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Anglo-American Tobacco Corp. vs. Clave, G.R. No. 50915, August 30, 1990, 1 9 !

CRA 1"# (Labor-only contracting) $ACT!% Petitioner Corporation entered into separate but identical contracts of promotional dealership with Epifanio Cabillan, Sofronio Perdigon and Walfrido Alverez for the purpose of selling the cigarettes manufactured by petitioner. hese dealers hired private respondents as drivers or helpers but subse!uently dismissed them. "n "ctober #$, #%&', the (ational President of respondent Associated )ederation of *abor +A)*,, for and in behalf of respondents filed a complaint with the *abor Arbiter against Petitioner Corporation and its promotional dealers, for unfair labor practice in dismissing respondent employees and for violation of P.-. (o. .#, the /inimum Wage *aw and the Eight 0our *abor *aw. Petitioner Corporation, in its answer, denied the e1istence of employer2employee relationship between the former and respondent employees. he *abor Arbiter rendered a decision which held the petitioner liable for all claims and charges in the complaint e1cept for the unfair labor practice charge, and ordered Petitioner Corporation to reinstate respondent employees with full bac3 wages. Petitioner appealed to the (ational *abor 4elations Commission but the same was dismissed. "n appeal to the Secretary of *abor, which the latter affirmed the decision of the (*4C. Still not satisfied, petitioner elevated the case to the "ffice of the President. 5n its decision, the "ffice of the President affirmed the appealed decision of the Secretary of *abor with the modification that the award of bac3 wages to be paid to private respondents be limited to si1 +6, months. &!!'(% he issue to be resolved in this case is whether or not private respondents, who were hired by the promotional dealers of the corporation, should be considered as employees of the corporation itself.

R')&NG% he petition is -5S/5SSE- and the decision of the "ffice of the President is A))54/E-. he Court found the petition devoid of merit. 5t is a fundamental rule that relations of parties must be 7udged from case to case and the decree of law and not by declaration of parties

he main issue of whether these dealers and the latter8s drivers are employees of the corporation can only be resolved by applying the four2fold test to determine the e1istence of an employer2employee relationship. 5n a long line of decisions, the Court, has invariably applied the four factors9 #, the selection and engagement of the employee: ., the payment of wages: ', the power of dismissal: and ;, the power to control the employee8s conduct. 5t is the latter factor, which is called the <control test< that is the most important. 5t appears that public respondent and the labor officers had applied the foregoing criteria in the facts of this case and correctly arrived at the conclusion that the dealers and the drivers=helpers of the latter were employees of Petitioner Corporation. 4ecords amply show that the dealers and private respondents were re!uired not only to 3eep regular wor3ing hours but to abide by petitioner8s regulations and policies as well. 5n other words, these dealers and the latter8s wor3ers were under the direct control and supervision of petitioner corporation from the very moment they entered the wor3 premises at the beginning of the wor3ing day until closing time. his was even e1pressly stated in the contracts of dealership. hat, <>ob contracting< must be distinguished from <labor2only contracting< which is defined in Section % of 4ule ?555, @oo3 555 of the "mnibus 4ules 5mplementing the *abor Code, 4ecords show that the contracts of dealership e1pressly directed the dealers to hire chauffer and=or helpers. Petitioner supplied the necessary vehicles for the selling of cigarettes and defrayed all e1penses for repairs thereof, fuel and toll payments. he wor3 carried out by the dealers and the latter8s drivers was performed during regular wor3ing hours si1 +6, days a wee3, which circumstance made it impossible for them to carry on any additional and independent business outside the premises of petitioner. Clearly, the promotional dealers were only engaged in <labor2only contracting.< A finding that a contractor was a <labor2only< contractor is e!uivalent to a finding that an employer2employee relationship e1isted between the owner and the <labor2only< contractor including the latter8s wor3ers, that relationship being attributed by the law itself. he rationale behind this is to prevent any violation or circumvention of any provision of our labor laws. he law in effect holds both the employer and labor2only contractor responsible to the latter8s employees for the more effective safeguarding of the employees8 rights under the *abor Code.