Title
Associated Anglo-American Tobacco Corp. vs. Clave
Case
G.R. No. 50915
Decision Date
Aug 30, 1990
Petitioner's promotional dealers, lacking capital, were deemed labor-only contractors; SC ruled employer-employee relationship existed, holding petitioner liable for workers' wages and benefits.
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Case Digest (G.R. No. 50915)

Facts:

Parties Involved:

  • Petitioner: Associated Anglo-American Tobacco Corporation.
  • Respondents:
    • Hon. Jacobo C. Clave (Presidential Executive Assistant).
    • Associated Federation of Labor (AFL) and its members: Amador Guarino, Vicente Marquez, Alfredo Enriquez, and Nicasio San Juan.

Background:

  • From 1972 to 1974, the petitioner entered into promotional dealership contracts with Epifanio Cabillan, Sofronio Perdigon, and Walfrido Alvarez to sell its cigarettes.
  • These dealers hired private respondents as drivers or helpers but later dismissed them.
  • On October 15, 1973, AFL filed a complaint against the petitioner and its dealers for unfair labor practice, violation of P.D. No. 21, the Minimum Wage Law, and the Eight-Hour Labor Law.
  • The petitioner denied any employer-employee relationship with the private respondents.

Labor Arbiter’s Decision:

  • The Labor Arbiter ruled in favor of the private respondents, ordering their reinstatement with full backwages, except for the unfair labor practice charge.
  • The National Labor Relations Commission (NLRC) and the Secretary of Labor affirmed the decision.
  • The Office of the President modified the award, limiting backwages to six months.

Key Findings:

  • The private respondents were indirectly hired by the petitioner through the dealers.
  • The dealers had no substantial capital or investment and were dependent on the petitioner for vehicles, fuel, and other expenses.
  • The dealers and their workers were under the petitioner’s control, as evidenced by their adherence to the petitioner’s regulations and working hours.

Issue:

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Ruling:

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Ratio:

  1. Four-Fold Test for Employer-Employee Relationship:

    • The Court applied the four-fold test: (a) selection and engagement of the employee, (b) payment of wages, (c) power of dismissal, and (d) power of control.
    • The control test was deemed the most important. The petitioner exercised control over the dealers and their workers, as evidenced by the working hours, regulations, and supervision.
  2. Labor-Only Contracting:

    • The promotional dealers lacked substantial capital or investment and were dependent on the petitioner for resources.
    • The work performed by the dealers and their workers was directly related to the petitioner’s business.
    • Under the Labor Code, labor-only contracting is prohibited, and the principal employer (petitioner) is held responsible for the workers’ rights and benefits.
  3. Policy Considerations:

    • The ruling aims to prevent circumvention of labor laws and ensure the protection of workers’ rights.
    • The law attributes an employer-employee relationship to labor-only contractors and their workers to safeguard labor standards.

Conclusion:

The Supreme Court upheld the findings of the labor tribunals and the Office of the President, ruling that the petitioner was the employer of the private respondents. The promotional dealers were deemed labor-only contractors, and the petitioner was held liable for the workers’ wages and benefits.


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