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FVR Skills and Services (SKILLEX )v. Jovert Seva, et.al.

(28 in total)
October 22, 2014| Brion, J. | Rights of Contractual Employees
Digester: Mercado, Carlo Robert
SUMMARY: A group of 28 janitorial and maintenance employees were
terminated by their employer, an independent contractor, after its contract
with Robinsons expired. These employees are regular employees who are
entitled to various benefits, including the right against security of tenure, as
they may only be dismissed with the proper substantial and procedural
requirements.
DOCTRINE: DO 18-02 grants contractual employees all the rights and
privileges due a regular employee, including the following:
(a) safe and healthful working conditions;
(b) labor standards such as service incentive leave, rest days, overtime pay,
holiday pay, 13th month pay and separation pay;
(c) social security and welfare benefits;
(d) self-organization, collective bargaining and peaceful concerted action;
and
(e) security of tenure
FACTS:
The twenty-eight (28) respondents were employees of petitioner FVR
Skills and Services Inc., an independent contractor engaged in the
business of providing janitorial and other manpower services. As early as
1998, some of the respondents have already been employed by the
company
April 2008: SKILLEX entered into contract with Robinsons to supply
janitorial and manpower services to Robinsons Place Ermita Mall from
January to December 2008
o Halfway through the contract, SKILLEX asked each
individual respondent to execute contracts indicating that
their employment will be terminated after December 31,
2008
As Robinsons no longer extended their contract with SKILLEX, the
respondents were dismissed as they were deemed project employees and
their project was already been completed. They thus filed illegal
dismissal cases
LA: respondents were project employees, thus after the contract with
Rob, their contracts will be terminated. Money claims (wage differential
and holiday pay) were granted

The Commission: reversed LA. They are regular employees, (some as far
back as 1998), therefore were illegally dismissed. Added separation pay
to the money claims
CA: Affirmed The Commission. In addition, it ruled the contracts the
individual employees signed had no binding effect and that Rana
(president) and Burgos (general manager) solidarily liable for the money
claims

RULING: Petition denied, except that the solidary liability of Rana and
Burgos was removed.
W/N respondents are regular employees YES. In both possible kinds of
regular employees
Article 280 (now 294) of the Labor Code determines WON an employee
is regular or project employee
There are two kinds of regular employees: (1) those who were engaged
to perform activities which are usually necessary or desirable in the usual
business or trade of the employer; and (2) those casual employees who
became regular after one year of service, whether continuous or broken,
but only with respect to the activity for which they have been hired
o These two are different from a project employee, or one
whose employment was fixed for a specific project or
undertaking, whose completion or termination had been
determined at the time of engagement.
[First kind of regular] Test of determining W/N regular employee 1:
reasonable connection between the particular activity performed by the
employee and the employers business or trade by considering the nature
of the work performed and its relation to the scheme of the particular
business, or the trade in its entirety.
o In the case at hand, the respondents work as janitors, service
crews and sanitation aides, are necessary or desirable to the
petitioners business
[Second kind of regular] Also, the respondents, even before the contract
with Robinsons, were already under the petitioners employ. They had
been doing the same type of work and occupying the same positions
from the time they were hired and until they were dismissed in January
2009.

1 For the first kind of regular employee, as the court


failed to emphasize

Although the respondents were assigned as contractual employees to the


petitioners various clients, under the law, they remain to be the
petitioners regular employees, who are entitled to all the rights and
benefits of regular employment including service incentive leave, rest
days, overtime pay, holiday pay, 13th month pay and separation pay, and
security of tenure
o Under Department Order 18-02, the contractor or
subcontractor is considered as the employer of the
contractual employee for purposes of enforcing the
provisions of the Labor Code and other social legislation
(hence SKILLEX and not Robinsons)
Other rights of contractuals are in Notes and
Doctrine

W/N the contracts individually signed by respondents, are valid NO,


they are voidable due to intimidation
The timing of the execution of the respondents respective employment
contracts (when it was known that the contract with Robinsons will not
be renewed) to be indicative of the petitioner s calculated plan to evade
the respondents right to security of tenure, to ensure their easy dismissal.
Under CC Art 1390, contracts wherein consent of one of the parties was
vitiated by intimidation are voidable
o The petitioners threat of nonpayment of the respondents
salaries clearly amounted to intimidation.
W/N the employees were validly dismissed NO. Illegal dismissal
To be valid, an employees dismissal must comply with the substantive
and procedural requirements of due process.
o Substantively, a dismissal should be supported by a just or
authorized cause.
o Procedurally, the employer must observe the twin notice and
hearing requirements in carrying out an employees
dismissal.
Petitioners failed to comply
W/N respondents entitled to separation pay YES.
Since this litigation resulted to strained relations between the petitioner
and the respondents, separation pay is proper instead of reinstatement.

W/N the officers (Rana and Burgos) are liable solidarily with the
company - NO
The respondents failed to show and prove gross negligence or bad faith
on part of Rana and Burgos
NOTES:
Article280.Regular and Casual Employment. The provisions of written
agreement to the contrary notwithstanding and regardless of the oral
agreement of the parties, an employment shall be deemed to be regular where
the employee has been engaged to perform activities which are usually
necessary or desirable in the usual business or trade of the employer, except
where the employment has been fixed for a specific project or undertaking
the completion or termination of which has been determined at the time of
the engagement of the employee or where the work or service to be
performed is seasonal in nature and the employment is for the duration of the
season.
An employment shall be deemed to be casual if it is not covered by the
preceding paragraph: Provided, That, any employee who has rendered at least
one year service, whether such service is continuous or broken, shall be
considered a regular employee with respect to the activity in which he is
employed and his employment shall continue while such activity exists
DO 18-02 grants contractual employees all the rights and privileges due
a regular employee, including the following:
(a) safe and healthful working conditions;
(b) labor standards such as service incentive leave, rest days, overtime
pay, holiday pay, 13th month pay and separation pay;
(c) social security and welfare benefits;
(d) self-organization, collective bargaining and peaceful concerted
action; and
(e) security of tenure

RONNIE ABING v. NLRC, ALLIED BANKING CORP., et al.


September 20, 2014 | Reyes, J. | Legitimate Contracting or Subcontracting
Digester: Roa, Annamhel Monique C.
SUMMARY: Petitioner had been working in Allied Banking through the
employment of contractors. Upon termination of the second contractors
service contract with Allied Banking, he alleges the latter is his true employer
and cries illegal dismissal.
DOCTRINE: See definition of Labor Contracting/ Subcontracting provided
in ratio. Under such an agreement, no employer-employee relationship exists
between the principal and the contractual worker.
FACTS:
Dec. 1991 Ronnie Abing sought employment with respondent Allied
Banking Corp, and was instructed to go to respondent Marilag Business
and Industrial Management Services Inc. (Marilag) which had a service
contract with said bank. He filled out an application form, passed the
medical examination and was told to report to Allied Bank, where he
would be assigned to the legal department of, and made to do various
tasks such as messenger, skip tracer, checker and verifier of properties, as
well as receiving clerk/vault keeper. He was issued an ID by Allied Bank
as its contractual employee.
Aug 2002 Allied Banks service contract with Marilag was termination
and the bank entered into a new service contract with respondent
Facilitators general Services, Inc. (FGSI). Upon complying with the
requirements, Abing was instructed to report to FGSI and thereupon
resumed his work at Allied Bank.
Oct. 2003 Allied Bank terminated its contract with FGSI and told
Abing to stop reporting at its main office by October 17, 2003. Abing
claimed that he was an employee of the bank and that he was being
illegally terminated w/o due process and then instituted a complaint for
illegal dismissal.
Counter-arguments: 1) Allied Bank Abing is not their employee; it was
Marilag and FGSI which hired him to perform services for the bank
under service agreements. It could not therefore have illegally dismissed
Abing. 2) FGSI It did not illegally dismiss Abing; when its service

contract with Allied Bank was terminated, they re-assigned him to


another place, such as Fortune Tobacco and Kenny Rogers, or even other
branches of Allied Bank, but petitioner refused and insisted to remain
working in the main office of Allied Bank. When he realized that the said
assignment was no longer possible, Abing executed a quitclaim and
release after he was paid his 13th month pay and SIL pay. 3) Marilag
Abing also executed a quitclaim in its favor, after its service contract
with Allied Bank was terminated, and by then, Abing had also began
working under FGSI.
LA dismissed Abings petition for failing to prove that he was an
employee of Allied Bank. LA also held that his claim was negated by the
quitclaims he executed in favor of Marilag and FGSI.
Upon appeal, the NLRC reversed the LA, having found that an
employer-employee relationship existed between the petitioner and
Allied Bank, in view of the fact that his services were usually necessary
and desirable to the business of the bank. However, NLRC granted the
bank and FGSIs MFR and reinstated LAs findings, rratiocinating that
Abing was an employee of a legitimate job contractor FGSI, which
exercised control and supervision over him. NLRC also noted his
quitclaims.
CA upheld NLRC, finding FGSI a legitimate job contractor pursuant to
Sec. 4(a) of Dept. Order No. 18-02 of the DOLE.

RULING: Wherefore, premises considered, the instant petition is hereby


denied.
Whether Allied Bank was the true employer of Abing No.
In a Rule 45 review, the Court considers the correctness of the assailed
CA decision, in contrast with the review for jurisdictional error that they
undertake under Rule 65.
The LA, NLRC and CA all found that FGSI was a legitimate job
contractor and that the petitioner was an employee of FGSI when he was
terminated upon the expiration of its service contract with Allied Bank.
Sec. 4(a) of Dept. Order 18-02 issued by the DOLE defines legitimate
labor contracting or subcontracting as an arrangement whereby a
principal agrees to put out or farm out with a contractor or
subcontractor the performance or completion of a specific job, work or
service with 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. Under such an arrangement, no

employer-employee relationship is created between the principal and


the contractual worker, who is actually the employee of the
contractor. On the other hand, Art. 106 of the LC defines labor-only
contracting as occurring when any of the ff. circumstance occurs: 1) the
contractor 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 the contractor are performing activities which are
directly related to the principal business of the employer, or 2) the
contractor does not exercise the right to control the performance of the
work of the employee. This arrangement is prohibited and
consequently, the law deems the principal as the employer of the
contractual employee.
FGSI had been doing business as a personnel and manpower agency for
20 years before it entered into a service contract with Allied Bank. Its
service contract expressly provided that it shall provide Allied Banks
main office with janitorial and maintenance personnel who shall remain
as FGSIs employees. They serve other companies and have their own
tools and equipment used to provide janitorial services. Applying the
four-fold test used in determining the existence of an employer-employee
relationship (selection, wages, dismissal, control), FGSI possesses all
these powers: FGSI hired Abing, paid and gave benefits to Abing, was
acknowledged by Abing as his employer when he signed his quitclaim,
and regularly controlled and supervised Abing in his work in Allied Bank
through its personnel officer.
Finally, Marilag and FGSI have been for decades in business as
janitorial/messengerial service and/or manpower recruitment companies.
In his petition, Abing described his tasks in Allied Bank as those of
messenger or runner with clerical functions assigned to him from time to
time, such as skip tracer, checker and verifier of properties, and
receiving clerk/vault keeper. W/o a clear and full description of his
actual tasks as well as alleged promotions, SC cant determine if his
tasks are usually necessary and desirable in the banks business. His
complaint for illegal dismissal has no merit.

FUJI TELEVISION NETWORK v. ARLENE S. ESPIRITU


Dec. 3, 2014 | Leonen, J. | Legitimate contracting or subcontracting: 4
Conditions; Fixed-term employees v Independent Contractors v. Regular
employees
Digester: Santiago, Senando Angelo
SUMMARY: Fuji Television Network hired Arlene Espiritu as a news
correspondent/producer to report Philippine news to Japan, with her contract
renewed annually. However, when she got diagnosed with lung cancer, she
informs Fuji, who then disclosed that they will have a hard time renewing the
contract, considering her situation. Both parties sign a contract for nonrenewal, which stipulates that she would not renew and that she would
receive $18,050 as compensation for services, etc. Arlene filed a complaint
against Fuji for illegally dismissing her. SC decides in her favor.
DOCTRINE: It is the burden of the employer to prove that a person whose
services it pays for is an independent contractor rather than a regular
employee with or without a fixed term. That a person has a disease does not
per se entitle the employer to terminate his or her services. Termination is the
last resort. At the very least, a competent public health authority must certify
that the disease cannot be cured within 6 months, even with appropriate
treatment.
FACTS (Skip? Go to second issue. Maam wants to focus on that.):
2005: Petitioner Fuji Television Network, Inc. engaged Arlene S. Espiritu
as a news correspondent/producer to report Philippine news to Fuji
through its Manila Bureau field office. Her contract, initially good for 1
year, was renewed annually with salary adjustment.
January 2009: Arlene is diagnosed with lung cancer.
o She informs Fuji, and the chief of News Agency told her
that the company will have a hard time renewing her
contract since it would be difficult for her to perform her
job, even if her physician certifies that she is still fit for
work.

2009, May 5: Both Arlene and Fuji sign a non-renewal contract, which
stipulates that her contract will no longer be renewed after its expiration
on May 31, 2009. It also provided that the parties release each other from
liabilities and responsibilities under the contract.
o In consideration of the contract, she acknowledges receiving
$18,050:
Her monthly salary from March-May 2009,
Year-end bonus,
mid-year bonus, and
separation pay.
o In her signature, however, she affixes U.P.she is under
protest.
[LA] May 6: Arlene files a complaint for illegal dismissal and attorneys
fees with the LA, alleging that she was forced to sign the non-renewal
contract when Fuji came to know of her illness.
o She says her salaries and other benefits for March and April
2009 were withheld when she refused to sign.
o She claims she had no other choice but to sign. It was only
when she signed that the above amount was given.
September 10: LA dismisses Arlenes complaint, concluding that Arlene
was not Fujis employee but an independent contractor, after applying the
four-fold test (see note #1). She appeals to the NLRC.
[NLRC] 2010, March 5: NLRC holds that Arlene was a regular
employee with respect to the activities for which she was employed since
she continuously rendered services that were deemed necessary and
desirable to Fujis business.
o NLRC reverses LA decision and orders payment of
backwages.
o Both parties file separate MRs, but NLRC denies, finding no
merit.
[CA] Both file separate petitions for certiorari to CA, which are later
consolidated.
o Disposition: NLRC decision affirmed, also ordering
reinstatement, in addition to payment of backwages and
benefits, moral and exemplary damages, attorneys fees, and
legal interest of 12% per year.
o Held: Arlene is a regular employee, and the successive
renewals of her fixed-term contract resulted in regular
employment.

She is not an independent contractor because she was not


contracted on account of any peculiar ability, special talent,
or skill. Since Fuji owned everything Arlene used in her
work, she could not be an independent contractor.
o Held: She was illegally dismissed as Fuji failed to observe
due process for her dismissal since she was a regular
employee.
o Held: Arlene did not sign the non-renewal contract
voluntarily and that Fuji made it appear that she chose not to
renew her contract.
An MR was filed, but was denied for failure to raise new matters.
[SC] Fuji files petition for review, assailing CAs decision which held
Arlene to be a regular employee and awarding her claims, benefits, and
damages and arguing:
Rebuttal to CA
Reasoning
findings
Arlene was hired as Arlene was hired as a stringer and
an independent
informed her she would remain one.
contractor, not as a She insisted that her contract be renewed
regular employee;
annually because she had skills that
Fuji had no control
distinguished her from ordinary
over her work.
employees.
(Focus on this.)
Both parties dealt on equal terms upon
negotiating and entering into the
contracts.
There was no illegal The non-renewal contract is unneeded as the
dismissal.
employment automatically terminated upon
expiration of her contract.
Notwithstanding, she agreed not to renew her
contract. In an email to Fuji, she consented to
it, but refused to sign anything.
(She sent an email of the non-renewal
agreement that she agreed to sign, which
further stipulated that Fuji shall re-hire her if
she was still interested to work for them.)
No damages should
They dealt with her in good good faith.
be awarded.
Even if Fuji was not bound to pay sick leaves
in excess of 30 days, they still paid her full
salary for March-May even if she only

reported for work for a total of 9 days.


RULING: Petition denied. CA decision affirmed with modification that
backwages be computed from June 2009. Legal interest at 6% per annum.
Whether the petition for review should be dismissed as the signatory of
the verification and certification of non-forum shopping of the petition
had no authority to sign the same on behalf of Fuji. NO.
Fuji complied substantially with the requirements of verification and
certification against forum shopping.
Whether CA was correct in holding NLRC to properly rule that Arlene
was a regular employee, not an independent contractor, and that she was
illegally dismissed YES
******* start of the part of the case where Maam asked us to focus
*******
Art. 280, LC classifies employees into four:
o Regular (further classified into two)
those engaged to perform activities which are usually
necessary or desirable in the usual business or trade of
the employer;
casual employees who have rendered at least one year
of service, whether such is continuous or broken.
o Project
o Seasonal and
o Casual.
Brent School, Inc. v Zamora, introduces a new classification: employees
with fixed-term contracts, where the decisive determinant in the
employment is the day certain agreed upon for the start and end of
employment.
o Fixed term is an essential and natural appurtenance in
overseas employment contracts and officers in educational
institutions.
o Some employers might abuse such contracts in that periods
are imposed to prevent the employee from getting tenured.
Void contractscontrary to public policy or morals.
o Criteria to determine the validity of such contracts:
1) The fixed period of employment was
knowingly and voluntarily agreed upon by the
parties without any force, duress, or improper

pressure being brought to bear upon the employee


and absent any other circumstances vitiating his
consent; or
2) It satisfactorily appears that the employer and
the employee dealt with each other on more or
less equal terms with no moral dominance
exercised by the former or the latter.
o Rationale: when the employee, on account of special skills or
market forces, is in a position to make demands upon the
prospective employer, such prospective employee needs less
protection than the ordinary worker. Lesser limitations on the
parties freedom of contract are thus required for the
protection of the employee.
o The Court cited two cases wherein fixed-term contracts were
upheld as valid. (See notes 3 and 4)
Art. 106, LC recognizes independent contractors (See note 5).
o Definition: one who carries on a distinct and independent
business and undertakes to perform the job, work, or service
on its own account and under ones own responsibility
according to ones own manner and method, free from the
control and direction of the principal in all matters
connected with the performance of the work except as to the
results thereof. (Orozco v. CA)
No employer-employee relationship exists.
o DOLE Department Order No. 18-A, Series of 2011 defines a
contractor as having an arrangement whereby a principal
agrees to put out or farm out with a contractor 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.
(Sec. 3(c))
Same Order states: A trilateral relationship in
legitimate job contracting and subcontracting
arrangement exists among:
Principal (P)
Contractor (C)
Employees of contractor hired to accomplish
principals work (E)

Employer-employee relationship existent only


between C,E.
But where an independent C is an individual with
unique skills and talents that set them apart from
ordinary E, the contractor him/herself performs the
work for the Pnot trilateral but a bilateral
relationship.
o Two kinds of independent contractors exist:
Those engaged in legitimate job contracting
Those who have unique skills and talents that set
them apart from ordinary employees.
******* end of the part of the case where Maam asked us to focus *******
Arlene Espiritu was a regular employee with a fixed term contract.
o Test for determining regular employment: is whether there is
a reasonable connection between the employees activities
and the usual business of the employer.
o Art. 280, LC provides that the nature of work must be
necessary or desirable in the usual business or trade of the
employer as the test for determining regular employment.
This repeated engagement under contract of hire is
indicative of the necessity and desirability of the
petitioners work in private respondent ABCs
business.
Philips Semiconductors, Inc. v. Fadriquela: Where
an employees contract had been continuously
extended or renewed to the same position, with the
same duties and remained in the employ without any
interruption, then such employee is a regular
employee.
o An employee can be a regular employee with a fixed-term
contract.
As long as the employee is the one requesting, or
bargaining, that the contract have a definite date of
termination, or that the fixed-term contract be
freely entered into by the employer and the
employee, then the validity of the fixed-term
contract will be upheld.

Whether the CA properly modified the NLRC decision when it awarded


reinstatement, damages, and attorneys fees YES.

Apart from Arlenes illegal dismissal, the manner of her dismissal was
effected in an oppressive approach with her salary and other benefits
being withheld until May 5, 2009, when she had no other choice but to
sign the non-renewal contract. Thus, there was legal basis for the Court
of Appeals to modify the National Labor Relations Commissions
decision.

NOTES:
Four-fold test
o (a) the selection and engagement of the employee;
o (b) the payment of wages;
o (c) the power of dismissal; and
o (d) the employers power to control the employee on the
means and methods by which the work is accomplished.
If this control test is satisfied, then the person is an
employee; else, independent contractor.
Stringer: news correspondent who is retained on a part-time basis to
report on events in a particular place.
Labayog v. MY San Biscuits: fixed-term contracts valid as the employees
knew they were being hired as mixers, packers, and machine operators
only for a specific period.
Caparoso v. Court of Appeals: fixed-term contracts upheld the validity of
the fixed-term contract of employment. Caparoso and Quindipan claimed
they were dismissed illegally but there was no evidence of vitiation of
consent. Also, there was no proof that the employers used such contracts
to prevent workers regularization.
Art. 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, if any,
shall be paid in accordance with the provisions of this Code. X x x
The Secretary of Labor and Employment may, by appropriate
regulations, restrict or prohibit the contracting-out of labor to protect the
rights of workers established under this Code. In so prohibiting or
restricting, he may make appropriate distinctions between labor-only
contracting and job contracting as well as differentiations within these
types of contracting and determine who among the parties involved shall
be considered the employer for purposes of this Code, to prevent any
violation or circumvention of any provision of this Code.

There is labor-only contracting where the person supplying workers to


an employer does not have substantial capital or investment in the form
of tools, equipment, machineries, work premises, among others, and the
workers recruited and placed by such person are performing activities
which are directly related to the principal business of such employer. In
such cases, the person or intermediary shall be considered merely as an
agent of the employer who shall be responsible to the workers in the
same manner and extent as if the latter were directly employed by him.

POLYFOAM-RGC INTL. v. CONCEPCION


June 13, 2012 | Peralta, J. | Elements of Labor-only Contracting
Digester: Santos, Ihna
SUMMARY: Conception, a factory worker at Polyfoam was dismissed from
work due to an alleged infraction of a company rule. He filed for an illegal
dismissal complaint. Gramaje filed a Motion for Intervention, claiming to be
the real employer of Concepcion. The Court, in assessing Gramajes
contractorship using the elements of labor only contracting, found out that
Gramaje is a labor only contractor. Because of this, the Court rules that there
was an employer-employee relationship between Polyfoam and Concepcion
since a finding that a contractor is a labor only contractor is equivalent to
declaring an employer-employee relationship between Polyfoam and
Conception.
DOCTRINE: Labor only contracting is a prohibited act where the contractor
merely recruits workers to perform a job for a principal. These elements are
present in labor only contracting: (1) contractor does not have substantial
capital or investment, and (2) employees recruited, supplied or placed by
such contractor are performing activities which are directly related to the
main business of the principal.
A finding that a contractor is a labor only contractor is equivalent to
declaring an employer-employee relationship between the worker of the
contractor and the principal.
FACTS:
Concepcion filed for illegal dismissal, nonpayment of wages, premium
pay for rest day, separation pay, service incentive leave pay, 13th month

pay, damages, and attorneys fees against Polyfoam and Natividad Cheng
(manager).
Concepcion alleged that he was hired as an all around factory worker
and served for almost 6 years. On January 14, 2000, he allegedly
discovered that his time card was not in the rack and was later informed
that he could no longer punch his time card.
When he protested to the supervisor, the latter told him that the
management had dismissed him due to an infraction of a company rule.
Cheng refused to face him.
Concepcions counsel later wrote a letter to the manager requesting that
Concepcion be readmitted to work, but the request was unheeded. Thus,
the illegal dismissal complaint.
Gramaje filed a Motion for Intervention claiming to be the real employer
of Concepcion.
Polyfoam and Cheng filed a Motion to Dismiss on the grounds that the
NLRC has no jurisdiction over the case, because of the absence of
employer-employee relationship between them and that the money
claims had already prescribed.
LA Adolfo Babiano issued Order 12 granting Gramajes motion for
intervention (she is an indispensable party) and denied Polyfoams
motion to dismiss as the lack of employee-employer relationship is only
a matter of defense.
Polyfoam insisted that NLRC had no jurisdiction for Concepcion was not
their employee. They also fault Concepcion for naming Cheng as a partydefendant considering she is not even a director of the company.
In her Position Paper, Gramaje claimed that PA Gramaje Employment
Services is a legitimate job contractor who provided manpower needs of
Polyfoam. Concepcion was hired as a packer and assigned to
Polyfoam. She argued that he was not dismissed from employment, but
he just stopped coming to work.
LA Padolina rendered a decision finding respondent to have been
illegally dismissed and held that Polyfoam and PAGES are solidarily
liable for the money claims.
NLRC modified the LA decision by exonerating Polyfoam from liability
and deleted the awards of backwages, 13th month pay, damages, and
attorneys fees. Gramaje is an independent contractor and the employees
assigned to Polyfoam were still under the control and supervision of
Gramaje who had its own office equipment, tools, and substantial capital
and supplied the plastic containers and carton boxes used by her
employees in performing their duties. They also found sufficient

evidence to prove that it was Gramaje who paid the wages and benefits
(SSS).
NLRC: no illegal dismissal since respondent was not notified that he had
been dismissed nor was he prevented from returning to his work.
Reinstatement could not be given because of strained relations between
the parties.
CA: agreed with LAs conclusion that Gramaje is not a legitimate job
contractor but only a labor only contracter because:
o Gramaje failed to present its Audited Financial Statement (would
show financial standing and ownership equipment)
o Gramaje failed to present a single copy of the purported contract
with Polyfoam
o Her licences appeared to be spurious
o She was not registered with DOLE as a private recruitment agency
o She only presented 1 SSS Quarterly Collection List whose
authenticity is doubtful
Also, they were represented by one law firm though they used different
lawyers. This gives the impression that this was only a scheme to avoid
the employee-employer relationship. Thus, respondent was indeed
Polyfoams employee. This relationship can onlyso be seen by its
exercise of supervision over the work of the respondent (Polyfoams
Mga Alituntunin at Karampatang Parusa), the length he had worked for
Polyfoam and its direct firimg of the respondent.
Petitioners filed a petition for certiorari.

RULING: Petition denied.


Whether Gramaje is a labor only contractorYES
Article 106 Labor Code explains the relations which may arise between
an employer, a contractor, and the contractors employees.
There is labor only contracting where the person supplying workers to
an employer does not have substantial capital or investment in the form
of tools, equipment, machineries, work premises, among others, and the
workers recruited and placed by such person are performing activities
which are directly related to the principal business of such employer. In
such cases, the person or intermediary shall be considered merely as an
agent of the employer who shall be responsible to the workers in the
same manner and extent as if the latter were directly employed by him.
Sasan Sr. v. NLRCS distinguished between permissible job
contracting from labor only contracting:

These conditions concur:


The contractor carries on a distinct and independent business
and undertakes to perform the job on its own account and under
its own responsibility according to its own method, and free
from control and direction of the principal except results
Contractor has substantial capital or investment
Agreement between principal and contractor assures contractual
employees entitlement to all labor safety and health standards,
free exercise of right to self-organization, security of tenure, and
social/welfare benefits
o Labor only contracting: prohibited act where the contractor merely
recruits workers to perform a job for a principal. These elements
are present:
Contractor does not have substantial capital or investment
Employees recruited, supplied or placed by such contractor are
performing activities which are directly related to the main
business of the principal
Test of independent contractorship is whether one claiming to be an
independent contractor has contracted to do the work according to his
own methods and without being subject to the control of the employer
except to the results.
Applying these tests, Gramaje is not an independent job contractor, but a
labor only contractor because:
o Gramaje has no substantial capital or investment. The presumption
is that a contractor is only a labor only contractor unless he
overcomes the burden of proving that it has substantial capital,
investment, tools, and the like.
o However, neither Prescilla or Polyfoam presented evidence
showing ownership of the machineries. But considering that they
are found within the premises of Polyfoam, the presumption is the
latter owns them. Also, there was no showing that Gramaje had
other clients aside from Polyfoam
The fact that Ed Concepcion has to follow the Alituntunin at
Karampatang Parusa shows that Gramaje does not maintain an
o

Permissible job contracting: refers to an arrangement whereby a


principal agrees to put out a contractor the performance of a
specific job within a definite period regardless wheter it is
completed within the premises of the principal.

independent business whcih works according to its own manner and


method, free from the control and supervision of Polyfoam
o Gramaje failed to establish that she was the one in charge of
Concepcion
Being a mere agent of the principal company as a labor-only contractor,
liability attaches to them both. Thus, Polyfoam and Gramaje are
solidarily liable.

Whether an employer-employee relationship exists between Polyfoam


and respondentYES
A finding that a contractor is a labor only contractor is equivalent to
declaring an employee-employer relationship between Polyfoam and
Gramajes employees.
Whether respondent was illegally dismissed from employmentYES
There was no abandonment by Ed Concepcion since he was prevented
from working. Thus, no abandonment and there is illegal dismissal in
the absence of just grounds for termination.
NORKIS TRADING CORPORATION v. JOAQUIN BUENAVISTA
Petitioner/s: Norkis Trading Corporation
Respondent/s:Joaquin Buenavista, Henry Fabroa, Ricardo Cape, Bertuldo
Tulod, Willy Dondoyano and Glen VIllariasa
Ponente: Reyes, J
Action: Petition for Review on Certiorari
Date: October 10, 2012

FACTS
1. Norkis Trading, a domestic corporation engaged in the business of
manufacturing and marketing of Yamaha motorcycles and multi-purpose
vehicles. Petitioners were hired as Operators and Welders assogned in the
operation of industrial and welding machines owned and used by Norkis
Trading
2. The respondents were regarded by Norkis as members of PASAKA, a
cooperative organized under the Cooperative Code of the Philippines, which
was deemed an independent contractor deployed to render serices for Norkis
even though they have been working there for many years.However, the
respondents believe that they were regular employees.

3. The respondents filed a complaint for labor-only contracting and nonpayment of minimum wage and overtime pay with the DOLE against Norkis
Trading and PASAKA. This filing of complaint allegedly led to their
suspension, as they were served by PASAKA with memoranda charging them
with a violation of the rule against commission of acts injurious or prejudicial
to the interest or welfare of the cooperative.
4. On August 16, 1999, the respondent s received another set of memoranda
from PASAKA, charging them with the following violations of the
cooperatives rules and regulations:
a. Serious misconduct or willful disobedience of superiors
instructions or orders
b. Gross and habitual neglect of duties by abandoning work without
permission
c. absences without filing a leave of absence
d. wasting time or loiterinf on companys time or leaving their post
temporarily
5. PASAKA informed the respondents of their 15 day suspension, which was
extended for another 15 days, thus, they filed a complaint for illegal
suspension against Norkis Trading and PASAKA
6. When they were about to report back to work, they were informed by
PASAKA that they will be transferred Porta Coeli Industrial Corporation, the
sister company of Norkis Trading, as washers of Multicab vehicles.
7. The respondents opposed this transfer as it would amount to demotion
from being skilled workers to utility workers. Thus, they amended their
complaint for illegal suspension to include the charge od unfair labor
practice, illegal dismissal, damages and attorneys fees
8. The Labor Arbiter dismissed the complaint for lack of merit and directed
the respondents to report back to PASAKA. The LA also ruled that the
respondents failed to prove with convincing evidence that they were
dismissed from employment.
9. Meanwhile, DOLE ruled that PASAKA was engaged in labor-only
contracting, as it failed to prove that it has substantial capital. Moreover, the
machineries, equipment, supplies and even the supervisors of the respondents
were from Norkis Trading.
10. The DOLE order was assailed before the CA which affirmed the decision
of DOLE. It subsequently denied the MR filed
11. On appeal to the NLRC, the judgment of the LA was affirmed with
modification. It ruled that the LA had no jurisdiction over the dispute because
th respondentd were not employees but members of PASAKA, thus, it was an
intra-corporate dispute.

12. The CA, acting on the petition for certiorari, reversed the decision of the
NLRC and ordered the reinstatement of the respondents, or pay their
backwagses. It considered the finding of DOLE that PASAKA was engaged
in Labor-only contracting, thus, ruled that the resoondents were illegally
dismissed.
ISSUE 1
Whether or not the CA erred in disregarding the factual findings of the LA
and the NLRC -- NO
HELD
1. The court ruled that factual findings of labor officials may be examined
when there is a showing that they were arrived at arbitrarily or in disregard of
evidenceon record. Although the factual findings of labor officials, who are
deemed to have acquired expertise, are generally accorded respect and
finality, these findings are not infallible
2. It is within the expanded jurisdiction of the CA to review the findings of
NLRC. It has been held that the CA can take cognizance of a petition for
certiorari if it finds that the NLRC committed grave abuse of discretion by
capriciously, whimsically, or arbitrarily disregarding evidence which are
material to or decisive of the controversy (Cocomangas Hotel Beach Resort
v. Visca)
ISSUE 2
Whether or not PASAKA is a mere labor-only contractor YES
HELD
1.Labor-only contracting is a prohibited act where the contractor or
subcontractor merely recruits, supplies, or places workers to perform a job,
work, or service for a principal. The elements are the ff:
a. the contractor or subcontractor does not have substantial capital or
investment to actually perform the job, work, or service under it own
account and responsibility
b. the employees recruited, supplied or placed by such contractor or
subcontrcator perform activities which are directly related to the
main business of the principal.
2. The Court differentiated labor-only contracting with from legitimate job
contracting, which is 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 subh job, work, or service is to

be performed or completed within or outside the premises of the principal.


The requisites are:
a. the contractor carries on a distinct and independent business and
partakes 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
b. the contractor has substantial capital or investment
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
3. PASAKA failed to prove that the cooperative had substantial capital or
investment sufficient to enable it to perform the functions of an independent
contractor. The machinery, equipment and supplies were owned by Norkis.
Even though PASAKA showed its Statement of Financial Condition, it was
not shown that the properties were actually and directly used in the conduct
of PASAKAs business. Moreover, PASAKA failed to dispute the allegation
of the respondents that it was officers of Norkis that supervised the work and
paid their salaries.
ISSUE 3
Whether Norkis Trading or PASAKA is the principal employer of the
respondents Norkis Trading is the principal employer, considering that
PASAKA is a mere labor-only contractor
HELD
1. Being a labor-only contractor, PASAKA is regarded only as the agent of
Norkis
2. Moreover, the CA has already ruled that PASAKA was engaged in laboronly contracting, when the latter assailed the DOLE order finding for the
respondents. Such findings by the DOLE cannot just be rejected. It was grave
abuse of discretion on the part of the NLRC to ignore or simply sweep under
the rug the findings of the DOLE Regional Director.
3. The Court also has ruled in its Resolution dated April 14, 2008, dismissing
the claim. The decision has become final and executory. The ruling of the
Court has become res judicata, which is defined as a matter adjudged. Under
the Doctrine of Res Judicata, an existing final judgment or decree rendered
on the merits, and without fraud or collusion, by a court of competent
jurisdiction, upon any matter within its jurisdiction, is conclusive of the
rights of parties or their privies, in all other actions or suits in the same or any

other judicial tribunal of concurrent jurisdiction on the points and matters in


issue in the first suit.
4. Res Judicata has to aspects: bar by prior judgment and conclusiveness of
judgment. In the case at bar, the concept of conclusiveness of judgment has
set in. This rule precludes the Court from re-opening the issues that were
already settled with finality. In this case, it was th ruling that PASAKA was
engaged in labor-only contracting.
ISSUE 4
Whether or not the respondents were ilegally dismissed YES
HELD
1. The respondents were actually dismissed, which is contrary to the ruling
of the CA that they were constructively dismissed.
2. Where an entity has been declared to be a labor-only contractor, the
employees supplied by the said contractor to the principal employer become
regular employees of the latter. Thus, having regained regular status, the
employees are entitled to security of tenure and can only be dismissed for
just or authorized causes and after they had been afforded due process.
3. In the case at bar, Norkis argues that the transfer to Porta Coeli was just an
offer to respondents. However, the Court stressed the fact that the
respondents were not given any option as there is no showing that Norkis
would still accept them.
4. Norkis argues that the transfer was relayed to the respondents by
PASAKA, however, the Court ruled that such act was done by Norkis, being
the principal and PASAKA, merely being the agent.
5. The Court stressed that where there is labor-only contracting, the Labor
Code itself establishes an employer-employee relationship between the
employer and the employees of the labor-only contractor. This was
established for the purpose of preventing circumvention of labor laws. The
effect is that, the contractor is considered merely an agent of the principal
employer and the latter is responsible to the employees of the labor-only
contractor as if such employees had been directly employed by the principal
employer.
6. Considering the admission of Norkis that it has no duty to admit and treat
respondents as its employees, the transfer to Porta Coeli amounts, not even
to demotion, but to severing the work relation. The intent to dismiss was
sufficiently established.
DISPO
Petition DENIED

Benigno v. Vigilla v. Philippine College of Criminology


G.R. No: 200094
Petitioners: Benigno M. Vigilla and 17 others
Respondents: Phiippine College of Criminology and/or Gregory Alan F.
Bautista
Ponente: J. Mendoza
Action: Petition for review on certiorari of a decision of the CA
Date: June 10, 2013
FACTS
1. Petitioners were janitors, janitresses and supervisor in the
maintenance department of PCCr under the control of Atty. Seril
(PCCrs Senior VP for Admin). They were, however, made to believe
that they were actually under MBMSI (corporation engaged in
providing janitorial services to clients) wherein Atty. Seril is also the
President and General Manager.
2. PCCr discovered that the Certificate of Incorporation of MBSI has
been revoked which led to the termination of their relationship and
the dismissal of the maintenance personnel. (this was done by
Bautista, PCCrs president)
3. The dismissed employees filed complaints for illegal dismissal,
reinstatement, back wages, etc by alleging:
a. It was PCCr not the MBMSI who was their real employer
b. PCCr had direct control over MMSIs operations
c. No contract between MBMSI and PCCR
d. Selection and hiring was done by PCCr
4. PCCrs reply
a. PCCr is not the direct employer
b. MBMSI was the one who had control
c. PCCr had contractual agreement with MBMSI which makes
the latter the employer
d. Presented waivers and quitclaims executed by petitioners
i. For in consideration of this amount, I forever
release MBMS from any claims, demands, etc
ii. Documents have been notarized
5. LAs Decision: In favor of petitioners
a. PCCr real employer
i. Atty. Seril had the control over means and methods.
He acted as VP for Admin of PCCr and not as
President of MBMSI.
b. MBMSI a mere alter ego/labor-only contractor
c. Complainants were regular employees

d. PCCr/Bautista were in bad faith in dismissing


6. NLRCs Decision: Affirmed with modifications
a. Modification: Since MBMSI and Atty. Seril are labor-only
contractors, they are solidarily liable with PCCr, BUT, due to
the release waiver and quitclaims executed by petitioners,
they are excused.
7. Petitioners appealed and attached their affidavits denying they had
signed such releases, waivers and quitclaims.
8. LRCs modified Decision: Award still superseded by the releases,
waivers, and quitclaims
9. CAs Decision: Quitclaims, releases still extinguished their liability
a. Based on the principle of solidary liability and NCC 1217
(Payment by one of the solidary debtors extinguish the
obligation), the releases, waivers, and quitclaims in favor of
MBMSI and Atty. Seril redounded to respondents benefit.
b. Upheld the authenticity and due execution of the documents
since petitioners failed to substantiate their claim of forgery
and to overcome the presumption of regularity of a notarized
document
MAIN ISSUE: WoN petitioners claims were amicably settled by virtue
of the releases, waivers, and quitclaims which they had executed in favor
of MBMSI - YES
SUBISSUE 1: WoN petitioners executed the said releases, waivers and
quitclaims?
HELD 1: YES, they are valid.
1. This authenticity issue is an afterthought as they never questioned it
duering the proceedings before the LA and only after the NLRCs
declaration that the quitclaims settled the issue did they pose the
question.
2. SC is not a trier of facts and even if we relax the rle, n reason to
reverse the factual findings of both the NLRC and CA. Petitioners
failed to substantitate their claims and these are just allegations. On
the contrary, records confirm that they were relay paid as the amount
of P2M was coursed by PCCr to Atty. Seril then handed out to
complainants.
3. Notarization gives prima facie evidence of due execution.
a. Petitioner argues that such presumption will not arise
because there are nor records of such document in the Notary
Section of Manila.

b. Court is not moved. Respondents should not be penalized for


the failure of the notary republic to submit his Notarial
Report.
c. IN Destreza v. Rinoza-Plazo the notarized deed of sale
should be admitted as evidence despite the failure of the
Notary Public in submitting his notarial report to the notarial
section of the RTC Manila.
d. It would have been different if the notary was not a lawyer or
was not commissioned.
SUBISSUE2: WoN a dissolved corporation can enter into an agreement
such as releases, waivers and quitclaims beyond the 3-year winding up
period under Section 122 of the Corporation Code Yes, it can enter.
Petitioners Arguments:
MBMSI has no legal personality to incur liabilities as it did not exist
as a corporation since its Certification of Incorporation had been
revoked. Hence, MBMSI must be exempt from its liabilities as it is
no longer existing as a corporation.
HELD
1. The executed documents (release, waivers and quitclaims) are valid
and binding despite the revocation of Certificate of Incorporation.
Revocation does not result in the termination of its liabilities.
2. Section 122 of Corporation Code provides for a 3-uear winding up
period for a corporation whose charter is annulled by forfeiture or to
continue as a body corporate to settle and close its affairs.
SUBISSUE3: WoN a labor-only contractor is solidarily liable with the
employer? Yes, he is solidarily lliable
Petitioners Argument: No solidarily liability in case of labor-only contractor
It is the employer who would be directly responsible to the supplied
worker.
Article 109 of Labor code and CC1217 do not apply in the case.
HELD
1. The releases, waivers, and quitclaims executed in favor of MBMSI
redounded to the benefit of PCCr pursuant to NCC 1217
2. If a labor-contractor is soldiarily liable with the employer, then the
release, waivers and quitclaims in favor of MBMSI will redound to
the benefit of PCCR. If not, then the documents will not extinguish
liability of PCCr.
3. This is pursuant to Article 109 of Labor Code and the last paragraph
of Article 106 which states: in such cases (labor-only contracting),
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.
4. Section 19 of D.O 18-02 interprets Article 106
a. The principal shall be deemed as the direct employer of the
contracting employees and therefore solidarily liable with
the contractor or subcontractor for whatever monetary claims
the contractual employees may have against the former in
the case of violations as provided for in Sections 5 (LaborOnly contracting)
5. This is strengthened by the issuance of D.O 18-A which is the latest
set of rules implementing Articles 106-109
a. Section 27: A finding by competent authority of labor only
contacting shall render the principal jointly and severally
liable with the contractor to the latters employees.
6. These rules and legislations designed to implement a primary
legislation have the force and effect of law. A rule is binding on the
courts so long as the procedure fixed for its promulgation is followed
and within the scope of the statutory authority granted by the
legislature.
7. Jurisprudence also supports that there is solidary liability
a. Philippine Bank of Communications vs NLRC: The law in
effect holds both the employer and the labor-only
contractor responsible to the latters employees for the more
effective safeguarding of the employees rights under the
Labor Code.
b. San Miguel Corporation v . MAERC Integrated Services,
Inc: Court differentiated the solidary liability of a legitimate
job contracting versus a labor-only contracting. In legitimate,
liable only for payment of employees wages whenever the
contractor fails to pay the same. If labor-only, e becomes
solidarily liable to all rightful claims of the employee.
c. 7K Corporation vs NLRC: Principal employer is solidarily
liable with the labor-only contractor for the rightful claims of
the employee
8. The law in protecting the rights of laborer does not allow oppression
nor self-destruction of the employer.
DISPO: PCCr and MBSI are solidarily liable.
NOTES
The documents were executed in 2009, 6 years after the MBMSIs
dissolution on July 2, 2003

SUPERIOR PACKAGING CORPORATION v BALAGSAY


October 10, 2012 | Reyes, J. | Work Relationship
Digester:
SUMMARY: Superior Packaging engaged the services of Lancer during the
efficacy of D.O. No. 10, s. 1997. After four months, Arnel Balagsay et al
filed a complaint and DOLE found several violations.
DOCTRINE: Labor-only contracting means that there is an employeremployee relationship between the principal and the employees of the
supposed contractor, and the labor-only contractor is considered as a mere
agent of the principal, the real employer.
FACTS:
Superior Packaging Corporation (Superior) engaged the services of
Lancer Staffing & Services Network, Inc. (Lancer) to provide reliever
services to its business, which involves the manufacture and sale of
commercial and industrial corrugated boxes. Respondents were engaged
for 4 months (February to June 1998) and their tasks included loading,
unloading, segregation of corrugated boxes.
Respondents filed a complaint for underpayment of wages, nonpayment
of premium pay for worked rest, overtime pay and non-payment of salary
against Superior and its President Cesar Luz. DOLE conducted an
inspection of the premises and found several violations, to wit:
Non-presentation of payrolls and daily time records
Non-submission of annual report of safety organization
Medical and accident/illness report
Non-registration of establishment under Rule 1020 of Occupational
and Health Standards
No trained first aide.
[DOLE] issued an Order finding in favor of respondents and adopting
the computation of claims. Superior and Luz were ordered to pay a total
of P840, 463.38.
[MR in DOLE] Superior argues that the respondents are not its
employees but of Lancer and that they pay Lancer in lump sum for the
services rendered. MR denied because claim is not substantiated and
even if respondents are not its employees, Superior is still liable
according to Section 13 of D.O. No. 10, s 1997.
[Appeal to Secretary of DOLE] dismissed. Superior filed an MR, but was
also denied.

[CA] affirmed Secretary of DOLEs orders, with modification in that Luz


was absolved of any personal liability under award.
[Partial MR in CA] insofar as the finding of solidary liability with Lancer
is concerned, but it was denied.

RULING: Petition DENIED. Lancer is a labor-only contractor and is


solidarily liable for the unpaid money claims.
Whether or not Lancer is a labor-only contractor (hence, Superior is
liable for unpaid money claims) - YES
Labor-only contracting is prohibited and the person acting as contractor
shall be considered merely as an agent or intermediary of the
employer who shall responsible to the workers in the same manner and
extent as if the latter were directly employed by him.
At time of respondents employment in 1998, the applicable regulation
was D.O. No 10 series of 1997. According to Section 9 of this D.O.:
Labor-contracting any person who undertakes to supply workers to
an employer shall be deemed to be engages in labor only contracting
where such person:
o Does not have substantial capital or investment in the form
of tools; equipment, machineries, work premises and other
materials; and
o 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.
The following facts establish the Lancer is a labor-only contractor:
INADEQUACY OF ITS CAPITAL INVESTMENT to maintain
its day-to-day operations- The ratio of Lancers authorized capital
stock of P400,000 as against its subscribed and paid-up capital stock
of P25,000. Court does not set an absolute figure for what it
considers substantial capital for an independent job contractor but it
measures the same against the type of work which the contractor is
obligated to perform for the principal.
NATURE OF RESPONDENTS WORK WAS DIRECTLY
RELATED TO SUPERIORS BUSINESS Superior failed to
produce any written service contract that might serve as proof of its
alleged agreement with Lancer.
Labor-only contracting means that there is an employer-employee
relationship between the principal and the employees of the supposed

contractor, and the labor-only contractor is considered as a mere agent of


the principal, the real employer.
Whether or not Superior cannot be held solidarily liable by way of
double indemnity? NOT RESOLVED BECAUSE THIS ISSUE IS
RAISED FOR THE FIRST TIME
Superiors arguments:
DOLE erred in doubling respondents underpayment of wages and
regular holiday pay inasmuch as the solidary liability of a principal
does not extend to a punitive award against a contractor.
No evidence showing that the respondents rendered overtime work
and that they actually worked on their rest days for them to be
entitled to such pay.
Court: Superior never questioned nor discussed such issue from DOLE to
CA. To consider alleged facts and argument raised belatedly would
amount to trampling on the basic principles of fair play, justice, and due
process. With regard to contention on evidence, the Court is not a trier of
facts and this applies with greater force in labor cases. Factual findings of
labor tribunals or agencies, and are affirmed by CA, are accorded respect
and finality, and are binding upon this Court.
Whether or not DOLE has the authority to make a finding of an
employer-employee relationship (concomitant to its visitorial and
enforcement power)? YES
This issue was also belatedly raised. At any rate, the argument lacks
merit. DOLE acted within its authority when it determined the existence
of an employer-employee relationship between Superior and the
respondents as it falls within the purview of its visitorial and enforcement
power under Article 128(b) of the Labor Code:
Secretary of Labor and Employment or his duly authorized
representatives
shall have the power to issue compliance orders to give effect to the
labor standards provisions of this Code and other labor legislation
shall issue write of execution to the appropriate authority for the
enforcement of their orders
In Bombo Radyo Phils Inc v Secretary of DOLE,
Court stated that it can be assumed that the DOLE in the exercise of
its visitorial and enforcement power somehow was to make a
determination of the existence of an employer-employee relationship.

Such determination is merely preliminary, incidental and collateral to


the DOLEs primary function of enforcing labor standard provisions.
DOLE must not be precluded from being able to reach its own
conclusions.
Eparwa v. Liceo de Cagayan
G.R. No: 150402
Petitioner/s: EPARWA SECURITY AND JANITORIAL SERVICES, INC.
Respondent/s: LICEO DE CAGAYAN UNIVERSITY
Ponente: CARPIO, J
Date: November 28, 2006.
FACTS
1. December 1997: Eparwa and LDCU, through their representatives, entered
into a Contract for Security Services, wherein LDCU agrees to pay Eparwa
PHP 5000 per guard monthly
2. 21 December 1998: 11 security guards whom Eparwa assigned to LDCU
filed a complaint before the NLRC (filed against both Eparwa and LDCU for
underpayment of salary, legal holiday pay, 13th month pay, rest day, service
incentive leave, night shift differential, overtime pay, and payment for
attorneys fees)
LDCU made a cross-claim and prayed that Eparwa should reimburse
LDCU for any payment to the security guards
3. LA: a) Security guards entitled to wage differntials and premium for
holiday and rest day work. b) LDCU and Eparwa solidarily liable under Art
109. c) Eparwa also ordered to reimburse LDCU for whatever amount due
the security guards
4. NLRC: modified: Affirmed a) and b), but on c), declared that Eparwa is
not required to reimburse LDCU for payment to security guards meaning
although they are solidarily liable, it is LDCU that is ultimately liable
5. CA: reversed. Reinstated LA decision, meaning Eparwa will reimburse
LDCU for payment it makes to the security guards
ISSUE 1
W/N LDCU alone ultimately liable to the security guards for the wage
differentials and premium for holiday and rest day pay? - YES.

HELD
1. See Art. 106-109 of the Labor Code, on solidary liability of contractor and
principal (as in lantarang one full page copy-paste ang ponente dito LOL)
2. The ruling in Eagle Security Agency v. NLRC squarely applies to the
present case. The ponencia then proceeds to copy 2 pages worth of the
decision [In that case, Eagle is the contractor while PTSI is the principal]
This joint and several liability of the contractor and the principal is
mandated by the Labor Code to assure compliance of the provisions
therein including the statutory minimum wage
The contractor is made liable by virtue of his status as direct
employer. The principal, on the other hand, is made the indirect
employer of the contractors employees for purposes of paying the
employees their wages should the contractor be unable to pay them.
This joint and several liability facilitates, if not guarantees, payment
of the workers performance of any work, task, job or project. In the
end ultimate liability for the payment of the increases rests with
the principal
If PTSI pays the security guards, it cannot claim reimbursement from
EAGLE. But in case it is EAGLE that pays them, the latter can claim
reimbursement from PTSI
3. As applied in this case
For the security guards, the actual source of the payment of their
wage differentials and premium for holiday and rest day work does
not matter as long as they are paid. This is the import of Eparwa and
LDCUs solidary liability.
LDCUs ultimate liability comes into play because of the expiration
of the Contract for Security Services. There is no privity of contract
between the security guards and LDCU, but LDCUs liability to the
security guards remains because of Articles 106, 107 and 109 of the
Labor Code
Eparwa may claim reimbursement from LDCU for any payment it
may make to the security guards. However, LDCU cannot claim any
reimbursement from Eparwa for any payment it may make to the
security guards
DISPO
Set aside CA decision. Reinstate NLRC, where LDCU may ask Eparwa from
reimbursement