Labor Standards

Case Assignment No. 6

1. Virginia G. Neri, et. al vs. NLRC, et. Al

G.R. Nos. 97008-09, July 23, 1993

2. Philippine Fuji Xerox Corporation, et. Al vs. NLRC, et.al

G.R. No. 111501, March 5, 1996

3. Meralco Industrial Engineering Services, Corp. vs. NLRC, et. al.,

G.R. No. 145402, March 14, 2008

4. Abing vs. NLRC

G.R. No. 185345, September 10, 2014

5. Alilin vs. Petron Corporation

G.R. No. 177592, June 9, 2014

6. Petron Corporation vs. Caberte

G.R. No. 182255, June 15, 2015

Read:

Arts. 101-129
D.O. 174-17
VIRGINIA G. NERI and JOSE CABELIN, petitioners, vs. NATIONAL LABOR RELATIONS
COMMISSION FAR EAST BANK & TRUST COMPANY (FEBTC) and BUILDING CARE
CORPORATION, respondents. G.R. Nos. 97008-09 July 23, 1993

Facts:
 Petitioners instituted complaints against FEBTC and BCC to compel the bank to accept
them as regular employees and for it to pay the differential between the wages being
paid them by BCC and those received by FEBTC employees with similar length of service.
 They contended that BCC in engaged in labor-only contracting because it failed to
adduce evidence purporting to show that it invested in the form of tools, equipment,
machineries, work premises and other materials which are necessary in the conduct of its
business.
 Moreover, petitioners argue that they perform duties which are directly related to the
principal business or operation of FEBTC.

 It is well-settled that there is labor-only contracting where: (a) 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, (b) the workers
recruited and placed by such person are performing activities which are directly related
to the principal business of the employer.

Ruling:

 The Supreme Court ruled that respondent BCC need not prove that it made investments
in the form of tools, equipment, machineries, and work premises, among others,
because it has established that it has sufficient capitalization.

 This fact was both determined by the Labor Arbiter and the NLRC as BCC had a capital
stock of P1 million fully subscribed and paid for. BCC is therefore a highly capitalized
venture and cannot be deemed engaged in labor-only contracting.

 While there may be no evidence that it has investment in the form of tools, equipment,
machineries, work premises, among others, it is enough that it has substantial capital,
as was established before the Labor Arbiter as well as the NLRC.

 The law does not require both substantial capital and investment in the form of tools,
equipment, machineries, etc. This is clear from the use of the conjunction "or" instead of
“and”. Having established that it has substantial capital, it was no longer necessary for
BCC to further adduce evidence to prove that it does not fall within the purview of
"labor-only" contracting.

 There is even no need for it to refuse petitioners' contention that the activities they
perform are directly related to the principal business of respondent bank.

 On the other hand, the Court has already taken judicial notice of the general practice
adopted in several government and private institutions and industries of hiring
independent contractors to perform special services.

 These services range from janitorial, security and even technical or other specific
services such as those performed by petitioners Neri and Cabelin. While these services
may be considered directly related to the principal business of the employer,
nevertheless, they are not necessary in the conduct of the principal business of the
employer. Petition is dismissed.
PHILIPPINE FUJI XEROX CORPORATION, JENNIFER A. BERNARDO and ATTY. VICTORINO
LUIS vs. NATIONAL LABOR RELATIONS COMMISSION, PAMBANSAN KILUSAN NG
PAGGAWA, (KILUSAN)-TUCP, PHILIPPINE XEROX EMPLOYEES UNION-KILUSAN AND
PEDRO GARADO
G.R. No. 111501 MARCH 5, 1996

FACTS OF THE CASE

Petitioner Fuji Xerox entered into an agreement under which Skillpower, Inc. supplied
workers to operate copier machines of Fuji Xerox as part of their "Xerox Copier Project".
Respondent Garado was assigned as key operator at Fuji Xerox Buendia Branch.

In 1983, Garado went on leave and was replaced by a substitute. However, upon his
return he found out that there was a spoilage of over 600 copies. He tried to talk to the service
technician to stop the meter of the machine since he was afraid that he would be blamed for the
spoilage. The technician refused, and later on Fuji Xerox learned about the incident. Fuji Xerox
reported this to Skillpower, Inc. Skillpower, Inc. asked Garado to explain the incident and was put
on suspension. Garado filed a complaint for illegal dismissal.

The Labor Arbiter ruled that Garado was an employee of Skillpower, Inc. this dismissing
the complaint for illegal dismissal against Fuji Xerox. LA said that Skillpower exercised control
and supervision of Garado's work although the later receives his salary from Fuji Xerox.

On appeal, the NLRC found that Garado was an employee of Fuji Xerox and was illegally
dismissed by the latter. NLRC said that although Garado's request was wrongful it was not the
appropriate penalty. NLRC also said that although Garado was suspended by Skillpower, Inc. the
company acted at the behest of Fuji Xerox. The power of control and supervision was with Fuji
Xerox and also the payment of respondent's salary. Skillpower, Inc. merely acted as a paymaster-
agent of Fuji Xerox and that Skillpower, Inc is a labor-only contractor. Thus, Garado is employed
by Fuji Xerox.

Fuji Xerox contends that Skillpower, Inc. is an independent contractor. Thus, this appeal
to the SC.

ISSUE
1. Whether or not Garado is an employee of Fuji Xerox or of Skillpower, Inc.

RULING
ISSUE#1 Garado is an employee of Fuji Xerox

The Agreement between petitioner Fuji Xerox and Skillpower, Inc. provides that Skillpower, Inc. is
an independent contractor and that the workers hired by it “shall not, in any manner and under
any circumstances, be considered employees of [the] Company, and that the Company has no
control or supervision whatsoever over the conduct of the Contractor or any of its workers in
respect to how they accomplish their work or perform the Contractor’s obligations under this
AGREEMENT.”

In Tabas v. California Manufacturing Company, Inc.,[9] this Court held on facts similar to those in
the case at bar:

There is no doubt that in the case at bar, Livi performs “manpower services,”
meaning to say, it contracts out labor in favor of clients. We hold that it is one
notwithstanding its vehement claims to the contrary, and notwithstanding the
provision of the contract that it is “an independent contractor.” The nature of one’s
business is not determined by self-serving appellations one attaches thereto but
 by the tests provided by statute and prevailing case law. The bare fact that Livi
maintains a separate line of business does not extinguish the equal fact that it
has provided California with workers to pursue the latter’s own business. In this
connection, we do not agree that the petitioners had been made to perform
activities “which are not directly related to the general business of
manufacturing,” California’s purported “principal operation activity.” The
petitioners had been charged with “merchandising [sic] promotion or sale of the
products of [California] in the different sales outlets in Metro Manila including task
and occasional [sic] price tagging,” an activity that is doubtless, an integral part of
the manufacturing business. It is not, then, as if Livi had served as its
(California’s) promotions or sales arm or agents, or otherwise, rendered a piece
of work it (California) could not have itself done; Livi as a placement agency, had
simply supplied it with the manpower necessary to carry out its (California’s)
merchandising activities, using its (California’s) premises and equipment.

xxx xxx xxx

The fact that the petitioners have allegedly admitted being Livi’s “direct
employees” in their complaints is nothing conclusive. For one thing, the fact that
the petitioners were (are), will not absolve California since liability has been
imposed by legal operation. For another, and as we indicated, the relations of
parties must be judged from case to case and the decree of law, and not by
declaration of parties.

Skillpower, Inc. is, therefore, a “labor-only” contractor and Garado is not its employee. No
grave abuse of discretion can thus be imputed to the NLRC for declaring petitioner Fuji Xerox
guilty of illegal dismissal of private respondent.
2. Meralco Industrial Engineering Services, Co., vs. NLRC

Facts:

Meralco and the private respondent executed a contract where the latter
would supply the petitioner janitorial services, which include labor, materials, tools
and equipment, as well as supervision of its assigned employees, at Meralco’s
Rockwell Thermal Plant in Makati City.

The 49 employees lodged a Complaint for illegal deduction, underpayment,

non-payment of overtime pay, legal holiday pay, premium pay for holiday and rest
day and night differentials against the private respondent before the LA.

By virtue of RA 6727, the contract between Meralco and the private

respondent was amended to increase the minimum daily wage per employee. 2
months after the amendment of the contract, Meralco sent a letter to private
respondent informing them that at the end of business hours of Jan. 31, 1990, it
would be terminating contract entered into with the private respondents. On the
said date, the complainants were pulled out from their work. The complainants
amended their complaint to include the charge of illegal dismissal and to implead
Meralco as a party respondent.

The LA dismissed the complaint. On appeal, the NLRC affirmed the decision
of the LA with the modification that Meralco was solidarily liable with the private
respondents. The CA on the other hand, modified the Decision of the NLRC and held
Meralco to be solidarily liable with the private respondent for the satisfaction of the
laborer’s separation pay.

Issue:
Whether Meralco should be liable for the payment of the dismissed laborer’s
separation pay.

Decision:

Petition GRANTED, Judgment and Resolution Reversed and SET ASIDE.

The CA used Art. 109 of the Labor Code to hold Meralco solidarily liable with the
private respondent as regard to the payment of separation pay. However, the SC
ruled that Art. 109 should be read in relation to Art. 106 and 107 of the LC. Thus, an
indirect employer can only be held liable with the independent contractor or
subcontractor in the event that the latter fails to pay the wages of its employees.
While it is true that the petitioner was the indirect employer of the complainants, it
cannot be held liable in the same way as the employer in every respect. Meralco may
be considered an indirect employer only for purposes of unpaid wages.

The only instance when the principal can also be held liable with the independent
contractor or subcontractor for the backwages and separation pay of the latter’s
employees is when there is proof that the principal conspired with the independent
contractor or subcontractor in the illegal dismissal of the employees. In the present
case, there is no allegation, much less proof presented, that the petitioner conspired
with private respondents in the illegal dismissal of the latter’s employees; hence, it
cannot be held liable for the same.

Neither can the liability for the separation pay of the complainants be extended to
the petitioner based on contract. Contract Order No. 166-84 executed between the
petitioner and the private respondents contains no provision for separation pay in
the event that the petitioner terminates the same. It is basic that a contract is the
law between the parties and the stipulations therein, provided that they are not
contrary to law, morals, good customs, public order or public policy, shall be binding
as between the parties. Hence, if the contract does not provide for such a liability,
this Court cannot just read the same into the contract without possibly violating the
intention of the parties.

Although petitioner is not liable for complainants’ separation pay, the Court
conforms to the consistent findings in the proceedings below that the petitioner is
solidarily liable with the private respondents for the judgment awards for
underpayment of wages and non-payment of overtime pay.

In this case, however, private respondents had already posted a surety bond in an
amount sufficient to cover all the judgment awards due the complainants, including
those for underpayment of wages and non-payment of overtime pay. The joint and
several liabilitnvfvy of the principal with the contractor and subcontractor were
enacted to ensure compliance with the provisions of the Labor Code, principally
those on statutory minimum wage. This liability facilitates, if not guarantees,
payment of the workers’ compensation, thus, giving the workers ample protection as
mandated by the 1987 Constitution. With private respondents’ surety bond, it can
therefore be said that the purpose of the Labor Code provision on the solidary
liability of the indirect employer is already accomplished since the interest of the
complainants are already adequately protected. Consequently, it will be futile to
continuously hold the petitioner jointly and solidarily liable with the private
respondents for the

But while this Court had previously ruled that the indirect employer can recover
whatever amount it had paid to the employees in accordance with the terms of the
service contract between itself and the contractor, the said ruling cannot be applied
in reverse to this case as to allow the private respondents (the independent
contractor), who paid for the judgment awards in full, to recover from the petitioner
(the indirect employer).
There Is No Employer-Employee Relationship Under An Arrangement
Whereby A Principal Agrees To Put Out Or Farm Out With A Contractor Or
Subcontractor The Performance Or Completion Of A Specific Job, Work Or
Service Within A Definite Or Predetermined Period, Regardless Of Whether
Such Job, Work Or Service Is To Be Performed Or Completed Within Or
Outside The Premises Of the Principal…

THIRD DIVISION, G.R. NO. 185345, SEPTEMBER 10, 2014,RONNIE L.

ABING, PETITIONER, VS. NATIONAL LABOR RELATIONS COMMISSION,
ALLIED BANKING CORPORATION, FACILITATORS GENERAL SERVICES
AND MARILAG BUSINESS AND INDUSTRIAL MANAGEMENT SERVICES,
INC., RESPONDENTS
The Facts:
 Ronnie Abing (petitioner) applied for employment with Allied Banking
Corporation, but was instructed to report to Marilag Business and
Industrial Management Services Inc (MBIMSI) (Marilag), which had a
service contract with Allied Bank.
 He filled up an application form with Marilag, passed its exam, and was
told to report to Allied Bank’s legal department, where he was assigned to
perform various tasks, and issued an Allied Bank ID as its contractual
employee.
 At the termination of Marilag’s service contract with Allied Bank, Ronnie
was instructed to report to the new service provider, Facilitators General
Services Inc. (FGSI), where he again filled up an application form and told
to report to Allied Bank. In October, 2003, Allied Bank terminated its
services with FGSI and Ronnie was told to stop reporting for work at Allied
Bank’s main office by October 17, 2003.
 Claiming that he was illegally terminated by Allied Bank which is his
employer, Ronnie filed a complaint for illegal dismissal against the bank,
averring that Allied Bank’s service contracts with Marilag and FGSI were
mere schemes to keep him a contractual employee and prevent his
regularisation, despite the fact that he had served the bank for many years
and performed duties which were necessary and desirable to the business
of Allied Bank.
  Allied Bank denied liability, pointing to Marilag and FGSI as Ronnie’s
employers under their service agreement; not being its employee, the
bank could not have dismissed Ronnie. Marilag manifested that Ronnie
executed a quitclaim in its favour when its service contract with Allied Bak
was terminated; by then, Ronnie had resumed reporting to the bank.
FGSI, on the other hand claimed that it is a legitimate independent job
contractor. When its service contract with Allied Bank was terminated,
Ronnie was re-assigned to another workplace, but he refused to be re-
assigned, insisting on continuing his employment with Allied Bank. The
CA affirmed the NLRC decision finding that FGSI is a legitimate job
contractor pursuant to Section 4(a) of Department Order No. 18-02 of the
Department of Labor and Employment (DOLE). Thus, Ronnie filed the
instant appeal before the Supreme Court to assail the CA ruling.
The Issue:
Whether or not Ronnie is an employee of Allied Bank.
The Ruling:
The petition is devoid of merit.
It is settled that a review of the decision of the CA in a labor case under Rule 45
of the Rules of Court is limited only to a review of errors of law imputed to the
CA. We reiterate what was elucidated in Bani Rural Bank, Inc. v. De
Guzman1 that:
In a Rule 45 review, we consider the correctness of the assailed CA decision, in
contrast with the review for jurisdictional error that we undertake under Rule 65.
Furthermore, Rule 45 limits us to the review of questions of law raised against
the assailed CA decision. In ruling for legal correctness, we have to view the CA
decision in the same context that the petition for certiorari it ruled upon was
presented to it; we have to examine the CA decision from the prism of whether it
correctly determined the presence or absence of grave abuse of discretion in the
NLRC decision before it, not on the basis of whether the NLRC decision on the
merits of the case was correct. In other words, we have to be keenly aware that
the CA undertook a Rule 65 review, not a review on appeal, of the NLRC
decision challenged before it. This is the approach that should be basic in a Rule
45 review of a CA ruling in a labor case. In question form, the question to ask is:
Did the CA correctly determine whether the NLRC committed grave abuse of
discretion in ruling on the case?2(Emphasis supplied)
AVELINO S. ALILIN et al. vs PETRON CORP G.R. NO. 177592, 2014-06-09

FACTS:
 Petron is a domestic corporation engaged in the oil business. In 1968,
Romualdo D. Gindang Contractor, owned and operated by Romualdo D.
Gindang, started recruiting laborers for fielding to Petron’s Mandaue Bulk
Plant.
 When Romualdo died in 1989, his son Romeo, through Romeo D. Gindang
Services (RDG), took over and continued to provide manpower services to
Petron.
 Petron and RDG entered into a Contract for Services from June 1, 2000 to May
31, 2002, to provide Petron with janitorial, maintenance, tanker receiving,
packaging and other utility services. This was extended until Sept 30, 2002.
Upon expiration, no renewal was done and workers were dismissed.
 Petitioners filed an illegal dismissal complaint against Petron alleging that
they were barred from continuing their services on Oct 16, 2002.
 Petitioners claim that although it was RDG who hired them and paid their
salaries, RDG is a labor-only contractor, acting as an agent of Petron, their
true employer.
 Claiming to be regular employees, petitioners asserted that their dismissal
allegedly in view of the expiration of the service contract between Petron and
RDG is illegal.
 RDG denied liability over petitioners’ claim of illegal dismissal while also
corroborating petitioners’ claim that they are regular employees of Petron.
 Petron, on the other hand, maintained that RDG is an independent contractor
and the real employer of the petitioners. It was RDG, which hired and
selected petitioners, paid their salaries and wages, and directly supervised
their work.
 Both Labor Arbiter and NLRC ruled that petitioners are Petron’s regular
employees. CA however ruled otherwise stating that there is no employer-
employee relationship, and that RDG is in fact an independent labor
contractor with sufficient capitalization and investment. The Motion for
Reconsideration by Petitioners was dismissed, hence this petition.

ISSUE: (1) Whether RDG is a a labor-only contractor (2) Whether Petron is liable for
petitioners’ dismissal

RULING:
(1)
 YES. The contractor is always presumed to be a labor-only contractor, unless
such contractor overcomes the burden of proving otherwise. However,
where the principal is the one claiming that the contractor is legitimate, said
principal (Petron) has the burden of proving so. In this case, the
presumption that RDG is a labor-only contractor stands, due to the failure of
 Petron to discharge the burden of proving otherwise. The Court also found
that the works performed were directly related to Petron’s business negating
further Petron’s claim that RDG is independent.
(2)
 YES. “[A] finding that a contractor is a ‘labor- only’ contractor is equivalent to
declaring that there is an employer-employee relationship between the
principal and the employees of the supposed contractor.” In this case, the
employer-employee relationship becomes all the more apparent due to the
presence of the power of control on the part of Petron over RDG. Petron
therefore, being the principal employer and RDG, being the labor-only
contractor, are solidarily liable for petitioners’ illegal dismissal and monetary
claims.