Aliviado, et al. vs. P&G Phil., Inc. & PROMM-GEM, Inc. G.R.

160506 March 9, 2010

Facts:

Herein petitioners are contract employee workers under Promm-Gem or SAPS for a period of more or less five months at a time. They have individually signed contracts with these agencies. They receive their wages not from P&G but from the agencies they have contracted with. Petitioners were sent to different branches of P&G as merchandisers. Later, they filed a complaint against P&G for regularization, service incentive leave pay and other benefits with damages. The complaint was later changed including the dismissal of the lower court. The complaint was dismissed due to the lack of merit. The contention of the labor arbiter is that there is no employer-employee relationship between P&G and the petitioners since the contract that was signed by the employees was not between them and P&G but between the petitioners and Promm-Gem or SAPS. The payment of wages, the power of dismissal control with respect to the means and methods by which their work was accomplished were exercised by the agencies they signed the contract with. Both Promm-Gem and SAPS were two legitimate and individual contractors of such employees, therefore there is no arguments that they have legally signed a contract with them and not with P&G. The petitioners appealed to the NLRC and the labor arbiter's decision was upheld. They then filed a petition for certiorari with the CA, alleging grave abuse of discretion amounting to lack or excess of jurisdiction on the part of the labor arbiter and the NLRC. The said petition was simply denied as it was dismissed by the CA.

Issues: 1.) Is P&G the employer of petitioners? 2.) Were petitioners illegally dismissed?

Held: (a) that Promm-Gem, Inc. (Promm-Gem) is a legitimate independent contractor; (b) that Sales and Promotions Services (SAPS) is a labor-only contractor consequently its employees are considered employees of Procter & Gamble Phils., Inc. (P&G); (c) that Promm-Gem is guilty of illegal dismissal; (d) that SAPS/P&G is likewise guilty of illegal dismissal; (e) that

petitioners are entitled to reinstatement; and (f) that the dismissed employees of SAPS/P&G are entitled to moral damages and attorneys fees there being bad faith in their dismissal. Article 106 defines labor-only contracting, viz: 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. Promm-Gem cannot be held as labor-only since they have a substantial amount of capital and therefore they are the ones responsible for the illegal dismissal of the employers that have contracted with them. On the other hand, SAPS does not have the same amount of capital and is held by the court as labor-only. Therefore, the employees who have contracted with SAPS are employees of P&G. The laborers were illegally dismissed as the contentions of P&G was that the petitioners were dismissed due to misconduct. Misconduct to be valid just cause for dismissal, such misconduct (a) must be serious; (b) must relate to the performance of the employees duties; and (c) must show that the employee has become unfit to continue working for the employer. As the said petitioners contracted Promm-Gem may have erroneously sued P&G when they were supposed to sue Promm-Gem, but it should not be taken as a wrongful intent against P&G. A misconduct which is not serious or grave, as that existing in the instant case, cannot be a valid basis for dismissing an employee. With regard to the petitioners placed with P&G by SAPS, they were given no written notice of dismissal. In termination cases, the burden of proof rests upon the employer to show that the dismissal is for just and valid cause. In this case at bar, P&G failed to discharge the burden of proving the legality of the dismissals of those petitioners who are considered its employees. Hence, the dismissals necessarily were not justified and are therefore illegal.