1 PHILIPPINE FUJI XEROX CORPORATION, petitioners, vs.

NATIONAL LABOR RELATIONS COMMISSION

FACTS:
Petitioner Fuji Xerox entered into an agreement under which Skillpower, Inc. supplied workers to operate copier machines of Fuji Xerox as part of the latters Xerox Copier Project in its sales offices. Private respondent Pedro Garado was assigned as key operator at Fuji Xeroxs in its one of its branch. When he went on leave and was substituted by other, upon his return he discovered there was a spoilage of over 600 copies afraid that he might be blamed the asked the technician to stop the meter f the machine. This was reported by FUJI ZEROX to Skillpower and it ordere him to explain and suspended him from work. Grado filed a complaint for illegal dismissal. LA rendered decision that Grado is an employee of Skillpower Inc. but NLRC held that although Skillpower, Inc. had substantial capital assets, the fact was that the copier machines, which Garado operated, belonged to petitioner Fuji Xerox, and that although it was Skillpower, Inc. which had suspended Garado, the latter merely acted at the behest of Fuji Xerox. And that FUJI ZEROX is the employer of Grado and that Skilipower, Inc. merely acted as paymaster-agent of Fuji Xerox. The NLRC held that Skilipower, Inc. was a labor-only contractor and Garado should be deemed to have been directly employed by Fuji Xerox, regardless of the agreement between it and Skillpower. Hence this petition

ISSUE:
1) WON Skillpower Inc is a labor only contractor? 2)WON there was an employer- employee relationship between FUJI ZEROX and Grado?

HELD:
1) YES. ARTICLE 106. 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 persons 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. Petitioner Fuji Xerox argues that Skillpower, Inc. had typewriters and service vehicles for the conduct of its business independently of the petitioner. But typewriters and vehicles bear no direct relationship to the job for which Skillpower, Inc. contracted its service of operating copier machines and offering copying services to the public. The fact is that Skillpower, Inc. did not have copying machines of its own. What it did was simply to supply manpower to Fuji Xerox. The phrase substantial capital and investment in the form of tools, equipment, machineries, work premises, and other materials which are necessary in the conduct of his business, in the Implementing Rules clearly contemplates tools, equipment, etc., which are directly related to the service it is being contracted to render. One who does not have an independent business for undertaking the job contracted for is just an agent of the employer. 2) YES. As shown in the following: 1) Though he was recruited by Skillpower to be assigned in FUJI ZEROX, he was employed exclusively in FUJI from 1980 to 1984 and was already a member of union which petitioned the company for his regularization. 2) Though the service provided by Skillpower, Inc., namely, operating petitioners xerox machine, is neither directly related nor necessary to the business of selling and leasing copier machines of petitioner but Xerox Copier machines of petitioners promotes goodwill as it advertise the quality of their products. Though the task is not directly related to the employers business it cannot be automatically said that the one performing the task is a job contractor. 3) Though employment records, vouchers and loan checks as well as SSS were course through Skillbuilder but the power of control and dismissal is with FUJI ZEROX as evince in the 2 letters. They dispel any doubt that Fuji Xerox exercised disciplinary authority over Garado and that Skillpower, Inc. issued the order of dismissal merely in obedience to the decision of petitioner. 4) Though Skillpower is highly-capitalized business venture registered as independent employer with SEC and DOLE but the service of private respondent was not a specific or special skill that Skillpower Inc was in the business of providing. Although in the Neri case the telex machine operated by the employee belonged to the employer, the service was deemed permissible because it was specific and technical. This cannot be said of the service rendered by private respondent Garado. 5) And lastly though there was agreement between them that Skillpower is an independent contractor but the relations of parties must be judged from case to case and the decree of law, and not by declaration of parties. Skilipower, Inc. is, therefore, a labor-only contractor and Garado is not its employee. Petition is dismissed

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G.R. No. 159668 March 7, 2008 MANDAUE GALLEON TRADE, INC. and/or GAMALLOSONS TRADERS, INC., petitioners, vs.VICENTE ANDALES, FACTS:
Petitioners Mandaue Galleon Trade, Inc. (MGTI) and Gamallosons Traders, Inc.4 (GTI) are business entities engaged in rattan furniture manufacturing for export. Respondent Vicente Andales5 (Andales) filed a complaint with the Labor Arbiter (LA) against both petitioners for illegal dismissal and non-payment of 13th month pay and service incentive leave pay. The complainants alleged that MGTI hired them on various dates asweavers, grinders, sanders and finishers. And that they were all dismissed without notice and just cause. The complainant insisted that they were all employees of MGTI. On the other hand, MGTI denied the existence of employeremployeerelationship with complainants, claiming that they are workers of independent contractors whose services were engaged temporarily and seasonally when the demands for its products are high and could not be met by its regular workforce. LA rendered a Decision holding that 183complainants are regular piece-rate employees of MGTI since they were made to perform functions which are necessary to MGTI's rattan furniture manufacturing business and that there was no dismissal but only a claim of separation pay. NLRC affirms LAs finding that there was an employer- employee relationship except the dismissal as there was a constructive dismissal that took place. CA modified the decision as to separation pay claim only. Petitioner filed for a petition

ISSUE:
WON there was an employer- employee relationship between MGTI and Andales et al?

HELD:
YES, for the following reasons: 1) The respondents' work as weavers, grinders, sanders and finishers is directly related to MGTI's principal business of rattan furniture manufacturing. Where the employees are tasked to undertake activities usually desirable or necessary in the usual business of the employer, the contractor is considered as a "labor-only" contractor and such employees are considered as regular employees of the employer 2) MGTI was unable to present any proof that its contractors had substantial capital. There was no evidence pertaining to the contractors' capitalization; nor to their investment in tools, equipment or implements actually used in the performance or completion of the job, work, or service that they were contracted to render. The law casts the burden on the contractor to prove that it has substantial capital, investment, tools, etc. Employees, on the other hand, need not prove that the contractor does not have substantial capital, investment, and tools to engage in job-contracting. Thus, the contractors are "labor-only" contractors since they do not have substantial capital or investment which relates to the service performed and respondents performed activities which were directly related to MGTI's main business. MGTI, the principal employer, is solidarily liable with the labor-only contractors, for the rightful claims of the employees. In prohibiting"labor-only" contracting and creating an employer-employee relationship between the principal and the supposed contractor's employees, the law intends to prevent employers from circumventing labor laws intended to protect employees. PETITION IS DENIED FOR LACK OF MERIT.