Philippine Bank of Communications Vs NLRC

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.
The petitioner bank maintains that no employer-employee relationship was established between
itself and Ricardo Orpiada and that Ricardo Orpiada was an employee of (CESI) and not of the
bank.
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:
(Hiring) Orpiada was assigned to work in the bank by (CESI) Orpiada could not have found his way
to the bank's offices had he not been first hired by (CESI) but subject to the acceptance of the bank
and the bank did accept him as will be seen shortly.
With respect to the (payment) of Orpiada's wages, the bank remitted to CE SI amounts
corresponding to the "daily service rate" of Orpiada and the others similarly assigned by (CESI) to
the bank, and (CESI) paid to Orpiada and the others the wages pertaining to to them.
(Dismissal) The bank requested (CESI) to withdraw Orpiada's assignment and that (CESI) did, in
fact, withdraw such assignment.
Turning to the power to (control) Orpiada's conduct, it should be noted immediately that Orpiada
performed his sections within the bank's premises, and not within the office premises of (CESI) As
such, Orpiada must have been subject to at least the same control and supervision that the bank
exercises over any other person physically within its premises and rendering services to or for the
bank, in other words, any employee or staff member of the bank.
The second ("payment of wages") and third ("power of dismissal") factors suggest that the relevant
relationship was that subsisting between (CESI) and Orpiada, a relationship conceded by (CESI) to
be one between employer and employee. Upon the other hand, the first ("selection and
engagement") and fourth ("control of employee's conduct") factors indicate that some direct
relationship did exist between Orpiada and the bank and that such relationship may be assimilated
to employment
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-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.
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.
In the present case, the undertaking of (CESI) was to provide its client-the bank-with a certain
number of persons able to carry out the work of messengers. Such undertaking of CESI was
complied with when the requisite number of persons were assigned or seconded to the petitioner
bank. Orpiada utilized the premises and office equipment of the bank and not those of (CESI)
Messengerial work-the delivery of documents to designated persons whether within or without the
bank premises — is of course directly related to the day-to-day operations of the bank. Section 9(2)
quoted above does no trequire for its applicability that the petitioner must be engaged in the delivery
of items as a distinct and separate line of business.

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

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