Source: http://lawlibrary.chanrobles.com/index.php?option=com_content&amp;view=article&amp;id=50613:gr-146408-2008&amp;catid=1502&amp;Itemid=566
Timestamp: 2019-04-22 02:11:45+00:00

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PHILIPPINE AIRLINES, INC., Petitioner, v. ENRIQUE LIGAN, EMELITO SOCO, ALLAN PANQUE, JOLITO OLIVEROS, RICHARD GONCER, NONILON PILAPIL, AQUILINO YBANEZ, BERNABE SANDOVAL, RUEL GONCER, VIRGILIO P. CAMPOS, JR., ARTHUR M. CAPIN, RAMEL BERNARDES, LORENZO BUTANAS, BENSON CARESUSA, JEFFREY LLENOS, ROQUE PILAPIL, ANTONIO M. PAREJA, CLEMENTE R. LUMAYNO, NELSON TAMPUS, ROLANDO TUNACAO, CHERRIE ALEGRES, BENEDICTO AUXTERO, EDUARDO MAGDADARAUG, NELSON M. DULCE, and ALLAN BENTUZAL, Respondents.
10. 1 Should at any time OWNER find the services herein undertaken by CONTRACTOR to be unsatisfactory, it shall notify CONTRACTOR who shall have fifteen (15) days from such notice within which to improve the services. If CONTRACTOR fails to improve the services under this Agreement according to OWNER'S specifications and standards, OWNER shall have the right to terminate this Agreement immediately and without advance notice.
10.2 Should CONTRACTOR fail to improve the services within the period stated above or should CONTRACTOR breach the terms of this Agreement and fail or refuse to perform the Work in such a manner as will be consistent with the achievement of the result therein contracted for or in any other way fail to comply strictly with any terms of this Agreement, OWNER at its option, shall have the right to terminate this Agreement and to make other arrangements for having said Work performed and pursuant thereto shall retain so much of the money held on the Agreement as is necessary to cover the OWNER's costs and damages, without prejudice to the right of OWNER to seek resort to the bond furnished by CONTRACTOR should the money in OWNER's possession be insufficient.
The complaints of respondents were consolidated.
(3) Ordering respondent Synergy to pay complainant Benedicto Auxtero a financial assistance in the amount of P5,000.00.
The awards hereinabove enumerated in the aggregate total amount of THREE HUNDRED TWENTY-TWO THOUSAND THREE HUNDRED FIFTY NINE PESOS AND EIGHTY SEVEN CENTAVOS (P322,359.87) are computed in detail by our Fiscal Examiner which computation is hereto attached to form part of this decision.
Only petitioner assailed the NLRC decision via petition for certiorari before this Court.
By Resolution11 of January 25, 1999, this Court referred the case to the Court of Appeals for appropriate action and disposition, conformably with St. Martin Funeral Homes v. National Labor Relations Commission which was promulgated on September 16, 1998.
. . . IN UPHOLDING THE NATIONAL LABOR RELATIONS COMMISSION DECISION WHICH IMPOSED THE RELATIONSHIP OF EMPLOYER-EMPLOYEE BETWEEN PETITIONER AND THE RESPONDENTS HEREIN.
. . . IN AFFIRMING THE RULING OF THE NATIONAL LABOR RELATIONS COMMISSION ORDERING THE REINSTATEMENT OF RESPONDENT AUXTERO DESPITE THE ABSENCE [OF] ANY FACTUAL FINDING IN THE DECISION THAT PETITIONER ILLEGALLY TERMINATED HIS EMPLOYMENT.
Petitioner argues that the law does not prohibit an employer from engaging an independent contractor, like Synergy, which has substantial capital in carrying on an independent business of contracting, to perform specific jobs.
Petitioner further argues that its contracting out to Synergy various services like janitorial, aircraft cleaning, baggage-handling, etc., which are directly related to its business, does not make respondents its employees.
Finally, petitioner avers that reinstatement of respondents had been rendered impossible because it had reduced its personnel due to heavy losses as it had in fact terminated its service agreement with Synergy effective June 30, 199816 as a cost-saving measure.
The decision of the case hinges on a determination of whether Synergy is a mere job-only contractor or a legitimate contractor. If Synergy is found to be a mere job-only contractor, respondents could be considered as regular employees of petitioner as Synergy would then be a mere agent of petitioner in which case respondents would be entitled to all the benefits granted to petitioner's regular employees; otherwise, if Synergy is found to be a legitimate contractor, respondents' claims against petitioner must fail as they would then be considered employees of Synergy.
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 the 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.
"Substantial capital or investment" refers to capital stocks and subscribed capitalization in the case of corporations, tools, equipment, implements, machineries and work premises, actually and directly used by the contractor or subcontractor in the performance or completion of the job, work or service contracted out.
Petitioner asserts, however, that mere compliance with substantial capital requirement suffices for Synergy to be considered a legitimate contractor, citing Neri v. National Labor Relations Commission.18 Petitioner's reliance on said case is misplaced.
In Neri, the Labor Arbiter and the NLRC both determined that Building Care Corporation had a capital stock of P1 million fully subscribed and paid for.19 The corporation's status as independent contractor had in fact been previously confirmed in an earlier case20 by this Court which found it to be serving, among others, a university, an international bank, a big local bank, a hospital center, government agencies, etc."
More significantly, however, is that respondents worked alongside petitioner's regular employees who were performing identical work.23 As San Miguel Corporation v. Aballa24 and Dole Philippines, Inc. v. Esteva, et al.25 teach, such is an indicium of labor-only contracting.
Even if only one of the two elements is present then, there is labor-only contracting.
The control test element under the immediately-quoted paragraph (ii), which was not present in the old Implementing Rules (Department Order No. 10, Series of 1997),26 echoes the prevailing jurisprudential trend27 elevating such element as a primary determinant of employer-employee relationship in job contracting agreements.
While petitioner claimed that it was Synergy's supervisors who actually supervised respondents, it failed to present evidence thereon. It did not even identify who were the Synergy supervisors assigned at the workplace.
Section 6. Qualified and Experienced Worker: Owner's Right to Dismiss Workers.
The express provision in the Agreement that Synergy was an independent contractor and there would be "no employer-employee relationship between [Synergy] and/or its employees on one hand, and [petitioner] on the other hand" is not legally binding and conclusive as contractual provisions are not valid determinants of the existence of such relationship. For it is the totality of the facts and surrounding circumstances of the case33 which is determinative of the parties' relationship.
Respecting the dismissal on November 15, 199234 of Auxtero, a regular employee of petitioner who had been working as utility man/helper since November 1988, it is not legally justified for want of just or authorized cause therefor and for non-compliance with procedural due process. Petitioner's claim that he abandoned his work does not persuade.35 The elements of abandonment being (1) the failure to report for work or absence without valid or justifiable reason, and (2) a clear intention to sever the employer-employee relationship manifested by some overt acts,36 the onus probandi lies with petitioner which, however, failed to discharge the same.
As regards the remaining respondents, the Court affirms the ruling of both the NLRC and the appellate court, ordering petitioner to accept them as its regular employees and to give each of them the salaries, allowances and other employment benefits and privileges of a regular employee under the pertinent Collective Bargaining Agreement.
Petitioner claims, however, that it has become impossible for it to comply with the orders of the NLRC and the Court of Appeals, for during the pendency of this case, it was forced to reduce its personnel due to heavy losses caused by economic crisis and the pilots' strike of June 5, 1998.41 Hence, there are no available positions where respondents could be placed.
Other than its bare allegations, petitioner presented nothing to substantiate its impossibility of compliance. In fact, petitioner waived this defense by failing to raise it in its Memorandum filed on June 14, 1999 before the Court of Appeals.43 Further, the notice of termination in 1998 was in disregard of a subsisting temporary restraining order44 to preserve the status quo, issued by this Court in 1996 before it referred the case to the Court of Appeals in January 1999. So as to thwart the attempt to subvert the implementation of the assailed decision, respondents are deemed to be continuously employed by petitioner, for purposes of computing the wages and benefits due respondents.
Finally, it must be stressed that respondents, having been declared to be regular employees of petitioner, Synergy being a mere agent of the latter, had acquired security of tenure. As such, they could only be dismissed by petitioner, the real employer, on the basis of just or authorized cause, and with observance of procedural due process.
WHEREFORE, the Court of Appeals Decision of September 29, 2000 is AFFIRMED with MODIFICATION.
(b) pay respondent BENEDICTO AUXTERO salary differential; backwages from the time of his dismissal until the finality of this decision; and separation pay, in lieu of reinstatement, equivalent to one (1) month pay for every year of service until the finality of this decision.
There being no data from which this Court may determine the monetary liabilities of petitioner, the case is REMANDED to the Labor Arbiter solely for that purpose.
1 NLRC records, Vol. I, pp. 168-177.
5 Id. at 8; NLRC records, Vol. 1, p. 104.
6 Ibid.; vide also NLRC records, Vol. 1, p. 151.
11 CA rollo, p. 179.
12 Rollo, pp. 7-17. Penned by Associate Justice B.A. Adefuin-De la Cruz and concurred in by then Presiding Justice Salome Montoya and Associate Justice Renato Dacudao.
18 G.R. NOS. 97008-09, July 23, 1993, 224 SCRA 717.
20 Citing Associated Labor Unions-TUCP v. National Labor Relations Commission, G.R. No. 101784, October 21, 1991, Third Division, Minute Resolution.
22 VidePetitioner's Motion for Reconsideration of CA Decision of September 29, 2000, id. at 425-450.
23 Id. at 348-349; vide NLRC records, Vol. 1, pp. 105 and 223; Position Papers for Petitioner, NLRC records, Vol. 1, pp. 83-92 and pp. 156-167; Affidavit of Benedicto A. Auxtero, NLRC records, Vol. 1, p. 185; Memorandum for petitioner, NLRC records, Vol. 1, pp. 206-216.
More. Private respondents had been working in the aqua processing plant inside the SMC compound alongside regular SMC shrimp processing workers performing identical jobs under the same SMC supervisors. This circumstance is another indicium of the existence of a labor-only contractorship.
25 G.R. No. 161115, November 30, 2006, 509 SCRA 332.
(ii) The employees recruited, supplied or placed by such contractor or subcontractor are performing activities which are directly related to the main business of the principal.
27 Vide Neri v. National Labor Relations Commission, supra note 18; Aurora Land Projects Corp. v. National Labor Relations Commission, 334 Phil. 44, 48 (1997); Escario v. National Labor Relations Commission, G.R. No. 124055, June 8, 2000, 333 SCRA 257; Vinoya v. National Labor Relations Commission, G.R. No. 126586, February 2, 2000, 324 SCRA 469; National Power Corporation v. Court of Appeals, G.R. No. 119121, August 14, 1998, 294 SCRA 209.
28 Acevedo v. Advanstar Company, Inc., G.R. No. 157656, November 11, 2005, 474 SCRA 656, 668 citing New Golden City Builders and Development Corporation v. Court of Appeals, 463 Phil. 821 (2003); San Miguel Corporation v. Aballa, supra note 24 at 421.
30 NLRC records, Vol. 1, p. 6.
32 Aboitiz Haulers, Inc. v. Dimapatoi, G.R. No. 148619, September 19, 2006, 502 SCRA 271, 287 citing Guinnux Interiors, Inc. v. National Labor Relations Commission, 339 Phil. 75, 78-79 (1997); Manila Water Company Inc. v. PeÃ±a, G.R. No. 158255, July 8, 2004, 434 SCRA 53, 60-61.
33 San Miguel Corporation v. Aballa, supra note 24 at 422-423 (citation omitted).
34 NLRC records, Vol. 1, p. 185.
35 Floren Hotel v. National Labor Relations Commission, G.R. No. 155264, May 6, 2005, 458 SCRA 128, 144; Masagana Concrete Products v. NLRC, 372 Phil. 459 (1999).
36 Northwest Tourism Corp. v. Court of Appeals, Former Special Third Division, G.R. No. 150591, June 27, 2005, 461 SCRA 298, 309; ACD Investigation Security Agency, Inc. v. Daquera, G.R. No. 147473, March 30, 2004, 426 SCRA 494; Premier Development Bank v. NLRC, 354 Phil. 851 (1998).
37 Vide Cinderella Marketing Corporation v. NLRC, 353 Phil. 284 (1998); ABS-CBN Broasting Corporation v. Nazareno, G.R. No. 164156, September 2006, 503 SCRA 204; Kimberly-Clark (Phils.), Inc., v. Secretary of Labor, G.R. No. 156668, November 23, 2007 for jurisprudence on regularization differential.
38 Star Paper Corporation v. Espiritu, G.R. No. 154006, November 2, 2006, 506 SCRA 556, 568; Tan v. Lagrama, G.R. No. 151228, August 15, 2002, 387 SCRA 393, 406; Prudential Bank and Trust Co. v. Reyes, G.R. No. 141093, February 20, 2001, 352 SCRA 316, 332.
39 Gold City Integrated Port Service, Inc. v. National Labor Relations Commission, G.R. No. 103560, July 6, 1995, 245 SCRA 627, 641; Panday v. National Labor Relations Commission, G.R. No. 67664, May 20, 1992, 209 SCRA 122.
40 Northwest Tourism Corp. v. Court of Appeals, Former Special Third Division, G.R. No. 150591, June 27, 2005, 461 SCRA 298, 311; F.F. Marine Corporation v. National Labor Relations Commission, Second Division, G.R. No. 152039, April 8, 2005, 455 SCRA 154, 174.
42 Id. at 54; vide Annexes "B" - "B-12" inclusive, pp. 453-465.
43 Vide rollo, pp. 382-396.

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