27. Tabas v. California Manufacturing Co., Inc.

TABAS VS. CALIFORNIA MANUFACTURING INC GR NO. 806680, JANUARY 26, 1989
FACTS 1. Petitioners were the employees of Livi Manpower Services. They were
assigned to the respondent pursuant to a manpower supply agreement as
promotional merchandisers. 2. It was provided in the agreement that: 1) California
would have no control or supervision over the workers as to how they perform or
accomplish their work, 2) Livi is an independent contractor and that it has the sole
responsibility of complying with all the existing as well as future laws, rules and
regulations pertinent to employment of labor, 3) the assignment to California was
seasonal and contractual, and 4) payroll, including COLA and holiday pay shall be
delivered Livi at Californias premises. 3. Petitioners were made to sign 6-month
employment contracts which were renewed for the same period. Unlike regular
employees of California, they did not receive fringe benefits and bonuses and were
paid only a daily allowance. 4. Petitioners contend that they have become regular
employees of California. Subsequent to their claim for regularization, California no
longer re-hired them. Livi, on the other hand, claims the workers as its employees
and that it is an independent contractor. 5. Labor Arbiter found that no employeremployee relationship existed. The NLRC affirmed the ruling. ISSUE Is there an
employer-employee relationship between California and the petitioners? HELD YES.
The existence of an employer-employee relationship is a question of law and cannot
be made subject to agreement. The stipulations in the manpower supply agreement
will not erase either partys obligations as an employer. Livi is a labor-only
contractor, notwithstanding the provisions in the agreement. The nature of ones
business is not determined by self-serving appellations but by test provided by
statute and the prevailing case law. Californias contention that the workers are not
performing activities which are directly related to its general business of
manufacturing is untenable. The promotion or sale of products, including the task of
occasional price tagging, is an integral part of the manufacturing business. Livi as a
placement agency had simply supplied the manpower necessary for California to
carry out its merchandising activities, using the latters premises and equipment.
Merchandising is likewise not a specific project because it is an activity related to
the day-to-day operations of California. Based on Article 106 of the Labor Code, the
labor-only contractor is considered merely an agent of the employer and liability
must be shouldered by either one or by both. Petitioners are ordered reinstated as
regular employees.

115. San Felipe Neri School of Mandaluyong, Inc. v. NLRC

SAN FELIPE NERI SCHOOL OF MANDALUYONG, INC. VS. NLRC 201 SCRA 478 FACTS 1.
San Felipe Neri School of Mandaluyong Inc. sold its properties and assets to the

Roman Catholic Archbishop of Manila (RCAM). Immediately thereafter, RCAM as

transferee-purchaser, continued the operation of the school, but applied for a new
permit to operate the same. 2. RCAM required the respondent teachers to apply as
new employees subject to the usual probation. Demoted to probationary status and
their past services not recognized by the new employer, the teachers inquired about
their rights from the former employer, herein petitioners, but to no avail. Instead,
they were referred to the new owners of the school. 3. The teachers then filed a
complaint before the Labor Arbiter against all the petitioners, including RCAM, the
vendee-transferee, as alternative defendant for separation pay, differential pay and
other claims. ISSUE Whether or not respondent teachers employment was
terminated by the sale and transfer of San Felipe Neri School of Mandaluyong, Inc.
to the Archbishop of Manila that would entitle them to separation pay. HELD Change
of ownership or management of an establishment or company, however, is not one
of the just causes provided by law for the termination of employment. There can be
no controversy, however, for it is a principle well-recognized, that it is within the
employer's legitimate sphere of management control of the business to adopt
economic policies or make some changes or adjustments in their organization or
operations that would insure profit to itself or protect the investment of its
stockholders. As in the exercise of such management prerogative, the employer
may merge or consolidate its business with another, or sell or dispose all or
substantially all of its assets and properties which may bring about the dismissal or
termination of its employees in the process. Such dismissal or termination should
not, however, be interpreted in such a manner as to insulate the employer or selling
corporation (petitioner school) from its obligation to its employees, particularly the
payment of separation pay. Such situation is not envisioned in the law. It strikes at
the very concept of social justice. A close scrutiny of the pertinent Deed of Sale
dated April 18, 1981 reveals no express stipulation whatsoever relative to the
continued employment by the transferee, RCAM of the employees (herein private
respondents) of the erstwhile employer (petitioner). On the contrary, records show
that RCAM expressly manifested its unwillingness to absorb the petitioner school's
employees or to recognize their prior service. As correctly found by the Labor
Arbiter and the NLRC, respondent teachers' employment has been effectively
terminated and there was in effect a closure. Obviously, therefore, the fate of
private respondents under the new owner (RCAM) appeared unprovided for. And
there is no law which requires the purchaser to absorb the employees of the selling
corporation. As there is no such law, the most that the purchasing company may do,
for purposes of public policy and social justice, is to give preference to the qualified
separated employees of the selling company, who in their judgment are necessary
in the continued operation of the business establishment. This, RCAM did. It required
private respondents to re-apply as new employees as a condition for rehiring,
subject to the usual probationary status, the latter's past services with the
petitioners-transferors not recognized.
Peoples Broadcasting v. Sec. of DOLE

G.R. no. 179652. May 8, 2009

Facts:
Jandeleon Juezan (respondent) filed a complaint against Peoples Broadcasting Service, Inc. (Bombo
Radyo Phils., Inc) (petitioner) for illegal deduction, non-payment of service incentive leave, 13 th month pay,
premium pay for holiday and rest day and illegal diminution of benefits, delayed payment of wages and noncoverage of SSS, PAG-IBIG and Philhealth before the Department of Labor and Employment (DOLE)
Regional Office No. VII,Cebu City.
On the basis of the complaint, the DOLE conducted a plant level inspection on 23 September 2003. In
the Inspection Report Form, the Labor Inspector wrote under the heading Findings/Recommendations nondiminution of benefits and Note: Respondent deny employer-employee relationship with the complainant- see
Notice of Inspection results.
Petitioner was required to rectify/restitute the violations within five (5) days from receipt. No rectification
was effected by petitioner; thus, summary investigations were conducted, with the parties eventually ordered to
submit their respective position papers.
In his Order dated 27 February 2004, DOLE Regional Director Atty. Rodolfo M. Sabulao (Regional
Director) ruled that respondent is an employee of petitioner, and that the former is entitled to his money claims
amounting to P203, 726.30. Petitioner sought reconsideration of the Order, claiming that the Regional Director gave
credence to the documents offered by respondent without examining the originals, but at the same time he missed or
failed to consider petitioners evidence. Petitioners motion for reconsideration was denied. [ On appeal to the
DOLE Secretary, petitioner denied once more the existence of employer-employee relationship. In its Order
dated 27 January 2005, the Acting DOLE Secretary dismissed the appeal on the ground that petitioner did not post a
cash or surety bond and instead submitted a Deed of Assignment of Bank Deposit. Petitioner maintained that there is
no employer-employee relationship had ever existed between it and respondent because it was the drama directors
and producers who paid, supervised and disciplined respondent. It also added that the case was beyond the
jurisdiction of the DOLE and should have been considered by the labor arbiter because respondents claim
exceeded P5,000.00.
Issue:
Does the Secretary of Labor have the power to determine the existence of an employer-employee
relationship?
Held:
No.
Clearly the law accords a prerogative to the NLRC over the claim when the employer-employee relationship
has terminated or such relationship has not arisen at all. The reason is obvious. In the second situation especially,
the existence of an employer-employee relationship is a matter which is not easily determinable from an ordinary
inspection, necessarily so, because the elements of such a relationship are not verifiable from a mere ocular
examination. The intricacies and implications of an employer-employee relationship demand that the level of
scrutiny
should
be
far
above
the
cursory
and
the
mechanical. While documents, particularly documents found in the employers office are the primary source
materials, what may prove decisive are factors related to the history of the employers business operations, its
current state as well as accepted contemporary practices in the industry. More often than not, the question of
employer-employee relationship becomes a battle of evidence, the determination of which should be comprehensive
and intensive and therefore best left to the specialized quasi-judicial body that is the NLRC.
It can be assumed that the DOLE in the exercise of its visitorial and enforcement power somehow has to
make a determination of the existence of an employer-employee relationship. Such prerogatival
determination, however, cannot be coextensive with the visitorial and enforcement power itself. Indeed, such
determination is merely preliminary, incidental and collateral to the DOLEs primary function of enforcing
labor standards provisions. The determination of the existence of employer-employee relationship is still
primarily lodged with the NLRC. This is the meaning of the clause in cases where the relationship of
employer-employee still exists in Art. 128 (b).

Thus, before the DOLE may exercise its powers under Article 128, two important questions must be
resolved: (1) Does the employer-employee relationship still exist, or alternatively, was there ever an employeremployee relationship to speak of; and (2) Are there violations of the Labor Code or of any labor law?
The existence of an employer-employee relationship is a statutory prerequisite to and a limitation on
the power of the Secretary of Labor, one which the legislative branch is entitled to impose. The rationale
underlying this limitation is to eliminate the prospect of competing conclusions of the Secretary of Labor and the
NLRC, on a matter fraught with questions of fact and law, which is best resolved by the quasi-judicial body, which
is the NRLC, rather than an administrative official of the executive branch of the government. If the Secretary of
Labor proceeds to exercise his visitorial and enforcement powers absent the first requisite, as the dissent
proposes, his office confers jurisdiction on itself which it cannot otherwise acquire.
Reading of Art. 128 of the Labor Code reveals that the Secretary of Labor or his authorized representatives
was granted visitorial and enforcement powers for the purpose of determining violations of, and enforcing, the
Labor Code and any labor law, wage order, or rules and regulations issued pursuant thereto. Necessarily, the actual
existence of an employer-employee relationship affects the complexion of the putative findings that the Secretary of
Labor may determine, since employees are entitled to a different set of rights under the Labor Code from the
employer as opposed to non-employees. Among these differentiated rights are those accorded by the labor
standards provisions of the Labor Code, which the Secretary of Labor is mandated to enforce. If there is no
employer-employee relationship in the first place, the duty of the employer to adhere to those labor standards with
respect to the non-employees is questionable.
At least a prima facie showing of such absence of relationship, as in this case, is needed to preclude the
DOLE from the exercise of its power. The Secretary of Labor would not have been precluded from exercising the
powers under Article 128 (b) over petitioner if another person with better-grounded claim of employment than that
which respondent had. Respondent, especially if he were an employee, could have very well enjoined other
employees to complain with the DOLE, and, at the same time, petitioner could ill-afford to disclaim an employment
relationship with all of the people under its aegis.
The most important consideration for the allowance of the instant petition is the opportunity for the
Court not only to set the demarcation between the NLRCs jurisdiction and the DOLEs prerogative but also
the procedure when the case involves the fundamental challenge on the DOLEs prerogative based on lack of
employer-employee relationship. As exhaustively discussed here, the DOLEs prerogative hinges on the
existence of employer-employee relationship, the issue is which is at the very heart of this case. And the
evidence clearly indicates private respondent has never been petitioners employee. But the DOLE did not
address, while the Court of Appeals glossed over, the issue. The peremptory dismissal of the instant petition
on a technicality would deprive the Court of the opportunity to resolve the novel controversy.
WHEREFORE, the petition is GRANTED.

SECOND DIVISION
[G.R. No. 121327. December 20, 2001]

CECILIO P. DE LOS SANTOS and BUKLOD MANGGAGAWA NG

CAMARA
(BUMACA), petitioners,
vs. NATIONAL
LABOR
RELATIONS COMMISSION (SECOND DIVISION), HON.
COMMISSIONERS VICTORIANO R. CALAYCAY, RAUL T.
AQUINO, and ROGELIO I. RAYALA, CAMARA STEEL

INDUSTRIES INC., JOSELITO JACINTO, ALBERTO F. DEL PILAR,

DENNIS ALBANO, MERCEDITA G. PASTRANA, TOP-FLITE and
RAUL RUIZ,respondents.
DECISION
BELLOSILLO, J.:

This is a petition for certiorari under Rule 65 assailing the Decision of public respondent
National Labor Relations Commission (NLRC) which remanded this case to the Labor Arbiter
who ruled that petitioner Cecilio P. de los Santos was illegally dismissed by private respondent
Camara Steel, Inc., and as a consequence, ordered his immediate reinstatement. Specifically, the
dispositive portion of the Labor Arbiter's Decision promulgated 23 May 1999 states -

WHEREFORE, presimes considered, respondent Camara Steel Industries, Inc. is

hereby ordered to reinstate complainant Cecilio de los Santos to his former position
within ten (10) days from receipt of this Resolution without loss of seniority rights
and other benefits with full back wages from date of dismissal up to actual date of
reinstatement which is hereby computed as of even date as follows:
From 8/23/93 - 12/15/93 = 3.73 mos.
P118 x 26 days x 3.73 mos. = P11,443.64
12/16/93 - 3/29/94 = 3.43 mos.
P135 x 26 days x 3.43 mos. = 12,039.30
Total Backwages as of 3/29/94 P23,482.94
Respondent Camara Steel Industries, Inc. is also ordered to pay complainant 10% for
and as attorney's fees.
All other claims are hereby dismissed for lack of merit.
On 3 May 1991 petitioner De los Santos started working at Camara Steel Industries Inc.
(CAMARA STEEL), a company engaged in the manufacture of steel products such as LPG
cylinders and drums.He was first assigned at the LPG assembly line, then later, as operator of a
blasting machine. While performing his task as such operator, he met an accident that forced him
to go on leave for one and a half (1-1/2) months. Upon his return, he was designated as a janitor

assigned to clean the premises of the company, and occasionally, to transfer scrap and garbage
from one site to another.[1]
On 11 May 1993 petitioner was doing his usual chores as a janitor of CAMARA STEEL
when he momentarily left his pushcart to answer the call of Narciso Honrado, scrap in-charge,
who summoned him to the company clinic. There Honrado handed him a box which he placed
on top of a drum in his pushcart for transfer to the other lot of the company near gate 2. On his
way out of gate 2, however, the security guard on duty found in the box handed to him by
Honrado two (2) pieces of electric cable measuring 2.26 inches each and another piece of 1.76
meters with a total estimated value of P50.00 toP100.00. Apprehensive that he might be charged
with theft, petitioner De los Santos explained that the electric cord was declared a scrap by
Honrado whose instructions he was only following to transfer the same to the adjacent lot of the
company as scrap.
Narciso Honrado admitted responsibility for the haul and his error in declaring the electric
cables as scrap. The general manager, apparently appeased by Honrados apology, issued a
memorandum acknowledging receipt of his letter of apology and exculpated him of any
wrongdoing.
Taking an unexpected volte face, however, the company through its counsel filed on 9 July
1993 a criminal complaint for frustrated qualified theft against Honrado and herein petitioner De
los Santos.The complaint however was subsequently dismissed by the Provincial Prosecutor of
Pasig for lack of evidence.[2]
On 23 August 1993, upon request of Top-Flite, alleged manpower agency of De los Santos,
CAMARA STEEL terminated his services.
Aggrieved by his illegal termination, De los Santos sought recourse with the Labor Arbiter
who on 29 March 1994 rendered a decision ordering respondent CAMARA STEEL to reinstate
Delos Santos to his former position within ten (10) days without loss of seniority rights and other
benefits with full back wages from date of dismissal up to actual reinstatement as herein before
stated.
CAMARA STEEL went to the NLRC for recourse. Top-Flite filed a Motion for
Intervention praying that it be permitted to intervene in the appeal as co-respondent and,
accordingly, be allowed to submit its own memorandum and other pleadings.[3]
On 23 May 1995 the NLRC reversed the Labor Arbiter and ordered the return of the entire
records of the case to the arbitration branch of origin for further proceedings. In its Decision,
NLRC specified the reasons for the remand to the Labor Arbiter -[4]

First, as respondents have broadly implied, having alleged that he was an employee of
Camara Steel, it was complainants burden to prove this allegation as a fact, not merely
through his uncorroborated statements but through independent evidence. As noted by
respondents, he has not submitted one piece of evidence to support his premise on this
matter except for his sworn statement.
Secondly, the Arbiter maintained that the contract of services submitted by
respondents was insufficient to prove that complainant was an employee of Top-Flite,
but he has obviously omitted consideration of Annexes F, G, H and I which are time
sheets of the complainant with Top-Flite and the corresponding time cards which he
punches in for Camara Steel.
The NLRC further noted that under the circumstances it became appropriate to conduct a
formal hearing on the particular issue of whether an employer-employee relationship existed
between the parties, which issue was determinative of the nature of petitioner's dismissal by
CAMARA STEEL. That being so, according to the NLRC, it was necessary for the Labor
Arbiter to issue the appropriate directive to summon Top-Flite as a necessary party to the case,
for the manpower agency to submit its own evidence on the actual status of petitioner.
As pointed out by petitioner, the errors in the disputed decision by the NLRC are: (a) NLRC
violated due process of law when it did not consider the evidence on record; (b) CAMARA
STEEL, and not Top-Flite, is the real employer of petitioner; (c) Contrary to the finding of
NLRC, Top-Flite was made a party respondent in the illegal dismissal case docketed as NLRCNCR No. 00-08-05302-93 and the NLRC was therefore in error in remanding the case to the
Labor Arbiter for further proceedings.
Petitioner De los Santos contends that NLRC was in grave error when it ruled that, with the
exception of a bare assertion on his sworn statement, he "has not submitted one piece of evidence
to support his premise"[5] that he was in fact an employee of CAMARA STEEL.
To underscore NLRC's oversight, petitioner brings to our attention and specifies the pieces
of evidence which he presented before the Labor Arbiter on 19 November 1993 - also
appended as Annexes to petitioner's "Traverse to Camaras Position Paper and Reply:" (a) Annex
E to E-1 - Approval signature of Camaras Department head, Reynaldo Narisma, without which
petitioner cannot render overtime; (b) Annex F - Petitioners daily time record for 8/3/92 to
8/9/92; (c) Annex F-1 - Signature of private respondent Mercedita Pastrana, approving in her
capacity as Assistant Manager of Camara Steel; (d) Annex F-2 - Signature of private respondent
Dennis Albano, Personnel Manager of Camara Steel Industries Inc. also co-signing for approval;
(e) Annex F-3 - Signature of Narisma, as Department Head of Camara Steel Industries Inc.
where petitioner is working; (f) Annex G - Daily Time Record of petitioner for 7/6/92 to 7/12/92;

(g) Annex G-1 - Signature of Camara Steel Assistant Manager; (h) Annex G-2 - Signature of
Camaras Personnel Manager, Dennis Albano, approving; (i) Annex G-3 - Signature of Camaras
Department Head where petitioner is working, Mr. Narisma, approving; (j) Annex H to H-1 Petitioners Daily Time Card (representative samples) with name and logo of Camara Steel
Industries Inc.; and, (k) Annex J - Affidavit of Complainant.
All these pieces of evidence which, according to petitioner De los Santos, were not properly
considered by NLRC, plainly and clearly show that the power of control and supervision over
him was exercised solely and exclusively by the managers and supervisors of CAMARA
STEEL. Even the power to dismiss was also lodged with CAMARA STEEL when it admitted in
page 3 of its Reply that upon request by Top-Flite, the steel company terminated his employment
after being allegedly caught committing theft.
Petitioner De los Santos also advances the view that Top-Flite, far from being his employer,
was in fact a "labor-only" contractor as borne out by a contract whereby Top-Flite undertook to
supply CAMARA STEEL workers with "warm bodies" for its factory needs and edifices. He
insists that such contract was not a job contract but the supply of labor only. All things
considered, he is of the firm belief that for all legal intents and purposes, he was an employee - a
regular one at that - of CAMARA STEEL.
In its comment, private respondent CAMARA STEEL avers that far from being its
employee, De los Santos was merely a project employee of Top-Flite who was assigned as
janitor in private respondent company. This much was acknowledged by Top-Flite in its Motion
for Intervention filed before the NLRC.[6] Such allegation, according to private respondent
CAMARA STEEL, supports all along its theory that De los Santos' assignment to the latter as
janitor was based on an independent contract executed between Top-Flite and CAMARA
STEEL.[7]
Respondent CAMARA STEEL further argues that crystal clear in the Motion for
Intervention of Top-Flite is its allegation that it was in fact petitioner's real employer as his
salaries and benefits during the contractual period were paid by Top-Flite; not only that, De los
Santos was dismissed by CAMARA STEEL upon the recommendation of Top-Flite. These
ineluctably show that Top-Flite was not only a job contractor but was in truth and in fact the
employer of petitioner.
In his petition, De los Santos vigorously insists that he was the employee of respondent
CAMARA STEEL which in turn was not only denying the allegation but was finger-pointing
Top-Flite as petitioner's real employer. De los Santos again objects to this assertion and claims
that Top-Flite, far from being an employer, was merely a "labor-only" contractor.

In the maze and flurry of claims and counterclaims, several contentious issues continue to
stick out like a sore thumb. Was De los Santos illegally dismissed? If so, by whom? Was his
employer respondent CAMARA STEEL, in whose premises he was allegedly caught stealing, or
was it Top-Flite, the manpower services which allegedly hired him?
Inextricably intertwined in the resolution of these issues is the determination of whether
there existed an employer-employee relationship between CAMARA STEEL and respondent De
Los Santos, and whether Top-Flite was an "independent contractor" or a "labor-only"
contractor. A finding that Top-Flite was a "labor-only" contractor reduces it to a mere agent of
CAMARA STEEL which by statute would be responsible to the employees of the "laboronly" contractor as if such employees had been directly employed by the employer.
Etched in an unending stream of cases are the four (4) standards in determining the existence
of an employer-employee relationship, namely: (a) the manner of selection and engagement of
the putative employee; (b) the mode of payment of wages; (c) the presence or absence of power
of dismisssal; and, (d) the presence or absence of control of the putative employee's
conduct. Most determinative among these factors is the so-called "control test."
As shown by the evidence on record, De los Santos was hired by CAMARA STEEL after
undergoing an interview with one Carlos Suizo, its timekeeper who worked under the direct
supervision of one Renato Pacion, a supervisor of CAMARA STEEL. These allegations are
contained in the affidavit[8] executed by De los Santos and were never disputed by CAMARA
STEEL. Also remaining uncontroverted are the pieces of documentary evidence adduced by De
los Santos consisting of daily time records marked Annexes "F" and "G" which, although bearing
the heading and logo of Top-Flite, were signed by officers of respondent CAMARA STEEL, and
Annexes "H" and "I" with the heading and logo of CAMARA STEEL.
Incidentally, we do not agree with NLRC's submission that the daily time records serve no
other purpose than to establish merely the presence of De los Santos within the premises of
CAMARA STEEL.Contrarily, these records, which were signed by the companys officers, prove
that the company exercised the power of control and supervision over its employees, particularly
De los Santos. There is dearth of proof to show that Top-Flite was the real employer of De los
Santos other than a naked and unsubstantiated denial by CAMARA STEEL that it has no power
of control over De los Santos. Records would attest that even the power to dismiss was vested
with CAMARA STEEL which admitted in its Reply that "Top-Flite requested CAMARA STEEL
to terminate his employment after he was caught by the security guard committing theft."
A cursory reading of the above declaration will confirm the fact that the dismissal of De los
Santos could only be effected by CAMARA STEEL and not by Top-Flite as the latter could only
"request" for De los Santos' dismissal. If Top-Flite was truly the employer of De los Santos, it
would not be asking permission from or "requesting" respondent CAMARA STEEL to dismiss

De los Santos considering that it could very well dismiss him without CAMARA STEEL's
assent.
All the foregoing considerations affirm by more than substantial evidence the existence of
an employer-employee relationship between De los Santos and CAMARA STEEL.
As to whether petitioner De los Santos was illegally terminated from his employment, we
are in full agreement with the Labor Arbiter's finding that he was illegally dismissed. As
correctly observed by the Labor Arbiter, it was Narciso Honrado, scrap in-charge, who handed
the box containing the electrical cables to De los Santos. No shred of evidence can show that De
los Santos was aware of its contents, or if ever, that he conspired with Honrado in bilking the
company of its property. What is certain however is that while Honrado admitted, in a letter of
apology, his culpability for the unfortunate incident and was unconditionally forgiven by the
company, De los Santos was not only unceremoniously dismissed from service but was charged
before the court for qualified theft (later dismissed by the public prosecutor for lack of
evidence). For sure, De los Santos cannot be held more guilty than Honrado who, being the scrap
in-charge, had the power to classify the cables concerned as scrap.
Neither can we gratify CAMARA STEEL's contention that petitioner was validly dismissed
for loss of trust and confidence. As provided for in the Labor Code:

Art. 282. Termination by employer - An employer may terminate an employment for

any of the following causes: x x x (c) Fraud or willful breach by the employee of the
trust reposed in him by his employer or duly authorized representative x x x x
Of course, it must be stressed that loss of confidence as a just cause for the termination of
employment is based on the premise that the employee holds a position of trust and confidence,
as when he is entrusted with responsibility involving delicate matters, and the task of a janitor
does not fall squarely under this category.
Petitioner De los Santos argues that Top-Flite was merely a "labor-only" contractor. To
fortify his stance, De los Santos brings to our attention the contract of service [9] dated 8 February
1991 between CAMARA STEEL and Top-Flite which provides:

1) The contractor (Top-Flite) shall provide workers (non-skilled) six (6) days a week
for the Clients (Camara) factory and edifices.
However, both respondent CAMARA STEEL and Top-Flite[10] are adamant in their belief that the
latter was not a "labor-only" contractor as they rely on another provision of the contract which
states -

2) The Contractor warrants the honesty, reliability, industry and cooperative

disposition of the person it employs to perform the job subject to this contract, and
shall employ such persons only as are in possession of health certificates and police
clearances x x x x
The preceding provisions do not give a clear and categorical answer as regards the real
character of Top-Flite's business. For whatever its worth, the invocation of the contract of service
is a tacit admission by both parties that the employment of De los Santos was by virtue of such
contract. Be that as it may, Top-Flite, much less CAMARA STEEL, 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 job contractor, it being crucial that its character be measured in
terms of and determined by the criteria set by statute. The case of Tiu v. NLRC[11] succinctly
enunciates this statutory criteria -

Job contracting is permissible only if the following conditions are met: 1) the
contractor carries on an independent business and undertakes the contract work on his
own 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 the work except as to the results thereof; and 2) the
contractor has substantial capital or investment in the form of tools, equipment,
machineries, work premises, and other materials which are necessary in the conduct of
the business.
"Labor-only contracting" as defined in Sec. 4, par. (f), Rule VIII-A, Book III, of
the Omnibus Rules Implementing the Labor Code states that a "labor-only" contractor, 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: (a) The contractor or subcontractor does not have substantial capital or
investment to actually perform the job, work or service under its own account or responsibility;
and, (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.
Applying the foregoing provisions, the Court finds Top-Flite to be a "labor-only" contractor,
a mere supplier of labor to CAMARA STEEL, the real employer. Other than its open declaration
that it is an independent contractor, no substantial evidence was adduced by Top-Flite to back up
its claim. Its revelation that it provided a sweeper to petitioner would not suffice to convince this
Court that it possesses adequate capitalization to undertake an independent business. [12] Neither
will the submission prosper that De los Santos did not perform a task directly related to the
principal business of respondent CAMARA STELL. As early as in Guarin v. NLRC[13] we ruled
that "the jobs assigned to the petitioners as mechanics, janitors, gardeners, firemen and

grasscutters were directly related to the business of Novelty as a garment

manufacturer," reasoning that "for the work of gardeners in maintaining clean and well-kept
grounds around the factory, mechanics to keep the machines functioning properly, and firemen to
look out for fires, are directly related to the daily operations of a garment factory."
In its comment respondent CAMARA STEEL empathically argues that Top-Flite, although
impleaded as respondent in NLRC-NCR Cases Nos. 00-0704761-93 and 00-0805061-93, subject
of the present appeal, was never summoned for which reason it was deprived of procedural due
process; basically the same line of argument adopted by the NLRC in its decision to remand the
case to the arbitration branch of origin. CAMARA STEEL obviously wants wants to impress
upon us that Top-flite, being a necessary party, should have been summoned and the failure to do
so would justify the remand of the case to the Labor Arbiter.
We are not persuaded. The records show that Top-Flite was not only impleaded in the
aforementioned case but was in fact afforded an opportunity to be heard when it submitted a
position paper. This much was admitted by Top-Flite in par. 5 of its Motion for
Intervention where it stated that "movant submitted its position paper in the cases mentioned in
the preceding paragraph but the Presiding Arbiter ignored the clear and legal basis of
the position of the movant."[14] In other words, the failure of Top-Flite to receive summons was
not a fatal procedural flaw because it was never deprived of the opportunity to ventilate its side
and challenge petitioner in its position paper, not to mention the comment which it submitted
through counsel before this Court.[15] It moved to intervene not because it had no notice of the
proceedings but because its position paper allegedly was not considered by the Labor
Arbiter. While jurisdiction over the person of the defendant can be acquired by service of
summons, it can also be acquired by voluntary appearance before the court which includes
submission of pleadings in compliance with the order of the court or tribunal. A fortiori,
administrative tribunals exercising quasi-judicialpowers are unfettered by the rigidity of certain
procedural requirements subject to the observance of fundamental and essential requirments
of due process in justiciable cases presented before them. In labor cases, a punctilious adherence
to stringent technical rules may be relaxed in the interest of the workingman. A remand of the
case, as the NLRC envisions, would compel petitioner, a lowly worker, to tread once again the
calvary of a protracted litigation and flagellate him into submission with the lash of technicality.
WHEREFORE, the petition is GRANTED and the appealed Decision of the NLRC is
REVERSED and SET ASIDE and the Decision of the Labor Arbiter promulgated 23 May 1999
is REINSTATED and ADOPTED as the Decision in this case.
SO ORDERED.