Friday, March 02, 2012

Escario, et. al. vs. NLRC, [G.R. No. 124055 June 8, 2000]

Facts: Petitioners are merchandisers of respondent company. They withdraw stocks from the warehouse , fix the prices, price-tagging, displaying the products and inventory. They were paid by the company through an agent to avoid liability. They claim that they were under the control and supervision of the company. They asked for regularization of their status. They were then given notice of their termination. The company denied any employer-employee relationship. They claim that they used an agent or independent contractors to sell the merchandise. The Labor Arbiter ruled that there was an employer-employee relationship. The NLRC set aside the decision and said that there was no such relationship. The agent was a legitimate independent contractor. 

Issue: Whether or not the petitioners are employees of the company. 

Held: The Court ruled that there is no employer-employee relationship and that petitioners are employees of the agent. The agent is a legitimate independent contractor. Labor-only contractor occurs only when the contractor merely recruits, supplies or places workers to perform a job for a principal. The labor-only contractor doesn’t have substantial capital or investment and the workers recruited perform activities directly related to the principal business of the employer. There is permissible contracting only when the contractor carries an independent business and undertakes the contract in his own manner and method, free from the control of the principal and the contractor has substantial capital or investment. The agent, and not the company, also exercises control over the petitioners. No documents were submitted to prove that the company exercised control over them. The agent hired the petitioners. The agent also pays the petitioners, no evidence was submitted showing that it was the company paying them and not the agent. It was also the agent who terminated their services. By petitioning for regularization, the petitioners concede that they are not regular employees.

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