Aboitiz Haulers Inc v Monaorai Dimapatoi et. al (G.R. No. 148619)

FACTS:

Petitioner Aboitiz Haulers, Inc. is a domestic corporation principally engaged in the nationwide and overseas forwarding and distribution of cargoes. Private respondents Monaorai Dimapatoi, Cecilia Agawin, Raul Mamate, Emmanuel Guerrero and Gemeniano Bigaw worked as checkers in the Mega Warehouse, which is owned by the petitioner.

Petitioner claims that respondents are not its employees, rather they are the employees of Grigio Security Agency and General Services (Grigio), a manpower agency that supplies security guards, checkers and stuffers. It allegedly entered into a Written Contract of Service with Grigio. By virtue of the aforementioned Written Contract of Service, Grigio supplied petitioner with security guards, checkers and stuffers for petitioner’s Mega Warehouse. The respondents were among the checkers that were assigned to the petitioner’s warehouse.

Petitioner also alleges that the respondents left the warehouse and did not report to work thereafter. As a result of the respondents’ sudden abandonment of their work, there was no orderly and proper turnover of papers and other company property in connection with the termination of the Written Contract for Services.

Respondents, on the other hand, claim that most of them worked as checkers in petitioner’s warehouse even before 1 March 1994. Respondents maintain that during their employment with the petitioner, they were not paid their regular holiday pay, night shift differential, 5-day service incentive leave, and overtime premium. They also averred that illegal deductions were being made on their wages. They also allege that petitioner dismissed them on the pretext that the Written Contract of Service between Grigio and the petitioner had been terminated.

Raul Mamate filed a complaint before the Department of Labor and Employment (DOLE) for nonpayment of wages and other benefits, as well as illegal deductions. The labor arbiter ruled that the complainants’ failure to offer any evidence showing that Grigio had no substantial capital denotes that Grigio was a legitimate independent job contractor.  On appeal, the NLRC affirmed the findings of the labor arbiter.

The Court of Appeals determined that Grigio was not an independent job contractor, despite its claim that it has sufficient capital. After ruling that petitioner was the employer of the respondents, the Court of Appeals resolved that the respondents were illegally dismissed by the petitioner since the latter failed to comply with the procedural requirements of notice and hearing. It affirmed the NLRC and the labor arbiter in deciding that the respondents were not entitled to their claims for payment of holiday pay, night shift differentials, overtime and illegal deductions as these claims were not sufficiently proven.

Issue:

 1. Whether or not Grigio is a "labor-only" contractor

2. Whether the respondents were lawfully dismissed due to abandonment.

HELD:

1. YES. Article 106 of the Labor Code explains the relations which may arise between an employer, a contractor and the contractor’s employees thus:

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 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 provision of this Code.

The first two paragraphs of Art. 106 set the general rule that a principal is permitted by law to engage the services of a contractor for the performance of a particular job, but the principal, nevertheless, becomes solidarily liable with the contractor for the wages of the contractor’s employees. The third paragraph empowers the Secretary of Labor to make distinctions between permissible job contracting and "labor-only" contracting. 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, and the "labor-only" contractor is considered as a mere agent of the principal, the real employer.

In the case, the respondents’ work, as warehouse checkers, is directly related to the principal business of the petitioner. Petitioner also exercises the right to control and determines not only the end to be achieved, but also the manner and means to be used in reaching that end. Lastly, petitioner failed to sufficiently prove that Grigio had "substantial capital or investment."

The respondents, as checkers, were employed to check and inspect cargoes, a task which is clearly necessary for the petitioner’s business of forwarding and distributing of cargoes. The petitioner did not dispute the fact that the respondents were hired as checkers as early as 1992. The fact that they were employed before the Written Contract of Services indicates that the respondents’ work was indeed necessary for the petitioner’s business.

Grigio did not undertake the performance of its service contract according to its own manner and method, free from the control and supervision of its principal. The work activities, work shifts, and schedules of the respondents, including the time allowed for "recess" were set under the Written Contract of Services.

2. NO. Abandonment as a just and valid ground for dismissal requires the deliberate and unjustified refusal of the employee to resume his employment. Mere absence of failure to report for work, after notice to return, is not enough to amount to such abandonment.

 For a valid finding of abandonment, two factors must be present:

(1) the failure to report for work or absence without valid or justifiable reason;

(2) a clear intention to sever employer-employee relationship,

The burden of proof to show that there was unjustified refusal to return to work rests on the employer. Petitioner failed to prove this. Even assuming there was abandonment, petitioner did not comply with the statutory requirement of notice and hearing.

In the present case, the petitioner failed to serve the respondents either of the two notices. Neither did petitioner afford the respondents an opportunity to contest their dismissal. Having failed to establish the requirements of notice and hearing, the dismissal of the respondents is tainted with illegality.

*Petitioner to reinstate respondents with full status and rights of regular employees.

San Miguel Corporation v Maerc Integrated Sevices Inc., et. al (G.R. No. 144672)

FACTS:

291 workers filed their complaints against San Miguel Corporation and Maerc Integrated Services, Inc, for illegal dismissal, underpayment of wages, non-payment of service incentive leave pays and other labor standards benefits, and for separation pays The complainants alleged that they were hired by San Miguel Corporation (SMC) through its agent or intermediary Maerc Integrated Services, Inc. (MAERC) to work in 2 designated workplaces in Mandaue City. They washed and segregated various kinds of empty bottles used by SMC to sell and distribute its beer beverages to the consuming public. They were paid on a per piece or pakiao basis except for a few who worked as checkers and were paid on daily wage basis.

Complainants alleged that long before SMC contracted the services of MAERC a majority of them had already been working for SMC under the guise of being employees of another contractor, Jopard Services, until the services of the latter were terminated on 31 January 1988.

SMC denied liability for the claims and averred that the complainants were not its employees but of MAERC, an independent contractor whose primary corporate purpose was to engage in the business of cleaning, receiving, sorting, classifying, etc., glass and metal containers.

In a letter dated 15 May 1991, SMC informed MAERC of the termination of their service contract by the end of June 1991. SMC cited its plans to phase out its segregation activities starting 1 June 1991 due to the installation of labor and cost-saving devices.

When the service contract was terminated, complainants claimed that SMC stopped them from performing their jobs; that this was tantamount to their being illegally dismissed by SMC who was their real employer as their activities were directly related, necessary and desirable to the main business of SMC; and, that MAERC was merely made a tool or a shield by SMC to avoid its liability under the Labor Code. MAERC admitted that it recruited the complainants and placed them in the bottle segregation project of SMC but maintained that it was only conveniently used by SMC as an intermediary in operating the project.

The Labor Arbiter rendered a decision holding that MAERC was an independent contractor. The National Labor Relations Commission (NLRC) ruled that MAERC was a labor-only contractor and that complainants were employees of SMC.

ISSUE:

Whether the complainants are employees of petitioner SMC or of respondent MAERC.

HELD:

Employees are those of SMC. In ascertaining an employer-employee relationship, the following factors are considered: (a) the selection and engagement of employee; (b) the payment of wages; (c) the power of dismissal; and, (d) the power to control an employee's conduct.

Evidence discloses that petitioner played a large and indispensable part in the hiring of MAERC's workers. It also appears that majority of the complainants had already been working for SMC long before the signing of the service contract between SMC and MAERC in 1988.

In the case, the incorporators of MAERC admitted having supplied and recruited workers for SMC even before MAERC was created.  The NLRC also found that when MAERC was organized into a corporation in February 1988, the complainants who were then already working for SMC were made to go through the motion of applying for work with Ms. Olga Ouano, President and General Manager of MAERC.

As for the payment of workers' wages, SMC assumed the responsibility of paying for the mandated overtime, holiday and rest day pays of the MAERC workers. SMC also paid the employer's share of the SSS and Medicare contributions, the 13th month pay, incentive leave pay and maternity benefits. These lend credence to the complaining workers' assertion that while MAERC paid the wages of the complainants, it merely acted as an agent of SMC.

SMC maintained a constant presence in the workplace through its own checkers. The responsibility of watching over the MAERC workers by MAERC personnel became superfluous with the presence of additional checkers from SMC. Control of the premises in which the contractor's work was performed was also viewed as another phase of control over the work, and this strongly tended to disprove the independence of the contractor.

But the most telling evidence is a letter by Mr. Antonio Ouano, Vice-President of MAERC addressed to Francisco Eizmendi, SMC President and Chief Executive Officer, asking the latter to reconsider the phasing out of SMC's segregation activities in Mandaue City.  The letter attested to an arrangement entered into by the two (2) parties which was not reflected in the Contract of Services. A peculiar relationship mutually beneficial for a time but nonetheless ended in dispute when SMC decided to prematurely end the contract leaving MAERC to shoulder all the obligations to the workers.

While MAERC's investments in the form of buildings, tools and equipment amounted to more than P4 Million, one cannot disregard the fact that it was the SMC which required MAERC to undertake such investments under the understanding that the business relationship between petitioner and MAERC would be on a long term basis.

NOTES:

Jurisprudence has it that in determining the existence of an independent contractor relationship, several factors may be considered such as:

o   whether the contractor was carrying on an independent business

o   the nature and extent of the work

o   the skill required

o   the term and duration of the relationship

o   the right to assign the performance of specified pieces of work

o   the control and supervision of the workers

o   the power of the employer with respect to the hiring, firing and payment of the workers of the contractor

o   the control of the premises

o   i.the duty to supply premises, tools, appliances, materials and labor

o   the mode, manner and terms of payment.

Emmanuel Babas et. al. v Lorenzo Shipping Corporation (G.R. No. 186091)

FACTS:

          Lorenzo Shipping Corporation (LSC) is a duly organized domestic corporation engaged in the shipping industry. LSC entered into a General Equipment Maintenance Repair and Management Services Agreement (Agreement) with Best Manpower Services, Inc. (BMSI).  Under the Agreement, BMSI undertook to provide maintenance and repair services to LSC’s container vans, heavy equipment, trailer chassis, and generator sets.  BMSI further undertook to provide checkers to inspect all containers received for loading to and/or unloading from its vessels.

Simultaneous with the execution of the Agreement, LSC leased its equipment, tools, and tractors to BMSI.  The period of lease was coterminous with the Agreement. 

          BMSI then hired petitioners on various dates to work at LSC as checkers, welders, utility men, clerks, forklift operators, motor pool and machine shop workers, technicians, trailer drivers, and mechanics. 

In September 2003, petitioners filed with the Labor Arbiter (LA) a complaint for regularization against LSC and BMSI.  On October 1, 2003, LSC terminated the Agreement, effective October 31, 2003.  Consequently, petitioners lost their employment.

BMSI asserted that it is an independent contractor.  It averred that it was willing to regularize petitioners; however, some of them lacked the requisite qualifications for the job. LSC averred that petitioners were employees of BMSI and were assigned to LSC by virtue of the Agreement.  BMSI is an independent job contractor with substantial capital or investment in the form of tools, equipment, and machinery necessary in the conduct of its business. The Agreement between LSC and BMSI constituted legitimate job contracting. Thus, petitioners were employees of BMSI and not of LSC.

          The Labor Arbiter dismissed petitioners’ complaint on the ground that petitioners were employees of BMSI.  It was BMSI which hired petitioners, paid their wages, and exercised control over them. The NLRC reversed the Labor Arbiter

Issue:

                Whether or not respondent was engaged in labor-only contracting.

Held:

Yes. In De Los Santos v. NLRC, the character of the business, i.e., whether as labor-only contractor or as job contractor, should be measured in terms of, and determined by, the criteria set by statute. The parties cannot dictate by the mere expedience of a unilateral declaration in a contract the character of their business. 

The Court has observed that:

First, petitioners worked at LSC’s premises, and nowhere else. Other than the provisions of the Agreement, there was no showing that it was BMSI which established petitioners’ working procedure and methods, which supervised petitioners in their work, or which evaluated the same. There was absolute lack of evidence that BMSI exercised control over them or their work.

Second, LSC was unable to present proof that BMSI had substantial capital.  There was no proof pertaining to the contractor’s capitalization, nor to its investment in tools, equipment, or implements actually used in the performance or completion of the job, work, or service that it was contracted to render.  What is clear was that the equipment used by BMSI were owned by, and merely rented from, LSC.  

          Third, petitioners performed activities which were directly related to the main business of LSC. The work of petitioners as checkers, welders, utility men, drivers, and mechanics could only be characterized as part of, or at least clearly related to, and in the pursuit of, LSC’s business.

Lastly, BMSI had no other client except for LSC, and neither BMSI nor LSC refuted this finding, thereby bolstering the NLRC finding that BMSI is a labor-only contractor.

The CA erred in considering BMSI’s Certificate of Registration as sufficient proof that it is an independent contractor.  Jurisprudence states that a Certificate of Registration issued by the Department of Labor and Employment is not conclusive evidence of such status. The fact of registration simply prevents the legal presumption of being a mere labor-only contractor from arising. 

*LSC is ordered to reinstate the petitioners to their former positions. Petitioners are declared as regular employees of LSC.

NOTES:

Labor-only contracting  -a prohibited act

-          is an arrangement where the contractor or subcontractor merely recruits, supplies, or places workers to perform a job, work, or service for a principal. 

-          Elements:

(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 perform activities which are directly related to the main business of the principal.^[20]

 Permissible job contracting or subcontracting – an arrangement whereby a principal agrees to put out or farm out with the 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.

Conditions: 

(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 the 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

Oceanic Wireless Network Inc. V Commissioner of Internal Revenue (CTA CASE NO. 6111)

Facts:

                Oceanic Wireless is a corporation with principal office located in Legaspi Village, Makati. In April 1996, petitioner filed its 1995 Annual Corporate Annual Income Tax Return. In December 1996, petitioner received a letter from the Revenue District Officer authorizing Revenue Officers to examine the books of accounts and other records for the period January to December 1995.

                In 1999, petitioner executed a Waiver of Defense of Prescription of the NIRC within which respondent may assess petitioner for deficiency taxes. A preliminary report of tax assessment was issued and petitioner was requested to attend an informal conference to discuss the result of the investigation done on the books.

Again, petitioner received another pre-assessment notice this time with Details of Discrepancies. The company was advised to file a written protest or set up an office conference to discuss the assessments for deficiency income. Inasmuch as the authority of respondent to assess was about to prescribe in July 31 1999, demand letters were sent on July 30, 1999.

Petitioner now contends that the assessment notices for taxable year 1995 are void for having been issued beyond the 3-yr prescriptive period as provided under the NIRC. Since the tax return was filed in April 1995, respondent has 3 years to assess the petitioner.  But the assessment was done in 1999, hence the action has already prescribed.

Petitioner also questions the validity of the waiver on the ground that it failed to state the kind and amount of tax required under RMO 20-90.

Respondent argues that petitioner executed a waiver extending the period of the respondent pursuant to the provisions in the Tax Code.

Issue:

1.       Whether or not the BIR’s right to assess has already prescribed.

2.       Whether or not the deficiency assessments are void for failure to state the law and facts to which the assessments are made.

3.       Whether or not petitioner is liable for deficiency income tax.

Held:

1.       No. BIR’s right has not yet prescribed and the assessment notices are valid. At the time of the execution of the waiver, there was no preliminary assessment issued yet against petitioner where the kind and amount of tax could be referred to. Such details cannot be specified in the waiver since it was still unascertainable at the time.

Following the rule that the period of respondent to assess was extended up to July 31, 1999 in view of the waiver, the deficiency assessments issued against petitioner on July 30, 1999 are within the period allowed by law.

2.       No.  The purpose of Section 228 of the National Internal Revenue Code of 1997in requiring that "(t)he taxpayer be informed of the law and facts on which assessment is made" is to give the taxpayer the opportunity to refute the findings of the examiner and give a more accurate and detailed explanation regarding the proposed assessment.

In the case, there was substantial compliance with Sec. 228 of the NIRC because petitioner was able to protest the assessments intelligently, thereby implying that it had actual knowledge of the factual and legal bases of the assessments. The fact that petitioner was furnished the computation and brief explanation of how the assessment for deficiency quarterly income tax was arrived at, the requirement under Section 228 of the 1997 Tax Code is deemed complied with. And even if petitioner was not furnished of the detailed computation of the deficiency quarterly income tax, the same was discussed with petitioner during the informal conference.  

3.       Yes. Petitioner having failed to comply with the requirement of the law in disputing an assessment, the same became final, executory and demandable.  Sec. 228 states that:

x x x If the protest is denied in whole or in part, or is not acted upon within one hundred eighty (180) daysfrom submission of documents, the taxpayer adversely affected by the decision or inaction may appeal to the Court of Tax Appeals within thirty (30) days from receipt of the said decision, or from the lapse of the one hundred eighty (180)-day period; otherwise, the decision shall become final, executory and demandable. Undoubtedly, a taxpayer has sixty (60) days from the filing of the protest to submit the relevant documents to support its protest, otherwise, the assessment becomes final. Within one hundred eighty(180) days from the submission of the relevant documents, the respondent should act on the protest. If the respondent rendered his decision within the period or failed to act on it, the remedy of the taxpayer is to file within thirty (30) days from the receipt of the decision or from the lapse of one hundred eighty(180) days, an appeal to this court, otherwise, the assessment will become final, executory and demandable. x x x

In the case, petitioner failed to submit supporting documents contrary to what was jointly stipulated by the parties. Hence, the reckoning of the 180-day period would be the day the protest was filed (August 16, 1999). However, respondent failed to render his decision within 180 days or until February 12, 2000. The remedy of petitioner was to file within 30 days there from an appeal with this court which would be until March 14, 2000. But since the Petition for Review was filed only on May 12, 2000, the same was definitely filed beyond the date prescribed by law.

*Case dismissed for being filed out of time. 

Amaro v Sumanguit (G.R. No. L-14986)

DOCTRINE:  The refusal of the Chief of Police to give assistance, which it was his duty to do, constitutes an actionable dereliction in light of Article 27 of the Civil Code.

Facts:

Jose Amaro was assaulted and shot at neat the city government building of Silay. The next day, he went with Cornelio Amaro (his father) to the office of the Ambrosio Sumanguit (defendant). Instead of obtaining assistance to their complaint, they were harassed and terrorized. They gave up and renounced their right and interest in the prosecution of the crime.

Having finished the investigation of the crime complained of, Sumanguit is now harassing the plaintiffs in their daily work by ordering them to appear in his office when he is absent and taking the plaintiiff’s signatures in prepared affidavits exempting the police from any dereliction of duty in their case.

The plaintiffs filed suit for damages against Sumanguit (chief of police of Silay City).The complaint was dismissed on the ground that it does not state facts sufficient to constitute a cause of action.

Issue:

                Whether or not there was an actionable dereliction on the part of the defendant.

Held:

Yes. The plaintiff’s claim for relief is not based on the fact of harassment but on the appellee’s refusal to give them assistance, which it was his duty to do as an officer of the law.

In the case, the complaint was imperfectly drafted. But the Rules of Court require that there be a showing , by a statement of ultimate facts, that the plaintiff has a right and that this right was violated by the defendant. The compliant should not be dismissed upon mere ambiguity. The remedy is to file a complaint directly with the city attorney by lodging an administrative charge against Sumanguit.

This suggested remedy does not preclude the action for damages under Article 27 of the Civil Code and hence does not justify the dismissal of the complaint.