GR 186114; (October, 2015) (Digest)
G.R. No. 186114 October 7, 2015
CHEVRON (PHILS.), INC., Petitioner vs. VITALIANO C. GALIT, SJS AND SONS CONSTRUCTION CORPORATION and MR. REYNALDO SALOMON, Respondents
FACTS
Vitaliano C. Galit filed a complaint for illegal dismissal and monetary claims against Caltex Philippines, Inc. (now Chevron (Phils.), Inc.), SJS and Sons Construction Corporation (SJS), and its president, Reynaldo Salomon. Galit alleged he was a regular employee of Chevron since 1982, assigned as an “all-around employee” at its Pandacan depot, under the direct control and supervision of Chevron supervisors, and was verbally terminated on January 15, 2005. SJS claimed it was a legitimate contractor engaged in providing manpower on a per-project basis, that it hired Galit in 1993 as a project employee assigned to Chevron as a janitor based on a contract, and that his employment ended when the manpower contract with Chevron expired on November 30, 2004, after which SJS closed its operations. Chevron contended it entered into janitorial service contracts with SJS, under which SJS employed and paid Galit, supplied necessary tools, and exercised supervision and control; Chevron’s contract with SJS expired on November 30, 2004, and a new contract was later awarded to another contractor. The Labor Arbiter dismissed the complaint against Chevron for lack of jurisdiction (no employer-employee relationship) and against SJS and Salomon for lack of merit, but awarded Galit separation pay from SJS on equity grounds. The NLRC affirmed that SJS was a legitimate contractor and Galit’s employer, but modified the award, finding Galit was a regular employee of SJS whose employment ended due to the cessation of SJS’s operations. The Court of Appeals reversed, holding SJS was a labor-only contractor, Chevron was Galit’s actual employer, and Galit was illegally dismissed, ordering his reinstatement with backwages and attorney’s fees. Chevron appealed to the Supreme Court.
ISSUE
The primary issue is whether an employer-employee relationship existed between Chevron and Galit, making Chevron liable for illegal dismissal. A corollary issue is whether SJS was an independent contractor or a labor-only contractor.
RULING
The Supreme Court REVERSED and SET ASIDE the Court of Appeals Decision and Resolution. It REINSTATED the Decision of the NLRC.
The Court held that no employer-employee relationship existed between Chevron and Galit. Applying the four-fold test, the Court found that: (1) SJS, not Chevron, selected and engaged Galit; (2) SJS paid Galit’s wages, as evidenced by payroll and check vouchers; (3) SJS had the power to dismiss Galit, as shown by its issuance of termination notices; and (4) SJS had the power of control over Galit, as the service contracts stipulated that SJS would supervise its employees, supply equipment and materials at its own expense, and ensure the performance of its workers. The “control test,” being the most important, was not satisfied as the contracts indicated SJS retained control over its employees’ conduct. The Court further ruled that SJS was a legitimate independent contractor, not a labor-only contractor, as it possessed substantial capital, investment, and tools to perform the job, and the service it provided (janitorial work) was not directly related to Chevron’s main business (oil industry). Since no employer-employee relationship existed with Chevron, the award of reinstatement, backwages, and attorney’s fees against Chevron had no legal basis. The liability for separation pay, as ordered by the NLRC, remained with SJS as the legitimate employer.