Phil. Bank of Communications v. NLRC (G.R. No. L-66598; December 19, 1986)

CASE DIGEST: PHILIPPINE BANK OF COMMUNICATIONS, petitioner, vs. THE NATIONAL LABOR RELATIONS COMMISSION, HONORABLE ARBITER TEODORICO L. DOGELIO and RICARDO ORPIADA respondents. (This case digest was copied from Azucena's book, The Labor Code with Comments and Cases, Year 22, Edition 8, 2013, Page 316. Available in bookstores nationwide.)

FACTS: Philippine Bank of Communications and the Corporate Executive Search, Inc. (CESI) entered into an agreement under which CESI would provide “Temporary Services” to PBCom consisting of eleven (11) messengers, one of whom was Orpiada who had been assigned to the bank since June 1975.

He rendered messengerial services to the bank, within its premises, together with others doing similar job. In or about October 1976, the bank requested CESI to withdraw Orpiada’s assignment because Orpiada’s services “were no longer needed.” Orpiada filed a complaint against the bank for illegal dismissal and failure to pay the 13th-month pay. During the compulsory arbitration proceedings, the Bank impleaded CESI as an additional respondent. Both the bank and CESI maintained that CESI (and not the bank) was Orpiada’s employer


Whether or not an employer-employee relationship existed between the bank and Orpiada.

The bank maintained that Orpiada was an employee of CESI. The bank documents its position by pointing to the following provisions of its letter agreement with CESI: xxx

2. Such individuals will nevertheless remain your [CESI’s] employees and you will, therefore, retain all liabilities arising from the new Labor Code as amended, Social Security Act and other applicable governmental decrees, rules and regulations, x x x 
RULING: There is, of course, nothing illegal about hiring persons to carry out “a specific project or undertaking the completion or termination of which (was) determined at the time of the engagement of (the) employee, or where the work or service to be performed is seasonal in nature and the employment is for the duration of the season.” 1 The letter agreement itself, however, merely required CESI to furnish the bank with eleven (11) messengers for “a contract period from January 19, 1976—.” The eleven (11) messengers were thus supposed to render “temporary” services for an indefinite or unstated period of time. Ricardo Orpiada himself was assigned to the bank’s offices from June 25, 1975 and rendered services to the bank until sometime in October 1976, or a period of about sixteen months. Under the Labor Code, however, any employee who has rendered at least one year of service, whether such service is continuous or not, shall be considered a regular employee (Article 281, second paragraph). 2 Assuming, therefore, that Orpiada could properly be regarded as a casual (as distinguished from a regular) employee of the bank, he becomes entitled to be regarded as a regular employee of the bank as soon as he had completed one year of service to the bank. Employers may not terminate the service of a regular employee except for a just cause or when authorized under the Labor Code (Article 280 3 [now 279], Labor Code). It is not difficult to see that to uphold the contractual arrangement between the bank and CESI would in effect be to permit employers to avoid the necessity of hiring regular or permanent employees and to enable them to keep their employees indefinitely on a temporary or casual status, thus to deny them security of tenure in their jobs. Article 106 of the Labor Code is precisely designed to prevent such a result.

We hold that, in the circumstances of this case, CESI was engaged in “laboronly” contracting vis-a-vis the petitioner bank and in respect of Ricardo Orpiada, and that consequently, the petitioner bank is liable to Orpiada as if Orpiada had been directly employed not only by CESI but also by the bank. It may well be that the bank may in turn proceed against CESI to obtain reimbursement of, or some contribution to, the amounts which the bank will have to pay to Orpiada; but this is not necessary to determine here.