VIRGINIA NERI vs NLRC

GR Nos 97008-09; 23 July 1993

VIRGINIA NERI and JOSE CABELIN v NATIONAL LABOR RELATIONS COMMISSION, FAR EAST BANK & TRUST
Petitioner COMPANY (FEBTC) and BUILDING CARE CORPORATION (BCC)
Respondents
Bellosillo., J.
Petitioners applied and were hired by BCC, a corporation providing technical, maintenance, engineering,
housekeeping, security and other services to its clientele. They were assigned to work in Cagayan de Oro
City branch of FEBTC.
Petitioners instituted complaints against FEBTC and BCC before Regional Arbitration of DOLE to compel
FEBTC to accept them as regular employees and to pay differential wages paid by BCC than those received
by FEBTC employees.
LA dismissed complaint for lack of merit. BCC was considered an independent contractor by establishing
that it had substantial capitalization of P1M or a stockholders equity of P1.5M
FACTS:

NLRC affirmed decision of LA.

Petitioners contend that
1. BCC is engaged in labor-only contracting because it failed to adduce evidence showing that it invested
in tools, equipment, machineries, work premises and other materials necessary in the conduct of its
business.
2. They perform duties directly related to principal business of FEBTC
3. Following labor-only contracting definition, the logical conclusion is BCC is a labor only contractor
4. following PNB v NLRC, the Court held that where labor only contracting exists Labor Code itself
establishes employment relationship between employer and employees of labor only contractor.
ISSUE: W/N BCC is a labor-only contractor
HELD: No
It is well established that there is labor-only contracting where (a) 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 (b) the workers recruited and placed by such person are performing
activities which are directly related to principal business of employer.
1. The law does not require both substantial capital and investment in the form of tools, equipment and
machineries. This is clear with the conjunction or. If the intention was to require both, the
conjunction and should have been used.
BCC need not prove that it made investments in the form of tools, equipment, machineries, work
premises, among others because it has established that it has sufficient capitalization.
LA and NLRC both determined that BCC had a capital stock of P1M fully subscribed and paid for.
Hence, BCC is a highly capitalized venture and cannot be deemed engaged in labor only contracting.
2. In fact the status of BCC as an independent contractor was previously confirmed by the Court in
RULING:

Associated Labor Unions-TUCP v NLRC where it held that Building Care Corporation is a big firm which
services, among others, a university, an international bank, a big local bank, a hospital center,
government agencies, etc. It is a qualified independent contractor.
3. In case of petitioner Neri, it is admitted that FEBT issued a job description which detailed her functions
but in reading such, it shows that what was controlled was the end result not how the machine will be
operated
4. Petitioners did not deny that they were selected and hired by BCC before being assigned to work in
FEBTC.
Evidence shows BCC maintained supervision and control over petitioners as they reported for work
wearing prescribed uniform by BCC; leaves of absence filed with BCC and salaries drawn only from
BCC.
Neri even previously secured certification of employment from BCC
5. Under the terms and conditions of the contract, BCC alone had the power to reassign petitioners.
Deployment to FEBT was not subject to banks acceptance.