Joeb Aliviado, et al. vs. Procter & Gamble Phils., Inc.

G.R. No. 160506, March 9, 2010

Del Castillo, J.:

Facts: R is principally engaged in the manufacture and production of different consumer

and health products, which sells it on wholesale basis to various supermarkets
and distributors. To enhance consumer awareness and acceptance of the
products, R entered into contract with Promm-Gem and SAPS for the promotion
and merchandising of its products. Ps worked as R’s merchandisers and
individually signed employment contracts with either Promm-Gem or SAPS for
periods of more or less five months at a time. They were assigned at different
outlets, supermarkets and stores where they handled all the products of R. They
received their wages from Promm-Gem or SAPS, which also imposed disciplinary
measures on erring merchandisers for reasons such as habitual absenteeism,
dishonesty or changing day-off without prior notice.

P complaint R For regularization and other monetary claims.

On the grounds The complaint was later amended to include charges of illegal dismissal.

P presented to That they are employees of R. They claim that they were recruited by the
the court the salesmen of R and were engaged to undertake merchandising chores for R long
following before the existence of Promm-Gem and/or SAPS. They assert that Promm-Gem
proposition and SAPS are labor-only contractors providing services of manpower to their
client. They claim that the contractors have neither substantial capital nor tools
and equipment to undertake independent labor contracting. Petitioners insist that
since they had been engaged to perform activities which are necessary or
desirable in the usual business or trade of P&G, then they are its regular
employees.

R counter There is no employment relationship between it and petitioners. It was

argued this Promm-Gem or SAPS that (1) selected petitioners and engaged their services; (2)
proposition by paid their salaries; (3) wielded the power of dismissal; and (4) had the power of
presenting that control over their conduct of work.

The MTC / LA Dismissed the complaint. There was no employer-employee relationship between
the Ps and R, as the former were employed by Promm-Gem and SAPS.

The RTC / NLRC Dismissed the appeal. Affirmed the LA. Motion for reconsideration was denied.

Whereas the CA Denied the petition and affirmed the NLRC with Modification. R is ordered to pay
service incentive leave pay to Ps. Motion for reconsideration was denied.

Issue: 1. Whether or not Promm-Gem is a labor-only contractor?

2. Whether or not SAPS is a labor-only contractor?

The SC Held 1. No. Promm-Gem cannot be considered as a labor-only contractor.

that: 2. Yes. SAPS is a labor-only contractor.

The SC J. Del 1. Find that it is a legitimate independent contractor. The records also show
Castillo that Promm-Gem supplied its complainant-workers with the relevant
materials, such as markers, tapes, liners and cutters, necessary for them
 to perform their work. Promm-Gem also issued uniforms to them. It is
also relevant to mention that Promm-Gem already considered the Ps
working under it as its regular, not merely contractual or project,
employees. This circumstance negates the existence of element (ii) as
stated in Section 5 of DOLE Department Order No. 18-02, which speaks of
contractual employees.
2. 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 R, this court find that the former is engaged
in "labor-only contracting”.

The FF. Laws are Section 5 (i) and (ii) of DOLE Department Order No. 18-02
the basis.

It Was To emphasize, there is labor-only contracting when the contractor or

Concluded sub-contractor 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) The contractor does not exercise the right to control over the performance of
the work of the contractual employee.

The same is also In Vinoya v. National Labor Relations Commission

affirmed

Under this The Court held that "[w]ith the current economic atmosphere in the country, the
circumstance paid-in capitalization of PMCI amounting to P75,000.00 cannot be considered as
substantial capital and, as such, PMCI cannot qualify as an independent
contractor."

Synthesis (if any)

Conclusion +
Facts

therefore "Where labor-only contracting exists, the Labor Code itself establishes an
employer-employee relationship between the employer and the employees of the
labor-only contractor."

wherefore The petition is granted. R and Promm-Gem, Inc. are ORDERED to reinstate their
respective 30 and 50 employees immediately without loss of seniority rights and
with full backwages and other benefits from the time of their illegal dismissal up
to the time of their actual reinstatement. R is further ORDERED to pay each of
those 30 Ps considered as its employees