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    114 Alilin V Petron Corporation

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    fullgrin
    This case involves a dispute over whether petitioners were regular employees of Petron Corporation or employees of an alleged independent contractor, Romeo D. Gindang Services. The Supreme Court ruled that Petron failed to prove that Gindang Services was a legitimate independent contractor rather than a "labor-only" contractor. As Gindang Services was determined to be a labor-only contractor, the petitioners were deemed regular employees of Petron Corporation. The Court found Petron did not establish Gindang Services had substantial capital or investment when the petitioners started working for Petron decades prior, and Petron exercised control over the petitioners. Therefore, Petron was liable for their illegal dismissal claims.

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    114 Alilin V Petron Corporation

    Uploaded by

    fullgrin
    68 views7 pages
    This case involves a dispute over whether petitioners were regular employees of Petron Corporation or employees of an alleged independent contractor, Romeo D. Gindang Services. The Supreme Court ruled that Petron failed to prove that Gindang Services was a legitimate independent contractor rather than a "labor-only" contractor. As Gindang Services was determined to be a labor-only contractor, the petitioners were deemed regular employees of Petron Corporation. The Court found Petron did not establish Gindang Services had substantial capital or investment when the petitioners started working for Petron decades prior, and Petron exercised control over the petitioners. Therefore, Petron was liable for their illegal dismissal claims.

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    114 Alilin v Petron Corporation

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    This case involves a dispute over whether petitioners were regular employees of Petron Corporation or employees of an alleged independent contractor, Romeo D. Gindang Services. The Supreme Court ruled that Petron failed to prove that Gindang Services was a legitimate independent contractor rather than a "labor-only" contractor. As Gindang Services was determined to be a labor-only contractor, the petitioners were deemed regular employees of Petron Corporation. The Court found Petron did not establish Gindang Services had substantial capital or investment when the petitioners started working for Petron decades prior, and Petron exercised control over the petitioners. Therefore, Petron was liable for their illegal dismissal claims.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    68 views7 pages

    114 Alilin V Petron Corporation

    Uploaded by

    fullgrin
    This case involves a dispute over whether petitioners were regular employees of Petron Corporation or employees of an alleged independent contractor, Romeo D. Gindang Services. The Supreme Court ruled that Petron failed to prove that Gindang Services was a legitimate independent contractor rather than a "labor-only" contractor. As Gindang Services was determined to be a labor-only contractor, the petitioners were deemed regular employees of Petron Corporation. The Court found Petron did not establish Gindang Services had substantial capital or investment when the petitioners started working for Petron decades prior, and Petron exercised control over the petitioners. Therefore, Petron was liable for their illegal dismissal claims.

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    of 7

    Case: ALILIN v PETRON CORPORATION

    Topic: JOB or INDEPENDENT JOB CONTRACTOR

    DOCTRINE: [I]n distinguishing between prohibited labor-only contracting


    and permissible job contracting, the totality of the facts and the surrounding
    circumstances of the case shall be considered." Generally, the contractor is
    presumed to be a labor-only contractor, unless such contractor overcomes
    the burden of proving that it has the substantial capital, investment, tools
    and the like.

    However, where the principal is the one claiming that the contractor is a
    legitimate contractor, as in the present case, said principal has the burden of
    proving that supposed status.

    "[A] finding that a contractor is a ‘labor-only’ contractor is equivalent to


    declaring that there is an employer-employee relationship between the
    principal and the employees of the supposed contractor."

    PETITIONERS: AVELINO S. RESPONDENTS: PETRON


    ALILIN, TEODORO CALESA, CORPORATION
    CHARLIE HINDANG, EUTIQUIO
    GINDANG, ALLAN SUNGAHID,
    MAXIMO LEE, JOSE G. MORA
    TO, REX GABILAN, AND
    EUGEMA L. LAURENTE

    ACTION SEQUENCE: LA- Petitoners are regular employees of petron,


    Commison – affirmed
    FACTS:

    Romeo D. Gindang Services (RDG) recruits laborers for Petron

    RDG hired the petitioners as laborers for Petron’s Mandaue Bulk Plant
     The longest hire was from 1968 and the latest was 1993
    Petron and RDG entered into a Contract for Services from June 1, 2000 to May
    31, 2002
     The Contract was extended to July 31 2002 and extended further until
    September 30 2002

    No further renewal of service was made

    Petitioners filed a complaint for illegal dismissal against Petron and RDG with
    the Labor Arbiter claiming to be regular employees of Petron (for those who took
    agency, think the principal, agent and third-party issue)
     RDG corroborated the petitioners claim and denied liability over
    petitioners’ claim of illegal dismissal and that Petron cannot capitalize on
    the service contract to escape liability

     Petron maintained that RDG is an independent contractor and the real


    employer of the petitioners and that It was RDG which hired and selected
    petitioners, paid their salaries and wages, and directly supervised their
    work

    The Labor Arbiter ruled that the petitioners are the regular employees of Petron

    The Commission affirmed the ruling of the LA

    The CA reversed the ruling of the Commission and the LA


     the records of the case do not show that petitioners were directly hired,
    selected or employed by Petron; that their wages and other wage related
    benefits were paid by the said company; and that Petron controlled the
    manner by which they carried out their tasks.
     On the other hand, RDG was shown to be responsible for paying
    petitioners’ wages. In fact, SSS records show that RDG is their employer
    and actually the one remitting their contributions thereto

    Hence this Petition for Review on Certiorari

    ISSUE: Whether the Petitioners are regular employees of Petron


    RULING: Yes, they are regular employees of petron

    Labor-only contracting, distinguished from permissible job contracting

    The prevailing rule on labor-only contracting at the time Petron and RDG entered
    into the Contract for Services in June 2000 is DOLE Department Order No. 10,
    series of 1997,43 the pertinent provision of which reads:

    Section 4. x x x

    xxxx

    (f) "Labor-only contracting" prohibited under this Rule is an arrangement where


    the contractor or subcontractor merely recruits, supplies or places workers to
    perform a job, work or service for a principal and the following elements are
    present:

    (i) 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; and

    (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.

    xxxx

    Section 6. Permissible contracting or subcontracting. - Subject to the conditions


    set forth in Section 3 (d) and (e) and Section 5 hereof, the principal may engage
    the services of a contractor or subcontractor for the performance of any of the
    following:

    (a) Works or services temporarily or occasionally needed to meet


    abnormal increase in the demand of products or services, provided that the
    normal production capacity or regular workforce of the principal cannot
    reasonably cope with such demands;

    (b) Works or services temporarily or occasionally needed by the principal


    for undertakings requiring expert or highly technical personnel to improve
    the management or operations of an enterprise;

    (c) Services temporarily needed for the introduction or promotion of new


    products, only for the duration of the introductory or promotional period;

    (d) Works or services not directly related or not integral to the main
    business or operation of the principal, including casual work, janitorial,
    security, landscaping, and messengerial services, and work not related to
    manufacturing processes in manufacturing establishments;

    (e) Services involving the public display of manufacturers’ products which


    do not involve the act of selling or issuance of receipts or invoices;

    (f) Specialized works involving the use of some particular, unusual or


    peculiar skills, expertise, tools or equipment the performance of which is
    beyond the competence of the regular workforce or production capacity of
    the principal; and

    (g) Unless a reliever system is in place among the regular workforce,


    substitute services for absent regular employees, provided that the period
    of service shall be coextensive with the period of absence and the same is
    made clear to the substitute employee at the time of engagement. The
    phrase "absent regular employees" includes those who are serving
    suspensions or other disciplinary measures not amounting to termination of
    employment meted out by the principal, but excludes those on strike where
    all the formal requisites for the legality of the strike have been prima facie
    complied with based on the records filed with the National Conciliation
    and Mediation Board.

    "Permissible job contracting or subcontracting refers to an arrangement whereby


    a principal agrees to farm out with a contractor or subcontractor the performance
    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.

    Under this arrangement, the following conditions must be met:

    (a) the contractor carries on a distinct and independent business and undertakes
    the contract work on his 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 his work except as to
    the results thereof;

    (b) the contractor 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 welfare benefits."

    Labor-only contracting, on the other hand, is a prohibited act, defined as


    "supplying workers to an employer who 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."

    [I]n distinguishing between prohibited labor-only contracting and


    permissible job contracting, the totality of the facts and the surrounding
    circumstances of the case shall be considered." Generally, the contractor is
    presumed to be a labor-only contractor, unless such contractor overcomes the
    burden of proving that it has the substantial capital, investment, tools and the
    like.

    However, where the principal is the one claiming that the contractor is a
    legitimate contractor, as in the present case, said principal has the burden of
    proving that supposed status. It is thus incumbent upon Petron, and not upon
    petitioners as Petron insists, to prove that RDG is an independent contractor.

    Petron failed to discharge the burden of proving that RDG is a legitimate


    contractor. Hence, the presumption that RDG is a labor-only contractor
    stands

     while Petron was able to establish that RDG was financially capable as a
    legitimate contractor at the time of the execution of the service contract in
    2000, it nevertheless failed to establish the financial capability of RDG at
    the time when petitioners actually started to work for Petron in 1968, 1979,
    1981, 1987, 1990,1992 and 1993.
    Sections 8 and 9,Rule VIII, Book III of the implementing rules of the Labor
    Code, in force since 1976 and prior to DOLE Department Order No. 10, series of
    1997, provide that for job contracting to be permissible, one of the conditions
    that has to be met is that the contractor must have substantial capital or
    investment. Petron having failed to show that this condition was met by RDG, it
    can be concluded, on this score alone, that RDG is a mere labor-only contractor.
    Otherwise stated, the presumption that RDG is a labor-only contractor stands due
    to the failure of Petron to discharge the burden of proving the contrary.

    Petron’s power of control over petitioners exists in this case.

     "[A] finding that a contractor is a ‘labor-only’ contractor is equivalent to


    declaring that there is an employer-employee relationship between the
    principal and the employees of the supposed contractor."
     In this case, the employer employee relationship between Petron and
    petitioners becomes all the more apparent due to the presence of the power
    of control on the part of the former over the latter.

    Petitioners already attained regular status as employees of Petron

    In sum, the Court finds that RDG is a labor-only contractor. As such, it is


    considered merely as an agent of Petron. Consequently, the employer-employee
    relationship which the Court finds to exist in this case is between petitioners as
    employees and Petron as their employer. Petron therefore, being the principal
    employer and RDG, being the labor-only contractor, are solidarily liable for
    petitioners' illegal dismissal and monetary claims.

    DISPOSITIVE PORTION

    WHEREFORE, the Petition is GRANTED. The May 10, 2006 Decision and
    March 30, 2007 Resolution of the Court of Appeals in CA-G.R. SP No. 01291
    are REVERSED and SET ASIDE. The February 18, 2005 Decision and August
    24, 2005 Resolution of the National Labor Relations Commission in NLRC Case
    No. V-000481-2003 are hereby REINSTATED and AFFIRMED.

    NOTES

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