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PERPETUAL HELP CREDIT COOPERATIVE, INC. (PHCCI) V. FABURADA FACTS: 1. Private respondents Faburada et. al. filed a complaint against PHCCI for illegal dismissal, premium pay, separation pay, wage differential, moral damages and attys fees. 2. PHCCI filed a motion to dismiss on the ground that no employer-employee relationship exists since private respondents are all members and co-owners of the cooperative. Also, private respondents have not exhausted the remedies provided in the coop by-laws. PHCCI also filed a supplemental motion to dismiss alleging that RA 6939, the Cooperative Development Authority Law, requires conciliation or mediation within the cooperative before a resort to judicial proceeding. 3. The Labor Arbiter ruled in favor of the private respondents, holding that the case is impressed with employer-employee relationship and that the laws on cooperatives is subservient to the Labor Code. The NLRC affirmed. ISSUE: WON there is an employer-employee relationship between the parties and WON private respondents were regular employees HELD: YES. YES. RATIO: Elements in determining existence of employer employee relationship: 1) Selection and engagement of the worker or the power to hire 2) The power to dismiss 3) Payment of wages by whatever means 4) Power to control the workers conduct The above elements are present here. PHCCI through its Manager Mr. Edilberto Lantaca, Jr. hired respondents as computer programmer and clerks. They worked regular working hours, were assigned specific duties, were paid regular wages, and made to accomplish regular time records, and worked under the supervision of the manager. Art. 280, Labor Code comprehends 3 kinds of employees: 1) REGULAR EMPLOYEES or those whose work is necessary or desirable to the usual business of the employer 2) PROJECT EMPLOYEES or those whose 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 services to be performed is seasonal in nature and the employment is for the duration of the season 3) CASUAL EMPLOYEES or those who are neither regular nor project employees There are 2 separate instances whereby it can be determined that an employment is regular: 1) If the particular activity performed by the employee is necessary or desirable in the usual business or trade of the employer 2) If the employee has been performing the job for at least a year !!!Private respondents were rendering services necessary to the day-to-day operations of PHCCI. This alone qualified them as regular employees. Moreover, all of them except one worked with PHCCI for more than 1 year. That Faburada worked only on a part-time basis does not mean that he is not a regular employee. Regularity of employment is not determined by the number of hours one works but by the nature and length of time one has been in that particular job. GRN 119268 FEBRUARY 23, 2000 JARDIN VS NLRC QUISUMBING, J.: FACTS: Petitioners were drivers of Goodman Taxi and were collected average of PhP400 as boundary plus 30pesos for car wash. They do not agree with the car wash fee and planned to form a union. Upon learning of their plan, private respondent refused to let petitioners drive their taxicab for few days. Petitioners filed illegal dismissal and illegal collection of wash fee. Labor Arbiter dismissed the complaint while NLRC reversed the decision ratiocinating that as employees, their dismissal must be for just cause and after due process.

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ISSUE: Whether or not an employer-employee relationship exists. RULING: Complainants ate taxi drivers on boundary system but in determining if employer-employee relationship exists, the four-fold test is applied: power of selection; payment of wages; power of dismissal, and; power to control the employees. Petitioners are undoubtedly employees of the respondent because taxi drivers perform activities which are necessary or desirable in the usual business or trade of the employer. Thus an employee illegally dismissed shall be entitled to reinstatement without loss of seniority rights and other privileges and to his full backwages, inclusive of allowances an to his other benefits or their monetary equivalent computed from the time his compensation was withheld from him up to the time of his actual reinstatement. Q: In the above case, was the strike illegal? A: No. As to the legality of the strike; it was based on the termination dispute and petitioners believed in good faith that in dismissing them, the company was guilty of ULP. The no-strike, no lockout provision in the CBA can only be invoked when the strike is economic. As to the violence, both parties agreed that the violence was not attributed to the striking employees alone as the company itself hired men to pacify the strikers. Such violence cannot be a ground for declaring the strike illegal. Corporal Sr. v. NLRC Ruga vs. National Labor Relations Commission FACTS: Alipio R. Ruga et al, were fihermen-crew members of 7/N Sandyman II one of several fishing vessels owned and operated by De Guzman Fishing Enterprises. They render service aboard the fishing the vessel in various capacities and are being paid on percentage commission basis. At one instance on September 11, 1983, upon arrival at the fishing port, Ruga et al were accused of selling their catch at midsea and were told to proceed to the police station. Ruga et al denied the charge and view it as a countermove to their having formed a labor union and being members of two major labor organizations. The charge against them was dropped for no witnesses were presented. But inspite of this, they were not allowed to return to their vessel and resumed their work. Ruga et al, then filed individual complaints of illegal dismissal and nonpayment of 13th month pay, emergency cost of living allowance, and service incentive pay, with the DOLE Regional Arbitration Branch No. V, Legaspi City, Albay. De Guzman Fishing Enterprises, thru its operations manager, Mr. Conrado S. De Guzman, denied the employer-employee relationship between them on the theory that they were only engage in a joint venture. Having failed to reach an amicable settlement, the labor arbiter scheduled the case for hearing. After two sessions, the labor arbiter dismissed the complaint affirming the joint venture theory. Ruga et al, appealed the decision to the National Labor Relations Commission. NLRC affirmed the decision of the Labor Arbiter. Hence this instant petitions. ISSUE: Whether or not the fishermen-crew members of the trawl fishing vessel are employees of De Guzman Fishing Enterprises. HELD: We have consistently ruled that in determining the existence of an employer-employee relationship, the elements that are generally considered are the following (a) the selection and engagement of the employee; (b)

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the payment of wages; (c) the power of dismissal; and (d) the employers power to control the employee with respect to the means and methods by which the work is to be accomplished. The employment relation arises from contract of hire, express or implied. In the absence of hiring, no actual employer-employee relation could exist. From the four (4) elements mentioned, We have generally relied on the so-called right-of-control test where the person for whom the services are performed reserves a right to control not only the end to be achieved but also the means to be used in reaching such end. The test calls merely for the existence of the right to control the manner of doing the work, not the actual exercise of the right. The case of Pajarillo vs. SSS, supra, invoked by the public respondent as authority for the ruling that a joint fishing venture existed between private respondent and petitioners is not applicable in the instant case. There is neither right of control nor actual exercise of such right on the part of the boat-owners in the Pajarillo case, where the Court found that the pilots therein are not under the orders of the boat-owners as regards their employment; that they go out to sea not upon directions of the boat-owners, but upon their own volition as to when, how long and where to go fishing; that the boat-owners do not in any way control the crew-members with whom the former have no relationship whatsoever; that they simply join every trip for which the pilots allow them, without any reference to the owners of the vessel; and that they only share in their own catch produced by their own efforts. REVERSED and SET ASIDE. Private respondent is ordered to reinstate petitioners to their former positions or any equivalent positions with 3-year backwages and other monetary benefits under the law. Mendiola v. CA Tongko vs. The Manufacturers Life Insurance Co., Inc Manufacturers Life Insurance Co. (Phils.), Inc. (Manulife) is a domestic corporation engaged in life insurance business. Renato A. Vergel De Dios was, during the period material, its President and Chief Executive Officer. Gregorio V. Tongko started his professional relationship with Manulife on July 1, 1977 by virtue of a Career Agent's Agreement (Agreement) he executed with Manulife. In the Agreement, it is provided that: It is understood and agreed that the Agent is an independent contractor and nothing contained herein shall be construed or interpreted as creating an employer-employee relationship between the Company and the Agent. The Company may terminate this Agreement for any breach or violation of any of the provisions hereof by the Agent by giving written notice to the Agent within fifteen (15) days from the time of the discovery of the breach. No waiver, extinguishment, abandonment, withdrawal or cancellation of the right to terminate this Agreement by the Company shall be construed for any previous failure to exercise its right under any provision of this Agreement. Either of the parties hereto may likewise terminate his Agreement at any time without cause, by giving to the other party fifteen (15) days notice in writing. In 1983, Tongko was named as a Unit Manager in Manulife's Sales Agency Organization. In 1990, he became a Branch Manager. As the CA found, Tongko's gross earnings from his work at Manulife, consisting of commissions, persistency income, and management overrides. The problem started sometime in 2001, when Manulife instituted manpower development programs in the regional sales management level. Relative thereto, De Dios addressed a letter dated November 6, 2001 to Tongko regarding an October 18, 2001 Metro North Sales Managers Meeting. Stating that Tongkos Region was the lowest performer (on a per Manager basis) in terms of recruiting in 2000 and, as of today, continues to remain one of the laggards in this area. Other issues were:"Some Managers are unhappy with their earnings and would

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want to revert to the position of agents." And "Sales Managers are doing what the company asks them to do but, in the process, they earn less." Tongko was then terminated. Therefrom, Tongko filed a Complaint dated November 25, 2002 with the NLRC against Manulife for illegal dismissalIn the Complaint. In a Decision dated April 15, 2004, Labor Arbiter dismissed the complaint for lack of an employer-employee relationship. The NLRC's First Division, while finding an employer-employee relationship between Manulife and Tongko applying the four-fold test, held Manulife liable for illegal dismissal. Thus, Manulife filed an appeal with the CA. Thereafter, the CA issued the assailed Decision dated March 29, 2005, finding the absence of an employer-employee relationship between the parties and deeming the NLRC with no jurisdiction over the case. Hence, Tongko filed this petition. Issue: WON Tongko was an employee of Manulife WON Tongko was illegally dismissed. Held: Yes In the instant case, Manulife had the power of control over Tongko that would make him its employee. Several factors contribute to this conclusion. In the Agreement dated July 1, 1977 executed between Tongko and Manulife, it is provided that: The Agent hereby agrees to comply with all regulations and requirements of the Company as herein provided as well as maintain a standard of knowledge and competency in the sale of the Company's products which satisfies those set by the Company and sufficiently meets the volume of new business required of Production Club membership.Under this provision, an agent of Manulife must comply with three (3) requirements: (1) compliance with the regulations and requirements of the company; (2) maintenance of a level of knowledge of the company's products that is satisfactory to the company; and (3) compliance with a quota of new businesses. Among the company regulations of Manulife are the different codes of conduct such as the Agent Code of Conduct, Manulife Financial Code of Conduct, and Manulife Financial Code of Conduct Agreement, which demonstrate the power of control exercised by the company over Tongko. The fact that Tongko was obliged to obey and comply with the codes of conduct was not disowned by respondents. Thus, with the company regulations and requirements alone, the fact that Tongko was an employee of Manulife may already be established. Certainly, these requirements controlled the means and methods by which Tongko was to achieve the company's goals. More importantly, Manulife's evidence establishes the fact that Tongko was tasked to perform administrative duties that establishes his employment with Manulife. Additionally, it must be pointed out that the fact that Tongko was tasked with recruiting a certain number of agents, in addition to his other administrative functions, leads to no other conclusion that he was an employee of Manulife. 2. Yes In its Petition for Certiorari dated January 7, 2005[26] filed before the CA, Manulife argued that even if Tongko is considered as its employee, his employment was validly terminated on the ground of gross and habitual neglect of duties, inefficiency, as well as willful disobedience of the lawful orders of Manulife. Manulife stated: In the instant case, private respondent, despite the written reminder from Mr. De Dios refused to shape up and altogether disregarded the latter's advice resulting in his laggard performance clearly indicative of his willful disobedience of the lawful orders of his superior. As private respondent has patently failed to perform a very fundamental duty, and that is to yield obedience to all reasonable rules, orders and instructions of the Company, as well

1. 2. 1.

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as gross failure to reach at least minimum quota, the termination of his engagement from Manulife is highly warranted and therefore, there is no illegal dismissal to speak of. It is readily evident from the above-quoted portions of Manulife's petition that it failed to cite a single iota of evidence to support its claims. Manulife did not even point out which order or rule that Tongko disobeyed. More importantly, Manulife did not point out the specific acts that Tongko was guilty of that would constitute gross and habitual neglect of duty or disobedience. Manulife merely cited Tongko's alleged "laggard performance," without substantiating such claim, and equated the same to disobedience and neglect of duty. Apropos thereto, Art. 277, par. (b), of the Labor Code mandates in explicit terms that the burden of proving the validity of the termination of employment rests on the employer. Failure to discharge this evidential burden would necessarily mean that the dismissal was not justified, and, therefore, illegal. The Labor Code provides that an employer may terminate the services of an employee for just cause and this must be supported by substantial evidence. The settled rule in administrative and quasi-judicial proceedings is that proof beyond reasonable doubt is not required in determining the legality of an employer's dismissal of an employee, and not even a preponderance of evidence is necessary as substantial evidence is considered sufficient. Substantial evidence is more than a mere scintilla of evidence or relevant evidence as a reasonable mind might accept as adequate to support a conclusion, even if other minds, equally reasonable, might conceivably opine otherwise. Here, Manulife failed to overcome such burden of proof. It must be reiterated that Manulife even failed to identify the specific acts by which Tongko's employment was terminated much less support the same with substantial evidence. To repeat, mere conjectures cannot work to deprive employees of their means of livelihood. Thus, it must be concluded that Tongko was illegally dismissed. Moreover, as to Manulife's failure to comply with the twin notice rule, it reasons that Tongko not being its employee is not entitled to such notices. Since we have ruled that Tongko is its employee, however, Manulife clearly failed to afford Tongko said notices. Thus, on this ground too, Manulife is guilty of illegal dismissal.

Locsin vs. PLDT Facts: On November 1, 1990, respondent Philippine Long Distance Telephone Company (PLDT) and the Security and Safety Corporation of the Philippines (SSCP) entered into a Security Services Agreement (Agreement) whereby SSCP would provide armed security guards to PLDT to be assigned to its various offices. Pursuant to such agreement, petitioners Raul Locsin and Eddie Tomaquin, among other security guards, were posted at a PLDT office. On August 30, 2001, respondent issued a Letter dated August 30, 2001 terminating the Agreement effective October 1, 2001. Despite the termination of the Agreement, however, petitioners continued to secure the premises of their assigned office. They were allegedly directed to remain at their post by representatives of respondent. In support of their contention, petitioners provided the Labor Arbiter with copies of petitioner Locsins pay slips for the period of January to September 2002. Then, on September 30, 2002, petitioners services were terminated. Thus, petitioners filed a complaint before the Labor Arbiter for illegal dismissal and recovery of money claims such as overtime pay, holiday pay, premium pay for holiday and rest day, service incentive leave pay, Emergency Cost of Living Allowance, and moral and exemplary damages against PLDT. The Labor Arbiter rendered a Decision finding PLDT liable for illegal dismissal. It was explained in the Decision that petitioners were found to be employees of PLDT and not of SSCP. Such conclusion was arrived at with the factual finding that petitioners continued to serve as guards of PLDTs offices. As such employees, petitioners were entitled to substantive and procedural due process before termination of employment.

Issue: Is there employer-employee relationship? Ruling: Yes. From the foregoing circumstances, reason dictates that we conclude that petitioners remained at their post under the instructions of respondent. We can further conclude that respondent dictated upon petitioners that the latter perform their regular duties to secure the premises during operating hours. This, to our mind and under the circumstances, is sufficient to establish the existence of an employer-employee relationship. To reiterate, while respondent and SSCP no longer had any legal relationship with the termination of the Agreement, petitioners remained at their post securing the premises of respondent while receiving their salaries, allegedly from SSCP. Clearly, such a situation makes no sense, and the denials proffered by respondent do not shed any light to the situation. It is but reasonable to conclude that, with the behest and, presumably, directive of respondent, petitioners continued with their services. Evidently, such are indicia of control that respondent exercised over petitioners. Evidently, respondent having the power of control over petitioners must be considered as petitioners employerfrom the termination of the Agreement onwardsas this was the only time that any evidence of control was exhibited by respondent over petitioners and in light of our ruling in Abella. Thus, as aptly declared by the NLRC, petitioners were entitled to the rights and benefits of employees of respondent, including due process requirements in the termination of their services. Both the Labor Arbiter and NLRC found that respondent did not observe such due process requirements. Having failed to do so, respondent is guilty of illegal dismissal. FRANCISCO v. NLRC | Ynares-Santiago, J. G.R. No. 170087 | August 31, 2006 Petitioner: Angelina Francisco Respondent: NLRC, KASEI Corp. Quick Summary: Angelina Francisco filed a complaint for constructive dismissal. Kaseis defense was that no employee-employer relationship exist since he was only hired as a technical consultant. The Court held, using economic test that she is an employee and DEPENDENT to the company since: she had served the company for six years before her dismissal, receiving check vouchers indicating her salaries/wages, benefits, 13th month pay, bonuses and allowances, as well as deductions and Social Security When petitioner was designated General Manager, respondent corporation made a report to the SSS signed by Irene Ballesteros. Petitioners membership in the SSS as manifested by a copy of the SSS specimen signature card which was signed by the President of Kasei Corporation and the inclusion of her name in the on-line inquiry system of the SSS evinces the existence of an employer-employee relationship between petitioner and respondent corporation.

IMPORTANT NOTES: In addition to the control test, economic realities of the employment relations help provide a comprehensive analysis of the true classification of the individual, whether as employee, independent contractor, corporate officer or some other capacity. The better approach would therefore be to adopt a two-tiered test involving: (1) the putative employers power to control the employee with respect to the means and methods by which the work is to be accomplished; and (2) the underlying economic realities of the activity or relationship.

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The determination of the relationship between employer and employee depends upon the circumstances of the whole economic activity, such as: (1) the extent to which the services performed are an integral part of the employers business; (2) the extent of the workers investment in equipment and facilities; (3) the nature and degree of control exercised by the employer; (4) the workers opportunity for profit and loss; (5) the amount of initiative, skill, judgment or foresight required for the success of the claimed independent enterprise; (6) the permanency and duration of the relationship between the worker and the employer; and (7) the degree of dependency of the worker upon the employer for his continued employment in that line of business. The proper standard of economic dependence : whether the worker is dependent on the alleged employer for his continued employment in that line of business. TENG v. PAHAGAC G.R. No. L-66598 December 19, 1986 PHILIPPINE BANK OF COMMUNICATIONS, vs. NLRC, HON. ARBITER TEODORICOL. DOGELIO and RICARDO ORPIADA, FACTS: Petitioner Philippine Bank of Communications and the Corporate Executive Search Inc.(CESI) entered into a letter agreement dated January 1976 under which CES) undertookto provide "Tempo[rary] Services" to petitioner Consisting of the "temporary services"of eleven (11) messengers. The contract period is described as being "from January1 9 7 6 . " A t t a c h e d t o t h e l e t t e r a g r e e m e n t w a s a " L i s t o f M e s s e n g e r s a s s i g n e d atPhilippine Bank of Communications" which list included, as item No. 5 thereof, t h e name of private respondent Ricardo Orpiada.R i c a r d o O r p i a d a w a s t h u s a s s i g n e d t o w o r k w i t h t h e p e t i t i o n e r b a n k . A s s u c h , h e rendered services to the bank, within the premises of the bank and alongside otherp e o p l e a l s o r e n d e r i n g s e r v i c e s t o t h e b a n k . T h e r e w a s s o m e q u e s t i o n a s t o w h e n Ricardo Orpiada commenced rendering services to the bank. As noted above, the letteragreement was dated January 1976. However, the position paper submitted by CESI tothe National Labor Relations Commission (NLRC) stated that CES) hired Ricardo Orpiadao n 2 5 J u n e 1 9 7 5 a s a T e m p o S e r v i c e employee, and assigned him to work with thepetitioner bank "as evidenced by the appointment memo issued to him on 25 June1975. Be that as it may, on or about October 1976, the petitioner requested CESI tow i t h d r a w O r p i a d a ' s a s s i g n m e n t b e c a u s e , i n t h e a l l e g a t i o n o f t h e b a n k , O r p i a d a ' s service s "were no longer needed."On 29 October 1976, Orpiada instituted a complaint in the Department of Labor (nowM i n i s t r y o f L a b o r a n d E m p l o y m e n t ) a g a i n s t t h e p e t i t i o n e r f o r i l l e g a l d i s m i s s a l a n d f ailure to pay the 13th month pay provided for in Presidential Decree No. 851. Afteri n v e s t i g a t i o n , t h e O f f i c e o f t h e R e g i o n a l D i r e c t o r , R e g i o n a l O f f i c e N o . I V o f t h e Department of Labor, issued an order dismissing Orpiada's complaint for failure of Mr.Orpiada to show the existence of an employer-employee relationship between the bankand himself.Despite the foregoing order, Orpiada succeeded in having his complaint certified forc o m p u l s o r y a r b i t r a t i o n . D u r i n g t h e c o m p u l s o r y a r b i t r a t i o n p r o c e e d i n g s , C E S I w a s brou ght into the picture as an additional respondent by the bank. Both the bank and CESI stoutly maintained that CESI (and not the bank) was the employer of Orpiada.O n 1 2 S e p t e m b e r 1 9 7 7 , r e s p o n d e n t L a b o r A r b i t e r D o g e l i o r e n d e r e d a d e c i s i o n reinstating complainant to the same or equivalent position with full back wages and topay the latter's 13th month pay for the year 1976.O n 2 6 O c t o b e r 1 9 7 7 , t h e b a n k a p p e a l e d t h e d e c i s i o n o f t h e L a b o r A r b i t e r t o t h e respondent NLRC. More than six years later the NLRC promulgated its decisionaffirming the award of the L a b o r A r b i t e r e x c e p t f o r t h e m o d i f i c a t i o n r e d u c i n g t h e complainant's back wages to two (2) years

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without qualification.Accordingly, on 2 April 1984, the bank filed the present petition for certiorari with thisCourt seeking to annul and set aside the decision of respondent Labor Arbiter Dogelio and the decision of the NLRC. ISSUE: WON an employer-employee relationship existed between the petitioner Phil.Bank of Communications and private respondent Ricardo Orpiada. HELD: Yes, because CESI is a labor-only contractor. 037 RATIO: It is in necessary in this case to confront the task of determining the a p p r o p r i a t e characterization of the relationship between the bank and CESI was that relationship one of employer and job (independent) contractor or one of employer and "labor-only"contractor to resolve the issue.Under the general rule set out in the 1st and 2nd paragraphs of Article 106 , anemployer who enters into a contract with a contractor for the performance of work forthe employer, does not thereby create an employer -employee relationship betweenhimself and the employees of the contractor. Thus, the employees of the contractorremain the contractor's employees and his alone. Nonetheless when a contractor failsto pay the wages of his employees in accordance with the Labor Code, the em ployerwho contracted out the job to the contractor becomes jointly and severally liable with h i s c o n t r a c t o r t o t h e e m p l o y e e s o f t h e latter "to the extent of the work performed u n d e r t h e c o n t r a c t " a s s u c h e m p l o y e r w e r e t h e e m p l o y e r o f t h e c o n t r a c t o r ' s employees. Th e l a w i t s e l f , i n o t h e r w o r d s , e s t a b l i s h e s a n e m p l o y e r - e m p l o y e e relationship between the employer and the job contractor's employees for a limited purpose, i.e., in order to ensure that the latter get paid the wages due to them.A s i m i l a r s i t u a t i o n o b t a i n s w h e r e t h e r e i s " l a b o r o n l y " c o n t r a c t i n g . T h e " l a b o r - o n l y " contractor-i.e "the person or intermediary" is considered "merely as an agent of theemployer. " The employer is made by the statute responsible to the employees of the"labor only" contractor a s i f s u c h e m p l o y e e s h a d b e e n d i r e c t l y e m p l o y e d b y t h e employer . Thus, where "labor only" contracting exists in a given case, the statute itself implies or establishes an employer employee relationship between the employer (theowner of the project) and the employees of the "labor only" contractor, this time for a comprehensive purpose: "employer for purposes of this Code , to prevent any violationor circumvention of any provision of this Code . " T h e l a w i n e f f e c t h o l d s b o t h t h e employer and the "labor-only" contractor responsible to the latter's employees for themore effective safeguarding of the employees' rights under the Labor Code. The bank and CESI urge that CESI is NOT properly regarded as a "labor-only" contractorupon the ground that CESI is possessed of substantial capital or investment in the formof office equipment, tools and trained service personnel.We are unable to agree with the bank and CES) on this score. The definition of "labor-only" contracting in Section 9 of Rule VIII of Book III entitled "Conditions of Employment," of the Omnibus Rules Implementing the Labor Code m u s t b e read in conjunction with the definition of job contracting given in Section 8 of thesame Rules

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. T h e u n d e r t a k i n g g i v e n b y C E S I i n f a v o r o f t h e b a n k w a s n o t t h e perfor mance of a specific job for instance, the carriage and delivery of documents andparcels to the addresses thereof. In the present case, the undertaking of CESI was to provide its client-the bank-with a certain number of persons able to carry out the work of messengers . Orpiada utilized the premises and office equipment of the bank and nott h o s e o f C E S I s . S u c c i n c t l y p u t , C E S I i s n o t a p a r c e l d e l i v e r y c o m p a n y : a s i t s n a m e indicates, it is a recruitment and placement corporation placing bodies, as it were, in different client companies for longer or shorter periods of time.

SAN MIGUEL V MAERC INTEGRATED SERVICES 405 SCRA 579 BELLOSILLO; July 10, 2003

FACTS - TWO HUNDRED NINETY-ONE (291) workers filed their complaints (nine [9] complaints in all) against San Miguel Corporation (petitioner herein) and Maerc Integrated Services, Inc. (respondent herein), for illegal dismissal, underpayment of wages, non-payment of service incentive leave pays and other labor standards benefits, and for separation pays from 25 June to 24 October 1991. The complainants alleged that they were hired by San Miguel Corporation (SMC) through its agent or intermediary Maerc Integrated Services, Inc. (MAERC) to work in two (2) designated workplaces in Mandaue City: one, inside the SMC premises at the Mandaue Container Services, and another, in the Philphos Warehouse owned by MAERC. They washed and segregated various kinds of empty bottles used by SMC to sell and distribute its beer beverages to the consuming public. They were paid on a per piece or pakiao basis except for a few who worked as checkers and were paid on daily wage basis. Complainants alleged that long before SMC contracted the services of MAERC a majority of them had already been working for SMC under the guise of being employees of another contractor, Jopard Services, until the services of the latter were terminated on 31 January 1988. SMC informed MAERC of the termination of their service contract by the end of June 1991. SMC cited its plans to phase out its segregation activities starting 1 June 1991 due to the installation of labor and cost-saving devices. When the service contract was terminated, complainants claimed that SMC stopped them from performing their jobs; that this was tantamount to their being illegally dismissed by SMC who was their real employer as their activities were directly related, necessary and desirable to the main business of SMC; and, that MAERC was merely made a tool or a shield by SMC to avoid its liability under the Labor Code - MAERC for its part admitted that it recruited the complainants and placed them in the bottle segregation project of SMC but maintained that it was only conveniently used by SMC as an intermediary in operating the project or work directly related to the primary business concern of the latter with the end in view of avoiding its obligations and responsibilities towards the complaining workers. -The Labor Arbiter rendered a decision holding that MAERC was an independent contractor. He dismissed the complaints for illegal dismissal but ordered MAERC to pay complainants' separation benefits in the total amount of P2,334,150.00. MAERC and SMC were also ordered to jointly and severally pay complainants their wage differentials in the amount of P845,117.00 and to pay attorney's fees in the amount of P317,926.70. - The National Labor Relations Commission (NLRC) ruled that MAERC was a labor-only contractor and that complainants were employees of SMC. The NLRC also held that whether MAERC was a job contractor or a labor-only contractor, SMC was still solidarily liable with MAERC for the latter's unpaid obligations, citing Art. 109 4 of the Labor Code. Thus, the NLRC modified the judgment of the Labor Arbiter and held SMC jointly and severally liable with MAERC for complainants' separation benefits. In addition, both respondents were ordered to pay jointly and severally an indemnity fee of P2,000.00 to each complainant. - SMC filed petition for certiorari ISSUE WON the complainants are employees of petitioner SMC or of respondent MAERC HELD Employees of SMC

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- In ascertaining an employer-employee relationship, the following factors are considered: (a) the selection and engagement of employee; (b) the payment of wages; (c) the power of dismissal; and, (d) the power to control an employee's conduct, the last being the most important. Application of the aforesaid criteria clearly indicates an employer-employee relationship between petitioner and the complainants. - Evidence discloses that petitioner played a large and indispensable part in the hiring of MAERC's workers. It also appears that majority of the complainants had already been working for SMC long before the signing of the service contract between SMC and MAERC. - The incorporators of MAERC admitted having supplied and recruited workers for SMC even before MAERC was created. The NLRC also found that when MAERC was organized into a corporation, the complainants who were then already working for SMC were made to go through the motion of applying for work with Ms. Olga Ouano, President and General Manager of MAERC, upon the instruction of SMC through its supervisors to make it appear that complainants were hired by MAERC. This was testified to by two (2) of the workers who were segregator and forklift operator assigned to the Beer Marketing Division at the SMC compound and who had been working with SMC under a purported contractor Jopard Services since March 1979 and March 1981, respectively. Both witnesses also testified that together with other complainants they continued working for SMC without break from Jopard Services to MAERC. - As for the payment of workers' wages, it is conceded that MAERC was paid in lump sum but records suggest that the remuneration was not computed merely according to the result or the volume of work performed. The memoranda of the labor rates bearing the signature of a Vice-President and General Manager for the Vismin Beer Operations as well as a director of SMC appended to the contract of service reveal that SMC assumed the responsibility of paying for the mandated overtime, holiday and rest day pays of the MAERC workers. SMC also paid the employer's share of the SSS and Medicare contributions, the 13th month pay, incentive leave pay and maternity benefits. In the lump sum received, MAERC earned a marginal amount representing the contractor's share. These lend credence to the complaining workers' assertion that while MAERC paid the wages of the complainants, it merely acted as an agent of SMC. - Petitioner insists that the most significant determinant of an employer-employee relationship, i.e., the right to control, is absent. The contract of services between MAERC and SMC provided that MAERC was an independent contractor and that the workers hired by it "shall not, in any manner and under any circumstances, be considered employees of the Company, and that the Company has no control or supervision whatsoever over the conduct of the Contractor or any of its workers in respect to how they accomplish their work or perform the Contractor's obligations under the Contract." - In deciding the question of control, the language of the contract is not determinative of the parties' relationship; rather, it is the totality of the facts and surrounding circumstances of each case. - Despite SMCs disclaimer, there are indicia that it actively supervised the complainants. SMC maintained a constant presence in the workplace through its own checkers. Its asseveration that the checkers were there only to check the end result was belied by the testimony of Carlito R. Singson, head of the Mandaue Container Service of SMC, that the checkers were also tasked to report on the identity of the workers whose performance or quality of work was not according to the rules and standards set by SMC. According to Singson, "it (was) necessary to identify the names of those concerned so that the management [referring to MAERC] could call the attention to make these people improve the quality of work." - Other instances attesting to SMC's supervision of the workers are found in the minutes of the meeting held by the SMC officers on 5 December 1988. Among those matters discussed were the calling of SMC contractors to have workers assigned to segregation to undergo and pass eye examination to be done by SMC EENT company doctor and a review of compensation/incentive system for segregators to improve the segregation activities. - But the most telling evidence is a letter by Mr. Antonio Ouano, Vice-President of MAERC dated 27 May 1991 addressed to Francisco Eizmendi, SMC President and Chief Executive Officer, asking the latter to reconsider the phasing out of SMC's segregation activities in Mandaue City. The letter was not denied but in fact used by SMC to advance its own arguments. Briefly, the letter exposed the actual state of affairs under which MAERC was formed and engaged to handle the segregation project of SMC. It provided an account of how in 1987 Eizmendi approached the would-be incorporators of MAERC and offered them the business of servicing the SMC bottlewashing and segregation department in order to avert an impending labor strike. After initial reservations, MAERC incorporators accepted the offer and before long trial segregation was conducted by SMC at the PHILPHOS warehouse. - In legitimate job contracting, the law creates an employer-employee relationship for a limited purpose, i.e., to ensure that the employees are paid their wages. The principal employer becomes jointly and severally liable with the job contractor only for the payment of the employees' wages whenever the contractor fails to pay the same. Other than that, the principal employer is not responsible for any claim made by the employees.

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- On the other hand, in labor-only contracting, the statute creates an employer-employee relationship for a comprehensive purpose: to prevent a circumvention of labor laws. 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. The principal employer therefore becomes solidarily liable with the labor-only contractor for all the rightful claims of the employees. - This distinction between job contractor and labor-only contractor, however, will not discharge SMC from paying the separation benefits of the workers, inasmuch as MAERC was shown to be a labor-only contractor; in which case, petitioner's liability is that of a direct employer and thus solidarily liable with MAERC. - SMC also failed to comply with the requirement of written notice to both the employees concerned and the Department of Labor and Employment (DOLE) which must be given at least one (1) month before the intended date of retrenchment. The fines imposed for violations of the notice requirement have varied. The measure of this award depends on the facts of each case and the gravity of the omission committed by the employer. For its failure, petitioner was justly ordered to indemnify each displaced worker P2,000.00. Disposition Petition is DENIED WACK-WACK GOLF & COUNTRY CLUB V NLRC (CAGASAN, DOMINGUEZ, BSMI) 456 SCRA 280 CALLEJO, SR; April 15, 2005 NATURE Petition for review decision of CA FACTS - A large portion of the Wack Wack (WW) clubhouse (including the kitchen) was destroyed by fire, and because of this, the management had to suspend operations of the Food and Beverage department, requiring the suspension of 54 employees. The Employees Union found the suspension as arbitrary and constitutive of union-busting, and went on strike. The parties soon after entered into an amicable settlement, whereby a special separation benefit/ retirement package was formulated. The same provides for, among other things, a 1 month separation pay for every year of service, and be considered on priority basis for employment by concessionaires and/or contractors, and even by the club, upon full resumption of operations. - The package was availed of by 3 employees (Cagasan, Dominguez, and Baluyot), who received large sums of money as separation pay. Soon after, WW entered into a Management Contract with Business Staffing and Management Inc (BSMI), whereby the latter will provide management services for WW. Cagasan and Dominguez filed their application for employment with BMSI. They, by reason of the priority given by the separation package, were rehired on probationary status by BMSI. - WW also engaged other contractors in the operations of the club (like janitorial services, Finance and accounting services). Because of the various management service contracts, BMSI made an organizational analysis and manpower evaluation to streamline its operations. It found the positions of Cagasan and Domiguez redundant, and subsequently terminated them. Cagasan and Dominguez then filed complaints in the NLRC for illegal dismissal against WW. NLRC ordered reinstatement ISSUES 1. WON BMSI is an independent contractor (which will answer the question as WON there was an employer-employee relationship) 2. WON the employees were illegally dismissed HELD

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1. YES Reasoning - An independent contractor is one who undertakes job contracting, i.e., a person who: (a) 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 (b) has substantial capital or investment in the form of tools, equipments, machineries, work premises and other materials which are necessary in the conduct of the business. Jurisprudence shows that 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 of the premises; the duty to supply premises, tools, appliances, materials and labor; and the mode, manner and terms of payment. - There is indubitable evidence showing that BSMI is an independent contractor, engaged in the management of projects, business operations, functions, jobs and other kinds of business ventures, and has sufficient capital and resources to undertake its principal business. It had provided management services to various industrial and commercial business establishments. - In December 1993, Labor Sec. Laguesma, in a case, recognized BSMI as an independent contractor. As a legitimate job contractor, there can be no doubt as to the existence of an employer-employee relationship between the contractor and the workers. Thus, there is no employer-employee relation between WW and the workers. 2. NO Ratio As there was no employer-employee relationship between WW and the complainants, there can be no illegal dismissal. Reasoning - the complainants (private respondents herein) were validly terminated upon their option to take the separation package provided by WW. Thus, the same have no cause of action against WW. Disposition Petition granted. CA and NLRC decisions set aside Aliviado v. Procter & Gamble Philippines, Inc., GR No. 160506, 9 March 2010 (Del Castillo) Facts: 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. 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. Aliviado and other petitioners worked as P&Gs merchandisers, and individually signed employment contracts with either Promm-Gem or SAPS for periods of more or less five months at a time. They were assigned at different outlets, supermarkets, and stores where they handled all the products of P&G, and received their wages from Promm-Gem or SAPS. Promm-Gem and SAPS imposed disciplinary measures on erring merchandisers. In December 1991, petitioners filed a complaint against P&G for regularization, service incentive leave pay, and other benefits, with damages. The LA dismissed the case for lack of merit and ruled that there was no employeremployee relationship between the 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 by Promm-Gem/SAPS. He further found that Promm-Gem and SAPS were legitimate independent job contractors. The NLRC and the CA subsequently affirmed the LAs findings. Issue: W/N Promm-Gem and SAPS are legitimate job contractors. Ruling: Promm-Gem is a legitimate job contractor, while SAPS is a labor-only contractor. Therefore, the employees of SAPS are the employees of P&G, SAPS being merely the agent of P&G. Promm-Gem has shown evidence that it has substantial investment which relates to the work to be performed, such as authorized stock of P1M and a paid-in

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capital, or capital available for operations, of P500k; it has long-term assets worth over P400k and current assets worth over P700k; it maintained its own warehouse and office space with a floor area of 870 square meters; it had under its name three registered vehicles which were used for its promotional/merchandising business; and it has clients aside from P&G. Promm-Gem also supplied its complainantworkers with the relevant materials, such as markers, tapes, liners, and cutters, necessary for them to perform their work. Promm-Gem also issued them uniforms. Also, Promm-Gem already considered the complainants working under it as its regular, not merely contractual or project, employees. This 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. On the other hand, SAPS Articles of Incorporation shows that it has a paid-in capital of only little over P31k. There is no other evidence presented to show how much its working capital and assets are. Furthermore, there is no showing of substantial investment in tools, equipment, or other assets. It failed to show that its paid-in capital is sufficient for its 6-month contract period with P&G to generate its needed revenue to sustain its operations independently. Instead, it could be readily seen that its capital is not even sufficient for one months payroll, which is pegged at little over P44k. Furthermore, 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, SAPS is engaged in labor-only contracting. Petition granted. Labor laws expressly prohibit labor-only contracting. To prevent its circumvention, the Labor Code establishes an employer-employee relationship between the employer and the employees of the labor-only contractor. There is labor-only contracting when the contractor or sub-contractor merely recruits, supplies, or places workers to perform a job, work, or service for a principal and any of the following elements are present: (i) The contractor or subcontractor does not have substantial capital or investment which relates to the job, work, or service to be performed and the employees recruited, supplied, or placed by such contractor or subcontractor are performing activities which are directly related to the main business of the principal; or (ii) The contractor does not exercise the right to control over the performance of the work of the contractual employee. Where labor-only contracting exists, the Labor Code itself establishes an employer-employee relationship between the employer and the employees of the labor-only contractor. The statute establishes this relationship for a comprehensive purpose: to prevent a circumvention of labor laws. 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. In termination cases, the burden of proof rests upon the employer to show that the dismissal is for just and valid cause.

SPIC N SPAN SERVICES VS GLORIA PAJE FACTS

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SNSs business is to supply manpower services to its clients for a fee. Swift andSNS have a contract to promote Swift products. Respondents worked as Deli/Promo Girls of Swiftproducts in various supermarkets in Tarlac and Pampanga. They were all dismissed from theiremployment. They filed two complaints for illegal dismissal against SNS and Swift before theNational Labor Relations Commission. After two unsuccessful conciliation hearings, the Labor Arbiter ordered theparties to submit their position papers. Swift filed its position paper; SNS did n o t . T h e complainants position papers were signed by Florencio P. Peralta who was not a lawyer and whoclaimed to be the complainants representative, although he never showed any proof of hisauthority to represent them. In their position papers, the complainants alleged that they were employees of Swift and SNS, and their services were terminated without cause and without due process. Thetermination came on the day they received their notices; thus, they were denied the proceduraldue process requirements of notice and hearing prior to their termination of employment. Swift,in its position paper, moved to dismiss the complaints on the ground that it entered into an i n d e p e n d e n t l a b o r c o n t r a c t w i t h S N S f o r t h e p r o m o t i o n o f i t s p r o d u c t s ; i t a l l e g e d t h a t t h e complainants were the employees of SNS, not of Swift. In addition, the petitioner contended thatthe case should be decided in their favor on the ground of nonsigning of the position paper bythe respondents. ISSUE W hether or not signature in a pleading is fatal to respondents case; and whether o r n o t representation by a non -lawyer is sufficient justification for respondents failure to comply with the requirements of law. HELD Both answers are in the negative. The lack of a verification in a pleading is only a formal defect,not a jurisdictional defect, and is not necessarily fatal to a case. The primary reason for requiring averification is simply to ensure that the allegations in the pleading are done in good faith, are true andcorrect, and are not mere speculations.As for the second issue, Our Labor Code allows a non -lawyer to represent a party before the Labor Arbiter and the Commission, but provides limitations: Non-lawyers may appear before the Commissionor any Labor Arbiter only: (1) If they represent themselves; or (2) If they represent their organization ormembers thereof. Thus, SNS concludes that the respondents representative had no personality toappear before the Labor Arbiter or the NLRC, and his representation for the respondents should produceno legal effect.Our approach to these arguments is simple as the problem boils down to a balance between a technicalrule and protected constitutional interests. The cited technical infirmity cannot defeat the respondentspreferred right to security of tenure which has primacy over technical requirements. Thus, we affirmt h e C A s r u l i n g o n t h i s p o i n t , w i t h o u t p r e j u d i c e t o w h a t e v e r a c t i o n m a y b e t a k e n a g a i n s t t h e representative, if he had indeed been engaged in the unauthorized practice of law. DOCTRINE: Job contracting. In permissible job contracting, the principal agrees to put out or farm out with a contractor or subcontractor the performance or completion of a specific job, work or service within a definite or p redetermined period, regardless of whether such job, work or service is to bep e r f o r m e d o r c o m p l e t e d w i t h i n o r o u t s i d e t h e p r e m i s e s o f t h e p r i n c i p a l . T h e t e s t i s w h e t h e r t h e independent contractor has contracted to do the work according to his own methods and without being subject to the principals control except only as to the results, he has substantial capital, and he hasa s s u r e d t h e c o n t r a c t u a l e m p l o y e e s e n t i t l e m e n t t o a l l l a b o r a n d o c c u p a t i o n a l s a f e t y a n d h e a l t h standards, free exercise of the right to self-organization, security of tenure, and social and welfare benefits. GSIS v. NLRC

Mariveles Shipyard V CA G.R. No. 144134; November 11, 2003; 415 SCRA 573

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Facts: Sometime on October 1993, Mariveles Shipyard Corporation engaged the services of Longest Force Investigation and Security Agency, Inc. to render security services at its premises. Pursuant to their agreement, Longest Force deployed its security guards, the private respondents herein, at the petitioners shipyard in Mariveles, Bataan. According to petitioner, it religiously complied with the terms of the security contract with Longest Force, promptly paying its bills and the contract rates of the latter. However, it found the services being rendered by the assigned guards unsatisfactory and inadequate, causing it to terminate its contract with Longest Force on April 1995. Longest Force, in turn, terminated the employment of the security guards it had deployed at petitioners shipyard. On September 1996, private respondents filed a case for illegal dismissal, underpayment of wages pursuant to the PNPSOSIA-PADPAO rates, non-payment of overtime pay, premium pay for holiday and rest day, service incentive leave pay, 13th month pay and attorneys fees, against both Longest Force and petitioner, before the Labor Arbiter. The case sought the guards reinstatement with full back wages and without loss of seniority rights. Longest Force admitted that it employed private respondents and assigned them as security guards at the premises of petitioner rendering a 12 hours duty per shift for the said period. It likewise admitted its liability as to the non-payment of the alleged wage differential in the total amount of P2,618,025 but passed on the liability to petitioner The petitioner denied any liability on account of the alleged illegal dismissal, stressing that no employeremployee relationship existed between it and the security guards. It further pointed out that it would be the height of injustice to make it liable again for monetary claims which it had already paid. Anent the cross-claim filed by Longest Force against it, petitioner prayed that it be dismissed for lack of merit. Petitioner averred that Longest Force had benefited from the contract; it was now estopped from questioning said agreement on the ground that it had made a bad deal. The Labor Arbiter rendered judgment that Longest Force and Mariveles Shipping be jointly and severally liable to pay the money claims of the complainants. Petitioner appealed the foregoing to the NLRC. The labor tribunal, affirmed the decision of the Labor Arbiter. Petitioner moved for reconsideration, but this was denied by the NLRC. The petitioner then filed a special civil action for certiorari assailing the NLRC judgment for having been rendered with grave abuse of discretion with the Court of Appeals. The Court of Appeals denied due course to the petition and dismissed it outright. Issue: WON Longest Force should be held solely and ultimately liable. Held: Petitioners liability is joint and several with that of Longest Force, pursuant to Articles 106, 107 and 109 of the Labor Code which provide as follows: 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.

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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. ART. 107. INDIRECT EMPLOYER. The provisions of the immediately preceding Article shall likewise apply to any person, partnership, association or corporation which, not being an employer, contracts with an independent contractor for the performance of any work, task, job or project. ART. 109. SOLIDARY LIABILITY . The provisions of existing laws to the contrary notwithstanding, every employer or indirect employer shall be held responsible with his contractor or subcontractor for any violation of any provision of this Code. For purposes of determining the extent of their civil liability under this Chapter, they shall be considered as direct employers. In this case, when petitioner contracted for security services with Longest Force as the security agency that hired private respondents to work as guards for the shipyard corporation, petitioner became an indirect employer of private respondents pursuant to Article 107 abovecited. Following Article 106, when the agency as contractor failed to pay the guards, the corporation as principal becomes jointly and severally liable for the guards wages. This is mandated by the Labor Code to ensure compliance with its provisions, including payment of statutory minimum wage. The security agency is held liable by virtue of its status as direct employer, while the corporation is deemed the indirect employer of the guards for the purpose of paying their wages in the event of failure of the agency to pay them. This statutory scheme gives the workers the ample protection consonant with labor and social justice provisions of the 1987 Constitution. Petitioner cannot evade its liability by claiming that it had religiously paid the compensation of guards as stipulated under the contract with the security agency. Labor standards are enacted by the legislature to alleviate the plight of workers whose wages barely meet the spiraling costs of their basic needs. Labor laws are considered written in every contract. Stipulations in violation thereof are considered null. Similarly, legislated wage increases are deemed amendments to the contract. Thus, employers cannot hide behind their contracts in order to evade their (or their contractors or subcontractors) liability for noncompliance with the statutory minimum wage. However, the court emphasizes that the solidary liability of petitioner with that of Longest Force does not preclude the application of the Civil Code provision on the right of reimbursement from his co-debtor by the one who paid. As held in Del Rosario & Sons Logging Enterprises, Inc. v. NLRC , the joint and several liability imposed on petitioner is without prejudice to a claim for reimbursement by petitioner against the security agency for such amounts as petitioner may have to pay to complainants, the private respondents herein. The security agency may not seek exculpation by claiming that the principals payments to it were inadequate for the guards lawful compensation. As an employer, the security agency is charged with knowledge of labor laws; and the adequacy of the compensation that it demands for contractual services is its principal concern and not any others.