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* SECOND DIVISION.
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CARPIO-MORALES,J.:
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2 Rollo, p. 136.
3 Id., at pp. 136-137.
4 Id., at p. 138.
185
10. 1Should at any time OWNER find the services herein undertaken
by CONTRACTOR to be unsatisfactory, it shall notify CONTRACTOR
who shall have fifteen (15) days from such notice within which to improve
the services. If CONTRACTOR fails to improve the services under this
Agreement according to OWNERS specifications and standards, OWNER
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shall have the right to terminate this Agreement immediately and without
advance notice.
10.2Should CONTRACTOR fail to improve the services within the
period stated above or should CONTRACTOR breach the terms of this
Agreement and fail or refuse to perform the Work in such a manner as will
be consistent with the achievement of the result therein contracted for or in
any other way fail to comply strictly with any terms of this Agreement,
OWNER at its option, shall have the right to terminate this Agreement and
to make other arrangements for having said Work performed and pursuant
thereto shall retain so much of the money held on the Agreement as is
necessary to cover the OWNERs costs and damages, without prejudice to
the right of OWNER to seek resort to the bond furnished by
CONTRACTOR should the money in OWNERs possession be insufficient.
x x x x (Underscoring supplied)
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5 Id., at p. 8; NLRC Records, Vol. 1, p. 104.
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6 Ibid.; Vide also NLRC Records, Vol. 1, p. 151.
7 Rollo, pp. 302-316.
8 Id., at pp. 315-316.
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188
I.
. . . IN UPHOLDING THE NATIONAL LABOR RELATIONS
COMMISSION DECISION WHICH IMPOSED THE RELATIONSHIP OF
EMPLOYER-EMPLOYEE BETWEEN PETITIONER AND THE
RESPONDENTS HEREIN.
II.
. . . IN AFFIRMING THE RULING OF THE NATIONAL LABOR
RELATIONS COMMISSION ORDERING THE REINSTATEMENT OF
RESPONDENT AUXTERO DESPITE THE ABSENCE [OF] ANY
FACTUAL FINDING IN THE DECISION THAT PETITIONER
ILLEGALLY TERMINATED HIS EMPLOYMENT.
III.
. . . [IN ANY EVENT IN] COMMITT[ING] A PATENT AND GRAVE
ERROR IN UPHOLDING THE DECISION OF THE NATIONAL LABOR
RELATIONS COMMISSION WHICH COMPELLED THE PETITIONER
TO EMPLOY THE RESPONDENTS AS REGULAR EMPLOYEES DESPITE
THE FACT THAT THEIR SERVICES ARE IN EXCESS OF PETITIONER
COMPANYS OPERATIONAL REQUIREMENTS.14 (Italics supplied)
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12 Rollo, pp. 7-17. Penned by Associate Justice B.A. Adefuin-De la Cruz and
concurred in by then Presiding Justice Salome Montoya and Associate Justice Renato
Dacudao.
13 Id., at p. 29.
14 Id., at pp. 42-43.
189
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.
The Secretary of Labor 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. (Emphasis, capitalization and underscoring supplied)
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of the job, work or service, and the contractual workers engaged by the
contractor or subcontractor to accomplish the job, work or service.
(Emphasis and underscoring supplied)
Section5. Prohibition against labor-only contracting.Labor-only
contracting is hereby declared prohibited. For this purpose, labor-only
contracting shall refer to an arrangement where the contractor or
subcontractor merely recruits, supplies or places workers to perform a job,
work or service for a principal, and any of the following elements are [sic]
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. (Emphasis,
underscoring and capitalization supplied)
In Neri, the Labor Arbiter and the NLRC both determined that
Building Care Corporation had a capital stock of P1 million fully
subscribed and paid for.19 The corporations status as independent
contractor had in fact been previously confirmed in an earlier case20
by this Court which found it to be serving, among others, a
university, an international bank, a big local bank, a hospital center,
government agencies, etc.
In stark contrast to the case at bar, while petitioner steadfastly
asserted before the Labor Arbiter and the NLRC that Synergy has a
substantial capital to engage in legitimate contracting, it failed to
present evidence thereon. As the NLRC held:
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17 Id., at p. 184.
18 G.R. Nos. 97008-09, July 23, 1993, 224 SCRA 717.
19 Id., at p. 720.
20 Citing Associated Labor Unions-TUCP v. National Labor Relations
Commission, G.R. No. 101784, October 21, 1991, Third Division, Minute Resolution.
21 Rollo, p. 285.
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22 Vide Petitioners Motion for Reconsideration of CA Decision of September 29, 2000, id.,
at pp. 425-450.
23 Id., at pp. 348-349; Vide NLRC Records, Vol. 1, pp. 105 and 223; Position Papers for
Petitioner, NLRC Records, Vol. 1, pp. 83-92 and pp. 156-167; Affidavit of Benedicto A.
Auxtero, NLRC Records, Vol. 1, p. 185; Memorandum for petitioner, NLRC Records, Vol. 1,
pp. 206-216.
24 G.R. No. 149011, June 28, 2005, 461 SCRA 392, 425. This Court held:
xxxx
More. Private respondents had been working in the aqua processing plant inside the
SMC compound alongside regular SMC shrimp processing workers performing
identical jobs under the same SMC supervisors. This circumstance is another indicium
of the existence of a labor-only contractorship.
x x x x (Italics supplied)
25 G.R. No. 161115, November 30, 2006, 509 SCRA 332.
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(ii)The contractor does not exercise the right to control over the
performance of the work of the contractual employee. (Emphasis and
CAPITALIZATION supplied)
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26 Section 4(f) of Rule VIII-A of the Implementing Rules of Book III, as added by
Department Order No. 10, Series of 1997, merely provides:
(f) Labor-only contracting prohibited under this Rule is an arrangement where
the contractor or subcontractor merely recruits, supplies or places workers to perform
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a job, work or service for a principal, and the following elements are present:
(i) The contractor or subcontractor does not have substantial capital or
investment to actually perform the job, work or service under its own account
and responsibility; and
(ii) 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.
27 Vide Neri v. National Labor Relations Commission, supra note 18; Aurora
Land Projects Corp. v. National Labor Relations Commission, 334 Phil. 44, 48; 266
SCRA 48, 60 (1997); Escario v. National Labor Relations Commission, G.R. No.
124055, June 8, 2000, 333 SCRA 257; Vinoya v. National Labor Relations
Commission, G.R. No. 126586, February 2, 2000, 324 SCRA 469; National Power
Corporation v. Court of Appeals, G.R. No. 119121, August 14, 1998, 294 SCRA 209.
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and other matters and such person shall not again be employed to perform
the services hereunder without OWNERS
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28 Acevedo v. Advanstar Company, Inc., G.R. No. 157656, November 11, 2005, 474 SCRA
656, 668 citing New Golden City Builders and Development Corporation v. Court of Appeals,
463 Phil. 821; 418 SCRA 411 (2003); San Miguel Corporation v. Aballa, supra note 24 at p.
421.
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29 Rollo, p. 170.
30 NLRC Records, Vol. 1, p. 6.
31 Id., at p. 477.
32 Aboitiz Haulers, Inc. v. Dimapatoi, G.R. No. 148619, September 19, 2006, 502
SCRA 271, 287 citing Guinnux Interiors, Inc. v. National Labor Relations
Commission, 339 Phil. 75, 78-79; 272 SCRA 689, 694 (1997); Manila Water
Company Inc. v. Pea, G.R. No. 158255, July 8, 2004, 434 SCRA 53, 60-61.
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35Floren Hotel v. National Labor Relations Commission, G.R. No. 155264, May
6, 2005, 458 SCRA 128, 144; Masagana Concrete Products v. National Labor
Relations Commission, 372 Phil. 459; 313 SCRA 576 (1999).
36Northwest Tourism Corp. v. Court of Appeals, Former Special Third Division,
G.R. No. 150591, June 27, 2005, 461 SCRA 298, 309; ACD Investigation Security
Agency, Inc. v. Daquera, G.R. No. 147473, March 30, 2004, 426 SCRA 494; Premier
Development Bank v. National Labor Relations Commission, 354 Phil. 851; 293
SCRA 49 (1998).
37 Vide Cinderella Marketing Corporation v. National Labor Relations
Commission, 353 Phil. 284; 291 SCRA 91 (1998); ABS-CBN Broadcasting
Corporation v. Nazareno, G.R. No. 164156, September 2006, 503 SCRA 204;
Kimberly-Clark (Phils.), Inc. v. Secretary of Labor, G.R. No. 156668, 538 SCRA 353,
November 23, 2007 for jurisprudence on regularization differential.
38Star Paper Corporation v. Espiritu, G.R. No. 154006, November 2, 2006, 506
SCRA 556, 568; Tan v. Lagrama, G.R. No. 151228, August 15, 2002, 387 SCRA 393,
406; Prudential Bank and Trust Co. v. Reyes, G.R. No. 141093, February 20, 2001,
352 SCRA 316, 332.
39 Gold City Integrated Port Service, Inc. v. National Labor Relations
Commission, G.R. No. 103560, July 6, 1995, 245 SCRA 627,
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641; Panday v. National Labor Relations Commission, G.R. No. 67664, May 20,
1992, 209 SCRA 122.
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