Bernanrdo vs.

nlrc
Facts:

Petitioners numbering 43 are deaf–mutes who were hired on various periods from
1988 to 1993 by respondent Far East Bank and Trust Co. as Money Sorters and
Counters through a uniformly worded agreement called ‘Employment Contract for
Handicapped Workers. Subsequently, they are dismissed.
Petitioners maintain that they should be considered regular employees, because their
task as money sorters and counters was necessary and desirable to the business of
respondent bank. They further allege that their contracts served merely to preclude
the application of Article 280 and to bar them from becoming regular employees.
Private respondent, on the other hand, submits that petitioners were hired only as
“special workers and should not in any way be considered as part of the regular
complement of the Bank.”[12] Rather, they were “special” workers under Article 80
of the Labor Code.
Issue: WON petitioners have become regular employees.
Held:

The uniform employment contracts of the petitioners stipulated that they shall be
trained for a period of one month, after which the employer shall determine whether
or not they should be allowed to finish the 6-month term of the contract. Furthermore,
the employer may terminate the contract at any time for a just and reasonable
cause. Unless renewed in writing by the employer, the contract shall automatically
expire at the end of the term.
Respondent bank entered into the aforesaid contract with a total of 56 handicapped
workers and renewed the contracts of 37 of them. In fact, two of them worked from
1988 to 1993. Verily, the renewal of the contracts of the handicapped workers and the
hiring of others lead to the conclusion that their tasks were beneficial and necessary to
the bank. More important, these facts show that they were qualified to perform the
responsibilities of their positions. In other words, their disability did not render them
unqualified or unfit for the tasks assigned to them.
In this light, the Magna Carta for Disabled Persons mandates that a qualified disabled
employee should be given the same terms and conditions of employment as
a qualified able-bodied person. Section 5 of the Magna Carta provides:
“Section 5. Equal Opportunity for Employment.—No disabled person shall be denied
access to opportunities for suitable employment. A qualified disabled employee shall
be subject to the same terms and conditions of employment and the same
compensation, privileges, benefits, fringe benefits, incentives or allowances as a
qualified able bodied person.”
The fact that the employees were qualified disabled persons necessarily removes the
employment contracts from the ambit of Article 80. Since the Magna Carta accords
them the rights of qualified able-bodied persons, they are thus covered by Article 280
of the Labor Code, which provides:
“ART. 280. Regular and Casual Employment. — The provisions of written agreement
to the contrary notwithstanding and regardless of the oral agreement of the parties, an
employment shall be deemed to be regular where the employee has been engaged to
perform activities which are usually necessary or desirable in the usual business or
trade of the employer, x x x”
“The primary standard, therefore, of determining regular employment is the
reasonable connection between the particular activity performed by the employee in
relation to the usual trade or business of the employer. The test is whether the former
is usually necessary or desirable in the usual business or trade of the employer. The
connection can be determined by considering the nature of the work performed and its
relation to the scheme of the particular business or trade in its entirety. Also if the
employee has been performing the job for at least one year, even if the performance is
not continuous and merely intermittent, the law deems repeated and continuing need
for its performance as sufficient evidence of the necessity if not indispensability of
that activity to the business. Hence, the employment is considered regular, but only
with respect to such activity, and while such activity exists.”
Respondent bank entered into the aforesaid contract with a total of 56 handicapped
workers and renewed the contracts of 37 of them. In fact, two of them worked from
1988 to 1993. Verily, the renewal of the contracts of the handicapped workers and the
hiring of others lead to the conclusion that their tasks were beneficial and necessary to
the bank. More important, these facts show that they were qualified to perform the
responsibilities of their positions. In other words, their disability did not render them
unqualified or unfit for the tasks assigned to them.
Without a doubt, the task of counting and sorting bills is necessary and desirable to
the business of respondent bank. With the exception of sixteen of them, petitioners
performed these tasks for more than six months

VALLUM SECURITY SERVICES and BAGUIO LEISURE CORPORATION (HYATT TERRACES

BAGUIO), petitioners,
vs.
THE NATIONAL LABOR RELATIONS COMMISSION,

FACTS:

On 1 September 1986, petitioner Baguio Leisure Corporation (Hyatt Terraces Baguio) ("Hyatt
Baguio") and petitioner Vallum Security Services ("Vallum") entered into a contract for security
services under the terms of which Vallum agreed to protect the properties and premises of Hyatt
Baguio by providing fifty (50) security guards, on a 24-hour basis, a day.
On 1 June 1988, Heinrich L. Maulbecker, Hyatt Baguio's General Manager, wrote to Domingo A.
Inocentes, President of Vallum advising that effective 1 July 1988, the contract of security services
would be terminated.

Vallum informed Mr. Maulbecker, on 22 June 1988, that it was agreeable to the termination of the
contract.

On 30 June 1988, private respondents, who were security guards provided by Vallum to Hyatt
Baguio, were informed by Vallum's Personnel Officer that the contract between the two (2) had
already expired. Private respondents were directed to report to Vallum's head office at Sucat Road,
in Muntinlupa, Metropolitan Manila, not later than 15 July 1988 for re-assignment. They were also
told that failure to report at Sucat would be taken to mean that they were no longer interested in
being re-assigned to some other client of Vallum.

ISSUE
whether or not private respondent security guards are indeed employees of petitioner Hyatt Baguio.

HELD;

In the case at bar, we noted that Vallum did not have a branch office in Baguio City and that Hyatt
Baguio provided Vallum with offices at Hyatt's own premises and allowed Vallum to use its Security
Department in the processing of applications. That was the reason too why Vallum had stipulated
that Hyatt Baguio was to distribute the salaries of the security guards directly to them and that Hyatt
had used its own corporate forms and pay slips in doing so. The security guards were clearly
performing activities directly related to the business operations of Hyatt Baguio, since the
undertaking to safeguard the person and belongings of hotel guests is one of the obligations of a
hotel vis-a-visits guests and the general public.

Where labor-only contracting exists in a given case, the law itself implies or establishes an
employer-employee relationship between the employer (the owner of the project or establishment)
(here, Hyatt Baguio) and the employees of the labor-only contractor (here, Vallum) to prevent any
violation or circumvention of provisions of the Labor Code. 16

The issue of illegal dismissal need not detain us for long. It has not been alleged by petitioners that a
just or authorized cause for terminating private respondents' services had existed. And even if such
lawful cause existed, it is not alleged that private respondents' rights to procedural due process in
that connection had been appropriately observed.

We conclude that petitioners have not shown any grave abuse of discretion or any act without or any
in excess of jurisdiction on the part of the National Labor Relations Commission in rendering its
Resolutions dated 31 July 1990 and 31 January 1991.
SHOPPERS GAIN SUPERMART, JERRY TAN, JACK TAN and HEIRS OF JAMES TAN, petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION
Facts of the case:

From 1982 to 1990, private respondents had worked in the Shoppers Gain Supermarket in various capacities
as "merchandiser, cashier, bagger, check-out personnel, sales lady, printer/film and warehouseman" for at
least one year each. Private respondents were part of a pool of workers supplied by three (3) manpower
service companies under "labor-only" contracts. In December of 1990, due to an unavoidable circumstance,
petitioner constrained to stop its business and consequently terminate its contract with the three (3)
manpower service companies. Petitioner was able to pay separation pays for its regular employees but not
for private respondents.

A complaint for illegal dismissal was filed for which the Labor Arbiter rendered a decision finding Shoppers
Gain Supermarket guilty of labor-only contracting and ordered it to pay separation pay and backwages to
respondents. On appeal, the National Labor Relations Commission affirmed said decision. Elevating the case
to the Supreme Court, petitioners raised the following grounds inter alia:

(a) That for employer-employee to exist, the following requirements must be satisfied, namely: (1) selection
and engagement of the employees; (2) the payment of wages; (3) the power of dismissal; and (4) the power
to control employees' conduct; and

(b) Since the manpower agencies themselves admitted per their respective position papers that they
selected, hired, paid, disciplined, dismissed and controlled the private respondents, it followed that the
latter are not the employees of the petitioner corporation but of the agencies only.

Issue:

Whether or not private respondents are considered employees of petitioner Shoppers Gain Supermarket in
view of the fact that they were merely furnished through labor-only contracts with three manpower
agencies.

Ruling:

The Supreme Court held that what was controlling in the issue is the provisions of Artcile 106 of the Labor
Code and not that of Article 208. The former clearly defines what constitute labor-only contractor as
differentiated from a direct contractor, including the legal effects of each, while the latter is merely for the
purpose of determining whether or not an employee is considered regular. Based on the provision of Article
106, the Supreme Court ruled that the petitioner was indeed the direct employer of private respondents and
was therefore 0bliged to pay them separation pay. The Supreme Court reasoned that since it is undeniable
that the private respondents' work as merchandisers, cashiers, baggers, check-out personnel, sales ladies,
warehousemen and so forth were directly related, necessary and vital to the day-to-day operations of the
supermarket and that their jobs involved normal and regular functions in the ordinary business of the
petitioner corporation, the provision of Article 106 clearly applied thus making the manpower agencies
merely agents of petitioner corporation. Consequently, private respondents are considered employees of
petitioner Shoppers Gain Supermart.

FRANKLIN BAGUIO AND 15 OTHERS, BONIFACIO IGOT AND 6 OTHERS, ROY MAGALLANES
AND 4 OTHERS, CLAUDIO BONGO, EDUARDO ANDALES and 4 OTHERS, petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION (3rd DIVISION), GENERAL MILLING
CORPORATION and/or FELICIANO LUPO, respondents.
FACTS:

Sometime in 1983, private respondent Feliciano LUPO, a building contractor, entered into a contract
with GMC, a domestic corporation engaged in flour and feeds manufacturing, for the construction of
an annex building inside the latter's plant in Cebu City. In connection with the aforesaid contract,
LUPO hired herein petitioners either as carpenters, masons or laborers.

Subsequently, LUPO terminated petitioners' services, on different dates. As a result, petitioners filed
Complaints against LUPO and GMC before the NLRC Regional Arbitration Branch No. VII, Cebu
City, for unpaid wages, COLA differentials, bonus and overtime pay.

Petitioners contend that GMC is jointly and severally liable with LUPO for the latter's obligations to
them. They seek recovery from GMC based on Article 106 of the Labor Code, infra, which holds the
employer jointly and severally liable with his contractor for unpaid wages of employees of the latter.

ISSUE

The liability of an employer in job contracting, vis-a-vis his contractor's employees

HELD:

Upon the facts and circumstances, we uphold the solidary liability of GMC and LUPO for the latter's
liabilities in favor of employees whom he had earlier employed and dismissed.

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

In other words, a person is deemed to be engaged in "labor only" contracting where (1) 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 (2) the workers recruited and
placed by such person are performing activities which are directly related to the principal business of
such employer (See Section 9, Rule VIII, Book III of the Omnibus Rules Implementing the Labor
Code;

PCI AUTOMATION CENTER, INC., petitioner, vs. NATIONAL LABOR

RELATIONS COMMISSION and HECTOR SANTELICES, respondents

Facts:

In 1985, Philippine Commercial International Bank (PCIB) commenced its

4th GL Environment Conversion Project intended to link all existing computer
systems within PCIB and its various branches around the country. It entered
into a Computer Services Agreement with petitioner PCI Automation Center,
Inc. (PCI-AC), under which petitioner obligated itself to direct, supervise and
run the development of the software, computer software applications and
computer system of PCIB. On the other hand, PCIB agreed to provide the
petitioner with encoders and computer attendants, among others. [3]

To comply with its obligation to procure manpower for the petitioner, PCIB
engaged the services of Prime Manpower Resources Development, Inc.
(Prime). PCIB and Prime entered into an External Job Contract
On September 20, 1985, private respondent Hector Santelices was hired
by Prime and assigned to petitioner as a data encoder to work on the 4th GL
Environment Conversion Project of PCIB. However, on March 18, 1991,
[5]

Prime decided to terminate private respondents services after it was informed

by the petitioner that his services were no longer needed in the project. [6]

Private respondent filed before the NLRC a complaint for illegal dismissal
against Prime and PCI-AC
ISSUE: WON the private respondent was illegally dismissed.

HELD:

Under the law, any person (hereinafter referred to as the principal

employer) who enters into an agreement with a job contractor, either for the
performance of a specified work or for the supply of manpower, assumes
responsibility over the employees of the latter. However, for the purpose of
[18]

determining the extent of the principal employers liability, the law makes a
distinction between legitimate job contracting and labor-only contracting.
Article 106 of the Labor Code states:

Article 106. Contractor or subcontractor. -Whenever an employer enters into a

contract with another person for the performance of the formers work, the employees
of the contractor and of the latters subcontractor, 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 may, by appropriate regulations, restrict or prohibit
the contracting out of labor to protect the rights of workers established under
this Code. In so prohibiting or restricting, he may make appropriate
distinctions between labor-only contracting and job contracting as well as
differentiations within these types of contracting and determine who among
the parties involved shall be considered the employer for purposes of this
Code, to prevent any violation or circumvention of any provision of this Code.
There is labor-only contracting where the person supplying workers to an
employer does not have substantial capital or investment in the form of tools,
equipment, machineries, work premises, among others, and the workers
recruited and placed by such persons are performing activities which are
directly related to the principal business of such employer. In such cases, the
person or intermediary shall be considered merely as an agent of the
employer who shall be responsible to the workers in the same manner and
extent as if the latter were directly employed by him.

Thus, in legitimate job contracting, the principal employer is considered only an indirect
employer,[21] while in labor-only contracting, the principal employer is considered the
direct employer of the employee.

Filipinas Broadcasting Network, Inc. v. Mapa

G.R. No. 118892, 11 March 1998
Complainant claimed that he was an employee of respondent Filipinas Broadcasting
Network, Inc. In defense, the company responded saying that the complainant was a
volunteer radio reporter. “As a volunteer reporter, [Complainant] was not to be paid wages
as an employee of DZRC but he was permitted to find sponsors whose business
establishments will be advertised every time he goes on the air. Most importantly,
[Complainant’s] only work consisted of occasional newsbits or on-the spot reporting of
consisted of occasional newsbits or on-the spot reporting of incidents or newsworthy
occurances, which was very seldom.”
ISSUE: WON volunteers are considered employee.

HELD: The complainant was a volunteer.

it is possible that a volunteer may later on claim to be an employee and file a labor
complaint against the establishment. In the Filipinas Broadcasting Network case, the
establishment was fortunate to have various documentation ordocumentary evidence to
prove the volunteer agreement between the parties: (a) Affidavit of Allan Almario who is a
volunteer, (b) Affidavit of Elmer Anonuevo who is a volunteer, (c) Affidavit of Carlito Baylon
who is an advertiser, (d) Bio-Data of Complainant acknowledging that he was a volunteer,
(e) Letter of Complainant acknowledging that he is a volunteer.
Without such documentary evidence, and if the establishment failed to establish lack of
control, it could have had a different outcome – i.e. the Complainant could have been
declared an employee and the employer would have been liable for illegal dismissal.
Employers should always bear in mind that in labor cases it all comes to down to
documentary evidence. If the establishment fails to produce documentation in a labor case,
it may lose that case – despite having had a different verbal agreement with the volunteer.
 Chavez v. NLRC
448 SCRA 478

Facts

 Petitioner Pedro Chavez was hired as truck driver of Private Respondent Supreme Packaging, Inc.
 Chavez requested to avail himself of the benefits that a regular employees were receiving but his
request was denied
 Chavez filed before NLRC a complaint for regularization. Later on he was dismissed by SPI
 He later on filed an amended complaint for illegal dismissal

Issue
1. W/N there existed an employer-employee relationship between SPI and Chavez?
2. W/N Chavez is an independent contractor?
Held
1. Yes, there existed an employer-employee relationship between SPI and Chavez
 Applying four-fold test, all elements are present
1. selection and engagement of the employee
- it was SPI who engaged the services of Chavez without intervention of third party
2. payment of wages
- that petitioner was paid on per trip basis is not significant, this is merely a method of computing
compensation and not a basis for determining the existence or absence of er-ee relationship
3. power of dismissal
- power to dismiss was inherent in the fact that they engaged the services of Chavez as driver
4. power to control employee's conduct
- an employee is subject to employer's power to control the means and method by which the work is
to be performed while an independent contractor is free from control and supervision of employer
* Manifestation of Power of Control of SPI to Chavez
1. truck was owned by SPI
2. express instruction in the method of delivery
3. instruction on parking of delivery truck
4. instruction on when and where Chavez would perform his task by issuing to him gate passes and
routing slips
2. Chavez is not and Independent Contractor
* Proof that Chavez is not an Independent Contractor
1. Chavez did not own the truck
2. SPI did not have substantial capitalization or investment
3. Delivery was exclusively done for SPI for 10years
* Er-Ee Relationship cannot be negated by expressly repudiating it in contract and providing therein
that the employee is an independent contractor. Indeed the employment status of the person is
defined and prescribed by law and not by what parties say it should be.