GR L 66598; (December, 1986) (Digest)
G.R. No. L-66598, December 19, 1986
Philippine Bank of Communications, petitioner, vs. The National Labor Relations Commission, Honorable Arbiter Teodorico L. Dogelio and Ricardo Orpiada, respondents.
FACTS
Petitioner Philippine Bank of Communications entered into a letter agreement in January 1976 with Corporate Executive Search Inc. (CESI), whereby CESI undertook to provide temporary messenger services. Private respondent Ricardo Orpiada, hired by CESI, was assigned to work at the bank. The agreement stipulated that individuals assigned by CESI would remain CESI’s employees, with CESI retaining liabilities under labor laws, though the bank could set work days, hours, and methods. Orpiada commenced service, with evidence suggesting a start date as early as June 1975, and rendered services until October 1976 when the bank requested his withdrawal, alleging his services were no longer needed.
Orpiada filed a complaint for illegal dismissal and non-payment of 13th-month pay against the bank. The Labor Arbiter ruled in his favor, ordering reinstatement with back wages and payment of the 13th-month pay. The National Labor Relations Commission affirmed this decision, modifying it to limit back wages to two years. The bank petitioned for certiorari, contending no employer-employee relationship existed between it and Orpiada, as he was solely an employee of CESI under their contractual terms.
ISSUE
Whether an employer-employee relationship existed between petitioner bank and private respondent Orpiada, making the bank liable for illegal dismissal.
RULING
Yes, an employer-employee relationship existed. The Supreme Court denied the petition, affirming the NLRC decision. The determination of such a relationship hinges on the “four-fold test”: selection and engagement, payment of wages, power of dismissal, and most importantly, the power of control. While CESI initially selected Orpiada subject to the bank’s acceptance, and CESI paid his wages, the bank exercised control over his work performance, including work days, hours, and methods. Crucially, the bank requested his withdrawal, effectively exercising the power of dismissal.
The Court found the arrangement constituted “labor-only contracting” under Article 106 of the Labor Code. CESI, lacking substantial capital or investment, merely supplied workers to the bank, which controlled the employees’ work. Orpiada, having rendered service for about sixteen months, attained regular employee status per Article 281 of the Labor Code. Upholding the bank’s contractual defense would permit circumvention of security of tenure by indefinitely keeping workers on temporary status through intermediaries. Consequently, the bank is deemed the direct employer, jointly and severally liable with CESI for illegal dismissal. The bank’s recourse for reimbursement, if any, lies in a separate action against CESI.