Republic of the Philippines

SUPREME COURT
Manila

FIRST DIVISION

G.R. No. L-32245 May 25, 1979

DY KEH BENG, petitioner,
vs.
INTERNATIONAL LABOR and MARINE UNION OF THE PHILIPPINES, ET AL., respondents.

A. M Sikat for petitioner.

D. A. Hernandez for respondents.



DE CASTRO, J.:

Petitioner Dy Keh Beng seeks a review by certiorari of the decision of the Court of Industrial Relations dated
March 23, 1970 in Case No. 3019-ULP and the Court's Resolution en banc of June 10, 1970 affirming said
decision. The Court of Industrial Relations in that case found Dy Keh Beng guilty of the unfair labor practice
acts alleged and order him to

reinstate Carlos Solano and Ricardo Tudla to their former jobs with backwages from their respective dates of
dismissal until fully reinstated without loss to their right of seniority and of such other rights already
acquired by them and/or allowed by law. 1

Now, Dy Keh Beng assigns the following errors 2 as having been committed by the Court of Industrial
Relations:

I

RESPONDENT COURT ERRED IN FINDING THAT RESPONDENTS SOLANO AND TUDLA WERE
EMPLOYEES OF PETITIONERS.

II

RESPONDENT COURT ERRED IN FINDING THAT RESPONDENTS SOLANO AND TUDLA WERE
DISMISSED FROM THEIR EMPLOYMENT BY PETITIONER.

III

RESPONDENT COURT ERRED IN FINDING THAT THE TESTIMONIES ADDUCED BY COMPLAINANT ARE
CONVINCING AND DISCLOSES (SIC) A PATTERN OF DISCRIMINATION BY THE PETITIONER HEREIN.

IV

RESPONDENT COURT ERRED IN DECLARING PETITIONER GUILTY OF UNFAIR LABOR PRACTICE ACTS
AS ALLEGED AND DESCRIBED IN THE COMPLAINT.

V

RESPONDENT COURT ERRED IN PETITIONER TO REINSTATE RESPONDENTS TO THEIR FORMER JOBS
WITH BACKWAGES FROM THEIR RESPECTIVE DATES OF DISMISSALS UNTIL FINALLY REINSTATED
WITHOUT LOSS TO THEIR RIGHT OF SENIORITY AND OF SUCH OTHER RIGHTS ALREADY ACQUIRED
BY THEM AND/OR ALLOWED BY LAW.

The facts as found by the Hearing Examiner are as follows:

A charge of unfair labor practice was filed against Dy Keh Beng, proprietor of a basket factory, for
discriminatory acts within the meaning of Section 4(a), sub-paragraph (1) and (4). Republic Act No. 875, 3
by dismissing on September 28 and 29, 1960, respectively, Carlos N. Solano and Ricardo Tudla for their
union activities. After preliminary investigation was conducted, a case was filed in the Court of Industrial
Relations for in behalf of the International Labor and Marine Union of the Philippines and two of its
members, Solano and Tudla In his answer, Dy Keh Beng contended that he did not know Tudla and that
Solano was not his employee because the latter came to the establishment only when there was work which
he did on pakiaw basis, each piece of work being done under a separate contract. Moreover, Dy Keh Beng
countered with a special defense of simple extortion committed by the head of the labor union, Bienvenido
Onayan.

After trial, the Hearing Examiner prepared a report which was subsequently adopted in toto by the Court of
Industrial Relations. An employee-employer relationship was found to have existed between Dy Keh Beng and
complainants Tudla and Solano, although Solano was admitted to have worked on piece basis. 4 The issue
therefore centered on whether there existed an employee employer relation between petitioner Dy Keh Beng
and the respondents Solano and Tudla .

According to the Hearing Examiner, the evidence for the complainant Union tended to show that Solano and
Tudla became employees of Dy Keh Beng from May 2, 1953 and July 15, 1955, 5 respectively, and that except
in the event of illness, their work with the establishment was continuous although their services were
compensated on piece basis. Evidence likewise showed that at times the establishment had eight (8) workers
and never less than five (5); including the complainants, and that complainants used to receive ?5.00 a day.
sometimes less. 6

According to Dy Keh Beng, however, Solano was not his employee for the following reasons:

(1) Solano never stayed long enought at Dy's establishment;

(2) Solano had to leave as soon as he was through with the

(3) order given him by Dy;

(4) When there were no orders needing his services there was nothing for him to do;

(5) When orders came to the shop that his regular workers could not fill it was then that Dy went to
his address in Caloocan and fetched him for these orders; and

(6) Solano's work with Dy's establishment was not continuous. , 7

According to petitioner, these facts show that respondents Solano and Tudla are only piece workers, not
employees under Republic Act 875, where an employee 8 is referred to as

shall include any employee and shag not be limited to the employee of a particular employer unless the Act
explicitly states otherwise and shall include any individual whose work has ceased as a consequence of, or in
connection with any current labor dispute or because of any unfair labor practice and who has not obtained
any other substantially equivalent and regular employment.

while an employer 9

includes any person acting in the interest of an employer, directly or indirectly but shall not include any
labor organization (otherwise than when acting as an employer) or anyone acting in the capacity of officer
or agent of such labor organization.

Petitioner really anchors his contention of the non-existence of employee-employer relationship on the
control test. He points to the case of Madrigal Shipping Co., Inc. v. Nieves Baens del Rosario, et al., L-13130,
October 31, 1959, where the Court ruled that:

The test ... of the existence of employee and employer relationship is whether there is an understanding
between the parties that one is to render personal services to or for the benefit of the other and recognition
by them of the right of one to order and control the other in the performance of the work and to direct the
manner and method of its performance.

Petitioner contends that the private respondents "did not meet the control test in the fight of the ...
definition of the terms employer and employee, because there was no evidence to show that petitioner had
the right to direct the manner and method of respondent's work. 10 Moreover, it is argued that petitioner's
evidence showed that "Solano worked on a pakiaw basis" and that he stayed in the establishment only when
there was work.

While this Court upholds the control test 11 under which an employer-employee relationship exists "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, " it finds no merit with petitioner's arguments as stated
above. It should be borne in mind that the control test calls merely for the existence of the right to control
the manner of doing the work, not the actual exercise of the right. 12 Considering the finding by the Hearing
Examiner that the establishment of Dy Keh Beng is "engaged in the manufacture of baskets known as kaing,
13 it is natural to expect that those working under Dy would have to observe, among others, Dy's
requirements of size and quality of the kaing. Some control would necessarily be exercised by Dy as the
making of the kaing would be subject to Dy's specifications. Parenthetically, since the work on the baskets is
done at Dy's establishments, it can be inferred that the proprietor Dy could easily exercise control on the
men he employed.

As to the contention that Solano was not an employee because he worked on piece basis, this Court agrees
with the Hearing Examiner that

circumstances must be construed to determine indeed if payment by the piece is just a method of
compensation and does not define the essence of the relation. Units of time ... and units of work are in
establishments like respondent (sic) just yardsticks whereby to determine rate of compensation, to be
applied whenever agreed upon. We cannot construe payment by the piece where work is done in such an
establishment so as to put the worker completely at liberty to turn him out and take in another at pleasure.

At this juncture, it is worthy to note that Justice Perfecto, concurring with Chief Justice Ricardo Paras who
penned the decision in "Sunrise Coconut Products Co. v. Court of Industrial Relations" (83 Phil..518, 523),
opined that

judicial notice of the fact that the so-called "pakyaw" system mentioned in this case as generally practiced in
our country, is, in fact, a labor contract -between employers and employees, between capitalists and laborers.

Insofar as the other assignments of errors are concerned, there is no showing that the Court of Industrial
Relations abused its discretion when it concluded that the findings of fact made by the Hearing Examiner
were supported by evidence on the record. Section 6, Republic Act 875 provides that in unfair labor practice
cases, the factual findings of the Court of Industrial Relations are conclusive on the Supreme Court, if
supported by substantial evidence. This provision has been put into effect in a long line of decisions where
the Supreme Court did not reverse the findings of fact of the Court of Industrial Relations when they were
supported by substantial evidence. 14

Nevertheless, considering that about eighteen (18) years have already elapsed from the time the complainants
were dismissed, 15 and that the decision being appealed ordered the payment of backwages to the employees
from their respective dates of dismissal until finally reinstated, it is fitting to apply in this connection the
formula for backwages worked out by Justice Claudio Teehankee in "cases not terminated sooner." 16 The
formula cans for fixing the award of backwages without qualification and deduction to three years, "subject
to deduction where there are mitigating circumstances in favor of the employer but subject to increase by
way of exemplary damages where there are aggravating circumstances. 17 Considering there are no such
circumstances in this case, there is no reason why the Court should not apply the abovementioned formula
in this instance.

WHEREFORE; the award of backwages granted by the Court of Industrial Relations is herein modified to an
award of backwages for three years without qualification and deduction at the respective rates of
compensation the employees concerned were receiving at the time of dismissal. The execution of this award
is entrusted to the National Labor Relations Commission. Costs against petitioner.

SO ORDERED.

Teehankee, Makasiar, Guerrero, and Melencio-Herrera, JJ., concur.

Fernandez, J., took no part.

Republic of the Philippines
SUPREME COURT
Manila

SECOND DIVISION

G.R. No. L-64048 August 29, 1986

PETROPHIL CORPORATION, petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION, ANSELMO B. ENCARNACION AND GERSHER
ENGINEERING WORKS, respondents.

Linda P. Ilagan for petitioners.



PARAS, J.:

The instant petition which seeks the review and reversal of the Decision dated January 25, 1983 of
respondent National Labor Relations Commission in NLRC Case No. 246-LR-XI-77, raises the following
questions-

1. Which was the employer of respondent Anselmo B. Encarnacion-petitioner Petrophil Corporation or
respondent Gersher Engineering Works?

2. Was Anselmo B. Encarnacion illegally dismissed? and

3. What benefits, if any was he entitled to and from whom?

Private respondent, Anselmo B. Encarnacion, had been working as a casual employee of various job
contractors in Petrophil's premises since 1963 when the firm was still under the ownership and management
of Esso Standard Philippines. On December 21, 1973, Esso Standard Philippines was sold to Petrophil
Corporation. At that time, Anselmo B. Encarnacion was working at the bulk plant as an employee of one
Juanito Campos who had a job contract with Esso Standard Philippines. The said job contract was continued
by Petrophil Corporation so respondent Encarnacion remained working at the bulk plant. In March 1976,
respondent Gersher Engineering Works entered into a service contract with Petrophil and thereafter placed
respondent Encarnacion in its payroll

Sometime in March 28, 1977, respondent Gersher received a letter from Petrophil Corporation complaining
about the unsatisfactory performance of respondent Encarnacion. As a result, respondent Gersher decided to
re-assign Encarnacion to Caltex Phil. Inc. with whom said respondent Gersher had also a contract.
Respondent Encarnacion refused to be reassigned to Caltex unless he was made to occupy the same position
of warehouseman as in Petrophil Corporation and since the position available at Caltex was that of
equipment maintainer, respondent Encarnacion refused to be transferred. Instead he filed a complaint for
illegal dismissal against respondent Gersher and in the alternative, against petitioner Petrophil Corporation,
before the Labor Relations Division of the then Department of Labor.

In a decision dated September 26, 1977, Labor Arbiter Modesto R. Rosales rendered judgment holding that
respondent Encarnacion was the employee of respondent Gersher Engineering Works and not of petitioner
Petrophil Corporation; that respondent Encarnacion was not illegally dismissed; but that he is entitled to
receive from respondent Gersher the 13th month pay of P340.00 covering the year from March 15, 1976 to
March 26, 1977 and the emergency monthly living allowance of P100.00 for the same period. The claim for
holiday and vacation leave pay was dismissed for insufficiency of evidence. The judgment further ordered
respondent Gersher to accept respondent Encarnacion back to work to be assigned as helper in any of its
contractual jobs (except Petrophil Corporation) with the same salary and without loss of seniority and other
benefits appurtenant to his position. Respondent Encarnacion was also ordered to report and present himself
for work with respondent Gersher within five (5) days from notice, otherwise he would be considered to
have abandoned his work. The case against Petrophil Corporation was dismissed.

Respondent Encarnacion appealed the decision to respondent National Labor Relations Commission
Respondent Gersher did not appeal from the said decision, neither did it file an answer to Encarnacion's
appeal.

On January 25, 1985, the National Labor Relations Commission rendered judgment modifying the decision of
the Labor Arbiter and holding that Encarnacion was the employee of Petrophil Corporation and not of
respondent Gersher and that he had been illegally dismissed. The dispositive portion of the decision of the
respondent Commission reads-

WHEREFORE, respondent Petrophil is hereby ordered to:

1. Immediately reinstate the complainant in his former position without loss of seniority rights and
privileges, with fixed backwages equivalent to three years, without qualification or deduction; and

2. Pay the complainant emergency cost-of-living allowances and 13th month pay both covering the
period corresponding to backwages.

Hence, the instant petition which We find to be meritorious.

On the first issue raised, We agree with the findings of the Labor Arbiter that respondent Encarnacion was
the employee of respondent Gersher and not petitioner Petrophil Corporation. This fact was admitted by no
less than Gersher in its position paper which it filed with the Labor Relations Division of the then
Department of Labor. Thus, in the said position paper, respondent Gersher states

2. That the complainant started work with respondent Gersher Engineering Work sometime on or about
March 15, 1976 but that after March 31, 1977, the complainant left his work with the herein respondent and
never came back; he has not notified the respondent herein that he was no longer reporting for work; that
the said respondent herein only hired the said complainant on March 15, 1976 until the date mentioned
above.

3. That sometime on or about March l, 1976 respondent Gersher Engineering Work entered into a contract
of services with respondent Petrophil Corporation, as an independent contractor. ...

4. That after said contract was consummated, the complainant Anselmo Encarnacion commenced work on or
about March 15, 1976 with said respondent with monthly salary of P340.00. ...

The payrolls of respondent Gersher also show that respondent Encarnacion was its employee. For the period
from March 15, 1976 and continuously up to March 31, 1977, respondent Encarnacion was receiving his salary
from respondent Gersher. There was never an instance during this period that Encarnacion received his
salary from Petrophil Corporation.

Anent the issues of his alleged illegal dismissal and his entitlement to benefits from his employer, We
likewise agree with the decision of the Labor Arbiter that respondent Encarnacion was not dismissed but
was only demoted and transferred to Caltex Phil. Inc. because of his failure to observe proper diligence in his
work, and also because of his indolence, habitual tardiness and absences. But following his demotion and
transfer, Encarnacion refused to report for work anymore. As aptly ruled by the Labor Arbiter this regard-

Anent the issue of illegal dismissal respondent Gersher Engineering Works allege (sic) that Encarnacion was
not separated from the service but was only demoted from the position of helper and transferred to the
contract of respondent Gersher Engineering Works with Caltex Philippines Corporation without reduction in
salary due to his failure to observe proper diligence in his work, habitual tardiness, habitual absences and
indolence in his assigned work.

Time and again, this Office has sustained the view that it is management prerogative to transfer, demote,
discipline and even to dismiss an employee to protect its business, provided it is not tainted with unfair
labor practice.

The record, however, is bereft of any evidence to show that the demotion and transfer of Encarnacion was
due to unfair labor practice acts defined under Article 249 ... (third official edition of the Labor Code of the
Philippines, as amended), hence the act of Gersher Engineering Works in transferring and demoting
complainant Encarnacion is anchored on just and valid grounds. (pp. 19-20, Rollo)

Considering the foregoing, reinstatement of respondent Encarnacion and payment of his money claims
should be made by respondent Gersher Engineering Works, his employer which has evidently accepted the
decision of the Labor Arbiter by not appealing therefrom Petitioner Petrophil Corporation is absolved from
any and all liability.

WHEREFORE, the appealed decision dated January 25, 1983 of the National Labor Relations Commission is
hereby REVERSED and SET ASIDE and in lieu thereof, the decision dated September 26, 1977 of Labor
Arbiter Modesto Rosales is ordered reinstated. No pronouncement as to costs.

SO ORDERED.

Feria (Chairman), Fernan, Alampay and Gutierrez, Jr., JJ., concur.
















Republic of the Philippines
SUPREME COURT
Manila

SECOND DIVISION

G.R. No. 78711 June 27, 1990

ABOITIZ SHIPPING EMPLOYEES ASSOCIATION, LAZARO ABAIGAR, VICTORIANO ANIBAN, FELIPE
BATERZAL, RUFINO YAGUIT, JONNIE YAGUIT and EUGENIO BALBUENA, petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION and ABOITIZ SHIPPING CORPORATION, respondents.

Rogelio B. De Guzman for petitioners.

Bienvenido A. Salinas, Jr. for private respondent.



PARAS, J.:

This is a petition for certiorari to set aside the Resolutions of the public respondent National Labor Relations
Commission (NLRC) dated April 30, 1987 and May 29, 1987 affirming the Decision of August 23, 1985
rendered by Labor Arbiter Julio P. Andres, Jr. holding that:

... respondent Aboitiz Shipping Corporation could not be guilty of said charge (unfair labor practice through
dismissal) for lack of employer-employee relationship between them and the individual complainants at the
time said act was allegedly committed in April 1985. (p. 165, Rollo)

and consequently dismissing the case for lack of merit. Hence, this petition anchored on two grounds:

1. GRAVE ABUSE OF DISCRETION COMMITTED BY THE NATIONAL LABOR RELATIONS
COMMISSION WHICH AMOUNTS TO LACK OF JURISDICTION.

2. THE RESOLUTIONS SOUGHT TO BE REVIEWED ARE NOT IN ACCORD WITH LAW AND
APPLICABLE DECISIONS OF THIS HONORABLE COURT. (p. 2 Comment, p. 166, Rollo)

The real issue however which surfaces from the allegations and arguments of the parties is whether or not
an employer-employee relationship existed between respondent Aboitiz Shipping Corporation (ABOITIZ, for
short) and the petitioners-workers at the time of the latter's alleged dismissal on April 26, 1985.

The six (6) petitioners herein claimed that they were employed as carpenters by respondent corporation
until their illegal dismissal on April 26, 1985. They alleged that they were all allegedly dismissed by Ben
Baguio and his spouse on April 26, 1985 just a day after the inspection made by Efren Bautista of the
National Capital Region of the Ministry of Labor and Employment on respondent ABOITIZ in connection
with LSED-4-408-85, a labor case which same complainants filed with the Ministry of Labor and
Employment. According to the complainants, said act of the Baguios constitute unfair labor practice defined
under par. (f) of Article 249 of the Labor Code, as amended, and the resultant dismissal of the individual
complainants is illegal as there was allegedly no just cause nor were they duly afforded due process of law.
They thus, pray that the respondent corporation be held liable for unfair labor practice through dismissal,
damages and attorney's fees.

Respondent ABOITIZ denies that the petitioners were their employees at the time of their dismissal but are
employees of respondent Ben Baguio by virtue of a Service Contract dated June 16, 1984. A pertinent portion
of which reads as follows:

8. That it is understood and agreed that there is no employer-employee relationship between the FIRST
PARTY (Aboitiz Shipping Corporation) and SECOND PARTY (Narben's Service Contractor) much less any of
the latter's carpenters. The SECOND PARTY shall have the right to hire and fire such employees, exercise
general control as to the time, manner and method of performance of work; that the sole interest of the
FIRST PARTY is that all its properties, cargoes, equipments and other appurtenances be safe and protected
from destruction, pilferage, damage and other losses as envisioned in paragraph 9. The SECOND PARTY
shall hold free from any liability the FIRST PARTY from any claim of whatsoever nature which the
carpenters of the SECOND PARTY may institute either against the FIRST PARTY and SECOND PARTY. (pp.
3-4, NLRC Resolution; pp. 3-4, Rollo)

On their part, spouses Ben and Leonarda Baguio aver that they are the proprietors of Narben's Service
Contractor engaged in contracting carpentry jobs and has a service contract with respondent Aboitiz
Shipping Corporation. Spouses Baguio admit that the petitioners were indeed their employees whose duties
were to do carpentry work, subject to the condition that the moment their works were finished, their
employment would end, and that they would be re-hired once respondent ABOITIZ would enter into another
contract. Petitioners submit the following pieces of evidence in support of the presence of employer-
employee relationship with respondent Aboitiz, viz:

(1) Social Security Numbers:

03-173171-0 Lazaro Abaigar;
06-112277-9 Felipe Baterzal;
03-634457-0 Rufino Yaguit;
03-77089084 Jonnie Yaguit;
07-4915-8 Eugenio Balbuena; and
03-78050193 Victoriano Aniban

(2) Deduction for Social Security Premitims from their salaries;

(3) Company Identification Cards issued to petitioners, examples of which are Annexes "B", "B-1" and "B-
2", of Petition;

(4) Withholding of taxes as evidenced by BIR Form W-2 Annexes "C" to "C-5", of Petition; and

(5) Time Cards and normal conduct of employer-employee relations enumerated in the above Statement
of Facts. (Memorandum of Petitioners, p. 212, Rollo)

They therefore pray that the resolutions of public respondent be set aside; that this Court declare the
illegality of dismissal of individual petitioners; and that their reinstatement with full backwages to private
respondent as regular employees thereof be granted.

In the resolution of April 18, 1988, this Court gave due course to the petition and required the parties to file
their simultaneous memoranda within thirty (30) days from notice.

Records reveal that petitioners are not regular employees of the private respondent at the time of their
alleged illegal dismissal. For one, petitioners, on June 20, 1984, filed individual application for employment
with Narben's Service Contractor. They were eventually issued payslips, deducted SSS premiums, Pag-ibig
fund and withholding tax from their salaries by this Contractor.

As held in Mafinco Trading Corporation vs. Ople, 70 SCRA 139 (1976), the existence of employer-employee
relationship is determined by four (4) elements, namely: (1) the selection and engagement of the employee;
(2) the payment of wages; (3) the power of dismissal; and (4) the power to control employees' conduct.
From a reading of the provisions of the aforesaid service contract, the concurrence of these four elements on
NARBEN's will easily be noted. For NARBEN's had the right to hire the necessary number of carpenters to
accomplish the carpentry requirements of respondent corporation and to fire them. It had charge of the
payment of wages of its laborers and the power of administrative supervision and general control as to the
time, manner and method of performance of work.

All the above evidences constitute positive proofs that the petitioners-workers were, at the time in question,
in the employ of NARBEN's and not anymore of respondent Corporation. Respondent NLRC, therefore, did
not err in refusing to give weight to petitioners' uncorroborated claim that they were continuously
employees of Aboitiz Shipping Corporation.

With regard to the issuance of Id's to petitioners by private respondent, it appears that these Id's were
special Id's and is different from those issued to its regular employees. On these special Identification cards,
the following words are written: THIS IS TO CERTIFY THAT THE BEARER WHOSE PICTURE APPEAR ON
THIS CARD IS AUTHORIZED TO HAUL, OPERATE, AND TRANSACT BUSINESS WITH ABOITIZ SHIPPING
CORPORATION. On the other hand, appearing on the regular or probationary employee's Id cards are the
following words: "THIS IS TO CERTIFY THAT THE BEARER WHOSE PICTURE AND PERSONAL DATA
APPEAR ON THIS CARD IS AN EMPLOYEE OF ABOITIZ SHIPPING CORPORATION." (pp. 109-110, Rollo)

Besides, the issue of the existence of employer-employee relationship between the parties in the case at bar
is a question of fact which has already been resolved by the labor arbiter and upheld by the National Labor
Relations Commission. Review of labor cases are confined to questions of jurisdiction or grave abuse of
discretion. We find that no grave abuse of discretion W-as committed by public respondent NLRC in
affirming the non-existence of employer-employee relationship between petitioners and private respondent.

PREMISES CONSIDERED, the petition is hereby DISMISSED for lack of merit.

SO ORDERED.

Melencio-Herrera (Chairperson), Padilla, Sarmiento and Regalado, JJ., concur.







Republic of the Philippines
SUPREME COURT
Manila


SECOND DIVISION
[G.R. No. 121327. December 20, 2001]

CECILIO P. DE LOS SANTOS and BUKLOD MANGGAGAWA NG CAMARA (BUMACA), petitioners, vs.
NATIONAL LABOR RELATIONS COMMISSION (SECOND DIVISION), HON. COMMISSIONERS
VICTORIANO R. CALAYCAY, RAUL T. AQUINO, and ROGELIO I. RAYALA, CAMARA STEEL INDUSTRIES
INC., JOSELITO JACINTO, ALBERTO F. DEL PILAR, DENNIS ALBANO, MERCEDITA G. PASTRANA, TOP-
FLITE and RAUL RUIZ, respondents.


D E C I S I O N
BELLOSILLO, J.:

This is a petition for certiorari under Rule 65 assailing the Decision of public respondent National Labor
Relations Commission (NLRC) which remanded this case to the Labor Arbiter who ruled that petitioner
Cecilio P. de los Santos was illegally dismissed by private respondent Camara Steel, Inc., and as a
consequence, ordered his immediate reinstatement. Specifically, the dispositive portion of the Labor
Arbiter's Decision promulgated 23 May 1999 states -

WHEREFORE, presimes considered, respondent Camara Steel Industries, Inc. is hereby ordered to reinstate
complainant Cecilio de los Santos to his former position within ten (10) days from receipt of this Resolution
without loss of seniority rights and other benefits with full back wages from date of dismissal up to actual
date of reinstatement which is hereby computed as of even date as follows:

From 8/23/93 - 12/15/93 = 3.73 mos.

P118 x 26 days x 3.73 mos. = P11,443.64

12/16/93 - 3/29/94 = 3.43 mos.

P135 x 26 days x 3.43 mos. = 12,039.30

Total Backwages as of 3/29/94 P23,482.94

Respondent Camara Steel Industries, Inc. is also ordered to pay complainant 10% for and as attorney's fees.

All other claims are hereby dismissed for lack of merit.

On 3 May 1991 petitioner De los Santos started working at Camara Steel Industries Inc. (CAMARA STEEL), a
company engaged in the manufacture of steel products such as LPG cylinders and drums. He was first
assigned at the LPG assembly line, then later, as operator of a blasting machine. While performing his task
as such operator, he met an accident that forced him to go on leave for one and a half (1-1/2) months. Upon
his return, he was designated as a janitor assigned to clean the premises of the company, and occasionally, to
transfer scrap and garbage from one site to another.[1]

On 11 May 1993 petitioner was doing his usual chores as a janitor of CAMARA STEEL when he momentarily
left his pushcart to answer the call of Narciso Honrado, scrap in-charge, who summoned him to the
company clinic. There Honrado handed him a box which he placed on top of a drum in his pushcart for
transfer to the other lot of the company near gate 2. On his way out of gate 2, however, the security guard
on duty found in the box handed to him by Honrado two (2) pieces of electric cable measuring 2.26 inches
each and another piece of 1.76 meters with a total estimated value of P50.00 to P100.00. Apprehensive that
he might be charged with theft, petitioner De los Santos explained that the electric cord was declared a
scrap by Honrado whose instructions he was only following to transfer the same to the adjacent lot of the
company as scrap.

Narciso Honrado admitted responsibility for the haul and his error in declaring the electric cables as scrap.
The general manager, apparently appeased by Honrados apology, issued a memorandum acknowledging
receipt of his letter of apology and exculpated him of any wrongdoing.

Taking an unexpected volte face, however, the company through its counsel filed on 9 July 1993 a criminal
complaint for frustrated qualified theft against Honrado and herein petitioner De los Santos. The complaint
however was subsequently dismissed by the Provincial Prosecutor of Pasig for lack of evidence.[2]

On 23 August 1993, upon request of Top-Flite, alleged manpower agency of De los Santos, CAMARA STEEL
terminated his services.

Aggrieved by his illegal termination, De los Santos sought recourse with the Labor Arbiter who on 29 March
1994 rendered a decision ordering respondent CAMARA STEEL to reinstate Delos Santos to his former
position within ten (10) days without loss of seniority rights and other benefits with full back wages from
date of dismissal up to actual reinstatement as herein before stated.

CAMARA STEEL went to the NLRC for recourse. Top-Flite filed a Motion for Intervention praying that it be
permitted to intervene in the appeal as co-respondent and, accordingly, be allowed to submit its own
memorandum and other pleadings.[3]

On 23 May 1995 the NLRC reversed the Labor Arbiter and ordered the return of the entire records of the
case to the arbitration branch of origin for further proceedings. In its Decision, NLRC specified the reasons
for the remand to the Labor Arbiter -[4]

First, as respondents have broadly implied, having alleged that he was an employee of Camara Steel, it was
complainants burden to prove this allegation as a fact, not merely through his uncorroborated statements
but through independent evidence. As noted by respondents, he has not submitted one piece of evidence to
support his premise on this matter except for his sworn statement.

Secondly, the Arbiter maintained that the contract of services submitted by respondents was insufficient to
prove that complainant was an employee of Top-Flite, but he has obviously omitted consideration of Annexes
F, G, H and I which are time sheets of the complainant with Top-Flite and the corresponding time cards
which he punches in for Camara Steel.

The NLRC further noted that under the circumstances it became appropriate to conduct a formal hearing on
the particular issue of whether an employer-employee relationship existed between the parties, which issue
was determinative of the nature of petitioner's dismissal by CAMARA STEEL. That being so, according to
the NLRC, it was necessary for the Labor Arbiter to issue the appropriate directive to summon Top-Flite
as a necessary party to the case, for the manpower agency to submit its own evidence on the actual status of
petitioner.

As pointed out by petitioner, the errors in the disputed decision by the NLRC are: (a) NLRC violated due
process of law when it did not consider the evidence on record; (b) CAMARA STEEL, and not Top-Flite, is
the real employer of petitioner; (c) Contrary to the finding of NLRC, Top-Flite was made a party respondent
in the illegal dismissal case docketed as NLRC-NCR No. 00-08-05302-93 and the NLRC was therefore in
error in remanding the case to the Labor Arbiter for further proceedings.

Petitioner De los Santos contends that NLRC was in grave error when it ruled that, with the exception of a
bare assertion on his sworn statement, he "has not submitted one piece of evidence to support his
premise"[5] that he was in fact an employee of CAMARA STEEL.

To underscore NLRC's oversight, petitioner brings to our attention and specifies the pieces of evidence
which he presented before the Labor Arbiter on 19 November 1993 - also appended as Annexes to
petitioner's "Traverse to Camaras Position Paper and Reply:" (a) Annex E to E-1 - Approval signature of
Camaras Department head, Reynaldo Narisma, without which petitioner cannot render overtime; (b) Annex
F - Petitioners daily time record for 8/3/92 to 8/9/92; (c) Annex F-1 - Signature of private respondent
Mercedita Pastrana, approving in her capacity as Assistant Manager of Camara Steel; (d) Annex F-2 -
Signature of private respondent Dennis Albano, Personnel Manager of Camara Steel Industries Inc. also co-
signing for approval; (e) Annex F-3 - Signature of Narisma, as Department Head of Camara Steel Industries
Inc. where petitioner is working; (f) Annex G - Daily Time Record of petitioner for 7/6/92 to 7/12/92; (g)
Annex G-1 - Signature of Camara Steel Assistant Manager; (h) Annex G-2 - Signature of Camaras
Personnel Manager, Dennis Albano, approving; (i) Annex G-3 - Signature of Camaras Department Head
where petitioner is working, Mr. Narisma, approving; (j) Annex H to H-1 - Petitioners Daily Time Card
(representative samples) with name and logo of Camara Steel Industries Inc.; and, (k) Annex J - Affidavit of
Complainant.

All these pieces of evidence which, according to petitioner De los Santos, were not properly considered by
NLRC, plainly and clearly show that the power of control and supervision over him was exercised solely and
exclusively by the managers and supervisors of CAMARA STEEL. Even the power to dismiss was also lodged
with CAMARA STEEL when it admitted in page 3 of its Reply that upon request by Top-Flite, the steel
company terminated his employment after being allegedly caught committing theft.

Petitioner De los Santos also advances the view that Top-Flite, far from being his employer, was in fact a
"labor-only" contractor as borne out by a contract whereby Top-Flite undertook to supply CAMARA STEEL
workers with "warm bodies" for its factory needs and edifices. He insists that such contract was not a job
contract but the supply of labor only. All things considered, he is of the firm belief that for all legal intents
and purposes, he was an employee - a regular one at that - of CAMARA STEEL.

In its comment, private respondent CAMARA STEEL avers that far from being its employee, De los Santos
was merely a project employee of Top-Flite who was assigned as janitor in private respondent company.
This much was acknowledged by Top-Flite in its Motion for Intervention filed before the NLRC.[6] Such
allegation, according to private respondent CAMARA STEEL, supports all along its theory that De los Santos'
assignment to the latter as janitor was based on an independent contract executed between Top-Flite and
CAMARA STEEL.[7]

Respondent CAMARA STEEL further argues that crystal clear in the Motion for Intervention of Top-Flite is
its allegation that it was in fact petitioner's real employer as his salaries and benefits during the contractual
period were paid by Top-Flite; not only that, De los Santos was dismissed by CAMARA STEEL upon the
recommendation of Top-Flite. These ineluctably show that Top-Flite was not only a job contractor but was
in truth and in fact the employer of petitioner.

In his petition, De los Santos vigorously insists that he was the employee of respondent CAMARA STEEL
which in turn was not only denying the allegation but was finger-pointing Top-Flite as petitioner's real
employer. De los Santos again objects to this assertion and claims that Top-Flite, far from being an
employer, was merely a "labor-only" contractor.

In the maze and flurry of claims and counterclaims, several contentious issues continue to stick out like a
sore thumb. Was De los Santos illegally dismissed? If so, by whom? Was his employer respondent
CAMARA STEEL, in whose premises he was allegedly caught stealing, or was it Top-Flite, the manpower
services which allegedly hired him?

Inextricably intertwined in the resolution of these issues is the determination of whether there existed an
employer-employee relationship between CAMARA STEEL and respondent De Los Santos, and whether Top-
Flite was an "independent contractor" or a "labor-only" contractor. A finding that Top-Flite was a "labor-
only" contractor reduces it to a mere agent of CAMARA STEEL which by statute would be responsible to the
employees of the "labor-only" contractor as if such employees had been directly employed by the employer.

Etched in an unending stream of cases are the four (4) standards in determining the existence of an
employer-employee relationship, namely: (a) the manner of selection and engagement of the putative
employee; (b) the mode of payment of wages; (c) the presence or absence of power of dismisssal; and, (d)
the presence or absence of control of the putative employee's conduct. Most determinative among these
factors is the so-called "control test."

As shown by the evidence on record, De los Santos was hired by CAMARA STEEL after undergoing an
interview with one Carlos Suizo, its timekeeper who worked under the direct supervision of one Renato
Pacion, a supervisor of CAMARA STEEL. These allegations are contained in the affidavit[8] executed by De
los Santos and were never disputed by CAMARA STEEL. Also remaining uncontroverted are the pieces of
documentary evidence adduced by De los Santos consisting of daily time records marked Annexes "F" and
"G" which, although bearing the heading and logo of Top-Flite, were signed by officers of respondent
CAMARA STEEL, and Annexes "H" and "I" with the heading and logo of CAMARA STEEL.

Incidentally, we do not agree with NLRC's submission that the daily time records serve no other purpose
than to establish merely the presence of De los Santos within the premises of CAMARA STEEL. Contrarily,
these records, which were signed by the companys officers, prove that the company exercised the power of
control and supervision over its employees, particularly De los Santos. There is dearth of proof to show that
Top-Flite was the real employer of De los Santos other than a naked and unsubstantiated denial by
CAMARA STEEL that it has no power of control over De los Santos. Records would attest that even the
power to dismiss was vested with CAMARA STEEL which admitted in its Reply that "Top-Flite requested
CAMARA STEEL to terminate his employment after he was caught by the security guard committing theft."

A cursory reading of the above declaration will confirm the fact that the dismissal of De los Santos could
only be effected by CAMARA STEEL and not by Top-Flite as the latter could only "request" for De los
Santos' dismissal. If Top-Flite was truly the employer of De los Santos, it would not be asking permission
from or "requesting" respondent CAMARA STEEL to dismiss De los Santos considering that it could very
well dismiss him without CAMARA STEEL's assent.

All the foregoing considerations affirm by more than substantial evidence the existence of an employer-
employee relationship between De los Santos and CAMARA STEEL.

As to whether petitioner De los Santos was illegally terminated from his employment, we are in full
agreement with the Labor Arbiter's finding that he was illegally dismissed. As correctly observed by the
Labor Arbiter, it was Narciso Honrado, scrap in-charge, who handed the box containing the electrical cables
to De los Santos. No shred of evidence can show that De los Santos was aware of its contents, or if ever,
that he conspired with Honrado in bilking the company of its property. What is certain however is that
while Honrado admitted, in a letter of apology, his culpability for the unfortunate incident and was
unconditionally forgiven by the company, De los Santos was not only unceremoniously dismissed from
service but was charged before the court for qualified theft (later dismissed by the public prosecutor for lack
of evidence). For sure, De los Santos cannot be held more guilty than Honrado who, being the scrap in-
charge, had the power to classify the cables concerned as scrap.

Neither can we gratify CAMARA STEEL's contention that petitioner was validly dismissed for loss of trust
and confidence. As provided for in the Labor Code:

Art. 282. Termination by employer - An employer may terminate an employment for any of the following
causes: x x x (c) Fraud or willful breach by the employee of the trust reposed in him by his employer or
duly authorized representative x x x x

Of course, it must be stressed that loss of confidence as a just cause for the termination of employment is
based on the premise that the employee holds a position of trust and confidence, as when he is entrusted
with responsibility involving delicate matters, and the task of a janitor does not fall squarely under this
category.

Petitioner De los Santos argues that Top-Flite was merely a "labor-only" contractor. To fortify his stance, De
los Santos brings to our attention the contract of service[9] dated 8 February 1991 between CAMARA STEEL
and Top-Flite which provides:

1) The contractor (Top-Flite) shall provide workers (non-skilled) six (6) days a week for the Clients
(Camara) factory and edifices.

However, both respondent CAMARA STEEL and Top-Flite[10] are adamant in their belief that the latter was
not a "labor-only" contractor as they rely on another provision of the contract which states -

2) The Contractor warrants the honesty, reliability, industry and cooperative disposition of the person it
employs to perform the job subject to this contract, and shall employ such persons only as are in possession
of health certificates and police clearances x x x x

The preceding provisions do not give a clear and categorical answer as regards the real character of Top-
Flite's business. For whatever its worth, the invocation of the contract of service is a tacit admission by
both parties that the employment of De los Santos was by virtue of such contract. Be that as it may, Top-
Flite, much less CAMARA STEEL, cannot dictate, by the mere expedient of a unilateral declaration in a
contract, the character of its business, i.e., whether as "labor-only" contractor, or job contractor, it being
crucial that its character be measured in terms of and determined by the criteria set by statute. The case of
Tiu v. NLRC[11] succinctly enunciates this statutory criteria -

Job contracting is permissible only if the following conditions are met: 1) the contractor carries on an
independent business and undertakes the contract work on his own account under his own responsibility
according to his own manner and method, free from the control and direction of his employer or principal
in all matters connected with the performance of the work except as to the results thereof; and 2) the
contractor has substantial capital or investment in the form of tools, equipment, machineries, work premises,
and other materials which are necessary in the conduct of the business.

"Labor-only contracting" as defined in Sec. 4, par. (f), Rule VIII-A, Book III, of the Omnibus Rules
Implementing the Labor Code states that a "labor-only" contractor, prohibited under this Rule, is an
arrangement where the contractor or subcontractor merely recruits, supplies or places workers to perform a
job, work or service for a principal and the following elements are present: (a) The contractor or
subcontractor does not have substantial capital or investment to actually perform the job, work or service
under its own account or responsibility; and, (b) 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.

Applying the foregoing provisions, the Court finds Top-Flite to be a "labor-only" contractor, a mere supplier
of labor to CAMARA STEEL, the real employer. Other than its open declaration that it is an independent
contractor, no substantial evidence was adduced by Top-Flite to back up its claim. Its revelation that it
provided a sweeper to petitioner would not suffice to convince this Court that it possesses adequate
capitalization to undertake an independent business.[12] Neither will the submission prosper that De los
Santos did not perform a task directly related to the principal business of respondent CAMARA STELL.
As early as in Guarin v. NLRC[13] we ruled that "the jobs assigned to the petitioners as mechanics, janitors,
gardeners, firemen and grasscutters were directly related to the business of Novelty as a garment
manufacturer," reasoning that "for the work of gardeners in maintaining clean and well-kept grounds
around the factory, mechanics to keep the machines functioning properly, and firemen to look out for fires,
are directly related to the daily operations of a garment factory."

In its comment respondent CAMARA STEEL empathically argues that Top-Flite, although impleaded as
respondent in NLRC-NCR Cases Nos. 00-0704761-93 and 00-0805061-93, subject of the present appeal, was
never summoned for which reason it was deprived of procedural due process; basically the same line of
argument adopted by the NLRC in its decision to remand the case to the arbitration branch of origin.
CAMARA STEEL obviously wants wants to impress upon us that Top-flite, being a necessary party, should
have been summoned and the failure to do so would justify the remand of the case to the Labor Arbiter.

We are not persuaded. The records show that Top-Flite was not only impleaded in the aforementioned case
but was in fact afforded an opportunity to be heard when it submitted a position paper. This much was
admitted by Top-Flite in par. 5 of its Motion for Intervention where it stated that "movant submitted its
position paper in the cases mentioned in the preceding paragraph but the Presiding Arbiter ignored the
clear and legal basis of the position of the movant."[14] In other words, the failure of Top-Flite to receive
summons was not a fatal procedural flaw because it was never deprived of the opportunity to ventilate its
side and challenge petitioner in its position paper, not to mention the comment which it submitted through
counsel before this Court.[15] It moved to intervene not because it had no notice of the proceedings but
because its position paper allegedly was not considered by the Labor Arbiter. While jurisdiction over the
person of the defendant can be acquired by service of summons, it can also be acquired by voluntary
appearance before the court which includes submission of pleadings in compliance with the order of the
court or tribunal. A fortiori, administrative tribunals exercising quasi-judicial powers are unfettered by the
rigidity of certain procedural requirements subject to the observance of fundamental and essential
requirments of due process in justiciable cases presented before them. In labor cases, a punctilious
adherence to stringent technical rules may be relaxed in the interest of the workingman. A remand of the
case, as the NLRC envisions, would compel petitioner, a lowly worker, to tread once again the calvary of a
protracted litigation and flagellate him into submission with the lash of technicality.

WHEREFORE, the petition is GRANTED and the appealed Decision of the NLRC is REVERSED and SET
ASIDE and the Decision of the Labor Arbiter promulgated 23 May 1999 is REINSTATED and ADOPTED as
the Decision in this case.

SO ORDERED.

Mendoza, Quisumbing, and De Leon, Jr., JJ., concur.
Buena, J., on official business.