Sasan, Sr. vs. National Labor Relations Commission 4th Division

Helpmate, Inc. is a legitimate independent job contractor because it possesses substantial capital and carries on a distinct business, meaning no employer-employee relationship exists between the principal bank and the contractor's employees; furthermore, the NLRC may validly consider evidence submitted for the first time on appeal to ascertain factual truths in labor cases.

E-PCIBank entered into a Contract for Services with HI, a company providing janitorial and messengerial services, which was renewed annually until 2001. When the contract finally expired, the bank bidded out its requirements to other agencies, leading to the pull-out of the petitioners from the bank's premises and their subsequent filing of illegal dismissal complaints.

• Filed as separate complaints for illegal dismissal, separation pay, and other money claims with the NLRC Arbitration Branch in Cebu City.
• Labor Arbiter Jose G. Gutierrez rendered a decision on January 7, 2002, declaring HI a labor-only contractor and E-PCIBank as the real employer.
• Respondents E-PCIBank and HI appealed the decision to the NLRC 4th Division.
• The NLRC reversed the Labor Arbiter's decision on January 22, 2003, declaring HI a legitimate contractor and dismissing the illegal dismissal claims.
• Petitioners filed a Petition for Certiorari under Rule 65 with the Court of Appeals.
• The Court of Appeals affirmed the NLRC decision on April 24, 2006.
• Petitioners filed the current Petition for Review on Certiorari under Rule 45 with the Supreme Court.

• HI is a domestic corporation engaged in providing janitorial and messengerial services and was registered with the Department of Labor and Employment (DOLE).
• Petitioners were hired by HI and assigned to various branches of E-PCIBank to perform janitorial, messengerial, and driving duties.
• The service contract between HI and E-PCIBank expired on July 15, 2000, and was not renewed as the bank chose other service providers through bidding.
• Following the contract expiration, HI placed the petitioners on "off-detail" status and subsequently offered them new assignments with other clients.
• Petitioners refused the new assignments and filed complaints for illegal dismissal, alleging they had become regular employees of E-PCIBank due to the length of their service and the nature of their work.
• During the appeal process at the NLRC, HI submitted for the first time documentary evidence including SEC registrations of increased capital, audited financial statements showing assets over P20 million, and land titles to prove it was not a labor-only contractor.

• Petitioners argued that they were regular employees of E-PCIBank because their tasks (janitorial, driving, messengerial) were necessary and desirable to the bank's business.
• They claimed that E-PCIBank exercised direct control and supervision over the means and methods of their work.
• They contended that HI was a labor-only contractor because it allegedly lacked substantial capital or investment at the time of the Labor Arbiter's proceedings.
• They argued that the NLRC should not have accepted or appreciated the new evidence submitted by HI on appeal, as those documents existed during the trial and should have been presented earlier.

• E-PCIBank argued that it was merely a client of HI and that HI, as an independent contractor, exercised all powers of an employer, including hiring, firing, and payroll.
• HI asserted that it was a legitimate job contractor with a distinct business and substantial capitalization, as evidenced by its DOLE registration and financial records.
• HI maintained that the petitioners were not dismissed but were merely on temporary "off-detail" status pending reassignment, which the petitioners ultimately refused.

• Procedural Issues:
  • Whether the NLRC committed grave abuse of discretion or erred in accepting and considering documentary evidence submitted by the respondents for the first time on appeal.
• Substantive Issues:
  • Whether Helpmate, Inc. is a labor-only contractor or a legitimate independent job contractor.
  • Whether the petitioners were illegally dismissed from their employment.

• Procedural:
  • The Court ruled that the NLRC did not err in accepting new evidence on appeal because technical rules of evidence are not binding in labor cases. Under Article 221 of the Labor Code, labor officials are mandated to use all reasonable means to ascertain facts speedily and objectively. The Court emphasized that the submission of additional evidence on appeal does not prejudice the other party if they are given the opportunity to refute it, which the petitioners had during the subsequent stages of litigation.
• Substantive:
  • The Court ruled that HI is a legitimate independent job contractor because it met the legal requirements: it is DOLE-registered, carries on a distinct business, and proved substantial capitalization (assets exceeding P20 million and ownership of real property).
  • The Court found that E-PCIBank did not exercise "control" over the petitioners' conduct, as the contract specifically vested the power of selection, engagement, and discharge in HI.
  • The Court held that there was no illegal dismissal; the petitioners were HI's employees, and their removal from the bank was a result of the expiration of the service contract. Their refusal to accept new assignments from HI was deemed a failure to maintain their employment status rather than a dismissal by the employer.

• Liberal Application of Procedural Rules in Labor Cases — The principle that the NLRC is not precluded from receiving evidence for the first time on appeal because technical rules of procedure are not binding. In this case, it allowed the court to consider HI's financial capacity despite the late submission of documents.
• Legitimate Job Contracting — An arrangement where a contractor carries on an independent business, possesses substantial capital or investment, and maintains control over the performance of the work. The Court applied this to HI to shield E-PCIBank from being considered the direct employer.
• Labor-Only Contracting — A prohibited act where the contractor merely supplies workers and lacks substantial capital. The Court clarified that if substantial capital is proven, it is unnecessary to prove that the work is not "directly related" to the principal's business to escape the "labor-only" label.
• The Control Test — The standard used to determine the existence of an employer-employee relationship by looking at who has the power to control the means and methods of the work. The Court used the Service Contract's terms to show HI, not the bank, held this power.

• "Technical rules of evidence are not binding in labor cases. Labor officials should use every reasonable means to ascertain the facts in each case speedily and objectively, without regard to technicalities of law or procedure, all in the interest of due process."
• "The essence of due process is simply an opportunity to be heard, or as applied to administrative proceedings, a fair and reasonable opportunity to explain one's side."
• "Where the control of the principal is limited only to the result of the work, independent job contracting exists."

• Clarion Printing House, Inc. v. National Labor Relations Commission — Cited to support the rule that the NLRC is not precluded from receiving evidence for the first time on appeal.
• Vinoya v. National Labor Relations Commission — Referenced to define the elements and distinctions between permissible job contracting and prohibited labor-only contracting.
• Neri v. National Labor Relations Commission — Followed to establish that a contractor need only have either substantial capital or investment in tools/equipment, and that proving substantial capital is sufficient to find legitimate contracting.

• Labor Code, Article 221 — Provides that technical rules of evidence and procedure are not controlling in labor proceedings.
• Labor Code, Articles 106 to 109 — Governs the regulation of contracting and subcontracting and the solidary liability of employers and contractors.
• Rules of Court, Rule 130, Section 3 — The Best Evidence Rule, which the petitioners invoked but the Court found inapplicable to the flexible procedural standards of the NLRC.
• Department Order No. 10, Series of 1997 — The implementing rules of the Labor Code concerning the registration and regulation of contractors.