RANDY ALMEDA, EDWIN M. AUDENCIAL, NOLIE D.

RAMIREZ,
ERNESTO M. CALICAGAN and REYNALDO M. CALICAGAN
vs.
ASAHI GLASS PHILIPPINES, INC.
Asahi Glass Phil (a domestic corporation engaged in the business
of glass manufacturing) and SSASI (a labor-only contractor)
entered into a service contract whereby the latter undertook to
provide the former with the necessary manpower for its
operations. Pursuant to such a contract, SSASI employed
petitioners Almeda, Audencial, Ramirez and Calicagan as glass
cutters, and petitioner Calicagan as Quality Controller all
assigned to work for Asahi Glass. Petitioners worked for
respondent for periods ranging from three to 11 years. On 1
December 2002, respondent terminated its service contract with
SSASI, which in turn, terminated the employment of petitioners
on the same date. Believing that SSASI was a labor-only
contractor, and having continuously worked as glass cutters and
quality controllers for the respondent - functions which are
directly related to its main line of business as glass manufacturer -
for three to 11 years, petitioners asserted that they should be
considered regular employees of the respondent
ASAHI GLASS PHILS STAND: petitioners not their regular
employees.
:petitioners were employees of SSASI and were merely assigned
by SSASI to work for respondent to perform intermittent services
pursuant to an Accreditation Agreement
SSASI: claims to be a duly registered independent contractor
LA: dismissed
NLRC: vacated and set aside| Illegal dismissal
: SSASI was engaged in labor-only contracting since it did not
have substantial capital and investment in the form of tools,
equipment and machineries.
: petitioners were recruited and assigned by SSASI to respondent
as glass cutters, positions which were directly related to
respondents principal business of glass manufacturing.
: The liability of [respondent] and [SSASI] for [petitioners]
backwages is further declared to be joint and several.
CA: REVERSED NLRC
: SSASI is a legitimate job contractor
: SSASI is a legitimate job contractor as proven by its Certificate
of Registration issued by the DOLE
: The service contract itself, which was duly approved by the
DOLE, defined the relationship between SSASI and petitioners as
one of employer-employees
: SSASI which exercised the power of control over petitioners.
Petitioners were merely allowed to work at respondents
premises for reasons of efficiency.
:SSASI, not respondent, who terminated petitioners services
SC: PETITION GRANTED
; if SSASI was a labor-only contractor, then respondent shall be
considered as the employer of petitioners who must bear the
liability for the dismissal of the latter, if any.
: Even respondents claim that petitioners services were required
only intermittently, depending on the market, deserves scant
credit. The indispensability of petitioners services was fortified by
the length and continuity of their performance,
: An important element of legitimate job contracting is that the
contractor has substantial capital or investment, which
respondent failed to prove. There is a dearth of evidence to
prove that SSASI possessed substantial capital or investment
when respondent began contractual relations with it more than
a decade before 2003. Respondents bare allegations, without
supporting proof that SSASI had substantial capital or investment,
do not sway this Court. The Court did not find a single financial
statement or record to attest to the economic status and
financial capacity of SSASI to venture into and sustain its own
business independent from petitioner
: The fact that it was SSASI which dismissed petitioners from
employment is irrelevant. It is hardly proof of control, since it was
demonstrated only at the end of petitioners employment. What
is more, the dismissal of petitioners by SSASI was a mere result of
the termination by respondent of its contractual relations with
SSASI.
: Certificate of Registration of SSASI was merely secured in order
to blanket the previous relations between SSASI and respondent
with legality
:To permit respondent to disguise the true nature of its
transactions with SSASI by the terms of its contract, for the
purpose of evading its liabilities under the law, would seriously
impair the administration of justice. A party cannot dictate, by
the mere expedient of a unilateral declaration in a contract, the
character of its business, i.e., whether as labor-only contractor or
as job contractor, it being crucial that its character be measured
in terms of and determined by the criteria set by statute.
: having gained regular status, petitioners were entitled to
security of tenure and could only be dismissed on just or
authorized causes and after they had been accorded due
process.
: since SSASI was a labor-only contractor, and petitioners were to
be deemed the employees of respondent, then the said reason
would not constitute a just or authorized cause
23
for petitioners
dismissal
NOTES:
Permissible job contracting or subcontracting refers to an
arrangement whereby a principal agrees to put out or farm out
to a contractor or subcontractor the performance or completion
of a specific job, work or service within a definite or
predetermined period, regardless of whether such job, work or
service is to be performed or completed within or outside the
premises of the principal.A person is considered engaged in
legitimate job contracting or subcontracting if the following
conditions concur:
(a) The contractor or subcontractor carries on a distinct
and independent business and undertakes to perform
the job, work or service on its own account and under
its own responsibility according to its own manner and
method, and free from the control and direction of the
principal in all matters connected with the
performance of the work except as to the results
thereof;
(b) The contractor or subcontractor has substantial
capital or investment; and
(c) The agreement between the principal and
contractor or subcontractor assures the contractual
employees entitlement to all labor and occupational
safety and health standards, free exercise of the right
to self-organization, security of tenure, and social and
welfare benefits
On the other hand, labor-only contracting, a prohibited act, is
an arrangement in which the contractor or subcontractor
merely recruits, supplies or places workers to perform a job, work
or service for a principal. In labor-only contracting, the following
elements are present:
(a) The contractor or subcontractor does not have
substantial capital or investment to actually perform
the job, work or service under its own account and
responsibility;
(b) 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
In labor-only contracting, the statutes create an employer-
employee relationship for a comprehensive purpose: to prevent
circumvention of labor laws. The contractor is considered as
merely the agent of the principal employer and the latter is
responsible to the employees of the labor-only contractor as if
such employees are directly employed by the principal
employer.
It should be borne in mind that the power of control refers merely
to the existence of the power and not to the actual exercise
thereof. It is not essential for the employer to actually supervise
the performance of duties of the employee; it is enough that the
former has a right to wield the power
The primary standard, therefore, of determining a regular
employment is the reasonable connection between the
particular activity performed by the employee in relation to the
usual business or trade of the employer. x x x The connection can
be determined by considering the nature of the work performed
and its relation to the scheme of the particular business or trade
in its entirety. Also, if the employee has been performing the job
for at least one year, even if the performance is not continuous
or merely intermittent, the law deems the repeated and
continuing need for its performance as sufficient evidence of the
necessity if not indispensability of that activity to the business.
Hence, the employment is also considered regular, but only with
respect to such activity and while such activity exists