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Republic of the Philippines

SUPREME COURT

Manila

THIRD DIVISION

G.R. No. 192558 February 15, 2012

BITOY !"IER #$!NI%O P. !"IER&, Petitioner,

vs.

F%Y !CE CORPOR!TION'F%OR$E%YN C!STI%%O, Respondents.

D ! I S I O N

MEN$O(!, J.:

This is a petition under Rule "# of the Rules of !ivil Procedure assailin$ the March %&, '(%( Decision of the

!ourt of )ppeals (CA) and its *une +, '(%( Resolution, in !)-.R. SP No. %(+#, /hich reversed the Ma0'&, '(( Decision of the National 1abor Relations !o22ission (NLRC) in the case entitled Bitoy Javier v. Fly

Ace/Flordelyn Castillo, holdin$ that petitioner 3ito0 *avier (Javier) /as ille$all0 dis2issed fro2 e2plo02ent

and orderin$ 4l0 )ce !orporation (Fly Ace) to pa0 bac5/a$es and separation pa0 in lieu of reinstate2ent.

!)*e+ee)* Fa+*-

On Ma0 '6, '((&, *avier filed a co2plaint before the N1R! for underpa02ent of salaries and other labor

standard benefits. He alle$ed that he /as an e2plo0ee of 4l0 )ce since Septe2ber '((+, perfor2in$ various

tas5s at the respondent7s /arehouse such as cleanin$ and arran$in$ the canned ite2s before their deliver0 to

certain locations, e8cept in instances /hen he /ould be ordered to acco2pan0 the co2pan07s deliver0

vehicles, as pahinante9 that he reported for /or5 fro2 Monda0 to Saturda0 fro2 +:(( o7cloc5 in the 2ornin$ to

#:(( o7cloc5 in the afternoon9 that durin$ his e2plo02ent, he /as not issued an identification card and pa0slips

b0 the co2pan09 that on Ma0 ;, '((&, he reported for /or5 but he /as no lon$er allo/ed to enter the co2pan0

pre2ises b0 the securit0 $uard upon the instruction of Ruben On$ (Mr. Ong), his superior9 that after several

2inutes of be$$in$ to the $uard to allo/ hi2 to enter, he sa/ On$ /ho2 he approached and as5ed /h0 he

/as bein$ barred fro2 enterin$ the pre2ises9 that On$ replied b0 sa0in$, <an!ngin "o ana# "o$< that he

then /ent ho2e and discussed the 2atter /ith his fa2il09 that he discovered that On$ had been courtin$ his

dau$hter )nnal0n after the t/o 2et at a fiesta celebration in Malabon !it09 that )nnal0n tried to tal5 to On$ and

convince hi2 to spare her father fro2 trouble but he refused to accede9 that thereafter, *avier /as ter2inated

fro2 his e2plo02ent /ithout notice9 and that he /as neither $iven the opportunit0 to refute the cause=s of his

dis2issal fro2 /or5.

To support his alle$ations, *avier presented an affidavit of one 3en$ie Valen>uela /ho alle$ed that *avier /as

a stevedore or pahinante of 4l0 )ce fro2 Septe2ber '((+ to *anuar0 '((&. The said affidavit /as subscribed

before the 1abor )rbiter (LA).

4or its part, 4l0 )ce averred that it /as en$a$ed in the business of i2portation and sales of $roceries.

So2eti2e in Dece2ber '((+, *avier /as contracted b0 its e2plo0ee, Mr. On$, as e8tra helper on

a pa#ya% basis at an a$reed rate of P 6((.(( per trip, /hich /as later increased to P 6'#.(( in *anuar0 '((&.

Mr. On$ contracted *avier rou$hl0 # to ; ti2es onl0 in a 2onth /henever the vehicle of its contracted hauler,



Mil2ar Haulin$ Services, /as not available. On )pril 6(, '((&, 4l0 )ce no lon$er needed the services of *avier.

Den0in$ that he /as their e2plo0ee, 4l0 )ce insisted that there /as no ille$al dis2issal. 4l0 )ce sub2itted a

cop0 of its a$ree2ent /ith Mil2ar Haulin$ Services and copies of ac5no/led$2ent receipts evidencin$

pa02ent to *avier for his contracted services bearin$ the /ords, <dail0 2anpo/er (pa#ya%/piece rate pay)<

and the latter7s si$natures=initials.

Ru/) o *e %abor !rb/*er

On Nove2ber '&, '((&, the 1) dis2issed the co2plaint for lac5 of 2erit on the $round that *avier failed to

present proof that he /as a re$ular e2plo0ee of 4l0 )ce. He /rote:

!o2plainant has no e2plo0ee ID sho/in$ his e2plo02ent /ith the Respondent nor an0 docu2ent sho/in$

that he received the benefits accorded to re$ular e2plo0ees of the Respondents. His contention that

Respondent failed to $ive hi2 said ID and pa0slips i2plies that indeed he /as not a re$ular e2plo0ee of 4l0

)ce considerin$ that co2plainant /as a helper and that Respondent co2pan0 has contracted a re$ular

truc5in$ for the deliver0 of its products.

Respondent 4l0 )ce is not en$a$ed in truc5in$ business but in the i2portation and sales of $roceries. Since

there is a re$ular hauler to deliver its products, /e $ive credence to Respondents7 clai2 that co2plainant /as

contracted on <pa5iao< basis.

)s to the clai2 for underpa02ent of salaries, the pa0roll presented b0 the Respondents sho/in$ salaries of

/or5ers on <pa5iao< basis has evidentiar0 /ei$ht because althou$h the si$nature of the co2plainant appearin$

thereon are not unifor2, the0 appeared to be his true si$nature.

8 8 8 8

Hence, as co2plainant received the ri$htful salar0 as sho/n b0 the above described pa0rolls, Respondents

are not liable for salar0 differentials.

Ru/) o *e N%RC

On appeal /ith the N1R!, *avier /as favored. It ruled that the 1) s5irted the ar$u2ent of *avier and

i22ediatel0 concluded that he /as not a re$ular e2plo0ee si2pl0 because he failed to present proof. It /as of

the vie/ that a pa#ya% basis arran$e2ent did not preclude the e8istence of e2plo0ere2plo0ee relationship.

<Pa02ent b0 result 8 8 8 is a 2ethod of co2pensation and does not define the essence of the relation. It is a

2ere 2ethod of co2putin$ co2pensation, not a basis for deter2inin$ the e8istence or absence of an

e2plo0ere2plo0ee relationship. <The N1R! further averred that it did not follo/ that a /or5er /as a ?ob

contractor and not an e2plo0ee, ?ust because the /or5 he /as doin$ /as not directl0 related to the e2plo0er7strade or business or the /or5 2a0 be considered as <e8tra< helper as in this case9 and that the relationship of

an e2plo0er and an e2plo0ee /as deter2ined b0 la/ and the sa2e /ould prevail /hatever the parties 2a0

call it. In this case, the N1R! held that substantial evidence /as sufficient basis for ?ud$2ent on the e8istence

of the e2plo0ere2plo0ee relationship. *avier /as a re$ular e2plo0ee of 4l0 )ce because there /as

reasonable connection bet/een the particular activit0 perfor2ed b0 the e2plo0ee (as a &pahinante&) in relation

to the usual business or trade of the e2plo0er @i2portation, sales and deliver0 of $roceriesA. He 2a0 not be

considered as an independent contractor because he could not e8ercise an0 ?ud$2ent in the deliver0 of

co2pan0 products. He /as onl0 en$a$ed as a <helper.<



4indin$ *avier to be a re$ular e2plo0ee, the N1R! ruled that he /as entitled to a securit0 of tenure. 4or failin$

to present proof of a valid cause for his ter2ination, 4l0 )ce /as found to be liable for ille$al dis2issal of *avier

/ho /as li5e/ise entitled to bac5/a$es and separation pa0 in lieu of reinstate2ent. The N1R! thus ordered:

34EREFORE, pre2ises considered, co2plainant7s appeal is partiall0 -R)NTD. The assailed Decision of

the labor arbiter is V)!)TD and a ne/ one is hereb0 entered holdin$ respondent 41B )! !ORPOR)TION

$uilt0 of ille$al dis2issal and nonpa02ent of %6th 2onth pa0. !onseCuentl0, it is hereb0 ordered to pa0co2plainant D)NI1O <3ito0< *)VIR the follo/in$:

%. 3ac5/a$es P "#,++(.&6

'. Separation pa0, in lieu of reinstate2ent &,"#(.((

6. npaid %6th 2onth pa0 @proportionateA #,;66.66

TOT)1 P #,&#".%;

)ll other clai2s are dis2issed for lac5 of 2erit.

SO OR$ERE$.

Ru/) o *e Cour* o !ea-

On March %&, '(%(, the !) annulled the N1R! findin$s that *avier /as indeed a for2er e2plo0ee of 4l0 )ce

and reinstated the dis2issal of *avier7s co2plaint as ordered b0 the 1). The !) e8ercised its authorit0 to 2a5e

its o/n factual deter2ination anent the issue of the e8istence of an e2plo0ere2plo0ee relationship bet/een

the parties. )ccordin$ to the !):

8 8 8

In an ille$al dis2issal case the on!s pro'andi rests on the e2plo0er to prove that its dis2issal /as for a valid

cause. Ho/ever, before a case for ille$al dis2issal can prosper, an e2plo0ere2plo0ee relationship 2ust first

be established. 8 8 8 it is incu2bent upon private respondent to prove the e2plo0eee2plo0er relationship b0

substantial evidence.

8 8 8

It is incu2bent upon private respondent to prove, b0 substantial evidence, that he is an e2plo0ee of

petitioners, but he failed to dischar$e his burden. The nonissuance of a co2pan0issued identification card to

private respondent supports petitioners7 contention that private respondent /as not its e2plo0ee.

The !) li5e/ise added that *avier7s failure to present salar0 vouchers, pa0slips, or other pieces of evidence to

bolster his contention, pointed to the inescapable conclusion that he /as not an e2plo0ee of 4l0 )ce. 4urther,

it found that *avier7s /or5 /as not necessar0 and desirable to the business or trade of the co2pan0, as it /as

onl0 /hen there /ere scheduled deliveries, /hich a re$ular haulin$ service could not deliver, that 4l0 )ce



/ould contract the services of *avier as an e8tra helper. 1astl0, the !) declared that the facts alle$ed b0 *avier

did not pass the <control test.<

He contracted /or5 outside the co2pan0 pre2ises9 he /as not reCuired to observe definite hours of /or59 he

/as not reCuired to report dail09 and he /as free to accept other /or5 else/here as there /as no e8clusivit0 of

his contracted service to the co2pan0, the sa2e bein$ coter2inous /ith the trip onl0. Since no substantial

evidence /as presented to establish an e2plo0ere2plo0ee relationship, the case for ille$al dis2issal couldnot prosper.

The petitioners 2oved for reconsideration, but to no avail.

Hence, this appeal anchored on the follo/in$ $rounds:

I.

34ET4ER T4E 4ONOR!B%E COURT OF !PPE!%S ERRE$ IN 4O%$ING T4!T T4E

PETITIONER 3!S NOT ! REGU%!R EMP%OYEE OF F%Y !CE.

II.

34ET4ER T4E 4ONOR!B%E COURT OF !PPE!%S ERRE$ IN 4O%$ING T4!T T4E

PETITIONER IS NOT ENTIT%E$ TO 4IS MONET!RY C%!IMS.

The petitioner contends that other than its bare alle$ations and selfservin$ affidavits of the other e2plo0ees,

4l0 )ce has nothin$ to substantiate its clai2 that *avier /as en$a$ed on a pa#ya% basis. )ssu2in$ that *avier

/as indeed hired on a pa#ya% basis, it does not preclude his re$ular e2plo02ent /ith the co2pan0. ven the

ac5no/led$2ent receipts bearin$ his si$nature and the confir2in$ receipt of his salaries /ill not sho/ the true

nature of his e2plo02ent as the0 do not reflect the necessar0 details of the co22issioned tas5. 3esides,

*avier7s tas5s as pahinante are related, necessar0 and desirable to the line of business b0 4l0 )ce /hich is

en$a$ed in the i2portation and sale of $rocer0 ite2s. <On da0s /hen there /ere no scheduled deliveries, he

/or5ed in petitioners7 /arehouse, arran$in$ and cleanin$ the stored cans for deliver0 to clients.< More

i2portantl0, *avier /as sub?ect to the control and supervision of the co2pan0, as he /as 2ade to report to the

office fro2 Monda0 to Saturda0, fro2 +:(( o7cloc5 in the 2ornin$ until #:(( o7cloc5 in the afternoon. The list of

deliverable $oods, to$ether /ith the correspondin$ clients and their respective purchases and addresses,

/ould necessaril0 have been prepared b0 4l0 )ce. !learl0, he /as sub?ected to co2pliance /ith co2pan0rules and re$ulations as re$ards /or5in$ hours, deliver0 schedule and output, and his other duties in the

/arehouse.

The petitioner chiefl0 relied on Chave v. NLRC /here the !ourt ruled that pa02ent to a /or5er on a per trip

basis is not si$nificant because <this is 2erel0 a 2ethod of co2putin$ co2pensation and not a basis for

deter2inin$ the e8istence of e2plo0ere2plo0ee relationship.< *avier li5e/ise invo5es the rule that, <in

controversies bet/een a laborer and his 2aster, 8 8 8 doubts reasonabl0 arisin$ fro2 the evidence should be

resolved in the for2er7s favour. The polic0 is reflected is no less than the !onstitution, 1abor !ode and !ivil

!ode.<



!lai2in$ to be an e2plo0ee of 4l0 )ce, petitioner asserts that he /as ille$all0 dis2issed b0 the latter7s failure

to observe substantive and procedural due process. Since his dis2issal /as not based on an0 of the causes

reco$ni>ed b0 la/, and /as i2ple2ented /ithout notice, *avier is entitled to separation pa0 and bac5/a$es.

In its !o22ent, 4l0 )ce insists that there /as no substantial evidence to prove e2plo0ere2plo0ee

relationship. Havin$ a service contract /ith Mil2ar Haulin$ Services for the purpose of transportin$ and

deliverin$ co2pan0 products to custo2ers, 4l0 )ce contracted *avier as an e8tra helper or pahinante on a2ere <per trip basis.< *avier, /ho /as actuall0 a loiterer in the area, onl0 acco2panied and assisted the

co2pan0 driver /hen Mil2ar could not deliver or /hen the e8i$enc0 of e8tra deliveries arises for rou$hl0 five to

si8 ti2es a 2onth. 3efore 2a5in$ a deliver0, 4l0 )ce /ould turn over to the driver and *avier the deliver0

vehicle /ith its loaded co2pan0 products. Eith the vehicle and products in their custod0, the driver and *avier

</ould leave the co2pan0 pre2ises usin$ their o/n 2eans, 2ethod, best ?ud$2ent and discretion on ho/ to

deliver, ti2e to deliver, /here and F/henG to start, and 2anner of deliverin$ the products.<

4l0 )ce dis2isses *avier7s clai2s of e2plo02ent as baseless assertions. )side fro2 his bare alle$ations, he

presented nothin$ to substantiate his status as an e2plo0ee. <It is a basic rule of evidence that each part0

2ust prove his affir2ative alle$ation. If he clai2s a ri$ht $ranted b0 la/, he 2ust prove his clai2 b0 co2petent

evidence, rel0in$ on the stren$th of his o/n evidence and not upon the /ea5ness of his opponent.< Invo5in$

the case of Lope v. Bodega City 4l0 )ce insists that in an ille$al dis2issal case, the burden of proof is upon

the co2plainant /ho clai2s to be an e2plo0ee. It is essential that an e2plo0ere2plo0ee relationship be

proved b0 substantial evidence. Thus, it cites:

In an ille$al dis2issal case, the on!s pro'andi rests on the e2plo0er to prove that its dis2issal of an e2plo0ee

/as for a valid cause. Ho/ever, before a case for ille$al dis2issal can prosper, an e2plo0ere2plo0ee

relationship 2ust first be established.

4l0 )ce points out that *avier 2erel0 offers factual assertions that he /as an e2plo0ee of 4l0 )ce, </hich are

unfortunatel0 not supported b0 proof, docu2entar0 or other/ise.< *avier si2pl0 assu2ed that he /as ane2plo0ee of 4l0 )ce, absent an0 co2petent or relevant evidence to support it. <He perfor2ed his contracted

/or5 outside the pre2ises of the respondent9 he /as not even reCuired to report to /or5 at re$ular hours9 he

/as not 2ade to re$ister his ti2e in and ti2e out ever0 ti2e he /as contracted to /or59 he /as not sub?ected

to an0 disciplinar0 sanction i2posed to other e2plo0ees for co2pan0 violations9 he /as not issued a co2pan0

I.D.9 he /as not accorded the sa2e benefits $iven to other e2plo0ees9 he /as not re$istered /ith the Social

Securit0 S0ste2 (***) as petitioner7s e2plo0ee9 and, he /as free to leave, accept and en$a$e in other 2eans

of livelihood as there is no e8clusivit0 of his contracted services /ith the petitioner, his services bein$ co

ter2inus /ith the trip onl0. )ll these lead to the conclusion that petitioner is not an e2plo0ee of the

respondents.<

Moreover, 4l0 )ce clai2s that it had <no ri$ht to control the result, 2eans, 2anner and 2ethods b0 /hich*avier /ould perfor2 his /or5 or b0 /hich the sa2e is to be acco2plished.< In other /ords, *avier and the

co2pan0 driver /ere $iven a free hand as to ho/ the0 /ould perfor2 their contracted services and neither

/ere the0 sub?ected to definite hours or condition of /or5.

4l0 )ce li5e/ise clai2s that *avier7s function as a pahinante /as not directl0 related or necessar0 to its

principal business of i2portation and sales of $roceries. ven /ithout *avier, the business could operate its

usual course as it did not involve the business of inland transportation. 1astl0, the ac5no/led$2ent receipts

bearin$ *avier7s si$nature and /ords < pa#iao rate,< referrin$ to his earned salaries on a per trip basis, have



evidentiar0 /ei$ht that the 1) correctl0 considered in arrivin$ at the conclusion that *avier /as not an

e2plo0ee of the co2pan0.

The !ourt affir2s the assailed !) decision.

It 2ust be noted that the issue of *avier7s alle$ed ille$al dis2issal is anchored on the e8istence of an

e2plo0ere2plo0ee relationship bet/een hi2 and 4l0 )ce. This is essentiall0 a Cuestion of fact. -enerall0, the!ourt does not revie/ errors that raise factual Cuestions. Ho/ever, /hen there is conflict a2on$ the factual

findin$s of the antecedent decidin$ bodies li5e the 1), the N1R! and the !), <it is proper, in the e8ercise of

Our eCuit0 ?urisdiction, to revie/ and reevaluate the factual issues and to loo5 into the records of the case and

ree8a2ine the Cuestioned findin$s.< In dealin$ /ith factual issues in labor cases, <substantial evidence that

a2ount of relevant evidence /hich a reasonable 2ind 2i$ht accept as adeCuate to ?ustif0 a conclusion is

sufficient.<

)s the records bear out, the 1) and the !) found *avier7s clai2 of e2plo02ent /ith 4l0 )ce as /antin$ and

deficient. The !ourt is constrained to a$ree. )lthou$h Section %(, Rule VII of the Ne/ Rules of Procedure of

the N1R! allo/s a rela8ation of the rules of procedure and evidence in labor cases, this rule of liberalit0 does

not 2ean a co2plete dispensation of proof. 1abor officials are en?oined to use reasonable 2eans to ascertain

the facts speedil0 and ob?ectivel0 /ith little re$ard to technicalities or for2alities but no/here in the rules are

the0 provided a license to co2pletel0 discount evidence, or the lac5 of it. The Cuantu2 of proof reCuired,

ho/ever, 2ust still be satisfied. Hence, </hen confronted /ith conflictin$ versions on factual 2atters, it is for

the2 in the e8ercise of discretion to deter2ine /hich part0 deserves credence on the basis of evidence

received, sub?ect onl0 to the reCuire2ent that their decision 2ust be supported b0 substantial

evidence.< )ccordin$l0, the petitioner needs to sho/ b0 substantial evidence that he /as indeed an e2plo0ee

of the co2pan0 a$ainst /hich he clai2s ille$al dis2issal.

8pectedl0, opposin$ parties /ould stand poles apart and proffer alle$ations as different as chal5 and cheese.

It is, therefore, incu2bent upon the !ourt to deter2ine /hether the part0 on /ho2 the burden to prove lies/as able to hurdle the sa2e. <No particular for2 of evidence is reCuired to prove the e8istence of such

e2plo0ere2plo0ee relationship. )n0 co2petent and relevant evidence to prove the relationship 2a0 be

ad2itted. Hence, /hile no particular for2 of evidence is reCuired, a findin$ that such relationship e8ists 2ust

still rest on so2e substantial evidence. Moreover, the substantialit0 of the evidence depends on its Cuantitative

as /ell as its +!alitative aspects.< )lthou$h substantial evidence is not a function of Cuantit0 but rather of

Cualit0, the 8 8 8 circu2stances of the instant case de2and that so2ethin$ 2ore should have been proffered.

Had there been other proofs of e2plo02ent, such as 8 8 8 inclusion in petitioner7s pa0roll, or a clear e8ercise

of control, the !ourt /ould have affir2ed the findin$ of e2plo0ere2plo0ee relationship.<

In su2, the rule of thu2b re2ains: the on!s pro'andi falls on petitioner to establish or substantiate such clai2

b0 the reCuisite Cuantu2 of evidence. <Ehoever clai2s entitle2ent to the benefits provided b0 la/ shouldestablish his or her ri$ht thereto 8 8 8.< Sadl0, *avier failed to adduce substantial evidence as basis for the

$rant of relief.

In this case, the 1) and the !) both concluded that *avier failed to establish his e2plo02ent /ith 4l0 )ce. 30

/a0 of evidence on this point, all that *avier presented /ere his selfservin$ state2ents purportedl0 sho/in$

his activities as an e2plo0ee of 4l0 )ce. !learl0, *avier failed to pass the substantialit0 reCuire2ent to support

his clai2. Hence, the !ourt sees no reason to depart fro2 the findin$s of the !).



Ehile *avier re2ains fir2 in his position that as an e2plo0ed stevedore of 4l0 )ce, he /as 2ade to /or5 in the

co2pan0 pre2ises durin$ /ee5da0s arran$in$ and cleanin$ $rocer0 ite2s for deliver0 to clients, no other proof

/as sub2itted to fortif0 his clai2. The lone affidavit e8ecuted b0 one 3en$ie Valen>uela /as unsuccessful in

stren$thenin$ *avier7s cause. In said docu2ent, all Valen>uela attested to /as that he /ould freCuentl0 see

*avier at the /or5place /here the latter /as also hired as stevedore. !ertainl0, in $au$in$ the evidence

presented b0 *avier, the !ourt cannot i$nore the inescapable conclusion that his 2ere presence at the

/or5place falls short in provin$ e2plo02ent therein. The supportin$ affidavit could have, to an e8tent,bolstered *avier7s clai2 of bein$ tas5ed to clean $rocer0 ite2s /hen there /ere no scheduled deliver0 trips,

but no infor2ation /as offered in this sub?ect si2pl0 because the /itness had no personal 5no/led$e of

*avier7s e2plo02ent status in the co2pan0. Veril0, the !ourt cannot accept *avier7s state2ents, hoo5, line and

sin5er.

The !ourt is of the considerable vie/ that on *avier lies the burden to pass the /ellsettled tests to deter2ine

the e8istence of an e2plo0ere2plo0ee relationship, vi : @%A the selection and en$a$e2ent of the e2plo0ee9

@'A the pa02ent of /a$es9 @6A the po/er of dis2issal9 and @"A the po/er to control the e2plo0ee7s conduct. Of

these ele2ents, the 2ost i2portant criterion is /hether the e2plo0er controls or has reserved the ri$ht to

control the e2plo0ee not onl0 as to the result of the /or5 but also as to the 2eans and 2ethods b0 /hich the

result is to be acco2plished.

In this case, *avier /as not able to persuade the !ourt that the above ele2ents e8ist in his case.,avvphi, He

could not sub2it co2petent proof that 4l0 )ce en$a$ed his services as a re$ular e2plo0ee9 that 4l0 )ce paid

his /a$es as an e2plo0ee, or that 4l0 )ce could dictate /hat his conduct should be /hile at /or5. In other

/ords, *avier7s alle$ations did not establish that his relationship /ith 4l0 )ce had the attributes of an e2plo0er

e2plo0ee relationship on the basis of the above2entioned fourfold test. Eorse, *avier /as not able to refute

4l0 )ce7s assertion that it had an a$ree2ent /ith a haulin$ co2pan0 to underta5e the deliver0 of its $oods. It

/as also bafflin$ to reali>e that *avier did not dispute 4l0 )ce7s denial of his services7 e8clusivit0 to the

co2pan0. In short, all that *avier laid do/n /ere bare alle$ations /ithout corroborative proof.

4l0 )ce does not dispute havin$ contracted *avier and paid hi2 on a <per trip< rate as a stevedore, albeit on

a pa#ya% basis. The !ourt cannot fail to note that 4l0 )ce presented docu2entar0 proof that *avier /as indeed

paid on a pa#ya% basis per the ac5no/led$2ent receipts ad2itted as co2petent evidence b0 the 1).

nfortunatel0 for *avier, his 2ere denial of the si$natures affi8ed therein cannot auto2aticall0 s/a0 us to

i$nore the docu2ents because <for$er0 cannot be presu2ed and 2ust be proved b0 clear, positive and

convincin$ evidence and the burden of proof lies on the part0 alle$in$ for$er0.<

!onsiderin$ the above findin$s, the !ourt does not see the necessit0 to resolve the second issue presented.

One final note. The !ourt7s decision does not contradict the settled rule that <pa02ent b0 the piece is ?ust a

2ethod of co2pensation and does not define the essence of the relation.< Pa02ent on a piecerate basis doesnot ne$ate re$ular e2plo02ent. <The ter2 /a$e7 is broadl0 defined in )rticle + of the 1abor !ode as

re2uneration or earnin$s, capable of bein$ e8pressed in ter2s of 2one0 /hether fi8ed or ascertained on a

ti2e, tas5, piece or co22ission basis. Pa02ent b0 the piece is ?ust a 2ethod of co2pensation and does not

define the essence of the relations. Nor does the fact that the petitioner is not covered b0 the SSS affect the

e2plo0ere2plo0ee relationship. Ho/ever, in deter2inin$ /hether the relationship is that of e2plo0er and

e2plo0ee or one of an independent contractor, each case 2ust be deter2ined on its o/n facts and all the

features of the relationship are to be considered.< nfortunatel0 for *avier, the attendant facts and

circu2stances of the instant case do not provide the !ourt /ith sufficient reason to uphold his clai2ed status

as e2plo0ee of 4l0 )ce.



Ehile the !onstitution is co22itted to the polic0 of social ?ustice and the protection of the /or5in$ class, it

should not be supposed that ever0 labor dispute /ill be auto2aticall0 decided in favor of labor. Mana$e2ent

also has its ri$hts /hich are entitled to respect and enforce2ent in the interest of si2ple fair pla0. Out of its

concern for the less privile$ed in life, the !ourt has inclined, 2ore often than not, to/ard the /or5er and upheld

his cause in his conflicts /ith the e2plo0er. Such favoritis2, ho/ever, has not blinded the !ourt to the rule that

?ustice is in ever0 case for the deservin$, to be dispensed in the li$ht of the established facts and the applicable

la/ and doctrine.

34EREFORE, the petition is $ENIE$. The March %&, '(%( Decision of the !ourt of )ppeals and its *une +,

'(%( Resolution, in !)-.R. SP No. %(+#, are hereb0 !FFIRME$.

SO ORDRD.



6G.R. No. 1207. May 1, 1999:

COC! CO%! BOTT%ERS P4I%S., INC., petitioner, vs. N!TION!% %!BOR RE%!TIONS COMMISSION a)

R!MON B. C!NONIC!TO, respondents.

$ E C I S I O N

BE%%OSI%%O, J .;

This petition for certiorari under Rule ;# of the Revised Rules of !ourt assails the 6 *anuar0 %#

decision of the National 1abor Relations !o22ission @N1R!A holdin$ that private respondent Ra2on 3

!anonicato is a re$ular e2plo0ee of petitioner !oca !ola 3ottlers Phils. Inc. @!O!) !O1)A entitled to

reinstate2ent and bac5 /a$es. The N1R! reversed the decision of the 1abor )rbiter of '& )pril %" /hich

declared that no e2plo0ere2plo0ee relationship e8isted bet/een !O!) !O1) and !anonicato thereb0

foreclosin$ entitle2ent to reinstate2ent and bac5 /a$es.

On + )pril %&; !O!) !O1) entered into a contract of ?anitorial services /ith 3acolod *anitorial Services

@3*SA stipulatin$ a2on$ others

That the 4irst Part0 @!O!) !O1)A desires to en$a$e the services of the Second Part0 @3*SA, as an

Independent !ontractor, to perfor2 and provide for the 2aintenance, sanitation and cleanin$ services for the

areas hereinbelo/ 2entioned, all located /ithin the aforesaid buildin$ of the 4irst Part0 8 8 8 8

%. he scope o- %or# o- the *econd arty incl!des all -loors %alls doors vertical and horiontal areas ceiling

all %indo%s glass s!r-aces partitions -!rnit!re -it!res and other interiors %ithin the a-orestated covered

areas.

'. 8cept holida0s /hich are rest da0s, the Second Part0 /ill underta5e dail0 the follo/in$: %A S/eepin$,

da2p2oppin$, spot scrubbin$ and polishin$ of floors9 'A !leanin$, saniti>in$ and disinfectin$ a$ents to be

used on co22odes, urinals and /ashbasins, /ater spots on chro2e and other fi8tures to be chec5ed9 6A

!leanin$ of $lass surfaces, /indo/s and $lass partitions that reCuire dail0 attention9 "A !leanin$ and dustin$ of

hori>ontal and vertical surfaces9 #A !leanin$ of fi8tures, counters, panels and sills9 ;A !lean, pic5up ci$arette

butts fro2 sandburns and ashtra0s and trash receptacles9 +A Trash and rubbish disposal and burnin$.

In addition, the Second Part0 /ill also do the follo/in$ once a /ee5, to /it: %A !leanin$, /a8in$ and polishin$

of lobbies and offices9 'A Eashin$ of /indo/s, $lasses that reCuire cleanin$9 6A Thorou$h disinfectin$ and

cleanin$ of toilets and /ashroo2s.

6. he *econd arty shall s!pply the necessary !tensils e+!ip"ent and s!pervision and it shall only e"ploy

the services o- -i-teen (,0) honest relia'le care-!lly screened cooperative and trained personnel %ho are in

good -aith in the per-or"ance o- its herein !nderta#ing

". The Second Part0 hereb0 $uarantees a$ainst unsatisfactor0 /or52anship. Minor repair of co2fort roo2s

are free of char$e provided the 4irst Part0 /ill suppl0 the necessar0 2aterials for such repairs at its

e8pense. As "ay 'e necessary the *econd arty shall also report on s!ch part or areas o- the pre"ises

covered 'y this contract %hich "ay re+!ire repairs -ro" ti"e to ti"e 8 8 8 @italics suppliedA.



ver0 0ear thereafter a service contract /as entered into bet/een the parties under si2ilar ter2s and

conditions until about Ma0 %".

On '; October %& !O!) !O1) hired private respondent Ra2on !anonicato as a casual e2plo0ee and

assi$ned hi2 to the bottlin$ cre/ as a substitute for absent e2plo0ees. In )pril %( !O!) !O1) ter2inated

!anonicatoJs casual e2plo02ent. 1ater that 0ear !O!) !O1) availed of !anonicatoJs services, this ti2e as a

painter in contractual pro?ects /hich lasted fro2 fifteen @%#A to thirt0 @6(A da0s.

On % )pril %% !anonicato /as hired as a ?anitor b0 3*S /hich assi$ned hi2 to !O!) !O1) considerin$

his fa2iliarit0 /ith its pre2ises. On # and + March %' !anonicato started paintin$ the facilities of !O!)

!O1) and continued doin$ so several 2onths thereafter or so for a fe/ da0s ever0 ti2e until ; to '# *une

%6. -oaded b0 infor2ation that !O!) !O1) e2plo0ed previous 3*S e2plo0ees /ho filed a co2plaint

a$ainst the co2pan0 for re$ulari>ation pursuant to a co2pro2ise a$ree2ent, !anonicato sub2itted a si2ilar

co2plaint a$ainst !O!) !O1) to the 1abor )rbiter on & *une %6. The co2plaint /as doc5eted as R)3

!ase No. (;(;%(66+6.

Eithout notif0in$ 3*S, !anonicato no lon$er reported to his !O!) !O1) assi$n2ent startin$ ' *une

%6. On %# *ul0 %6 he sent his sister Ro/ena to collect his salar0 fro2 3*S. 3*S released his salar0 but

advised Ro/ena to tell !anonicato to report for /or5. !lai2in$ that he /as barred fro2 enterin$ the pre2ises

of !O!) !O1) on either %" or %# *ul0 %6, !anonicato 2et /ith the proprietress of 3*S, -loria 1acson, /ho

offered hi2 assi$n2ents in other fir2s /hich he ho/ever refused.

On '6 *ul0 %6 !anonicato a2ended his co2plaint a$ainst !O!) !O1) b0 citin$ instead as $rounds

therefor ille$al dis2issal and underpa02ent of /a$es. He included 3*S therein as a corespondent. On '&

Septe2ber %6 3*S sent hi2 a letter advisin$ hi2 to report for /or5 /ithin three @6A da0s fro2 receipt

other/ise, he /ould be considered to have abandoned his ?ob.

On '& )pril %" the 1abor )rbiter ruled that: @aA there /as no e2plo0ere2plo0ee relationship bet/een!O!) !O1) and Ra2on !anonicato because 3*S /as !anonicatoJs real e2plo0er9 @bA 3*S /as a le$iti2ate

?ob contractor, hence, an0 liabilit0 of !O!) !O1) as to !anonicatoJs salar0 or /a$e differentials /as solidar0

/ith 3*S in accordance /ith pars. % and ' of )rt. %(;, 1abor !ode9 @cA !O!) !O1) and 3*S 2ust ?ointl0 and

severall0 pa0 !anonicato his /a$e differentials a2ountin$ to P',++;.&( and his %6th 2onth salar0

of P%,(;&.((, includin$ ten @%(KA percent attorne0Js fees in the su2 of P6&"."&. The 1abor )rbiter also

ordered that all other clai2s b0 !anonicato a$ainst !O!) !O1) be dis2issed for lac5 of e2plo0ere2plo0ee

relationship9 that the co2plaint for ille$al dis2issal as /ell as all the other clai2s be li5e/ise dis2issed for lac5

of 2erit9 and that !O!) !O1) and 3*S deposit P","'.'& /ith the Depart2ent of 1abor Re$ional )rbitration

3ranch Office /ithin ten @%(A da0s fro2 receipt of the decision.

The N1R! re?ected on appeal the decision of the 1abor )rbiter on the $round that the ?anitorial services of!anonicato /ere found to be necessar0 or desirable in the usual business or trade of !O!) !O1). The N1R!

accepted !anonicatoJs proposition that his /or5 /ith the 3*S /as the sa2e as /hat he did /hile still a casua

e2plo0ee of !O!) !O1). In so holdin$ the N1R! applied )rt. '&( of the 1abor !ode and declared that

!anonicato /as a re$ular e2plo0ee of !O!) !O1) and entitled to reinstate2ent and pa02ent of P%&,%(#.%(

in bac5 /a$es.

On '; Ma0 %# the N1R! denied !O!) !O1)Js 2otion for reconsideration for lac5 of 2erit. Hence, this

petition, assi$nin$ as errors: @aA N1R!Js findin$ that ?anitorial services /ere necessar0 and desirable in !O!)

!O1)Js trade and business9 @bA N1R!Js application of )rt. '&( of the 1abor !ode in resolvin$ the issue of



/hether an e2plo02ent relationship e8isted bet/een the parties9 @cA N1R!Js rulin$ that there /as an

e2plo0ere2plo0ee relationship bet/een petitioner and !anonicato despite its virtual affir2ance that 3*S /as

a le$iti2ate ?ob contractor9 @dA N1R!Js declaration that !anonicato /as a re$ular e2plo0ee of petitioner

althou$h he had rendered the co2pan0 onl0 five @#A 2onths of casual e2plo02ent9 and, @eA N1R!Js order

directin$ the reinstate2ent of !anonicato and the pa02ent to hi2 of si8 @;A 2onths bac5 /a$es.

Ee find $ood cause to sustain petitioner. 4indin$s of fact of ad2inistrative offices are $enerall0 accordedrespect b0 us and no lon$er revie/ed for the reason that such factual findin$s are considered to be /ithin their

field of e8pertise. 8ception ho/ever is 2ade, as in this case, /hen the N1R! and the 1abor )rbiter 2ade

contradictor0 findin$s.

Ee perceive at the outset the disposition of the N1R! that ?anitorial services are necessar0 and desirable

to the trade or business of petitioner !O!) !O1). 3ut this is inconsistent /ith our pronounce2ent in 1i"'erly

2ndependent La'or 3nion v. 4rilon /here the !ourt too5 ?udicial notice of the practice adopted in severa

$overn2ent and private institutions and industries of hirin$ ?anitorial services on an <independent contractor

basis.< In this respect, althou$h ?anitorial services 2a0 be considered directl0 related to the principal business

of an e2plo0er, as /ith ever0 business, /e dee2ed the2 unnecessar0 in the conduct of the e2plo0erJs

principal business.

This ?udicial notice, of course, rests on the assu2ption that the independent contractor is a le$iti2ate ?ob

contractor so that there can be no doubt as to the e8istence of an e2plo0ere2plo0ee relationship bet/een

contractor and the /or5er. In this situation, the onl0 pertinent Cuestion that 2a0 arise /ill no lon$er deal /ith

/hether there e8ists an e2plo02ent bond but /hether the e2plo0ee 2a0 be considered re$ular or casual as

to deserve the application of )rt. '&( of the 1abor !ode.

It is an alto$ether different 2atter /hen the ver0 e8istence of an e2plo02ent relationship is in

Cuestion. This /as the issue $enerated b0 !anonicatoJs application for re$ulari>ation of his e2plo02ent /ith

!O!) !O1) and the subseCuent denial b0 the latter of an e2plo0ere2plo0ee relationship /ith theapplicant. It /as error therefore for the N1R! to appl0 )rt. '&( of the 1abor !ode in deter2inin$ the e8istence

of an e2plo02ent relationship of the parties herein, especiall0 in li$ht of our e8plicit holdin$ in *inger *e%ing

Machine Co"pany v. 4rilon that 5

8 8 8 8 FtGhe definition that re$ular e2plo0ees are those /ho perfor2 activities /hich are desirable and

necessar0 for the business of the e2plo0er is not deter2inative in this case. )n0 a$ree2ent 2a0 provide that

one part0 shall render services for and in behalf of another for a consideration @no 2atter ho/ necessar0 for

the latterJs businessA even /ithout bein$ hired as an e2plo0ee. This is precisel0 true in the case of an

independent contractorship as /ell as in an a$enc0 a$ree2ent. The !ourt a$rees /ith the petitionerJs

ar$u2ent that )rticle '&( is not the 0ardstic5 for deter2inin$ the e8istence of an e2plo02ent relationship

because it 2erel0 distin$uishes bet/een t/o 5inds of e2plo0ees, i.e., re$ular e2plo0ees and casuale2plo0ees, for purposes of deter2inin$ the ri$ht of an e2plo0ee to certain benefits, to ?oin or for2 a union, or

to securit0 of tenure. )rticle '&( does not appl0 /here the e8istence of an e2plo02ent relationship is in

dispute.

In deter2inin$ the e8istence of an e2plo0ere2plo0ee relationship it is necessar0 to deter2ine /hether

the follo/in$ factors are present: @aA the selection and en$a$e2ent of the e2plo0ee9 @bA the pa02ent of

/a$es9 @cA the po/er to dis2iss9 and, @dA the po/er to control the e2plo0eeJs conduct. Notabl0, these are al

found in the relationship bet/een 3*S and !anonicato and not bet/een !anonicato and petitioner !O!)

!O1). )s the Solicitor-eneral 2anifested



In the instant case, the selection and en$a$e2ent of the ?anitors for petitioner /ere done b0 3*S. The

application for2 and letter sub2itted b0 private respondent @!anonicatoA to 3*S sho/ that he ac5no/led$ed

the fact that it /as 3*S /ho did the hirin$ and not petitioner 8 8 8 8

3*S paid the /a$es of private respondent, as evidenced b0 the fact that on *ul0 %#, %6, private respondent

sent his sister to 3*S /ith a note authori>in$ her to receive his pa0.

Po/er of dis2issal is also e8ercised b0 3*S and not petitioner. 3*S is the one that assi$ns the ?anitors to its

clients and transfers the2 /hen it sees fit.Since 3*S is the one /ho en$a$es their services, then it onl0 follo/s

that it also has the po/er to dis2iss the2 /hen ?ustified under the circu2stances.

1astl0, 3*S has the po/er to control the conduct of the ?anitors. The supervisors of petitioner, bein$ interested

in the result of the /or5 of the ?anitors, also $ives su$$estions as to the perfor2ance of the ?anitors, but this

does not 2ean that 3*S has no control over the2. The interest of petitioner is onl0 /ith respect to the result of

their /or5. On the other hand, 3*S oversees the totalit0 of their perfor2ance.

The po/er of the e2plo0er to control the /or5 of the e2plo0ee is said to be the 2ost the 2ost si$nificant

deter2inant. !anonicato disputed this po/er of 3*S over hi2 b0 assertin$ that his e2plo02ent /ith !O!)

!O1) /as not interrupted b0 his application /ith 3*S since his duties before and after he applied for

re$ulari>ation /ere the sa2e, involvin$ as the0 did, /or5in$ in the 2aintenance depart2ent and doin$ paintin$

tas5s /ithin its facilities. !anonicato cited the 1abor tili>ation Reports of !O!) !O1) sho/in$ his paintin$

assi$n2ents. These reports, ho/ever, are not e8pressive of the true nature of the relationship bet/een

!anonicato and !O!) !O1)9 neither do the0 detract fro2 the fact that 3*S e8ercised real authorit0 over

!anonicato as its e2plo0ee.

Moreover, a closer scrutin0 of the reports reveals that the paintin$ ?obs /ere perfor2ed b0 !anonicato

sporadicall0, either in a fe/ da0s /ithin a 2onth and onl0 for a fe/ 2onths in a 0ear. This infreCuenc0 or

irre$ularit0 of assi$n2ents countervails !anonicatos sub2ission that he /as assi$ned specificall0 to underta5ethe tas5 of paintin$ the /hole 0ear round. If an0thin$, it he/s closel0 to the assertion of 3*S that it assi$ned

!anonicato to these ?obs to 2aintain and saniti>e the pre2ises of petitioner !O!) !O1) pursuant to its

contract of services /ith the co2pan0.

It is clear fro2 these established circu2stances that N1R! should have reco$ni>ed 3*S as the e2plo0er

of !anonicato and not !O!) !O1). This is de2anded b0 the fact that it did not disturb, and therefore it

upheld, the findin$ of the 1abor )rbiter that 3*S /as trul0 a le$iti2ate ?obcontractor and could b0 itself hire its

o/n e2plo0ees. The !o22ission could not have reached an0 other le$iti2ate conclusion considerin$ that

3*S satisfied all the reCuire2ents of a ?obcontractor under the la/, na2el0, @aA the abilit0 to carr0 on an

independent business and underta5e the contract /or5 on its o/n account under its o/n responsibilit0

accordin$ to its 2anner and 2ethod, free fro2 the control and direction of its principal or client in all 2attersconnected /ith the perfor2ance of the /or5 e8cept as to the results thereof9 and, @bA the substantial capital or

invest2ent in the for2 of tools, eCuip2ent, 2achiner0, /or5 pre2ises, and other 2aterials /hich are

necessar0 in the conduct of its business.

It is to be noted that !O!) !O1) is not the onl0 client of 3*S /hich has its roster of clients li5e San

Mi$uel !orporation, Distileria 3a$o Incorporated, niversit0 of Ne$ros OccidentalRecolletos, niversit0 of St

1a Salle, Riverside !olle$e, !olle$e )ssurance Plan Phil., Inc., and Ne$ros !onsolidated 4ar2ers )ssociation

Inc. This is proof enou$h that 3*S has the capabilit0 to carr0 on its business of ?anitorial services /ith bi$

establish2ents aside fro2 petitioner and has sufficient capital or 2aterials necessar0 therefor. )ll told, there



bein$ no e2plo0ere2plo0ee relationship bet/een !anonicato and !O!) !O1), the latter cannot be validl0

ordered to reinstate the for2er and pa0 hi2 bac5 /a$es.

34EREFORE, the petition is -R)NTD. The N1R! decision of 6 *anuar0 %# declarin$ Ra2on 3.

!anonicato a re$ular e2plo0ee of petitioner !oca !ola 3ottlers Phils., Inc., entitled to reinstate2ent and bac5

/a$es is RVRSD and ST )SID. The decision of the 1abor )rbiter of '& )pril %" findin$ no e2plo0er

e2plo0ee relationship bet/een petitioner and private respondent but directin$ petitioner !oca !ola 3ottlersPhils., Inc., instead and 3acolod *anitorial Services to pa0 ?ointl0 and severall0 Ra2on 3

!anonicato P',++;.&( as /a$e differentials, P%,(;&.(( as %6th 2onth pa0 andP6&"."& as attorne0Js fees, is

RINST)TD.

SO OR$ERE$.

Republic of the PhilippinesSupre2e !ourt

Manila

T4IR$ $I"ISION

PO%YFO!M<RGC INTERN!TION!%,CORPOR!TION a) PRECI%%! !. GR!M!E,Petitioners,

vers!s

E$G!R$O CONCEPCION,Respondent.

G.R. No. 12=79 Pre-e)*;

PR)1T), J ., Acting Chairperson,

)3)D,VI11)R)M), *R.,MNDOL), andPR1)S3RN)3, JJ . Pro>ua*e;

*une %6, '(%'

88



$ E C I S I O N

PER!%T!, J .;

This is a petition for revie/ on certiorari under Rule "# of the Rules of !ourt filed b0 petitioners Pol0foa2R-!International !orporation @Pol0foa2A and Precilla ). -ra2a?e @-ra2a?eA a$ainst respondent d$ardo!oncepcion assailin$ the !ourt of )ppeals @!)A Decision dated Dece2ber %, '((# and Resolution dated )pri'#, '((; in !)-.R. SP No. &6;;. The assailed decision reversed the National 1abor Relations !o22issions@N1R!sA Decision dated Ma0 +, '((6 in N1R! N!R !) No. (6(;''(', /hile the assailed resolution deniedpetitioners and respondents 2otions for reconsideration. The factual and procedural antecedents follo/: On 4ebruar0 &, '(((, respondent filed a !o2plaint for ille$al dis2issal, nonpa02ent of /a$es, pre2iu2 pa0for rest da0, separation pa0, service incentive leave pa0, %6 th 2onth pa0, da2a$es, and attorne0s fees a$ainstPol0foa2 and Ms. Natividad !hen$ @!hen$A. Respondent alle$ed that he /as hired b0 Pol0foa2 as an all

around factor0 /or5er and served as such for al2ost si8 0ears. On *anuar0 %", '(((, he alle$edl0 discoveredthat his ti2e card /as not in the rac5 and /as later infor2ed b0 the securit0 $uard that he could no lon$er punch his ti2e card. Ehen he protested to his supervisor, the latter alle$edl0 told hi2 that the 2ana$e2entdecided to dis2iss hi2 due to an infraction of a co2pan0 rule. !hen$, the co2pan0s 2ana$er, also refused toface hi2. Respondents counsel later /rote a letter to Pol0foa2s 2ana$er reCuestin$ that respondent be read2itted to /or5, but the reCuest re2ained unheeded pro2ptin$ the latter to file the co2plaint for ille$aldis2issal.

On )pril '&, '(((, -ra2a?e filed a Motion for Intervention clai2in$ to be the real e2plo0er of respondent. Onthe other hand, Pol0foa2 and !hen$ filed a Motion to Dis2iss on the $rounds that the N1R! has no

?urisdiction over the case, because of the absence of e2plo0ere2plo0ee relationship bet/een Pol0foa2 andrespondent and that the 2one0 clai2s had alread0 prescribed.

On Ma0 '", '(((, 1abor )rbiter )dolfo 3abiano issued an Order $rantin$ -ra2a?es 2otion for intervention, itappearin$ that she is an indispensable part0 and den0in$ Pol0foa2 and !hen$s 2otion to dis2iss as the lac5of e2plo0ere2plo0ee relationship is onl0 a 2atter of defense. In their Position Paper, Pol0foa2 and !hen$ insisted that the N1R! has no ?urisdiction over the case, becauserespondent /as not their e2plo0ee. The0 li5e/ise contended that respondents 2one0 clai2s had alread0prescribed. 4inall0, the0 fault respondent for includin$ !hen$ as a part0defendant, considerin$ that she is noeven a director of the co2pan0.

In her Position Paper, -ra2a?e clai2ed that P.). -ra2a?e 2plo02ent Services @P)-SA is a le$iti2ate ?obcontractor /ho provided so2e 2anpo/er needs of Pol0foa2. It /as alle$ed that respondent /as hired as

pac5er and assi$ned to Pol0foa2, char$ed /ith pac5in$ the latters finished foa2 products. She ar$ued,ho/ever, that respondent /as not dis2issed fro2 e2plo02ent, rather, he si2pl0 stopped reportin$ for /or5.

On Dece2ber %", '((%, 1abor )rbiter @1)A Marita V. Padolina rendered a Decision findin$ respondent to havebeen ille$all0 dis2issed fro2 e2plo02ent and holdin$ Pol0foa2 and -ra2a?e=P)-S solidaril0 liable forrespondents 2one0 clai2s. The dispositive portion of the Decision is Cuoted belo/ for eas0 reference:

EHR4OR, pre2ises considered, ?ud$2ent is hereb0 rendered findin$ co2plainant to havebeen ille$all0 dis2issed and respondents Pol0foa2R-! International !orporation, P.).-ra2a?e 2plo02ent Services=Precilla ). -ra2a?e are ordered to pa0 co2plainant ?ointl0 andseverall0 the follo/in$:



%A. Separation Pa0 P #',(((.(('A. 3ac5/a$es %#+,("%.6&6A. %6th Month Pa0 %+,"(+.(("A. Moral Da2a$es #,(((.((#A. 8e2plar0 Da2a$es #,(((.((;A. )ttorne0s fees '6,;"".&6P ';(,(6.'%

)ll other clai2s are denied for lac5 of factual basis. SO ORDRD.

The 1abor )rbiter found respondent to have been ille$all0 dis2issed fro2 e2plo02ent and thus isentitled to full bac5/a$es inclusive of allo/ances. In lieu of reinstate2ent, the 1) a/arded respondenseparation pa0 of one 2onth salar0 for ever0 0ear of service fro2 )pril '%, %" until pro2ul$ation of thedecision. The 1) further held that petitioners are solidaril0 liable to respondent for the latters 2one0 clai2s,considerin$ that -ra2a?e @the contractorA /as not enrolled as private e2plo02ent a$enc0 in the re$istr0 of theRe$ional Office of the Depart2ent of 1abor and 2plo02ent @DO1A and considerin$ further that respondent

perfor2ed a ?ob directl0 related to the 2ain business of Pol0foa2.On appeal b0 petitioners, the N1R! 2odified the 1) decision b0 e8oneratin$ Pol0foa2 fro2 liabilit0 for

respondents clai2 for separation pa0 and deletin$ the a/ards of bac5/a$es, %6 th 2onth pa0, da2a$es, andattorne0s fees. The dispositive portion of the decision reads:

EHR4OR, the appealed decision is 2odified in that the co2plaint a$ainstrespondentappellant Pol0foa2R-! International !orp. is dis2issed. Ho/ever, respondentintervenorappellant P.). -ra2a?e 2plo02ent Services is hereb0 ordered to pa0 co2plainantseparation pa0 of one @%A 2onth salar0 for ever0 0ear of service rec5oned fro2 )pril '%, %; upto the rendition of this decision, or the su2 of P#&,#((( @sicA.

The a/ards of bac5/a$es, %6th 2onth pa0, da2a$es, and attorne0s fees are set aside.

SO ORDRD.

The N1R! found -ra2a?e to be an independent contractor /ho contracted the pac5a$in$ aspect of thefinished foa2 products of Pol0foa2. Pursuant to said contract, -ra2a?es e2plo0ees, includin$ respondent,/ere assi$ned to Pol0foa2 but re2ained under the control and supervision of -ra2a?e. It li5e/ise concludedthat -ra2a?e had its o/n office eCuip2ent, tools, and substantial capital and, in fact, supplied the plasticcontainers and carton bo8es used b0 her e2plo0ees in perfor2in$ their duties. The !o22ission also foundsufficient evidence to prove that -ra2a?e paid respondents /a$es and benefits and reported the latter to theSocial Securit0 S0ste2 @SSSA as a covered e2plo0ee. )s to /hether there /as ille$al dis2issal, the N1R!ans/ered in the ne$ative, since respondent /as not notified that he had been dis2issed nor /as he preventedfro2 returnin$ to his /or5. The N1R! found -ra2a?e liable for clai2in$ that respondent abandoned his

?ob. Reinstate2ent, ho/ever, could not be decreed because of the strained relations bet/een the partieshence, the a/ard of separation pa0. 3ut the N1R! refused to a/ard bac5/a$es. The a/ard of 2oral ande8e2plar0 da2a$es /as li5e/ise deleted for lac5 of evidence.

)$$rieved, respondent elevated the case to the !) in a special civil action for certiorari under Rule ;#of the Rules of !ourt.On Dece2ber %, '((#, the appellate court rendered the assailed decision, thedispositive portion of /hich reads:

EHR4OR, IN VIE O4 TH 4OR-OIN-, the petition is -R)NTD. The assailedDecision of the National 1abor Relations !o22ission, 4irst Division dated Ma0 +,'((6 is RVRSD and the decision of 1abor )rbiter Marita Padolina, datedDece2ber %",'((%, is hereb0 RINST)TD.



SO ORDRD.

The !) a$reed /ith the 1)s conclusion that -ra2a?e is not a le$iti2ate ?ob contractor but onl0 a laboronl0 contractor because of the follo/in$: @%A -ra2a?e failed to present its )udited 4inancial State2ent that/ould have sho/n its financial standin$ and o/nership of eCuip2ent, 2achineries, and tools necessar0 to runher o/n business9 @'A -ra2a?e failed to present a sin$le cop0 of the purported contract /ith Pol0foa2 as to the

pac5a$in$ aspect of the latters business9 @6A -ra2a?es licenses supposedl0 issued b0 the DO1 appeared tobe spurious. @"A -ra2a?e /as not re$istered /ith DO1 as a private recruit2ent a$enc09 and @#A -ra2a?epresented onl0 one @%A SSS uarterl0 !ollection 1ist /hose authenticit0 is doubtful. The !) noted thapetitioners are represented b0 onl0 one la/ fir2 thou$h the0 2ade it appear that the0 /ere represented b0different la/0ers. These circu2stances, sa0s the !), $ive rise to the suspicion that the creation oestablish2ent of -ra2a?e /as ?ust a sche2e desi$ned to evade the obli$ation inherent in an e2plo0ere2plo0ee relationship. Thus, respondent /as indeed Pol0foa2s e2plo0ee. This relationship /as specificall0sho/n b0 Pol0foa2s e8ercise of supervision over the /or5 of respondent9 the furnishin$ of a cop0 oPol0foa2s Mga Alit!nt!nin at 1ara"patang ar!sa to serve as respondents $uide in the perfor2ance of hisdut09 the len$th of ti2e that respondent had perfor2ed activities necessar0 for Pol0foa2s business9 andPol0foa2s act of directl0 firin$ respondent. 4inall0, the appellate court affir2ed the 1)s findin$s of ille$aldis2issal as respondent /as dis2issed fro2 the service /ithout cause and due process. !onseCuentl0

separation pa0 in lieu of reinstate2ent /as a/arded. The !) Cuoted /ith approval the 1) conclusions on thea/ard of respondents other 2one0 clai2s.

Petitioners no/ co2e before the !ourt in this petition for revie/ on certiorari based on the follo/in$assi$ned errors:

I.TH !ORT O4 )PP)1S RRD IN NOT DISMISSIN- TH PTITION4OR C6R2ORAR2 4I1D 3B HRIN RSPONDNT !ONSIDRIN- TH 4)!T TH)T ITE)S !1)R1B 4I1D OT O4 TIM, H)VIN- 3N 4I1D ON TH ++TH D)B 4ROMR!IPT 3B HRIN RSPONDNT O4 TH RSO1TION O4 TH N1R! DNBIN- HISMOTION 4OR R!ONSIDR)TION.

II.TH !ORT O4 )PP)1S RRD IN NOT PHO1DIN- TH D!ISION O4 TH N1R! )NDITS 4INDIN-S TH)T )A RSPONDNT !ON!P!ION IS )N MP1OB O4 P.). -R)M)*MP1OBMNT SRVI!S9 3A P.). -R)M)* IS ) 1-ITIM)T *O3 !ONTR)!TOR9 !ARSPONDNT !ON!P!ION E)S NOT DISMISSD 4ROM HIS *O3, !ONSIDRIN- TH)TTHS 4INDIN-S )R 411B SPPORTD 3B VIDN!.

III.TH !ORT O4 )PP)1S RRD IN RINST)TIN- TH D!ISION O4 TH 1)3OR

)R3ITR M)RIT) P)DO1IN) )E)RDIN- RSPONDNT !ON!P!ION 3)!E)-S,MOR)1 )ND MP1)RB D)M)-S )ND )TTORNBS 4S.

There are three issues for resolution, to /it: @%A /hether or not -ra2a?e is an independent ?ob contractor9 @'A/hether or not an e2plo0ere2plo0ee relationship e8ists bet/een Pol0foa2 and respondent9 and @6A /hetheor not respondent /as ille$all0 dis2issed fro2 e2plo02ent.

7ra"a8e is a La'or5Only Contractor



)rticle %(; of the 1abor !ode e8plains the relations /hich 2a0 arise bet/een an e2plo0er, acontractor, and the contractors e2plo0ees, thus:

)RT. %(;. Contractor or s!'contracting . Q Ehenever an e2plo0er enters into a contract /ithanother person for the perfor2ance of the for2ers /or5, the e2plo0ees of the contractor and of the latters subcontractor, if an0, shall be paid in accordance /ith the provisions of this !ode.

In the event that the contractor or subcontractor fails to pa0 the /a$es of his e2plo0ees inaccordance /ith this !ode, the e2plo0er shall be ?ointl0 and severall0 liable /ith his contractor or subcontractor to such e2plo0ees to the e8tent of the /or5 perfor2ed under the contract, inthe sa2e 2anner and e8tent that he is liable to e2plo0ees directl0 e2plo0ed b0 hi2.

The Secretar0 of 1abor and 2plo02ent 2a0, b0 appropriate re$ulations, restrict or prohibit thecontractin$ out of labor to protect the ri$hts of /or5ers established under the !ode. In soprohibitin$ or restrictin$, he 2a0 2a5e appropriate distinctions bet/een laboronl0 contractin$and ?ob contractin$ as /ell as differentiations /ithin these t0pes of contractin$ and deter2ine/ho a2on$ the parties involved shall be considered the e2plo0er for purposes of this !ode, toprevent an0 violation or circu2vention of an0 provision of this !ode.

There is laboronl0 contractin$ /here the person suppl0in$ /or5ers to an e2plo0er does nothave substantial capital or invest2ent in the for2 of tools, eCuip2ent, 2achineries, /or5pre2ises, a2on$ others, and the /or5ers recruited and placed b0 such person are perfor2in$activities /hich are directl0 related to the principal business of such e2plo0er. In such cases,the person or inter2ediar0 shall be considered 2erel0 as an a$ent of the e2plo0er /ho shall beresponsible to the /or5ers in the sa2e 2anner and e8tent as if the latter /ere directl0 e2plo0edb0 hi2.

In *asan *r. v. National La'or Relations Co""ission 9 th 4ivision the !ourt distin$uished per2issible ?ob contractin$ or subcontractin$ fro2 laboronl0 contractin$, to /it:

Per2issible ?ob contractin$ or subcontractin$ refers to an arran$e2ent /hereb0 aprincipal a$rees to put out or far2 out to a contractor or subcontractor the perfor2ance or co2pletion of a specific ?ob, /or5 or service /ithin a definite or predeter2ined period,re$ardless of /hether such ?ob, /or5 or service is to be perfor2ed or co2pleted /ithin or outside the pre2ises of the principal. ) person is considered en$a$ed in le$iti2ate ?obcontractin$ or subcontractin$ if the follo/in$ conditions concur:

@aA The contractor or subcontractor carries on a distinct and independent businessand underta5es to perfor2 the ?ob, /or5 or service on its o/n account and under itso/n responsibilit0 accordin$ to its o/n 2anner and 2ethod, and free fro2 thecontrol and direction of the principal in all 2atters connected /ith the perfor2ance of the /or5 e8cept as to the results thereof9

@bA The contractor or subcontractor has substantial capital or invest2ent9 and

@cA The a$ree2ent bet/een the principal and contractor or subcontractor assures thecontractual e2plo0ees entitle2ent to all labor and occupational safet0 and healthstandards, free e8ercise of the ri$ht to selfor$ani>ation, securit0 of tenure, andsocial and /elfare benefits.

In contrast, laboronl0 contractin$, a prohibited act, is an arran$e2ent /here thecontractor or subcontractor 2erel0 recruits, supplies or places /or5ers to perfor2 a ?ob, /or5 or service for a principal. In laboronl0 contractin$, the follo/in$ ele2ents are present:



@aA The contractor or subcontractor does not have substantial capital or invest2entto actuall0 perfor2 the ?ob, /or5 or service under its o/n account and responsibilit09and

@bA The e2plo0ees recruited, supplied or placed b0 such contractor or subcontractor are perfor2in$ activities /hich are directl0 related to the 2ain business of theprincipal.

The test of independent contractorship is /hether one clai2in$ to be an independent contractor hascontracted to do the /or5 accordin$ to his o/n 2ethods and /ithout bein$ sub?ect to the control of thee2plo0er, e8cept onl0 as to the results of the /or5. In *an Mig!el Corporation v. *e"illano the !ourt laiddo/n the criteria in deter2inin$ the e8istence of an independent and per2issible contractor relationship, to /it:

8 8 8 FEGhether or not the contractor is carr0in$ on an independent business9 the nature ande8tent of the /or59 the s5ill reCuired9 the ter2 and duration of the relationship9 the ri$ht to assi$nthe perfor2ance of a specified piece of /or59 the control and supervision of the /or5 to another9the e2plo0ers po/er /ith respect to the hirin$, firin$ and pa02ent of the contractors /or5ers9the control of the pre2ises9 the dut0 to suppl0 the pre2ises, tools, appliances, 2aterials, and

labor9 and the 2ode, 2anner and ter2s of pa02ent.

Si2pl0 put, the totalit0 of the facts and the surroundin$ circu2stances of the case are to be considered. achcase 2ust be deter2ined b0 its o/n facts and all the features of the relationship are to be considered.

)ppl0in$ the fore$oin$ tests, /e a$ree /ith the !)s conclusion that -ra2a?e is not an independent ?obcontractor, but a laboronl0 contractor.

First , -ra2a?e has no substantial capital or invest2ent. The presu2ption is that a contractor is a labor

onl0 contractor unless he overco2es the burden of provin$ that it has substantial capital, invest2ent, tools,and the li5e. The e2plo0ee should not be e8pected to prove the ne$ative fact that the contractor does not havesubstantial capital, invest2ent and tools to en$a$e in ?obcontractin$.

-ra2a?e clai2ed that it has substantial capital of its o/n as /ell as invest2ent in its office, eCuip2entand tools. She pointed out that she furnished the plastic containers and carton bo8es used in carr0in$ out thefunction of pac5in$ the 2attresses of Pol0foa2. She added that she had placed in Pol0foa2s /or5place ten@%(A sealin$ 2achines, t/ent0 @'(A hand truc5s, and t/o @'A for5lifts to enable respondent and the othee2plo0ees of -ra2a?e assi$ned at Pol0foa2 to perfor2 their ?ob. 4inall0, she e8plained that she had her o/noffice /ith her o/n staff. Ho/ever, aside fro2 her o/n bare state2ent, neither -ra2a?e nor Pol0foa2presented evidence sho/in$ -ra2a?es o/nership of the eCuip2ent and 2achineries used in the perfor2anceof the alle$ed contracted ?ob. !onsiderin$ that these 2achineries are found in Pol0foa2s pre2ises, there canbe no other lo$ical conclusion but that the tools and eCuip2ent utili>ed b0 -ra2a?e and her e2plo0ees areo/ned b0 Pol0foa2. Neither did Pol0foa2 nor -ra2a?e sho/ that the latter had clients other than thefor2er. Since petitioners failed to adduce evidence that -ra2a?e had an0 substantial capital, invest2ent or

assets to perfor2 the /or5 contracted for, the presu2ption that -ra2a?e is a laboronl0 contractor stands.

*econd -ra2a?e did not carr0 on an independent business or underta5e the perfor2ance of its servicecontract accordin$ to its o/n 2anner and 2ethod, free fro2 the control and supervision of its principal,Pol0foa2, its apparent role havin$ been 2erel0 to recruit persons to /or5 for Pol0foa2. It is undisputed thatrespondent had perfor2ed his tas5 of pac5in$ Pol0foa2s foa2 products in Pol0foa2s pre2ises. )s to therecruit2ent of respondent, petitioners /ere able to establish onl0 that respondents application /as referred to-ra2a?e, but that is all. Prior to his ter2ination, respondent had been perfor2in$ the sa2e ?ob in Pol0foa2sbusiness for al2ost si8 @;A 0ears. He /as even furnished a cop0 of Pol0foa2s Mga Alit!nt!nin at 1ara"patangar!sa /hich e2bodied Pol0foa2s rules on attendance, the 2anner of perfor2in$ the e2plo0ees duties,ethical standards, cleanliness, health, safet0, peace and order. These rules carried /ith the2 thecorrespondin$ penalties in case of violation.



Ehile it is true that petitioners sub2itted the )ffidavit of Pol0foa2s supervisor Victor )badia, clai2in$

that the latter did not e8ercise supervision over respondent because the latter /as not Pol0foa2s bu-ra2a?es e2plo0ee, said )ffidavit is insufficient to prove such clai2. Petitioners should have presented theperson /ho the0 clai2 to have e8ercised supervision over respondent and their alle$ed other e2plo0eesassi$ned to Pol0foa2. It /as never established that -ra2a?e too5 entire char$e, control and supervision of the/or5 and service a$reed upon. )nd as aptl0 observed b0 the !), it is li5e/ise hi$hl0 unusual and suspect as

to the absence of a /ritten contract specif0in$ the perfor2ance of a specified service, the nature and e8tent ofthe service or /or5 to be done and the ter2 and duration of the relationship.

An 6"ployer56"ployee Relationship 6istsBet%een Respondent and oly-oa"

) findin$ that a contractor is a laboronl0 contractor, as opposed to per2issible ?ob contractin$, is eCuivalent todeclarin$ that there is an e2plo0ere2plo0ee relationship bet/een the principal and the e2plo0ees of thesupposed contractor, and the laboronl0 contractor is considered as a 2ere a$ent of the principal, the reale2plo0er. In this case, Pol0foa2 is the principal e2plo0er and -ra2a?e is the laboronl0 contractor. Pol0foa2and -ra2a?e are, therefore, solidaril0 liable for the ri$htful clai2s of respondent.

Respondent %as 2llegally 4is"issed Fro" 6"ploy"ent

Respondent stated that on *anuar0 %", '(((, his ti2e card /as suddenl0 ta5en off the rac5. His supervisorlater infor2ed hi2 that Pol0foa2s 2ana$e2ent decided to dis2iss hi2 due to infraction of co2pan0 rule. Inshort, respondent insisted that he /as dis2issed fro2 e2plo02ent /ithout ?ust or la/ful cause and /ithoutdue process. Pol0foa2 did not offer an0 e8planation of such dis2issal. It, instead, e8plained that respondentsreal e2plo0er is -ra2a?e. -ra2a?e, on the other hand, denied the clai2 of ille$al dis2issal. She shifted thebla2e on respondent clai2in$ that the latter in fact abandoned his /or5. The 1) $ave credence to respondents narration of the circu2stances of the case. Said conclusion /as

affir2ed b0 the !). Ee find no reason to depart fro2 such findin$s.

)bandon2ent cannot be inferred fro2 the actuations of respondent. Ehen he discovered that his ti2ecard /as off the rac5, he i22ediatel0 inCuired fro2 his supervisor. He later sou$ht the assistance of hiscounsel, /ho /rote a letter addressed to Pol0foa2 reCuestin$ that he be read2itted to /or5. Ehen saidreCuest /as not acted upon, he filed the instant ille$al dis2issal case. These circu2stances clearl0 ne$ate theintention to abandon his /or5.

Petitioners failed to sho/ an0 valid or authori>ed cause under the 1abor !ode /hich allo/ed it to

ter2inate the services of respondent. Neither /as it sho/n that respondent /as $iven a2ple opportunit0 tocontest the le$alit0 of his dis2issal. No notice of ter2ination /as $iven to hi2. !learl0, respondent /as notafforded due process. Havin$ failed to establish co2pliance /ith the reCuire2ents of ter2ination of

e2plo02ent under the 1abor !ode, the dis2issal of respondent /as tainted /ith ille$alit0!onseCuentl0, respondent is entitled to reinstate2ent /ithout loss of seniorit0 ri$hts, and other privile$es andto his full bac5/a$es inclusive of allo/ances and to his other benefits or their 2onetar0 eCuivalent co2putedfro2 the ti2e his co2pensation /as /ithheld up to the ti2e of his actual reinstate2ent. Ho/ever, ireinstate2ent is no lon$er feasible as in this case, separation pa0 eCuivalent to one 2onth salar0 for ever00ear of service shall be a/arded as an alternative. Thus, the !) is correct in affir2in$ the 1)s a/ard ofseparation pa0 /ith full bac5/a$es and other 2onetar0 benefits.

34EREFORE, pre2ises considered, the petition is hereb0 $ENIE$. The !ourt of )ppeals Decision

dated Dece2ber %, '((# and Resolution dated )pril '#, '((;, in !)-.R. SP No. &6;;, are !FFIRME$. SO OR$ERE$.



4IRST DIVISION

G.R. No. 182018 O+*ober 10, 2012

NOR?IS TR!$ING CORPOR!TION, Petitioner,vs. O!@UIN BUEN! "IST!, 4ENRY F!BRO!, RIC!R$O C!PE, BERTU%$O TU%O$, 3I%%Y $ON$OY!NO a) G%EN "I%%!R!S!, Respondents.

D ! I S I O N

REYES, J.:

3efore us is a Petition for Revie/ on !ertiorari filed b0 petitioner Nor5is Tradin$ !orporation @Nor5is Tradin$A toassail the Decision dated Ma0 +, '((+ and Resolution dated March ", '((& of the !ourt of )ppeals @!)A in!)-.R. SP No. &"("%.

Te Fa+*-

The petition ste2s fro2 an a2ended co2plaint for ille$al suspension, ille$al dis2issal, unfair labor practiceand other 2onetar0 clai2s filed /ith the National 1abor Relations !o22ission @N1R!A b0 herein respondents*oaCuin 3uenavista @3uenavistaA, Henr0 4abroa @4abroaA, Ricardo !ape @!apeA, 3ertuldo Tulod @TulodA, Eill0



Dondo0ano @Dondo0anoA and -len Villariasa @VillariasaA a$ainst Nor5is Tradin$ and Pana$hiusa saaus/a$an MultiPurpose !ooperative @P)S))A. The co2plaint /as doc5eted as N1R!R)3VII !ase No.(%"('.

Durin$ the proceedin$s a Cuo, herein respondents sub2itted the follo/in$ aver2ents:

The respondents /ere hired b0 Nor5is Tradin$, a do2estic corporation en$a$ed in the business of

2anufacturin$ and 2ar5etin$ of Ba2aha 2otorc0cles and 2ultipurpose vehicles, on separate dates and forvarious positions, particularl0:

Na"e 4ate o- :iring osition

*oaCuin 3uenavista March %", %" Operator

Henr0 4abroa *anuar0 #, %6 Eelder

Ricardo !ape *anuar0 %6 Eelder=Operator

3ertuldo Tulod Nove2ber %6, %" Eelder=)ssistant Operator

Eill0 Dondo0ano *anuar0 %6 Eelder

-len Villariasa 4ebruar0 %6 Eelder

)lthou$h the0 /or5ed for Nor5is Tradin$ as s5illed /or5ers assi$ned in the operation of industrial and /eldin$2achines o/ned and used b0 Nor5is Tradin$ for its business, the0 /ere not treated as re$ular e2plo0ees b0Nor5is Tradin$. Instead, the0 /ere re$arded b0 Nor5is Tradin$ as 2e2bers of P)S)), a cooperativeor$ani>ed under the !ooperative !ode of the Philippines, and /hich /as dee2ed an independent contractorthat 2erel0 deplo0ed the respondents to render services for Nor5is Tradin$. The respondents nonethelessbelieved that the0 /ere re$ular e2plo0ees of Nor5is Tradin$, citin$ in their Position Paper the follo/in$circu2stances that alle$edl0 characteri>ed their e2plo02ent /ith the co2pan0:

The /or5 of the operators involves operatin$ industrial 2achines, such as, press 2achine, h0draulic 2achine,and spot/eld 2achine. On the other hand, the /elders used the /eldin$ 2achines. The 2achines used b0co2plainants herein respondents in their /or5 are all o/ned b0 respondent Nor5is Tradin$ herein petitionerand these are installed and located in the /or5in$ area of the co2plainants inside the co2pan07s pre2ises.

The co2plainants produced steel crates /hich are e8ported directl0 b0 respondent Nor5is Tradin$ to *apan.These crates are used as containers of 2otorc0cle 2achines and are shipped fro2 *apan bac5 to respondentNor5is Tradin$.

The 2aterials and supplies used b0 co2plainants in their /or5 are supplied b0 respondent Nor5is Tradin$

throu$h 3en?a2in -ulbin, the co2pan07s Stoc52an, upon the reCuest of Tirso Maslo$, a 1ead2an alsoe2plo0ed b0 respondent Nor5is Tradin$.

Respondent Nor5is Tradin$ $ave instructions and supervised the /or5 of co2plainants throu$h d/in Ponceand iven )lilin, /ho are both 1ead2en, and Rico !abanas, /ho is the Production Supervisor, of the for2er.

The salaries of co2plainants are paid inside the pre2ises of respondent Nor5is Tradin$ b0 Dalia Ro?o and3elen Rubio, /ho are also e2plo0ees of the said co2pan0 assi$ned at the accountin$ office.

Despite havin$ served respondent Nor5is Tradin$ for 2an0 0ears and perfor2in$ the sa2e functions asre$ular e2plo0ees, co2plainants /ere not accorded re$ular status. It /as 2ade to appear that co2plainantsare not e2plo0ees of said co2pan0 but that of respondent P)S)).



)$ainst the fore$oin$ scenario, the respondents, to$ether /ith several other co2plainants, filed on *une ,% /ith the Depart2ent of 1abor and 2plo02ent @DO1A a co2plaint a$ainst Nor5is Tradin$ and P)S))for laboronl0 contractin$ and nonpa02ent of 2ini2u2 /a$e and overti2e pa0. The co2plaint /as doc5etedas 1SD !ase No. RO+(((;!I!S%;&.

The filin$ of the co2plaint for laboronl0 contractin$ alle$edl0 led to the suspension of the respondents72e2bership /ith P)S)). On *ul0 '', %, the0 /ere served b0 P)S)) /ith 2e2oranda char$in$ the2

/ith a violation of the rule a$ainst co22ission of acts in?urious or pre?udicial to the interest or /elfare of thecooperative. The 2e2oranda cited that the respondents7 filin$ of a case a$ainst Nor5is Tradin$ had $reatl0pre?udiced the interest and /elfare of the cooperative. In their ans/er to the 2e2oranda, the respondentse8plained that the0 2erel0 /anted to be reco$ni>ed as re$ular e2plo0ees of Nor5is Tradin$. The case recordsinclude copies of the 2e2oranda sent to respondents 3uenavista, 4abroa and Dondo0ano.

On )u$ust %;, %, the respondents received another set of 2e2oranda fro2 P)S)), no/ char$in$ the2/ith the follo/in$ violations of the cooperative7s rules and re$ulations: @%A serious 2isconduct or /illfuldisobedience of superior7s instructions or orders9 @'A $ross and habitual ne$lect of duties b0 abandonin$ /or5/ithout per2ission9 @6A absences /ithout filin$ leave of absence9 and @"A /astin$ ti2e or loiterin$ onco2pan07s ti2e or leavin$ their post te2poraril0 /ithout per2ission durin$ office hours. !opies of the2e2oranda sent to 4abroa and !ape for2 part of the records.

On )u$ust ';, %, P)S)) infor2ed the respondents of the cooperative7s decision to suspend the2 forfifteen @%#A /or5in$ da0s, to be effective fro2 Septe2ber % to '%, %, for violation of P)S)) rules.

The records include copies of the 2e2oranda sent to 4abroa and !ape. The suspension pro2pted therespondents to file /ith the N1R! the co2plaint for ille$al suspension a$ainst Nor5is Tradin$ and P)S)).

The %#da0 suspension of the respondents /as e8tended for another period of %# da0s, fro2 Septe2ber '',% to October %', %. !opies of P)S))7s separate letters to 3uenavista, 4abroa, !ape and Dondo0anoon the cooperative7s decision to e8tend the suspension for2 part of the records.

On October %6, %, the respondents /ere to report bac5 to /or5 but durin$ the hearin$ in their N1R! case,the0 /ere infor2ed b0 P)S)) that the0 /ould be transferred to Nor5is Tradin$s7 sister co2pan0, Porta !oeliIndustrial !orporation @Porta !oeliA, as /ashers of Multicab vehicles.

The respondents opposed the transfer as it /ould alle$edl0 result in a chan$e of e2plo0ers, fro2 Nor5isTradin$ to Porta !oeli. The respondents also believed that the transfer /ould result in a de2otion since fro2bein$ s5illed /or5ers in Nor5is Tradin$, the0 /ould be reduced to bein$ utilit0 /or5ers.These circu2stances2ade the respondents a2end their co2plaint for ille$al suspension, to include the char$es of unfair laborpractice, ille$al dis2issal, da2a$es and attorne07s fees.

4or their part, both Nor5is Tradin$ and P)S)) clai2ed that the respondents /ere not e2plo0ees of Nor5isTradin$. The0 insisted that the respondents /ere 2e2bers of P)S)), /hich served as an independent

contractor that 2erel0 supplied services to Nor5is International !o., Inc. @Nor5is InternationalA pursuant to a ?obcontract /hich P)S)) and Nor5is International e8ecuted on *anuar0 %", % for %'%,#(( pieces of 4=-4Series Reinforce2ent Production. )fter P)S)) received reports fro2 its coordinator at Nor5is International of the respondents7 lo/ efficienc0 and violation of the cooperative7s rules, and after $ivin$ said respondents thechance to present their side, a penalt0 of suspension /as i2posed upon the2 b0 the cooperative. The ille$alsuspension bein$ co2plained of /as then not lin5ed to the respondents7 e2plo02ent, but to their 2e2bership/ith P)S)).

Nor5is Tradin$ stressed that the respondents /ere deplo0ed b0 P)S)) to Nor5is International, a co2pan0that is entirel0 separate and distinct fro2 Nor5is Tradin$.

Te Ru/) o *e %abor !rb/*er



On *une %, '(((, 1abor )rbiter *ose -. -utierre> @1) -utierre>A dis2issed the co2plaint via a Decision /ithdecretal portion that reads:

EHR4OR, the fore$oin$ pre2ises considered, ?ud$2ent is hereb0 rendered DISMISSIN- this case forlac5 of 2erit. !o2plainants herein respondents are ho/ever directed to report bac5 to respondent P)S)) for /or5 assi$n2ent /ithin ten @%(A da0s fro2 receipt of this decision. 1i5e/ise, respondent P)S)) is directed toaccept the co2plainants bac5 for /or5.

SO ORDRD.

1) -utierre> sustained the suspension i2posed b0 P)S)) upon the respondents, ta5in$ into account theoffenses that the said respondents /ere found to have co22itted. He li5e/ise re?ected the respondents7 clai2of ille$al dis2issal. He ruled that to be$in /ith, the respondents had failed to prove /ith convincin$ evidencethat the0 /ere dis2issed fro2 e2plo02ent. The Decision reads in part:

3efore the le$alit0 or ille$alit0 of a dis2issal can be put in issue, the fact of dis2issal itself 2ust, first, be clearl0established. In the instant case, Ee find that co2plainants herein respondents failed to prove /ith convincin$evidence the fact that the0 /ere dis2issed fro2 e2plo02ent. This observation is derived fro2 their ver0 o/nalle$ation in their position paper. The first para$raph of pa$e # of the co2plainants7 position paper clearl0sho/s that the0 /ere not 0et dis2issed fro2 their e2plo02ent. The said para$raph states:

<!onvinced that the co2pan0 is bent on ter2inatin$ their services, co2plainants a2ended their co2plaint toinclude the char$es of unfair labor practice, ille$al dis2issal, da2a$es and attorne07s fees.<

The truth, as the record /ould sho/ is that, co2plainants /ere onl0 offered another post in order to save thecontractual relations bet/een their cooperative and Nor5is Tradin$ as the latter finds the co2plainants7perfor2ance not satisfactor0. The co2plainants too5 this offer as a de2otion a2ountin$ to dis2issal. Ee donot ho/ever, a$ree as their transfer to another post /as onl0 the best option available in order to save thecontractual relations bet/een their cooperative @P)S))A and Nor5is Tradin$.

The alle$ation of unfair labor practice and clai2 for 2onetar0 a/ards /ere li5e/ise re?ected b0 the 1). 4eelin$a$$rieved, the respondents appealed fro2 the decision of the 1) to the N1R!.

In the 2eanti2e, DO1 Re$ional Director Melencio . 3alana$ @Re$ional Director 3alana$A issued on )u$ust'', '((( his Order in 1SD !ase No. RO+(((;!I!S%;&. Re$ional Director 3alana$ ruled that P)S))/as en$a$ed in laboronl0 contractin$. The other findin$s in his Order that are si$nificant to this case are asfollo/s: @%A P)S)) had failed to prove that it had substantial capital9 @'A the 2achineries, eCuip2ent andsupplies used b0 the respondents in the perfor2ance of their duties /ere all o/ned b0 Nor5is Tradin$ and notb0 P)S))9 @6A the respondents7 2e2bership /ith P)S)) as a cooperative /as inconseCuential to theire2plo02ent /ith Nor5is Tradin$9 @"A Nor5is Tradin$ and P)S)) failed to prove that their subcontractin$arran$e2ents /ere covered b0 an0 of the conditions set forth in Section ; of Depart2ent Order No. %(, Seriesof %+9 @#A Nor5is Tradin$ and P)S)) failed to dispute the respondents7 clai2 that their /or5 /as

supervised b0 lead2en and production supervisors of Nor5is Tradin$9 and @;A Nor5is Tradin$ and P)S))failed to dispute the respondents7 alle$ation that their salaries /ere paid b0 e2plo0ees of Nor5isTradin$. Nor5is Tradin$ and P)S)) /ere then declared solidaril0 liable for the 2onetar0 clai2s of thereinco2plainants, as provided in the dispositive portion of Re$ional Director 3alana$7s Order, to /it:

34EREFORE, respondent P!N!G4IUS! S! ?!US3!G!N MU%TIPURPOSECOOPER!TI"Eand=or NOR?IS TR!$ING CORPOR!TION are hereb0 OR$ERE$ to pa0 solidaril0 thea2ount of T4REE 4UN$RE$ T4IRTEEN T4OUS!N$ T4REE 4UN$RE$ FIFTY<FOUR !N$ 50'100#6P:=1=,=57.50& PESOS, Philippine !urrenc0, /ithin ten @%(A calendar da0s fro2 receipt hereof to hereinco2plainants 8 8 8:

8 8 8 8



SO ORDRD.

The respondents infor2ed the N1R! of Re$ional Director 3alana$7s Order b0 filin$ a Manifestation datedSepte2ber %%, '(((, attachin$ thereto a cop0 of the Order dated )u$ust '', '(((.

It bears 2entionin$ that Re$ional Director 3alana$7s Order /as later affir2ed b0 then DO1 Secretar0 PatriciaSto. To2as @Sec. Sto. To2asA in her Orders dated 4ebruar0 +, '((' and October %", '(('. Ehen the rulin$s

of the DO1 Secretar0 /ere appealed before the !) via the petitions for certiorari doc5eted as !)-.R. SPNo. +6&&( and !)-.R. SP No. +";%, the !) affir2ed the Orders of the DO1 Secretar0. ) 2otion forreconsideration of the !) decision /as denied in a Resolution dated October , '((+. The t/o petitionsdoc5eted as -.R. Nos. %&((+&+, /hich /ere brou$ht before this !ourt to Cuestion the !)7s rulin$s, /erelater denied /ith finalit0 b0 this !ourt in the Resolutions dated Dece2ber #, '((+ and )pril %", '((&.

Te Ru/) o *e N%RC

On )pril %&, '((', the N1R! rendered its Decision affir2in$ /ith 2odification the decision of 1) -utierre>. Itheld that the respondents /ere not ille$all0 suspended fro2 /or5, as it /as their 2e2bership in thecooperative that /as suspended after the0 /ere found to have violated the cooperative7s rules and re$ulations.It also declared that the respondents7 dis2issal /as not established b0 substantial evidence. The N1R!ho/ever declared that the 1) had no ?urisdiction over the dispute because the respondents /ere note2plo0ees, but 2e2bers of P)S)). The suspension of the respondents as 2e2bers of P)S)) for alle$edviolation of the cooperative7s rules and re$ulations /as not a labor dispute, but an intracorporate dispute. Theco2plaint /as also declared to have been filed a$ainst the /ron$ part0 because the respondents /ere foundb0 the N1R! to have been deplo0ed b0 P)S)) to Nor5is International pursuant to a ?ob contract.

The dispositive portion of the N1R!7s Decision reads:

EHR4OR, the Decision dated *une %, '((( of the 1abor )rbiter is )44IRMD, /ith respect to theDISMISS)1 of the co2plainants herein respondents for lac5 of 2erit FsicG, but deletin$ the portion directin$ theco2plainants to report bac5 to respondent P)S)) for /or5 assi$n2ent and to accept the2 bac5 to /or5bein$ an internal concern of P)S)).

SO ORDRD.

The respondents7 2otion for reconsideration /as denied b0 the N1R! in a Resolution dated Dece2ber %&,'((6. ndaunted, the respondents Cuestioned the N1R!7s rulin$s before the !) via a petition for certiorari.

Te Ru/) o *e C!

4indin$ 2erit in the petition for certiorari, the !) rendered its decision reversin$ and settin$ aside the decisionand resolution of the N1R!. The dispositive portion of its Decision dated Ma0 +, '((+ reads:

WHEREFORE , the petition is GRANTED. The assailed Decision and Resolution of the N1R!, are hereb0RVRSD and ST )SID, and a ne/ ?ud$2ent is hereb0 rendered orderin$ the private respondents to:

@%A Reinstate petitioners to their for2er positions /ithout loss of seniorit0 ri$hts, and to pa0 full bac5/a$esinclusive of allo/ances and their other benefits or their 2onetar0 eCuivalent co2puted fro2 the ti2e of ille$aldis2issal to the ti2e of actual reinstate2ent9 and

@'A )lternativel0, if reinstate2ent is not possible, to pa0 full bac5/a$es inclusive of other benefits or their2onetar0 eCuivalent fro2 the ti2e of ille$al dis2issal until the sa2e is paid in full, and pa0 petitioners7separation pa0 eCuivalent to one 2onth7s salar0 for ever0 0ear of service.



SO ORDRD.

The !) re?ected the ar$u2ent of P)S)) and Nor5is Tradin$ that b0 virtue of a ?ob contract e8ecuted on*anuar0 %", %, the respondents /ere deplo0ed to Nor5is International and not to Nor5is Tradin$. The !)held:

Ee are not convinced. Private respondents7 a2on$ the2, herein petitioner o/n evidence belie their clai2.

In its !o22ent, NORIS TR)DIN- attached the Pa0roll Re$isters for PANAGHIUSA SA KAUSWAGANPASAKA! "U#TIPURPOSE $OOPERATI%E&NI$I Tin P'(te coverin$ the pa0roll periods <%'='&=&(%=(+=<and <(%=(&=(%=%"=<. Included a2on$ the pa0ees therein /ere the petitioners herein respondents. 8 8 8Eh0 /ere petitioners included in said pa0rolls for said pa0roll periods /hen the supposed !ontract /ithNORIS INTRN)TION)1 /as not 0et e8ecuted )pparentl0, private respondents slipped. Thus, /e hold thatthe 2uch ball0hooed *anuar0 %", % !ontract bet/een P)S)) and NORIS INTRN)TION)1, is but a2ere afterthou$ht, a concoction desi$ned b0 private respondents to evade their obli$ations topetitioners. @!itations o2itted and e2phasis suppliedA

The !) also considered Re$ional Director 3alana$7s findin$ in 1SD !ase No. RO+(((;!I!S%;& thatP)S)) /as en$a$ed in laboronl0 contractin$. In rulin$ that the respondents /ere ille$all0 dis2issed, the !)held that Nor5is Tradin$7s refusal to accept the respondents bac5 to their for2er positions, offerin$ the2instead to accept a ne/ assi$n2ent as /ashers of vehicles in its sister co2pan0, /as a de2otion thata2ounted to a constructive dis2issal.

Nor5is Tradin$7s 2otion for reconsideration /as denied b0 the !) in its Resolution dated March ", '((&.Hence, this petition.

Te Pre-e)* Pe*/*/o)

The petition is founded on the follo/in$ $rounds:

%A TH !ORT O4 )PP)1S H)S DP)RTD 4ROM TH S)1 !ORS O4 *DI!I)1 PRO!DIN-SEHN IT M)D ITS OEN 4)!T)1 4INDIN-S )ND DISR-)RDD TH NI4ORM )ND !ONSISTNT4)!T)1 4INDIN-S O4 TH 1)3OR )R3ITR )ND TH N1R!, EHI!H MST 3 )!!ORDD -R)TEI-HT, RSP!T )ND VN 4IN)1ITB. IN SO DOIN-, TH !ORT O4 )PP)1S !DD ITS

)THORITB ON !RTIOR)RI NDR R1 ;# O4 TH R1S O4 !ORT 3!)S S!H 4)!T)14INDIN-S ER 3)SD ON SP!1)TIONS )ND NOT ON OTHR VIDN!S FSI!G ON R!ORD.

'A TH !ORT O4 )PP)1S H)S DTRMIND ) STION O4 S3ST)N! NOT IN )!!ORD EITH1)E )ND *RISPRDN! IN R1IN- TH)T TH N1R! !OMMITTD -R)V )3S O4 DIS!RTIONIN )11-D1B I-NORIN- TH R1IN- O4 TH R-ION)1 DIR!TOR.

6A TH !ORT O4 )PP)1S H)S DTRMIND ) STION O4 S3ST)N! NOT IN )!!ORD EITH

1)E )ND *RISPRDN! IN R1IN- TH)T PTITIONR IS TH MP1OBR O4 RSPONDNTS.

"A TH !ORT O4 )PP)1S H)S DTRMIND ) STION O4 S3ST)N! NOT IN )!!ORD EITH1)E )ND *RISPRDN! IN R1IN- TH)T TH RSPONDNTS ER !ONSTR!TIV1BDISMISSD !ONTR)RB TO TH 4)!T)1 4INDIN-S O4 TH 1)3OR )R3ITR )ND TH N1R! )NDEITHOT SHOEIN- )NB VIDN! TO OVRTRN S!H 4INDIN- O4 4)!T.

The respondents oppose these $rounds in their !o22ent. In support of their ar$u2ents, the respondentssub2it /ith their !o22ent copies of the !)7s Decision and Resolution in !)-.R. SP No. +6&&( and !)-.R.SP No. +";%, and this !ourt7s Resolutions in -.R. Nos. %&((+&+.



T/- Cour*A- Ru/)

The !ourt resolves to den0 the petition.

Fa+*ua /)/)- o abor o/+/a- >ay be ea>/)e by *e +our*- e) *ere /- a -o/) *a* *eyere arr/De a* arb/*rar/y or /) /-rear o eD/e)+e o) re+or.

)s re$ards the first $round, the petitioner Cuestions the !)7s reversal of 1) -utierre>7s and the N1R!7s rulin$s,and ar$ues that said rulin$s should have been accorded $reat /ei$ht and finalit0 b0 the appellate court asthese /ere alle$edl0 supported b0 substantial evidence.

On this 2atter, the settled rule is that factual findin$s of labor officials, /ho are dee2ed to have acCuirede8pertise in 2atters /ithin their ?urisdiction, are $enerall0 accorded not onl0 respect but even finalit0 b0 thecourts /hen supported b0 substantial evidence, i.e., the a2ount of relevant evidence /hich a reasonable 2ind2i$ht accept as adeCuate to support a conclusion. Ee e2phasi>e, nonetheless, that these findin$s are notinfallible. Ehen there is a sho/in$ that the0 /ere arrived at arbitraril0 or in disre$ard of the evidence on record,the0 2a0 be e8a2ined b0 the courts. The !) can then $rant a petition for certiorari if it finds that the N1R!, inits assailed decision or resolution, has 2ade a factual findin$ that is not supported b0 substantial evidence. It is/ithin the ?urisdiction of the !), /hose ?urisdiction over labor cases has been e8panded to revie/ the findin$sof the N1R!.

Ee have thus e8plained in !oco2an$as Hotel 3each Resort v. Visca that the !) can ta5e co$ni>ance of apetition for certiorari if it finds that the N1R! co22itted $rave abuse of discretion b0 capriciousl0, /hi2sicall0,or arbitraril0 disre$ardin$ evidence /hich are 2aterial to or decisive of the controvers0. The !) cannot 2a5ethis deter2ination /ithout loo5in$ into the evidence presented b0 the parties. The appellate court needs toevaluate the 2aterialit0 or si$nificance of the evidence, /hich are alle$ed to have been capriciousl0,/hi2sicall0, or arbitraril0 disre$arded b0 the N1R!, in relation to all other evidence on record.

This case falls /ithin the e8ception to the $eneral rule that findin$s of fact of labor officials are to be accordedrespect and finalit0 on appeal. )s our discussions in the other $rounds that are raised in this petition /illde2onstrate, the !) has correctl0 held that the N1R! has disre$arded facts and evidence that are 2aterial tothe outco2e of the respondents7 case. No error can be ascribed to the appellate court for 2a5in$ its o/nassess2ent of the facts that are si$nificant to the case to deter2ine the presence or absence of $rave abuseof discretion on the part of the N1R!, even if the !)7s findin$s turn out to be different fro2 the factual findin$sof both the 1) and N1R!.

Nor/- Tra/) /- *e r/)+/a e>oyer o *e re-o)e)*-, +o)-/er/) *a* P!S!?! /- a >ere abor<o)y +o)*ra+*or.

The second and third $rounds, bein$ interrelated as the0 both pertain to the !)7s findin$ that an e2plo0ere2plo0ee relationship e8isted bet/een the petitioner and the respondents, shall be discussed ?ointl0. In itsdecision, the !) cited the findin$s of the Re$ional Director in 1SD !ase No. RO+(((;!I!S%;& and

declared that the N1R! co22itted a $rave abuse of discretion /hen it i$nored said findin$s.

The issue of /hether or not the respondents shall be re$arded as e2plo0ees of the petitioner hin$es 2ainl0 onthe Cuestion of /hether or not P)S)) is a laboronl0 contractor. 1aboronl0 contractin$, a prohibited act, is anarran$e2ent /here the contractor or subcontractor 2erel0 recruits, supplies, or places /or5ers to perfor2 a

?ob, /or5, or service for a principal. In laboronl0 contractin$, the follo/in$ ele2ents are present: @aA thecontractor or subcontractor does not have substantial capital or invest2ent to actuall0 perfor2 the ?ob, /or5, or service under its o/n account and responsibilit09 and @bA the e2plo0ees recruited, supplied or placed b0 suchcontractor or subcontractor perfor2 activities /hich are directl0 related to the 2ain business of the principal.These differentiate it fro2 per2issible or le$iti2ate ?ob contractin$ or subcontractin$, /hich refers to anarran$e2ent /hereb0 a principal a$rees to put out or far2 out /ith the contractor or subcontractor theperfor2ance or co2pletion of a specific ?ob, /or5, or service /ithin a definite or predeter2ined period,



re$ardless of /hether such ?ob, /or5, or service is to be perfor2ed or co2pleted /ithin or outside the pre2isesof the principal. ) person is considered en$a$ed in le$iti2ate ?ob contractin$ or subcontractin$ if the follo/in$conditions concur: @aA the contractor carries on a distinct and independent business and parta5es the contract/or5 on his account under his o/n responsibilit0 accordin$ to his o/n 2anner and 2ethod, free fro2 thecontrol and direction of his e2plo0er or principal in all 2atters connected /ith the perfor2ance of his /or5e8cept as to the results thereof9 @bA the contractor has substantial capital or invest2ent9 and @cA the a$ree2entbet/een the principal and the contractor or subcontractor assures the contractual e2plo0ees7 entitle2ent to all

labor and occupational safet0 and health standards, free e8ercise of the ri$ht to selfor$ani>ation, securit0 oftenure, and social /elfare benefits.

Ee e2phasi>e that the petitioner7s ar$u2ents a$ainst the respondents7 clai2 that P)S)) is a laboronl0contractor, /hich is thus to be re$arded as a 2ere a$ent of Nor5is Tradin$ for /hich the respondents renderedservice, are alread0 2ooted b0 the finalit0 of this !ourt7s Resolutions dated Dece2ber #, '((+ and )pril %",'((& in -.R. Nos. %&((+&+, /hich ste2s fro2 the !)7s and the DO1 Secretar07s revie/ of the DO1Re$ional Director7s Order dated )u$ust '', '((( in 1SD !ase No. RO+(((;!I!S%;&.

To recapitulate, Re$ional Director 3alana$ issued on )u$ust '', '((( its Order in 1SD !ase No. RO+(((;!I!S%;& and declared P)S)) as a 2ere laboronl0 contractor, and Nor5is Tradin$ as the truee2plo0er of herein respondents. He e8plained that P)S)) failed to prove durin$ the conduct of a su22ar0

investi$ation that the cooperative had substantial capital or invest2ent sufficient to enable it to perfor2 thefunctions of an independent contractor. The respondents7 clai2 that the 2achiner0, eCuip2ent and suppliesthe0 used to perfor2 their duties /ere o/ned b0 Nor5is Tradin$, and not b0 P)S)), /as undisputed. EhileP)S)) reflected in its State2ent of 4inancial !ondition for the 0ear %; propert0 and eCuip2ent net ofaccu2ulated depreciation at P6"",'+6.(', there /as no sho/in$ that the properties covered thereb0 /ereactuall0 and directl0 used in the conduct of P)S))7s business. The DO1 Re$ional Director e8plained:

Herein respondents a2on$ the2, herein petitioner failed to prove that their subcontractin$ arran$e2ents fallunder an0 of the conditions set forth in Sec. ; of D.O. %( S. %+ to Cualif0 as per2issible contractin$ orsubcontractin$ as provided for as follo/s:

Sec. ;. Per2issible contractin$ or subcontractin$. Sub?ect to conditions set forth in Sec. " @dA and @eA and

Section # hereof, the principal 2a0 en$a$e the services of a contractor or subcontractor for the perfor2ance ofan0 of the follo/in$:

a.A Eor5s or services te2poraril0 or occasionall0 needed to 2eet abnor2al increase in the de2and of productsor services...

bA Eor5s or services te2poraril0 or occasionall0 needed b0 the principal for underta5in$s reCuirin$ e8pert orhi$hl0 technical personnel to i2prove the 2ana$e2ent or operations of an enterprise9

cA Services te2poraril0 needed for the introduction or pro2otion of ne/ products...9

dA Eor5s or services not directl0 related or not inte$ral to 2ain business or operation of the principal includin$casual /or5, ?anitorial, securit0, landscapin$ and 2essen$erial services and /or5 not related to 2anufacturin$processes in 2anufacturin$ establish2ents.

eA Services involvin$ the public displa0 of 2anufacturers7 products...9

fA Speciali>ed /or5s involvin$ the use of so2e particular, unusual or peculiar s5ills... and

$A nless a reliever s0ste2 is in place a2on$ the re$ular /or5force, substitute services for absent re$ulare2plo0ees...



It is therefore evident that herein respondents are en$a$ed in <laboronl0< contractin$ as defined in )rt. %(; ofthe 1abor !ode. 4urther2ore, such contractin$=subcontractin$ arran$e2ent not onl0 falls under laboronl0contractin$ but also fails to Cualif0 as le$iti2ate subcontractin$ as defined under Sec. " par. e of D.O. %( S.%+, to /it:

<Sec. ". Definition of ter2s.

dA

Sub?ect to the provisions of Sections ;, + and & of this Rule, contractin$ or subcontractin$ shall be le$iti2ate ifthe follo/in$ circu2stances concur:

iA The contractor or subcontractor carries on a distinct and independent business and underta5es to perfor2the ?ob, /or5 or service on its o/n account and under its o/n responsibilit0, accordin$ to its o/n 2anner and2ethod, and free fro2 the control and direction of the principal in all 2atters connected /ith the perfor2anceof the /or5 e8cept to the results thereof9

iiA The contractor or subcontractor has substantial capital or invest2ent9 and

iiiA The a$ree2ent bet/een the principal and contractor or subcontractor assures the contractual e2plo0eesentitle2ent to all labor and occupational and safet0 and health standards, free e8ercise of the ri$ht to selfor$ani>ation, securit0 of tenure and social and /elfare benefits.< @2phasis suppliedA

To$ether /ith his findin$ that P)S)) evidentl0 lac5ed substantial capital or invest2ent reCuired fro2le$iti2ate ?ob contractors, Re$ional Director 3alana$ ruled that the cooperative failed to dispute therespondents7 alle$ation that officers of Nor5is Tradin$ supervised their /or5 and paid their salaries. Inconclusion, P)S)) and Nor5is Tradin$ /ere declared solidaril0 liable for the 2onetar0 a/ards 2ade in favorof therein clai2antse2plo0ees, /hich included herein respondents. ) 2otion for reconsideration of the Order/as denied b0 the Re$ional Director.

pon appeal, then DO1 Sec. Sto. To2as affir2ed the rulin$s of Re$ional Director 3alana$. 3oth Nor5isTradin$ and P)S)) filed their separate appeals fro2 the orders of the DO1 Secretar0 to the !) via thepetitions for certiorari doc5eted as !)-.R. SP Nos. +6&&( and +";%, but said petitions /ere dis2issed forlac5 of 2erit b0 the !) in its Decision dated Ma0 +, '((+ and Resolution dated October , '((+. The !) held:

This !ourt a$rees /ith the findin$ of the DO1 Re$ional Director, as affir2ed b0 the Secretar0 of 1abor in herassailed Order, that petitioners a2on$ the2, herein petitioner /ere en$a$ed in laboronl0 contractin$.

First. P)S)) failed to prove that it has substantial capitali>ation or invest2ent in the for2 of tools, eCuip2ent,2achineries, /or5 pre2ises, a2on$ others, to Cualif0 as an independent contractor. P)S))7s clai2 that ithas 2achineries and eCuip2ent /orth P 6"",'+6.(' as reflected in its 4inancial State2ents andSupple2entar0 Schedules is belied b0 private respondents7 a2on$ the2, herein respondents evidence /hich

consisted of pictures sho/in$ 2achineries and eCuip2ent /hich /ere o/ned b0 and located at the pre2isesof petitioner NORIS TR)DIN- @as earlier noted, so2e of the pictures sho/ed so2e of the privaterespondents operatin$ said 2achinesA. Indeed it 2a5es one /onder /h0, if P)S)) indeed had such2achineries and eCuip2ent /orth P 6"",'+6.(', private respondents /ere usin$ 2achineries and eCuip2ento/ned b0 and located at the pre2ises of NORIS TR)DIN-.

ven $rantin$ that indeed P)S)) had 2achineries and eCuip2ent /orth P 6"",'+6.(', it /as not sho/n thatsaid 2achineries and eCuip2ent /ere actuall0 used in the perfor2ance or co2pletion of the ?ob, /or5, orservice that it /as contracted to render under its supposed ?ob contract.

8 8 8 8



*econd. P)S)) li5e/ise did not carr0 out an independent business fro2 NORIS TR)DIN-. Ehile P)S))/as issued its !ertificate of Re$istration on *ul0 %&, %%, all it could sho/ to prove that it carried out anindependent business as a ?ob contractor /ere the Pro?ect !ontract dated *anuar0 ', %& /ith NORISTR)DIN-, and the Pro?ect !ontract dated Dece2ber %&, %& /ith NORIS INTRN)TION)1. Ho/ever, asearlier discussed, the Pro?ect !ontract dated Dece2ber %&, %& /ith NORIS INTRN)TION)1 is nothin$2ore than an afterthou$ht b0 the petitioners to confuse its /or5ers and defeat their ri$htful clai2s. The sa2ecan be said of the Pro?ect !ontract /ith EI!R and VIN, IN!., considerin$ that it /as e8ecuted onl0 on

4ebruar0 %, '(((. Veril0, said contract /as sub2itted onl0 to stren$then P)S))7s clai2 that it is a le$iti2ate ?ob contractor.

hird. Private respondents perfor2ed activities directl0 related to the principal business of NORIS TR)DIN-.The0 /or5ed as /elders and 2achine operators en$a$ed in the production of steel crates /hich /ere sent to*apan for use as containers of 2otorc0cles that are then sent bac5 to NORIS TR)DIN-. Privaterespondents functions therefore are directl0 related and vital to NORIS TR)DIN-7s business of2anufacturin$ of Ba2aha 2otorc0cles.

)ll the fore$oin$ considerations affir2 b0 2ore than substantial evidence that NORIS TR)DIN- andP)S)) en$a$ed in laboronl0 contractin$. @!itations o2itted and e2phasis suppliedA

Ehen the case /as brou$ht before this !ourt via the petitions for revie/ on certiorari doc5eted as -.R. Nos.%&((+&+, /e resolved to issue on Dece2ber #, '((+ our Resolution dis2issin$ the appeal for, a2on$ other$rounds, the failure of Nor5is Tradin$ to sufficientl0 sho/ an0 reversible error in the the !) decision. In ourResolution dated )pril %", '((&, /e denied /ith finalit0 Nor5is Tradin$s7 2otion for reconsideration on the$round that no substantial ar$u2ent and co2pellin$ reason /as adduced to /arrant a reconsideration of ourdis2issal of the petition. This !ourt7s resolutions, affir2in$ the findin$s of the !), had then beco2e final ande8ecutor0.

)ppl0in$ the doctrine of res ?udicata, all 2atters that have been full0 resolved /ith finalit0 b0 this !ourt7sdis2issal of the appeal that ste22ed fro2 Re$ional Director 3alana$7s Order dated )u$ust '', '((( in 1SD!ase No. RO+(((;!I!S%;& are alread0 conclusive bet/een the parties. Res ?udicata is defined as a2atter ad?ud$ed9 a thin$ ?udiciall0 acted upon or decided9 a thin$ or 2atter settled b0 ?ud$2ent. nder this

doctrine, an e8istin$ final ?ud$2ent or decree rendered on the 2erits, and /ithout fraud or collusion, b0 a courtof co2petent ?urisdiction, upon an0 2atter /ithin its ?urisdiction, is conclusive of the ri$hts of the parties or their privies, in all other actions or suits in the sa2e or an0 other ?udicial tribunal of concurrent ?urisdiction on thepoints and 2atters in issue in the first suit.

To state si2pl0, a final ?ud$2ent or decree on the 2erits b0 a court of co2petent ?urisdiction is conclusive ofthe ri$hts of the parties or their privies in all later suits on all points and 2atters deter2ined in the for2er suit.

Res 8!dicata has t/o aspects: bar b0 prior ?ud$2ent and conclusiveness of ?ud$2ent as provided underSection "+@bA and @cA, Rule 6, respectivel0, of the Rules of !ourt. nder the doctrine of conclusiveness of

?ud$2ent, facts and issues actuall0 and directl0 resolved in a for2er suit cannot be raised in an0 future casebet/een the sa2e parties, even if the latter suit 2a0 involve a different cause of action.

!learl0, res ?udicata in the concept of conclusiveness of ?ud$2ent has set in. In the proceedin$s before theRe$ional Director and the 1), there /ere identit0 of parties and identit0 of issues, althou$h the causes ofaction in the t/o actions /ere different. 4irst, herein respondents on the one hand, and Nor5is Tradin$ on theother hand, /ere all parties in the t/o cases, bein$ therein co2plainants and respondent, respectivel0. )s tothe second reCuisite, the issue of /hether P)S)) /as a laboronl0 contractor /hich /ould 2a5e Nor5isTradin$ the true e2plo0er of the respondents /as the 2ain issue in the t/o cases, especiall0 since Nor5isTradin$ had been ar$uin$ in both proceedin$s that it could not be re$arded as the herein respondents7e2plo0er, harpin$ on the defense that P)S)) /as a le$iti2ate ?ob contractor.



Si2ilarl0, in 4ole hilippines 2nc. v. 6steva /e held that the findin$ of the DO1 Re$ional Director, /hich hadbeen affir2ed b0 the ndersecretar0 of 1abor, b0 authorit0 of the Secretar0 of 1abor, in an Order that hasreached finalit0 and /hich provided that the cooperative !anner0 MultiPurpose !ooperative @!)MP!OA /asen$a$ed in laboronl0 contractin$ should bind the N1R! in a case for ille$al dis2issal. Ee ruled:

Ehile the causes of action in the proceedin$s before the DO1 and the N1R! differ, the0 are, in fact, ver0closel0 related. The DO1 Re$ional Office conducted an investi$ation to deter2ine /hether !)MP!O /as

violatin$ labor la/s, particularl0, those on laboronl0 contractin$. SubseCuentl0, it ruled that !)MP!O /asindeed en$a$in$ in laboronl0 contractin$ activities, and thereafter ordered to cease and desist fro2 doin$ so.8 8 8 The 2atter of /hether !)MP!O /as a laboronl0 contractor /as alread0 settled and deter2ined in theDO1 proceedin$s, /hich should be conclusive and bindin$ upon the N1R!. Ehat /ere left for thedeter2ination of the N1R! /ere the issues on /hether there /as ille$al dis2issal and /hether respondentsshould be re$ulari>ed.

8 8 8 4or the N1R! to i$nore the findin$s of DO1 Re$ional Director Parel and DO1 ndersecretar0 Tra?anois an un2ista5able and serious under2inin$ of the DO1 officials7 authorit0.

The rule on conclusiveness of ?ud$2ent then no/ precludes this !ourt fro2 reopenin$ the issues that /erealread0 settled /ith finalit0 in -.R. Nos. %&((+&+, /hich effectivel0 affir2ed the !)7s findin$s that P)S))

/as en$a$ed in laboronl0 contractin$, and that Nor5is Tradin$ shall be treated as the e2plo0er of therespondents.

In the present petition, Nor5is Tradin$ still ar$ues that the N1R! co22itted no $rave abuse of discretion ini$norin$ the findin$s of Re$ional Director 3alana$ considerin$ that his Order had not 0et reached finalit0 at theti2e the N1R! resolved the appeal fro2 the decision of the 1). This not/ithstandin$, this !ourt holds that the!) still co22itted no error in findin$ $rave abuse of discretion on the part of the N1R! b0 the latter7s utterdisre$ard of the findin$s of the Re$ional Director that Nor5is Tradin$ should be considered the e2plo0er ofherein respondents. )s correctl0 observed b0 the !) in the assailed Decision dated Ma0 +, '((+:

Surprisin$l0, the N1R! failed to consider or even 2a5e reference to the said )u$ust '', '((( Order of theDO1 Re$ional Director. !onsiderin$ the si$nificance of the DO1 Re$ional Director7s findin$s, the sa2ecannot ?ust be perfunctoril0 re?ected. 4or the N1R! to i$nore the findin$s of DO1 Re$ional Director is tounder2ine or disre$ard of FsicG the visitorial and enforce2ent po/er of the DO1 Secretar0 and his authori>edrepresentatives under )rticle %'& of the 1abor !ode, as a2ended. It /as $rave abuse of discretion then on thepart of the N1R! to i$nore or si2pl0 s/eep under the ru$ the findin$s of the DO1 Re$ional Director. @!itationo2itted and e2phasis oursA

) readin$ of the N1R!7s Resolution dated Dece2ber %&, '((6 indicates that /hile it /as confronted /ithopposin$ findin$s of the Re$ional Director and the 1) on the 2aterial issue of laboronl0 contractin$, it failed toeven atte2pt to revie/ thorou$hl0 the 2atter, loo5 into the records, reconcile the differin$ ?ud$2ents and 2a5eits o/n appreciation of the evidence presented b0 the parties. Instead, it si2pl0 brushed aside the rulin$s ofthe Re$ional Director, /ithout due consideration of the circu2stance that said labor official had the ?urisdictionto rule on the issue pursuant to the visitorial and enforce2ent po/ers of the DO1 Secretar0 and his dul0authori>ed representatives under )rticle %'& of the 1abor !ode.

The rule in appeals in labor cases provides that the !) can $rant a petition for certiorari if it finds that theN1R!, in its assailed decision or resolution, co22itted $rave abuse of discretion b0 capriciousl0, /hi2sicall0or arbitraril0 disre$ardin$ evidence /hich is 2aterial or decisive of the controvers0. Si$nificantl0, the Secretar0of 1abor had alread0 affir2ed Re$ional Director 3alana$7s Order /hen the appeal fro2 the 1)7s rulin$s /asresolved. In the N1R! Resolution dated Dece2ber %&, '((6, the !o22ission nonetheless 2erel0 held:

The photocopies of the Order of the Honorable Secretar0 of the Depart2ent of 1abor and 2plo02ent dated4ebruar0 +, '((' and the Order of the Re$ional Director of the Re$ional Office of the Depart2ent of 1abor and2plo02ent findin$ the e8istence of laboronl0 contractin$ bet/een respondent NORIS FTradin$G and



respondent P)S)) do not provide sufficient basis to disturb Our Decision. Ee are not convinced that thefacts and evidence, /hich are totall0 distinct fro2 this case and /hich /ere presented in a separateproceedin$s and before another Office, /ould be a sufficient and valid basis to divest the 1abor )rbiter a Cuoof his authorit0 /hich undoubtedl0 the la/ vests upon hi2 as his e8clusive ?urisdiction. The ?urisdictionconferred b0 )rticle '%+ of the 1abor !ode upon the 1abor )rbiter is <ori$inal and e8clusive<, and his authorit0to hear and decide caseFsG vested upon hi2 is to the e8clusion of an0 other court or Cuasi?udicial bod0. 30reason of their trainin$, e8perience, and e8pertise, 1abor )rbiters are in a better position to resolve

controversies, for /hich the0 are conferred ori$inal and e8clusive ?urisdiction b0 la/. ven )rticle '%& of the1abor !ode does not e2po/er the Re$ional Director of the Depart2ent of 1abor and 2plo02ent to shareori$inal and e8clusive ?urisdiction conferred on the 1abor )rbiter b0 )rticle '%+ 8 8 8.

Such utter disre$ard b0 the N1R! of the findin$s of the Re$ional Director and DO1 Secretar0 a2ounts to$rave abuse of discretion a2ountin$ to lac5 or e8cess of ?urisdiction. )s this !ourt7s revie/ of the records/ould confir2, a ?udicious stud0 of the evidence presented b0 the parties /ould have supported the findin$ thatNor5is Tradin$ should be treated as the respondents7 true e2plo0er, /ith P)S)) bein$ 2erel0 an a$ent ofsaid e2plo0er. P)S)) failed to sufficientl0 sho/ that it had substantial capital or invest2ent in the for2 oftools, eCuip2ent, 2achineries and /or5 pre2ises reCuired fro2 le$iti2ate ?ob contractors. The /or5 reCuiredfro2 the respondents, bein$ /elders and=or operators of industrial 2achines, /ere also directl0 related toNor5is Tradin$7s principal business of 2anufacturin$. The ?ob contract supposedl0 e8ecuted b0 and bet/een

P)S)) and Nor5is International in % deserved nil consideration $iven that the respondents had clai2edearl0 on that the0 be$an /or5in$ for Nor5is Tradin$ on various dates fro2 %6 to %". Moreover, the recordsconfir2 that Nor5is Tradin$ /as still a2on$ the clients of P)S)) as of *ul0 %, as clearl0 indicated in the2e2oranda it sent to respondents 3uenavista, 4abroa and Dondo0ano on *ul0 '', %, /hich provide:

Please ta5e note that the recent action 0ou have done in filin$ a case a$ainst one of our clients, Nor5is Tradin$!o., Inc., has $reatl0 pre?udiced the interest and /elfare of the !ooperative. @2phasis oursA

This cate$orical state2ent of P)S)) that Nor5is Tradin$ /as a2on$ its clients at the ti2e the 2e2oranda/ere issued onl0 further bolsters the respondents7 clai2, and Re$ional Director 3alana$7s findin$, that saidrespondents /ere deplo0ed b0 P)S)) to Nor5is Tradin$. This also contradicts petitioner7s ar$u2ent that itscontract /ith P)S)) had ended in %&.

4inall0, contrar0 to the insinuations of Nor5is Tradin$, the fact that P)S)) /as a dul0re$istered cooperativedid not preclude the possibilit0 that it /as en$a$ed in laboronl0 contractin$, as confir2ed b0 the findin$s of theRe$ional Director. )n entit0 is characteri>ed as a laboronl0 contractor based on the ele2ents and $uidelinesestablished b0 la/ and ?urisprudence, ?ud$in$ pri2aril0 on the relationship that the said entit0 has /ith theco2pan0 to /hich the /or5ers are deplo0ed, and not on an0 special arran$e2ent that the entit0 has /ith said/or5ers.

Ter>/)a*/o) o a) e>oy>e)* or )o u-* or au*or/e +au-e a>ou)*- *o a) /ea /->/--a.

)s to the issue of /hether the respondents /ere ille$all0 dis2issed b0 Nor5is Tradin$, /e ans/er in theaffir2ative, althou$h not b0 constructive dis2issal as declared b0 the !), but b0 actual dis2issal.

Ehere an entit0 is declared to be a laboronl0 contractor, the e2plo0ees supplied b0 said contractor to theprincipal e2plo0er beco2e re$ular e2plo0ees of the latter. Havin$ $ained re$ular status, the e2plo0ees areentitled to securit0 of tenure and can onl0 be dis2issed for ?ust or authori>ed causes and after the0 had beenafforded due process. Ter2ination of e2plo02ent /ithout ?ust or authori>ed cause and /ithout observin$procedural due process is ille$al.,;%phi,

In clai2in$ that the0 /ere ille$all0 dis2issed fro2 their e2plo02ent, the respondents alle$ed havin$ beeninfor2ed b0 P)S)) that the0 /ould be transferred, upon the behest of Nor5is Tradin$, as Multicab /ashersor utilit0 /or5ers to Porta !oeli, a sister co2pan0 of Nor5is Tradin$. Nor5is Tradin$ does not dispute that such

?ob transfer /as rela0ed b0 P)S)) unto the respondents, althou$h the co2pan0 contends that the transfer



/as 2erel0 an <offer< that did not constitute a dis2issal. It bears 2entionin$, ho/ever, that the respondents/ere not $iven an0 other option b0 P)S)) and Nor5is Tradin$ but to accede to said transfer. In fact, there isno sho/in$ that Nor5is Tradin$ /ould still /illin$l0 accept the respondents to /or5 for the co2pan0. Eorse, itstill vehe2entl0 denies that the respondents had ever /or5ed for it. )$ain, all defenses of Nor5is Tradin$ thatanchor on the alle$ed lac5 of e2plo0ere2plo0ee relationship bet/een it and the respondents no lon$er 2eritan0 consideration, $iven that this !ourt7s findin$s in -.R. Nos. %&((+&+ have beco2e conclusive. Thus, therespondents7 transfer to Porta !oeli, althou$h rela0ed to the respondents b0 P)S)) /as effectivel0 an act of

Nor5is Tradin$. Ehere laboronl0 contractin$ e8ists, the 1abor !ode itself establishes an e2plo0ere2plo0eerelationship bet/een the e2plo0er and the e2plo0ees of the laboronl0 contractor. The statute establishes thisrelationship for a co2prehensive purpose: to prevent a circu2vention of labor la/s. The contractor isconsidered 2erel0 an a$ent of the principal e2plo0er and the latter is responsible to the e2plo0ees of thelaboronl0 contractor as if such e2plo0ees had been directl0 e2plo0ed b0 the principal e2plo0er.

No further evidence or docu2ent should then be reCuired fro2 the respondents to prove such fact of dis2issal,especiall0 since Nor5is Tradin$ 2aintains that it has no dut0 to ad2it and treat said respondents as itse2plo0ees. !onsiderin$ that Porta !oeli is an entit0 separate and distinct fro2 Nor5is Tradin$, therespondents7 e2plo02ent /ith Nor5is Tradin$ /as necessaril0 severed b0 the chan$e in /or5 assi$n2ent. Itthen did not even 2atter /hether or not the transfer involved a de2otion in the respondents7 ran5 and /or5functions9 the intention to dis2iss, and the actual dis2issal of the respondents /ere sufficientl0 established.

In the absence of a clear sho/in$ that the respondents7 dis2issal /as for ?ust or authori>ed causes, theter2ination of the respondents7 e2plo02ent /as ille$al. Ehat 2a0 be reasonabl0 deduced fro2 the records/as that Nor5is Tradin$ decided on the transfer, after the respondents had earlier filed their co2plaint for laboronl0 contractin$ a$ainst the co2pan0. ven Nor5is Tradin$7s contention that the transfer 2a0 be dee2ed avalid e8ercise of 2ana$e2ent prero$ative is 2isplaced. 4irst, the e8ercise of 2ana$e2ent prero$ativepresupposes that the transfer is onl0 for positions /ithin the business establish2ent. Second, the e8ercise of2ana$e2ent prero$ative b0 e2plo0ers is not absolute, as it is li2ited b0 la/ and the $eneral principles of fairpla0 and ?ustice.

34EREFORE, pre2ises considered, the petition is $ENIE$.

SO ORDRD.

T4IR$ $I"ISION

EP!R3! SECURITY !N$ !NITORI!%SER"ICES, INC.,Petitioner,

versus

%ICEO $E C!G!Y!N UNI"ERSITY,Respondent.

G.R. No. 150702 Present: ISM3IN-, J.,!hairperson,!)RPIO,!)RPIO MOR)1S,

TIN-), andV1)S!O, *R., JJ.

Pro2ul$ated:Nove2ber '&, '((;

8 8



$ E C I S I O N C!RPIO, J.;

Te Ca-e This is a petition for certiorari of the Decision dated '( )pril '((% and the Resolution dated '% Septe2ber

'((% of the !ourt of )ppeals @appellate courtA in !)-.R. SP No. #%'(, Liceo de Cagayan 3niversity v. he:on. National La'or Relations Co""ission Fi-th 4ivision 6par%a *ec!rity and Janitorial *ervices 2nc. etal. The appellate court reinstated the %& )u$ust % decision of the 1abor )rbiter and re2anded the case tothe Re$ional )rbitration 3oard, 3ranch No. %( of !a$a0an de Oro !it0 to co2pute /hat is dueto 1iceo de !a$a0an niversit0 @1D!A fro2 par/a Securit0 and *anitorial Services, Inc. @par/aA.

Te Fa+*- On % Dece2ber %+, par/a and 1D!, throu$h their representatives, entered into a !ontract for Securit0Services. The pertinent portion of the contract provides that:

#. 4or and in consideration of this securit0, protective and safet0 services, F1D!G a$rees to pa0

Fpar/aG 4IV THOS)ND PSOS ON1B @P#,(((.((A, Philippine !urrenc0 per $uard a 2onthpa0able /ithin fifteen @%#A da0s after Fpar/aG presents its service invoice.Fpar/aG shall furnishF1D!G a 2onthl0 cop0 of SSS contribution of $uards and 2onthl0 pa0roll of each $uardassi$ned at F1D!sG pre2ises on a 2onthl0 basisF.G

par/a allocated the contracted a2ount of P#,((( per securit0 $uard per 2onth in the follo/in$ 2anner:

3asic Pa0 @P %(".#( 8 6%.#=%'A P6,"(.6%Ni$ht Diff. Pa0 %%6.;"%6th 2o. Pa0 '&".%(# da0 incentive leave "6.#"

nifor2 allo/ance #(.((2plo0ers SSS, Medicare, !! contribution ''".&(

)$enc0 share "'(.#6V)T "#".#!ONTR)!T R)T P #,(((.#(@rounded off to P #,(((.((A

On '% Dece2ber %&, %% securit0 $uards @securit0 $uardsA /ho2 par/a assi$ned to 1D! fro2 %Dece2ber %+ to 6( Nove2ber %& filed a co2plaint before the National 1abor Relations !o22issions@N1R!A Re$ional )rbitration 3ranch No. %( in!a$a0an de Oro !it0. Doc5eted as N1R!R)3 !ase No. %(

(%((%(', the co2plaint /as filed a$ainst both par/a and 1D! for underpa02ent of salar0, le$al holida0pa0, %6th 2onth pa0, rest da0, service incentive leave, ni$ht shift differential, overti2e pa0, and pa02ent forattorne0s fees. 1D! 2ade a crossclai2 and pra0ed that par/a should rei2burse 1D! for an0 pa02ent to the securit0$uards.

Te Ru/) o *e %abor !rb/*er In its decision dated %& )u$ust %, the 1abor )rbiter found that the securit0 $uards are entitled to /a$edifferentials and pre2iu2 for holida0 and rest da0 /or5. The 1abor )rbiter held par/a and



1D! solidaril0 liable pursuant to )rticle %( of the 1abor !ode. The dispositive portion of the 1abor )rbitersdecision reads:

EHR4OR, ?ud$2ent is renderedF:G %. Orderin$ respondents F1D!G and Fpar/aG solidaril0 liable to pa0 Fthe securit0

$uardsG for underpa02ent, holida0 and rest da0, as follo/s:

N a 2 e )2ount

%. !asiero , *ovencio P ";,&%.#

'. Villarino , 1eonardo ";,&%.#

6. 1u2bab , )driano ";,&%.#

". !aballero , -re$orio, *r. ";,&%.#

#. !a?illa , Delfin, *r. 6+,%&.#

;. Paduan$a , )rnold '(,6'%.%(

+. Dun$o$ , )chi2edes ";,&%.#

&. Ma$allanes , duardo ";,&%.#

. Dun$o$ , 1ui$i ";,&%.#

%(. Dun$o$ , Telford ";,&%.#

%%. 3ahian , Eilfredo 6(,+"%.6(

P ";6,#"(.#

'. Den0in$ the clai2 of unpaid %6th 2onth pa0, service incentive leave and ni$ht shiftpre2iu2 pa0 for lac5 of 2erit9

6. Orderin$ respondent Fpar/aG to rei2burse respondent F1D!G for /hatever

a2ount the latter 2a0 be reCuired to pa0 Fthe securit0 $uardsG9

". Orderin$ respondent Fpar/aG to pa0 respondent F1D!G P'(,(((.((and P#,(((.(( each of the Fsecurit0 $uardsG, 2oral and e8e2plar0 da2a$es9

#. Orderin$ Fpar/aG to pa0 %(K of attorne0s feeFsGF9G

;. The rest of the clai2s are denied for lac5 of 2erit.

So Ordered.

1D! filed an appeal before the N1R!. 1D! a$reed /ith the 1abor )rbiters decision on the securit0 $uardsentitle2ent to salar0 differential but challen$ed the propriet0 of the a2ount of the a/ard. 1D! alle$ed thatsecurit0 $uards not si2ilarl0 situated /ere $ranted unifor2 2onetar0 a/ards and that the decision did notinclude the basis of the co2putation of the a2ount of the a/ard. par/a also filed an appeal before the N1R!. 4or its part, par/a Cuestioned its liabilit0 for the securit0$uards clai2s and the a/arded crossclai2 a2ounts.

Te Ru/) o *e N%RC



The 4ifth Division of the N1R! resolved par/a and 1D!s separate appeals in its Resolution dated %*anuar0 '(((. The N1R! found that the securit0 $uards are entitled to /a$e differentials and pre2iu2 forholida0 and rest da0 /or5. )lthou$h the N1R! held par/a and 1D! solidaril0 liable for the /a$edifferentials and pre2iu2 for holida0 and rest da0 /or5, the N1R! did not reCuire par/a to rei2burse 1D!for its pa02ents to the securit0 $uards. The N1R! also ordered the reco2putation of the 2onetar0 a/ardsaccordin$ to the dates actuall0 /or5ed b0 each securit0 $uard. The dispositive portion of the N1R! Resolution

reads thus:

34EREFORE, the appealed decision is !FFIRME$, sub?ect to the 2odification that theportions thereof directin$ respondent P)RE) Securit0 )$enc0 and *anitorial Services, Inc. torei2burse respondent 1iceo de !a$a0an niversit0 for /hatever a2ount the latter 2a0 havepaid co2plainants and to pa0 respondent 1iceo de !a$a0an niversit0 the su2 FsicGFofG P'(,(((.(( and P#,(((.((, representin$ 2oral and e8e2plar0 da2a$es, respectivel0, of each co2plainants FsicG, are deleted for lac5 of le$al basis. 4urther the 2onetar0 a/ards for /a$e differential and pre2iu2s for holida0 and rest da0 /or5s shall be reco2puted b0 theRe$ional )rbitration 3ranch of ori$in at the e8ecution sta$e of the proceedin$s.

!oFnGfor2abl0, the a/ard of )ttorne0s feeFsG is eCuivalent to ten @%(KA percent of the a$$re$ate

2onetar0 a/ard as finall0 ad?usted.

SO OR$ERE$.

par/a and 1D! a$ain filed separate 2otions for partial reconsideration of the % *anuar0 '((( N1R!Resolution. 1D! Cuestioned the N1R!s deletion of 1D!s entitle2ent to rei2burse2enb0 par/a. par/a, on the other hand, pra0ed that 1D! be 2ade to rei2burse par/a for /hatever a2ounit 2a0 pa0 to the securit0 $uards.In its Resolution dated %" March '(((, the N1R! declared that althou$h par/a and 1D! are solidaril0 liableto the securit0 $uards for the 2onetar0 a/ard, 1D! alone is ulti2atel0 liable. The N1R! resolved the issuethus:

34EREFORE, the assailed resolution, dated % *anuar0 '(((, is MO$IFIE$ in thatrespondent 1iceo de !a$a0an niversit0 @1I!OA is ordered to rei2burserespondent par/a Securit0 and *anitorial Services, Inc. @P)RE)A for /hatever a2ount thelatter 2a0 have paid to co2plainants arisin$ fro2 this case.

SO OR$ERE$.

1D! filed a petition for certiorari before the appellate court assailin$ the N1R!s decision. 1D! too5 issue/ith the N1R!sorder that 1D! should rei2burse par/a. 1D! stated that this /ould free par/a fro2 an0liabilit0 for pa02ent of the securit0 $uards 2one0 clai2s.

Te Ru/) o *e !ea*e Cour*

In its Decision pro2ul$ated on '( )pril '((%, the appellate court $ranted 1D!s petition and reinstated the1abor )rbiters decision. The appellate court also allo/ed 1D! to clai2 rei2burse2ent fro2 par/a. Theappellate courts decision reads thus:

34EREFORE, fore$oin$ considered, the petition is hereb0 GR!NTE$. The decisiondated )u$ust %&, % of 1abor )rbiter !elenitoN. Dain$ is REINST!TE$. The case is



hereb0 REM!N$E$ to the Re$ional )rbitration 3oard, 3ranch No. %( of !a$a0an de Oro !it0to co2pute /hat is due to 1D! fro2 P)RE).

SO ORDRD.

par/a filed a 2otion for reconsideration of the appellate courts decision. par/a stressed that ?urisprudenceis consistent in rulin$ that the ulti2ate liabilit0 for the pa02ent of the 2onetar0 a/ard rests /ith 1D! alone. The appellate court denied par/as 2otion for reconsideration for lac5 of 2erit. Hence, this petition.

Te I--ue The petition raises this sole le$al issue: Is 1D! alone ulti2atel0 liable to the securit0 $uards for the /a$edifferentials and pre2iu2 for holida0 and rest da0 pa0

Te Ru/) o *e Cour* The petition has 2erit.

Ep(r)( (nd #D$Us So'id(r* #i(+i'it* (nd #D$Us U'ti(te #i(+i'it*

)rticles %(;, %(+ and %( of the 1abor !ode read:

)rt. %(;. Contractor or s!'contractor. Ehenever an e2plo0er enters into a contract /ith another person for the perfor2ance of thefor2ers /or5, the e2plo0ees of the contractor and of thelatters subcontractor, if an0, shall be paid in accordance /ith the provisions of this !ode.

In the event that the contractor or subcontractor fails to pa0 the /a$es of his e2plo0ees inaccordance /ith this !ode, the e2plo0er shall be ?ointl0 and severall0 liable /ith his contractor or subcontractor to such e2plo0ees to the e8tent of the /or5 perfor2ed under the contract, inthe sa2e 2anner and e8tent that he is liable to e2plo0ees directl0 e2plo0ed b0 hi2.

The Secretar0 of 1abor 2a0, b0 appropriate re$ulations, restrict or prohibit the contractin$ out of

labor to protect the ri$hts of /or5ers established under this !ode. In so prohibitin$ or restrictin$,he 2a0 2a5e appropriate distinctions bet/een laboronl0 contractin$ and ?ob contractin$ as /ellas differentiations /ithin these t0pes of contractin$ and deter2ine /ho a2on$ the partiesinvolved shall be considered the e2plo0er for purposes of this !ode, to prevent an0 violation or circu2vention of an0 provision of this !ode.

There is laboronl0 contractin$ /here the person suppl0in$ /or5ers to an e2plo0er does nothave substantial capital or invest2ent in the for2 of tools, eCuip2ent, 2achineries, /or5pre2ises, a2on$ others, and the /or5ers recruited and placed b0 such persons are perfor2in$activities /hich are directl0 related to the principal business of the e2plo0er. In such cases, theperson or inter2ediar0 shall be considered 2erel0 as an a$ent of the e2plo0er /ho shall be



responsible to the /or5ers in the sa2e 2anner and e8tent as if the latter /ere directl0 e2plo0edb0 hi2.

)rticle %(+. 2ndirect e"ployer. The provisions of the i22ediatel0 precedin$ )rticle shall li5e/iseappl0 to an0 person, partnership, association or corporation /hich, not bein$ an e2plo0er,contracts /ith an independent contractor for the perfor2ance of an0 /or5, tas5, ?ob or pro?ect.

)rticle %(. *olidary lia'ility . The provisions of e8istin$ la/s to the contrar0 not/ithstandin$,ever0 e2plo0er or indirect e2plo0er shall be held responsible /ith his contractor or subcontractor for an0 violation of an0 provision of this !ode. 4or purposes of deter2inin$ thee8tent of their civil liabilit0 under this !hapter, the0 shall be considered as direct e2plo0ers.

This !ourts rulin$ in 6agle *ec!rity Agency 2nc. v. NLRC sCuarel0 applies to the present case. In 6agle /eruled that:

This ?oint and several liabilit0 of the contractor and the principal is 2andated b0 the 1abor !odeto assure co2pliance of the provisions therein includin$ the statutor0 2ini2u2 /a$e F)rticle ,1abor !odeG. The contractor is 2ade liable b0 virtue of his status as direct e2plo0er. Theprincipal, on the other hand, is 2ade the indirect e2plo0er of the contractors e2plo0ees for purposes of pa0in$ the e2plo0ees their /a$es should the contractor be unable to pa0 the2.This ?oint and several liabilit0 facilitates, if not $uarantees, pa02ent of the /or5ers perfor2anceof an0 /or5, tas5, ?ob or pro?ect, thus $ivin$ the /or5ers a2ple protection as 2andated b0 the%&+ !onstitution FSee )rticle II Sec. %& and )rticle III Sec. 6G.

In the case at bar, it is be0ond dispute that the securit0 $uards are the e2plo0ees of )-1FSee )rticle VII Sec. ' of the !ontract for Securit0 Services9 -.R. No. &%""+, Rollo, p. 6"G. Thatthe0 /ere assi$ned to $uard the pre2ises of PTSI pursuant to the latters contract /ith )-1and that neither of these t/o entities paid their /a$e and allo/ance increases under the sub?ect/a$e orders are also ad2itted FSee 1abor )rbiters Decision, p. '9 -.R. No. &%""+, Rollo, p. +#G.Thus, the application of the aforecited provisions of the 1abor !ode on ?oint and several liabilit0of the principal and contractor is appropriate FSee Del Rosario U Sons 1o$$in$ nterprises, Inc.v. N1R!, -.R. No. ;"'(", Ma0 6%, %&#, %6; S!R) ;;G.

The solidar0 liabilit0 of PTSI and )-1, ho/ever, does not preclude the ri$ht of rei2burse2ent fro2 his codebtor b0 the one /ho paid FSee )rticle %'%+, !ivil !odeG. It is /ithrespect to this ri$ht of rei2burse2ent that petitioners can find support inthe aforecitedcontractual stipulation and Ea$e Order provision.

The Ea$e Orders are e8plicit that pa02ent of the increases are to be borne b0 the principal or client. To be borne, ho/ever, does not 2ean that the principal, PTSI in this case, /ould directl0

pa0 the securit0 $uards the /a$e and allo/ance increases because there is no privit0 of contract bet/een the2. The securit0 $uards contractual relationship is /ith their i22ediatee2plo0er, )-1. )s an e2plo0er, )-1 is tas5ed, a2on$ others, /ith the pa02ent of their /a$es FSee )rticle VII Sec. 6 of the !ontract for Securit0 Services, s!pra and 3autista v.Incion$,-.R. No. #'&'", March %;, %&&, %#& S!R) ;;#G.

On the other hand, there e8isted a contractual a$ree2ent bet/een PTSI and )-1 /hereinthe for2er availed of the securit0 services provided b0 the latter. In return, the securit0 a$enc0collects fro2 its client pa02ent for its securit0 services. This pa02ent covers the /a$es for thesecurit0 $uards and also e8penses for their supervision and trainin$, the $uards bonds, firear2s/ith a22unitions, unifor2s and other eCuip2ents, accessories, tools, 2aterials and suppliesnecessar0 for the 2aintenance of a securit0 force.



Pre2ises considered, *e -e+ur/*y uar- />>e/a*e re+our-e or *e ay>e)* o *e/)+rea-e- /- /* *e/r /re+* e>oyer , )-1. Ho/ever, in order for the securit0 a$enc0 toco2pl0 /ith the ne/ /a$e and allo/ance rates it has to pa0 the securit0 $uards, the Ea$eOrders 2ade specific provision to a2end e8istin$ contracts for securit0 services b0 allo/in$ thead?ust2ent of the consideration paid b0 the principal to the securit0 a$enc0 concerned. Ehatthe Ea$e Orders reCuire, therefore, is the a2end2ent of the contract as to the consideration tocover the service contractors pa02ent of the increases 2andated. In the end, therefore,

ulti2ate liabilit0 for the pa02ent of the increases rests /ith the principal.

In vie/ of the fore$oin$, the securit0 $uards should clai2 the a2ount of the increases fro2)-1. nder the 1abor !ode, in case the a$enc0 fails to pa0 the2 the a2ounts clai2ed, PTSIshould be held solidaril0 liable /ith )-1 F)rticles %(;,%(+ and %(G. Should )-1 pa0, itcan clai2 an ad?ust2ent fro2 PTSI for an increase in consideration to cover the increasespa0able to the securit0 $uards.

Ho/ever, in the instant case, the contract for securit0 services had alread0 e8pired /ithoutbein$ a2ended consonant /ith the Ea$e Orders. It is also apparent fro2 a readin$ of a recordthat )-1 does not no/ de2and fro2 PTSI an0 ad?ust2ent in the contract price and its 2ainconcern is freein$ itself fro2 liabilit0. -iven these peculiar circu2stances, / PTSI ay- *e

-e+ur/*y uar-, /* +a))o* +a/> re/>bur-e>e)* ro> E!G%E. Bu* /) +a-e /* /- E!G%E *a*ay- *e>, *e a**er +a) +a/> re/>bur-e>e)* ro> PTSI /) /eu o a) au-*>e)*,+o)-/er/) *a* *e +o)*ra+*, FsicG a e/re a) a )o* bee) re)ee. @2phasisaddedA

Ee repeatedl0 upheld our rulin$ in 6agle re$ardin$ rei2burse2ent in the subseCuent cases of *partan*ec!rity < 4etective Agency 2nc. v. NLRC 4evelop"ent Ban# o- the hilippines v. NLRC Alpha 2nvestigationand *ec!rity Agency 2nc. v. NLRC :elp"ate 2nc. v. NLRC et al. and Lapanday Agric!lt!ral 4evelop"entCorporation v. Co!rt o- Appeals.

4or the securit0 $uards, the actual source of the pa02ent of their /a$e differentials and pre2iu2 for holida0and rest da0 /or5 does not 2atter as lon$ as the0 are paid. This is the i2por

of par/a and 1D!s solidar0 liabilit0. !reditors, such as the securit0 $uards, 2a0 collect fro2 an0one othe solidar0 debtors. Solidar0 liabilit0 does not 2ean that, as bet/een the2selves, t/o solidar0 debtors areliable for onl0 half of the pa02ent. 1D!s ulti2ate liabilit0 co2es into pla0 because of the e8piration of the !ontract for Securit0 Services. Thereis no privit0 of contract bet/een the securit0 $uards and 1D!, but 1D!s liabilit0 to the securit0 $uardsre2ains because of )rticles %(;, %(+ and %( of the 1abor !ode. par/a is alread0 precluded fro2 as5in$1D! for an ad?ust2ent in the contract price because of the e8piration of the contract, but par/as liabilit0 tothe securit0 $uards re2ains because of their e2plo0ere2plo0ee relationship. In lieu of an ad?ust2ent in thecontract price, par/a 2a0 clai2 rei2burse2ent fro2 1D! for an0 pa02ent it 2a0 2a5e to the securit0$uards. Ho/ever, 1D! cannot clai2 an0 rei2burse2ent fro2 par/a for an0 pa02ent it 2a0 2a5e to thesecurit0 $uards.

34EREFORE, /e GR!NT the petition. Ee SET !SI$E the Decision dated '( )pril '((% and the Resolutiondated '% Septe2ber '((% of the !ourt of )ppeals. Ee REINST!TE the Resolutions dated % *anuar0'((( and %" March '((( of the National 1abor Relations !o22ission. SO OR$ERE$.

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