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Bacsin vs. Wahiman April 30, 2008

FACTS:
Bacsin, a public elementary school teacher, was charged with
Misconduct for fondling the breast of his student, as was witnessed by another
student. In his defense, Bacsin claimed that the touching happened by accident.

*CSC: GUILTY of Grave Misconduct (Acts of Sexual Harassment), DISMISSED. Act
contained in the Anti-Sexual Harassment Act of 1995. MR Denied. Appealed to
CA

*CA: Affirm. Even if Bacsin was formally charged with disgraceful and immoral
conduct and misconduct, CSC found that the allegations and evidence
sufficiently proved petitioners guilt of grave misconduct, which is punishable
by dismissal from service.

ISSUE: WON MISCONDUCT (which was the charge against him) includes Grave
Misconduct, thus, he can be convicted of such even if that was not charged

HELD: YES. Petition Dismissed.

*Dadubo v. Civil Service Commission: The charge against the respondent in an
administrative case need not be drafted with the precision of an information in
a criminal prosecution. It is sufficient that he is apprised of the substance of the
charge against him; what is controlling is the allegation of the acts complained
of, not the designation of the offense.
It is clear that petitioner was sufficiently informed of the basis of the charge
against him, which was his act of improperly touching one of his students. Thus
informed, he defended himself from such charge. The failure to designate the
offense specifically and with precision is of no moment in this administrative
case.
Charges against him imputes acts covered and penalized under Anti-sexual
harassment act of 1995. Domingo v. Rayala: it is not necessary that the demand,
request, or requirement of a sexual favor be articulated in a categorical oral or
written statement. It may be discerned, with equal certitude, from the acts of
the offender.

The act of mashing the breast, in an education environment, upon a student,
who felt fear at the time Bacsin touched her, are sufficient grounds for grave
misconduct. There is grave misconduct The act of petitioner of fondling one of
his students is against a law, RA 7877, and is doubtless inexcusable. The
particular act of petitioner cannot in any way be construed as a case of simple
misconduct. Sexually molesting a child is, by any norm, a revolting act that it
cannot but be categorized as a grave offense. Parents entrust the care and
molding of their children to teachers, and expect them to be their guardians
while in school. Petitioner has violated that trust. The charge of grave
misconduct proven against petitioner demonstrates his unfitness to remain as a
teacher and continue to discharge the functions of his office.

There is no denial of due process: The essence of due process is simply an
opportunity to be heard, or, as applied to administrative proceedings, an
opportunity to explain one's side or an opportunity to seek for a
reconsideration of the action or ruling complained of. These elements are
present in this case, where petitioner was properly informed of the charge and
had a chance to refute it, but failed.
A teacher who perverts his position by sexually harassing a student should not
be allowed, under any circumstance, to practice this noble profession.


5. BOOK FOUR, ART. 156-161

OCEAN BUILDERS CONSTRUCTION CORP., AND/OR DENNIS HAO,
PETITIONERS, VS. SPOUSES ANTONIO AND ANICIA CUBACUB,
RESPONDENTS.


FACTS: Bladimir Cubacub (Bladimir) was employed as maintenance man by
petitioner company Ocean Builders Construction Corp.

Bladimir was afflicted with chicken pox. He was thus advised by the petitioner,
to rest for three days which he did at the companys barracks where he lives
free of charge.

Three days later,, Bladimir went about his usual chores of manning the gate of
the company premises and even cleaned the company vehicles. Later in the
afternoon, however, he asked a co-worker, Ignacio Silangga (Silangga), to
accompany him to his house in Capas, Tarlac so he could rest. Informed by
Silangga of Bladimirs intention, Hao gave Bladimir P1,000.00 and ordered
Silangga to instead bring Bladimir to the nearest hospital.

Along with co-workers Narding and Tito Vergado, Silangga thus brought
Yanyan 2

Bladimir to the Caybiga Community Hospital (Caybiga Hospital), a primary-care
hospital around one kilometer away from the office of the company.

The hospital did not allow Bladimir to leave the hospital. He was then confined,
with Narding keeping watch over him. The next day, a doctor of the hospital
informed Narding that they needed to talk to Bladimirs parents, hence, on
Silanggas request, their co-workers June Matias and Joel Edrene fetched
Bladimirs parents from Tarlac.

At about 8 oclock in the evening of the same day, Bladimirs parents-
respondent spouses Cubacub, with their friend Dr. Hermes Frias (Dr. Frias),
arrived at the Caybiga Hospital and transferred Bladimir to the Quezon City
General Hospital (QCGH) where he was placed in the intensive care unit and
died the following day.

The death certificate issued by the QCGH recorded Bladimirs immediate cause
of death as cardio-respiratory arrest and the antecedent cause as pneumonia.
On the other hand, the death certificate issued by Dr. Frias recorded the causes
of death as cardiac arrest, multiple organ system failure, septicemia and chicken
pox.

Bladimirs parents-herein respondents later filed on August 17, 1995 before the
Tarlac Regional Trial Court (RTC) at Capas a complaint for damages against
petitioners, alleging that Hao was guilty of negligence which resulted in the
deterioration of Bladimirs condition leading to his death.

RTC Decision: dismissed the complaint, holding that Hao was not negligent. It
ruled that Hao was not under any obligation to bring Bladimir to better tertiary
hospitals, and assuming that Bladimir died of chicken pox aggravated by
pneumonia or some other complications due to lack of adequate facilities at the
hospital, the same cannot be attributed to Hao.

CA Decision: reversed the trial courts decision, holding that by Haos failure to
bring Bladimir to a better-equipped hospital, he violated Article 161 of the
Labor Code. It went on to state that Hao should have foreseen that Bladimir, an
adult, could suffer complications from chicken pox and, had he been brought to
hospitals like St. Lukes, Capitol Medical Center, Philippine General Hospital and
the like, Bladimir could have been saved.
ISSUE: Whether or not Hao is liable for damages for the death of bladimir.

HELD: Petition is Meritorious.

The present case is one for damages based on torts, the employer-employee
relationship being merely incidental. To successfully prosecute an action
anchored on torts, three elements must be present, viz: (1) duty (2) breach (3)
injury and proximate causation. The assailed decision of the appellate court
held that it was the duty of petitioners to provide adequate medical assistance
to the employees under Art. 161 of the Labor Code, failing which a breach is
committed.

Art. 161 of the Labor Code provides:
ART. 161. Assistance of employer. It shall be the duty of any employer to
provide all the necessary assistance to ensure the adequate and immediate
medical and dental attendance and treatment to an injured or sick employee in
case of emergency.

The Implementing Rules of the Code do not enlighten what the phrase
adequate and immediate medical attendance means in relation to an
emergency. It would thus appear that the determination of what it means is
left to the employer, except when a full-time registered nurse or physician are
available on-site as required, also under the Labor Code, specifically Art. 157
which provides:
Article 157. Emergency Medical and Dental Services. - It shall be the duty of
every employer to furnish his employees in any locality with free medical and
dental attendance and facilities consisting of:
(a) The services of a full-time registered nurse when the number of
employees exceeds fifty (50) but not more than two hundred (200)
except when the employer does not maintain hazardous workplaces, in
which case, the services of a graduate first-aider shall be provided for
the protection of workers, where no registered nurse is available. The
Secretary of Labor and Employment shall provide by appropriate
regulations, the services that shall be required where the number of
employees does not exceed fifty (50) and shall determine by
appropriate order, hazardous workplaces for purposes of this Article;
(b) The services of a full-time registered nurse, a part-time physician and
dentist, and an emergency clinic, when the number of employees
exceeds two hundred (200) but not more than three hundred (300);
and
(c) The services of a full-time physician, dentist and a full-time registered
nurse as well as a dental clinic and an infirmary or emergency hospital
with one bed capacity for every one hundred (100) employees when the
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number of employees exceeds three hundred (300). (emphasis and
underscoring supplied)

In the present case, there is no allegation that the company premises are
hazardous. Neither is there any allegation on the number of employees the
company has. If Haos testimony would be believed, the company had only
seven regular employees and 20 contractual employees - still short of the
minimum 50 workers that an establishment must have for it to be required to
have a full-time registered nurse.

The Court can thus only determine whether the actions taken by petitioners
when Bladimir became ill amounted to the necessary assistance to ensure
adequate and immediate medical . . . attendance to Bladimir as required under
Art. 161 of the Labor Code.

As found by the trial court and borne by the records, petitioner Haos advice for
Bladimir to, as he did, take a 3-day rest and to later have him brought to the
nearest hospital constituted adequate and immediate medical attendance that
he is mandated, under Art. 161, to provide to a sick employee in an emergency.

Chicken pox is self-limiting. Hao does not appear to have a medical
background. He may not be thus expected to have known that Bladimir needed
to be brought to a hospital with better facilities than the Caybiga Hospital,
contrary to appellate courts ruling.

AT ALL EVENTS, the alleged negligence of Hao cannot be considered as the
proximate cause of the death of Bladimir. Proximate cause is that which, in
natural and continuous sequence, unbroken by an efficient intervening cause,
produces injury, and without which, the result would not have occurred.

An
injury or damage is proximately caused by an act or failure to act, whenever it
appears from the evidence in the case that the act or omission played a
substantial part in bringing about or actually causing the injury or damage, and
that the injury or damage was either adirect result or a reasonably probable
consequence of the act or omission.
[6]


Verily, the issue in this case is essentially factual in nature. The dissent, apart
from adopting the appellate courts findings, finds that Bladimir contracted
chicken pox from a co-worker and Hao was negligent in not bringing that co-
worker to the nearest physician, or isolating him as well. This finding is not,
however, borne by the records. Nowhere in the appellate courts or even the trial
courts decision is there any such definite finding that Bladimir contracted
chicken pox from a co-worker. At best, the only allusion to another employee
being afflicted with chicken pox was when Hao testified that he knew it to heal
within three days as was the case of another worker, without reference,
however, as to when it happened.
[7]


On the issue of which of the two death certificates is more credible, the dissent,
noting that Dr. Frias attended to Bladimir during his last illness, holds that the
certificate which he issued - citing chicken pox as antecedent cause - deserves
more credence.

There appears, however, to be no conflict in the two death certificates on the
immediate cause of Bladimirs death since both cite cardio-respiratory arrest
due to complications - from pneumonia per QCGH, septicemia and chicken pox
per Dr. Frias. In fact, Dr. Frias admitted that the causes of death in both
certificates were the same.
[8]


Be that as it may, Dr. Frias could not be considered as Bladimirs attending
physician, he having merely ordered Bladimirs transfer to the QCGH after
seeing him at the Caybiga Hospital. He thereafter left Bladimir to the care of
doctors at QCGH, returning to Capas, Tarlac at 4 oclock the following morning
or eight hours after seeing Bladimir. As he himself testified upon cross-
examination, he did not personally attend to Bladimir anymore once the latter
was brought to the ICU at QCGH.
[9]


It bears emphasis that a duly-registered death certificate is considered a public
document and the entries therein are presumed correct, unless the party who
contests its accuracy can produce positive evidence establishing otherwise.
[10]

The QCGH death certificate was received by the City Civil Registrar on April 17,
1995. Not only was the certificate shown by positive evidence to be inaccurate.
Its credibility, more than that issued by Dr. Frias, becomes more pronounced as
note is taken of the fact that he was not around at the time of death.

2. Ecasinas vs. Shangri-Las Mactan , March 4, 2009

FACTS: Registered nurses Escasinas and Singco (petitioners) were engaged in
1999 and 1996, respectively, by Dr. Pepito (respondent doctor) to work in her
clinic at respondent (Shangri-la) in Cebu of which she was a retained physician.
In late 2002, petitioners filed with the NLRC, a complaint,

for
regularization, underpayment of wages, non-payment of holiday pay, night shift
differential and 13
th
month pay differential against respondents, claiming that
they are regular employees of Shangri-la. Shangri-la claimed, however, that
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petitioners were not its employees but of respondent doctor whom it retained
via MOA pursuant to Article 157 of the Labor Code, as amended.
Respondent doctor for her part claimed that petitioners were already working
for the previous retained physicians of Shangri-la before she was retained by
Shangri-la; and that she maintained petitioners services upon their request.
LA Decision: declared petitioners to be regular employees of Shangri-la.
to be regular employees of Shangri-la, the Arbiter noted that they usually
perform work which is necessary and desirable to Shangri-las business; that
they observe clinic hours and render services only to Shangri-las guests and
employees; that payment for their salaries were recommended to Shangri-las
Human Resource Department (HRD); that respondent doctor was Shangri-las
in-house physician, hence, also an employee; and that the MOA between
Shangri-la and respondent doctor was an insidious mechanism in order to
circumvent [the doctors] tenurial security and that of the employees under her.
NLRC Decision: granted Shangri-las and respondent doctors appeal and
dismissed petitioners complaint for lack of merit, it finding that no employer-
employee relationship exists between petitioner and Shangri-la. the Arbiter
erred in interpreting Article 157 in relation to Article 280 of the Labor Code, as
what is required under Article 157 is that the employer should provide the
services of medical personnel to its employees, but nowhere in said article is a
provision that nurses are required to be employed; that contrary to the finding
of the Arbiter, even if Article 280 states that if a worker performs work usually
necessary or desirable in the business of the employer, he cannot be
automatically deemed a regular employee; and that the MOA amply shows that
respondent doctor was in fact engaged by Shangri-la on a retainer basis, under
which she could hire her own nurses and other clinic personnel.

Petitioners said that, it was really Shangri-la which hired them and not
respondent doctor, the NLRC noted that the applications for employment were
made by persons who are not parties to the case and were not shown to have
been actually hired by Shangri-la.


Petitioners insist that under Article 157 of the Labor Code, Shangri-la is
required to hire a full-time registered nurse, apart from a physician, hence, their
engagement should be deemed as regular employment, the provisions of the
MOA notwithstanding; and that the MOA is contrary to public policy as it
circumvents tenurial security and, therefore, should be struck down as being
void ab initio. At most, they argue, the MOA is a mere job contract.

And petitioners maintain that respondent doctor is a labor-only contractor for
she has no license or business permit and no business name registration, which
is contrary to the requirements under Sec. 19 and 20 of the Implementing Rules
and Regulations of the Labor Code on sub-contracting.

ISSUE: whether or not Article 157 of the Labor Code does not make it
mandatory for a covered establishment to employ health personnel; that the
services of nurses is not germane nor indispensable to its operations; and that
respondent doctor is a legitimate individual independent contractor who has
the power to hire, fire and supervise the work of the nurses under her.

HELD: Petition Denied. The Court holds that, Art. 157 does not require the
engagement of full-time nurses as regular employees of a company employing
not less than 50 workers.

Thus, the Article provides:

ART. 157. Emergency medical and dental services. It shall be the duty of every
employer to furnish his employees in any locality with free medical and dental
attendance and facilities consisting of:

(a) The services of a full-time registered nurse when the number of
employees exceeds fifty (50) but not more than two hundred (200) except when
the employer does not maintain hazardous workplaces, in which case the
services of a graduate first-aider shall be provided for the protection of the
workers, where no registered nurse is available. The Secretary of Labor shall
provide by appropriate regulations the services that shall be required where the
number of employees does not exceed fifty (50) and shall determine by
appropriate order hazardous workplaces for purposes of this Article;

(b) The services of a full-time registered nurse, a part-time physician and
dentist, and an emergency clinic, when the number of employees exceeds two
hundred (200) but not more than three hundred (300); and

(c) The services of a full-time physician, dentist and full-time registered
nurse as well as a dental clinic, and an infirmary or emergency hospital with one
bed capacity for every one hundred (100) employees when the number of
employees exceeds three hundred (300).

In cases of hazardous workplaces, no employer shall engage the services of a
physician or dentist who cannot stay in the premises of the establishment for at
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least two (2) hours, in the case of those engaged on part-time basis, and not less
than eight (8) hours in the case of those employed on full-time basis. Where the
undertaking is nonhazardous in nature, the physician and dentist may be
engaged on retained basis, subject to such regulations as the Secretary of Labor
may prescribe to insure immediate availability of medical and dental treatment
and attendance in case of emergency. (Emphasis and underscoring supplied)


Under the foregoing provision, Shangri-la, which employs more than 200
workers, is mandated to furnish its employees with the services of a full-time
registered nurse, a part-time physician and dentist, and an emergency clinic
which means that it should provide or make available such medical and allied
services to its employees, not necessarily to hire or employ a service
provider. As held in Philippine Global Communications vs. De Vera:
[8]


x x x while it is true that the provision requires employers to engage the
services of medical practitioners in certain establishments depending on the
number of their employees, nothing is there in the law which says that medical
practitioners so engaged be actually hired as employees, adding that the law, as
written, only requires the employer to retain, not employ, a part-time
physician who needed to stay in the premises of the non-hazardous workplace
for two (2) hours. (Emphasis and underscoring supplied)


The term full-time in Art. 157 cannot be construed as referring to the type of
employment of the person engaged to provide the services, for Article 157
must not be read alongside Art. 280
[9]
in order to vest employer-employee
relationship on the employer and the person so engaged. So De Vera teaches:

x x x For, we take it that any agreement may provide that one party shall render
services for and in behalf of another, no matter how necessary for the latters
business, even without being hired as an employee. This set-up is precisely true
in the case of an independent contractorship as well as in an agency
agreement. Indeed, Article 280 of the Labor Code, quoted by the appellate
court, is not the yardstick for determining the existence of an employment
relationship. As it is, the provision merely distinguishes between two (2) kinds
of employees, i.e., regular and casual. x x

The phrase services of a full-time registered nurse should thus be taken to
refer to the kind of services that the nurse will render in the companys
premises and to its employees, not the manner of his engagement.


On the other hand, existence of an employer-
employee relationship is established by the presence of the following
determinants:
(1) the selection and engagement of the workers; (2) power of dismissal;
(3) the payment of wages by whatever means; and (4) the power to control the
worker's conduct, with the latter assuming primacy in the overall consideration.

Against the above-listed determinants, the Court holds that respondent doctor
is a legitimate independent contractor. That Shangri-la provides the clinic
premises and medical supplies for use of its employees and guests does not
necessarily prove that respondent doctor lacks substantial capital and
investment. Besides, the maintenance of a clinic and provision of medical
services to its employees is required under Art. 157, which are not directly
related to Shangri-las principal business operation of hotels and restaurants.

As to payment of wages, respondent doctor is the one who underwrites the
following: salaries, SSS contributions and other benefits of the staff
[13]
; group
life, group personal accident insurance and life/death insurance
[14]
for the staff
with minimum benefit payable at 12 times the employees last drawn salary, as
well as value added taxes and withholding taxes, sourced from herP60,000.00
monthly retainer fee and 70% share of the service charges from Shangri-las
guests who avail of the clinic services. It is unlikely that respondent doctor
would report petitioners as workers, pay their SSS premium as well as their
wages if they were not indeed her employeess
[15]


With respect to the supervision and control of the nurses and clinic staff, it is
not disputed that a document, Clinic Policies and Employee Manual
[16]
claimed
to have been prepared by respondent doctor exists, to which petitioners gave
their conformity
[17]
and in which they acknowledged their co-terminus
employment status. It is thus presumed that said document, and not the
employee manual being followed by Shangri-las regular workers, governs how
they perform their respective tasks and responsibilities.

Contrary to petitioners contention, the various office directives issued by
Shangri-las officers do not imply that it is Shangri-las management and not
respondent doctor who exercises control over them or that Shangri-la has
control over how the doctor and the nurses perform their work. The
letter
[18]
addressed to respondent doctor dated February 7, 2003 from a certain
Tata L. Reyes giving instructions regarding the replenishment of emergency kits
Yanyan 6

is, at most, administrative in nature, related as it is to safety matters; while the
letter
[19]
dated May 17, 2004 from Shangri-las Assistant Financial Controller,
Lotlot Dagat, forbidding the clinic from receiving cash payments from the
resorts guests is a matter of financial policy in order to ensure proper sharing
of the proceeds, considering that Shangri-la and respondent doctor share in the
guests payments for medical services rendered. In fine, as Shangri-la does not
control how the work should be performed by petitioners, it is not petitioners
employer.

6. BOOK SIX, POST EMPLOYMENT

a. Termination of Employment ( Arts. 278-286)

i. Classification of Employees

1. Babas vs. Lorenzo Shipping December 15, 2010


FACTS: Respondent is a duly organized domestic corporation engaged in the
shipping industry; it owns several equipment necessary for its business. LSC
entered into a General Equipment Maintenance Repair and Management Services
Agreement
[3]
(Agreement) with Best Manpower Services, Inc. (BMSI). Under
the Agreement, BMSI undertook to provide maintenance and repair services to
LSCs container vans, heavy equipment, trailer chassis, and generator sets. BMSI
further undertook to provide checkers to inspect all containers received for
loading to and/or unloading from its vessels.

Simultaneous with the execution of the Agreement, LSC leased its
equipment, tools, and tractors to BMSI.
[4]
The period of lease was coterminous
with the Agreement.

BMSI then hired petitioners on various dates to work at LSC as checkers,
welders, utility men, clerks, forklift operators, motor pool and machine shop
workers, technicians, trailer drivers, and mechanics. Six years later, or on May
1, 2003, LSC entered into another contract with BMSI, this time, a service
contract.
[5]


Thereafter, petitioners filed with the LA a complaint for regularization against
LSC and BMSI. On October 1, 2003, LSC terminated the Agreement, effective
October 31, 2003. Consequently, petitioners lost their employment.

LA DECISION: The LA found that petitioners were employees of BMSI. It was
BMSI which hired petitioners, paid their wages, and exercised control over
them.

NLRC DECISION: petitioners arguing that BMSI was engaged in labor-only
contracting. They insisted that their employer was LSC. Reversed the Decision
of LA. respondent BMSI is not engaged in legitimate job contracting. First,
respondent BMSI has no equipment, no office premises, no capital and no
investments as shown in the Agreement itself which states:

ISSUE: Whether or not the RESPONDENT WAS ENGAGED IN LABOR-ONLY
CONTRACTING TO DEFEAT PETITIONERS RIGHT TO SECURITY OF TENURE.
[13]



HELD: Petitioners vigorously insist that they were employees of LSC; and that
BMSI is not an independent contractor, but a labor-only contractor. LSC, on the
other hand, maintains that BMSI is an independent contractor, with adequate
capital and investment. LSC capitalizes on the ratiocination made by the CA.

In declaring BMSI as an independent contractor, the CA, in the challenged
Decision, heavily relied on the provisions of the Agreement, wherein BMSI
declared that it was an independent contractor, with substantial capital and
investment.

De Los Santos v. NLRC
[18]
instructed us that the character of the business, i.e.,
whether as labor-only contractor or as job contractor, should be measured in
terms of, and determined by, the criteria set by statute. The parties cannot
dictate by the mere expedience of a unilateral declaration in a contract the
character of their business.

In San Miguel Corporation v. Vicente B. Semillano, Nelson Mondejas, Jovito
Remada, Alilgilan Multi-Purpose Coop (AMPCO), and Merlyn N. Policarpio,
[19]
this
Court explained:

Despite the fact that the service contracts contain stipulations which are
earmarks of independent contractorship, they do not make it legally so. The
language of a contract is neither determinative nor conclusive of the
relationship between the parties. Petitioner SMC and AMPCO cannot dictate, by
a declaration in a contract, the character of AMPCO's business, that is, whether
as labor-only contractor, or job contractor. AMPCO's character should be
measured in terms of, and determined by, the criteria set by statute.
Yanyan 7


Thus, in distinguishing between prohibited labor-only contracting and
permissible job contracting, the totality of the facts and the surrounding
circumstances of the case are to be considered.

Labor-only contracting, a prohibited act, is an arrangement where the
contractor or subcontractor merely recruits, supplies, or places workers to
perform a job, work, or service for a principal. In labor-only contracting, the
following elements are present: (a) the contractor or subcontractor does not
have substantial capital or investment to actually perform the job, work, or
service under its own account and responsibility; and (b) the employees
recruited, supplied, or placed by such contractor or subcontractor perform
activities which are directly related to the main business of the principal.
[20]


On the other hand, permissible job contracting or subcontracting refers to an
arrangement whereby a principal agrees to put out or farm out with the
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.
[21]


A person is considered engaged in legitimate job contracting or subcontracting
if the following conditions concur:

(a) The contractor carries on a distinct and independent business and
undertakes the contract work on his 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 his
work except as to the results thereof;

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

(c) The agreement between the principal and the contractor or subcontractor
assures the contractual employees' entitlement to all labor and occupational
safety and health standards, free exercise of the right to self-organization,
security of tenure, and social welfare benefits.
[22]


Given the above standards, we sustain the petitioners contention that BMSI is
engaged in labor-only contracting.

First, petitioners worked at LSCs premises, and nowhere else. Other than the
provisions of the Agreement, there was no showing that it was BMSI which
established petitioners working procedure and methods, which supervised
petitioners in their work, or which evaluated the same. There was absolute lack
of evidence that BMSI exercised control over them or their work, except for the
fact that petitioners were hired by BMSI.

Second, LSC was unable to present proof that BMSI had substantial capital. The
record before us is bereft of any proof pertaining to the contractors
capitalization, nor to its investment in tools, equipment, or implements actually
used in the performance or completion of the job, work, or service that it was
contracted to render. What is clear was that the equipment used by BMSI were
owned by, and merely rented from, LSC.

In Mandaue Galleon Trade, Inc. v. Andales,
[23]
we held:

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.

Third, petitioners performed activities which were directly related to the
main business of LSC. The work of petitioners as checkers, welders, utility men,
drivers, and mechanics could only be characterized as part of, or at least clearly
related to, and in the pursuit of, LSCs business. Logically, when petitioners were
assigned by BMSI to LSC, BMSI acted merely as a labor-only contractor.

Lastly, as found by the NLRC, BMSI had no other client except for LSC, and
neither BMSI nor LSC refuted this finding, thereby bolstering the NLRC finding
that BMSI is a labor-only contractor.

The CA erred in considering BMSIs Certificate of Registration as sufficient proof
that it is an independent contractor. In San Miguel Corporation v. Vicente B.
Semillano, Nelson Mondejas, Jovito Remada, Alilgilan Multi-Purpose Coop
(AMPCO), and Merlyn N. Policarpio,
[24]
we held that a Certificate of Registration
issued by the Department of Labor and Employment is not conclusive evidence
of such status. The fact of registration simply prevents the legal presumption of
being a mere labor-only contractor from arising.
[25]


Indubitably, BMSI can only be classified as a labor-only contractor.
Consequently, the workers that BMSI supplied to LSC became regular
Yanyan 8

employees of the latter.
[26]
Having gained regular status, petitioners were
entitled to security of tenure and could only be dismissed for just or authorized
causes and after they had been accorded due process.

Petitioners lost their employment when LSC terminated its Agreement with
BMSI. However, the termination of LSCsAgreement with BMSI cannot be
considered a just or an authorized cause for petitioners dismissal. In Almeda v.
Asahi GlassPhilippines. Inc. v. Asahi Glass Philippines, Inc.,
[27]
this Court declared:

The sole reason given for the dismissal of petitioners by SSASI was the
termination of its service contract with respondent. But since SSASI was a labor-
only contractor, and petitioners were to be deemed the employees of
respondent, then the said reason would not constitute a just or authorized
cause for petitioners dismissal. It would then appear that petitioners were
summarily dismissed based on the aforecited reason, without compliance with
the procedural due process for notice and hearing.

Herein petitioners, having been unjustly dismissed from work, are entitled to
reinstatement without loss of seniority rights and other privileges and to full
back wages, inclusive of allowances, and to other benefits or their monetary
equivalents computed from the time compensation was withheld up to the time
of actual reinstatement. Their earnings elsewhere during the periods of their
illegal dismissal shall not be deducted therefrom.

2. OREGAS v. NLRC, 559 SCRA 153

FACTS: Petitioners Rommel C. Oregas, Darwin R. Hilario and Sherwin A.
Arboleda worked as valet parking and door attendants in respondent Dusit
Hotel Nikko. They have employment contracts with respondent FVA. In 2000,
FVA recalled petitioners from Dusit. Petitioners then instituted a complaint for
illegal dismissal, regularization, premium pay for holiday and rest day, holiday
pay, service incentive leave pay, 13th month pay and attorney's fees against
respondents Dusit, Philippine Hotelier's, Inc. and FVA. Petitioners alleged that
despite the length of their service, Dusit never the rank and file employees'
union of Dusit learned that petitioners were
entitled to regularization, Dusit immediately terminated their services du to
"end of contract."

On 3/6/2001, Labor Arbiter Potenciano S. Canizares, Jr. dismissed the
complaint for lack of merit. Petitioners failed to prove that they were
employees of Dusit. Petitioners admitted that they transferred to FVA after their
previous placement agencies terminated their contracts of services with Dusit.
Labor Arbiter Canizares also noted that petitioners signed application and
employment contracts with FVA and were under its payrolls and accounts.
Thus, FVA was petitioners' employer.

Finally, he ruled that petitioners were merely recalled and not dismissed from
the service by FVA.

On appeal, the NLRC issued a Resolution dated August 25, 2003, modifying the
decision of Labor Arbiter. The NLRC observed that the four-fold test in
determining the existence of an employer-employee relationship is present in
petitioners' relationship with FVA. On the matter of selection and engagement,
records showed that petitioners applied with and were employed by FVA.
Although they were required to test drive by Dusit, it was done only to verify if
they had the necessary skills and competence required by the job. On the matter
of control, it was established that petitioners maintained their daily time
records with FVA. On the matter of dismissal, FVA exercised its power to
dismiss when it recalled petitioners from Dusit. Finally, on the matter of
payment of wages, it is undisputed that petitioners were under the payrolls and
accounts of FVA.

Nevertheless, the NLRC noted that after petitioners' recall, they were no longer
given new assignments. Since more than six months have already lapsed,
petitioners were deemed to have been constructively dismissed and therefore
entitled to separation pay of one-half month pay for every year of service.

Petitioners elevated the case to the CA which affirmed the NLRC resolution.
Reconsideration having been denied, petitioners raises the instant petition.

ISSUES:

WON Respondent FVA is an independent contractor
WON there an EMPLOYER-EMPLOYEE RELATIONSHIP exists between
Petitioners and Respondent Hotel

HELD: Petition Denied

1. YES. the Labor Arbiter, NLRC and the CA were unanimous in finding that FVA
was a legitimate job contractor. Among the circumstances that established the
status of FVA as a legitimate job contractor are:
Yanyan 9

(1) FVA is registered with the DOLE and the DTI;

(2) FVA has a Contract for Services with Dusit for the supply of valet parking
and door attendant services;

(3) FVA has an independent business and provides valet parking and door
attendant services to other clients like Mandarin Oriental, Manila Hotel,
Peninsula Manila Hotel, Westin Philippine Plaza, Golden B Hotel, Pan Pacific
Manila Hotel, and Strikezone Bowling Lane; and (4) FVA's total assets from
1997 to 1999 amount to P1,502,597.70 to P9,021,335.13. In addition, it
provides the uniforms and lockers of its employees.

2. NO. By applying the four-fold test used in determining an employer-employee
relationship, the status of FVA as the employer of petitioners is indubitably
established.

a. Petitioners applied and signed employment contracts with FVA. They were
merely assigned to Dusit conformably with the Contract for Services between
FVA and Dusit.

b. FVA assigned a supervisor in Dusit to monitor petitioners' attendance, leaves
of absence, performance and conduct. Petitioners also maintained their daily
time records with FVA.

c. Petitioners were duly notified by FVA that they would be assigned to Dusit for
five months only. Thereafter, they may either be recalled for transfer to other
clients or be reassigned to Dusit depending on the result of FVA's evaluation of
their performance. In this case, FVA opted to recall petitioners from Dusit.

d. While FVA billed Dusit for the services rendered, it was actually FVA which
paid petitioners' salaries. Worthy of note, FVA registered petitioners with the
Bureau of Internal Revenue and the Social Security System as its employees.

In summary, this Court accepts as established the fact that FVA is a
legitimate job contractor and, in contemplation of law, the employer of
petitioners.

3. ALIVIADO v. PROCTER and GAMBLE PHILS

FACTS: Petitioners worked as merchandisers of P&G from various dates,
allegedly starting as early as 1982 or as late as June 1991, to either May 5, 1992
or March 11, 1993.
They all 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 P&G. They received their wages from Promm-Gem or SAPS.
SAPS and Promm-Gem imposed disciplinary measures on erring merchandisers
for reasons such as habitual absenteeism, dishonesty or changing day-off
without prior notice.

P&G is principally engaged in the manufacture and production of different
consumer and health products, which it sells on a wholesale basis to various
supermarkets and distributors.[8] To enhance consumer awareness and
acceptance of the products, P&G entered into contracts with Promm- Gem and
SAPS for the promotion and merchandising of its products. In December 1991,
petitioners filed a complaint against P&G for regularization, service incentive
leave pay and other benefits with damages. The complaint was later amended
to include the matter of their subsequent dismissal.

Ruling of the Labor Arbiter: Labor Arbiter dismissed the complaint for lack of
merit and ruled that there was no employer-employee relationship between
petitioners and P&G. He found that the selection and engagement of the
petitioners, the payment of their wages, the power of dismissal and control with
respect to the means and methods by which their work was accomplished, were
all done and exercised by Promm- Gem/SAPS. He further found that Promm-
Gem and SAPS were legitimate independent job contractors.

Ruling of the NLRC: The appeal of complainants is hereby DISMISSED and the
decision appealed from AFFIRMED. Ruling of the Court of Appeals: CA likewise
denied the petition.

Petitioners Arguments: Petitioners insist that they are employees of P&G. They
claim that they were recruited by the salesmen of P&G and were engaged to
undertake merchandising chores for P&G long before the existence of Promm-
Gem and/or SAPS. They further claim that when the latter had its so-called re-
alignment program, petitioners were instructed to fill up application forms and
report to the agencies which P&G created.

Respondents Arguments: On the other hand, P&G points out that the instant
petition raises only questions of fact and should thus be thrown out as the Court
Yanyan 10

is not a trier of facts. It argues that findings of facts of the NLRC, particularly
where the NLRC and the Labor Arbiter are in agreement, are deemed binding
and conclusive on the Supreme Court.

ISSUES: (1) whether P&G is the employer of petitioners; (2) whether
petitioners were illegally dismissed; and (3) whether petitioners are entitled for
payment of actual, moral and exemplary damages as well as litigation costs and
attorneys fees.

HELD: The petition has merit. As a rule, the Court refrains from reviewing
factual assessments of lower courts and agencies exercising adjudicative
functions, such as the NLRC. Occasionally, however, the Court is constrained to
wade into factual matters when there is insufficient or insubstantial evidence on
record to support those factual findings; or when too much is concluded,
inferred or deduced from the bare or incomplete facts appearing on record.[23]
In the present case, we find the need to review the records to ascertain the facts.
In order to resolve the issue of whether P&G is the employer of petitioners, it is
necessary to first determine whether Promm-Gem and SAPS are labor-only
contractors or legitimate job contractors.

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.

There is labor-only contracting where the person supplying workers to an
employer does not have substantial capital or investment in the form oftools,
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 anagent 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.

Clearly, the law and its implementing rules allow contracting arrangements for
the performance of specific jobs, works or services.

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.

In the instant case, the financial statements of Promm-Gem show that ithas
authorized capital stock of P1 million and a paid-in capital, or capital available
for operations, of P500,000.00 as of 1990. It also has long term assets worth
P432,895.28 and current assets ofP719,042.32.

Promm-Gem has also proven that it maintained its own warehouse and office
space with a floor area of 870 square meters. It also had under its name thre
registered vehicles which were used for its promotional/merchandising
business. Promm-Gem also has other clients aside from P&G. Under the
circumstances, we find that Promm-Gem has substantial investment which
relates to the work to be performed. These factors negate the existence of the
element specified in Section 5(i) of DOLE Department Order No. 18-02.

The records also show 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 complainants
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.
This, furthermore, negates on the part of Promm-Gem bad faith and intent to
circumvent labor laws which factors have often been tipping points that lead
the Court to strike down the employment practice or agreement concerned as
contrary to public policy, morals, good customs or public order. Under the
circumstances, Promm-Gem cannot be considered as a labor-only contractor.
We find that it is a legitimate independent contractor.

Furthermore, the petitioners have been charged with the merchandising and
promotion of the products of P&G, an activity that has already been considered
by the Court as doubtlessly directly related to the manufacturing business,
which is the principal business of P&G. 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, we find that the
former is engaged in labor-only contracting.

4. Sonza vs. ABS CBN

Yanyan 11

FACTS: ABS-CBN and MJMDC entered into a contract on may 1994. ABSCBN
was represented by its officers while MJMDC was represented by Sonza, as
president and general manager and Mel Tiangco, as EVP and treasurer referred
to in the agreement as agent, MJDC agreed to provide Sonzas services
exclusively ABS-CBN as talent for radio and television. The agreement listed the
services Sonza would render.

On April 1996, Sonza wrote a letter to ABS-CBNs president in regard to his
resignation in view of the events concerning his programs and career. April 30,
1996, Sonza filed a complaint against the ABS-CBN before the DOLE. Sonza
complained that the ABS-CBN did not pay his salaries, separation pay, and
service incentive, leave pay, signing bonus, travel allowances and amounts due
under the employee stock option plan (ESOP).

On July 10 1996, ABS-CBN filed a motion to dismiss on the ground that there is
no employer-employee relationship. Sonza filed an opposition to the motion on
July 19, 1996.

Meanwhile, ABS-CBN opened a account to continually remit Sonza fees under
the agreement.

Labor arbiter denied the motion to dismiss; however in his decision labor
arbiter dismissed the complaint for lack of jurisdiction and that there is not
employer-employee relationship.
On appeal, the NLRC affirmed the decision of the labor arbiter. The same was
also denied upon the motion for reconsideration.

ISSUES and RULING:

I. Whether or not Sonza is an employee or independent contractor
> The existence of an employer-employee relationship is a question of fact.
Appellate courts accord the factual findings of the labor arbiter and the NLRC
not only respect but also finality when supported by substantial evidence. Court
does not substitute its own judgment for that of the tribunal in determining
where the weight of evidence lies or what evidence is credible.

II. Essential elements of employer-employee relationship

A. Selection and engagement of employer. The specific selection and hiring of
Sonza, because of his unique skills, talent and celebrity status not possessed by
ordinary employees. Is a circumstance indicative but not conclusive of
independent contractual relationship.

B, Payment of wages whatever benefits Sonza enjoyed arose from contract
and not because of an employeremployee relationship. The power to bargain
the talent fees way above the salary scales of ordinary employees is a
circumstance indicative, but not conclusive of independent contractual
relationship.

C. Power of dismissal. Sonza failed to show that ABS-CBN
could terminate his service on grounds other than breach of contract, such as
retrenchment to prevent losses as provided
under labor laws.

D. power of control applying the control test the court held that Sonza is not
an employee but an independent contractor. The control test being the most
important test our courts apply in distinguishing an employee from an
independent contactor.ABS-CBN did not exercise control over the means and
methods of performance of Sonzas work. Moreover a radio broadcast specialist
who works under minimal supervision is an independent contractor lastly, in
broadcast industry exclusively is not necessarily the same as control.

I. Nature of Sonzas claim
Sonzas claims are all based on the may agreement and stock option plan and
not in the 1994 labor code. Clearly the present case does not call for an
application of the labor code. In effect Sonzas cause of action is for breach of
contract which is intrinsically a civil dispute cognizable by the court. Petition is
denied.

5. Garden Memories vs. NLRC

FACTS: Petitioner is engaged in the business of operating a memorial park
situated at Calsadang Bago, Pateros, Metro-Manila and selling memorial Plan
and services.
Respondent Cruz, on the other hand, worked at the Garden of Memories
Memorial Park as a utility worker from August 1991 until her termination in
February 1998. Cruz, filed for illegal dismissal, underpayment of wages, non-
inclusion in the Social Security Services, and non-payment of legal/special
holiday, premium pay for rest day, 13th month pay and service incentive leave
pay against Garden of Memories before the Department of Labor and
Employment (DOLE).
Yanyan 12


Upon motion of Garden of Memories, Requio was impleaded as respondent on
the alleged ground that she was its service contractor and the employer of Cruz.

In her position paper,
[5]
Cruz averred that she worked as a utility worker of
Garden of Memories with a salary of P115.00 per day. As a utility worker, she
was in charge, among others, of the cleaning and maintenance of the ground
facilities of the memorial park. Sometime in February 1998, she had a
misunderstanding with a co-worker named Adoracion Requio regarding the
use of a garden water hose. When the misunderstanding came to the knowledge
of Requio, the latter instructed them to go home and not to return anymore.
After three (3) days, Cruz reported for work but she was told that she had been
replaced by another worker. She immediately reported the matter of her
replacement to the personnel manager of Garden of Memories and manifested
her protest.

Cruz argued that as a regular employee of the Garden of Memories, she could
not be terminated without just or valid cause. Also, her dismissal was violative
of due process as she was not afforded the opportunity to explain her side
before her employment was terminated.

Cruz further claimed that as a result of her illegal dismissal, she suffered
sleepless nights, serious anxiety and mental anguish.

In its Answer,
[6]
Garden of Memories denied liability for the claims of Cruz and
asserted that she was not its employee but that of Requio, its independent
service contractor, who maintained the park for a contract price. It insisted that
there was no employer-employee relationship between them because she was
employed by its service contractor, Victoriana Requio (Victoriana), who was
later succeeded by her daughter, Paulina, when she (Victoriana) got sick.
Garden of Memories claimed that Requio was a service contractor who carried
an independent business and undertook the contract of work on her own
account, under her own responsibility and according to her own manner and
method, except as to the results thereof.

In her defense, Requio prayed for the dismissal of the complaint stating that it
was Victoriana, her mother, who hired Cruz, and she merely took over the
supervision and management of the workers of the memorial park when her
mother got ill. She claimed that the ownership of the business was never
transferred to her.

Requio further stated that Cruz was not dismissed from her employment but
that she abandoned her work.
[7]


On October 27, 1999, the LA ruled that Requio was not an independent
contractor but a labor-only contractor and that her defense that Cruz
abandoned her work was negated by the filing of the present case.

LA Decision: LA declared both Garden of Memories and Requio, jointly and
severally, liable for the monetary claims of Cruz,
ISSUE:
1. whether or not petitioner is engaged in labor-only contracting
2. whether or not there exist an employer-empoyee relationship

HELD: No Merit
Section 106 of the Labor Code on contracting and subcontracting provides:
Article 106. Contractor or subcontractor. - 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 latters subcontractor 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 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.
Yanyan 13


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.[Underscoring provided]

In the same vein, Sections 8 and 9, DOLE Department Order No. 10, Series of
1997, state that:
Sec. 8. Job contracting. There is job contracting 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 work except as to the results
thereof; and

(2) The contractor has substantial capital or investment in the form of tools,
equipment, machineries, work premises, and other materials which are
necessary in the conduct of his business.

Sec. 9. Labor-only contracting. (a) Any person who undertakes to supply
workers to an employer shall be deemed to be engaged in labor-only
contracting where such person:
(1) Does not have substantial capital or investment in the form of tools,
equipment, machineries, work premises and other materials; and

(2) The workers recruited and placed by such persons are performing activities
which are directly related to the principal business or operations of the
employer in which workers are habitually employed.

(b) Labor-only contracting as defined herein is hereby prohibited and the
person acting as contractor shall be considered merely as an agent or
intermediary 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.

(c) For cases not falling under this Article, the Secretary of Labor shall
determine through appropriate orders whether or not the contracting out of
labor is permissible in the light of the circumstances of each case and after
considering the operating needs of the employer and the rights of the workers
involved. In such case, he may prescribe conditions and restrictions to insure
the protection and welfare of the workers.

On the matter of labor-only contracting, Section 5 of Rule VIII-A of the Omnibus
Rules Implementing the Labor Code, 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 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.

X x x x

Thus, in determining the existence of an independent contractor relationship,
several factors may be considered, such as, but not necessarily confined to,
whether or not the contractor is carrying on an independent business; the
nature and extent of the work; the skill required; the term and duration of the
relationship; the right to assign the performance of specified pieces of work; the
control and supervision of the work to another; the employers power with
respect to the hiring, firing and payment of the contractors workers; the control
Yanyan 14

of the premises; the duty to supply premises, tools, appliances, materials and
labor; and the mode, manner and terms of payment.
[15]


On the other hand, there is labor-only contracting where: (a) 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 (b) the workers recruited and placed by such person are performing
activities which are directly related to the principal business of the employer.
[16]


The Court finds no compelling reason to deviate from the findings of the
tribunals below. Both the capitalization requirement and the power of control
on the part of Requio are wanting.

Generally, the presumption is that the contractor is a labor-only contracting
unless such contractor overcomes the burden of proving that it has the
substantial capital, investment, tools and the like.
[17]
In the present case, though
Garden of Memories is not the contractor, it has the burden of proving that
Requio has sufficient capital or investment since it is claiming the supposed
status of Requio as independent contractor.
[18]
Garden of Memories, however,
failed to adduce evidence purporting to show that Requio had sufficient
capitalization. Neither did it show that she invested in the form of tools,
equipment, machineries, work premises and other materials which are
necessary in the completion of the service contract.

Furthermore, Requio was not a licensed contractor. Her explanation that her
business was a mere livelihood program akin to a cottage industry provided by
Garden of Memories as part of its contribution to the upliftment of the
underprivileged residing near the memorial park proves that her capital
investment was not substantial. Substantial capital or investment refers to
capital stocks and subscribed capitalization in the case of corporations, tools,
equipment, implements, machineries, and work premises, actually and directly
used by the contractor or subcontractor in the performance or completion of
the job, work or service contracted out.
[19]
Obviously, Requio is a labor-only
contractor.

Another determinant factor that classifies petitioner Requio as a labor-only
contractor was her failure to exercise the right to control the performance of the
work of Cruz.

The requirement of the law in determining the existence of independent
contractorship is that the contractor should undertake the work on his own
account, under his own responsibility, according to his own manner and
method, free from the control and direction of the employer except as to the
results thereof.
[21]
In this case, however, the Service Contract Agreement clearly
indicates that Requio has no discretion to determine the means and manner by
which the work is performed. Rather, the work should be in strict compliance
with, and subject to, all requirements and standards of Garden of Memories.

Under these circumstances, there is no doubt that Requio is engaged in labor-
only contracting, and is considered merely an agent of Garden of Memories. As
such, the workers she supplies should be considered as employees of Garden of
Memories. Consequently, the latter, as principal employer, is responsible to the
employees of the labor-only contractor as if such employees have been directly
employed by it.
[22]


Notably, Cruz was hired as a utility worker tasked to clean, sweep and water the
lawn of the memorial park. She performed activities which were necessary or
desirable to its principal trade or business. Thus, she was a regular employee
of Garden of Memories and cannot be dismissed except for just and authorized
causes.


ii. Regular Employee, project/ seasonal employee, probationary, casual
557 SCRA 124

1. Goma vs. Pamplona

FACTS: Petitioner commenced the instant suit by filing a complaint for illegal
dismissal, underpayment of wages, non-payment of premium pay for holiday
and rest day, five (5) days incentive leave pay, damages and
attorney's fees, against the respondent. The case was filed with the Sub-
Regional Arbitration Branch No. VII of Dumaguete City. Petitioner claimed that
he worked as a carpenter at the Hacienda Pamplona since 1995; that he worked
from 7:30 a.m. to 12:00 noon and from 1:00 p.m. to 5:00 p.m. daily with a salary
rate of P90.00 a day paid weekly; and that he worked continuously until 1997
when he was not given any work assignment.

Yanyan 15

On a claim that he was a regular employee, petitioner alleged to have been
illegally dismissed when the respondent refused without just cause to give him
work assignment. Thus, he prayed for backwages, salary differential, service
incentive leave pay, damages and attorney's fees.
On the other hand, respondent denied having hired the petitioner as its
regular employee. It instead argued that petitioner was hired by a certain Antoy
Caaveral, the manager of the hacienda at the time it was owned by Mr. Bower
and leased by Manuel Gonzales, a jai-alai pelotari known as "Ybarra."[6]
Respondent added that it was not obliged to absorb the employees of the
former owner.

In 1995, Pamplona Plantation Leisure Corporation (PPLC) was created for the
operation of tourist resorts, hotels and bars. Petitioner, thus, rendered service
in the construction of the facilities of PPLC. If at all, petitioner was a project but
not a regular employee.

On June 28, 1999, Labor Arbiter Geoffrey P. Villahermosa dismissed the
case for lack of merit.[8] The Labor Arbiter concluded that petitioner was hired
by the former owner, hence, was not an employee of the respondent.

Consequently, his money claims were denied.

On appeal to the National Labor Relations Commission (NLRC), the
petitioner obtained favorable judgment when the tribunal reversed and set
aside the Labor Arbiter's decision.

The NLRC upheld the existence of an employer-employee relationship,
ratiocinating that it was difficult to believe that a simple carpenter from far
away Pamplona would go to Dumaguete City to hire a competent lawyer to help
him secure justice if he did not believe that his right as a laborer had been
violated.

Contrary to the NLRC's finding, the CA concluded that there was no
employer-employee relationship. The CA stressed that petitioner having raised
a positive averment, had the burden of proving the existence of an
employer-employee relationship.

ISSUE: 1) Is the petitioner a regular employee of the respondent? 2) If so, was
he illegally dismissed from employment? and 3) Is he entitled to his monetary
claims?


HELD: A thorough examination of the records compels this Court to reach a
conclusion different from that of the CA. It is true that petitioner admitted
having been employed by the former owner prior to 1993 or before the
respondent took over the ownership and management of the plantation,
however, he likewise alleged having been hired by the respondent as a
carpenter in 1995 and having worked as such for two years until 1997.

He is a project employee as he was hired - 1) for a specific project or
undertaking, and 2) the completion or termination of such project or
undertaking has been determined at the time of engagement of the employee.

In other words, as regards those workers who worked in 1995 specifically in
connection with the construction of the facilities of Pamplona Plantation Leisure
Corporation, their employment was definitely "temporary" in character and not
regular employment. Their employment was deemed terminated by operation
of law the moment they had finished the job or activity under which they were
employed.

Thus, departing from its initial stand that it never hired petitioner, the
respondent eventually admitted the existence of employer-employee
relationship before the CA. It, however, qualified such admission by claiming
that it was PPLC that hired the petitioner and that the nature of his employment
therein was that of a "project" and not "regular"
employee.

The employment relationship having been established, the next question
we must answer is: Is the petitioner a regular or project employee?

We find the petitioner to be a regular employee provided in Article 280 of the
Labor Code, as amended.

Respondent is engaged in the management of the Pamplona Plantation as well
as in the operation of tourist resorts, hotels, inns, restaurants, etc.

Petitioner, on the other hand, was engaged to perform carpentry work. His
services were needed for a period of two years until such time that the
respondent decided not to give him work assignment anymore. Owing to his
length of service, petitioner became a regular employee, by operation of law.

A project employee is assigned to carry out a specific project or
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undertaking the duration and scope of which are specified at the time the
employee is engaged in the project. A project is a job or undertaking which is
distinct, separate and identifiable from the usual or regular undertakings of the
company. A project employee is assigned to a project which begins and ends at
determined or determinable times.

The principal test used to determine whether employees are project
employees as distinguished from regular employees, is whether or not the
employees were assigned to carry out a specific project or undertaking, the
duration or scope of which was specified at the time the employees were
engaged for that project.[31] In this case, apart from respondent's bare
allegation that petitioner was a project employee, it had not shown that
petitioner was informed that he would be assigned to a specific project or
undertaking. Neither was it established that he was informed of the duration
and scope of such project or undertaking at the time of his engagement.

Most important of all, based on the records, respondent did not report the
termination of petitioner's supposed project employment to the
Department of Labor and Employment (DOLE). Department Order No. 19 (as
well as the old Policy Instructions No. 20) requires employers to submit a
report of an employee's termination to the nearest public employment office
every time the employment is terminated due to a completion of a project.
Respondent's failure to file termination reports, particularly on the cessation of
petitioner's employment, was an indication that the petitioner was not a project
but a regular employee.

We stress herein that the law overrides such conditions which are
prejudicial to the interest of the worker whose weak bargaining position
necessitates the succor of the State. What determines whether a certain
employment is regular or otherwise is not the will or word of the employer, to
which the worker oftentimes acquiesces. Neither is it the procedure of hiring
the employee nor the manner of paying the salary or the actual time spent at
work.

It is the character of the activities performed by the employer in relation to the
particular trade or business of the employer, taking into account all the
circumstances, including the length of time of its performance and its continued
existence. Given the attendant circumstances in the case at bar, it is obvious that
one year after he was employed by the respondent, petitioner became a regular
employee by operation of law.

As to the question of whether petitioner was illegally dismissed, we answer in
the affirmative. Well-established is the rule that regular employees enjoy
security of tenure and they can only be dismissed for just cause and with due
process, i.e., after notice and hearing. In cases involving an employee's
dismissal, the burden is on the employer to prove that the dismissal was legal.
This burden was not amply discharged by the respondent in this case.

Obviously, petitioner's dismissal was not based on any of the just or
authorized causes enumerated under Articles 282, 283 and 284 of the
Labor Code, as amended. After working for the respondent for a period of two
years, petitioner was shocked to find out that he was not given any work
assignment anymore. Hence, the requirement of substantive due process was
not complied with.

Apart from the requirement that the dismissal of an employee be based on any
of the just or authorized causes, the procedure laid down in Book VI Rule I,
Section 2 (d) of the Omnibus Rules Implementing the Labor Code, must be
followed. Failure to observe the rules is a violation of the
employee's right to procedural due process.

Having shown that petitioner is a regular employee and that his dismissal was
illegal, we now discuss the propriety of the monetary claims of the petitioner.
An illegally dismissed employee is entitled to: (1) either reinstatement, if viable,
or separation pay if reinstatement is no longer viable, and (2) backwages.

In the instant case, we are prepared to concede the impossibility of the
reinstatement of petitioner considering that his position or any equivalent
position may no longer be available in view of the length of time that this case
has been pending. Moreover, the protracted litigation may have seriously
abraded the relationship of the parties so as to render reinstatement
impractical. Accordingly, petitioner may be awarded separation pay in lieu of
reinstatement.

Petitioner's separation pay is pegged at the amount equivalent to
petitioner's one (1) month pay, or one-half (1/2) month pay for every year of
service, whichever is higher, reckoned from his first day of employment up to
finality of this decision. Full backwages, on the other hand, should be computed
from the date of his illegal dismissal until the finality of this
decision.

On petitioner's entitlement to attorney's fees, we must take into account
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the fact that petitioner was illegally dismissed from his employment and
that his wages and other benefits were withheld from him without any
valid and legal basis. As a consequence, he was compelled to file an action for
the recovery of his lawful wages and other benefits and, in the process, incurred
expenses. On these bases, the Court finds that he is entitled to attorney's fees
equivalent to ten percent (10%) of the monetary award.

Lastly, we affirm the NLRC's award of salary differential. In light of our
foregoing disquisition on the illegality of petitioner's dismissal, and our
adoption of the NLRC's findings, suffice it to state that such issue is a
question of fact, and we find no cogent reason to disturb the findings of the
labor tribunal. Petition granted.

2. Dela Cruz vs. Maersk

FACTS: Respondent Elite Shipping A.S. hired petitioner Dante D. de la Cruz as
third engineer for the vessel M/S Arktis Morning through its local agency in the
Philippines, co-respondent Maersk Filipinas Crewing Inc. Dela Cruz was
deployed to Jebel Ali, United Arab Emirates and boarded M/S Arktis Morning. In
a logbook entry, chief engineer Normann Per Nielsen expressed his
dissatisfaction over Dela Cruz 's performance: he has been informed that if he
does not improve his Job/Working performance within [a] short time he will be
signed off according to CBA Article 1 (7)1. Entry was followed by another one
which was similar in content And then, Dela Cruz was finally informed of his
discharge through a notice captioned "Notice according to CBA Article 1 (7):
Reason for the decision is The chief engineer has made 2 entries in the
engine logbook, regarding your insufficient job/working, which you are well
aware of. Dela Cruz was then made to disembark at the port of Houston, Texas
and was repatriated to Manila Dela Cruz thereafter filed a complaint for illegal
dismissal

Labor Arbiter: ruled that Dela Cruz was dismissed without just cause and due
process as the logbook entry (which respondents claimed to be the first notice
to petitioner) was vague.

NLRC: upheld LA decision
CA: reversed the decision. CA deemed the logbook entries to be sufficient
compliance with the first notice requirement of the law Issues

ISSUES:
1. WON Dela Cruz was illegally dismissed
2. WON Dela Cruz was a regular employer fee Held and Ratio

HELD: 1. Yes. An employer has the burden of proving that an employee's
dismissal was for a just cause and that it complied with the rudimentary
requirements of due process, that is, the opportunity to be heard and to
defend oneself
Procedural due process requires that a seaman must be given a written
notice of the charges against him and afforded a formal investigation
where he can defend himself personally or through a representative before he
can be dismissed and disembarked from the vessel The employer is bound to
furnish him two notices: (1) the written charge and (2) the written notice of
dismissal (in case that is the penalty imposed) in accordance with the POEA
Revised Standard Employment Terms and Conditions Governing the
Employment of Filipino Seafarers on Board Ocean-Going Vessels (POEA Revised
Standard Employment Terms and Conditions)

The notice must state with particularity the acts or omissions for which his
dismissal is being sought

In this case, the logbook entries did not substantially comply with the first
notice, or the written notice of charge(s)
Respondents should have indicated the grounds for the threatened
termination, the specific acts or omissions illustrating the same, along with the
date and the approximate time of their occurrence

The same thing may be said of the written notice of dismissal. It sorely lacked
the necessary details that should accompany it. The records were devoid of any
proof indicating that petitioner was ever given an opportunity to present his
side. Respondents dismally failed to prove that petitioner's termination from
employment was for cause Hence, not only was Dela Cruz's dismissal
procedurally flawed, it was also without just cause. The first sixty (60) days of
service is to be considered a probationary period which entitles a shipowner or
his representative to terminate the contract by giving fourteen (14) days of
written notice.

1. No. Seafarers are not covered by the term regular employment, as
defined under Article 280 of the Labor Code

Instead, they are considered contractual employees whose rights and
obligations are governed primarily by the POEA Standard Employment
Contract for Filipino Seamen, the Rules and Regulations Governing
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Overseas Employment, and, more importantly, by Republic Act No. 8042,
otherwise known as The Migrant Workers and Overseas Filipinos Act of
1995.

It is an accepted maritime industry practice that the employment of
seafarers is for a fixed period only. The Court acknowledges this to be for
the mutual interest of both the seafarer and the employer. Seafarers
cannot stay for a long and indefinite period of time at sea as limited access to
shore activity during their employment has been shown to adversely affect
them. Furthermore, the diversity in nationality, culture and language among the
crew necessitates the limitation of the period of employment

While the court recognizes that petitioner was a member of Seamen's
Union of the Philippines which had a CBA with respondent Elite Shipping
A.S. providing for a probationary period of employment, the CBA cannot
override the provisions of the POEA Standard Employment Contract. The
law is read into, and forms part of, contracts. And provisions in a contract are
valid only if they are not contrary to law, morals, good customs, public order or
public policy.

This is the only logical explanation possible as the parties cannot and
should not violate the POEA's directive that a contract of enlistment must not
exceed 12 months.