San Miguel v. Semillano (G.R. No. 164257; July 5, 2010)
CASE DIGEST: SAN MIGUEL CORPORATION, Petitioner, v. VICENTE B. SEMILLANO, NELSON MONDEJAR, JOVITO REMADA, ALILGILAN MULTI-PURPOSE COOP (AMPCO) and MERLYN V. POLIDARIO, Respondents. San Miguel v. Semillano (G.R. No. 164257; July 5, 2010).
FACTS: AMPCO hired the services of Vicente et al. [Vicente Semillano, Nelson Mondejar, Jovito Remada and Alex Hawod, respondents herein]They rendered service with SMC for more than 6 months.
Subsequently, SMC entered into a Contract of Services 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 SMCs supervisor. Vicente et al. waited for one month, unfortunately, they never heard a word from SMC.
Consequently, Vicente et al., as complainants, filed a COMPLAINT FOR ILLEGAL DISMISSAL with the Labor Arbiter against respondents.
Labor Arbiter (LA) rendered his decision declaring herein complainants as regular employees of San Miguel Corporation. Petitioner appealed the LA Decision to the NLRC. Initially, the NLRC Fourth Division affirmed with modifications the findings of the LA.
Petitioner SMC moved for a reconsideration of the foregoing decision. 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 attorneys 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. 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 commissions 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 SMCs 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.
ISSUE: Is AMPCO a legitimate job contractor?
HELD: 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.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.
Despite the fact that the service contracts 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 AMPCOs business, that is, whether as labor-only contractor, or job contractor. AMPCOs character should be measured in terms of, and determined by, the criteria set by statute. At a closer look, AMPCOs actual status and participation regarding respondents employment clearly belie the contents of the written service contract.
Petitioner cannot rely either on AMPCOs 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. 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.
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." The Court is not persuaded. The evidence is clear that respondents performed activities which were directly related to petitioners 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.
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.
FACTS: AMPCO hired the services of Vicente et al. [Vicente Semillano, Nelson Mondejar, Jovito Remada and Alex Hawod, respondents herein]They rendered service with SMC for more than 6 months.
Subsequently, SMC entered into a Contract of Services 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 SMCs supervisor. Vicente et al. waited for one month, unfortunately, they never heard a word from SMC.
Consequently, Vicente et al., as complainants, filed a COMPLAINT FOR ILLEGAL DISMISSAL with the Labor Arbiter against respondents.
Labor Arbiter (LA) rendered his decision declaring herein complainants as regular employees of San Miguel Corporation. Petitioner appealed the LA Decision to the NLRC. Initially, the NLRC Fourth Division affirmed with modifications the findings of the LA.
Petitioner SMC moved for a reconsideration of the foregoing decision. 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 attorneys 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. 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 commissions 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 SMCs 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.
ISSUE: Is AMPCO a legitimate job contractor?
HELD: 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.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.
Despite the fact that the service contracts 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 AMPCOs business, that is, whether as labor-only contractor, or job contractor. AMPCOs character should be measured in terms of, and determined by, the criteria set by statute. At a closer look, AMPCOs actual status and participation regarding respondents employment clearly belie the contents of the written service contract.
Petitioner cannot rely either on AMPCOs 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. 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.
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." The Court is not persuaded. The evidence is clear that respondents performed activities which were directly related to petitioners 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.
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.