GUARIN vs.

NLRC
G.R. NO. 86010 October 3, 1989

GRIÑO-AQUINO, J.:

FACTS:

Private respondents Lipercon Services, Inc. and Novelty Philippines,

Inc. entered into a "Contract of Services" in which the former, for a contract
price, undertook to provide the latter with Contractual
Laborers/Helpers/Janitors. For this reason, petitioners were hired by
Lipercon to work with Novelty as helpers, janitors, janitresses, firemen, and
mechanics. Petitioners worked with Novelty as such for three years.
Novelty terminated its agreement with Lipercon and consequently
petitioners were dismissed. Petitioners filed an illegal dismissal case
against Novelty and Lipercon, in which case the Labor Arbiter ruled that
petitioners were regular employees of Novelty and declared their dismissal
illegal. Both employers appealed. The National Labor Relations
Commission reversed the Labor Arbiter's decision and ruled that Lipercon
was an independent contractor. It ordered Lipercon to reinstate petitioners.

ISSUE:

Whether Lipercon is an independent contractor and the petitioners

are its employees.

RULING:

No. The Supreme Court ruled that as provided in Article 106 of the
Labor Code, and as can be gleaned from the agreement between Lipercon
and Novelty, it was clear that Lipercon was a "labor-only" contractor and
thus served merely an agent of Novelty tasked to provide it with manpower.
Lipercon's contention that it is an independent contractor because it
claimed to have substantial capital and investment in tools and equipment
was not given merit because it was not able to present substantial evidence
to that effect. On the contrary, the Supreme Court held that petitioners'
works were directly related to the daily operations of a garment factory
since gardeners work to maintain clean and well-kept grounds around the
factory, mechanics to keep the machines functioning properly, and firemen
to look out for fires. This fact is confirmed, according to the Court, by
Novelty's rehiring the workers or renewing the contract with Lipercon every
year from 1983 to 1986, a period of three (3) years.

As Lipercon was a "labor-only" contractor, the workers it supplied

Novelty became regular employees of the latter and the Court ordered their
reinstatement with back wages.