THIRD
DIVISION
|
COCA-COLA BOTTLERS PHILS., INC.,
Petitioner, - versus
- ALAN M. AGITO, REGOLO S. OCA III, ERNESTO G. ALARIAO,
JR., ALFONSO PAA, JR., DEMPSTER P. ONG, URRIQUIA T. ARVIN, GIL H. FRANCISCO,
and EDWIN M. GOLEZ,
Respondents. |
|
G.R. No. 179546 Present: YNARES-SANTIAGO, J., Chairperson, AUSTRIA-MARTINEZ, , CHICO-NAZARIO,
NACHURA,
and PERALTA,
JJ. Promulgated: February 13, 2009 |
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D
E C I S I O N
CHICO-NAZARIO, J.:
This is a
Petition for Review on Certiorari,
under Rule 45 of the Rules of Court, assailing the Decision[1]
dated 19 February 2007, promulgated by the Court of Appeals in CA-G.R. SP No. 85320, reversing the
Resolution[2]
rendered on
Petitioner is a domestic corporation duly registered with the Securities and Exchange Commission (SEC) and engaged in manufacturing, bottling and distributing soft drink beverages and other allied products.
On
Respondents
alleged in their Position Paper that they were salesmen assigned at the Lagro
Sales Office of petitioner. They had
been in the employ of petitioner for years, but were not regularized. Their employment was terminated on
Petitioner
filed its Position Paper (with Motion to Dismiss),[4]
where it averred that respondents were employees of Interserve who were tasked
to perform contracted services in accordance with the provisions of the
Contract of Services[5] executed
between petitioner and Interserve on 23 March 2002. Said Contract between petitioner and
Interserve, covering the period of
To prove
the status of Interserve as an independent contractor, petitioner presented the
following pieces of evidence: (1) the Articles of Incorporation of Interserve;[6]
(2) the Certificate of Registration of Interserve with the Bureau of Internal
Revenue;[7] (3) the Income Tax Return, with Audited
Financial Statements, of Interserve for 2001;[8]
and (4) the Certificate of Registration of Interserve as an independent job
contractor, issued by the Department of Labor and Employment (DOLE).[9]
As a
result, petitioner asserted that respondents were employees of Interserve,
since it was the latter which hired them, paid their wages, and supervised
their work, as proven by: (1) respondents’ Personal Data Files in the records
of Interserve;[10]
(2) respondents’ Contract of Temporary Employment with Interserve;[11]
and (3) the payroll records of Interserve.[12]
Petitioner, thus, sought the dismissal of respondents’
complaint against it on the ground that the Labor Arbiter did not acquire
jurisdiction over the same in the absence of an employer-employee relationship
between petitioner and the respondents.[13]
In a Decision dated 28 May 2003, the
Labor Arbiter found that respondents were employees of Interserve and not of
petitioner. She reasoned that the
standard put forth in Article 280 of the Labor Code for determining regular
employment (i.e., that the employee is performing activities that are
necessary and desirable in the usual business of the employer) was not
determinative of the issue of whether an employer-employee relationship existed
between petitioner and respondents.
While respondents performed activities that were necessary and desirable
in the usual business or trade of petitioner, the Labor Arbiter underscored
that respondents’ functions were not indispensable to the principal business of
petitioner, which was manufacturing and bottling soft drink beverages and
similar products.
The Labor
Arbiter placed considerable weight on the fact that Interserve was registered
with the DOLE as an independent job contractor, with total assets amounting to P1,439,785.00
as of
Nevertheless,
the Labor Arbiter directed Interserve to pay respondents their pro-rated 13th
month benefits for the period of January 2002 until April 2002.[14]
In the end, the Labor Arbiter
decreed:
WHEREFORE, judgment is hereby rendered finding that [herein respondents] are employees of [herein petitioner] INTERSERVE MANAGEMENT & MANPOWER RESOURCES, INC. Concomitantly, respondent Interserve is further ordered to pay [respondents] their pro-rated 13th month pay.
The complaints against COCA-COLA BOTTLERS PHILS., INC. is DISMISMMED for lack of merit.
In like manner the complaints against PEERLESS INTEGRATED SERVICES, INC., BETTER BUILDING INC. and EXCELLENT PARTNERS COOPERATIVE are DISMISSED for failure of complainants to pursue against them.
Other claims are dismissed for lack of merit.
The computation of the Computation
and Examination Unit, this Commission if (sic) made part of this Decision. [15]
Unsatisfied with the foregoing
Decision of the Labor Arbiter, respondents filed an appeal with the NLRC, docketed as NLRC NCR CA No. 036494-03.
In their Memorandum of Appeal,[16]
respondents maintained that contrary to the finding of the Labor Arbiter, their
work was indispensable to the principal business of petitioner. Respondents supported their claim with copies
of the Delivery Agreement[17]
between petitioner and TRMD Incorporated, stating that petitioner was “engaged
in the manufacture, distribution and sale of soft drinks and other related
products with various plants and sales offices and warehouses located all over
the Philippines.” Moreover, petitioner supplied the tools and equipment used by
respondents in their jobs such as forklifts, pallet, etc. Respondents
were also required to work in the warehouses, sales offices, and plants of
petitioner. Respondents pointed out that,
in contrast, Interserve did not own trucks, pallets cartillas, or any other equipment necessary in the sale of Coca-Cola
products.
Respondents further averred in their
Memorandum of Appeal that petitioner exercised control over workers supplied by
various contractors. Respondents cited
as an example the case of Raul Arenajo (Arenajo), who, just like them, worked
for petitioner, but was made to appear as an employee of the contractor
Peerless Integrated Services, Inc. As
proof of control by petitioner, respondents submitted copies of: (1) a
Memorandum[18] dated
11 August 1998 issued by Vicente Dy (Dy), a supervisor of petitioner, addressed
to Arenajo, suspending the latter from work until he explained his
disrespectful acts toward the supervisor who caught him sleeping during work
hours; (2) a Memorandum[19]
dated 12 August 1998 again issued by Dy to Arenajo, informing the latter that
the company had taken a more lenient and tolerant position regarding his
offense despite having found cause for his dismissal; (3) Memorandum[20]
issued by Dy to the personnel of Peerless Integrated Services, Inc., requiring
the latter to present their timely request for leave or medical certificates
for their absences; (4) Personnel Workers Schedules, [21]
prepared by RB Chua, another supervisor of petitioner; (5) Daily Sales
Monitoring Report prepared by petitioner;[22] and (6) the Conventional Route
System Proposed Set-up of petitioner. [23]
The NLRC,
in a Resolution dated 30 October 2003, affirmed the Labor Arbiter’s Decision
dated 28 May 2003 and pronounced that no employer-employee relationship existed
between petitioner and respondents. It
reiterated the findings of the Labor Arbiter that Interserve was an independent
contractor as evidenced by its substantial assets and registration with the
DOLE. In addition, it was Interserve
which hired and paid respondents’ wages, as well as paid and remitted their
SSS, Medicare, and Pag-ibig contributions.
Respondents likewise failed to convince the NLRC that the instructions
issued and trainings conducted by petitioner proved that petitioner exercised
control over respondents as their employer.[24] The dispositive part of the NLRC Resolution
states:[25]
WHEREFORE, the instant appeal is hereby DISMISSED for lack of merit. However, respondent Interserve Management & Manpower Resources, Inc., is hereby ordered to pay the [herein respondents] their pro-rated 13th month pay.
Aggrieved once more, respondents
sought recourse with the Court of Appeals by filing a Petition for Certiorari
under Rule 65, docketed as CA-G.R. SP
No. 85320.
The Court of Appeals promulgated its Decision on P510,000.00 invested in its service vehicles and P200,000.00
in its machineries and equipment, Interserve would be hard-pressed to meet the
demands of daily soft drink deliveries of petitioner in the Lagro area. The Court Appeals concluded that the respondents
used the equipment, tools, and facilities of petitioner in the day-to-day sales
operations.
Additionally, the Court of Appeals determined that petitioner
had effective control over the means and method of respondents’ work as
evidenced by the Daily Sales Monitoring Report, the Conventional Route System
Proposed Set-up, and the memoranda issued by the supervisor of petitioner
addressed to workers, who, like respondents, were supposedly supplied by
contractors. The appellate court deemed
that the respondents, who were tasked to deliver, distribute, and sell Coca-Cola
products, carried out functions directly related and necessary to the main
business of petitioner. The appellate
court finally noted that certain provisions of the Contract of Service between
petitioner and Interserve suggested that the latter’s undertaking did not
involve a specific job, but rather the supply of manpower.
The decretal portion of the Decision of the Court of Appeals
reads:[26]
WHEREFORE, the petition is GRANTED. The assailed Resolutions of public respondent NLRC are REVERSED and SET ASIDE. The case is remanded to the NLRC for further proceedings.
Petitioner
filed a Motion for Reconsideration, which the Court of Appeals denied in a
Resolution, dated
Hence, the
present Petition, in which the following issues are raised[28]:
I
WHETHER OR NOT THE COURT OF APPEALS ACTED IN ACCORDANCE WITH EVIDENCE ON RECORD, APPLICABLE LAWS AND ESTABLISHED JURISPRUDENCE WHEN IT RULED THAT INTERSERVE IS A LABOR-ONLY CONTRACTOR;
II
WHETHER OR NOT THE COURT OF APPEALS ACTED IN ACCORDANCE WITH APPLICABLE LAWS AND ESTABLISHED JURISPRUDENCE WHEN IT CONCLUDED THAT RESPONDENTS PERFORMED WORK NECESSARY AND DESIRABLE TO THE BUSINESS OF [PETITIONER];
III
WHETHER OR NOT THE COURT OF APPEALS COMMITTED SERIOUS ERROR WHEN IT DECLARED THAT RESPONDENTS WERE EMPLOYEES OF [PETITIONER], EVEN ABSENT THE FOUR ELEMENTS INDICATIVE OF AN EMPLOYMENT RELATIONSHIP; AND
IV
WHETHER OR NOT THE COURT OF APPEALS SERIOUSLY ERRED WHEN IT CONCLUDED THAT INTERSERVE WAS ENGAGED BY [PETITIONER] TO SUPPLY MANPOWER ONLY.
The Court ascertains that the
fundamental issue in this case is whether Interserve is a legitimate job
contractor. Only by resolving such issue
will the Court be able to determine whether an employer-employee relationship
exists between petitioner and the respondents. To settle the same issue, however, the Court
must necessarily review the factual findings of the Court of Appeals and look
into the evidence presented by the parties on record.
As a general rule, factual findings
of the Court of Appeals are binding upon the Supreme Court. One exception to this rule is when the
factual findings of the former are contrary to those of the trial court, or the
lower administrative body, as the case may be.
This Court is obliged to resolve an issue of fact herein due to the
incongruent findings of the Labor Arbiter and the NLRC and those of the Court
of Appeals. [29]
The relations which may arise in a
situation, where there is an employer, a contractor, and employees of the
contractor, are identified and distinguished under Article 106 of the Labor
Code:
Article 106. Contractor or subcontractor. - Whenever an employer enters into a contract with another person for the performance of the former’s work, the employees of the contractor and of the latter’s subcontractor, if any, shall be paid in accordance with the provisions of this Code.
In the event that the contractor or subcontractor fails to pay the wages of his employees in accordance with this Code, the employer shall be jointly and severally liable with his contractor or subcontractor to such employees to the extent of the work performed under the contract, in the same manner and extent that he is liable to employees directly employed by him.
The Secretary of Labor may, by appropriate regulations, restrict or prohibit the contracting out of labor to protect the rights of workers established under this Code. In so prohibiting or restriction, he may make appropriate distinctions between labor-only contracting and job contracting as well as differentiations within these types of contracting and determine who among the parties involved shall be considered the employer for purposes of this Code, to prevent any violation or circumvention of any provision of this Code.
There is “labor-only” contracting where the person supplying workers to an employee does not have substantial capital or investment in the form of tools, equipment, machineries, work premises, among others, and the workers recruited and placed by such persons are performing activities which are directly related to the principal business of such employer. In such cases, the person or intermediary shall be considered merely as an agent of the employer who shall be responsible to the workers in the same manner and extent as if the latter were directly employed by him.
The afore-quoted provision recognizes
two possible relations among the parties: (1) the permitted legitimate job
contract, or (2) the prohibited labor-only contracting.
A legitimate job contract, wherein an
employer enters into a contract with a job contractor for the performance of
the former’s work, is permitted by law.
Thus, the employer-employee relationship between the job contractor and
his employees is maintained. In legitimate job contracting, the law creates an
employer-employee relationship between the employer and the contractor’s
employees only for a limited purpose, i.e., to ensure that the employees
are paid their wages. The employer
becomes jointly and severally liable with the job contractor only for the
payment of the employees’ wages whenever the contractor fails to pay the
same. Other than that, the employer is
not responsible for any claim made by the contractor’s employees.[30]
On the other hand, labor-only
contracting is an arrangement wherein the contractor merely acts as an agent in
recruiting and supplying the principal employer with workers for the purpose of
circumventing labor law provisions setting down the rights of employees. It is not condoned by law. A finding by the appropriate authorities that
a contractor is a “labor-only” contractor establishes an employer-employee
relationship between the principal employer and the contractor’s employees and
the former becomes solidarily liable for all the rightful claims of the
employees. [31]
Section 5 of the Rules Implementing
Articles 106-109 of the Labor Code, as amended, provides the guidelines in
determining whether labor-only contracting exists:
Section 5. Prohibition against labor-only contracting. Labor-only contracting is hereby declared prohibited. For this purpose, labor-only contracting shall refer to an arrangement where the contractor or subcontractor merely recruits, supplies, or places workers to perform a job, work or service for a principal, and any of the following elements are [is] present:
i) The contractor or subcontractor does not have substantial capital or investment which relates to the job, work, or service to be performed and the employees recruited, supplied or placed by such contractor or subcontractor are performing activities which are directly related to the main business of the principal; or
ii) The contractor does not exercise the right to control the performance of the work of the contractual employee.
The foregoing provisions shall be without prejudice to the application of Article 248(C) of the Labor Code, as amended.
“Substantial capital or investment” refers to capital stocks and subscribed capitalization in the case of corporations, tools, equipment, implements, machineries and work premises, actually and directly used by the contractor or subcontractor in the performance or completion of the job, work, or service contracted out.
The “right to control” shall refer to the right reversed to the person for whom the services of the contractual workers are performed, to determine not only the end to be achieved, but also the manner and means to be used in reaching that end. (Emphasis supplied.)
When there is labor-only contracting,
Section 7 of the same implementing rules, describes the consequences thereof:
Section 7. Existence of an employer-employee relationship.—The contractor or subcontractor shall be considered the employer of the contractual employee for purposes of enforcing the provisions of the Labor Code and other social legislation. The principal, however, shall be solidarily liable with the contractor in the event of any violation of any provision of the Labor Code, including the failure to pay wages.
The principal shall be deemed the employer of the contractual employee in any of the following case, as declared by a competent authority:
a. where there is labor-only contracting; or
b. where the contracting arrangement falls within the prohibitions provided in Section 6 (Prohibitions) hereof.
According to the foregoing provision,
labor-only contracting would give rise to: (1) the creation of an
employer-employee relationship between the principal and the employees of the
contractor or sub-contractor; and (2) the solidary liability of the principal and
the contractor to the employees in the event of any violation of the Labor
Code.
Petitioner argues that there could not have been labor-only
contracting, since respondents did not perform activities that were
indispensable to petitioner’s principal business. And, even assuming that they did, such fact
alone does not establish an employer-employee relationship between petitioner
and the respondents, since respondents were unable to show that petitioner
exercised the power to select and hire them, pay their wages, dismiss them, and
control their conduct.
The
argument of petitioner is untenable.
The law clearly establishes an employer-employee relationship
between the principal employer and the contractor’s employee upon a finding
that the contractor is engaged in “labor-only” contracting. Article 106 of the Labor Code categorically
states: “There is ‘labor-only’ contracting where the
person supplying workers to an employee does not have substantial capital or
investment in the form of tools, equipment, machineries, work premises, among
others, and the workers
recruited and placed by such persons are performing activities which are directly
related to the principal business of such employer.” Thus, performing activities directly
related to the principal business of the employer is only one of the two
indicators that “labor-only” contracting exists; the other is lack of
substantial capital or investment. The
Court finds that both indicators exist in the case at bar.
Respondents
worked for petitioner as salesmen, with the exception of respondent Gil Francisco
whose job was designated as leadman. In
the Delivery Agreement[32]
between petitioner and TRMD Incorporated, it is stated that petitioner is
engaged in the manufacture, distribution and sale of softdrinks and other
related products. The work of
respondents, constituting distribution and sale of Coca-Cola products, is
clearly indispensable to the principal business of petitioner. The repeated re-hiring of some of the
respondents supports this finding.[33]
Petitioner also does not contradict
respondents’ allegations that the former has Sales Departments and Sales
Offices in its various offices, plants, and warehouses; and that petitioner
hires Regional Sales Supervisors and District Sales Supervisors who supervise and
control the salesmen and sales route helpers.[34]
As to
the supposed substantial capital and investment required of an independent job
contractor, petitioner calls the attention of the Court to the authorized
capital stock of Interserve amounting to P2,000,000.00.[35] It cites as authority Filipinas Synthetic Fiber Corp. v. National Labor Relations Commission[36]
and Frondozo v. National Labor Relations
Commission,[37] where
the contractors’ authorized capital stock of P1,600,000.00 and P2,000,000.00,
respectively, were considered substantial for the purpose of concluding that
they were legitimate job contractors.
Petitioner also refers to Neri v.
National Labor Relations Commission[38]
where it was held that a contractor ceases to be a labor-only contractor by
having substantial capital alone, without investment in tools and equipment.
This Court is unconvinced.
At the outset, the Court clarifies
that although Interserve has an authorized capital stock amounting to P2,000,000.00,
only P625,000.00 thereof was paid up as of
Petitioner cannot seek refuge in Neri v. National Labor Relations Commission. Unlike in Neri,
petitioner was unable to prove in the instant case that Interserve had substantial
capitalization to be an independent job contractor. In San
Miguel Corporation v. MAERC
Integrated Services, Inc.,[40]
therein petitioner San Miguel Corporation similarly invoked Neri, but was rebuffed by the Court
based on the following ratiocination[41]:
Petitioner also ascribes as error the failure of the Court of Appeals to apply the ruling in Neri v. NLRC. In that case, it was held that the law did not require one to possess both substantial capital and investment in the form of tools, equipment, machinery, work premises, among others, to be considered a job contractor. The second condition to establish permissible job contracting was sufficiently met if one possessed either attribute.
Accordingly,
petitioner alleged that the appellate court and the NLRC erred when they
declared MAERC a labor-only contractor despite the finding that MAERC had
investments amounting to P4,608,080.00 consisting of buildings,
machinery and equipment.
However, in Vinoya v. NLRC, we clarified that it was not enough to show substantial capitalization or investment in the form of tools, equipment, machinery and work premises, etc., to be considered an independent contractor. In fact, jurisprudential holdings were to the effect that in determining the existence of an independent contractor relationship, several factors may be considered, such as, but not necessarily confined to, whether the contractor was carrying on an independent business; the nature and extent of the work; the skill required; the term and duration of the relationship; the right to assign the performance of specified pieces of work; the control and supervision of the workers; the power of the employer with respect to the hiring, firing and payment of the workers of the contractor; the control of the premises; the duty to supply premises, tools, appliances, materials and labor; and the mode, manner and terms of payment.
In Neri, the Court considered not only the fact that respondent Building Care Corporation (BCC) had substantial capitalization but noted that BBC carried on an independent business and performed its contract according to its own manner and method, free from the control and supervision of its principal in all matters except as to the results thereof. The Court likewise mentioned that the employees of BCC were engaged to perform specific special services for their principal. The status of BCC had also been passed upon by the Court in a previous case where it was found to be a qualified job contractor because it was a “big firm which services among others, a university, an international bank, a big local bank, a hospital center, government agencies, etc.” Furthermore, there were only two (2) complainants in that case who were not only selected and hired by the contractor before being assigned to work in the Cagayan de Oro branch of FEBTC but the Court also found that the contractor maintained effective supervision and control over them.
Thus, in San Miguel Corporation, the investment of MAERC, the contractor
therein, in the form of buildings, tools, and equipment of more than P4,000,000.00
did not impress the Court, which still declared MAERC to be a labor-only contractor. In another case, Dole Philippines, Inc. v. Esteva,[42] the Court did not recognize the contractor therein
as a legitimate job contractor, despite its paid-up capital of over P4,000,000.00,
in the absence of substantial investment in tools and equipment used in the
services it was rendering.
Insisting that Interserve had
substantial investment, petitioner assails, for being purely speculative, the finding
of the Court of Appeals that the service vehicles and equipment of Interserve, with
the values of P510,000.00 and P200,000.00, respectively, could
not have met the demands of the Coca-Cola deliveries in the Lagro area.
Yet again, petitioner fails to
persuade.
The contractor, not the employee, has
the burden of proof that it has the substantial capital, investment, and tool
to engage in job contracting.[43] Although not the contractor itself (since
Interserve no longer appealed the judgment against it by the Labor Arbiter), said
burden of proof herein falls upon petitioner who is invoking the supposed
status of Interserve as an independent job contractor. Noticeably, petitioner failed to submit
evidence to establish that the service vehicles and equipment of Interserve, valued
at P510,000.00 and P200,000.00, respectively, were sufficient to
carry out its service contract with petitioner.
Certainly, petitioner could have simply provided the courts with records
showing the deliveries that were undertaken by Interserve for the Lagro area,
the type and number of equipment necessary for such task, and the valuation of
such equipment. Absent evidence which a
legally compliant company could have easily provided, the Court will not presume
that Interserve had sufficient investment in service vehicles and equipment,
especially since respondents’ allegation – that they were using equipment, such
as forklifts and pallets belonging to petitioner, to carry out their jobs – was
uncontroverted.
In sum,
Interserve did not have substantial capital or investment in the form of tools,
equipment, machineries, and work premises; and respondents, its supposed
employees, performed work which was directly related to the principal business
of petitioner. It is, thus, evident that
Interserve falls under the definition of a “labor-only” contractor, under Article
106 of the Labor Code; as well as Section 5(i) of the Rules Implementing Articles 106-109
of the Labor Code, as amended.
The Court, however, does not stop at
this finding. It is also apparent that
Interserve is a labor-only contractor under Section 5(ii)[44]
of the Rules Implementing Articles 106-109 of the Labor Code, as amended, since
it did not exercise the right to control the performance of the work of respondents.
The lack of
control of Interserve over the respondents can be gleaned from the Contract of
Services between Interserve (as the CONTRACTOR) and petitioner (as the CLIENT),
pertinent portions of which are reproduced below:
WHEREAS, the CONTRACTOR is engaged in the business, among others, of performing and/or undertaking, managing for consideration, varied projects, jobs and other related management-oriented services;
WHEREAS, the CONTRACTOR warrants that it has the necessary capital, expertise, technical know-how and a team of professional management group and personnel to undertake and assume the responsibility to carry out the above mentioned project and services;
WHEREAS, the CLIENT is desirous of utilizing the services and facilities of the CONTRACTOR for emergency needs, rush jobs, peak product loads, temporary, seasonal and other special project requirements the extent that the available work of the CLIENT can properly be done by an independent CONTRACTOR permissible under existing laws and regulations;
WHEREAS, the CONTRACTOR has offered to perform specific jobs/works at the CLIENT as stated heretofore, under the terms and conditions herein stated, and the CLIENT has accepted the offer.
NOW THEREFORE, for and in consideration of the foregoing premises and of the mutual covenants and stipulations hereinafter set forth, the parties have hereto have stated and the CLIENT has accepted the offer:
1. The CONTRACTOR agrees and undertakes to perform and/or provide for the CLIENT, on a non-exclusive basis for tasks or activities that are considered contractible under existing laws and regulations, as may be needed by the CLIENT from time to time.
2. To carry out the undertakings specified in the immediately preceding paragraph, the CONTRACTOR shall employ the necessary personnel like Route Helpers, Salesmen, Drivers, Clericals, Encoders & PD who are at least Technical/Vocational courses graduates provided with adequate uniforms and appropriate identification cards, who are warranted by the CONTRACTOR to be so trained as to efficiently, fully and speedily accomplish the work and services undertaken herein by the CONTRACTOR. The CONTRACTOR represents that its personnel shall be in such number as will be sufficient to cope with the requirements of the services and work herein undertaken and that such personnel shall be physically fit, of good moral character and has not been convicted of any crime. The CLIENT, however, may request for the replacement of the CONTRACTOR’S personnel if from its judgment, the jobs or the projects being done could not be completed within the time specified or that the quality of the desired result is not being achieved.
3. It is agreed and understood that the CONTRACTOR’S personnel will comply with CLIENT, CLIENT’S policies, rules and regulations and will be subjected on-the-spot search by CLIENT, CLIENT’S duly authorized guards or security men on duty every time the assigned personnel enter and leave the premises during the entire duration of this agreement.
4. The CONTRACTOR further warrants to make available at times relievers and/or replacements to ensure continuous and uninterrupted service as in the case of absences of any personnel above mentioned, and to exercise the necessary and due supervision over the work of its personnel.[45]
Paragraph 3
of the Contract specified that the personnel of contractor Interserve, which
included the respondents, would comply with “CLIENT” as well as “CLIENT’s policies,
rules and regulations.” It even required
Interserve personnel to subject themselves to on-the-spot searches by petitioner or its duly
authorized guards or security men on duty every time the said personnel entered
and left the premises of petitioner.
Said paragraph explicitly established the control of petitioner over the
conduct of respondents. Although under
paragraph 4 of the same Contract, Interserve warranted that it would exercise
the necessary and due supervision of the work of its personnel, there is a dearth
of evidence to demonstrate the extent or degree of supervision exercised by
Interserve over respondents or the manner in which it was actually
exercised. There is even no showing that
Interserve had representatives who supervised respondents’ work while they were
in the premises of petitioner.
Also
significant was the right of petitioner under paragraph 2 of the Contract to
“request the replacement of the CONTRACTOR’S personnel.” True, this right was conveniently qualified
by the phrase “if from
its judgment, the jobs or the projects being done could not be completed within
the time specified or that the quality of the desired result is not being
achieved,” but such qualification was rendered meaningless by the fact
that the Contract did not stipulate what work or job the personnel needed to
complete, the time for its completion, or the results desired. The said provision left a gap which could
enable petitioner to demand the removal or replacement of any employee in the
guise of his or her inability to complete a project in time or to deliver the
desired result. The power to recommend
penalties or dismiss workers is the strongest indication of a company’s right
of control as direct employer.[46]
Paragraph 4
of the same Contract, in which Interserve warranted to petitioner that the
former would provide relievers and replacements in case of absences of its
personnel, raises another red flag. An
independent job contractor, who is answerable to the principal only for the
results of a certain work, job, or service need not guarantee to said principal
the daily attendance of the workers assigned to the latter. An independent job contractor would surely
have the discretion over the pace at which the work is performed, the number of
employees required to complete the same, and the work schedule which its
employees need to follow.
As the
Court previously observed, the Contract of Services between Interserve and
petitioner did not identify the work needed to be performed and the final
result required to be accomplished.
Instead, the Contract specified the type of workers Interserve must
provide petitioner (“Route Helpers, Salesmen, Drivers, Clericals, Encoders
& PD”) and their qualifications (technical/vocational course graduates,
physically fit, of good moral character, and have not been convicted of any
crime). The Contract also states that, “to carry out the undertakings
specified in the immediately preceding paragraph, the CONTRACTOR shall employ
the necessary personnel,” thus, acknowledging that Interserve did not yet have
in its employ the personnel needed by petitioner and would still pick out such
personnel based on the criteria provided by petitioner. In other words, Interserve did not obligate
itself to perform an identifiable job, work, or service for petitioner, but
merely bound itself to provide the latter with specific types of
employees. These contractual provisions strongly
indicated that Interserve was merely a recruiting and manpower agency providing
petitioner with workers performing tasks directly related to the latter’s
principal business.
The
certification issued by the DOLE stating that Interserve is an independent job contractor
does not sway this Court to take it at face value, since the primary purpose
stated in the Articles of Incorporation[47]
of Interserve is misleading. According
to its Articles of Incorporation, the principal business of Interserve is to
provide janitorial and allied services.
The delivery and distribution of Coca-Cola products, the work for which respondents
were employed and assigned to petitioner, were in no way allied to janitorial
services. While the DOLE may have found that
the capital and/or investments in tools and equipment of Interserve were sufficient
for an independent contractor for janitorial services, this does not mean that such
capital and/or investments were likewise sufficient to maintain an independent contracting
business for the delivery and distribution of Coca-Cola products.
With the finding that Interserve was
engaged in prohibited labor-only contracting, petitioner shall be deemed the
true employer of respondents. As regular
employees of petitioner, respondents cannot be dismissed except for just or
authorized causes, none of which were alleged or proven to exist in this case,
the only defense of petitioner against the charge of illegal dismissal being
that respondents were not its employees.
Records also failed to show that petitioner afforded respondents the
twin requirements of procedural due process, i.e., notice and hearing, prior to their dismissal. Respondents were not served notices informing
them of the particular acts for which their dismissal was sought. Nor were they required to give their side
regarding the charges made against them.
Certainly, the respondents’ dismissal was not carried out in accordance
with law and, therefore, illegal.[48]
Given that respondents were illegally dismissed by petitioner, they are entitled to reinstatement, full backwages, inclusive of allowances, and to their other benefits or the monetary equivalents thereof computed from the time their compensations were withheld from them up to the time of their actual reinstatement, as mandated under Article 279 of the Labor Code,.
IN VIEW OF THE FOREGOING, the instant Petition is DENIED.
The Court AFFIRMS WITH
MODIFICATION the Decision dated
SO ORDERED.
|
|
MINITA V. CHICO-NAZARIO
Associate
Justice |
WE CONCUR:
CONSUELO YNARES-SANTIAGO
Associate Justice
Chairperson
Associate Justice Associate
Justice
DIOSDADO M.
PERALTA
Associate Justice
ATTESTATION
I attest that the conclusions in the above
Decision were reached in consultation before the case was assigned to the
writer of the opinion of the Court’s Division.
CONSUELO YNARES-SANTIAGO
Associate Justice
Chairperson, Third Division
CERTIFICATION
Pursuant to Section 13, Article VIII
of the Constitution, and the Division Chairperson’s Attestation, it is hereby
certified that the conclusions in the above Decision were reached in
consultation before the case was assigned to the writer of the opinion of the
Court’s Division.
REYNATO S. PUNO
Chief Justice
[1] Penned
by Associate Justice Rosalinda
[2] Rollo, pp. 152-157.
[3]
[4] CA
rollo, pp. 55-69.
[5]
[6]
[7]
[8]
[9]
[10]
[11] Id
at 95-96, 98-99, 101-102, 104-405, 107-108, 110-111. Only six Contracts of Temporary Employment
were attached to the Position Paper. The
Contracts for Temporary Employment of two of the respondents, Alfonso Paa, Jr.
and Edwin Golez, were not submitted.
[12]
[13]
[14] Rollo, pp. 134-149.
[15]
[16] CA rollo, pp. 150-170.
[17]
[18]
[19]
[20]
[21]
[22]
[23]
[24] Rollo, pp.152-156.
[25]
[26]
[27] CA rollo, pp. 456-457.
[28] Rollo, p. 330.
[29] Filipinas Pre-Fabricated Building Systems
(Filsystems), Inc. v. Puente, G.R. No. 153832,
[30] San Miguel Corporation v. MAERC Integrated
Services, Inc., 453 Phil. 543, 566-567 (2003).
[31]
[32] Rollo, p. 199.
[33] Based on respondents’ Personal Data files, which were kept by Interserve, respondent Regolo Oca worked in Coca-Cola in September 2000 as a salesman and his contract was renewed three more times until he was dismissed in April 2002. Respondent Ernesto Alario worked in Coca-Cola in October 2001, and his contract was renewed one more time before his dismissal in April 2002. Respondent Gil Francisco worked in Coca-cola as a Driver on August 1998 and later on as leadman in December 1998, and his contract was renewed until he was dismissed in April 2002. Respondent Arvin Urquia worked as a salesman in Coca-Cola in October 2001, and his contract was renewed in February 2002 until he was dismissed in April 2002. Lastly, respondent Alan Agito worked in Coca-Cola as salesman in May 2002, and his contract was renewed until he was dismissed in April 2002. (CA rollo, pp. 94, 97, 100, 103, 106, and 109.)
[34] Rollo, p. 283.
[35]
[36] 327 Phil. 144 (1996).
[37] CA-G.R.
SP No. 102442,
[38] G.R.
Nos. 97008-09,
[39] CA rollo, p. 78.
[40] Supra note 30.
[41]
[42] G.R.
No. 161115,
[43] Aboitiz Haulers, Inc. v. Dimapatoi, G.R.
No. 148619, 19 September 2006, 502 SCRA 271, 289; Guarin v. National Labor Relations Commission, G.R. No. 86010, 3
October 1989, 178 SCRA 267, 273.
[44] According
to Section 5 of the Rules Implementing Articles 106-109, as amended:
Section 5. Prohibition against labor-only
contracting. Labor-only contracting is
hereby declared prohibited. For this
purpose, labor-only contracting shall refer to an arrangement where the contractor
or subcontractor merely recruits, supplies, or places workers to perform a job,
work or service for a principal, and any
of the following elements are [is] present:
i)
The
contractor or subcontractor does not have substantial capital or investment which
relates to the job, work, or service to be performed and the employees
recruited, supplied or placed by such contractor or subcontractor are
performing activities which are directly related to the main business of the
principal; or
ii)
The
contractor does not exercise the right to control the performance of the work
of the contractual employee.
The use of the words “any” and “or” in the foregoing
provision means that the elements of labor-only contracting identified therein need
not exist concurrently. The existence of
one element is sufficient to establish labor-only contracting.
[45] Rollo, pp. 74-75.
[46] Brotherhood Labor Unity Movement of the
[47] CA rollo, p. 78.
[48] Abesco Construction and Development Corporation v. Ramirez, G.R. No. 141168, 10 April 2006, 487 SCRA 9, 15; Grandspan Development Corporation v. Bernardo, G.R. No. 141464, 21 September 2005, 470 SCRA 461, 470; Raycor Aircontrol Systems, Inc. v. National Labor Relations Commission, 330 Phil. 306, 334 (1996).