lack of merit.
SO ORDERED.
In siding with respondent Dalag, the NLRC determined that Dalag's true employer
was WM MFG, who merely engaged respondent Golden Rock as a labor-only
contractor. To arrive at this conclusion, the NLRC utilized the control test, thusly: 18
x x x [T]he employment contract of the complainant only showed that [Golden
Rocld] hired [Dalag] as a factory worker to be assigned to [WM MFG] and by all
indications, Golden Rock did not provide technical or special services [WM MFG].
Moreover, [WM MFG and Golden Rock] did not deny that the machines or tools
used by the complainant, including the work premises, belonged to respondent
[WM MFG], and not to the agency.
[WM MFG]'s control and supervision over the work of [Dalag] is indeed explicit,
and as stated by [Dalag] he was supervised not by Golden Rock but by the team
leaders and supervisors of [WM MFG]. And not only that, based on the evidence
submitted by respondent [WM MFG], it was the latter who even took the pains of
investigating the alleged infractions of [Dalag]. By [WM MFG and Golden Rock]'s
own allegation, it was [WM MFG] who issued memos to [Dalag] directing him to
explain several infractions allegedly committed. All those notices and
memoranda, which according to [WM MFG] [Dalag] refused to receive, emanated
from [WM MFG], and not from Golden Rock. This only demonstrates that the
complainant is not an employee of [Golden Rock] but of [WM MFG].
The so-called "control test" in determining employer-employee relationship is
applicable in the instant case. In this case, [WM MFG] reserved the right to control
the complainant not only as to the result of the work to be done but also to the
means and methods by which the same is to be accomplished. Hence, clearly,
there is an employer-employee between [WM MFG] and [Dalag].
Aside from applying the control test, the Commission likewise gave credence to
Dalag's postulation that several other factors point to Golden Rock's nature as a
labor-only contractor, a mere agent. The NLRC outlined these considerations as
follows: that Golden Rock supplied WM MFG with employees that perform
functions that are necessary, desirable, and directly related to the latter's main
business;19 that there is an absence of proof that Golden Rock is involved in
permissible contracting services20 and that it carries on an independent business
for undertaking job contracts other than to WM MFG;21 and that both WM MFG and
Golden Rock even jointly submitted pleadings to the NLRC, with the same
submission and defenses, and even under the same representation. 22 On account
of these circumstances, the NLRC deemed the contractual relation between WM
MFG and Golden Rock as one of labor-only contracting, akin to that of a principal
and his agent. In light of this determination, the NLRC held that they are,
therefore, jointly and severally liable23 to WM MFG's illegally dismissed employees
that were supplied by Golden Rock.
Dalag, having been prevented from reporting to work without just cause and
without being afforded the opportunity to be heard, is one of such illegally
dismissed employees to whom Golden Rock and petitioner are solidarily liable, so
the NLRC ruled. In its initial findings, the NLRC held that the attempt to serve
Dalag copies of the memoranda did not constitute sufficient notice for there was
no proof of service or even of an attempt thereof. The Commission explained that
assuming for the sake of argument that Dalag, indeed, refused to receive copies
of the memos personally served, WM MFG's remedy was then to serve them
through registered mail in order to be considered as compliance with the
procedural requirement of notice.24 WM MFG's failure to comply with the same
then resulted in Dalag being deprived of his procedural due process right.
Moreover, assuming even further that there was no deviation from procedure, the
NLRC held that the contents of the memos offered by petitioner in evidence do
not amount to valid cause for they merely constituted allegations, not proof, of
Dalag's infractions. As noted by the NLRC, no formal investigation followed the
attempt to serve Dalag copies of the memoranda. Thus, to the mind of the
Commission, the veracity of the allegations in the memoranda were not verified
and cannot, therefore, be taken at face value.25cralawred
Dalag's legal victory, however, would be short-lived, for eventually, WM MFG and
Nakague would jointly move for reconsideration, which would be granted by the
NLRC.
In its second Decision26 promulgated on September 20, 2011, the NLRC absolved
Dalag's alleged employers from liability, as follows:
WHEREFORE, in view of the foregoing premises, the Motion for Reconsideration
is hereby, GRANTED. The assailed Decision dated May 31, 2011 is
hereby REVERSED andSET ASIDE. The Decision of Labor Arbiter Eduardo G.
Magno dated January 24, 2011 is hereby REINSTATED.
SO ORDERED.
To justify the turnabout, the NLRC took into consideration Certificate of
Registration No. NCR-CFO-091110-0809-00327 dated August 27, 2009 and issued
by the Department of Labor and Employment (DOLE) to Golden Rock pursuant to
Department Order No. 18-02, s. 2002,28 and Articles 106-109 of the Labor Code,
on job-contracting.29 The said certificate, along with the copy of the Service
Agreement between WM MFG and Golden Rock and Dalag's Employment Contract,
was submitted for the first time as attachments to WM MFG and Nakague's motion
for reconsideration, but were, nevertheless, admitted by the NLRC in the interest
of substantial justice.30
With the introduction of these new pieces of evidence, the commission ruled anew
that its previous observationthat there was an absence of proof that Golden
Rock is a legitimate job contractorhas effectively been refuted. What is more,
the NLRC no longer relied solely on the control test and instead applied the fourfold test in ascertaining Dalag's true employer. And in reviewing its earlier
Decision, the NLRC noted that it is Golden Rock who paid Dalag's salaries and
wages; that under the Service Agreement, it reserved unto itself the power to
dismiss Dalag; and that it has sole control over the exercise of Dalag's
employment.31
The NLRC then proceeded to reiterate the Labor Arbiter's position that for the
employer's burden to prove that its dismissal of an employee was for just cause to
arise, the employee must first demonstrate that he was, in the first place, actually
dismisseda fact which Dalag failed to establish. Lastly, the NLRC noted that
Dalag reported for work for only three (3) months and cannot, therefore, be
considered a regular employee.32
Rulings of the Court of Appeals
Expectedly, the September 20, 2011 NLRC Decision prompted Dalag to elevate
the case to the CA via a Rule 65 petition for certiorari, docketed as CA-G.R. SP No.
122425, alleging that the commission committed grave abuse of discretion when
it reversed its own ruling. Specifically, Dalag argued that it was highly irregular for
the Commission to have admitted the documents belatedly offered by WM MFG as
evidence,33 and insisted that the NLRC did not err in its first Decision finding that
he was illegally dismissed.34 Meanwhile, WM MFG and Nakague would counter that
the petition to the CA ought to be dismissed outright since Dalag failed to file a
motion for reconsideration of the NLRC's second Decision, a condition sine qua
non for filing a petition for certiorari under Rule 65. They likewise point to the
Entry of Judgment35 issued by the NLRC, signifying that the second Decision of the
NLRC has already attained finality. To modify the same would then violate the
doctrine on the immutability of judgments.
On February 21, 2013, the appellate court rendered a Decision favoring Dalag in
the following wise:
WHEREFORE, the petition is GRANTED. The Decision Dated September 20, 2011
of the National Labor Arbiter's Commission, Second Division in NLRC NCR 0811002-10 (LAC No. 03-000673-11) is hereby REVERSED and SET ASIDE. The
NLRC's Decision dated May 31, 2011 is REINSTATED.
SO ORDERED.36ChanRoblesVirtualawlibrary
Dispensing with the procedural arguments, the CA struck down the contentions of
both parties relating to the rigid application of procedural rules. 37 It held that rules
of evidence prevailing in courts of law or equity are not binding in labor
cases,38 and allow the admission of additional evidence not presented before the
Labor Arbiter, and submitted before the NLRC for the first time on appeal, 39 as in
WM MFCs case.
As regards the alleged availability of a plain, speedy, and adequate remedy at
Dalag's disposal that bars the filing of a petition for certiorari, the CA held that
technical rules may be relaxed in this regard in the interest of substantial
justice.40 To quote the appellate court:
In this case, a liberal construction of the rules is called for as records show that
petitioner filed the petition as a pauper litigant. Technical rules of procedure may
be relaxed to serve the demands of substantial justice particularly in labor cases,
where the prevailing principle is that technical rules shall be liberally construed in
favor of the working class in accordance with the demands of substantial justice.
Rules of procedure should also not be applied in a very rigid technical sense in
labor cases in order that technicalities would not stand in the way of equitably
and completely resolving the rights and obligations of the parties. (citations
omitted)
On to the merits, the CA discussed that Golden Rock's Certificate of Registration is
not conclusive evidence that the company is an independent contractor. 41 More
controlling for the CA was the failure of Golden Rock to prove the concurrence of
the requisites of a legitimate independent job contractor according to
jurisprudence.42 Absent proof that Golden Rock has substantial capital and that it
exercised control over Dalag, the CA held that petitioner and Golden Rock
miserably failed to establish the latter's status as a legitimate independent
contractor.43 Finally, the appellate court did not give credence to petitioner's claim
of abandonment since it failed to discharge the burden of proving Dalag's
unjustified refusal to return to work.44
Unfazed, WM MFG and Nakague moved for reconsideration of the CA's ruling. On
September 17, 2013, the CA rendered an Amended Decision partially granting the
motion and modifying the decretal portion of its earlier ruling in the following
wise:
WHEREFORE, the Motion for Reconsideration is PARTIALLY GRANTED. The
Decision, dated February 21, 2013 of this Court which reads:
WHEREFORE, the petition is GRANTED. The Decision Dated September 20, 2011 of
the National Labor Arbiter's Commission, Second Division in NLRC NCR 08-1100210 (LAC No. 03-000673-11) is hereby REVERSED and SET ASIDE. The NLRC's
Decision dated May 31, 2011 is REINSTATED.
SO ORDERED.
is hereby AMENDED to read:
WHEREFORE, the petition is GRANTED. The Decision Dated September 20, 2011 of
the National Labor Arbiter's Commission, Second Division in NLRC NCR 08-1100210 (LAC No. 03-000673-11) is hereby REVERSED and SET ASIDE. The NLRC's
Decision dated May 31, 2011 is REINSTATED insofar as the liability of Golden Rock
Manpower Services and W.M. Manufacturing, Inc. are concerned. The company
officers, Watson Nakague and Pablo Ong are absolved of liability.
SO ORDERED.
SO ORDERED.45ChanRoblesVirtualawlibrary
The Facts
On 23 February 2006, petitioner Manila Memorial Park Cemetery, Inc. (Manila
Memorial) entered into a Contract of Services with respondent Ward Trading and
Services (Ward Trading). The Contract of Services provided that Ward Trading, as
an independent contractor, will render interment and exhumation services and
other related work to Manila Memorial in order to supplement operations at Manila
Memorial Park, Paranaque City.
Among those assigned by Ward Trading to perform services at the Manila
Memorial Park were respondents Ezard Lluz, Norman Corral, Erwm Fugaban,
Valdimar Balisi, Emilio Fabon, John Mark Aplicador, Michael Curioso, Junlin Espares,
and Gavino Farinas (respondents). They worked six days a week for eight hours
daily and were paid P250 per day.
On 26 June 2007, respondents filed a Complaint 4 for regularization and Collective
Bargaining Agreement benefits against Manila Memorial; Enrique B. Lagdameo,
Manila Memorial's Executive Vice-President and Director in Charge for Overall
Operations, and Ward Trading. On 6 August 2007, respondents filed an amended
complaint to include illegal dismissal, underpayment of 13 th month pay, and
payment of attorney's fees.
Respondents alleged that they asked Manila Memorial to consider them as regular
workers within the appropriate bargaining unit established in the collective
bargaining agreement by Manila Memorial and its union, the Manila Memorial Park
Free Workers Union (MMP Union). Manila Memorial refused the request since
respondents were employed by Ward Trading, an independent labor contractor.
Thereafter, respondents joined the MMP Union. The MMP Union, on behalf of
respondents, sought their regularization which Manila Memorial again declined.
Respondents then filed the complaint. Subsequently, respondents were dismissed
by Manila Memorial. Thus, respondents amended the complaint to include the
prayer for their reinstatement and payment of back wages.
Meanwhile, Manila Memorial sought the dismissal of the complaint for lack of
jurisdiction since there was no employer-employee relationship. Manila Memorial
argued that respondents were the employees of Ward Trading.
In a Decision5 dated 29 March 2010, the Labor Arbiter dismissed the complaint for
failing to prove the existence of an employer-employee relationship. The
dispositive portion of the Decision states:ChanRoblesVirtualawlibrary
WHEREFORE, premises considered, judgment is hereby rendered dismissing the
above-entitled case for complainants' lack of employer-employee relationship with
respondent Manila Memorial Park Cemetery, Inc.
SO ORDERED.6chanroblesvirtuallawlibrary
Respondents appealed7 to the NLRC. In a Decision8 dated 30 September 2010, the
NLRC reversed the Labor Arbiter's findings. The NLRC ruled that Ward Trading was
P43,982.
79
6. John Mark
Aplicador -
P43,982.
79
7. Michael
Curioso -
P43,982.
79
8. Ju[n]lin
Espares -
P43,982.
79
Manila Memorial then filed a Motion for Reconsideration which was denied by the
CA in a Resolution dated 17 July 2013.
Hence, the instant petition.chanRoblesvirtualLawlibrary
The Issue
The main issue for our resolution is whether or not an employer-employee
relationship exists between Manila Memorial and respondents for the latter to be
entitled to their claim for wages and other benefits.chanRoblesvirtualLawlibrary
The Court's Ruling
The petition lacks merit.
Manila Memorial contends that Ward Trading has total assets in excess of P1.4
million, according to Ward Trading's financial statements for the year 2006,
proving that it has sufficient capitalization to qualify as a legitimate independent
contractor. Manila Memorial insists that nowhere is it provided in the Contract of
Services that Manila Memorial controls the manner and means by which
respondents accomplish the results of their work. Manila Memorial states that the
company only wants its contractors and the latter's employees to abide by
company rules and regulations.
Respondents, on the other hand, assert that they are regular employees of Manila
Memorial since Ward Trading cannot qualify as an independent contractor but
should be treated as a mere labor-only contractor. Respondents state that (1)
there is enough proof that Ward Trading does not have substantial capital,
investment, tools and the like; (2) the workers recruited and placed by the alleged
contractors performed activities that were related to Manila Memorial's business;
and (3) Ward Trading does not exercise the right to control the performance of the
work of the contractual employees.
As a general rule, factual findings of the CA are binding upon this Court. One
exception to this rule is when the factual findings of the former are contrary to
those of the trial court, or the lower administrative body, as the case may be. This
Court is obliged to resolve an issue of fact due to the conflicting findings of the
Labor Arbiter on one hand, and the NLRC and the CA on the other.
In order to determine whether there exists an employer-employee relationship
between Manila Memorial and respondents, relevant provisions of the labor law
and rules must first be reviewed. Article 106 of the Labor Code
states:ChanRoblesVirtualawlibrary
Art. 106. Contractor or subcontractor. Whenever an employer enters into a
contract with another person for the performance of the former's work, the
employees of the contractor and of the latter's subcontractor, if any, shall be paid
in accordance with the provisions of this Code.
In the event that the contractor or subcontractor fails to pay the wages of his
employees in accordance with this Code, the employer shall be jointly and
severally liable with his contractor or subcontractor to such employees to the
extent of the work performed under the contract, in the same manner and extent
that he is liable to employees directly employed by him.
The Secretary of Labor and Employment may, by appropriate regulations, restrict
or prohibit the contracting-out of labor to protect the rights of workers established
under this Code. In so prohibiting or restricting, he may make appropriate
distinctions between labor-only contracting and job contracting as well as
differentiations within these types of contracting and determine who among the
parties involved shall be considered the employer for purposes of this Code, to
prevent any violation or circumvention of any provision of this Code.
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 such employer. In
such cases, the person or intermediary shall be considered merely as 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. (Emphasis supplied)
Sections 3, 5 and 7 of Department Order No. 18-02 12 distinguish between
legitimate and labor-only contracting and assume the existence of an employeremployee relationship if found to be engaged in labor-only contracting. The
provisions state:ChanRoblesVirtualawlibrary
xxxx
Section 3. Trilateral Relationship in Contracting Arrangements. In legitimate
contracting, there exists a trilateral relationship under which there is a contract
for a specific job, work or service between the principal and the contractor or
subcontractor, and a contract of employment between the contractor or
subcontractor and its workers. Hence, there are three parties involved in these
arrangements, the principal which decides to farm out a job or service to a
contractor or subcontractor, the contractor or subcontractor which has the
capacity to independently undertake the performance of the job, work or service,
and the contractual workers engaged by the contractor or subcontractor to
accomplish the job, work or service.
xxxx
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
1)
2)
The contractor does not exercise the right to control the performance of the
work of the contractual employee.13
In the present case, Manila Memorial entered into a Contract of Services with
Ward Trading, a single proprietorship owned by Emmanuel Mayor Ward with
business address in Las Pias City on 23 February 2006. In the Contract of
Services, it was provided that Ward Trading, as the contractor, had adequate
workers and substantial capital or investment in the form of tools, equipment,
machinery, work premises and other materials which were necessary in the
conduct of its business.
However, a closer look at the Contract of Services reveals that Ward Trading does
not have substantial capital or investment in the form of tools, equipment,
machinery, work premises and other materials since it is Manila Memorial which
owns the equipment used in the performance of work needed for interment and
exhumation services. The pertinent provision in the Contract of Services which
shows that Manila Memorial owns the equipment
states:ChanRoblesVirtualawlibrary
The COMPANY shall [sell] to the contractor the COMPANY owned equipment in the
amount of ONE MILLION FOUR HUNDRED THOUSAND PESOS ONLY (Php
1,400,000.00) payable in two (2) years or a monthly payment of FIFTY EIGHT
THOUSAND THREE HUNDRED THIRTY FIVE PESOS ONLY (Php 58,335.00) to be
deducted from the CONTRACTOR'S billing.14chanroblesvirtuallawlibrary
Just by looking at the provision, it seems that the sale was a regular business
transaction between two parties. However, Manila Memorial did not present any
evidence to show that the sale actually pushed through or that payments were
made by Ward Trading to prove an ordinary arms length transaction. We agree
with the NLRC in its findings:ChanRoblesVirtualawlibrary
While the above-cited provision of the Contract of Service implies that respondent
MMPCI would sell subject equipment to Ward at some future time, the former
failed to present any contract of sale as proof that, indeed, it actually sold said
equipment to Ward. Likewise, respondent MMPCI failed to present any
"CONTRACTOR'S billing" wherein the purported monthly installment of P58,335.00
had been deducted, to prove that Ward truly paid the same as they fell due. In a
contract to sell, title is retained by the vendor until full payment of the price.
Moreover, the Contract of Service provides that:ChanRoblesVirtualawlibrary
"5. The COMPANY reserves the right to rent all or any of the CONTRACTOR'S
equipment in the event the COMPANY requires the use of said equipment, x x x."
This provision is clear proof that Ward does not have an absolute right to use or
enjoy subject equipment, considering that its right to do so is subject to
respondent MMPCI's use thereof at any time the latter requires it. Such provision
is contrary to Article 428 of the Civil Code, which provides that "The owner has
the right to enjoy and dispose of a thing, without other limitation than those
established by law." It is plain to see that Ward is not the owner of the equipment
worth P1,400,000.00 that is being actually and directly used in the performance of
the services contracted out.
Further, the Service Contract states that:ChanRoblesVirtualawlibrary
"For its part, the COMPANY agrees to provide the following:
a) Area to store CONTRACTOR'S equipment and materials
b) Office space for CONTRACTOR'S staff and personnel"
This provision is clear proof that even the work premises actually and directly
used by Ward in the performance of the services contracted out is owned by
respondent MMPCI.15chanroblesvirtuallawlibrary
Also, the difference in the value of the equipment in the total amount of
P1,400,000.00 can be glaringly seen in Ward Trading's financial statements for the
year 2006 when compared to its 2005 financial statements. It is significant to note
that these financial statements were submitted by Manila Memorial without any
certification that these financial statements were actually audited by an
independent certified public accountant. Ward Trading's Balance Sheet 16 as of 31
December 2005 showed that it had assets in the amount of P441,178.50 and
property and equipment with a net book value of P86,026.50 totaling P534,705. A
year later, Ward Trading's Balance Sheet17 ending in 31 December 2006 showed
that it had assets in the amount of P57,084.70 and property and equipment with a
net book value of Pl,426,468 totaling P1,491,052.70. Ward Trading, in its Income
Statements18 for the years 2005 and 2006, only earned a net income of P53,800
in the year ending 2005 and P68,141.50 in 2006. Obviously, Ward Trading could
not have raised a substantial capital of P1,400,000.00 from its income alone
without the inclusion of the equipment owned and allegedly sold by Manila
Memorial to Ward Trading after they signed the Contract of Services on 23
February 2006.
Further, the records show that Manila Memorial and Enrique B. Lagdameo
admitted that respondents performed various interment services at its Sucat,
Paranaque branch which were directly related to Manila Memorial's business of
developing, selling and maintaining memorial parks and interment functions.
Manila Memorial even retained the right to control the performance of the work of
the employees concerned. As correctly observed by the
CA:ChanRoblesVirtualawlibrary
A perusal of the Service Contract would reveal that respondent Ward is still
subject to petitioner's control as it specifically provides that although Ward shall
be in charge of the supervision over individual respondents, the exercise of its
supervisory function is heavily dependent upon the needs of petitioner Memorial
Park, particularly:ChanRoblesVirtualawlibrary
"It is also agreed that:
DFI challenges the March 31, 2006 Decision3 and May 30, 2006 Resolution4 of the
Court Appeals, Special Twenty-Second Division, Cagayan De Oro City for being
contrary to law and jurisprudence. The Decision dismissed DFI's Petition
for Certiorari in C.A.-G.R. SP Nos. 53806 and 61607 and granted DARBMUPCO's
Petition for Certiorari in C.A.-G.R. SP No. 59958. It declared DFI as the statutory
employer of the respondent-workers.
The Facts
DFI owns an 800-hectare banana plantation ("original plantation") in Alejal,
Carmen, Davao.5 Pursuant to Republic Act No. 6657 or the Comprehensive
Agrarian Reform Law of 1988 ("CARL"), commercial farms shall be subject to
compulsory acquisition and distribution,6 thus the original plantation was covered
by the law. However, the Department of Agrarian Reform ("DAR") granted DFI a
deferment privilege to continue agricultural operations until 1998. 7 Due to
adverse marketing problems and observance of the so-called "lay-follow" or the
resting of a parcel of land for a certain period of time after exhaustive utilization,
DFI closed some areas of operation in the original plantation and laid off its
employees.8 These employees petitioned the DAR for the cancellation of DFI's
deferment privilege alleging that DFI already abandoned its area of
operations.9 The DAR Regional Director recalled DFI's deferment privilege resulting
in the original plantation's automatic compulsory acquisition and distribution
under the CARL.10 DFI filed a motion for reconsideration which was denied. It then
appealed to the DAR Secretary.11
In the meantime, to minimize losses, DPI offered to give up its rights and interest
over the original plantation in favor of the government by way of a Voluntary Offer
to Sell.12 The DAR accepted DFI's offer to sell the original plantation. However, out
of the total 800 hectares, the DAR only approved the disposition of 689.88
hectares. Hence, the original plantation was split into two: 689.88 hectares were
sold to the government ("awarded plantation") and the remaining 200 hectares,
more or less, were retained by DPI ("managed area").13 The managed area is
subject to the outcome of the appeal on the cancellation of the deferment
privilege before the DAR Secretary.
On January 1, 1996, the awarded plantation was turned over to qualified agrarian
reform beneficiaries ("ARBs") under the CARL. These ARBs are the same farmers
who were working in the original plantation. They subsequently organized
themselves into a multi-purpose cooperative named "DARBMUPCO," which is one
of the respondents in this case.14
On March 27, 1996, DARBMUPCO entered into a Banana Production and Purchase
Agreement ("BPPA")15with DFI.16 Under the BPPA, DARBMUPCO and its members as
owners of the awarded plantation, agreed to grow and cultivate only high grade
quality exportable bananas to be sold exclusively to DPI. 17 The BPPA is effective
for 10 years.18
the CA's former Twelfth Division and was docketed as C.A.-G.R. SP No. 53806.
CA.-G.R. SP No. 59958
Meanwhile, on June 20, 199731 and September 15, 1997,32 SPFL, together with
more than 300 workers, filed a case for underpayment of wages, nonpayment of
13th month pay and service incentive leave pay and attorney's fees against DFI,
DARBMUPCO and the respondent-contractors before the National Labor Relations
Commission ("NLRC") in Davao City. DARBMUPCO averred that it is not the
employer of respondent-workers; neither is DFI. It asserted that the money claims
should be directed against the true employerthe respondent-contractors. 33
In a Decision dated January 22, 1999, 34 the Labor Arbiter ("LA") held that die
respondent-contractors are "labor-only contractors." The LA gave credence to the
affidavits of the other contractors35 of DFI (who are not party-respondents in this
petition) asserting that DFI engaged their services, and supervised and paid their
laborers. The affidavits also stated that the contractors had no dealings with
DARBMUPCO, except that their work is done in the awarded plantation.36
The LA held that, under the law, DFI is deemed as the statutory employer of all
the respondent-workers.37 The LA dismissed the case against DARBMUPCO and
the respondent-contractors.38
DFI appealed to the NLRC. In a Resolution dated May 24, 1999, 39 the NLRC Fifth
Division modified the Decision of the LA and declared that DARBMUPCO and DFI
are the statutory employers of the workers rendering services in the awarded
plantation and the managed area, respectively. 40 It adjudged DFI and DARBMUPCO
as solidarity liable with the respondent-contractors for the monetary claims of the
workers, in proportion to their net planted area. 41
DARBMUPCO filed a motion for reconsideration which was denied. 42 It filed a
second motion for reconsideration in the NLRC, which was also denied for lack of
merit and for being barred under the NLRC Rules of Procedure.43 Hence,
DARBMUPCO elevated the case to the CA by way of a Petition forCertiorari.44 The
case was docketed as CA.-G.R. SP. No. 59958.
The former Eleventh Division of the CA consolidated C.A. G.R. SP. No. 59958 and
C.A.-G.R. SP No. 53806 in a Resolution dated January 27, 2001. 45
C.A.-G.R. SPNo. 61607
Pursuant to the May 4, 1999 Resolution of the SOLE approving the conduct of
certification election, the Department of Labor and Employment ("DOLE")
conducted a certification election on October 1, 1999.46On even date, DFI filed an
election protest47 before the Med-Arbiter arguing that the certification election
was premature due to the pendency of a petition for certiorari before the CA
assailing the February 18, 1999 and May 4, 1999 Resolutions of the SOLE
under the BPPA. This impelled DFI to hire contractors to supply labor enabling
DARBMUPCO to meet its quota. The CA observed that while the various agencies
involved in the consolidated petitions sometimes differ as to who the statutory
employer of the respondent-workers is, they are uniform in finding that the
respondent-contractors are labor-only contractors. 60
On the second issue, the CA reiterated the ruling of the SOLE 61 that absent an
injunction from the CA, the pendency of a petition for certiorari does not stay the
holding of the certification election.62 The challenged Resolution of the SOLE is
already final and executory as evidenced by an Entry of Judgment dated July 14,
1999; hence, the merits of the case can no longer be reviewed. 63
The CA thus held in its Decision dated March 31, 2006:
WHEREFORE, premises considered, this Court hereby ORDERS:
(1) the DISMISSAL of the petitions in C.A.-G.R. SP No. 53806 and C.A.-G.R. SP
No. 61607; and
(2)
the GRANTING of the petition in C.A.-G.R. SP No. 59958 and the SETTING
ASIDE of the assailed resolutions of the NLRC dated 24 May 1999, 30 July
1999 and 26 June 2000, respectively.
SO ORDERED.64ChanRoblesVirtualawlibrary
DFI filed a Motion for Reconsideration of the CA Decision which was denied in a
Resolution dated May 30, 2006.65
DFI is now before us by way of Petition for Review on Certiorari praying that
DARBMUPCO be declared the true employer of the respondent-workers.
DARBMUPCO filed a Comment66 maintaining that under the control test, DFI is the
true employer of the respondent-workers.
Respondent-contractors filed a Verified Explanation and Memorandum 67 asserting
that they were labor-only contractors; hence, they are merely agents of the true
employer of the respondent-workers.
SPFL did not file any comment or memorandum on behalf of the respondentworkers.68
The Issue
The issue before this Court is who among DFI, DARBMUPCO and the respondentcontractors is the employer of the respondent-workers.
Our Ruling
We deny the petition.
This case involves job contracting, a labor arrangement expressly allowed by law.
Contracting or subcontracting is an arrangement whereby a principal (or
employer) agrees to put out or farm out with 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. 69 It
involves a trilateral relationship among the principal or employer, the contractor
or subcontractor, and the workers engaged by the contractor or subcontractor. 70
Article 106 of the Labor Code of the Philippines71 (Labor Code) explains the
relations which may arise between an employer, a contractor, and the
contractor's employees,72 thus:
ART. 106. Contractor or subcontracting. - Whenever an employer enters into a
contract with another person for the performance of the formers work, the
employees of the contractor and of the latter's subcontractor, if any, shall be paid
in accordance with the provisions of this Code.
In the event that the contractor or subcontractor fails to pay the wages of his
employees in accordance with this Code, the employer shall be jointly and
severally liable with his contractor or subcontractor to such employees to the
extent of the work performed under the contract, in the same manner and extent
that he is liable to employees directly employed by him.
The Secretary of Labor and Employment may, by appropriate regulations, restrict
or prohibit the contracting out of labor to protect the rights of workers established
under this Code. In so prohibiting or restricting, he may make appropriate
distinctions between labor-only contracting and job contracting as well as
differentiations within these types of contracting and determine who among the
parties involved shall be considered the employer for purposes of this Code, to
prevent any violation or circumvention of any provision of this Code.
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 such employer. In such cases, the person or intermediary
shall be considered merely as 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.
The Omnibus Rules Implementing the Labor Code73 distinguishes between
permissible job contracting (or independent contractorship) and labor-only
contracting. Job contracting is permissible under the Code if the following
conditions are met:
(1) The contractor carries on an independent business and undertakes the
contract work on his own account under his own responsibility according to
his own manner and method, free from the control and direction of his
employer or principal in all matters connected with the performance of the
The workers recruited and placed by such person are performing activities
which are directly related to the principal business or operations of the
employer in which workers are habitually employed.75
As a general rule, a contractor is presumed to be a labor-only contractor, unless
such contractor overcomes the burden of proving that it has the substantial
capital, investment, tools and the like.76
Based on the conditions for permissible job contracting, we rule that
respondent-contractors are labor-only contractors.
There is no evidence showing that respondent-contractors are independent
contractors. The respondent-contractors, DFI, and DARBMUPCO did not offer any
proof that respondent-contractors were not engaged in labor-only contracting. In
this regard, we cite our ruling in Caro v. Rilloraza,77 thus:
"In regard to the first assignment of error, the defendant company pretends to
show through Venancio Nasol's own testimony that he was an independent
contractor who undertook to construct a railway line between Maropadlusan and
Mantalisay, but as far as the record shows, Nasol did not testify that the
defendant company had no control over him as to the manner or methods he
employed in pursuing his work. On the contrary, he stated that he was not
bonded, and that he only depended upon the Manila Railroad for money to be
paid to his laborers. As stated by counsel for the plaintiffs, the word 'independent
contractor' means 'one who exercises independent employment and contracts to
do a piece of work according to his own methods and without being subject to
control of his employer except as to result of the work.' furthermore, if the
employer claims that the workmen is an independent contractor, for whose acts
he is not responsible, the burden is on him to show his independence.
Tested by these definitions and by the fact that the defendant has
presented piactically no evidence to determine whether Venancio Nasol
was in reality an independent contractor or not, we are inclined to think
that he is nothing but an intermediary between the defendant and
certain laborers. It is indeed difficult to find that Nasol is an independent
contractor; a person who possesses no capital or money of his own to pay his
obligations to them, who files no bond to answer for any fulfillment of his contract
with his employer and specially subject to the control and supervision of his
employer, falls short of the requisites or conditions necessary for the common and
independent contractor."78 (Citations omitted; Emphasis supplied.)
To support its argument that respondent-contractors are the employers of
respondent-workers, and not merely labor-only contractors, DFI should have
presented proof showing that respondent-contractors carry on an independent
business and have sufficient capitalization. The record, however, is bereft of
showing of even an attempt on the part of DFI to substantiate its argument.
DFI cannot cite the May 24, 1999 Resolution of the NLRC as basis that respondentcontractors are independent contractors. Nowhere in the NLRC Resolution does it
say that the respondent-contractors are independent contractors. On the
contrary, the NLRC declared that "it was not clearly established on record that
said [respondent-]contractors are independent, xxx." 79
Further, respondent-contractors admit, and even insist that they are engaged in
labor-only contracting. As will be seen below, respondent-contractors made the
admissions and declarations on two occasions:first was in their Formal
Appearance of Counsel and Motion for Exclusion of Individual Party-Respondents
filed before the LA; and second was in their Verified Explanation and
Memorandum filed before this Court.
Before the LA, respondent-contractors categorically stated that they are "laboronly" contractors who have been engaged by DFI and DARBMUPCO. 80 They
admitted that they do not have substantial capital or investment in the form of
tools, equipment, machineries, work premises and other materials, and they
recruited workers to perform activities directly related to the principal operations
of their employer.81
Before this Court, respondents-contractors again admitted that they are labor-only
contractors. They narrated that:
1. Herein respondents, Voltaire Lopez, Jr., et al., were commissioned
and contracted by petitioner, Diamond Farms, Inc. (DFI) to recruit
farm workers, who are the complaining [respondent-workers] (as
represented by Southern Philippines Federation of Labor (SPFL) in
this appeal bycertiorari), in order to perform specific farm activities, such
as pruning, dcleafing, fertilizer application, bud inject, stem spray, drainage,
bagging, etc., on banana plantation lands awarded to private respondent,
Diamond Farms Agrarian Reform Beneficiaries Multi-Purpose Cooperative
(DARBMUPCO) and on banana planted lands owned and managed by
petitioner, DFI.
2. All farm tools, implements and equipment necessary to performance of such
farm activities were supplied by petitioner DFI to respondents Voltaire Lopez,
direction and supervision of the DFI. managers and personnel. DFI paid the
[respondent-contractors] for the services rendered in the plantation and the
[respondent-contractors] in turn pay their workers after they [respondentcontractors] received payment from DFI xxx DARBMUPCO did not have anything
to do with the hiring, supervision and payment of the wages of the workersrespondents thru the contractors-respondents. xxx87 (Emphasis supplied.)
DFI does not deny that it engaged the services of the respondent-contractors. It
does not dispute the claims of respondent-contractors that they sent their billing
to DFI for payment; and that DFI's managers and personnel are in close
consultation with the respondent-contractors.88
DFI cannot argue that DARBMUPCO is the principal of the respondent-contractors
because it (DARBMUPCO) owns the awarded plantation where respondentcontractors and respondent-workers were working;89 and therefore DARBMUPCO is
the ultimate beneficiary of the employment of the respondent-workers. 90
That DARBMUPCO owns the awarded plantation where the respondent-contractors
and respondent-workers were working is immaterial. This does not change the
situation of the parties. As correctly found by the CA, DFI, as the principal, hired
the respondent-contractors and the latter, in turn, engaged the services of the
respondent-workers.91 This was also the unanimous finding of the SOLE,92 the
LA,93 and the NLRC.94 Factual findings of the NLRC, when they coincide with the LA
and affirmed by the CA are accorded with great weight and respect and even
finality by this Court.95
Alilin v. Petron Corporation96 is applicable. In that case, this Court ruled that the
presence of the power of control on the part of the principal over the workers of
the contractor, under the facts, prove the employer-employee relationship
between the former and the latter, thus:
[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." In this case, the employer-employee
relationship between Pctron and petitioners becomes all the more
apparent due to the presence of the power of control on the part of the
former over the latter.
It was held in Orozco v. The Fifth Division of the Hon. Court of Appeals that:
This Court has constantly adhered to the "fourfold test" to determine whether
there exists an employer-employee relationship between the parties. The four
elements of an employment relationship are: (a) the selection and engagement of
the employee; (b) the payment of wages; (c) the power of dismissal; and (d) the
power to control the employee's conduct.
Of these four elements, it is the power to control which is the most
crucial and most determinative factor, so important, in fact, that, the
other elements may even be disregarded.
Hence, the facts that petitioners were hired by Romeo or his father and that their
salaries were paid by them do not detract from the conclusion that there exists an
employer-employee relationship between the parties due to Pctron's power of
control over the petitioners. One manifestation of the power of control is the
power to transfer employees from one work assignment to another. Here, Petron
could order petitioners to do work outside of their regular "maintenance/utility"
job. Also, petitioners were required to report for work everyday at the bulk plant,
observe an 8:00 a.m. to 5:00 p.m. daily work schedule, and wear proper uniform
and safety helmets as prescribed by the safety and security measures being
implemented within the bulk plant. All these imply control. In an industry where
safety is of paramount concern, control and supervision over sensitive operations,
such as those performed by the petitioners, are inevitable if not at all necessary.
Indeed, Petron deals with commodities that are highly volatile and flammable
which, if mishandled or not properly attended to, may cause serious injuries and
damage to property and the environment. Naturally, supervision by Petron is
essential in every aspect of its product handling in order not to compromise the
integrity, quality and safety of the products that it distributes to the consuming
public.97 (Citations omitted; Emphasis supplied)
That DFI is the employer of the respondent-workers is bolstered by the CA's
finding that DFI exercises control over the respondent-workers.98 DFI, through its
manager and supervisors provides for the work assignments and performance
targets of the respondent-workers. The managers and supervisors also have the
power to directly hire and terminate the respondent-workers.99 Evidently, DFI
wields control over the respondent-workers.
Neither can DFI argue that it is only the purchaser of the bananas produced in the
awarded plantation under the BPPA,100 and that under the terms of the BPPA, no
employer-employee relationship exists between DFI and the respondentworkers,101 to wit:
UNDERTAKING OF THE FIRST PARTY
xxx
3. THE FIRST PARTY [DARBMUPCO] shall be responsible for the proper conduct,
safety, benefits and general welfare of its members working in the plantation and
specifically render free and harmless the SECOND PARTY [DPI] of any expense,
liability or claims arising therefrom. It is clearly recognized, by the FIRST
PARTY that its members and other personnel utilized in the performance
of its function under this agreement are not employees of the SECOND
PARTY.102 (Emphasis supplied)
In labor-only contracting, it is the law which creates an employer-employee
relationship between the principal and the workers of the labor-only contractor. 103
Inasmuch as it is the law that forms the employment ties, the stipulation in the
BPPA that respondent-workers are not employees of DFI is not controlling, as the
proven facts show otherwise. The law prevails over the stipulations of the parties.
Thus, in Tabas v. California Manufacturing Co., Inc.,104 we held that: