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144672, 10 July
2003
FACTS:
Complainants are workers of SMC involved in the washing and
segregating of various kinds of empty bottles used by SMC to sell
and distribute its beer beverages to the consuming public. It
appears that SMC entered into a contract with MAERC, engaging the
services of the latter, such contract being renewed from time to
time. When the service contract was terminated, the workers filed
a complaint for illegal dismissal, underpayment of wages and non-
payment of other benefits. They claimed that SMC was their real
employer and that MAERC was merely used as a tool by SMC to avoid
its liability under the Labor Code. The Labor Arbiter dismissed
the complaints for illegal dismissal holding that MAERC is an
independent contractor. The NLRC however, ruled that MAERC was a
labor-only contractor and that complainants were SMC employees.
This decision was affirmed by the CA.
ISSUES:
1. WON the complainants are employees of SMC or MAERC
2. WON MAERC is a labor-only contractor or an independent
contractor
RULING:
1. The complainants are employees of SMC. In ascertaining an
employer-employee relationship, the ff. factors are
considered: (1) the selection and engagement of employee, (2)
the payment of wages, (3) the power of dismissal, and (4) the
power to control an employee’s conduct. In this case, the
evidence disclosed that SMC played a large and indispensable
part in the hiring of MAERC’s workers. Majority of the
complainants were already working for SMC when the workers
were instructed to apply for work in MAERC to make it appear
that complainants were hired by MAERC. As for the payment of
wages, it was revealed that SMC assumed the responsibility
of paying for the mandated overtime, holiday , rest day and
13th month pay of the workers. As to the power of control,
while the contract between SMC and MAERC provided that SMC
has no control or supervision whatsoever over the conduct of
the workers in respect to how they perform their task, there
are indicators that SMC actively supervised the complainants.
They also asserted their right to discipline the workers by
recommending the penalty to be imposed due to infractions
committed by some workers. With these facts and
circumstances, the court thus held that the complainants are
employees of SMC