Case Digest: Aliviado, et al. v. Procter & Gamble Phils

G.R. No. 160506 : June 6, 2011

JOEB M. ALIVIADO, Petitioners, v. PROCTER & GAMBLE PHILS., INC., and PROMM-GEM INC., Respondents.



Petitioners worked as merchandisers of P&G from various dates, allegedly starting as early as 1982 or as late as June 1991, to either May 5, 1992 or March 11, 1993, more specifically as follows: They all individually signed employment contracts with either Promm-Gem or SAPS for periods of more or less five months at a time.They were assigned at different outlets, supermarkets and stores where they handled all the products of P&G. They received their wages from Promm-Gem or SAPS.

SAPS and Promm-Gem imposed disciplinary measures on erring merchandisers for reasons such as habitual absenteeism, dishonesty or changing day-off without prior notice.

P&G is principally engaged in the manufacture and production of different consumer and health products, which it sells on a wholesale basis to various supermarkets and distributors.To enhance consumer awareness and acceptance of the products, P&G entered into contracts with Promm-Gem and SAPS for the promotion and merchandising of its products.

In December 1991, petitioners filed a complaintagainst P&G for regularization, service incentive leave pay and other benefits with damages. The complaint was later amendedto include the matter of their subsequent dismissal.

On November 29, 1996, the Labor Arbiter dismissed the complaint for lack of merit and ruled that there was no employer-employee relationship between petitioners and P&G. He found that the selection and engagement of the petitioners, the payment of their wages, the power of dismissal and control with respect to the means and methods by which their work was accomplished, were all done and exercised by Promm-Gem/SAPS. He further found that Promm-Gem and SAPS were legitimate independent job contractors.

NLRC affirmed the appealed decision. Petitioners filed a motion for reconsideration but the motion was denied.

Petitioners then filed a petition forcertiorariwith the CA, alleging grave abuse of discretion amounting to lack or excess of jurisdiction on the part of the Labor Arbiter and the NLRC. However, said petition was also denied by the CA. Hence, this petition.


Whether P&G is the employer of petitioners;

Whether petitioners were illegally dismissed

HELD: The decision of the Court of Appeals is sustained.


In the instant case, the financial statementsof Promm-Gem show that it has authorized capital stock ofP1 million and a paid-in capital, or capital available for operations, ofP500,000.00 as of 1990.It also has long term assets worthP432,895.28 and current assets ofP719,042.32. Promm-Gem has also proven that it maintained its own warehouse and office space with a floor area of 870 square meters.It also had under its name three registered vehicles which were used for its promotional/merchandising business. Promm-Gem also has other clientsaside from P&G.Under the circumstances, we find that Promm-Gem has substantial investment which relates to the work to be performed. These factors negate the existence of the element specified in Section 5(i) of DOLE Department Order No. 18-02.

The records also show that Promm-Gem supplied its complainant-workers with the relevant materials, such as markers, tapes, liners and cutters, necessary for them to perform their work. Promm-Gem also issued uniforms to them. It is also relevant to mention that Promm-Gem already considered the complainants working under it as its regular, not merely contractual or project, employees.

This circumstance negates the existence of element (ii) as stated in Section 5 of DOLE Department Order No. 18-02, which speaks ofcontractualemployees. This, furthermore, negates on the part of Promm-Gem bad faith and intent to circumvent labor laws which factors have often been tipping points that lead the Court to strike down the employment practice or agreement concerned as contrary to public policy, morals, good customs or public order.

Under the circumstances, Promm-Gem cannot be considered as a labor-only contractor. We find that it is a legitimate independent contractor.

On the other hand, the Articles of Incorporation of SAPS shows that it has a paid-in capital of onlyP31,250.00. There is no other evidence presented to show how much its working capital and assets are. Furthermore, there is no showing of substantial investment in tools, equipment or other assets.

Where labor-only contracting exists, the Labor Code itself establishes an employer-employee relationship between the employer and the employees of the labor-only contractor.The statute establishes this relationship for a comprehensive purpose: to prevent a circumvention of labor laws. The contractor is considered merely an agent of the principal employer and the latter is responsible to the employees of the labor-only contractor as if such employees had been directly employed by the principal employer.


Loss of trust and confidence, as a ground for dismissal, must be based on the wilful breach of the trust reposed in the employee by his employer. Ordinary breach will not suffice. A breach of trust is wilful if it is done intentionally, knowingly and purposely, without justifiable excuse, as distinguished from an act done carelessly, thoughtlessly, heedlessly or inadvertently.

Loss of trust and confidence, as a cause for termination of employment, is premised on the fact that the employee concerned holds a position of responsibility or of trust and confidence. As such, he must be invested with confidence on delicate matters, such as custody, handling or care and protection of the property and assets of the employer. And, in order to constitute a just cause for dismissal, the act complained of must be work-related and must show that the employee is unfit to continue to work for the employer.In the instant case, the petitioners-employees of Promm-Gem have not been shown to be occupying positions of responsibility or of trust and confidence. Neither is there any evidence to show that they are unfit to continue to work as merchandisers for Promm-Gem.