Labor Standards Finals Case Digest

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M a . C e c e l i a T i m b a l L l B – 2 R m 4 0 2

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Philippine Airlines vs Zamora (2007) G.R. 166996 ... 69

Philippine Airlines vs Philippine Airlines Employees Association (2007) G.R. 142399 ... 70

Castillo vs Uniwide Warehouse Club (2010) G.R. 169725 ... 71

Bank of the Philippine Islands vs NLRC (1989) G.R. 69746-47 ... 72

Traders Royal Bank Employees Union vs NLRC (1997) G.R. 120592 ... 74

Brahm Industries vs NLRC (1997) G.R. 118853 ... 78

Heirs of Aniban vs NLRC (1997) G.R. 155034 ... 79

Sapio vs Undaloc Construcion et al., (2008) G.R. 155034 ... 80

Atty. Ortiz vs San Miguel Corp., (2008) G.R. 151983-84 ... 81

Masmud vs NLRC (2009) G.R. 183385 ... 84

Bernardo vs. NLRC (1999) G.R. 122917 ... 85

Philippine Telegraph & Telephone Co vs NLRC (1997) G.R. 118978 ... 89

Del Monte Phils vs Velasco (2007) G.R. 153447 ... 90

Ultra Villa Food Haus vs, Geniston (1999) G.R. 120473 ... 91

Remington Industrial Sales Corp,. vs Castaneda (2007) G.R. 153477 ... 93

Tolosa vs NLRC (2008) G.R. 149578 ... 98

Phil Global Communications Inc vs de Vera (2005) G.R. 157214 ... 100

U-Bix Corp. vs Bandiola (2007) G.R. 157168 ... 101

Escasinas et al., vs Shangri-la Mactan Island Resort et al., (2009) G.R. 178827 ... 107

ISS Indochina Corp., vs Ferrer (2005) G.R. 156381... 110

People vs Capt. Gasacao (2005) G.R. 168449 ... 111

Acuña vs CA (2006) G.R. 159832 ... 114

Asian International Manpower Services vs CA (2006) G.R. 169652 ... 116

Sim vs. NLRC (2007) G.R. 157376 ... 119

Bahia Shipping Services Inc., vs Chua (2008) G.R. 162195 ... 122

Masangcay vs Trans-Global Maritime Agency Inc., (2008) G.R. 172800... 123

Magsaysay Maritime Corp., et al., vs Velasquez, et al., (2008) G.R. 179802 ... 124

Serrano vs Gallant Maritime Services et al., (2009) G.R. 167614 ... 125

People vs Domingo (2009) G.R. 181475 ... 127

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Philippine Bank of Communications vs NLRC (1986) G.R. L-66598

FACTS:

Petitioner Philippine Bank of Communications and the Corporate Executive Search Inc. (CESI) entered into a letter agreement dated January 1976 under which (CESI) undertook to provide "Temporary Services" to petitioner Consisting of the "temporary services" of eleven (11) messengers. The contract period is described as being "from January 1976." The petitioner in truth undertook to pay a "daily service rate of P18, " on a per person basis.

Ricardo Orpiada was thus assigned to work with the petitioner bank. As such, he rendered services to the bank, within the premises of the bank and alongside other people also rendering services to the bank. There was some question as to when Ricardo Orpiada commenced rendering services to the bank. On or about October 1976, the petitioner requested (CESI) to withdraw Orpiada's assignment because, in the allegation of the bank, Orpiada's services "were no longer needed."

Orpiada instituted a complaint in the Department of Labor against the petitioner for illegal dismissal and failure to pay the 13th month pay provided for in Presidential Decree No. 851. The Office of the Regional Director, Regional Office No. IV of the Department of Labor, issued an order dismissing Orpiada's complaint for failure of Mr. Orpiada to show the existence of an employer-employee relationship between the bank and himself.

The Labor Arbiter Dogelio rendered a decision ordering the reinstatement of complainant to the same or equivalent position with full back wages and to pay the latter's 13th month pay for the year 1976.

On 26 October 1977, the bank appealed the decision of the Labor Arbiter to the respondent NLRC. NLRC promulgated its decision affirming the award of the Labor Arbiter.

ISSUES:

1. What is the appropriate characterization of the relationship between the bank and (CESI)

2. Whether or not that relationship is one of employer and job (independent) contractor or one of employer and "labor-only" contractor;

HELD: Articles 106 and 107 of the Labor Code of the Philippines (Presidential Decree No. 442, as amended) provides

as follows:

ART. 106. Contractor or sub-contractor. Whenever an employer enters into a contract with another person for the performance of the former's work, the employees of the contractor and of the latter's subcontractor, if any, shall be paid in accordance with the provisions in this Code.

In the event that the contractor or sub-contractor fails to pay the wages of his employees in accordance with this Code, the employer shall be jointly and severally liable with his contractor or sub-contructor to such employees to the extent of the work performed under the contract in the same manner and extent that he is liable to employees directly employed by him

The Secretary of Labor may, by appropriate regulations, restrict or prohibit the contracting out of labor to protect the rights of workers established under this Code. In so prohibiting or restricting, he may make appropriate distinctions between labor-only contracting and job contracting as well as differentiations within these types of contracting and determine who among the parties involved shall be considered the employer for purposes of this Code, to prevent any violation or circumvention of any provisions of this Code.

There is "labor-only" contracting where the person supplying workers to an employer does not have substantial capital or investment in the form of tools, equipment, machineries, work premises, among others, and the workers recruited and placed by such person are performing activities which are directly related to the principal business of such employer. In such cases, the person or intermediary shall be considered merely as an agent of the employer who shall be responsible to the workers in the same manner and extent as if the latter were directly employed by him.

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ART. 107. Indirect employer. The provisions of the immediately preceding Article shall likewise apply to any person, part, nership association or corporation which, not being an employer, contracts with an independent contractor for the performance of any work, task, job or project. (Emphasis supplied)

Under the general rule set out in the first and second paragraphs of Article 106, an employer who enters into a contract with a contractor for the performance of work for the employer, does not thereby create an employer-employes relationship between himself and the employees of the contractor. Thus, the employees of the contractor remain the contractor's employees and his alone. Nonetheless when a contractor fails to pay the wages of his employees in accordance with the Labor Code, the employer who contracted out the job to the contractor becomes jointly and severally liable with his contractor to the employees of the latter "to the extent of the work performed under the contract" as such employer were the employer of the contractor's employees. The law itself, in other words, establishes an employer-employee relationship between the employer and the job contractor's employees for a limited purpose, i.e., in order to ensure that the latter get paid the wages due to them.

A similar situation obtains where there is "labor only" contracting. The "labor-only" contractor-i.e "the person or intermediary" is considered "merely as an agent of the employer. " The employer is made by the statute responsible to the employees of the "labor only" contractor as if such employees had been directly employed by the employer. Thus, where "labor only" contracting exists in a given case, the statute itself implies or establishes an employer-employee relationship between the employer (the owner of the project) and the employer-employees of the "labor only" contractor, this time for a comprehensive purpose: "employer for purposes of this Code, to prevent any violation or circumvention of any provision of this Code. " The law in effect holds both the employer and the "labor-only" contractor responsible to the latter's employees for the more effective safeguarding of the employees' rights under the Labor Code.

Both the petitioner bank and (CESI) have insisted that (CESI) was not a "labor only" contractor. Section 9 of Rule VIII of Book III entitled "Conditions of Employment," of the Omnibus Rules Implementing the Labor Code provides as follows:

Sec. 9. Labor-only contracting. (a) Any person who undertakes to supply workers to an employer shag be deemed to be engaged in labor-only contracting where such person:

(1) Does not have substantial capital or investment in the form of tools, equipment, machineries, work premises and other materials; and

(2) The workers recruited and placed by such person are performing activities which are to the principal business or operations of the c workers are habitually employed,

(b) Labor-only contracting as defined herein is hereby prohibited and the person acting as contractor shall be considered merely as an agent or intermediary of the employer who shall be responsible to the workers in the same manner and extent as if the latter were directly employed by him

(c) For cases not file under this Article, the Secretary of Labor shall determine through appropriate orders whether or not the contracting out of labor is permissible in the light of the circumstances of each case and after considering the operating needs of the employer and the rights of the workers involved. In such case, he may prescribe conditions and restrictions to insure the protection and welfare of the workers. (Emphasis supplied)

In contrast, job contracting-contracting out a particular job to an independent contractor is defined by the Implementing Rules as follows:

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Sec. 8. Job contracting. There is job contracting permissible under the Code if the following conditions are met: (1) The contractor carries on an independent business and undertakes the contract work on his own account under his own responsibility according to his own manner and method free from the control and direction of his employer or principal in all matters connected with the performance of the work except as to the results thereof; and

(2) The contractor has substantial capital or investment in the form of tools, equipment, machineries, work premises, and other materials which are necessary in the conduct of his business. (Emphasis supplied)

The definition of "labor-only" contracting in Rule VIII, Book III of the Implementing Rules must be read in conjunction with the definition of job contracting given in Section 8 of the same Rules.

CESI is not a parcel delivery company: as its name indicates, it is a recruitment and placement corporation placing bodies, as it were, in different client companies for longer or shorter periods of time. There is, of course, nothing illegal about hiring persons to carry out "a specific project or undertaking the completion or termination of which was determined at the time of the engagement of the employee, or where the work or service to be performed is seasonal in nature and the employment is for the duration of the season"

We hold that, in the circumstances 'instances of this case, (CESI) was engaged in "labor-only" or attracting vis-a-vis the petitioner and in respect Ricardo Orpiada, and that consequently, the petitioner bank is liable to Orpiada as if Orpiada had been directly, employed not only by (CESI) but also by the bank. It may well be that the bank may in turn proceed against (CESI) to obtain reimbursement of, or some contribution to, the amounts which the bank will have to pay to Orpiada; but this it is not necessary to determine here.

Neri vs NLRC (1993) 224 SCRA 717 FACTS:

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

ISSUE: Whether or not BCC was engaged in labor-only contracting.

HELD: It is well-settled that there is labor-only contracting where: (a) the person supplying workers to an employer

does not have substantial capital or investment in the form of tools, equipment, machineries, work premises, among others; and, (b) the workers recruited and placed by such person are performing activities which are directly related to the principal business of the employer.

BCC need not prove that it made investments in the form of tools, equipment, machineries, work premises, among others, because it has established that it has sufficient capitalization. This fact was both determined by the Labor Arbiter and the NLRC as BCC had a capital stock of P1 million fully subscribed and paid for. BCC is therefore a highly capitalized venture and cannot be deemed engaged in labor-only contracting.

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While there may be no evidence that it has investment in the form of tools, equipment, machineries, work premises, among others, it is enough that it has substantial capital, as was established before the Labor Arbiter as well as the NLRC. The law does not require both substantial capital and investment in the form of tools, equipment, machineries, etc. This is clear from the use of the conjunction "or" instead of ‚and‛. Having established that it has substantial capital, it was no longer necessary for BCC to further adduce evidence to prove that it does not fall within the purview of "labor-only" contracting. There is even no need for it to refute petitioners' contention that the activities they perform are directly related to the principal business of respondent bank.

On the other hand, the Court has already taken judicial notice of the general practice adopted in several government and private institutions and industries of hiring independent contractors to perform special services. These services range from janitorial, security and even technical or other specific services such as those performed by petitioners Neri and Cabelin. While these services may be considered directly related to the principal business of the employer, nevertheless, they are not necessary in the conduct of the principal business of the employer.

Filipinas Synthetic Fiber Corp., vs NLRC (1996) 257 SCRA 336 FACTS:

Filipinas Synthetic Fiber Corporation (FILSYN), a domestic corporation engaged in the manufacture of polyester fiber, contracted with De Lima Trading and General Services (DE LIMA) for the performance of specific janitorial services at the former's plant in Pursuant to the agreement Felipe Loterte, was deployed at FILSYN to take care of the plants and maintain general cleanliness around the premises.

Loterte sued FILSYN and DE LIMA for illegal dismissal, underpayment of wages, non-payment of legal holiday pay, service incentive leave pay and 13th month pay alleging that he was first assigned to perform janitorial work at FILSYN in 1981 by the La Saga General Services; that the La Saga was changed to DE LIMA on August 1991; that when a movement to demand increased wages and 13th month pay arose among the workers, he was accused of having posted in the bulletin board at FILSYN an article attributing to management a secret understanding to block the demand; and, for denying responsibility, his gate pass was unceremoniously cancelled was subsequently dismissed.

ISSUE: Whether or not De Lima is an independent job contractor.

HELD: Private respondent DE LIMA is an independent job contractor. Under the Labor Code, two (2) elements must

exist for a finding of labor-only contracting: (a) the person supplying workers to an employer does not have substantial capital or investment in the form of tools, equipment, machineries, work premises, among others, and (b) the workers recruited and placed by such persons are performing activities directly related to the principal business of such employer.

These two (2) elements do not exist in the instant case. As pointed out by petitioner, private respondent DE LIMA is a going concern duly registered with the Securities and Exchange Commission with substantial capitalization of P1,600,000.00, P400,000.00 of which is actually subscribed. 13 Hence, it cannot be considered as engaged in labor-only contracting being a highly capitalized venture. 14 Moreover, while the janitorial services performed by Felipe Loterte pursuant to the agreement between FILSYN and DE LIMA may be considered directly related to the principal business of FILSYN which is the manufacture of polyester fiber, nevertheless, they are not necessary in its operation. On the contrary, they are merely incidental thereto, as opposed to being integral, without which production and

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company sales will not suffer. Judicial notice has already been taken of the general practice in private as well as in government institutions and industries of hiring janitorial services on an independent contractor basis. Consequently, DE LIMA being an independent job contractor, no direct employer-employee relationship exists between petitioner FILSYN and private respondent Felipe Loterte.

With respect to its liability, however, petitioner cannot totally exculpate itself from the fact that respondent DE LIMA is an independent job contractor. Notwithstanding the lack of a direct employer-employee relationship between FILSYN and Felipe Loterte, the former is still jointly and severally liable with respondent DE LIMA for Loterte's monetary claims under Art. 109 of the Labor Code explicitly provides ‚every employer or indirect employer shall be Decision responsible with his contractor or subcontractor for any violation of any provision of this Code. For purposes of determining the extent of their civil liability under this Chapter, they shall be considered as direct employers.‛

Maraquinot vs NLRC (1998) 284 SCRA 539 FACTS:

Petitioner Alejandro Maraguinot, Jr. maintains that private respondents employed him as part of the filming crew with a salary of P375.00 per week. About four months later, he was designated Assistant Electrician with a weekly salary of P400.00, which was increased to P450.00. He was promoted to the rank of Electrician with a weekly salary of P475.00, which was increased to P539.00.

Petitioner Paulino Enero, on his part, claims that private respondents employed him in as a member of the shooting crew with a weekly salary of P375.00, which was increased to P425.00 then to P475.00.

Petitioners' tasks consisted of loading, unloading and arranging movie equipment in the shooting area as instructed by the cameraman, returning the equipment to Viva Films' warehouse, assisting in the "fixing" of the lighting system, and performing other tasks that the cameraman and/or director may assign.

Petitioners sought the assistance of their supervisors, Mrs. Alejandria Cesario, to facilitate their request that private respondents adjust their salary in accordance with the minimum wage law. In June 1992, Mrs. Cesario informed petitioners that Mr. Vic del Rosario would agree to increase their salary only if they signed a blank employment contract. As petitioners refused to sign, private respondents forced Enero to go on leave in then refused to take him back when he reported for work. Meanwhile, Maraguinot was dropped from the company payroll from 8 to 21 June 1992, but was returned on 22 June 1992. He was again asked to sign a blank employment contract, and when he still refused, private respondents terminated his services on 20 July 1992. Petitioners thus sued for illegal dismissal. On the other hand, private respondents assert that they contract persons called "producers" also referred to as "associate producers" 8 to "produce" or make movies for private respondents; and contend that petitioners are project employees of the association producers who, in turn, act as independent contractors. As such, there is no employer-employee relationship between petitioners and private respondents.

ISSUE: WON an employer-employee relationship existed between petitioners and private respondents or any one of

private respondents.

HELD: Assuming that the associate producers are job contractors, they must then be engaged in the business of

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must have tools, equipment, machinery, work premises, and other materials necessary to make motion pictures. However, the associate producers here have none of these. Private respondents' evidence reveals that the movie-making equipment are supplied to the producers and owned by VIVA. These include generators, cables and wooden platforms, cameras and "shooting equipment;" in fact, VIVA likewise owns the trucks used to transport the equipment. It is thus clear that the associate producer merely leases the equipment from VIVA.

If private respondents insist that the associate producers are labor contractors, then these producers can only be "labor-only" contractors. As labor-only contracting is prohibited, the law considers the person or entity engaged in the same a mere agent or intermediary of the direct employer. But even by the preceding standards, the associate producers of VIVA cannot be considered labor-only contractors as they did not supply, recruit nor hire the workers. In the instant case, it was Juanita Cesario, Shooting Unit Supervisor and an employee of VIVA, who recruited crew members from an "available group of free-lance workers which includes the complainants Maraguinot and Enero." 24 And in their Memorandum, private respondents declared that the associate producer "hires the services of . . . 6) camera crew which includes (a) cameraman; (b) the utility crew; (c) the technical staff; (d) generator man and electrician; (e) clapper; etc. . . . ." 25 This clearly showed that the associate producers did not supply the workers required by the movie project.

The relationship between VIVA and its producers or associate producers seems to be that of agency, as the latter make movies on behalf of VIVA, whose business is to "make" movies. As such, the employment relationship between petitioners and producers is actually one between petitioners and VIVA, with the latter being the direct employer. The employer-employee relationship between petitioners and VIVA can further be established by the "control test." These four elements are present here.

VIVA's control is evident in its mandate that the end result must be a "quality film acceptable to the company." The means and methods to accomplish the result are likewise controlled by VIVA, viz., the movie project must be finished within schedule without exceeding the budget, and additional expenses must be justified; certain scenes are subject to change to suit the taste of the company; and the Supervising Producer, the "eyes and ears" of VIVA and del Rosario, intervenes in the movie-making process by assisting the associate producer in solving problems encountered in making the film.

It may not be validly argued then that petitioners are actually subject to the movie director's control, and not VIVA's direction. The director merely instructs petitioners on how to better comply with VIVA's requirements to ensure that a quality film is completed within schedule and without exceeding the budget. At bottom, the director is akin to a supervisor who merely oversees the activities of rank-and-file employees with control ultimately resting on the employer.

Moreover, appointment slips 28 issued to all crew members state: During the term of this appointment you shall comply with the duties and responsibilities of your position as well as observe the rules and regulations promulgated by your superiors and by Top Management.

The words "supervisors" and "Top Management" can only refer to the "supervisors" and "Top Management" of VIVA. By commanding crew members to observe the rules and regulations promulgated by VIVA, the appointment slips only emphasize VIVA's control over petitioners.

Aside from control, the element of selection and engagement is likewise present in the instant case and exercised by VIVA. Notably, nowhere in the appointment slip does it appear that it was the producer or associate producer who hired the crew members; moreover, it is VIVA's corporate name which appears on the heading of the appointment

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slip. What likewise tells against VIVA is that it paid petitioners' salaries as evidenced by vouchers, containing VIVA's letterhead, for that purpose. All the circumstances indicate an employment relationship between petitioners and VIVA alone, thus the inevitable conclusion is that petitioners are employees only of VIVA.

San Miguel vs Maerc Integrated Services (2003) G.R. 144627 FACTS:

In a decision by the court, it Decision petitioner jointly and severally liable with MAERC for the payment of separation benefits and wage differential of 291 complainants. Petitioner reiterated that no employer- employee relationship exists between it and the complainants. And that MAERC is an independent contractor hence petitioner should not be Decision solidarily liable with it. It disputes this court’s finding that MAERC solely engaged the services of complainants and exercised control over the complainants conduct; that no intervention or influence could have been extended by it in the selection or hiring of complainants or the majority of them had worked to the petitioner before it signed a contract with MAERC.

ISSUE: WON employer- employee relationship exists between the parties.

HELD: Petitioner’s contention must be rejected. While the continuity of service rendered by the workers to petitioner

by itself does not signify an employer- employee relationship, it was Decision to be so considering the other circumstances present. More so, since the workers continued to work for petitioner without break from their former employer and then as employees of MAERC even before the latter was incorporated. The record adequately supports the fact that MAERC admitted recruiting workers for petitioner before its incorporation.

Most importantly, petitioner refutes this Court’s conclusion that petitioner exercised control over the workplace. It stresses that checkers assigned to the workplace did not stay there continuously to merit the conclusion that they maintained constant presence as Decision by the court.

We disagree. While petitioner’s checkers may not have stayed the full eight hours in the workplace because they had to leave for their office to make their reports, their attendance need not be continuous to be considered constant and therefore an indication of control. We find in fact that they maintained sufficient presence at the workplace to be able to pinpoint the workers whose performance was not at par and to report who they are.

Manila Water Co., vs Pena (2004) G.R. 158255 FACTS:

Petitioner Manila Water Company, Inc. is one of the two private concessionaires contracted by the Metropolitan Waterworks and Sewerage System (MWSS) to manage the water distribution system in the East Zone of Metro Manila. Under the Concession Agreement, petitioner undertook to absorb former employees of the MWSS whose names and positions were in the list furnished by the latter, while the employment of those not in the list was terminated. Private respondents, being contractual collectors of the MWSS, were among the 121 employees not included in the list; nevertheless, petitioner engaged their services without written contract for three months. Before the end of the three-month contract, the 121 collectors incorporated the Association Collectors Group, Inc. (ACGI), which was contracted by petitioner to collect charges for the Balara Branch. Subsequently, most of the 121 collectors

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were asked by the petitioner to transfer to the First Classic Courier Services, a newly registered corporation. Only private respondents remained with ACGI. Private respondents filed a complaint for illegal dismissal and money claims against petitioner, contending that they were petitioner’s employees as all the methods and procedures of their collections were controlled by the latter.

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

ISSUE: Whether or not ACGI is an independent contractor;

HELD: ACGI is an independent contractor but a labor- only contractor.

First, ACGI does not have substantial capitalization or investment in the form of tools, equipment, machineries, work premises, and other materials, to qualify as an independent contractor. While it has an authorized capital stock of P1,000,000.00, only P62,500.00 is actually paid-in, which cannot be considered substantial capitalization. The 121 collectors subscribed to four shares each and paid only the amount of P625.00 in order to comply with the incorporation requirements. Further, private respondents reported daily to the branch office of the petitioner because ACGI has no office or work premises. In fact, the corporate address of ACGI was the residence of its president, Mr. Herminio D. Peña. Moreover, in dealing with the consumers, private respondents used the receipts and identification cards issued by petitioner.

Second, the work of the private respondents was directly related to the principal business or operation of the petitioner. Being in the business of providing water to the consumers in the East Zone, the collection of the charges therefore by private respondents for the petitioner can only be categorized as clearly related to, and in the pursuit of the latter’s business. Lastly, ACGI did not carry on an independent business or undertake the performance of its service contract according to its own manner and method, free from the control and supervision of its principal, petitioner. Prior to private respondents’ alleged employment with ACGI, they were already working for petitioner, subject to its rules and regulations in regard to the manner and method of performing their tasks. This form of control and supervision never changed although they were already under the seeming employ of ACGI. Petitioner issued memoranda regarding the billing methods and distribution of books to the collectors; it required private respondents to report daily and to remit their collections on the same day to the branch office or to deposit them with Bank of the Philippine Islands; it monitored strictly their attendance as when a collector cannot perform his daily collection, he must notify petitioner or the branch office in the morning of the day that he will be absent; and although it was ACGI which ultimately disciplined private respondents, the penalty to be imposed was dictated by petitioner as shown in the letters it sent to ACGI specifying the penalties to be meted on the erring private respondents. These are indications that ACGI was not left alone in the supervision and control of its alleged employees. Consequently, it can be concluded that ACGI was not an independent contractor since it did not carry a distinct business free from the control and supervision of petitioner.

Under this factual milieu, there is no doubt that ACGI was engaged in labor-only contracting, and as such, is considered merely an agent of the petitioner. In labor-only contracting, the statute creates an employer-employee relationship for a comprehensive purpose: to prevent a circumvention of labor laws. The contractor is considered merely an agent of the principal employer and the latter is responsible to the employees of the labor-only contractor as if such employees had been directly employed by the principal employer. Since ACGI is only a labor-only contractor, the workers it supplied should be considered as employees of the petitioner.

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NHA vs Maceda Security Agency (2005) G.R. 163448 FACTS:

On September 17, 1996, respondent MASADA Security Agency entered into a 1-year contract to provide security services to the various offices and installations of NFA. Upon expiration of said contract, the parties extended the effectivity thereof on a monthly basis under same terms. Subsequently, the RTWPB issued several wage orders increasing the daily wage rate. Accordingly, respondent requested NFA for a corresponding upward adjustment in the monthly contract rate consisting of the increases in the daily minimum wage of the security guards as well as increases in their overtime pay, holiday pay and rest day pay. It also claimed SSS and Pag- ibig Premiums. NFA however granted only with respect to the increase in the daily wage by multiplying the amount of the mandated increase by 30 days and denied the others. Respondent now filed a case with the RTC for recovery of sum of money against NFA, seeking reimbursement for the other wage- related benefits. NFA however denied that respondent paid the security guards their wage related benefits and that respondent cannot demand an adjustment on said- related benefits because it is bound by their contract expressly limiting NFA’s obligation to pay onlY the increment in their daily wage.

ISSUES:

(1) Whether or not respondent is entitled to recover from NFA the wage related benefits of the security guards; (2) Whether or not respondent the liability of the principals in service contracts under Section 6 of RA 6727 and the wage orders issued by the RTWPB is limited only to the increment in the minimum wage;

HELD: Payment of the increases in the wage rate of workers is ordinarily shouldered by the employer. RA 6727

Section 6 however expressly lodged said obligation to the principals or indirect employers in construction projects and estalblishments providing security, janitorial and similar services , the prescribed increases in the wage rates of the workers shall be borne by the principals or clients of the service contractors and the contract shall be deemed amended accordingly.

The term wage in RA 6727 pertained to no other than the statutory minimum which is defined as the lowest wage rate fixed by law other than an employer can pay his worker. The presumption is that lawmakers are aware that ‚ wage‛ means the statutory minimum wage. If their intention was to extend the obligation of the principals in service contracts to the payment of the increment in the other benefits and remuneration of workers, it would be expressly specified.

At any rate, however, the interest of the employees will not be adversely affected if the obligation of the principals under the subject provision will be limited to the increase in the statutory minimum wage. This is so because all remuneration and benefits other than the increased statutory minimum wage should be shouldered and paid by the employer or service contractor to the workers concerned. Having discharged its obligation to the respondent, NFA no longer has the cause of action. The latter’s complaint for collection of remuneration and benefits other than the increased minimum wage rate should therefore be dismissed.

Abella vs PLDT (2005) G.R. 159469 Facts:

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Respondent People’s Security Incorporated entered into an agreement with the PLDT to provide the latter with such number of qualified uniformed and properly armed security guards for the purpose of guarding and protecting PLDT’s installations and properties from theft, pilferage, intentional damage, trespass or other unlawful acts. Under the agreement, it was expressly provided that there shall be no employer-employee relationship between the PLDT and the security guards, which may be supplied to it by PSI, and that the latter shall have the entire charge, control and supervision over the work and services of the supplied security guards. It was likewise stipulated therein that PSI shall also have the exclusive authority to select, engage, and discharge its security guards, with full control over their wages, salaries or compensation.

Consequently, respondent PSI deployed security guards to the PLDT. The sixty-five (65) security guards supplied by respondent PSI filed a Complaint for regularization against the PLDT alleging that petitioner security guards have been employed by the company through the years and that PSI acted as the middleman in the payment of the minimum pay to the security guards, but no premium for work rendered beyond eight hours was paid to them nor were they paid their 13th month pay. In sum, the Complaint states that inasmuch as the complainants are under the direct control and supervision of PLDT. Hence they should be considered as regular employees by the latter.

Issue: WON an employer- employee relationship exists between petitioners and respondent PLDT.

Held: We considered the following factors in considering the existence of an employer-employee relationship: (1) the

selection and engagement of the employee; (2) the payment of wages; (3) the power to dismiss; and (4) the power to control the employee’s conduct.

Testimonies during the trial reveal that interviews and evaluation were conducted by PLDT to ensure that the standards it set are met by the security guards. In fact, PLDT rarely failed to accept security guards referred to by PSI but on account of height deficiency. The referral is nothing but for possible assignment in a designated client which has the inherent prerogative to accept and reject the assignee for justifiable grounds or even arbitrarily. We are thus convinced that the employer-employee relationship is deemed perfected even before the posting of the complainants with the PLDT, as assignment only comes after employment.

PSI is a legitimate job contractor pursuant to Section 8, Rule VII, Book II of the Omnibus Rules Implementing the Labor Code. It is a registered corporation duly licensed by the Philippine National Police to engage in security business. It has substantial capital and investment in the form of guns, ammunitions, communication equipments, vehicles, office equipments like computer, typewriters, photocopying machines, etc., and above all, it is servicing clients other than PLDT like PCIBank, Crown Triumph, and Philippine Cable, among others. Here, the security guards which PSI had assigned to PLDT are already the former’s employees prior to assignment and if the assigned guards to PLDT are rejected by PLDT for reasons germane to the security agreement, then the rejected or terminated guard may still be assigned to other clients of PSI as in the case of Jonathan Daguno who was posted at PLDT on 21 February 1996 but was subsequently relieved therefrom and assigned at PCIBank Makati Square effective 10 May 1996. Therefore, the evidence as it stands is at odds with petitioners’ assertion that PSI is an ‚in-house‛ agency of PLDT so as to call for a piercing of veil of corporate identity

It is PSI that determined and paid the petitioners’ wages, salaries, and compensation. As elucidated by the Labor Arbiter, petitioners’ witness testified that his wages were collected and withdrawn at the office of PSI and PLDT pays PSI for the security services on a lump-sum basis and that the wages of complainants are only a portion of the total sum. The signature of the PLDT supervisor in the Daily Time Records does not ipso facto make PLDT the employer of complainants inasmuch as the Labor Arbiter had found that the record is replete with evidence showing that some of the Daily Time Records do not bear the signature of a PLDT supervisor yet no complaint was lodged for nonpayment of the guard’s wages evidencing that the signature of the PLDT’s supervisor is not a condition

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precedent for the payment of wages of the guards. Notably, it was not disputed that complainants enjoy the benefits and incentives of employees of PSI and that they are reported as employees of PSI with the SSS.

Lastly, petitioners capitalize on the delinquency reports prepared by PLDT personnel against some of the security guards as well as certificates of participation in civil disturbance course, certificates of attendance in first aid training, certificate of completion in fire brigade training seminar and certificate of completion on restricted land mobile radio telephone operation to show that the petitioners are under the direct control and supervision of PLDT and that the latter has, in fact, the power to dismiss them.

The Labor Arbiter found from the evidence that the delinquency reports were nothing but reminders of the infractions committed by the petitioners while on duty which serve as basis for PLDT to recommend the termination of the concerned security guard from PLDT. As already adverted to earlier, termination of services from PLDT did not ipso facto mean dismissal from PSI inasmuch as some of those pulled out from PLDT were merely detailed at the other clients of PSI as in the case of Jonathan Daguno, who was merely transferred to PCIBank Makati.

San Miguel vs Aballa (2005) G.R. 149011 Facts:

Petitioner San Miguel Corporation entered into a one-year contract with the Sunflower Multi-Purpose Cooperative. Sunflower undertook and agreed to perform and provide the company on a non exclusive basis for a period of one year the following: Messengerial, Janitorial, Shrimp harvesting and Sanitation. Pursuant to the contract, Sunflower engaged private respondents to render services at SMC’s Bacolod Shrimp Processing Plant. The contract was renewed and private respondentd continued to perform their tasks. Later, private respondents filed a complaint praying to be declared as regular employees of SMC, with claims of recovery of all benefits and privileges.

Issue: Whether or not Sunflower is engaged in labor only contracting.

Held: The test to determine the existence of independent contractorship is whether one claiming to be an

independent contractor has contracted to do the work according to his own methods and without being subject to the control of the employer, except only as to the results of the work.

In legitimate labor contracting, the law creates an employer-employee relationship for a limited purpose, i.e., to ensure that the employees are paid their wages. The principal employer becomes jointly and severally liable with the job contractor, only for the payment of the employees’ wages whenever the contractor fails to pay the same. Other than that, the principal employer is not responsible for any claim made by the employees.

In labor-only contracting, the statute creates an employer-employee relationship for a comprehensive purpose: to prevent a circumvention of labor laws. The contractor is considered merely an agent of the principal employer and the latter is responsible to the employees of the labor-only contractor as if such employees had been directly employed by the principal employer.

The following would show that sunflower is engaged in labor only contracting: What appears is that Sunflower does not have substantial capitalization or investment in the form of tools, equipment, machineries, work premises and other materials to qualify it as an independent contractor. It is gathered that the lot, building, machineries and all other working tools utilized by private respondents in carrying out their tasks were owned and provided by SMC.

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Sunflower, during the existence of its service contract with respondent SMC, did not own a single machinery, equipment, or working tool used in the processing plant. Everything was owned and provided by respondent SMC. The lot, the building, and working facilities are owned by respondent SMC.

And from the job description provided by SMC itself, the work assigned to private respondents was directly related to the aquaculture operations of SMC. Undoubtedly, the nature of the work performed by private respondents in shrimp harvesting, receiving and packing formed an integral part of the shrimp processing operations of SMC. As for janitorial and messengerial services, that they are considered directly related to the principal business of the employer has been jurisprudentially recognized. Furthermore, Sunflower did not carry on an independent business or undertake the performance of its service contract according to its own manner and method, free from the control and supervision of its principal, SMC, its apparent role having been merely to recruit persons to work for SMC. Therefore since Sunflower is labor only contracting, there is the existence of an employer- employee relationship between SMC and private respondents.

Manila Electric Co., vs Benamira (2005) G.R. 145271 Facts:

The individual respondents are licensed security guards formerly employed by People’s Security, Inc. and deployed as such at MERALCO’s head office. The security service agreement between PSI and MERALCO was terminated. Thereafter, 56 of PSI’s security guards, including herein eight individual respondents, filed a complaint for unpaid monetary benefits against PSI and MERALCO. Meanwhile, the security service agreement between respondent Armed Security & Detective Agency, Inc., (ASDAI) and MERALCO took effect. Subsequently, the individual respondents were absorbed by ASDAI and retained at MERALCO’s head office. Later, the security service agreement between respondent Advance Forces Security & Investigation Services, Inc. (AFSISI) and MERALCO took effect, terminating the previous security service agreement with ASDAI. The individual respondents amended their complaint to implead AFSISI as party respondent.

Issue: Whether or not the individual respondents are employees of MERALCO.

Held: No. In this case, the terms and conditions embodied in the security service agreement between MERALCO and

ASDAI expressly recognized ASDAI as the employer of individual respondents. Under the security service agreement, it was ASDAI which (a) selected, engaged or hired and discharged the security guards; (b) assigned them to MERALCO according to the number agreed upon; (c) provided the uniform, firearms and ammunition, nightsticks, flashlights, raincoats and other paraphernalia of the security guards; (d) paid them salaries or wages; and, (e) disciplined and supervised them or principally controlled their conduct. The agreement even explicitly provided that ‚*n+othing herein contained shall be understood to make the security guards under this Agreement, employees of the COMPANY, it being clearly understood that such security guards shall be considered as they are, employees of the AGENCY alone.‛ Clearly, the individual respondents are the employees of ASDAI.

Neither is the stipulation that the agency cannot pull out any security guard from MERALCO without its consent an indication of control. It is simply a security clause designed to prevent the agency from unilaterally removing its security guards from their assigned posts at MERALCO’s premises to the latter’s detriment.

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The clause that MERALCO has the right at all times to inspect the guards of the agency detailed in its premises is likewise not indicative of control as it is not a unilateral right. The agreement provides that the agency is principally mandated to conduct inspections, without prejudice to MERALCO’s right to conduct its own inspections.

Moreover, ASDAI and AFSISI are not ‚labor-only‛ contractors. There is ‚labor only‛ contract when the person acting as contractor is considered merely as an agent or intermediary of the principal who is responsible to the workers in the same manner and to the same extent as if they had been directly employed by him. On the other hand, ‚job (independent) contracting‛ is present if the following conditions are met: (a) the contractor carries on an independent business and undertakes the contract work on his own account under his own responsibility according to his own manner and method, free from the control and direction of his employer or principal in all matters connected with the performance of the work except to the result thereof; and (b) the contractor has substantial capital or investments in the form of tools, equipment, machineries, work premises and other materials which are necessary in the conduct of his business. Given the above distinction and the provisions of the security service agreements entered into by petitioner with ASDAI and AFSISI, we are convinced that ASDAI and AFSISI were engaged in job contracting.

The individual respondents can not be considered as regular employees of the MERALCO for, although security services are necessary and desirable to the business of MERALCO, it is not directly related to its principal business and may even be considered unnecessary in the conduct of MERALCO’s principal business, which is the distribution of electricity.

Furthermore, the fact that the individual respondents filed their claim for unpaid monetary benefits against ASDAI is a clear indication that the individual respondents acknowledge that ASDAI is their employer.

The fact that there is no actual and direct employer-employee relationship between MERALCO and the individual respondents does not exonerate MERALCO from liability as to the monetary claims of the individual respondents. When MERALCO contracted for security services with ASDAI as the security agency that hired individual respondents to work as guards for it, MERALCO became an indirect employer of individual respondents pursuant to Article 107 of the Labor Code.

DOLE Philppines vs Esteva (2006) G.R. 161115 Facts:

Petitioner is a corporation duly organized and existing in accordance with Philippine laws, engaged principally in the production and processing of pineapple for the export market. Its plantation is located in Polomolok, South Cotabato.

Respondents are members of the Cannery Multi-Purpose Cooperative (CAMPCO). CAMPCO was organized in accordance with Republic Act No. 6938, otherwise known as the Cooperative Code of the Philippines, and duly-registered with the Cooperative Development Authority (CDA) on 6 January 1993. Members of CAMPCO live in communities surrounding petitioner's plantation and are relatives of petitioner's employees. On 17 August 1993, petitioner and CAMPCO entered into a Service Contract. The Service Contract referred to petitioner as "the Company," while CAMPCO was "the Contractor."

Pursuant to the foregoing Service Contract, CAMPCO members rendered services to petitioner. The number of CAMPCO members that report for work and the type of service they performed depended on the needs of petitioner

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at any given time. Although the Service Contract specifically stated that it shall only be for a period of six months, i.e., from 1 July to 31 December 1993, the parties had apparently extended or renewed the same for the succeeding years without executing another written contract. It was under these circumstances that respondents came to work for petitioner.

The Task Force submitted a report on 3 June 1993 identifying six cooperatives that were engaged in labor-only contracting, one of which was CAMPCO. The DOLE Regional Office No. XI held a conference on 18 August 1993 wherein the representatives of the cooperatives named by the Task Force were given the opportunity to explain the nature of their activities in relation to petitioner. On 19 October 1993, Director Parel of DOLE Regional Office No. XI issued an Order, directing the cooperatives to cease and desist from engaging in labor-only contracting.

On 15 September 1994, DOLE Undersecretary Cresencio B. Trajano, by the authority of the DOLE Secretary, issued an Order dismissing the appeal of the Cooperatives.

Respondents started working for petitioner at various times in the years 1993 and 1994, by virtue of the Service Contract executed between CAMPCO and petitioner. All of the respondents had already rendered more than one year of service to petitioner. While some of the respondents were still working for petitioner, others were put on "stay home status" on varying dates in the years 1994, 1995, and 1996 and were no longer furnished with work thereafter. Together, respondents filed a Complaint, on 19 December 1996, with the National Labor Relations Commission (NLRC), for illegal dismissal, regularization, wage differentials, damages and attorney's fees.

Respondents thus argued that they should be considered regular employees of petitioner given that: (1) they were performing jobs that were usually necessary and desirable in the usual business of petitioner; (2) petitioner exercised control over respondents, not only as to the results, but also as to the manner by which they performed their assigned tasks; and (3) CAMPCO, a labor-only contractor, was merely a conduit of petitioner. As regular employees of petitioner, respondents asserted that they were entitled to security of tenure and those placed on "stay home status" for more than six months had been constructively and illegally dismissed. Respondents further claimed entitlement to wage differential, moral damages, and attorney's fees.

Petitioner, in its Position Paper filed before the NLRC, denied that respondents were its employees.

Petitioner explained that it found the need to engage external services to augment its regular workforce, which was affected by peaks in operation, work backlogs, absenteeism, and excessive leaves. It used to engage the services of individual workers for definite periods specified in their employment contracts and never exceeding one year. However, such an arrangement became the subject of a labor case, in which petitioner was accused of preventing the regularization of such workers. The Labor Arbiter who heard the case, rendered his Decision 18 on 24 June 1994 declaring that these workers fell squarely within the concept of seasonal workers as envisaged by Article 280 of the Labor Code, as amended, who were hired by petitioner in good faith and in consonance with sound business practice; and consequently, dismissing the complaint against petitioner.

The NLRC, in its Resolution, 19 dated 14 March 1995, affirmed in toto the Labor Arbiter's Decision and further found that the workers were validly and legally engaged by petitioner for "term employment," wherein the parties agreed to a fixed period of employment, knowingly and voluntarily, without any force, duress or improper pressure being brought to bear upon the employees and absent any other circumstance vitiating their consent. The said NLRC Resolution became final and executory on 18 June 1996. Despite the favorable ruling of both the Labor Arbiter and the NLRC, petitioner decided to discontinue such employment arrangement. Yet, the problem of petitioner as to shortage of workforce due to the peaks in operation, work backlogs, absenteeism, and excessive leaves, persisted.

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Petitioner then found a solution in the engagement of cooperatives such as CAMPCO to provide the necessary additional services.

Petitioner contended that respondents were owners-members of CAMPCO; that CAMPCO was a duly-organized and registered cooperative which had already grown into a multi-million enterprise; that CAMPCO was engaged in legitimate job-contracting with its own owners-members rendering the contract work; that under the express terms and conditions of the Service Contract executed between petitioner (the principal) and CAMPCO (the contractor), the latter shall undertake the contract work on its own account, under its own responsibility, and according to its own manner and method free from the control and direction of the petitioner in all matters connected with the performance of the work, except as to the result thereof; and since CAMPCO held itself out to petitioner as a legitimate job contractor, respondents, as owners-members of CAMPCO, were estopped from denying or refuting the same.

Petitioner further averred that Department Order No. 10, amending the rules implementing Books III and VI of the Labor Code, as amended, promulgated by the DOLE on 30 May 1997, explicitly recognized the arrangement between petitioner and CAMPCO as permissible contracting and subcontracting.

The LA and the NLRC decided the case in favor of the Petitioner Company and against the complaint of the private respondents (employees). On appeal by certiorari, the CA reversed the rulings of the LA and NLRC. Thus, the petitioner Company appealed to the SC for Petition for Review on Certiorari under Rule 45 of the revised Rules of Civil Procedure, questioning the decision of the Court of Appeals concerning the herein assailed issues.

Issues:

1. Whether or not department order no. 10, series of 1997 is the applicable regulation in this case. Whether or not there should be a retroactive application to department order no. 3, series of 2001.

2. Whether or not its retroactive application violated the constitutional provision against impairment of contracts and deprived petitioner of the due process of the law.

Held: The second assignment of error delves into the significance and application to the case at bar of the two

department orders issued by DOLE. Department Order No. 10, series of 1997, amended the implementing rules of Books III and VI of the Labor Code, as amended. Under this particular DOLE department order, the arrangement between petitioner and CAMPCO would qualify as permissible contracting. Department Order No. 3, series of 2001, revoked Department Order No. 10, series of 1997, and reiterated the prohibition on labor-only contracting.

Attention is called to the fact that the acts complained of by the respondents occurred well before the issuance of the two DOLE department orders in 1997 and 2001. The Service Contract between DOLE and CAMPCO was executed on 17 August 1993. Respondents started working for petitioner sometime in 1993 and 1994. While some of them continued to work for petitioner, at least until the filing of the Complaint, others were put on "stay home status" at various times in 1994, 1995, and 1996. Respondents filed their Complaint with the NLRC on 19 December 1996. A basic rule observed in this jurisdiction is that no statute, decree, ordinance, rule or regulation shall be given retrospective effect unless explicitly stated. Since there is no provision at all in the DOLE department orders that expressly allowed their retroactive application, then the general rule should be followed, and the said orders should be applied only prospectively.

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Which now brings this Court to the question as to what was the prevailing rule on labor-only contracting from 1993 to 1996, the period when the occurrences subject of the Complaint before the NLRC took place.

Article 106 of the Labor Code, as amended, permits legitimate job contracting, but prohibits labor-only contracting. The said provision reads —

ART. 106. Contractor or subcontractor. — Whenever an employer enters into a contract with another person for the performance of the former's work, the employees of the contractor and of the latter's subcontractor, if any, shall be paid in accordance with the provisions of this Code.

In the event that the contractor or subcontractor fails to pay the wages of his employees in accordance with this Code, the employer shall be jointly and severally liable with his contractor or subcontractor to such employees to the extent of the work performed under the contract, in the same manner and extent that he is liable to employees directly employed by him.

The Secretary of Labor may, by appropriate regulations, restrict or prohibit the contracting out of labor to protect the rights of workers established under this Code. In so prohibiting or restricting, he may make appropriate distinctions between labor-only contracting and job contracting as well as differentiations within these types of contracting and determine who among the parties involved shall be considered the employer for purposes of this Code, to prevent any violation or circumvention of any provision of this Code.

There is "labor-only" contracting where the person supplying workers to an employer does not have substantial capital or investment in the form of tools, equipment, machineries, work premises, among others, and the workers recruited and placed by such persons are performing activities which are directly related to the principal business of such employer. In such cases, the person or intermediary shall be considered merely as an agent of the employer who shall be responsible to the workers in the same manner and extent as if the latter were directly employed by him. To implement the foregoing provision of the Labor Code, as amended, Sections 8 and 9, Rule VIII, Book III of the implementing rules, in force since 1976 and prior to their amendment by DOLE Department Order No. 10, series of 1997, provided as follows —

Sec. 8. Job contracting. — There is job contracting permissible under the Code if the following conditions are met; (1) The contractor carries on an independent business and undertakes the contract work on his own account under his own responsibility according to his own manner and method, free from the control and direction of his employer or principal in all matters connected with the performance of the work except as to the results thereof; and (2) The contractor has substantial capital or investment in the form of tools, equipment, machineries, work premises, and other materials which are necessary in the conduct of his business.

Sec. 9. Labor-only contracting. — (a) Any person who undertakes to supply workers to an employer shall be deemed to be engaged in labor-only contracting where such person:

(1) Does not have substantial capital or investment in the form of tools, equipment, machineries, work premises and other materials; and

(2) The workers recruited and placed by such persons are performing activities which are directly related to the principal business or operations of the employer in which workers are habitually employed.

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(b) Labor-only contracting as defined herein is hereby prohibited and the person acting as contractor shall be considered merely as an agent or intermediary of the employer who shall be responsible to the workers in the same manner and extent as if the latter were directly employed by him.

(c) For cases not falling under this Article, the Secretary of Labor shall determine through appropriate orders whether or not the contracting out of labor is permissible in the light of the circumstances of each case and after considering the operating needs of the employer and the rights of the workers involved. In such case, he may prescribe conditions and restrictions to insure the protection and welfare of the workers.

Since these statutory and regulatory provisions were the ones in force during the years in question, then it was in consideration of the same that DOLE Regional Director Parel and DOLE Undersecretary Trajano issued their Orders on 19 September 1993 and 15 September 1994, respectively, both finding that CAMPCO was engaged in labor-only contracting. Petitioner, in its third assignment of error, questions the weight that the Court of Appeals gave these orders in its Decision, dated 20 May 2002, and Amended Decision, dated 27 November 2003.

San Miguel vs NLRC (2006) G.R. 147566 Facts:

On 16 October 1990, Rafael M. Maliksi filed a complaint against the San Miguel Corporation-Magnolia Division, herein referred to as SMC and Philippine Software Services and Education Center herein referred to as PHILSSEC to compel the said respondents to recognize him as a regular employee. He amended the complaint on 12 November 1990 to include the charge of illegal dismissal because his services were terminated on 31 October 1990.

The complainant's employment record indicates that he rendered service with Lipercon Services from 1 April 1981 to February 1982 as budget head assigned to SMC-Beer Division, then from July 1983 to April 1985 with Skillpower, Inc., as accounting clerk assigned to SMC-Magnolia Division, then from October 1988 to 1989 also with Skillpower, Inc. as acting clerk assigned to SMC-Magnolia Finance, and from October 1989 to 31 October 1990 with PHILSSEC assigned to Magnolia Finance as accounting clerk. The complainant considered himself as an employee of SMC-Magnolia. Lipercon Services, Skillpower, Inc. and PHILSSEC are labor-only contractors and any one of which had never been his employer. His dismissal, according to him, was in retaliation for his filing of the complaint for regularization in service. His dismissal was illegal there being no just cause for the action. He was not accorded due process neither was his dismissal reported to the Department of Labor and Employment.

PHILSSEC disclaimed liability. As an entity catering (sic) computer systems and program for business enterprises, it has contracted with SMC-Magnolia to computerize the latter's manual accounting reporting systems of its provincial sales. PHILSSEC then conducted a three phase analysis of SMC-Magnolia set up: first the computer needs of the firm was (sic) determined; then, the development of computer systems or program suitable; and, finally, set up the systems and train the employees to operate the same. In all these phases, PHILSSEC uses its computer system and technology and provided the necessary manpower to compliment the transfer of the technology to SMC-Magnolia. Complainant Maliksi was one of those employed by PHILSSEC whose principal function was the manual control of data needed during the computerization. Like all assigned to the project, the complainant's work was controlled by PHILSSEC supervisors, his salary paid by the agency and he reported directly to PHILSSEC. The computerization project was completed on 31 October 1990, and so, the complainant was terminated on the said date.