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Danilo Tabas, et al. vs
California Mfg Co. Inc, Lily-
Victoria Azarcon, NLRC
Jan. 26, 1989
Ponente: Sarmiento, J.
L. Agliam
SUMMARY: Petitioners were Livi Manpower EEs assigned to
work as "promotional merchandisers" for respondent
California pursuant to a manpower supply agreement. After
12 months of employment, petitioners alleged that they
had become regular California EEs but was later dismissed
by California when they instituted proceedings for
regularization. Petitioners filed for reinstatement and
payment of various benefits against California. California
denied the existence of ER-EE relationship. LA & NLRC
favored California. SC reversed; ordered that California
reinstate petitioners as regular EEs and held California and
Livi Manpower solidarily liable for petitioners money claims.
DOCTRINE: Notwithstanding the absence of a direct ER-EE
relationship between the ER in whose favor work had been
contracted out by a "labor-only" contractor, and the EEs,
the ER has the responsibility, together with the "labor-only"
contractor, for any valid labor claims, by operation of law.
The reason is that the "labor-only" contractor is considered
"merely an agent of the ER," and liability must be
shouldered by either one or shared by both.
FACTS:
Petitioners were, prior to their stint with respondent
California Manufacturing Company (California), employees
of Livi Manpower Services, Inc. (Livi), which subsequently
assigned them to work as "promotional merchandisers"
1
for California pursuant to a manpower supply agreement.
The agreement provided that:
o California "has no control or supervisions
whatsoever over [Livi's] workers with respect to
how they accomplish their work or perform
[Californias] obligation";
o Livi "is an independent contractor and nothing
herein contained shall be construed as creating
between [California] and [Livi] the relationship of
principal[-]agent or employer[-]employee';
o that "it is hereby agreed that it is the sole
responsibility of [Livi] to comply with all existing as
well as future laws, rules and regulations pertinent
to employment of labor";
o that "[California] is free and harmless from any
liability arising from such laws or from any accident
that may befall workers and employees of [Livi]
while in the performance of their duties for
[California];
o that the assignment of workers to California shall
be on a "seasonal and contractual basis";
o that "[c]ost of living allowance and the 10 legal
holidays will be charged directly to [California] at
cost";
o and that "[p]ayroll for the preceeding [sic] week
[shall] be delivered by [Livi] at [California's]
premises."
Petitioners were then made to sign employment contracts
with durations of 6 months, upon the expiration of which
they signed new agreements with the same period, and so
on. Unlike regular California employees, who received not
less than P2,823/month in addition to a host of fringe
benefits and bonuses, they received P38.56 plus P15 in
allowance daily.
Petitioners allege that they had become regular California
employees and demand, as a consequence whereof,
similar benefits.
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Petitioners claim that pending further proceedings below,
they were notified by California that they would not be
rehired. As a result, they filed an amended complaint
charging California with illegal dismissal.
Petitioners petitioned the NLRC for reinstatement and
payment of various benefits, including minimum wage,
overtime pay, holiday pay, thirteen-month pay, and
emergency cost of living allowance pay, against California.
California filed a motion to dismiss as well as a position
paper denying the existence of an employer-employee
relation between the petitioners and the company and,
any liability for payment of money claims.
On petitioners motion, Livi Manpower Services, Inc. was
impleaded as a party-respondent.
California admits having refused to accept the petitioners
back to work but deny liability therefor for the reason that
it is not the petitioners' employer and that the
"retrenchment" had been forced by business losses as
well as expiration of contracts. Afterwards, Livi re-
absorbed them into its labor pool on a "wait-in or standby"
status.
LA: ruled against the existence of any employer-employee
relation between the petitioners and California in the light
of the manpower supply contract and consequently
against Californias liability as and for the money claims
demanded; absolved Livi from any obligation because the
"retrenchment" in question was allegedly "beyond its
control" but assessed against Livi, separation pay and
attorney's fees
NLRC: affirmed
ISSUES/HELD: Whether it is Livi or California which exercises
control over the petitioner vis--vis the 4-fold test (By fiction of
law, EITHER or BOTH shoulder responsibility )
RATIO:
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The existence of an employer-employees relation is a
question of law and cannot be made the subject of
agreement.
The petitioners had been charged with "merchandising,
promotion or sale of the products of California in the
different sales outlets in Metro Manila including task and
occasional price tagging," an activity that is an integral
part of the manufacturing business.
The fact that the petitioners have been hired merely on a
"temporary or seasonal" basis is no argument. A
temporary or casual employee, under Art 281 of the LC,
becomes regular after service of 1 year, unless he has
been contracted for a specific project (PBCOM v NLRC).
Merchandising is not a specific project for the obvious
reason that it is an activity related to the day-to-day
operations of California.
When Livi, an "independent contractor providing
temporary services of manpower to its client, provided
California with manpower, it supplied California with
personnel, as if such personnel had been directly hired by
California. Hence, Art 106 of the LC applies: xxx In the
event that the contractor or sub-contractor fails to pay
wages of his employees in accordance with this Code, the
employer shall be jointly and severally liable with his
contractor or sub-contractor 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.xxx
Petitioners bad been given an initial 6-month contract,
renewed for another 6 months. Accordingly, under Art 281
of the LC, they had become regular employees of
California and had acquired a secure tenure. Hence, they
cannot be separated without due process of law.