The document discusses two cases regarding the employment status of individuals.
In Manila Water Co. vs Pena, the court ruled that the Association Collectors Group (ACGI) was not an independent contractor but a labor-only contractor. This was because ACGI did not have substantial capitalization, the work of the private respondents was directly related to Manila Water's business, and ACGI did not have control over the work and was subject to Manila Water's supervision. Thus, the private respondents were employees of Manila Water, not ACGI.
In Globe Mackay Cable and Radio Corp. vs. NLRC, the court ruled that the cost-of-living allowance (COLA) of monthly paid employees should be
The document discusses two cases regarding the employment status of individuals.
In Manila Water Co. vs Pena, the court ruled that the Association Collectors Group (ACGI) was not an independent contractor but a labor-only contractor. This was because ACGI did not have substantial capitalization, the work of the private respondents was directly related to Manila Water's business, and ACGI did not have control over the work and was subject to Manila Water's supervision. Thus, the private respondents were employees of Manila Water, not ACGI.
In Globe Mackay Cable and Radio Corp. vs. NLRC, the court ruled that the cost-of-living allowance (COLA) of monthly paid employees should be
The document discusses two cases regarding the employment status of individuals.
In Manila Water Co. vs Pena, the court ruled that the Association Collectors Group (ACGI) was not an independent contractor but a labor-only contractor. This was because ACGI did not have substantial capitalization, the work of the private respondents was directly related to Manila Water's business, and ACGI did not have control over the work and was subject to Manila Water's supervision. Thus, the private respondents were employees of Manila Water, not ACGI.
In Globe Mackay Cable and Radio Corp. vs. NLRC, the court ruled that the cost-of-living allowance (COLA) of monthly paid employees should be
G.R. NO. 74156. JUNE 29, 1988.MELENCIO- HERRERA, J. FACTS: Wage Order No. 6 increased the cost-of-living allowance of non-agricultural workersin the private sector. Petitioner corporation (GMCR) complied with the said WageOrder by paying its monthly-paid employees the mandated P3.00 per day COLA. However, in computing said COLA, GMCR multiplied the P3.00 daily COLA by 22days, which is the number of working days in the company. Respondent Union disagreed with the computation of the monthly COLA claimingthat the daily COLA rate of P3.00 should be multiplied by 30 days to arrive at themonthly COLA rate. The union alleged furthermore that prior to the effectivity ofWage Order No. 6, GMCR had been computing and paying the monthly COLA onthe basis of thirty (30) days per month and that this constituted an employer practice,which should not be unilaterally withdrawn. The Labor Arbiter ruled that the monthly COLA should be computed on the basis oftwenty two (22) days, since the evidence showed that there are only 22 paid days ina month for monthly-paid employees in the company. To compel the respondentcompany to use 30 days in a month to compute the allowance and retain 22 days forvacation and sick leave, overtime pay and other benefits is inconsistent and palpablyunjust. If 30 days is used as divisor, then it must be used for the computation of allbenefits, not just the allowance. But this is not fair to complainants, not to mentionthat it will contravene the provision of the parties' CBA. However, the NLRC reversed the Labor Arbiter and held that petitioner was guilty ofillegal deductions, upon the following considerations: (1) that the P3.00 daily COLAshould be paid and computed on the basis of thirty (30) days instead of twenty two(22) days since workers paid on a monthly basis are entitled to COLA on Saturdays,Sundays and legal holidays "even if unworked;" (2) that the full allowance enjoyed bymonthly-paid employees before the CBA executed in 1982 constituted voluntaryemployer practice, which cannot be unilaterally withdrawn. ISSUES: 1.How should the COLA be computed? 2.Can the COLA be unilaterally withdrawn by the employer? YES HELD: 1. The primordial consideration for entitlement to COLA is that basic wage is beingpaid. In other words, the payment of COLA is mandated only for the days that theemployees are paid their basic wage, even if said days are unworked. So that, on thedays that employees are not paid their basic wage, the payment of COLA is notmandated. Peculiar to this case, however, is the circumstance that pursuant to theCollective Bargaining Agreement (CBA) between Petitioner and Respondent Union,the monthly basic pay is computed on the basis of five (5) days a week, or twentytwo (22) days a month. In determining the hourly rate of monthly paid employees for purposes of computingovertime pay, the monthly wage is divided by the number of actual work days in amonth and then, by eight (8) working hours. If a monthly-paid employee rendersovertime work, he is paid his basic salary rate plus one-half thereof. Thus, where thecompany observes a 5-day work week, it will have to be held that the COLA shouldbe computed on the basis of twenty two (22) days, which is the period during whichthe employees of petitioner receive their basic wage. The CBA is the law betweenthe parties and, if not acceptable, can be the subject of future re-negotiation. 2. Payment in full by petitioner of the COLA before the execution of the CBA in 1982and in compliance with Wage Orders Nos. 1 (26 March 1981) to 5 (11 June 1984),should not be construed as constitutive of voluntary employer practice, which cannot now be unilaterally withdrawn by petitioner. To be considered as such, it should havebeen practiced over a long period of time, and must be shown to have beenconsistent and deliberate. Adequate proof is wanting in this respect. The test of longpractice has been enunciated in Oceanic Pharmaceutical Employees Union vs.Inciong such that respondent company agreed to continue giving holiday payknowing fully well that said employees are not covered by the law requiring paymentof holiday pay." Absent clear administrative guidelines, petitioner cannot be faulted for erroneousapplication of the law . Payment may be said to have been made by reason of amistake in the construction or application of a "doubtful or difficult question of law." Since it is a past error that is being corrected, no vested right may be said to havearisen nor any diminution of benefit under Article 100 of the Labor Code may be saidto have resulted by virtue of the correction. Manila Water Co., vs Pena (2004) G.R. 158255 FACTS: Petitioner Manila Water Company, Inc. is one of the two private concessionaires contracted by the Metropolitan Waterworks and Sewerage System (MWSS) to manage the water distribution system in the East Zone of MetroManila. Under the Concession Agreement, petitioner undertook to absorb former employees of the MWSS whose names and positions were in the list furnished by the latter, while the employment of those not in the list wasterminated. Private respondents, being contractual collectors of the MWSS, were among the 121 employees notincluded in the list; nevertheless, petitioner engaged their services without written contract for three months. Before the end of the three-month contract, the 121 collectors incorporated the Association Collectors Group, Inc. (ACGI),which was contracted by petitioner to collect charges for the Balara Branch. Subsequently, most of the 121 collectors were asked by the petitioner to transfer to the First Classic Courier Services, a newly registered corporation. Only private respondents remained with ACGI. Private respondents filed a complaint for illegal dismissal and moneyclaims against petitioner, contending that they were petitioners employees as all the methods and procedures of their collections were controlled by the latter. Petitioner on the other hand asserts that private respondents were employees of ACGI, an independent contractor. It maintained that it had no control and supervision over private respondents manner of performing their work except as to the results. Thus, petitioner did not have an employer-employee relationship with the private respondents, butonly a service contractor-client relationship with ACGI. ISSUE: Whether or not ACGI is an independent contractor; HELD: NO ACGI is NOT an independent contractor but a labor- only contractor. First, ACGI does not have substantial capitalization or investment in the form of tools, equipment, machineries, workpremises, and other materials, to qualify as an independent contractor. While it has an authorized capital stock ofP1,000,000.00, only P62,500.00 is actually paid-in, which cannot be considered substantial capitalization. The 121collectors subscribed to four shares each and paid only the amount of P625.00 in order to comply with the incorporation requirements. Further, private respondents reported daily to the branch office of the petitioner because ACGI has no office or work premises. In fact, the corporate address of ACGI was the residence of its president, Mr.Herminio D. Pea. Moreover, in dealing with the consumers, private respondents used the receipts and identification cards issued by petitioner. Second, the work of the private respondents was directly related to the principal business or operation of thepetitioner. Being in the business of providing water to the consumers in the East Zone, the collection of the chargestherefore by private respondents for the petitioner can only be categorized as clearly related to, and in the pursuit of the latters business. Lastly, ACGI did not carry on an independent business or undertake the performance of its service contract according to its own manner and method, free from the control and supervision of its principal, petitioner. Prior to private respondents alleged employment with ACGI, they were already working for petitioner, subject to its rules and regulations in regard to the manner and method of performing their tasks. This form ofcontrol and supervision never changed although they were already under the seeming employ of ACGI. Petitionerissued memoranda regarding the billing methods and distribution of books to the collectors; it required privaterespondents to report daily and to remit their collections on the same day to the branch office or to deposit them withBank of the Philippine Islands; it monitored strictly their attendance as when a collector cannot perform his dailycollection, he must notify petitioner or the branch office in the morning of the day that he will be absent; andalthough it was ACGI which ultimately disciplined private respondents, the penalty to be imposed was dictated bypetitioner as shown in the letters it sent to ACGI specifying the penalties to be meted on the erring privaterespondents. These are indications that ACGI was not left alone in the supervision and control of its allegedemployees. Consequently, it can be concluded that ACGI was not an independent contractor since it did not carry adistinct business free from the control and supervision of petitioner. Under this factual milieu, there is no doubt that ACGI was engaged in labor-only contracting, and as such, isconsidered merely an agent of the petitioner. In labor-only contracting, the statute creates an employer- employeerelationship for a comprehensive purpose: to prevent a circumvention of labor laws. The contractor is consideredmerely an agent of the principal employer and the latter is responsible to the employees of the labor-only contractoras if such employees had been directly employed by the principal employer. Since ACGI is only a labor-onlycontractor, the workers it supplied should be considered as employees of the petitioner TABAS V CALIFORNIA MANUFACTURING Facts: The petitioners petitioned the National Labor Relations Commission 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 the respondent, the California Manufacturing Company. California denied the existence of an employer-employee relation between the petitioners and the company and impleaded Livi Manpower Services, Inc. as a party- respondent. Petitioners were assigned to work as "promotional merchandisers" for California pursuant to a manpower supply agreement. The agreement provided that California "has no control or supervisions whatsoever over Livi's workers with respect to how they accomplish their work or perform California's obligation"; the 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'; 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" and 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. It was further expressly stipulated that the assignment of workers to California shall be on a "seasonal and contractual basis"; that "cost of living allowance and the 10 legal holidays will be charged directly to California at cost "; and that "payroll for the preceding week shall be delivered by Livi at California's premises." The petitioners were then made to sign employment contracts with durations of six months, upon the expiration of which they signed new agreements with the same period. Pending proceeding they were notified by California that they would not be rehired. As a result, they filed an amended complaint charging California with illegal dismissal. Issue: Whether or not Livi is only engaged in labor only contracting Held: Yes. The existence of an employer-employees relation is a question of law and being such, it cannot be made the subject of agreement. Hence, the fact that the manpower supply agreement between Livi and California had specifically designated the former as the petitioners' employer and had absolved the latter from any liability as an employer, will not erase either party's obligations as an employer, if an employer-employee relation otherwise exists between the workers and either firm. At any rate, since the agreement was between Livi and California, they alone are bound by it, and the petitioners cannot be made to suffer from its adverse consequences. The Court has consistently ruled that the determination of whether or not there is an employer-employee relation depends upon four standards: 1. the manner of selection and engagement of the putative employee; 2. the mode of payment of wages; 3. the presence or absence of a power of dismissal; and 4. the presence or absence of a power to control the putative employee's conduct. Of the four, the right-of-control test has been held to be the decisive factor. The fact that the petitioners have allegedly admitted being Livi's "direct employees" in their complaints is nothing conclusive. For one thing, the fact that the petitioners were (are), will not absolve California since liability has been imposed by legal operation. For another, and as the court indicated, the relations of parties must be judged from case to case and the decree of law, and not by declarations of parties. In the case at bar, Livi is admittedly an "independent contractor providing temporary services of manpower to its client. " When it thus provided California with manpower, it supplied California with personnel, as if such personnel had been directly hired by California. Hence, Article 106 of the Code applies. The Court need not therefore consider whether it is Livi or California which exercises control over the petitioner vis-a- vis the four barometers referred to earlier, since by fiction of law, either or both shoulder responsibility. The records show that the petitioners bad been given an initial six-month contract, renewed for another six months. Accordingly, under Article 281 of the Code, they had become regular employees-of-California-and had acquired a secure tenure. Hence, they cannot be separated without due process of law. The court reiterate that the petitioners are its employees and who, by virtue of the required one-year length-of- service, have acquired a regular status. Virginia G. Neri vs. National Labor Relations Commission, et al. Facts: Respondents are sued by two employees of Building Care Corporation, which provides janitorial and other specific services to various firms, to compel Far Bast Bank and Trust Company to recognize them as its regular employees and be paid the same wages which its employees receive. Building Care Corporation (BCC, for brevity), in the proceedings below, established that it had substantial capitalization of P1 Million or a stockholders equity of P1.5 Million. Thus the Labor Arbiter ruled that BCC was only job contracting and that consequently its employeeswere not employees of Far East Bank and Trust Company (FEBTC, for brevity). on appeal, this factual finding was affirmed by respondentNational Labor Relations Commission (NLRC, for brevity). Nevertheless, petitioners insist before us that BCC is engaged in "labor-only"contracting hence, they conclude, they are employees of respondent FEBTC. On 28 June 1989, petitioners instituted complaints against FEBTC and BCC before Regional Arbitration Branch No. 10 of the Department of Labor and Employment to compel the bank to accept them as regular employees and for it to pay the differential between the wages being paid them by BCC and those received by FEBTC employees with similar length of service. Issue: Whether or not BCC is only a job contracting company, hence petitioners are not regular employees of FEBTC. HELD: NO It is well-settled that there is labor-only contracting where: a. the person supplying workers to an employerdoes not have substantial capital or investment in the form of tools, equipment, machineries, work premises, amongothers; and, b. the workers recruited and placed by such person are performing activities which are directly relatedto the principal business of the employer. BCC need not prove that it made investments in the form of tools, equipment, machineries, work premises, amongothers, because it has established that it has sufficient capitalization. This fact was both determined by the LaborArbiter and the NLRC as BCC had a capital stock of P1 million fully subscribed and paid for. BCC is therefore ahighly capitalized venture and cannot be deemed engaged in labor-only contracting While there may be no evidence that it has investment in the form of tools, equipment, machineries, work premises,among others, it is enough that it has substantial capital, as was established before the Labor Arbiter as well as theNLRC. The law does not require both substantial capital and investment in the form of tools, equipment, machineries, etc. This is clear from the use of the conjunction "or" instead of and. Having established that it hassubstantial capital, it was no longer necessary for BCC to further adduce evidence to prove that it does not fall withinthe purview of "labor-only" contracting. There is even no need for it to refute petitioners' contention that the activitiesthey perform are directly related to the principal business of respondent bank. On the other hand, the Court has already taken judicial notice of the general practice adopted in several governmentand private institutions and industries of hiring independent contractors to perform special services. These servicesrange from janitorial, security and even technical or other specific services such as those performed by petitionersNeri and Cabelin. While these services may be considered directly related to the principal business of the employer,nevertheless, they are not necessary in the conduct of the principal business of the employer
Citizens' League of Freeworkers And/Or Balbino Epis, Nicolas Rojo, Et Al. vs. Hon. Macapanton Abbas, Judge of The Court of First Instance of Davao and TEOFILO GERONIMO and EMERITA Mendez
Brotherhood Laborhood Unity Movement of The Philippines Et Al. V. Honorable Ronaldo B. Zamora G.R. No. L-48645, 7 June, 1987, SECOND DIVISION, (GUTIERREZ, JR., J.) Doctrine of The Case
Brotherhood Laborhood Unity Movement of The Philippines Et Al. V. Honorable Ronaldo B. Zamora G.R. No. L-48645, 7 June, 1987, SECOND DIVISION, (GUTIERREZ, JR., J.) Doctrine of The Case
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