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Isagani Ecal vs NLRC

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Isagani Ecal vs NLRC
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  191. Isagani Ecal vs NLRCProvision: Art. 106 . Contractor or subcontractor  . — Whenever an employer enters into a contract with anotherperson for the performance of the former's work, the employees of the contractor and of the latter's subcontractor,if any, shall be paid in accordance with the provisions of this Code.In the event that the contractor or subcontractor fails to pay the wages of his employees in accordance with thisCode, the employer shall be jointly and severally liable with his contractor or subcontractor to such employees tothe etent of the work performed under the contract, in the same manner and etent that he is liable to employeesdirectly employed by him. !he ecretary of #abor may, by appropriate regulations, restrict or prohibit the contracting out of labor to protectthe rights of workers established under this Code. In so prohibiting or restricting, he may make appropriatedistinctions between labor$only contracting and job contracting as well as di%erentiations within these types of contracting and determine who among the parties involved shall be considered the employer for purposes of thisCode, to prevent any violation or circumvention of any provision of this Code. !here is &labor$only& contracting where the person supplying workers to an employer does not have substantialcapital or investment in the form of tools, euipment, machineries, work premises, among others, and the workersrecruited 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 employerwho shall be responsible to the workers in the same manner and etent as if the latter were directly employed. Art. 107 . Indirect Employer  . — !he provisions of the immediately preceding (rticle shall likewise apply to anyperson, partnership, association or corporation which, not being an employer, contracts with an independentcontractor for the performance of any work, task, job or project. Facts:  !his case traces its srcin from two consolidated complaints for illegal dismissal and money claims )led bypetitioners Isagani *cal, et al against private respondents +i$#ine !imber, Inc. and immy -atchuka, the companyforeman, with the epartment of #abor and *mployment. /etitioners alleged that they have been employed by +i$#ine. /rivate respondents, on the other hand, denied the eistence of an employer$employee relationship betweenthe company and the petitioners claiming that the latter are under the employ of an independent contractor,petitioner Isagani *cal, an employee of the company until his resignation. Issue: Is there an employer$employee relationship between petitioners and private respondent +i$#ine !imber, Inc.or merely an employer$independent contractor relationship between said private respondent and petitioner Isagani*cal with the other petitioners being mere contract workers of *cal0 In the case of the latter, is *cal engaged in&job& contracting or &labor$only& contracting0 Ruling 1 2nder the provisions of (rticle 345, paragraphs 3 and 6, an employer who enters into a contract with acontractor for the performance of work for the employer does not thereby establish an employer$employeerelationship between himself and the employees of the contractor. !he law itself, however, creates such arelationship when a contractor fails to pay the wages of his employees in accordance with the #abor Code, and onlyfor this limited purpose, i . e . to ensure that the latter will be paid the wages due them. ections 7 and 8, 9ule :III, ;ook III of the <mnibus 9ules implementing the #abor Code set forth the distinctionsbetween &job& contracting and &labor$only& contracting — ec. 7.  Job contracting . — !here is job contracting permissible under the Code if the following conditionsare met1=3> !he contractor carries on an independent business and undertakes the contract work on hisown account under his own responsibility according to his own manner and method, free fromcontrol and direction of his employer or principal in all matters connected with the performance of the work ecept as to the results thereof, and=6> !he contractor has substantial capital or investment in the form of tools, euipments,machineries, work premises, and other materials which are necessary in the conduct of hisbusiness. ec. 8. Labor-only contracting  — =a> (ny person who undertakes to supply workers to an employer shall bedeemed to be engaged in labor$only contracting where such person1=3> oes not have substantial capital or investment in the form of tools, euipments, machineries,work premises and other materials? and=6> !he workers recruited and placed by such person are performing activities which are directlyrelated to the principal business or operations of the employer in which workers are habituallyemployed.=b> #abor$only contracting as de)ned herein is hereby prohibited and the person acting ascontractor shall be considered merely as an agent or intermediary of the employer who shall beresponsible to the workers in the same manner and etent as if the latter were directly employedby him.(pplying the foregoing provisions, the Court )nds petitioner Isagani *cal to be a &labor$only& contractor, a meresupplier of manpower to +i$#ine. Isagani *cal was only poor laborer at the time of his resignation on @ebruary A,387B who cannot even a%ord to have his daughter treated for malnutrition. +e resigned and became a supplier of laborers for +i$#ine, because he saw an opportunity for him to earn more than what he was earning while still in the  payroll of the company. (t the same time, he continued working for the company as a laborer at the kiln dryingsection. +e de)nitely does not have sucient capital to invest in tools and machineries. !here is also no uestionthat the task performed by petitioners is directly related to the business of +i$#ine. /etitioners were assigned to sortout the lumber materials whether wet or fresh kiln as to siDes and to carry them from the stockpile to the dryerwhere they are loaded for drying after which they are unloaded. !he work of petitioners is an integral part of theoperation of the sawmill of +i$#ine without which production and company sales will su%er.( )nding that Isagani *cal is a &labor$only& contractor is euivalent to a )nding that an employer$employeerelationship eists between the company and *cal including the latter's &contract workers& herein petitioners, therelationship being such as provided by the law itself. ince petitioners perform tasks which are usually necessary or desirable in the main business of +i$#ine, theyshould be deemed regular employees of the latter and as such are entitled to all the bene)ts and rightsappurtenant to regular employment. ;eing regular employees, they should have been a%orded due process prior totheir dismissal. Instead they were unceremoniously dismissed. /etitioners, having been illegally dismissed areentitled to backwages euivalent to three years without uali)cations and deductions in line with prevailing jurisprudence. /rivate respondent +i$#ine !imber, Inc. is hereby ordered to reinstate petitioners to their formerpositions with backwages euivalent to three =E> years without deductions and uali)cations. !he records of thecase are remanded to the labor arbiter for determination of the unpaid bene)ts due petitioners.
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