FACTS: Petitioners, Virginia Neri and Jose Cabelin, are employees of Building Care

Corporation which provides janitorial and other housekeeping services to Far East Bank and

Trust Company. Petitioners contend that they must be recognized as regular employees of

FEBTC and be paid the same wages which its employees receive. They presented this before the

Labor Arbiter, and consequently also the NLRC, that their reason was that they claim that BCC

is engaged in labor-only services, which, under the law, means that the principal of the contractor

is the employer of petitioners. However, BCC argued that it is, in fact, the employers of the

petitioners. Citing that it had substantial capitalization of P1 Million or a stockholders’ equity of

P1.5 Million, therefore it is not a labor-only contracting party, and even certified that they issued

Neri a certification that he is an employee of BCC, under its Housekeeping and Special Services

Division. However, petitioners counter by saying that even though they had some capital, they

have failed to adduce evidence to show that they were the ones who invested in the tools,

equipment, machineries to do the work required by FEBTC, and regardless of the certification it

does not hold water because they are still a labor-only contractor. Hence this petition.

ISSUES: Whether or not BCC is a labor-only contractor. Whether or not petitioners are

employees of BCC.

DECISION: The decision was ruled in favor of the respondents BCC and FEBTC. In order to

resolve the first issue, of whether BCC is a labor-only contractor or not, we must refer to the

conditions the Labor Code provides on what labor-only is. The two conditions are (a) that the

person supplying workers to an employer does not have substantial capital or investment in the

form of tools, equipment, machineries, and work premises, among others and (b) that the

workers recruited and placed by such person are performing activities which are directly related

to the principal business of the employer. Based on the foregoing, BCC is not a labor-only

contractor because while it is true that there is no evidence that BCC invested in tools,

equipment, etc., it is enough that BCC has substantial capital. The “or” in the first requirement

means that BCC must have either one of those requisites in order for him to prove that he is not a

labor-only contractor. In order to answer the second requirement and the second issue, the right

of control test must be performed. Petitioners would contend that BCC is still an independent

contractor, given that they are free to perform the cleaning in however manner they want and

thus are still not employees of BCC, so they must be employees of FEBTC. This however, is

untrue. While the act of actual cleaning and radio operation, in how they swept the floor or what

they said on the radio, cannot be supervised, it is enough in the records to show that BCC

maintained supervision and control over petitioners. The control being that they are in the

Housekeeping and Special Services Division, that petitioners reported to work in the prescribed

BCC uniform, leaves of absence were filed directly to BCC, and salaries were drawn from BCC

only. This was enough to say that BCC had control in how they were going to achieve the end

result, by controlling them through a division that monitors their activities. Thus, the case is

dismissed for lack of merit.