Vinoya v. NLRC [G.R. No. 126596, February 2, 2000]

FACTS: Petitioner Vinoya was hired by RFC as sales representative. He avers that he was transferred by RFC to PMCI, an agency which provides RFC with additional contractual workers. In PMCI, he was reassigned to RFC as sales representative and then later informed by the personnel manager of RFC that his services were terminated. RFC maintains that no employer-employee relationship existed between petitioner and itself. Petitioner filed complaint for illegal dismissal. RFC alleges that PMCI is an independent contractor as the latter is a highly capitalized venture.


ISSUE: Whether or not petitioner was an employee of RFC and thereby, illegally dismissed.


HELD: Yes. PMCI was a labor-only contractor. Although the Neri doctrine stated that it was enough that a contractor had substantial capital to show it was an independent contractor, the case of Fuji Xerox clarified the doctrine stating that an independent business must undertake the performance of the contract according to its own manner and method free from the control of the principal. In this case, PMCI did not even have substantial capitalization as only a small amount of its authorized capital stock was actually paid-in. Also, PMCI did not carry on an independent business or undertake the performance of its contract according to its own manner and method. Furthermore, PMCI was not engaged to perform a specific and special job or service, which is one of the strong indicators that is an independent contractor. Lastly, in labor-only contracting, the employees supplied by the contractor perform activities, which are directly related to the main business of its principal. It is clear that in this case, the work of petitioner as sales representative was directly related to the business of RFC. Since due to petitioner’s length of service, he attained the status of regular employee thus cannot be terminated without just or valid cause. RFC failed to prove that his dismissal was for cause and that he was afforded procedural due process. Petitioner is thus entitled to reinstatement plus full backwages from his dismissal up to actual reinstatement.