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Case digest report 1

: Mark Vincent G. Ang Kim
: Personnel and Labor Law (BM 222)
7:30 AM – 12:00 P.M. (Block 1 Sunday)
Professor : Atty. Mundlyn G. Misal-Martin
Joeb M. Aliviado, et al. vs. Procter & Gamble Phils., Inc.
[GR No. 160506 March 9, 2010]
Facts of the case:
Petitioners worked as merchandisers of P&G. They all individually
signed employment contracts with either Promm-Gem or SAPS for periods
of more or less five months at a time. They were assigned at different
outlets, supermarkets and stores where they handled all the products of
P&G. They received their wages from Promm-Gem or SAPS.
Subsequently, petitioners filed a complaint against P&G for regularization,
service incentive, leave pay, and other benefits with damages. The
complaint was later amended to include the matter of their subsequent
The Labor Arbiter dismissed the complaint for lack of merit and ruled
that there was no employer-employee relationship between petitioners and
P&G. He found that the selection and engagement of the petitioners, the
payment of their wages, the power of dismissal and control with respect to
the means and methods by which their work was accomplished, were all
done and exercised by Promm-Gem/SAPS. He further found that PrommGem and SAPS were legitimate independent job contractors. On appeal to
the NLRC, the NLRC affirmed the decision of the labor arbiter. Petitioners
then filed a petition for certiorari with the CA, alleging grave abuse of
discretion amounting to lack or excess of jurisdiction on the part of the
Labor Arbiter and the NLRC. However, said petition was also denied by
the CA.
1.) Is P&G the employer of petitioners?
2.) Were petitioners illegally dismissed?
In order to determine whether P&G is the employer of petitioners, it
is necessary to first determine whether Promm-Gem and SAPS are laboronly contractors or legitimate job contractors. There is "labor-only"
contracting where the person supplying workers to an employer does not
have substantial capital or investment in the form of tools, equipment,
machineries, work premises, among others, and the workers recruited and
placed by such person are performing activities which are directly related
to the principal business of such employer. In such cases, the person or
intermediary shall be considered merely as an agent 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.
The Court held that Promm-Gem cannot be regarded as labor-only
contractor but a legitimate independent contractor because the financial
statement of Promm-Gem shows that it has authorized capital stock of P1
million and a paid-in capital, or capital available for operations, of
P500,000.00 as of 1990. It also has long term assets worth P432, 895.28
and current assets of P719, 042.32. Promm-Gem has also proven that it
maintained its own warehouse and office space with a floor area of 870
square meters. It also had under its name three registered vehicles which
were used for its promotional/merchandising business. Promm-Gem also
has other clients aside from P&G.
On the other hand, the Articles of Incorporation of SAPS shows that
it has a paid-in capital of only P31, 250.00. There is no other evidence
presented to show how much its working capital and assets are.
Furthermore, there is no showing of substantial investment in tools,
equipment or other assets. Considering that SAPS has no substantial
capital or investment and the workers it recruited are performing activities
which are directly related to the principal business of P&G, the court held
that SAPS is engaged in "labor-only contracting". The contractor is
considered merely an agent of the principal employer and the latter is
responsible to the employees of the labor-only contractor as if such
employees had been directly employed by the principal employer.
With regard to the termination letters given by Promm-Gem to its
employees uniformly specified the cause of dismissal as grave misconduct
and breach of trust. The court held that there were no valid causes for the
dismissal of petitioners-employees of Promm-Gem.
Misconduct to be valid just cause for dismissal, such misconduct (a)
must be serious; (b) must relate to the performance of the employee’s
duties; and (c) must show that the employee has become unfit to continue
working for the employer. In the case, petitioners-employees of PrommGem may have committed an error of judgment in claiming to be
employees of P&G, but it cannot be said that they were motivated by any
wrongful intent in doing so. As such, they are guilty of only simple
misconduct for assailing the integrity of Promm-Gem as a legitimate and
independent promotion firm. A misconduct which is not serious or grave,
as that existing in the instant case, cannot be a valid basis for dismissing
an employee.
Meanwhile, loss of trust and confidence, as a ground for dismissal,
must be based on the willful breach of the trust reposed in the employee
by his employer. Ordinary breach will not suffice. Loss of trust and
confidence, as a cause for termination of employment, is premised on the
fact that the employee concerned holds a position of responsibility or of
trust and confidence. And, in order to constitute a just cause for dismissal,
the act complained of must be work-related and must show that the
employee is unfit to continue to work for the employer. In the case at bar,
In the instant case, the petitioners-employees of Promm-Gem have not
been shown to be occupying positions of responsibility or of trust and
confidence. Neither is there any evidence to show that they are unfit to
continue to work as merchandisers for Promm-Gem. Hence, no valid
cause for dismissal by Promm-Gem against petitioner-employees.
With regard to the petitioners placed with P&G by SAPS, they were
given no written notice of dismissal. The records show that upon receipt by
SAPS of P&G’s letter terminating their "Merchandising Services Contact",
they in turn verbally informed the concerned petitioners not to report for
work anymore. It must be emphasized that the onus probandi to prove the
lawfulness of the dismissal rests with the employer. In termination cases,
the burden of proof rests upon the employer to show that the dismissal is
for just and valid cause. In the instant case, P&G failed to discharge the
burden of proving the legality and validity of the dismissals of those
petitioners who are considered its employees. Hence, the dismissals
necessarily were not justified and are therefore illegal.