NERI v.

NLRC GR: 97008-09

I.
Facts and Case Progression:
Neri and Cabelin (petitioners) applied for positions with and were hired by
respondent BCC and were assigned to work at FEBTC in CDO.
Respondents (NLRC, FEBTC & BCC) were sued by two employees of BCC
which provides janitorial and other specific services to various firms to
compel FEBTC to recognize them as its regular employees.
BCC established that it had substantial capital of 1M or a stockholder equity
of 1.5M and so the labor arbiter ruled that BCC was only job contracting and
that consequently its employees were not employees of FEBTC.
On appeal, NLRC affirmed the decision of the labor arbiter but the petitioners
insistence led to the petition at hand at the SC.
Note* [Legends]
FEBTC: Far East Bank & Trust Company
CDO: Cagayan de Oro
BCC: Building Care Corporation
II.

Doctrines and Application of Law

Note: petitioners contend that that BCC is engaged in Labor-only contracting

because it failed to show evidence that proves it invested in the form of tools,
equipment, machineries, work premises and other materials which is necessary in
the conduct of its business. Also they argue that they perform duties which are
directly related to the principal business or operation of FEBTC.
Cited Case:
1. PBOC vs NLRC
The doctrine laid down in the cited case wherein, when labor-only contracting exists,
the contractor is said to be merely an agent of the employer thus forming an
employer-employee relationship. The petitioners used the mentioned case as basis
to conclude they are employees of FEBTC and the Labor-only contractor BCC was
merely an agent.
The SC did not sustain the petition.
BCC need not prove that is made investments in the form of tools,
equipment, machineries work premises among others, because it has
established it had sufficient capitalization. The law provides that Does not
have substantial capital or investment in the form of tools
equipment, machineries, work premises and other materials. with
emphasis on the conjunction or meaning either proof of not having
substantial capital or no investment in the above stated is sufficient and both
need not be present always.
The SC has also taken judicial notice of the general practice adopted in
several government and private institutions and industries of hiring
independent contractors to perform special services ranging from janitorial,

NERI v. NLRC GR: 97008-09

security, etc. although these services may be considered directly related to
the principal business they are NOT NECESSARY IN THE CONDUCT OF THE
PRINCIPAL BUSINESS OF THE EMPLOYER.
Also, for the sake of argument, even if the petitioners were performing
activities directly related to the principal business of the bank, under the
right of control test, they must still be considered employees of BCC.
Instances:
1. Neri admitted that FEBTC issued a job description which detailed her
functions as a radio/telex operator but after further inspection of said job
description is showed that FEBTC sought to control the end result ONLY.
2. The record is replete with evidence disclosing that BCC maintained
supervision and control over petitioners through its housekeeping and
special services division (petitioners reported for work wearing the
prescribed uniform of BC, LOAs were filed with BCC and Salaries
were drawn from BCC only)
3. Neri even secured a certification from BCC that she was employed by it.
4. In the conditions of the contract it was BCC who had the power to reassign
petitioners thus showing their right to control.
5. BCC was paid in lump sum unlike in PBOC v. NLRC, they were to be paid on
a daily rate on a per person basis.
In conclusion, petitioners cannot be held to be employees of FEBTC because BCC
carries an independent business and undertaken the performance of its contract
with various clients according to its own manner and method free from the control
and supervision of its principals in all matters except the results.

No employer-employee relationship exists between petitioners and FEBTC

thus they are not regular employees (by virtue of control test)

PETITION DENIED.