Republic of the
Supreme Court
SECOND
DIVISION
|
SAN MIGUEL CORPORATION, Petitioner, - versus - VICENTE B. SEMILLANO, NELSON MONDEJAR, JOVITO REMADA, ALILGILAN
MULTI-PURPOSE COOP (AMPCO) and MERLYN V. POLIDARIO, Respondents. |
|
G.R. No. 164257 Present: CARPIO,
J., Chairperson, NACHURA, PERALTA,
ABAD,
and MENDOZA,
JJ. Promulgated: July 5, 2010 |
x
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D E C I S
I O N
MENDOZA, J.:
This is a petition for review on
certiorari under Rule 45 of the Rules of Court assailing (i) the February 19,
2004 Decision[1] of the
Court of Appeals in CA-G.R. SP. No. 75209 which reversed and set aside the
The
facts of the case, as found by the Court of Appeals,[3]
are as follows:
“xxx It appears that AMPCO hired
the services of Vicente et al. [Vicente Semillano, Nelson Mondejar, Jovito
Remada and Alex Hawod,[4]
respondents herein] on different dates in December [of 1991 and] 1994. All of them were assigned to work in SMC’s
Bottling Plant situated at Brgy. Granada Sta. Fe,
Subsequently, SMC entered into a
Contract of Services[5]
with AMPCO designating the latter as the employer of Vicente, et al. As a
result, Vicente et al. failed to claim the rights and benefits ordinarily
accorded a regular employee of SMC. In
fact, they were not paid their 13th month pay. On June 6, 1995, they
were not allowed to enter the premises of SMC. The project manager of AMPCO,
Merlyn Polidario, told them to wait for further instructions from the SMC’s
supervisor. Vicente et al. waited for one month, unfortunately, they never
heard a word from SMC.
Consequently, Vicente et al., as
complainants, filed on July 17, 1995 a COMPLAINT FOR ILLEGAL DISMISSAL with the
Labor Arbiter against AMPCO, Merlyn V. Polidario, SMC and Rufino I. Yatar [SMC
Plant Manager], as respondents. xxx Complainants alleged that they were fillers
of SMC Bottling Plant xxx assigned to perform activities necessary and
desirable in the usual business of SMC. xxx They claim that they were under the
control and supervision of SMC personnel and have worked for more than 6 months
in the company. As such, they assert that they are regular employees of SMC.
However, SMC utilized AMPCO making
it appear that the latter was their employer, so that SMC may evade the
responsibility of paying the benefits due them under the law. Finally,
complainants contend that AMPCO and SMC failed to give their 13th
month pay and that they were prevented from entering the SMC’s premises. Hence,
complainants contend that they were illegally dismissed from service.
On the other hand, respondent SMC
raised the defense that it is not the employer of the complainants. According to SMC, AMPCO is their employer
because the latter is an independent contractor xxx. Also SMC alleged that it
was AMPCO that directly paid their salaries and remitted their contributions to
the SSS. Finally, SMC assails the
jurisdiction of the Labor Arbiter contending that the instant dispute is
intra-cooperative in nature falling within the jurisdiction of the Arbitration
Committee of the Cooperative Development Authority.
On
Wherefore,
premises considered, judgment is hereby rendered declaring herein complainants
as regular employees of San Miguel Corporation and the latter is ordered:
1.
To reinstate complainants to their previous or
equivalent positions without loss of seniority rights with payment of full
backwages from the time of their illegal dismissal up to the time of their
actual reinstatement; and
2.
To pay complainant’s counsel attorney’s fees 10% of
the total award or P36,625.76.
Per our computation complainants Vicente Semillano, Nelson Mondejar
and Jovito Remada are entitled to the amount of P122,085.88
each as full backwages covering the period
SO ORDERED.[7]
Accordingly, respondents filed a motion for
partial execution of the decision of the Labor Arbiter praying for their
immediate reinstatement.[8]
Petitioner San Miguel Corporation (SMC)
filed its Opposition to the motion.[9]
The LA, however, rendered no ruling thereon.[10]
Petitioner appealed the LA Decision to the
NLRC. Initially, the NLRC Fourth Division affirmed with modifications the
findings of the LA as follows:
WHEREFORE, premises
considered, the appeals of respondents AMPCO and SMC are denied for lack of
merit and the decision appealed from is affirmed with a modification in the
following:
a. Respondent SMC to pay complainants
their backwages from
b. Respondent SMC to pay complainants
their accrued salaries and allowances from
c. Respondent SMC to pay complainants
ten percent (10%) of the total award as attorney’s fees.
Complainants, to
restate, are regular employees of San Miguel Corporation and the latter is ordered
to reinstate complainants to their former position as pilers/segregators.
Petitioner SMC moved for a reconsideration of
the foregoing decision. In a Resolution
dated February 28, 2002, the NLRC acted on the motion and reversed its earlier ruling. It absolved petitioner from liability and
instead held AMPCO, as employer of respondents, liable to pay for respondents’
backwages, accrued salaries, allowances, and attorney’s fees. In holding that AMPCO was an independent
contractor, NLRC was of the view that the law only required substantial capital
or investment. Since AMPCO had “substantial
capital of nearly one (1) million” then it qualified as an independent contractor.
The NLRC added that even under the
control test, AMPCO would be the real employer of the respondents, since it had
assumed the entire charge and control of respondents’ services. Hence, an employer-employee relationship existed
between AMPCO and the respondents.
Respondents timely filed their motion for
reconsideration of the NLRC resolution but it was denied.[11]
Feeling aggrieved over the turnaround by the
NLRC, the respondents filed a petition for review on certiorari under Rule 65
with the Court of Appeals (CA), which
favorably acted on it.
In overturning the commission’s ruling, the Court
of Appeals ironically applied the same control test that the NLRC used to
resolve the issue of who the actual employer was. The CA, however, found that petitioner SMC
wielded (i) the power of control over respondent, as SMC personnel supervised
respondents’ performance of loading and unloading of beer bottles, and (ii) the
power of dismissal, as respondents were refused entry by SMC to its premises
and were instructed by the AMPCO manager “to wait for further instructions from
the SMC’s supervisor.” The CA added that
AMPCO was a labor-only contractor since “a capital of nearly one million pesos”
was insufficient for it to qualify as an independent contractor. Thus, the decretal portion reads:
WHEREFORE,
premises considered, the instant petition is GRANTED. The assailed Resolutions
dated February 28, 2002 and September 27, 2002 both issued by the public
respondent National Labor Relations Commission in the case docketed as RAB CASE
NO. 06-07-10298-95 are hereby SET ASIDE and a new one entered reinstating its
original Decision dated
SO
ORDERED.
SMC filed a motion for reconsideration but it
was denied by the CA in its May 28, 2004 Resolution.[12]
Hence, this petition for review on certiorari.
Petitioner
SMC argues that the CA wrongly assumed that it exercised power of control over the
respondents just because they performed their work within SMC’s premises. In advocacy
of its claim that AMPCO is an independent contractor, petitioner relies on the
provisions of the service contract between petitioner and AMPCO, wherein the
latter undertook to provide the materials, tools and equipment to accomplish
the services contracted out by petitioner. The same contract provides that AMPCO shall
have exclusive discretion in the selection, engagement and discharge of its
employees/personnel or otherwise in the direction and control thereof. Petitioner also adds that AMPCO determines
the wages of its employees/personnel who shall be within its full control.
Petitioner further argues that respondents’ action is
essentially one for “regularization” (as employees of SMC) which is nowhere
recognized or allowed by law. Lastly,
petitioner contends that the case involves an intra-cooperative dispute, which
is within the original and exclusive jurisdiction of the Arbitration Committee
of the Cooperative and, thereafter, the Cooperative Development Authority.
In its Comment,[13] respondent AMPCO essentially advanced the same arguments in support of its claim as a legitimate job contractor.
The only issue that needs to be resolved is whether or not
AMPCO is a legitimate job contractor. A claim that an action for regularization
has no legal basis and is violative of petitioner’s constitutional and
statutory rights is, therefore, dependent upon the resolution of the issue
posed above.
The petition fails.
Generally, the findings of fact made by the
Labor Arbiter and the NLRC, as the specialized agencies presumed to have the
expertise on matters within their respective fields, are accorded much respect
and even finality, when supported by ample evidence[14] and
affirmed by the CA. The fact that the
NLRC, in its subsequent resolution, reversed its original decision does not
render the foregoing inapplicable where the resolution itself is not supported
by substantial evidence.
Department of Labor and Employment (DOLE)
Department Order No. 10, Series of 1997,
defines “job contracting” and “labor-only contracting” as follows:
Sec. 8. Job contracting. – There
is job contracting permissible under the Code if the following conditions are
met:
(1) The
contractor carries on an independent business and undertakes the contract work
on his own account under his own responsibility according to his own manner and
method, free from the control and direction
of his employer or principal
in all
matters connected with the performance
of the work except as to the results thereof; and
(2) The
contractor has substantial capital or investment in the form of tools,
equipment, machineries, work premises, and other materials which are necessary
in the conduct of his business.
Sec. 9. Labor-only contracting.
– (a) Any person who undertakes to supply workers to an employer shall be
deemed to be engaged in labor-only contracting where such person:
(1) Does not have substantial capital or
investment in the form of tools, equipment, machineries, work premises and
other materials; and
(2) The
workers recruited and placed by such persons are performing activities which
are directly related to the principal business or operations of the employer in
which workers are habitually employed.
(b) Labor-only contracting as defined
herein is hereby prohibited and the person acting as contractor shall be
considered merely as an agent or intermediary 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.
(c) For cases not falling under
this Article, the Secretary of Labor shall determine through appropriate orders
whether or not the contracting out of labor is permissible in the light of the
circumstances of each case and after considering the operating needs of the
employer and the rights of the workers involved. In such case, he may prescribe
conditions and restrictions to insure the protection and welfare of the
workers.
Section 5 of Department Order No. 18-02 (Series
of 2002) of the Rules Implementing Articles 106 to 109 of the Labor Code
further provides that:
“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. (emphasis supplied)
The
"right to control" shall refer to the right reserved 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.
The test to
determine the existence of independent contractorship is whether or not the one
claiming to be an independent contractor has contracted to do the work
according to his own methods and without being subject to the control of the
employer, except only as to the results of the work.[15]
The
existence of an independent and permissible contractor relationship is
generally established by the following criteria: whether or not the contractor
is 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 a specified piece of work; the control and supervision of
the work to another; the employer's power with respect to the hiring, firing
and payment of the contractor's workers; the control of the premises; the duty
to supply the premises, tools, appliances, materials, and labor; and the mode,
manner and terms of payment.[16]
Although
there may be indications of an independent contractor arrangement between
petitioner and AMPCO, the most determinant of factors exists which indicate otherwise.
Petitioner’s averment that AMPCO had total
assets amounting to P932,599.22 and income of P2,777,603.46 in
1994 was squarely debunked by the LA. Thus:
Furthermore, there are no pieces
of evidence that AMPCO has substantial capital or investment. An examination
its “Statement of Income and Changes in Undivided Savings” show that its income
for the year 1994 was P2,777,603.46 while its operating expenses for
said year is P2,718,315.33 or a net income of P59,288.13 for the
year 1994; that its cash on hand for 1994 is P22,154.80.
In fact, the NLRC in its original decision
likewise stated as follows:
In contrast, the (sic) AMPCO’s
main business activity is trading, maintaining a store catering to members and
the public. Its job contracting with SMC is only a minor activity or sideline.
The component of AMPCO’s substantial capital are [sic]in fact invested and used in the trading business. This is
palpably shown in the sizable amount of its accounts receivables amounting to
more than P.6M out of its members’ capital of only P.47M in 1994.
Neither
did petitioner prove that AMPCO had substantial equipment, tools, machineries,
and supplies actually and directly used by it in the performance or completion
of the segregation and piling job. In
fact, as correctly pointed out by the NLRC in its original
decision, there is nothing in AMPCO’s list[17]
of fixed assets, machineries, tools, and equipment which it could have used, actually
and directly, in the performance or completion of its contracted job, work or
service with petitioner. For said reason,
there can be no other logical conclusion but that the tools and equipment
utilized by respondents are owned by petitioner SMC. It is likewise noteworthy
that neither petitioner nor AMPCO has shown that the latter had clients other
than petitioner. Therefore, AMPCO has no
independent business.
In
connection therewith, DOLE Department Order No. 10 also states that an
independent contractor carries on an independent business and undertakes the
contract work on his own account, under his own responsibility, according to
his own manner and method, and free from the control and direction of his
employer or principal in all matters connected with the performance of the work
except as to the results thereof. This embodies what has long been
jurisprudentially recognized as the control test[18]
to determine the existence of employer-employee relationship.
In the
case at bench, petitioner faults the CA for holding that the respondents were
under the control of petitioner whenever they performed the task of loading in
the delivery trucks and unloading from them. It, however, fails to show how AMPCO took “entire
charge, control and supervision of the work and service agreed upon.” AMPCO’s Comment on the Petition is likewise
utterly silent on this point. Notably,
both petitioner and AMPCO chose to ignore the uniform finding of the LA, NLRC
(in its original decision) and the CA that one of the assigned jobs of
respondents was to “perform other acts as may be ordered by SMC’s officers.” Significantly, AMPCO, opted not to challenge
the original decision of the NLRC that found it a mere labor-only contractor.
Moreover, the Court is not convinced that AMPCO wielded
“exclusive discretion in the discharge”[19]
of respondents. As the CA correctly
pointed out, Merlyn Polidario, AMPCO’s project manager, even told respondents to “wait for further
instructions from the SMC’s supervisor” after they were prevented from entering
petitioner SMC’s premises. Based on the foregoing, no other logical conclusion
can be reached than that it was petitioner, not AMPCO, who wielded power of
control.
Despite the fact that the service contracts[20] contain
stipulations which are earmarks of independent contractorship, they do not make
it legally so. The language of a
contract is neither determinative nor conclusive of the relationship between the
parties. Petitioner SMC and AMPCO cannot dictate, by a declaration in a contract,
the character of AMPCO’s business, that is, whether as labor-only contractor,
or job contractor. AMPCO’s character should be measured in terms of, and
determined by, the criteria set by statute.[21] At a closer look, AMPCO’s actual status and
participation regarding respondents’ employment clearly belie the contents of
the written service contract.
Petitioner
cannot rely either on AMPCO’s Certificate of Registration as an Independent Contractor
issued by the proper Regional Office of the DOLE to prove its claim. It is not conclusive evidence of such
status. The fact of registration simply
prevents the legal presumption of being a mere labor-only contractor from
arising.[22] In distinguishing between permissible job
contracting and prohibited labor-only contracting, the totality of the facts
and the surrounding circumstances of the case are to be considered.[23]
Petitioner also argues that among the
permissible contracting arrangements include “work or services not directly
related or not integral to the main business or operation of the principal
including… work related to manufacturing processes of manufacturing
establishments.”[24] The Court is not persuaded. The evidence is clear that respondents
performed activities which were directly related to petitioner’s main line of
business. Petitioner is primarily engaged in manufacturing and marketing of
beer products, and respondents’ work of segregating and cleaning bottles is
unarguably an important part of its manufacturing and marketing process.
Lastly, petitioner claims that the
present case is outside the jurisdiction of the labor tribunals because respondent
Vicente Semillano is a member of AMPCO, not SMC. Precisely, he has joined the others in filing
this complaint because it is his position that petitioner SMC is his true
employer and liable for all his claims under the Labor Code.
Thus,
petitioner SMC, as principal employer, is solidarily liable with AMPCO, the
labor-only contractor, for all the rightful claims of respondents. Under this set-up,
AMPCO, as the "labor-only" contractor, is deemed an agent of the
principal (SMC). The law makes the
principal responsible over the employees of the "labor-only"
contractor as if the principal itself directly hired the employees.[25]
WHEREFORE, the petition is DENIED.
The February 19, 2004 Decision of the
Court of Appeals, reversing the decision of the National Labor Relations
Commission and reinstating the decision of the Labor Arbiter, is AFFIRMED.
SO ORDERED.
JOSE CATRAL
Associate Justice
WE
CONCUR:
ANTONIO
T. CARPIO
Associate
Justice
Chairperson
ANTONIO EDUARDO
B. NACHURA DIOSDADO M. PERALTA
Associate Justice
Associate Justice
ROBERTO A. ABAD
Associate
Justice
A T T E S
T A T I O N
I
attest that the conclusions in the above Decision had been reached in
consultation before the case was assigned to the writer of the opinion of the
Court’s Division.
ANTONIO T. CARPIO
Associate
Justice
Chairperson, Second Division
C E R T I
F I C A T I O N
Pursuant
to Section 13, Article VIII of the Constitution and the Division Chairperson’s
Attestation, I certify that the conclusions in the above Decision had been
reached in consultation before the case was assigned to the writer of the
opinion of the Court’s Division.
RENATO
C. CORONA
Chief Justice
[1] Penned by Associate Justice Mercedes
Gozo-Dadole with Associate Justice Eugenio S. Labitoria and Associate Justice Rosmari
D. Carandang concurring.
[2]
[3] Rollo,
pp. 34-43.
[4] Complainant Alex
Hawod’s complaint was dismissed by the Labor Arbiter because his signature does
not appear in complainant’s position paper as well as in the Joint Affidavit
submitted.
[5] It appears from the
records that there are two (2) Service Contracts material to the controversy.
The first is dated April 1992. The contractual period is for six (6) months
commencing
[6] Penned by Labor Arbiter Jesus N.
Rodriguez, Jr.
[7] Rollo,
p. 209.
[8]
[9]
[10] Nothing in the records indicates that
there was execution of the reinstatement aspect, whether by actual or by
payroll reinstatement.
[11] Rollo,
pp. 106-109.
[12]
[13]
[14] Aboitiz Haulers Inc.
v. Dimapatoi, G.R. No. 148619, September 19, 2006, 502 SCRA 281.
[15] San Miguel Corporation v. Aballa, G.R. No. 149011, June 28,
2005, 461 SCRA 421.
[16]DOLE Philippines Inc. v. Esteva, G.R. No. 161115, November 30, 2006, 509 SCRA 376; and Brotherhood Labor Unity Movement of the
Philippines v.
[17] Attached as Annex 4 of
AMPCO’s Comment reveals the following:
1.
Transportation
Equipment.
a.
1
unit custom van
b.
1
motor – Ford 350 (Gasoline)
2.
Land
and Building
3.
Furniture
and Fixtures
a.
3
pcs. office tables
b.
3 pcs Monobloc Chairs
4.
Office
Equipment
a.
5
pcs. Casio electronic Calculator (12 digit)
b.
1 unit Laminating Machine (ID)
c.
1
Printing Calculator
d.
Dry
Cell
5.
Communication
equipment
a.
2
pcs. ICOM ( Hand Set ) with Anthena
6.
Store
Equipment
a.
Nutex
– Temperature Compensated Capacity (kg.) / Weighing scale
b.
1
Cash Box
c.
1
Charmaster
d.
80
empty cases w/ bottles Coke litro
90 -do- Coke
regular
13 -do- Coke 500 ml
e. 2 pcs. Emergency light.
[18] The existence of an
employer-employee relationship is determined on the basis of four standards,
namely: (a) the manner of selection and engagement of the putative employee;
(b) the mode of payment of wages; (c) the presence or absence of power of
dismissal; and (d) the presence or absence of control of the putative
employee’s conduct. Most determinative among these factors is the so-called
"control test." Gallego v.
Bayer Philippines, Inc., G.R. No. 179807, July 31, 2009, 594 SCRA 736.
[19] See Service Contract.
[20] Certificate of Registration as
independent contractor issued by the Regional Director of Department of Labor
Regional Office No. VI; Articles of Incorporation, under which providing
services and other requirements of members, and engaging in utility services
are among its main objectives; Certificate of Confirmation as a registered
cooperative with the Bureau of Agricultural Cooperatives Development; Mayor’s
permit to engage in business as a contractor; Registration with the SSS as member.
[21] De
Los
[22] “Section 11. Registration of contractor
or subcontractors.-
xxx
Failure to register shall give rise to the presumption that
the contractor is engaged in labor-only contracting.”– Department Order No.
18-02 Series of 2002.
[23] Supra note 18.
[24] Petition for Review on Certiorari, p.
19; rollo, p. 23 citing Department
Order No. 10, Series of 1997.
[25] San Miguel Corporation v. MAERC Integrated Services, Inc., 453
Phil. 543 (2003).