Professional Documents
Culture Documents
and (5) Gramaje presented only one SSS Quarterly Collection List whose
authenticity is doubtful. The CA noted that petitioners are represented by
only one law firm though they made it appear that they were represented by
different lawyers.
ISSUES:
1. Whether or not Gramaje is an independent job contractor
2. Whether or not an employer-employee relationship exists between
Polyfoam and respondent; and
3. Whether or not respondent was illegally dismissed from employment
HELD:
Contracting or subcontracting
Article 106 of the Labor Code explains the relations which may arise
between an employer, a contractor, and the contractor's employees, thus:
Art. 106. Contracting or subcontracting. Whenever an employer
enters into a contract with another person for the performance of the
former's work, the employees of the contractor and of the latter's
subcontractor, if any, shall be paid in accordance with the provisions
of this Code.
In the event that the contractor or subcontractor fails to pay the
wages of his employees in accordance with this Code, the employer
shall be jointly and severally liable with his contractor or
subcontractor to such employees to the extent of the work performed
under the contract, in the same manner and extent that he is liable to
employees directly employed by him.
The Secretary of Labor and Employment may, by appropriate
regulations, restrict or prohibit the contracting out of labor to protect
the rights of workers established under the Code. In so prohibiting or
restricting, he may make appropriate distinctions between labor-only
contracting and job contracting as well as differentiations within
these types of contracting and determine who among the parties
involved shall be considered the employer for purposes of this Code,
to prevent any violation or circumvention of any provision of this
Code.
There is labor-only contracting where the person supplying workers to
an employer does not have substantial capital or investment in the
form of tools, equipment, machineries, work premises, among others,
and the workers recruited and placed by such person are performing
activities which are directly related to the principal business of such
employer. In such cases, the person or intermediary shall be
considered merely as an agent of the employer who shall be
responsible to the workers in the same manner and extent as if the
latter were directly employed by him.
In Sasan, Sr. v. National Labor Relations Commission 4th Division,
[41]
the Court distinguished permissible job contracting or subcontracting
from labor-only contracting, to wit:
ii)
The contractor does not exercise the right to
control the performance of the work of the contractual employee.
The foregoing provisions shall be without prejudice to the
application of Article 248(C) of the Labor Code, as amended.
Substantial capital or investment refers to capital stocks
and subscribed capitalization in the case of corporations, tools,
equipment, implements, machineries and work premises, actually
and directly used by the contractor or subcontractor in the
performance or completion of the job, work, or service contracted
out.
The right to control shall refer to the right reversed to the
person for whom the services of the contractual workers are
performed, to determine not only the end to be achieved, but also
the manner and means to be used in reaching that end.
(Emphasis supplied.)
When there is labor-only contracting, there is employeremployee relationship between the principal and the contractual
employee
When there is labor-only contracting, Section 7 of the same
implementing rules, describes the consequences thereof:
Section 7. Existence of an employer-employee relationship.
The contractor or subcontractor shall be considered the employer
of the contractual employee for purposes of enforcing the
provisions of the Labor Code and other social legislation. The
principal, however, shall be solidarily liable with the contractor in
the event of any violation of any provision of the Labor Code,
including the failure to pay wages.
The principal shall be deemed the employer of the
contractual employee in any of the following case, as declared by
a competent authority:
a.
where there is labor-only contracting; or
b.
where the contracting arrangement falls
within the prohibitions provided in Section 6 (Prohibitions)
hereof.
According to the foregoing provision, labor-only contracting would
give rise to: (1) the creation of an employer-employee relationship between
the principal and the employees of the contractor or sub-contractor; and (2)
the solidary liability of the principal and the contractor to the employees in
the event of any violation of the Labor Code.
Even if employees are not performing activities indispensable to the
business of the principal, labor-contracting may still exist if the
contractor does not demonstrate substantial capital or investment
The law clearly establishes an employer-employee relationship between the
principal employer and the contractors employee upon a finding that the
moral character, and have not been convicted of any crime). The Contract
also states that, to carry out the undertakings specified in the immediately
preceding paragraph, the CONTRACTOR shall employ the necessary
personnel, thus, acknowledging that Interserve did not yet have in its
employ the personnel needed by petitioner and would still pick out such
personnel based on the criteria provided by petitioner. In other words,
Interserve did not obligate itself to perform an identifiable job, work, or
service for petitioner, but merely bound itself to provide the latter with
specific types of employees. These contractual provisions strongly indicated
that Interserve was merely a recruiting and manpower agency providing
petitioner with workers performing tasks directly related to the latters
principal business.
Certification issued by DOLE is not sufficient to prove independent
contractorship
The certification issued by the DOLE stating that Interserve is an
independent job contractor does not sway this Court to take it at face value,
since the primary purpose stated in the Articles of Incorporation [47] of
Interserve is misleading. According to its Articles of Incorporation, the
principal business of Interserve is to provide janitorial and allied
services. The delivery and distribution of Coca-Cola products, the work for
which respondents were employed and assigned to petitioner, were in no
way allied to janitorial services. While the DOLE may have found that the
capital and/or investments in tools and equipment of Interserve were
sufficient for an independent contractor for janitorial services, this does not
mean that such capital and/or investments were likewise sufficient to
maintain an independent contracting business for the delivery and
distribution of Coca-Cola products.
2000; (6) RDG's Mayor's Permit for the years 2000 and 2001; (7) RDG's
Certificate of Accreditation issued by DTI; (8) performance bond and
insurance policy; (9) SSS Online Inquiry System Employee Contributions
and Employee Static Information; and (10) Romeo's affidavit stating that he
had paid the salaries of his employees assigned to Petron.
LA found against Petron and ruled that Alilin, et al. are its regular
employees because their jobs were directly related to Petron's business
operations; they worked under the supervision of Petron's foreman; they
were using Petron's tools and equipment in the performance of their works.
NLRC affirmed the ruling. However, CA reversed the ruling and found RDG
to be a legitimate contractor.
ISSUE: Whether or not RDG is a legitimate contractor
HELD: