ASSOCIATED ANGLO-AMERICAN TOBACCO CORPORATION, PETITIONER, VS. HON. JACOBO C. CLAVE, IN HIS CAPACITY AS PRESIDENTIAL EXECUTIVE ASSISTANT, ASSOCIATED FEDERATION OF LABOR (AFL) AN…

This petition for certiorari under Rule 65 of the Rules of
Court seeks the annulment of the decision of the Presidential Executive
Assistant of the Office of the President affirming the ruling of the Secretary
of Labor which ordered the payment of backwages to private respondents.

The factual background is as follows:

During the period from 1972 to 1974, petitioner corporation
entered into separate but identical contracts of promotional dealership with
Epifanio Cabillan, Sofronio Perdigon and Walfrido Alvarez for the purpose of
selling the cigarettes manufactured by petitioner.

These dealers hired private respondents as drivers or helpers but
subsequently dismissed them. Respondent
Guarino was employed for four (4) months by dealer Epifanio Cabillan; respondent
Vicente Marquez was employed for three (3) months by dealer Sofronio Perdigon;
respondent Alfredo Enriquez was employed for five (5) months and respondent
Nicasio San Juan for one and a half (1 1/2) months by dealer Walfrido Alvarez.

On October 15, 1973, the National President of respondent
Associated Federation of Labor (AFL), for and in behalf of respondents filed a
complaint with the Labor Arbiter against petitioner corporation and its
promotional dealers, for unfair labor practice in dismissing respondent
employees and for violation of P.D. No. 21, the Minimum Wage Law and the Eight
Hour Labor Law.

Petitioner corporation, in its answer, denied the existence of
employer-employee relationship between the former and respondent employees.

After the hearing, the Labor Arbiter rendered a decision which
held the petitioner liable for all claims and charges in the complaint except
for the unfair labor practice charge, and ordered petitioner corporation to
reinstate respondent employees with full backwages.

Petitioner appealed to the National Labor Relations Commission
but the same was dismissed. On appeal
to the Secretary of Labor, the latter on July 8, 1976 affirmed the decision of
the NLRC.

Still not satisfied, petitioner elevated the case to the Office of
the President. In its decision, the
Office of the President affirmed the appealed decision of the Secretary of
Labor with the modification that the award of backwages to be paid to private
respondents be limited to six (6) months.

Hence, this petition, alleging grave abuse of discretion of the
Office of the President.

The issue to be resolved in this case is whether or not private
respondents, who were hired by the promotional dealers of the corporation,
should be considered as employees of the corporation itself.

Petitioner contends that the contracts of dealership contain a
stipulation that should the dealers employ drivers and helpers, the latter
would be employees/workers of said dealers, who shall he responsible for the
wages, social security contributions, workmen’s compensation claims and
compliance with applicable labor laws. It submits therefore that private respondents herein are the employees
of the promotional dealers, not of the corporation.

The Labor Arbiter made a thorough and exhaustive study of the
case in arriving at the following conclusions, which were affirmed by the NLRC,
the Secretary of Labor and Office of the President, as follows:

“The Complainants, as established in the testimonies of the
witnesses, were hired by their respective contractors, separately on different
dates, except Complainant Alfredo Enriquez who was hired by and drove for seven (7) contractors from January 1969. They reported for work at the Corporation’s
Compound in Pasay City at 6:00 o’clock in the morning, began their workday by
getting the key of the vehicle they were assigned to drive from the
Corporation’s Security Guard, cleaned the vehicle, got boxes of cigarettes from
the stockroom (Bodega) of the Corporation to load in the vehicle and upon
arrival of Contractor between 6:30 and 7:00 o’clock in the morning, they would
leave the Corporation Compound for their respective destinations to sell
cigarettes. While selling cigarettes,
the complainants worked as driver and helper of the contractor. At lunch time, the contractor and the driver
helper (Complainant) would rest for about thirty minutes and eat their
meal. The meal was paid for by the
contractor. The earliest time the contractor
and complainant returned to the Corporation’s Compound was 4:00 o’clock in the
afternoon; afterwards, if the Contractor did not replenish his cigarette stocks
inside the vehicle, the complainant deposited the key of the vehicle with the
Corporation’s Security Guard and completed the workday. This routine was from Monday to Saturday or
six days a week. On Saturday afternoon
the Contractor paid the driver-helper his weekly wage of Forty Two (P42.00)
pesos or at Seven (P7.00) per day.

“x x x.

“On the Control Test

“A –   The Respondent Corporation failed to prove
that Respondent Contractors (Promotional Dealers) are independent contracts. On record the following were
established: 1.- The Contracts
(Exhibits 5, 6 and 7) are identical and
are pre-requisites before Respondent Contractors are employed by Respondent
Corporation; 2.- The Respondent Contractors have no capital or investment of
own; 3.- The Vehicles used by Respondent Contractors were provided by the
Respondent Corporation; 4.- The vehicles used are exclusively for selling the
products of the Respondent Corporation; 5.- Respondent Contractor’s time,
attention, efforts and energies to the performance of his duties are subject
to the control of Respondent Corporation
(Exhibits 5, 6 and 7, paragraph 1, page 2); 6.- The Respondent Corporation pays
the cost of gasoline, oil, maintenance and repairs, used or incurred by
Respondent Contractor in the use of the vehicle; 7.- The Respondent Corporation
pays the permit and licenses of the Respondent Contractors, needed in selling
its products; 8.- The Respondent Contractors are prohibited from selling
Respondent Corporation’s products at prices Higher than the price fixed by the
Corporation; and 9.- The Respondent Contractors are receiving salaries from
Respondent Corporation in the form of Commission and allowances;

“B
–   The complainants were indirectly
engaged or hired by Respondent Corporation, through the Respondent Contractors,
by making it a condition for employment of the Respondent Contractors to sign a
contract that virtually compels them to
hire chauffers and helper/helpers (complainants) as the corporation’s
responsibilities and obligations under the labor laws. The fact is that the Respondent Contractor
has no freedom to elect to drive the vehicle himself which is provided him by
the Respondent Corporation.

“x
x x.

“C
–  The Respondent Corporation had a part
in the power of control the employees’ (complainants) conduct. The complainants are required by the
Respondent Corporation to park the vehicles in the Compound of the Respondent
Corporation and the keys of the vehicles
are taken and kept in the possession of the Security Guard of the Respondent
Corporation until the Complainants report back to work in the following
morning.

“On
the Nature of Work Test

“x
x x.

“B
–   The Complainants and the contractors,
in relation to this business are not engaged in a business of their own. The fact remains that Respondent Contractors
are employed and paid wages on commission basis by Respondent Corporation. The complainants are paid daily wages by
whoever is the Contractor assigned to the truck that Complainants are driving,
and all the profits from the sale of cigarettes goes to the Respondent
Corporation.” (pp. 84-92, Rollo)

We find the petition devoid of merit.

It is a fundamental rule that relations of parties must be judged
from case to case and the decree of law and not by declaration of parties
(Tabas, et al. v. California Manufacturing Co., Inc., G.R. No. 80680, January
26, 1989). Although the contracts of
dealership subject of this case refer to Cabillan, Perdigon and Alvarez as
promotional dealers who shall be solely responsible for respondents’ wages and
claims, the main issue of whether these dealers and the latter’s drivers are
employees of the corporation can only be resolved by applying the four-fold
test to determine the existence of an employer-employee relationship. In a long line of decisions, this Court, has
invariably applied the four factors: 1)
the selection and engagement of the employee; 2) the payment of wages; 3) the
power of dismissal; and 4) the power to control the employee’s conduct (Sara,
et al. v. Agarrado and NLRC, No. 73199, October 26, 1988, 166 SCRA 625). It is the latter factor, which is called the
“control test” that is the most important.

It appears that public respondent and our labor officers had
applied the foregoing criteria in the facts of this case and correctly arrived
at the conclusion that the dealers and the drivers/helpers of the latter were
employees of petitioner corporation. We
find no compelling reasons to reverse these findings.

Records amply show that the dealers and private respondents were
required not only to keep regular working hours but to abide by petitioner’s
regulations and policies as well. In
other words, these dealers and the latter’s workers were under the direct control
and supervision of petitioner corporation from the very moment they entered the
work premises at the beginning of the working day until closing time. This was even expressly stated in the
contracts of dealership (pp. 20-43, Rollo).

Petitioner also submits that the dealers were not its employees
but independent contractors.

Section 8 of Rule VIII, Book II of the Omnibus Rules Implementing
the Labor Code provides:

“Section 8. Job
contracting. – There is job contracting
permissible under the Code 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
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 his business.”

“Job contracting” must be distinguished from “labor-only
contracting” which is defined in Section 9 of Rule VIII, Book III of the
Omnibus Rules Implementing the Labor Code, as follows:

“Sec. 9. Labor-only
contracting – a) Any person who undertakes to supply workers to an employer
shall be deemed to be engaged in labor-only contracting where such person:

“1)   Does not have substantial capital or
investment in the form of tools, equipment, machineries, work premises and
other materials; and

“2)   The workers recruited and placed by such
person are performing activities which are directly related to the principal
business or operations of the employer in which workers are habitually
employed.

“b)   Labor-only contracting as defined herein is
hereby prohibited and the person acting as contractor shall be considered
merely as an agent or intermediary of the employer who shall be responsible to
the workers in the same manner and extent as if the latter were directly
employed by him.

“x x x.”

Records show that the contracts of dealership expressly directed
the dealers to hire chauffers and/or helpers. Petitioner supplied the necessary vehicles for the selling of cigarettes
and defrayed all expenses for repairs thereof, fuel and toll payments. There was, furthermore, no evidence adduced
by petitioner corporation to show that the dealers had substantial capital
investment in selling petitioner’s cigarettes or that they carried on their own
business operations separate and distinct from that engaged in by petitioner
corporation. The work carried out by
the dealers and the latter’s drivers was performed during regular working hours
six (6) days a week, which circumstance made it impossible for them to carry on
any additional and independent business outside the premises of
petitioner. Clearly, the promotional
dealer’s were only engaged in “labor-only contracting.”

As a consequence thereof, a finding that a contractor was a
“labor-only” contractor is equivalent to a finding that an employer-employee
relationship existed between the owner and the “labor-only” contractor
including the latter’s workers, that relationship being attributed by the law
itself. The rationale behind this is to
prevent any violation or circumvention of any provision of our labor laws. The law in effect holds both the employer
and labor-only contractor responsible to the latter’s employees for the more
effective safeguarding of the employees’ rights under the Labor Code (Broadway
Motors, Inc. v. NLRC, No. 78382, December 14, 1987, 156 SCRA 522; Philippine
Bank of Communications v. NLRC, No. 66598, December 19, 1986, 146 SCRA 347).

Therefore, the ruling of respondent Office of the President that
petitioner corporation and private respondents were employer and employees,
respectively, cannot be regarded as constituting grave abuse of discretion or
as rendered without or in excess of jurisdiction.

ACCORDINGLY, the petition is DISMISSED and the decision of
the Office of the President in O.P. Case No. 1096 is AFFIRMED.

SO ORDERED.

Narvasa, (Chairman), Cruz, Gancayco, and Griño-Aquino, JJ., concur.