Facts:

• First Philippine Industrial Corporation (FPIC) is a domestic corporation involved in transporting petroleum products via pipeline.
• On March 29, 1993, FPIC entered into a Contract of Special Services with De Guzman Manpower Services (DGMS) for clerical, maintenance, and utility services.
• Raquel Calimbas and Luisa Mahilom were hired by DGMS to perform secretarial and clerical duties for FPIC, starting on February 13, 1996, and June 3, 1996, respectively.
• On June 21, 2001, FPIC informed Calimbas and Mahilom that their services would no longer be required by July 31, 2001, due to a "Pace-Setting" Study.
• DGMS formally notified them of the termination of their work assignments with FPIC, citing the end of the Project Contract.
• Both Calimbas and Mahilom signed quitclaims on August 3, 2001, releasing DGMS from any claims after receiving sums of P17,343.10 and P23,459.14, respectively.
• Despite the quitclaims, Calimbas and Mahilom filed a complaint against FPIC for illegal dismissal and monetary benefits, alleging they were regular employees of FPIC and were dismissed without cause.
• The Labor Arbiter ruled in their favor, declaring their dismissal illegal and ordering FPIC to reinstate them and pay back wages and attorney's fees.
• FPIC appealed to the National Labor Relations Commission (NLRC), which initially upheld the Labor Arbiter's decision but later reversed it, declaring DGMS as their employer.
• Calimbas and Mahilom then appealed to the Court of Appeals (CA), which reversed the NLRC's decision and reinstated the Labor Arbiter's ruling.
• FPIC subsequently filed a petition for review on certiorari with the Supreme Court.

Issue:

• (Unlock)

Ruling:

1. Yes, Calimbas and Mahilom were employees of FPIC.
2. No, Calimbas and Mahilom were not lawful...(Unlock)

Ratio:

• The Supreme Court upheld the Court of Appeals' finding that Calimbas and Mahilom were employees of FPIC and that DGMS was engaged in labor-only contracting.
• DGMS did not have substantial capital or investment, and the workers were performing activities directly related to FPIC's business.
• FPIC exercised control and supervision over Calimbas and Mahilom, further establishing the employer-employee relationship.
• FPIC failed to sh...continue reading