Part 2- Job Contracting & Labor Only Contracting

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010 ASIAN ALCOHOL CORPORATION, petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION,

FOURTH DIVISION, CEBU CITY and ERNESTO A. CARIAS, ROBERTO C. MARTINEZ, RAFAEL H.

SENDON, CARLOS A. AMACIO, LEANDRO O. VERAYO and ERENEO S. TORMO, respondents. G.R. No. 131108 March 25, 1999 | Justice Puno

Facts:

In September 1991, the Parsons family, who originally owned the controlling stocks in Asian Alcohol, was driven by mounting business losses to sell their majority rights to Prior Holdings, Inc. The next month, Prior Holdings took over its management and operation. To thwart further losses, Prior Holdings implemented an organizational plan and other cost-saving measures. Some 117 employees out of a total workforce of 360 were separated; 72 of them occupied redundant positions that were abolished. Of these positions, 21 held by union members and 51 by non-union members. The 6 private respondents are among those union members whose positions were abolished due to redundancy. Private respondents Carias, Martinez, and Sendon were water pump tenders; Amacio was a machine shop mechanic; Verayo was a briquetting plant operator while Tormo was a plant helper under him. They were all assigned at the Repair and Maintenance Section of the Pulupandan Plant. In October 1992, they received individual notices of termination effective November 30, 1992. They were paid the equivalent of 1 month salary for every year of service as separation pay, the money value of their unused sick, vacation, emergency and seniority leave credits, 13th month pay for the year 1992, medicine allowance, tax refunds, and goodwill cash bonuses for those with at least 10 years of service. All of them executed sworn releases, waivers and quitclaims. Except for Verayo and Tormo, they all signed sworn statements of conformity to the company retrenchment program. And except for Martinez, they all tendered letters of resignation. On December 18, 1992 the 6 private respondents filed with the NLRC Regional Arbitration Branch VI, Bacolod City, complaints for illegal dismissal with a prayer for reinstatement with backwages, moral damages and attorney's fees. They alleged that Asian Alcohol used the retrenchment program as a subterfuge for union busting. They claimed that they were singled out for separation by reason of their active participation in the union. They also asserted that Asian Alcohol was not bankrupt, as it has engaged in an aggressive scheme of contractual hiring through independent contractors.

The executive Labor Arbiter dismissed the complaints on the ground that the private respondents were terminated due to a valid redundancy and retrenchment program supported by documents reflecting the financial condition of the company. Moreover, retrenched employees cover not only union members but also non-members. The decision was reversed on appeal to the NLRC on the ground that private respondents were not redundant and that the company cannot possibly incur huge losses to warrant retrenchment because casual employees were later hired. The motion for reconsideration being denied hence, this petition for certiorari.

Issue:

Whether or not there was a valid reason to have the services of an independent contractor.

Held:

An employer's good faith in implementing a redundancy program is not necessarily destroyed by availment of the services of an independent contractor to replace the services of the terminated employees. The Court have previously ruled that the reduction of

the number of workers in a company made necessary by the introduction of an independent contractor is justified when the latter is undertaken in order to effectuate more economic and efficient methods of production. In the case at bar, private respondents failed to proffer any proof that the management acted in a malicious or arbitrary manner in engaging the services of an independent contractor to operate the Laura wells. Absent such proof, the Court has no basis to interfere with the bona fide decision of management to effect more economic and efficient methods of production.

Therefore, the Court granted the petition and reinstated the ruling of the Labor Arbiter.

020 COCA COLA BOTTLERS V. DE LA CRUZ, ET AL. G.R. No. 184977, December 7, 2009 | BRION, J.:

FACTS:

Respondents Ricky E. Dela Cruz, Rolando M. Guasis, Manny C. Pugal, Ronnie L. Hermo, Rolando C. Somero, Jr., Dibson D. Diocares, and Ian Ichapare filed in July 2000 two separate complaints for regularization with money claims against Coca-Cola Bottlers Philippines, Inc., impleading Peerless Integrated Service, Inc. (Peerless) also as a party-respondent.

Respondents’ contention. They are route helpers assigned to work in the petitioner’s trucks. They go from the Coca- Cola sales offices or plants to customer outlets such as sari-sari stores, restaurants, groceries, supermarkets and similar establishments; they were hired either directly by the petitioner or by its contractors, but they do not enjoy the full remuneration, benefits and privileges granted to the petitioner’s regular sales force. They argued that the services they render are necessary and desirable in the regular business of the petitioner. They worked under the control and supervision of the company’s supervisors who prepared their work schedules and assignments. Peerless and Excellent, did not have sufficient capital or investment to provide services to the petitioner. The respondents thus argued that the petitioner’s contracts of services with Peerless and Excellent are in the nature of "labor-only" contracts prohibited by law.

Petitioner’s contention. Petitioner contended that it entered into contracts of services with Peerless and Excellent Partners Cooperative, Inc. (Excellent) to provide allied services; under these contracts, Peerless and Excellent retained the right to select, hire, dismiss, supervise, control and discipline and pay the salaries of all personnel they assign to the petitioner; in return for these services, Peerless and Excellent were paid a stipulated fee. The petitioner posited that there is no employer-employee relationship between the company and the respondents and the complaints should be dismissed for lack of jurisdiction on the part of the National Labor Relations Commission (NLRC). Peerless did not file a position paper, although nothing on record indicates that it was ever notified of the amended complaint.

Petitioner belied the respondents’ submission that their jobs are usually necessary and desirable in its main business. It claimed that its main business is softdrinks manufacturing and the respondents’ tasks of handling, loading and unloading of the manufactured softdrinks are not part of the manufacturing process. It stressed that its only interest in the respondents is in the result of their work, and left to them the means and the methods of achieving this result. It thus argued that there is no basis for the respondents’ claim that without them, there would be over-production in the company and its operations would come to a halt. The petitioner lastly argued that in any case, the respondents did not present evidence in support of their claims of company control and supervision so that these claims cannot be considered and given weight.

The Labor Arbiter dismissed the complaint for lack of jurisdiction after finding that the respondents were the employees


of either Peerless or Excellent and not of the petitioner. The NLRC affirmed the LA’s ruling. The CA reversed NLRC’s ruling and found that Peerless and Excellent were engaged in labor-only contracting, a prohibited undertaking.

ISSUE: WON there was labor-only contracting and respondents were actually employees of Coca Cola.

HELD:

The SC ruled in favor of the respondents. The SC fully agree with the CA that Peerless and Excellent were mere suppliers of labor who had no sufficient capitalization and equipment to undertake sales and distribution of softdrinks as independent activities separate from the manufacture of softdrinks, and who had no control and supervision over the contracted personnel. They are therefore labor-only contractors. Consequently, the contracted personnel, engaged in component functions in the main business of the company under the latter’s supervision and control, cannot but be regular company employees.

Azucena pointed out in his book, The Labor Code with Comments and Cases that there are three parties in a legitimate contracting relationship, namely: the principal, the contractor, and the contractor’s employees. In this trilateral relationship, the principal controls the contractor and his employees with respect to the ultimate results or output of the contract; the contractor, on the other hand, controls his employees with respect, not only to the results to be obtained, but with respect to the means and manner of achieving this result. This pervasive control by the contractor over its employees results in an employer-employee relationship between them.

This trilateral relationship under a legitimate job contracting is different from the relationship in a labor-only contracting situation because in the latter, the contractor simply becomes an agent of the principal; either directly or through the agent, the principal then controls the results as well as the means and manner of achieving the desired results. In other words, the party who would have been the principal in a legitimate job contracting relationship and who has no direct relationship with the contractor's employees, simply becomes the employer in the labor-only contracting situation with direct supervision and control over the contracted employees. As Azucena astutely observed: in labor-contracting, there is really no contracting and no contractor; there is only the employer’s representative who gathers and supplies people for the employer; labor-contracting is therefore a misnomer.

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 persons 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 alter were directly employed by him.

Department Order No. 18-02 (D.O. 18-02) of DOLE prohibits labor-only contracting and provides the following elements:

i) The contractor or subcontractor does not have sufficient 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.

"Substantial capital or investment" refers to capital stocks and subscribed capitalization in the case of corporations, tools or

equipment, implements, machineries and work premises, actually and directly used by the contractor or subcontractor in the performance or completion of the job, work or service contracted out.

Although under the service contract between petitioner and Peerless and Excellent, it is agreed that the CONTRACTOR is subject to the control and direction of the COMPANY merely as to result to be accomplished by the work or services herein specified, and not as to the means and methods of accomplishing such result, the CONTRACTOR warrants that it will perform such work or services in such manner as will be consistent with the achievement of the result herein contracted for. However, the language of a contract is not determinative of the relationship of the parties. The contract between the principal and the contractor is not the final word on how the contracted workers relate to the principal and the purported contractor; the relationships must be tested on the basis of how they actually operate.

The CA noted that both the Peerless and the Excellent contracts show that their obligation was solely to provide the company with "the services of contractual employees," and nothing more. These contracted services were for the handling and delivery of the company’s products and allied services. Following D.O. 18-02 and the contracts that spoke purely of the supply of labor, the CA concluded that Peerless and Excellent were labor-only contractors. Other than the petitioner’s bare allegation, there is no indication in the records that Peerless and Excellent had substantial capital, tools or investment used directly in providing the contracted services to the petitioner. Thus, in the handling and delivery of company products, the contracted personnel used company trucks and equipment in an operation where company sales personnel primarily handled sales and distribution, merely utilizing the contracted personnel as sales route helpers.

The contracted personnel (acting as sales route helpers) were only engaged in the marginal work of helping in the sale and distribution of company products; they only provided the muscle work that sale and distribution required and were thus necessarily under the company’s control and supervision in doing these tasks. The contractors were not independently selling and distributing company products, using their own equipment, means and methods of selling and distribution; they only supplied the manpower that helped the company in the handing of products for sale and distribution. In the context of D.O. 18-02, the contracting for sale and distribution as an independent and self-contained operation is a legitimate contract, but the pure supply of manpower with the task of assisting in sales and distribution controlled by a principal falls within prohibited labor-only contracting.

030 TEMIC AUTOMOTIVE PHILIPPINES, INC., Petitioner, vs. TEMIC AUTOMOTIVE PHILIPPINES,

INC. EMPLOYEES UNION-FFW, Respondent. G.R. No. 186965, December 23, 2009

FACTS:

The petitioner is a corporation engaged in the manufacture of electronic brake systems and comfort body electronics for automotive vehicles. Respondent, the Union, is the exclusive bargaining agent of the petitioner's rank-and-file employees. The petitioner is composed of several departments, one of which is the warehouse department consisting of two warehouses - the electronic braking system and the comfort body electronics. These warehouses are further divided into four sections - receiving section, raw materials warehouse section, indirect warehouse section and finished goods section. The union members are regular rank-and-file employees working in these sections as clerks, material handlers, system encoders and general clerks.


By practice since 1998, the petitioner contracts out some of the work in the warehouse department, specifically those in the receiving and finished goods sections, to three independent service providers or forwarders, namely: Diversified Cargo Services, Inc. (Diversified), Airfreight 2100 (Airfreight) and Kuehne & Nagel, Inc. (KNI). The regular employees of the petitioner and those of the forwarders share the same work area and use the same equipment, tools and computers all belonging to the petitioner.

This outsourcing arrangement gave rise to a union grievance on the issue of the scope and coverage of the collective bargaining unit, specifically to the question of "w/n the functions of the forwarders’ employees are functions being performed by the regular rank-and-file employees covered by the bargaining unit." The union thus demanded that the forwarders' employees be absorbed into the petitioner's regular employee force and be given positions within the bargaining unit. The petitioner, on the other hand, contended that the contracting arrangement with the forwarders is a valid exercise of its management prerogative.

The union and the petitioner failed to resolve the dispute at the grievance machinery level, thus necessitating recourse to voluntary arbitration. The voluntary arbitrator ruled that the company validly contracted out its forwarding services. However, the voluntary arbitrator found that the petitioner went beyond the limits of the legally allowable contracting out because the forwarders' employees encroached upon the functions of the petitioner's regular rank-and-file workers. For these reasons, he declared the forwarders’ employees to be "employees of the company who are entitled to all the rights and privileges of regular employees of the company including security of tenure."

On Appeal, the CA fully affirmed the voluntary arbitrator’s decision and dismissed the petition for lack of merit. Hence, this petition.

ISSUE:

W/N the company validly contracted out or outsourced the said works to forwarding company.

RULING: YES

As forwarders they act as travel agents for cargo. They specialize in arranging transport and completing required shipping documentation of respondent's company's finished products. They provide custom crating and packing designed for specific needs of respondent company. These freight forwarders are actually acting as agents for the company in moving cargo to an overseas destination.

Significantly, both the voluntary arbitrator and the CA recognized that the petitioner was within its right in entering the forwarding agreements with the forwarders as an exercise of its management prerogative. The petitioner's declared objective for the arrangement is to achieve greater economy and efficiency in its operations – a universally accepted business objective and standard that the union has never questioned. In Meralco v. Quisumbing, we joined this universal recognition of outsourcing as a legitimate activity when we held that a company can determine in its best judgment whether it should contract out a part of its work for as long as the employer is motivated by good faith; the contracting is not for purposes of circumventing the law; and does not involve or be the result of malicious or arbitrary action.

Our own examination of the agreement shows that the forwarding arrangement complies with the requirements of Article 106 of the Labor Code and its implementing rules. To reiterate, no evidence or argument questions the company’s basic objective of achieving "greater economy and efficiency of operations." This, to our mind, goes a long way to negate the presence of bad faith. The forwarding arrangement has been in place since 1998 and no evidence has been presented showing that any regular employee

has been dismissed or displaced by the forwarders’ employees since then. No evidence likewise stands before us showing that the outsourcing has resulted in a reduction of work hours or the splitting of the bargaining unit – effects that under the implementing rules of Article 106 of the Labor Code can make a contracting arrangement illegal. The other requirements of Article 106, on the other hand, are simply not material to the present petition. Thus, on the whole, we see no evidence or argument effectively showing that the outsourcing of the forwarding activities violate our labor laws, regulations, and the parties’ CBA, specifically that it interfered with, restrained or coerced employees in the exercise of their rights to self-organization as provided in Section 6, par. (f) of the implementing rules.

It is in the appreciation of these forwarder services as one whole package of inter-related services that we discern a basic misunderstanding that results in the error of equating the functions of the forwarders’ employees with those of regular rank-and-file employees of the company. A clerical job, for example, may similarly involve typing and paper pushing activities and may be done on the same company products that the forwarders’ employees and company employees may work on, but these similarities do not necessarily mean that all these employees work for the company. The regular company employees, to be sure, work for the company under its supervision and control, but forwarder employees work for the forwarder in the forwarder’s own operation that is itself a contracted work from the company. The company controls its employees in the means, method and results of their work, in the same manner that the forwarder controls its own employees in the means, manner and results of their work.

The assailed CA Decision is hereby NULLIFY and SET ASIDE.

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

G.R. No. 160506; June 6, 2011 | DEL CASTILLO, J.:

FACTS:

Petitioners worked as merchandisers of P&G from various dates, allegedly starting as early as 1982 or as late as June 1991, to either May 5, 1992 or March 11, 1993. They all individually signed employment contracts with either Promm-Gem or SAPS for periods of more or less five months at a time. They were assigned at different outlets, supermarkets and stores where they handled all the products of P&G. They received their wages from Promm-Gem or SAPS. SAPS and Promm-Gem imposed disciplinary measures on erring merchandisers for reasons such as habitual absenteeism, dishonesty or changing day-off without prior notice.

P&G is principally engaged in the manufacture and production of different consumer and health products, which it sells on a wholesale basis to various supermarkets and distributors. To enhance consumer awareness and acceptance of the products, P&G entered into contracts with Promm-Gem and SAPS for the promotion and merchandising of its products.

In December 1991, petitioners filed a complaint against P&G for regularization, service incentive leave pay and other benefits with damages. The complaint was later amended to include the matter of their subsequent dismissal.

The Labor Arbiter dismissed the complaint for lack of merit and ruled that there was no employer-employee relationship between petitioners and P&G. The NLRC affirmed the decision of Labor Arbiter. CA affirmed NLRC’s decision with modification that respondent Procter & Gamble Phils., Inc. is ordered to pay service incentive leave pay to petitioners. Hence, this petition.

Petitioners’ Arguments:


They are employees of P&G. They were recruited by the salesmen of P&G and were engaged to undertake merchandising chores for P&G long before the existence of Promm-Gem and/or SAPS; When the latter had its so-called re-alignment program, petitioners were instructed to fill up application forms and report to the agencies which P&G created; P&G instigated their dismissal from work as can be gleaned from its letter to SAPS dated February 24, 1993, informing the latter that their Merchandising Services Contract will no longer be renewed; Promm-Gem and SAPS are labor-only contractors providing services of manpower to their client. The contractors have neither substantial capital nor tools and equipment to undertake independent labor contracting. They had been engaged to perform activities which are necessary or desirable in the usual business or trade of P&G, then they are its regular employees.

Respondents’ Arguments:

There is no employment relationship between it and petitioners. It was Promm-Gem or SAPS that (1) selected petitioners and engaged their services; (2) paid their salaries; (3) wielded the power of dismissal; and (4) had the power of control over their conduct of work; P&G also contends that the Labor Code neither defines nor limits which services or activities may be validly outsourced. Thus, an employer can farm out any of its activities to an independent contractor, regardless of whether such activity is peripheral or core in nature. It insists that the determination of whether to engage the services of a job contractor or to engage in direct hiring is within the ambit of management prerogative.

ISSUES:

1. Whether or not Promm-Gem and SAPS are labor-only contractors

2. Whether or not P&G (not Promm-Gem and SAPS) is the employer of petitioners

RULING:

1. 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.

PROMM –GEM IS A LEGITIMATE INDEPENDENT CONTRACTOR

In the instant case, the financial statements of Promm-Gem show that it has authorized capital stock of P1 million and a paid-in capital, or capital available for operations, of P500,000.00 as of 1990. It also has long term assets worth P432,895.28 and current assets of P719,042.32. Promm-Gem has also proven that it maintained its own warehouse and office space with a floor area of 870 square meters. It also had under its name three registered vehicles which were used for its promotional/merchandising business. Promm-Gem also has other clients aside from P&G. Under the circumstances, we find that Promm-Gem has substantial investment which relates to the work to be performed. These factors negate the existence of the element specified in Section 5(i) of DOLE Department Order No. 18-02.

The records also show that Promm-Gem supplied its complainant-workers with the relevant materials, such as markers,

tapes, liners and cutters, necessary for them to perform their work. Promm-Gem also issued uniforms to them. It is also relevant to mention that Promm-Gem already considered the complainants working under it as its regular, not merely contractual or project, employees. This circumstance negates the existence of element (ii) as stated in Section 5 of DOLE Department Order No. 18-02, which speaks of contractual employees. This, furthermore, negates – on the part of Promm-Gem – bad faith and intent to circumvent labor laws which factors have often been tipping points that lead the Court to strike down the employment practice or agreement concerned as contrary to public policy, morals, good customs or public order. Under the circumstances, Promm-Gem cannot be considered as a labor-only contractor. We find that it is a legitimate independent contractor.

SAPS IS A LABOR-ONLY CONTRACTOR

On the other hand, the Articles of Incorporation of SAPS shows that it has a paid-in capital of only P31,250.00. There is no other evidence presented to show how much its working capital and assets are. Furthermore, there is no showing of substantial investment in tools, equipment or other assets.

Furthermore, the petitioners have been charged with the merchandising and promotion of the products of P&G, an activity that has already been considered by the Court as doubtlessly directly related to the manufacturing business, which is the principal business of P&G. Considering that SAPS has no substantial capital or investment and the workers it recruited are performing activities which are directly related to the principal business of P&G, we find that the former is engaged in "labor-only contracting".

2. "Where ‘labor-only’ contracting exists, the Labor Code itself establishes an employer-employee relationship between the employer and the employees of the ‘labor-only’ contractor." The statute establishes this relationship for a comprehensive purpose: 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.

CONSEQUENTLY, THE PETITIONERS, HAVING BEEN RECRUITED AND SUPPLIED BY SAPS -- WHICH ENGAGED IN LABOR-ONLY CONTRACTING -- ARE CONSIDERED AS THE EMPLOYEES OF P&G.

050 PHILIPPINE AIRLINES, INC. vs. ENRIQUE LIGAN, et al.

G.R. No. 14640, February 29, 2008 | CARPIO MORALES, J.

FACTS:

Philippine Airlines (PAL) and Synergy Services Corporation (Synergy) entered into an agreement whereby Synergy undertook to provide loading, unloading, delivery of baggage and cargo and other related services to and from PAL’s aircraft at the Mactan Station. Under said contract Synergy shall furnish all the necessary capital, workers, loading, unloading and delivery materials, facilities, supplies, equipment and tools for the satisfactory performance and execution of the agreed services. Further, it expressly provided that Synergy was “an independent contractor and that there would be no employer-employee relationship between Synergy and/or its employees on the one hand, and PAL, on the other.

Respondents, Ligan, et al. who appeared to have been assigned by Synergy to PAL following their agreement, filed


complaints before the NLRC Regional Office at Cebu City against PAL, Synergy and their respective officials for underpayment, non-payment of premium pay for holidays, premium pay for rest days, service incentive leave pay, 13th month pay and allowances, and for regularization of employment status with PAL; they claiming to be “performing duties for the benefit of PAL since their job is directly connected with its business .”

The Labor Arbiter found Synergy an independent contractor and dismissed respondents’ complaint for regularization, but granted their money claims. On appeal, the NLRC vacated and set aside the decision of the Labor Arbiter by ruling that Synergy is a ‘labor-only’ contractor and ordering PAL to accept, as its regular employees, all the complainants, and to give each of them the salaries, allowances and other employment benefits and privileges of a regular employee. PAL assailed the NLRC decision via petition for certiorari before the Supreme Court who referred the case to the Court of Appeals for appropriate action and disposition. The CA affirmed the NLRC’s decision; hence the present action.

ISSUE: Whether Synergy is a labor-only contractor or a legitimate contractor.

RULING: LABOR-ONLY CONTRACTOR.

Legitimate contracting and labor-only contracting are defined in Department Order (D.O.) No. 18-02, Series of 2002 as follows:

Section 3. Trilateral relationship in contracting arrangements. In legitimate contracting, there exists a trilateral relationship under which there is a contract for a specific job, work or service between the principal and the contractor or subcontractor, and a contract of employment between the contractor or subcontractor and its workers. Hence, there are three parties involved in these arrangements, the principal which decides to farm out a job or service to a contractor or subcontractor, the contractor or subcontractor which has the capacity to independently undertake the performance of the job, work or service, and the contractual workers engaged by the contractor or subcontractor to accomplish the job, work or service.

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:

(1) 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

(2) The contractor does not exercise the right to control over the performance of the work of the contractual employee.

Substantial capital or investment and the right to control are further defined under the same D.O. as follows:

Substantial capital or investment refers to capital stocks and subscribed capitalization in the case of corporations, tools, equipment, implements, machineries and work premises, actually and directly used by the contractor or subcontractor in the performance or completion of the job, work or service contracted out.

Right to control shall refer to the right reserved to the person for whom the services of the contractual workers are performed, to determine not only the end to be achieved, but also the manner and means to be used in reaching that end.

From the records of the case, it is gathered that the work performed by almost all of the respondents – loading and unloading of baggage and cargo of passengers – is directly related to the main business of PAL. And the equipment used by them as station loaders, such as trailers and conveyors, are owned by PAL. Likewise, respondents worked alongside PAL’s regular employees who were performing identical work, such is an indicium of labor-only contracting.

While PAL 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. It was only after the CA rendered its challenged decision when PAL, in its motion for reconsideration, sought to prove, for the first time, Synergy’s substantial capitalization by attaching photocopies of Synergy’s financial statements.

PAL’s assertion that mere compliance with substantial capital requirement suffices for Synergy to be considered a legitimate contractor is misplaced. Even if only one of the two elements is present then, there is labor-only contracting.

While PAL claimed that it was Synergy’s supervisors who actually supervised respondents, it failed to present evidence thereon. It did not even identify who were the Synergy supervisors assigned at the workplace. PAL in fact admitted that it fixes the work schedule of respondents as their work was dependent on the frequency of plane arrivals. And as the NLRC found, PAL’s managers and supervisors approved respondents’ weekly work assignments; and respondents and other regular PAL employees were all referred to as “station attendants” of the cargo operation and airfreight services of PAL.

The express provision in the agreement that Synergy was an independent contractor and there would be “no employer-employee relationship between Synergy and/or its employees and PAL” is not legally binding and conclusive, as contractual provisions are not valid determinants of the existence of such relationship. For it is the totality of the facts and surrounding circumstances of the case which is determinative of the parties’ relationship.

Finally, it must be stressed that respondents, having been declared to be regular employees of petitioner, Synergy being a mere agent of the latter, had acquired security of tenure. As such, they could only be dismissed by PAL, the real employer, on the basis of just or authorized cause, and with observance of procedural due process.

Whereby, PAL was ordered to accept respondents as its regular employees in their same or substantially equivalent positions, and pay the wages and benefits due them as regular employees plus salary differential and pay respondent Auxtero (who has been illegally dismissed) salary differential; backwages from the time of his dismissal until the finality of this decision; and separation pay, in lieu of reinstatement.

THE MOTION FOR RECONSIDERATION (April 30, 2009)

The Court found no sufficient reason to deviate from its original decision, but clarified/modified a few points:

While the decision ruled on the regular status of respondents, it must be deemed to be without prejudice to the resolution of the issue of illegal dismissal in the proper case. The SC did not and could not take cognizance of the validity of the eventual dismissal of respondents because the matter of just or authorized cause is beyond the issues of the case.


Respecting PAL’s allegation of financial woes that led to the lay-off of respondents, petitioner failed to establish such economic losses which rendered impossible the compliance with the order to accept respondent as regular employees. PAL, for the first time, revealed the matter of termination and the allegation of financial woes in its MR before the CA not by way of defense to a charge of illegal dismissal but to manifest that supervening events have rendered it impossible for petitioner to comply with the order to accept respondents as regular employees. Moreover, the issue of economic losses as a ground for dismissing respondents is factual in nature, hence, it may be determined in the proper case.

There being no data from which the Court may determine the monetary liabilities of PAL the case is remanded to the Labor Arbiter solely for that purpose.

060 EMMANUEL BABAS ET. AL. vs. LORENZO SHIPPING CORPORATION

G.R. No. 186091, December 15, 2010 | NACHURA, J.

FACTS:

Lorenzo Shipping Corporation (LSC) is a duly organized domestic corporation engaged in the shipping industry; it owns several equipment necessary for its business. LSC entered into a General Equipment Maintenance Repair and Management Services Agreement (Agreement) with Best Manpower Services, Inc. (BMSI). Under the Agreement, BMSI undertook to provide maintenance and repair services to LSC’s container vans, heavy equipment, trailer chassis, and generator sets. BMSI further undertook to provide checkers to inspect all containers received for loading to and/or unloading from its vessels.

Simultaneous with the execution of the Agreement, LSC leased its equipment, tools, and tractors to BMSI. The period of lease was coterminous with the Agreement.

BMSI then hired petitioners on various dates to work at LSC as checkers, welders, utility men, clerks, forklift operators, motor pool and machine shop workers, technicians, trailer drivers, and mechanics. Six years later, LSC entered into another contract with BMSI, this time, a service contract. Four months later, petitioners filed with the Labor Arbiter (LA) a complaint for regularization against LSC and BMSI. A month thereafter, LSC terminated the Agreement. Consequently, petitioners lost their employment.

BMSI asserted that it is an independent contractor. It averred that it was willing to regularize petitioners; however, some of them lacked the requisite qualifications for the job. BMSI was willing to reassign petitioners who were willing to accept reassignment. BMSI denied petitioners’ claim for underpayment of wages and non-payment of 13th month pay and other benefits.

LSC, on the other hand, averred that petitioners were employees of BMSI and were assigned to LSC by virtue of the Agreement. BMSI is an independent job contractor with substantial capital or investment in the form of tools, equipment, and machinery necessary in the conduct of its business. The Agreement between LSC and BMSI constituted legitimate job contracting. Thus, petitioners were employees of BMSI and not of LSC.

The LA rendered a decision dismissing petitioners’ complaint. Reversing the LA, the NLRC held that BMSI is not engaged in legitimate job contracting. BMSI has no equipment, no office premises, no capital and no investments. In fact, parties signed a Lease Contract wherein BMSI leased several excess equipment of LSC to enable it to discharge its obligation under the Agreement. So without the equipment which BMSI leased from LSC, the former would not be able to perform its commitments in the Agreement.

The CA reversed the NLRC. In holding that BMSI was an independent contractor, the CA relied on the provisions of the

Agreement, wherein BMSI warranted that it is an independent contractor, with adequate capital, expertise, knowledge, equipment, and personnel necessary for the services rendered to LSC. According to the CA, the fact that BMSI entered into a contract of lease with LSC did not ipso facto make BMSI a labor-only contractor; on the contrary, it proved that BMSI had substantial capital. The CA was of the view that the law only required substantial capital or investment. Since BMSI had substantial capital, as shown by its ability to pay rents to LSC, then it qualified as an independent contractor.

ISSUE: Whether or not the CA erred in its decision in holding that BMSI is an independent contractor (and not a labor-only contractor).

HELD: YES.

In distinguishing between prohibited labor-only contracting and permissible job contracting, the totality of the facts and the surrounding circumstances of the case are to be considered.

Labor-only contracting, a prohibited act, is an arrangement where the contractor or subcontractor merely recruits, supplies, or places workers to perform a job, work, or service for a principal. In labor-only contracting, the following elements are present: (a) 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 (b) the employees recruited, supplied, or placed by such contractor or subcontractor perform activities which are directly related to the main business of the principal.1[20]

On the other hand, permissible job contracting or subcontracting refers to an arrangement whereby a principal agrees to put out or farm out with the 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.

A person is considered engaged in legitimate job contracting or subcontracting if the following conditions concur:

(a) The contractor carries on a distinct and independent business and undertakes the contract work on his 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 his work except as to the results thereof;

(b) The contractor has substantial capital or investment; and

(c) The agreement between the principal and the contractor or subcontractor assures the contractual employees' entitlement to all labor and occupational safety and health standards, free exercise of the right to self-organization, security of tenure, and social welfare benefits.

Given the above standards, the Court sustains the petitioners’ contention that BMSI is engaged in labor-only contracting.

First, petitioners worked at LSC’s premises, and nowhere else. Other than the provisions of the Agreement, there was no showing that it was BMSI which established petitioners’ working procedure and methods, which supervised petitioners in their work, or which evaluated the same. There was absolute lack of evidence that BMSI exercised control over them or their work, except for the fact that petitioners were hired by BMSI.


Second, LSC was unable to present proof that BMSI had substantial capital. The record before us is bereft of any proof pertaining to the contractor’s capitalization, nor to its investment in tools, equipment, or implements actually used in the performance or completion of the job, work, or service that it was contracted to render. What is clear was that the equipment used by BMSI were owned by, and merely rented from, LSC.

Third, petitioners performed activities which were directly related to the main business of LSC. The work of petitioners as checkers, welders, utility men, drivers, and mechanics could only be characterized as part of, or at least clearly related to, and in the pursuit of, LSC’s business. Logically, when petitioners were assigned by BMSI to LSC, BMSI acted merely as a labor-only contractor.

Lastly, as found by the NLRC, BMSI had no other client except for LSC, and neither BMSI nor LSC refuted this finding, thereby bolstering the NLRC finding that BMSI is a labor-only contractor.

Indubitably, BMSI can only be classified as a labor-only contractor. The CA, therefore, erred when it ruled otherwise. Consequently, the workers that BMSI supplied to LSC became regular employees of the latter. Having gained regular status, petitioners were entitled to security of tenure and could only be dismissed for just or authorized causes and after they had been accorded due process.

WHEREFORE, the petition is GRANTED. The Decision and the Resolution of the Court of Appeals in CA are REVERSED and SET ASIDE.

070 SAN MIGUEL CORPORATION vs. MAERC INTEGRATED SERVICES, INC.

G.R. No. 144672 - July 10, 2003 | BELLOSILLO, J.:

FACTS:

291 workers filed their complaints (9 complaints in all) against and MAERC for illegal dismissal, underpayment of wages, non-payment of service incentive leave pays and other labor standards benefits, and for separation pays. The complainants alleged that they were hired by SMC through its agent or intermediary MAERC to work in 2 designated workplaces in Mandaue City: one, inside the SMC premises at the Mandaue Container Services, and another, in the Philphos Warehouse owned by MAERC. They washed and segregated various kinds of empty bottles used by SMC to sell and distribute its beer beverages to the consuming public. They were paid on a per piece or pakiao basis except for a few who worked as checkers and were paid on daily wage basis. Complainants alleged that long before SMC contracted the services of MAERC a majority of them had already been working for SMC under the guise of being employees of another contractor, Jopard Services, until the services of the latter were terminated.

SMC denied liability for the claims and averred that the complainants were not its employees but of MAERC, an independent contractor whose primary corporate purpose was to engage in the business of cleaning, receiving, sorting, classifying, etc., glass and metal containers.

It appears that SMC entered into a Contract of Services with MAERC engaging its services on a non-exclusive basis for 1 year beginning 1 February 1988. The contract was renewed for 2 more years in March 1989. It also provided for its automatic renewal on a month-to-month basis after the 2-year period and required that a written notice to the other party be given 30 days prior to the intended date of termination, should a party decide to discontinue with the contract.

In a letter dated 15 May 1991, SMC informed MAERC of the termination of their service contract by the end of June 1991. SMC cited its plans to phase out its segregation activities starting 1 June 1991 due to the installation of labor and cost-saving devices. When

the service contract was terminated, complainants claimed that SMC stopped them from performing their jobs; that this was tantamount to their being illegally dismissed by SMC who was their real employer as their activities were directly related, necessary and desirable to the main business of SMC; and, that MAERC was merely made a tool or a shield by SMC to avoid its liability under the Labor Code.

MAERC for its part admitted that it recruited the complainants and placed them in the bottle segregation project of SMC but maintained that it was only conveniently used by SMC as an intermediary in operating the project or work directly related to the primary business concern of the latter with the end in view of avoiding its obligations and responsibilities towards the complaining workers.

The 9 cases were consolidated. LA rendered a decision holding that MAERC was an independent contractor. He dismissed the complaints for illegal dismissal but ordered MAERC to pay complainants' separation benefits. MAERC and SMC were also ordered to jointly and severally pay complainants their wage differentials and attorney's fees. The complainants appealed the LA's finding that MAERC was an independent contractor and solely liable to pay the amount representing the separation benefits to the exclusion of SMC, as well as the LA's failure to grant the Temporary Living Allowance of the complainants. SMC appealed the award of attorney's fees. The NLRC ruled that MAERC was a labor-only contractor and that complainants were employees of SMC. The NLRC also held that whether MAERC was a job contractor or a labor-only contractor, SMC was still solidarily liable with MAERC for the latter's unpaid obligations, citing Art. 109 of the Labor Code. Thus, the NLRC modified the judgment of the Labor Arbiter and held SMC jointly and severally liable with MAERC for complainants' separation benefits. NLRC’s decision was affirmed by CA, hence, this present petition.

ISSUES:

1. WON MAERC is a labor-only contractor despite the finding that MAERC had investments amounting to P4,608,080.00 consisting of buildings, machinery and equipment.

2. WON whether MAERC was a job contractor or a labor-only contractor, SMC was still solidarily liable with MAERC for the latter's unpaid obligations, citing Art. 109 of the Labor Code.

NOTE: hindi ko na sinama ung issue re existence of employer-employee relationship between SMC and complainants. Basta meron daw, SABE!

RULING:

1. Yes.

In Vinoya v. NLRC, we clarified that it was not enough to show substantial capitalization or investment in the form of tools, equipment, machinery and work premises, etc., to be considered an independent contractor. In fact, jurisprudential holdings were to the effect that in determining the existence of an independent contractor relationship, several factors may be considered, such as, but not necessarily confined to, whether the contractor was carrying on an independent business; the nature and extent of the work; the skill required; the term and duration of the relationship; the right to assign the performance of specified pieces of work; the control and supervision of the workers; the power of the employer with respect to the hiring, firing and payment of the workers of the contractor; the control of the premises; the duty to supply premises, tools, appliances, materials and labor; and the mode, manner and terms of payment.

While MAERC's investments in the form of buildings, tools and equipment amounted to more than P4 Million, we cannot


disregard the fact that it was the SMC which required MAERC to undertake such investments under the understanding that the business relationship between petitioner and MAERC would be on a long term basis. Nor do we believe MAERC to have an independent business. Not only was it set up to specifically meet the pressing needs of SMC which was then having labor problems in its segregation division, none of its workers was also ever assigned to any other establishment, thus convincing us that it was created solely to service the needs of SMC. Naturally, with the severance of relationship between MAERC and SMC followed MAERC's cessation of operations, the loss of jobs for the whole MAERC workforce and the resulting actions instituted by the workers.

2. No. On this point, we agree with petitioner as distinctions must be made. In legitimate job contracting, the law creates an employer-employee relationship for a limited purpose, i.e., to ensure that the employees are paid their wages. The principal employer becomes jointly and severally liable with the job contractor only for the payment of the employees' wages whenever the contractor fails to pay the same. Other than that, the principal employer is not responsible for any claim made by the employees.

On the other hand, in labor-only contracting, the statute creates an employer-employee relationship for a comprehensive purpose: 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. The principal employer therefore becomes solidarily liable with the labor-only contractor for all the rightful claims of the employees.

This distinction between job contractor and labor-only contractor, however, will not discharge SMC from paying the separation benefits of the workers, inasmuch as MAERC was shown to be a labor-only contractor; in which case, petitioner's liability is that of a direct employer and thus solidarily liable with MAERC.

SMC also failed to comply with the requirement of written notice to both the employees concerned and the Department of Labor and Employment (DOLE) which must be given at least one (1) month before the intended date of retrenchment. The fines imposed for violations of the notice requirement have varied. The measure of this award depends on the facts of each case and the gravity of the omission committed by the employer. For its failure, petitioner was justly ordered to indemnify each displaced worker P2,000.00.

080 KIMBERLY INDEPENDENT LABOR UNION FOR SOLIDARITY, ACTIVISM AND NATIONALISM-

ORGANIZED LABOR ASSOCIATION IN LINE INDUSTRIES AND AGRICULTURE (KILUSAN-OLALIA) ET. AL. vs. DRILON, KIMBERLY-CLARK PHILIPPINES,

INC., ET. AL. G.R. No. L-77629/185 SCRA 190, May 9, 1990 │REGALADO, J.

FACTS:

Respondent Company Kimberly-Clark Philippines, Inc. executed a 3-year CBA with United Kimberly Clark Employees Union-Philippine Transport and General Workers' Organization (UKCEU-PTGWO) which expired on June 30, 1986. Within the 60-day freedom period prior to the expiration of and during the negotiations for the renewal of the said CBA, some members of the bargaining unit formed another union called Kimberly Independent Labor Union for Solidarity, Activism and Nationalism-Organized Labor Association in Line Industries and Agriculture (KILUSAN-OLALIA).

On April 21, 1986, KILUSAN-OLALIA filed a petition for certification election. KIMBERLY and UKCEU-PTGWO did not object

to the holding of a certification election but objected to the inclusion of the so-called contractual workers whose employment with KIMBERLY was coursed through an independent contractor, Rank Manpower Company, as among the qualified voters.

Pending resolution of the petition for certification election by the med-arbiter, KILUSAN-OLALIA filed a notice of strike on May 7, 1986 with the Bureau of Labor Relations, docketed as BLR Case No. NS-5-164-86, charging KIMBERLY with ULP based, among others, on the following alleged acts: non-regularization of casuals/contractuals with over six months service and engaging in CBA negotiations despite the pendency of a petition for certification election. Conciliation proceedings conducted by the bureau proved futile thus, KILUSAN-OLALIA declared a strike at KIMBERLY's premises in San Pedro, Laguna on May 23, 1986. Finding that the labor dispute would adversely affect national interest, then Minister Augusto S. Sanchez issued an assumption order. In obedience to said assumption order, KILUSAN-OLALIA terminated its strike and picketing activities effective June 1, 1986.

On June 2, 1986, Med-Arbiter Bonifacio I. Marasigan, who was handling the certification election case issued an order declaring the following as eligible to vote in the certification election:

1) regular rank-and-file laborers/employees of the respondent company;

2) casuals who have worked at least six (6) months;

3) contractual employees who are allegedly in the employ of an independent contractor and who have also worked for at least 6 months.

During the pre-election conference, 64 casual workers were challenged by KIMBERLY and UKCEU-PTGWO on the ground that they are not employees of KIMBERLY but of RANK. It was agreed by all the parties that the 64 voters shall be allowed to cast their votes but that their ballots shall be segregated and subject to challenge proceedings. After the elections, UKCEU-PTGWO won over KILUSAN-OLALIA by 20 votes. This count excluded the votes of the 64 employees.

1. KILUSAN-OLALIA = 246 votes

2. (UKCEU-PTGWO) = 266 votes

3. NO UNION = 1 vote

4. SPOILED BALLOTS = 4 votes

5. CHALLENGED BALLOTS = 64 votes

581 votes

On July 2, 1986, KILUSAN-OLALIA filed with the med-arbiter a "Protest and Motion to Open and Count Challenged Votes" on the ground that the 64 workers are employees of KIMBERLY within the meaning of Article 212(e) of the Labor Code.

On July 7, 1986, KIMBERLY filed an opposition to the protest and motion, asserting that there is no employer-employee relationship between the casual workers and the company. The med-arbiter opted not to rule on the protest until the issue of regularization has been resolved by Minister of Labor and Employment (MOLE).

On November 13, 1986, then Minister Sanchez rendered a decision in BLR Case No. NS-5-164-86 declaring, among others, that:

1) the service contract for janitorial and yard maintenance service between KIMBERLY and RANK was declared legal;

2) the other casual employees not performing janitorial and yard maintenance services were deemed labor-only contractual and since labor-only contracting is prohibited, such employees were held to have attained the status of regular employees, the regularization being effective as of the date of the decision;


3) UKCEU-PTGWO, having garnered more votes than KILUSAN-OLALIA, was certified as the exclusive bargaining representative of KIMBERLY's employees;

On November 25, 1986, KIMBERLY filed a motion for reconsideration with respect to the regularization of contractual workers. KILUSAN-OLALIA filed also MR questioning the authority of the MOLE to assume jurisdiction over the representation issue.

On January 9, 1987, former Labor Minister Franklin Drilon denied both motions for reconsideration filed by KIMBERLY and KILUSAN-OLALIA. The new CBA executed between KIMBERLY and UKCEU-PTGWO was signed. Since the members were only considered regular at the time of the decision, their votes were not re-considered as regards the election. Hence, KIMBERLY-OLALIA filed this petition for certiorari seeking to reverse the decision dated November 13, 1986 and resolution dated January 9, 1987 handed down by the two former Ministers of Labor.

**NOTE: As can be deduced from the case, Casual Workers employed thru RANK were composed of: 1) workers performing janitorial and yard maintenance services; and 2) other workers NOT performing janitorial and yard maintenance services.

ISSUE:

1. WON the casual workers performing janitorial or yard maintenance service employed thru RANK (independent contractor) should be considered regular employees of Kimberly

2. WON the other casual workers not performing janitorial or yard maintenance service who, thru RANK (independent contractor), have been in the employ of KIMBERLY for more than one year became regular employees of KIMBERLY

RULING: (**No thorough discussion on independent contracting. The ruling focused on regularization.)

1. NO. We do not find it necessary to disturb the finding of then Minister Sanchez holding as legal the service contract executed between KIMBERLY and RANK, with respect to the workers performing janitorial and yard maintenance service, which is supported by substantial and convincing evidence. Besides, we take judicial notice of the general practice adopted in several government and private institutions and industries of hiring a janitorial service on an independent contractor basis. Furthermore, the occasional directives and suggestions of KIMBERLY are insufficient to erode primary and continuous control over the employees of the independent contractor. Lastly, the duties performed by these workers are not independent and integral steps in or aspects of the essential operations of KIMBERLY which is engaged in the manufacture of consumer paper products and cigarette paper, hence said workers cannot be considered regular employees.

Taken from 2009 Abad book: “In a case decided by the SC involving workers performing janitorial and yard maintenance service, it was held that inasmuch as the duties performed by the workers were not x x x integral steps in or aspects of the operations of the principal engaged in the manufacture of consumer products, the workers cannot be considered regular employees of the principal but they remain to be employees of the independent contractor. (Kimberly Independent Labor Union, etc. vs. Drilon, 185 SCRA 190 [1990].)” See Abad’s book for his contrary opinion (control test vs. character of the activities performed as being usually necessary or desirable in the business of the principal).

**NOTE: No direct mention in the case that the casual workers performing janitorial or yard maintenance service were employed for more than one year, but I believe they were so. So the difference in the ruling on regularization between the 2 classes of casual workers both employed thru an independent contractor lies mainly on the nature or character of the activities performed.

2. YES. The individual petitioners herein are the mechanics, electricians, machinists, machine shop helpers, warehouse helpers, painters, carpenters, pipefitters and masons who have been in the employ of KIMBERLY for more than one year at the time of the filing of the Petition for certification election by KILUSAN-OLALIA. Owing to their length of service with the company, these workers became regular employees, by operation of law, one year after they were employed by KIMBERLY through RANK.

The Labor Code defines who are regular employees, as follows:

Art. 280. Regular and Casual Employment. — The provisions of written agreement to the contrary not withstanding and regardless of the oral agreements of the parties, an employment shall be deemed to be regular where the employee has been engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer, except where the employment has been fixed for a specific project or under the completion or termination of which has been determined at the time of the engagement of the employee or where the work or services to be performed is seasonal in nature and the employment is for the duration of the season.

An employment shall be deemed to be casual if it is not covered by the preceding paragraph: Provided, That any employee who has rendered at least one year of service, whether such service is continuous or broken, shall be considered a regular employee with respect to the activity in which he is employed and his employment shall continue while such activity exists.

The law thus provides for two kinds of regular employees, namely: 1. those who are engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer; and 2. those who have rendered at least one year of service, whether continuous or broken, with respect to the activity in which they are employed. The individual petitioners herein who have been adjudged to be regular employees fall under the second category.

Owing to their length of service with the company, these workers became regular employees, by operation of law, one year after they were employed by KIMBERLY through RANK. While the actual regularization of these employees entails the mechanical act of issuing regular appointment papers and compliance with such other operating procedures as may be adopted by the employer, it is more in keeping with the intent and spirit of the law to rule that the status of regular employment attaches to the casual worker on the day immediately after the end of his first year of service. To rule otherwise, and to instead make their regularization dependent on the happening of some contingency or the fulfillment of certain requirements, is to impose a burden on the employee which is not sanctioned by law.

That the first stated position is the situation contemplated and sanctioned by law is further enhanced by the absence of a statutory limitation before regular status can be acquired by a casual employee. The law is explicit. As long as the employee has rendered at least one year of service, he becomes a regular employee with respect to the activity in which he is employed. The law does not provide the qualification that the employee must first


be issued a regular appointment or must first be formally declared as such before he can acquire a regular status. Obviously, where the law does not distinguish, no distinction should be drawn.

We find and so hold that the former labor minister gravely abused his discretion in holding that those workers not engaged in janitorial or yard maintenance service attained the status of regular employees only on November 13, 1986, which thus deprived them of their constitutionally protected right to vote in the certification election and choose their rightful bargaining representative. As a consequence of their status as regular employees, those workers not perforce janitorial and yard maintenance service were entitled to the payment of salary differential, cost of living allowance, 13th month pay, and such other benefits extended to regular employees under the CBA, from the day immediately following their first year of service in the company. These regular employees are likewise entitled to vote in the certification election held in July 1, 1986. Consequently, the votes cast by those employees not performing janitorial and yard maintenance service, which form part of the 64 challenged votes, should be opened, counted and considered for the purpose of determining the certified bargaining representative.

Documents

Part 2- Job Contracting & Labor Only Contracting