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PINAGBUKLOD NG MANGGAGAWANG PROMO NG BURLINGAME vs. BURLINGAME CORPORATION

June 15, 2007

Facts: A petition for certification was filed by Lakas sa Industriya ng Kapatirang Haligi ng Alyansa-Pinagbuklod ng Manggagawang Promo ng Burlingame before the Department of Labor and Employment. The filing of certification meant Lakas sa Industriya ng Kapatirang Haligi ng Alyansa- Pinagbuklod ng Manggagawang Promo ng Burlingame’s aim to represent all rank and file employees of the respondent, which counts to 70 all in all. The petitioner seeks to be recognized by the employer, Burlingame Corporation, as a collective bargaining agent or the alternative, that a certification/consent election be held among regular rank and file employees. The respondent filed a motion for the petition’s dismissal, arguing that the members of LIKHA-PMPB form no employer-employee relationship with them. The company also argues that the members of LIKHA-PMPB are actually employees of F. Garil Manpower Services, a duly licensed local employment agency.

Renato Panungo, the med-ariter, dismissed the petition, stating that there lacks an employee-employer relationship. The decision forced LIKHA-PMPB to file a appeal before the Secretary of Labor and Employment. The Secretary decided in favour of the petitioner. The company appealed to

the Court of Appeals which reversed the Secretary’s decision. The petitioner filed a motion of reconsideration before the same court, but was denied. Thus, this petition before the Supreme Court.

Issue: Whether or not the members of Lakas sa Industriya ng Kapatirang Haligi ng Alyansa-Pinagbuklod ng Manggagawang Promo ng Burlingame form an employee-employer relationship with Burlingame Corporation because they’re employees of F. Garil Manpower Services, an independent contractor.

Held: Yes. Employee-employer relationship does exist. Job contracting is permissible only if the following conditions are met: 1) the contractor carries on an independent business and undertakes the contract work on his own account under his own responsibility according to his own manner and method, free from the control and direction of his employer or principal in all matters connected with the performance of the work except as to the results thereof; and 2) the contractor has substantial capital or investment in the form of tools, equipment, machineries, work premises, and other materials which are necessary in the conduct of the business. Under this circumstance, there is no doubt that F. Garil was engaged in labor-only contracting, and as such, is considered merely an agent of Burlingame. In labor-only contracting, the law creates an employer- employee relationship to prevent a circumvention of labor laws. The contractor is considered merely an agent of the principal employer and the latter is responsible to the employees of the labor-only contractor as if such employees had been directly employed by the principal employer. Since F. Garil is a labor-only contractor, the workers it supplied should be considered as employees of Burlingame in the eyes of the law.

Aliviado, et al. vs. Procter & Gamble Philippines and PROMM-GEM, Inc. G.R. No. 160506

JOEB M. ALIVIADO, ARTHUR CORPUZ, ERIC ALIVIADO, et al. vs. PROCTER & GAMBLE PHILS., INC., and PROMM-GEM INC.

June 6, 2011

Facts: Aliviado and co-petitioners worked as merchandisers for Procter & Gamble. They had employment contracts with either Promm-Gem or SAPS for more or less five months at a time. Their work entails being assigned at different outlets, supermarkets, and stores where they handled all the products of Procter & Gamble. They receive their wages from Promm-Gem or SAPS. SAPS and Promm-Gem imposed disciplinary measures on merchandisers who commit habitual absenteeism, dishonesty, or changing day-off without prior notice. Procter & Gamble, meanwhile, manufactures and produces different consumer and health products,

which it sells on a wholesale basis to various supermarkets and distributors. Procter and Gamble entered into a contract with Promm-Gem and SAPS for the promotion and merchandising of its products.

The petitioners filed a complaint against Procter & Gamble for regularization, service incentive leave pay and other benefits with damages. It was later amended after their dismissal from work. The Labor Arbiter, however, dismissed the complaint for lack of merit and ruled that no employer-employee relationship between petitioners and Procter & Gamble. The four-fold test, when applied, seems to not apply at this instance, the Labor Arbiter ruled. It was also found that Promm-Gem and SAPS were legitimate independent job contractors. An appeal was filed before the National Labor Relations Commission which ruled in favour of Procter & Gamble. A motion for reconsideration was subsequently filed, but was denied. When the petitioners filed a petition before the Court of Appeals, it was denied. Thus, this petition before the Supreme Court.

Issue: Whether or not Promm-Gem and SAPS are labor-only contractors. Held: No. Promm-Gem cannot be considered as a labor-only contractor. It is a legitimate independent contractor. The law and its implementing rules allow contracting arrangements for the performance of specific jobs, works or services. Indeed, it is management prerogative to farm out any of its activities, regardless of whether such activity is peripheral or core in nature. However, in order for such outsourcing to be valid, it must be made to an independent contractor because the current labor rules expressly prohibit labor-only contracting. To emphasize, there is labor-only contracting when the contractor or sub-contractor merely recruits, supplies or places workers to perform a job, work or service for a principal and any of the following elements are 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.

Desirable – Unnecessary

Coca Cola Bottlers Philippines, Inc. vs. NLRC G.R. No. 120466

COCA COLA BOTTLERS PHILS., INC. vs.

NATIONAL LABOR RELATIONS COMMISSION and RAMON B. CANONICATO

Facts: Coca-Cola entered into a contract of janitorial services with Bacolod Janitorial Services (BJS) stipulating that Coca-Cola desires to engage the services of BJS, as an independent contractor, to perform and provide for the maintenance, sanitation, and cleaning services. Every year thereafter a service contract was entered into between the parties under similar terms and conditions. Canonicato was hired by Coca Cola as a casual employee and assigned him to the bottling crew as a substitute for absent employees. A year after, Coca-Cola terminated Canonicato’s casual employment. Later that year, the latter was re-hired, but this time as a painter in contractual projects which lasted from 15-30 days. Thereafter, Canonicato was hired by BJS as a janitor and assigned him to Coca-Cola considering his familiarity with its premises but his services were again terminated a year later.

Based on the information that Coca-Cola employed previous BJS employees who filed a complaint against the company for regularization pursuant to a compromise agreement, Canonicato filed the same before the Labor Arbiter. Without notifying BJS, Canonicato no longer reported for work and sent his sister, Rowena, to claim his salary on his behalf. BJS released his salary but advised Rowena to tell him to report for work. Canonicato met with the proprietress of BJS which offered him other assignments in other firms but Canonicato refused. He amended his complaint citing in addition as grounds for his complaint – illegal dismissal and underpayment of wages. BJS sent him a letter advising him to report for work within 3 days, otherwise, it’ll be considered as if he abandoned his job.

The Labor Arbiter ruled that there was no employer-employee relationship between Coca-Cola and Canonicato because BJS was Canonicato’s real employer; BJS was a legitimate job contractor, hence, any liability of Coca Cola as to Canonicato’s salary or wage differentials was solidary with BJS; Coca-Cola and BJS must jointly and severally pay Canonicato his wage differentials. Other claims were dismissed on the ground of lack of employer-employee relationship. The NLRC rejected on appeal the decision of the Labor Arbiter on the ground that the janitorial services of Canonicato were found to be necessary or desirable in the usual business or trade of Coca-Cola.

Issue: Whether or not janitorial services of Canonicato were necessary and desirable in the usual trade and business of Coca-Cola.

Held: It was held that at the outset of the disposition of the NLRC that janitorial services are necessary and desirable to the trade or business of Coca-Cola. However, it is inconsistent in the court’s ruling in Kimberly Independent Labor Union v. Drilon where it took judicial notice of the practice adopted in several government and private institutions and industries of hiring janitorial services on an independent contractor basis. Hence, court ruled that although janitorial services may be considered

directly related to the principal business of an employer, as with every business, we deemed them unnecessary in the conduct of the employer’s principal business.

Labor Contractor Only; Requisites and Prohibition Manila Water Co., Inc. vs. Pena

G.R. No. 158255

MANILA WATER COMPANY, INC. vs.

HERMINIO D. PENA, ESTEBAN B. BALDOZA, JORGE D. CANONIGO, JR., IKE S. DELFIN, RIZALINO M. INTAL, REY T. MANLEGRO, JOHN L. MARTEJA, MARLON B. MORADA, ALLAN D. ESPINA, EDUARDO ONG, AGNESIO D. QUEBRAL, EDMUNDO B. VICTA, VICTOR C. ZAFARALLA, EDILBERTO C. PINGUL and FEDERICO M. RIVERA

July 8, 2004

Facts: Manila Water Company, Inc. is one of the two private concessionaires contracted by the Metropolitan Waterworks and Sewerage System (MWSS) to manage the water distribution system in the East Zone of Metro Manila, pursuant to Republic Act No. 8041, otherwise known as the National Water Crisis Act of 1995. Under the Concession Agreement, MWC undertook to absorb former employees of the MWSS whose names and positions were in the list furnished by the latter, while the employment of those not in the list was terminated on the day MWC took over the operation of the East Zone, Private respondents, being contractual collectors of the MWSS, were among the 121 employees not included in the list; nevertheless, MWC engaged their services without written contract from August 1, 1997 to August 31, 1997. Thereafter, on September 1, 1997, they signed a three-month contract to perform collection services for eight branches of MWC in the East Zone.

Before the end of the three-month contract, the 121 collectors incorporated the Association Collectors Group, Inc. (ACGI), which was contracted by MWC to collect charges for the Balara Branch. Subsequently, most of the 121 collectors were asked by MWC to transfer to the First Classic Courier Services, a newly registered corporation. Only private respondents herein remained with ACGI. MWC continued to transact with ACGI to do its collection needs until February 8, 1999, when it terminated its contract with ACGI.

Private respondents filed a complaint for illegal dismissal and money claims against MWC, contending that they were its employees as all the methods and procedures of their collections were controlled by the latter. On the other hand, MWC asserts that private respondents were employees

of ACGI, an independent contractor. It maintained that it had no control and supervision over private respondents manner of performing their work except as to the results. Thus, it did not have an employer-employee relationship with the private respondents, but only a service contractor- client relationship with ACGI.

Labor Arbiter Carpio rendered a decision finding the dismissal of private respondents illegal. He held that private respondents were regular employees of MWC not only because the tasks performed by them were controlled by it but, also, the tasks were obviously necessary and desirable to MWC’s principal business. Both parties appealed to the NLRC, which reversed the decision of the Labor Arbiter. Private respondents filed a petition for certiorari with the Court of Appeals, contending that the NLRC acted with grave abuse of discretion amounting to lack or excess of jurisdiction when it reversed the decision of the Labor Arbiter. The Court of Appeals reversed the decision of the NLRC and reinstated with modification the decision of the Labor Arbiter. It held that MWC deliberately prevented the creation of an employment relationship with the private respondents; and that ACGI was not an independent contractor. It likewise denied petitioners motion for reconsideration.

Issue: Whether or not ACGI is an independent contractor or a labor only contractor.

Held: The ACGI is a labor only contractor. Therefore, private respondents were considered employees of petitioner. Under Section 5, Department Order No. 18-02, Rules Implementing Articles 106-109 of the Labor Code, a labor-only contractor is one where the contractor recruits, supplies or places workers to perform job, work or service for a principal, and any of the following elements is 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. The requisites were all present in the case of ACGI: they have no substantial capitalization and they did not carry on an independent business or undertake the performance of its service contract according to its manner and method. In labor-only contracting, the contractor is merely an agent of the principal employer. Effect of Finding

San Miguel Corporation vs. Aballa G.R. No. 149011

SAN MIGUEL CORPORATION vs.

PROSPERO A. ABALLA, BONNY J. ABARING, EDWIN M. ADLA-ON, ALVIN C. ALCALDE, CELANIO D. ARROLLADO, EDDIE A.

ARROLLADO, et al., and the COURT OF APPEALS June 28, 2005

Facts: Petitioner San Miguel Corporation (SMC) and Sunflower Multi- Purpose Cooperative (Sunflower) entered into a one-year Contract of Services commencing on January 1, 1993, to be renewed on a month to month basis until terminated by either party. Pursuant to the contract, Sunflower engaged private respondents to, as they did, render services at SMC’s Bacolod Shrimp Processing Plant at Sta. Fe, Bacolod City. The contract was deemed renewed by the parties every month after its expiration on January 1, 1994 and private respondents continued to perform their tasks until September 11, 1995. In July 1995, private respondents filed a complaint before the NLRC praying to be declared as regular employees of SMC, with claims for recovery of all benefits and privileges enjoyed by SMC rank and file employees. Private respondents subsequently filed on September 25, 1995 an Amended Complaint4 to include illegal dismissal as additional cause of action following SMC’s closure of its Bacolod Shrimp Processing Plant on September 15, 19955 which resulted in the termination of their services. By Decision of September 23, 1997, Labor Arbiter Drilon dismissed private respondents’ complaint for lack of merit. Private respondents appealed to the NLRC. By Decision of December 29, 1998, the NLRC dismissed the appeal for lack of merit, it finding that third party respondent Sunflower was an independent contractor in light of its observation that "[i]n all the activities of private respondents, they were under the actual direction, control and supervision of third party respondent Sunflower, as well as the payment of wages, and power of dismissal.

Private respondents filed a petition for certiorari before the Court of Appeals (CA) after NLRC denied its Motion for Reconsideration. By Decision of February 7, 2001, the appellate court reversed the NLRC decision and accordingly found the private respondents as employees of SMC ordering the latter to pay the respondents, among others, separation pay with full backwages and other benefits or monetary benefits given to regular SMC employees. SMC’s Motion for Reconsideration having been denied for lack of merit by Resolution of July 11, 2001, it comes before this Court via the present petition for review on certiorari.

Issue: Whether or not respondents are employees of SMC in view of Sunflower acting as labor-only contractor.

Held: Yes. Section 5. 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 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. What appears is that Sunflower does not have substantial capitalization or investment in the form of tools, equipment, machineries, work premises and other materials to qualify it as an independent contractor. Sunflower, during the existence of its service contract with respondent SMC, did not own a single machinery, equipment, or working tool used in the processing plant. Everything was owned and provided by respondent SMC. The lot, the building, and working facilities are owned by respondent SMC. The machineries and equipments like washer machine, oven or cooking machine, sizer machine, freezer, storage, and chilling tanks, push carts, hydraulic jack, tables, and chairs were all owned by respondent SMC. All the boxes, trays, molding pan used in the processing are also owned by respondent SMC. The gloves and boots used by the complainants were also owned by respondent SMC. Even the mops, electric floor cleaners, brush, hose, soaps, floor waxes, chlorine, liquid stain removers, Lysol and the like used by the complainants assigned as cleaners were all owned and provided by respondent SMC. Furthermore, Sunflower did not carry on an independent business or undertake the performance of its service contract according to its own manner and method, free from the control and supervision of its principal, SMC, its apparent role having been merely to recruit persons to work for SMC.

With regard to finding of facts, the general rule, no doubt, is that findings of facts of an administrative agency which has acquired expertise in the particular field of its endeavor are accorded great weight on appeal. The rule is not absolute and admits of certain well-recognized exceptions, however. Thus, when the findings of fact of the labor arbiter and the NLRC are not supported by substantial evidence or their judgment was based on a misapprehension of facts, the appellate court may make an independent evaluation of the facts of the case.

That there has been substantial compliance with the requirement on verification of position papers under Section 3, Rule V of the 1990 NLRC Rules of Procedure is not difficult to appreciate in light of the provision of