SECOND DIVISION
[ G.R. No. 231579, June 16, 2021 ]
RONALD O. MARTINEZ, JUSTINO D. BUCAY, EDUARDO D. CANLAS, EDWIN Q. CANSINO, REYNALDO C. CAPILI, EMERITO D. CAPILI, DAVID L. CAYANAN, ROMEO C. CORTEZ, RENATO T. FRANCO, JERWIN P. GADIA, FREDERICK V. ILANO, ERNESTO C. IÑOSA, JUANITO A. LOBARDIO, ERNESTO L. MANGIO, GARRY L. MAÑACOP, GELICO A. MARZAN, BIENVENIDO D. MILLAN, JR., BENEDICTO O. MIRANDA, AARON T. OLIQUINO, EDGAR C. PANGILINAN, ARNOLD B. PEREZ, GERARDO S. ROXAS, ROBERT LAXAMANA,* ALBERT SANTOS, EDGARDO ABAGAT, EDGARDO VILLAVICENCIO (HEREIN REPRESENTED BY HIS NOW WIDOW ELNOR C. PANGILINAN), JANNEL LORD M. BONDOC (NOW HEREIN REPRESENTED BY JAZMIN ALFONSO), AND ROEL M. GUTIERREZ, PETITIONERS, VS. MAGNOLIA POULTRY PROCESSING PLANT (MPPP), NOW NAMED SAN MIGUEL FOODS, INC., (SMFI) - MPPP, RESPONDENT.
[G.R. NO. 231636]
SAN MIGUEL FOODS, INC., PETITIONER, VS. RONALD O. MARTINEZ, JUSTINO D. BUCAY, EDUARDO D. CANLAS, EDWIN Q. CANSINO, REYNALDO C. CAPILI, EMERITO D. CAPILI, DAVID L. CAYANAN, ROMEO C. CORTEZ, RENATO T. FRANCO, JERWIN P. GADIA, FREDERICK V. ILANO, ERNESTO C. IÑOSA, JUANITO A. LOBARDIO, ERNESTO L. MANGIO, GARRY L. MAÑACOP, GELICO A. MARZAN, BIENVENIDO D. MILLAN, JR., BENEDICTO O. MIRANDA, AARON T. OLIQUINO, EDGAR C. PANGILINAN, ARNOLD B. PEREZ, GERARDO S. ROXAS, ROBERT LAXAMANA, ALBERT SANTOS, EDGARDO ABAGAT, EDGARDO VILLAVICENCIO (HEREIN REPRESENTED BY HIS NOW WIDOW ELNOR C. PANGILINAN), JANNEL LORD M. BONDOC (NOW HEREIN REPRESENTED BY JAZMIN ALFONSO), AND ROEL M. GUTIERREZ, RESPONDENTS.
D E C I S I O N
LAZARO-JAVIER, J.:
THE CASES
In their separate petitions for review on
certiorari, Ronald O. Martinez and twenty-seven (27) others
[1] (Martinez,
et al.) on the one hand,
and
Magnolia Poultry Processing Plant, now named San Miguel Foods, Inc.
(SMFI-MPPP), on the other, assail the following dispositions of the
Court of Appeals in CA – G.R. SP No. 129575
[2] entitled
"Ronald O. Martinez, et al. v. National Labor Relations Commission (5th
Division), Magnolia Poultry Processing Plant (MPPP) now named San
Miguel Foods, Inc., (SMFI) – MPPP, and ROMAC Services and Trading Co.,
Inc.":
1) | Decision[3] dated April 29, 2016
declaring Romac as a labor-only contractor, and Martinez, et
al. as regular employees of SMFI-MPPP, but denying their claim
for CBA benefits and damages; and |
|
|
2) | Resolution[4] dated May 9, 2017
denying the respective motions for reconsideration of Martinez,
et al., SMFI-MPPP, and Romac. |
Antecedents
In their Amended Complaint
[5] dated August 23, 2010, Ronald O. Martinez and the initial twenty-five (25) other employees
[6] filed a complaint for illegal dismissal with other monetary claims
[7]
against SMFI-MPPP and Romac Services and Trading Co. Inc. (Romac). On
September 30, 2010, two (2) others, namely: Roel M. Gutierrez and
Ernesto Iñosa filed a similar complaint.
[8] The two (2) cases were subsequently consolidated per Order
[9]dated October 15, 2010.
Martinez, et al. alleged that on separate dates, they were
hired by Romac as daily paid rank and file employees assigned at the
production department of SMFI-MPPP in Quebiawan, San Fernando City,
Pampanga. Romac though did not have a business distinct and separate
from that of SMFI-MPPP.
As members of the sanitation crew assigned at the production department,
they performed tasks necessary and desirable to the poultry business of
SMFI-MPPP i.e., receiving-dressing, packaging, slitter, stunner,
blood vat, scalder, head puller, deboning, chicken fat remover, crates
sanitizer, crates cleaner, filer, stocker, hanger, inspector, feeder,
and transporter. The sanitation aspect though only accounted for 30% of
their tasks as they were mainly utilized at the production line of
SMFI-MPPP.
In the performance of these tasks, they were closely monitored by
regular supervisory employees of SMFI-MPPP such as Gilbert Espino, Caloy
Castor, Danilo Aguilar, Noel Guerrero, and Joseph Zapata. To ensure the
quality of its products, SMFI-MPPP periodically trained them through
seminars on Basic Poultry Operations, Good Manufacturing Practices,
Sanitation, and Hazard Analysis and Critical Control Point (HACCP)
Overview.
They regularly reported for work until January 4, 2010, when most of
them were no longer allowed inside the premises of SMFI-MPPP because it
had ceased operations preparatory to its intended outsourcing of
services. Thus, they got constrained to file the case for illegal
dismissal with monetary claims against SMFI-MPPP and Romac.
As regular employees of SMFI-MPPP, they are entitled to the benefits
under the Collective Bargaining Agreement (CBA) between SMFI-MPPP and
SMFI-MPPP Workers Union (SMFI-MPPPWU-Daily).
Records show that Edgardo Villavicencio[10] died on September 19, 2010 while Jannel Lord Bondoc[11] died on June 21, 2011.
SMFI-MPPP,[12] on the
other hand, countered that it is engaged in the business of poultry,
meat, animal feeds, and veterinary medicines. To maximize efficiency and
cost-effectiveness, beginning December 1, 1994, it entered into a
contract of services with Romac for the performance of peripheral and
ancillary tasks pertaining to its poultry business, i.e.,
sanitation, maintenance, janitorial, housekeeping, and reliever services
in times of demand upsurge. Romac, thus, deployed its own employees to
perform these contracted services at the company's processing plant in
San Fernando, Pampanga.
As early as 2007, it already contemplated on the closure of its Pampanga
Plant in anticipation of its plan to cede the same to a third party.
But in consideration of the numerous employees who would be affected by
the closure, the same was deferred for some time and got implemented
only in December of 2009.
Contrary to the position of Martinez, et al., the fact that
SMFI-MPPP required them to attend seminars on Basic Poultry Operations,
Good Manufacturing Practices, Sanitation, and HACCP Overview did not
prove the existence of an employer-employee relationship between them.
It required attendance to these seminars as part of its accreditation
requirements. As Romac's regular employees, Martinez, et al. had no right to claim benefits under the CBA between SMFI-MPPP and SMFI-MPPPWU-Daily.[13]
For its part, Romac[14] acknowledged that it had a contractual (fixed period) employer-employee relationship with Martinez, et al.
It was initially registered with the Securities and Exchange Commission
(SEC) on June 26, 1989 to engage and operate in the business of
contracting for general building maintenance and cleaning services,
furnishing skilled and semi-skilled manpower services which include
janitorial, messengerial, and driver services.[15]
In compliance with Department Order No. (DO) 10, series of 1997, it
registered as a legitimate job contractor with the Department of Labor
and Employment (DOLE) per Certificate of Registration No. R03-9709-006;
and under DO 18-02, series of 2002 per Certificate of Registration No.
III-O93-0502-006. It had substantial capital and investment in the form
of tools, equipment, work premises, and other materials necessary for
the conduct of its business as legitimate job contractor.
In 1994, it entered into two (2) service contracts with SMFI-MPPP -
Contract for Sanitation, Maintenance, Janitorial, and Housekeeping
Services and a Contract for Substitute or Reliever Services. Pursuant to
these contracts, it designated Martinez, et al. to work at the SMFI-MPPP plant in San Fernando City, Pampanga. There, Martinez, et al. worked under the direct control and supervision of Licerio Araza, supervisory personnel of Romac.
As fixed period employees, Martinez,
et al. should not be
accorded regular or permanent status either by Romac or SMFI-MPPP. Upon
the termination of its service contracts with SMFI-MPPP, it offered to
transfer Martinez,
et al., to other assignments, but they
refused, insisting they were SMFI-MPPP's regular employees. There could
be no illegal dismissal to speak of simply because what took place was a
mere expiration of the service contracts for which Martinez,
et al., got employed.
[16]
Ruling of the Labor Arbiter
By Decision
[17] dated August 4, 2011, Labor Arbiter Reynaldo V. Abdon declared that Martinez,
et al. were illegally dismissed, Romac was a labor-only contractor, and that the actual employer of Martinez,
et al. was SMFI-MPPP, thus:
WHEREFORE, premises considered, judgment is hereby rendered
DECLARING that respondent ROMAC SERVICES AND TRADING, INC. is a
labor-only contractor and that respondent SAN MIGUEL FOODS, INC.
(MAGNOLIA POULTRY PROCESSING PLANT) is the true employer of the
complainants.
It is also DECLARED that complainants are deemed regular employees of
the respondent San Miguel Foods, Inc. Consequently, complainants are
within the scope of coverage of Magnolia Poultry Processing Plant Daily
Union (PTGWO) Collective Bargaining Agreement (CBA) with SMFI.
IT IS FURTHER DECLARED that complainants were illegally dismissed by
respondents. Accordingly, respondent SAN MIGUEL FOODS, INC. (MAGNOLIA
PROCESSING PLANT) is hereby ORDERED to reinstate the complainants to
their former job positions without loss of seniority rights and
benefits.
Moreover, respondents ROMAC SERVICES AND TRADING, INC. and SAN MIGUEL
CORPORATION, INC. are jointly and severally DIRECTED [to] pay the
complainants their full backwages and other benefits from the date of
dismissal until they are reinstated, the grand total amount at present
is Four Million Six Hundred Eighty One Thousand Seven Hundred Seventy
Two and Seventy Six Centavos (Php4,681,772.76).
Additionally, respondents are jointly and severally ORDERED to pay the
complainants ten percent (10%) of their monetary award as attorney's
fees, in the sum of Four Hundred Sixty Eight Thousand One Hundred
Seventy Seven and Twenty Seven Centavos (Php 468,177.27).
The Report of the Fiscal Examiner on the computation of the
complainants' monetary awards is hereto attached as Annex "A" and made
an integral part of this decision.
Finally, the reinstatement aspect of this Decision is immediately
executory. Hence, respondent San Miguel Foods, Inc. is DIRECTED to
submit Compliance Report to this Office as regards the reinstatement of
complainants within twenty (20) days from receipt of this decision.
Claims for moral and exemplary damages are dismissed for lack of merit.
Claims for monetary benefits under the present CBA is also denied for
lack of basis.
SO ORDERED.
Appeals to the National Labor Relations Commission (NLRC)
Martinez,
et al., SMFI-MPPP, and Romac filed their respective appeals before the National Labor Relations Commission (NLRC).
Martinez, et al., faulted the labor arbiter for denying their claims for CBA benefits and damages.[18]
SMFI-MPPP, on the other hand, faulted the labor arbiter for holding that Romac was a labor-only contractor and that Martinez, et al. were regular employees of SMFI-MPPP. It emphasized that Martinez, et al.
did not perform acts necessary and desirable to its main business of
poultry supply. For lack of employer-employee relationship between the
company and these individuals, it cannot be held liable for Martinez, et al.'s complaint for illegal dismissal and money claims.[19]
Romac, for its part, reiterated that it is a legitimate labor contractor
and that it had an employment contract with SMFI-MPPP for a specific
period which already expired. There could be no illegal dismissal to
speak of when what took place was a mere expiration of the service
contracts for which Martinez, et al. were employed.[20]
Dispositions of the NLRC
By Resolution dated December 15, 2011, the NLRC initially dismissed the
respective appeals of SMFI-MPPP and Romac. It noted that the joint
declaration attached to the appeal bond of SMFI-MPPP was not signed by
the bonding company while the appeal of Romac did not bear any bond at
all in violation of Section 6, Rule VI of the NLRC Rules of Procedure.[21]
SMFI-MPPP, thus, promptly submitted the required joint declaration duly
signed by Prudential Guarantee and Assurance, Inc. Vice-President Guia
Laguio-Flaminiano. As for Romac, it submitted a manifestation that the
common bond attached to the memorandum of appeal of SMFI-MPPP actually
pertained to both of them.
[22] Finding these submissions to be in order, the NLRC reinstated their respective appeals.
By Decision
[23] dated September 13, 2012, the NLRC reversed in this wise,
viz.:
x x x Romac x x x is a legitimate labor contractor.
Respondent Romac is the complainants' employer, and not San Miguel.
Complainants were assigned to San Miguel pursuant to two contracts of:
1) Sanitation[,] Maintenance[,] Janitorial[,] and Housekeeping Services,
and 2) Reliever Services. The services they rendered were maintenance
and janitorial services, a job not necessary or desirable to the poultry
business of San Miguel. x x x
Considering that there is absence of employer-employee relationship, San
Miguel cannot be held guilty of illegal dismissal. Neither can it
accord regular employment status to complainants, nor pay their
backwages and attorney's fees.
Complainants are the contractual employees of Romac, as shown in the
employment contracts for fixed periods. When the contracts of services
entered in by and between San Miguel and Romac expired, the assignment
of the complainants to San Miguel also ended.
x x x x
Thus, there is no illegal dismissal to speak of. The complainants are
not entitled to backwages, damages[,] nor attorney's fees. Romac was
transferring them to CCPI-SFD, but complainants refused.
x x x x
WHEREFORE, premises considered, the appeals of San Miguel and Romac
Services are GRANTED. The appeal of the complainants is DISMISSED.
The Decision appealed from is VACATED, and a new one issued DISMISSING the complaint.
SO ORDERED.[24]
The motion for reconsideration of Martinez,
et al., was subsequently denied per Resolution
[25] dated January 25, 2013.
Ruling of the Court of Appeals
On a petition for
certiorari initiated by Martinez,
et al. in CA – G.R. SP No. 129575, the Court of Appeals, by Decision
[26] dated April 29, 2016, nullified the dispositions of the NLRC and reinstated the ruling of the labor arbiter,
viz.:
x x x As correctly found by the Labor Arbiter, respondent Romac was a labor-only contractor.
x x x x
First, respondent Romac had no substantial capital.
x x x x
Second, respondent Romac supplied petitioners to respondent SMFI,
to perform activities which were directly related to respondent SMFI's
main business.
Petitioners' work in ensuring the sanitation and maintenance of the
equipment, was directly related to the chicken poultry business of
respondent SMFI. Petitioners' jobs of sanitation and maintenance, were
necessary and desirable in the day-to-day operations of respondent
SMFI's business. Notably, petitioners had been performing the same tasks
regularly, within respondent SMFI's plant, for long periods of time.
This was sufficient evidence of the indispensability of petitioners'
jobs to respondent SMFI's business.
Third, respondent Romac did not exercise the right to control
over the performance of work of the petitioners. Rather, it was
respondent SMFI that exercised the power of control over the petitioners
in the performance of their work.
x x x x
With respect to the final issue, we rule in the affirmative. Petitioners
were entitled to their money claims.
x x x x
We SET ASIDE the Decision dated 13 September 2012, and the
Resolution dated 25 January 2013, both issued by the National Labor
Relations Commission, and we REINSTATE the Decision dated 4 August 2011 issued by the Labor Arbiter.
IT IS SO ORDERED.[27]
The Court of Appeals denied reconsideration on May 9, 2017.
[28]
The Present Petitions
Both Martinez,
et al. and SMFI-MPPP now seek affirmative relief through their respective petitions for review on
certiorari.
In G.R. No. 231579,
Martinez, et al. assert anew that they
are entitled to backwages and differential benefits pursuant to the CBA
of the regular rank-and-file employees of SMFI-MPPP for three (3) years
prior to their illegal dismissal, plus damages.
[29]
In G.R. No. 231636,
SMFI-MPPP[30]
maintains that the contracts of service it entered into with Romac were
valid and that the latter is a legitimate job contractor with
substantial capitalization and investment. In 2001 alone, Romac had an
authorized capital stock of P20,000,000.00. Romac hired and paid the
salaries and benefits of Martinez,
et al., and held the power to discipline and fire them. While performing their duties within the premises of SMFI-MPPP, Martinez,
et al.
were under the direct control and supervision of Licerio Araza, a
supervisory employee of Romac. SMFI-MPPP, therefore, could not have
illegally dismissed Martinez,
et al., who are, in fact, employees
of Romac, nor could be made liable for the reinstatement of these
employees and payment of their money claims.
Both petitioners, thereafter, filed their respective comments,
reiterating the arguments in their petitions.
Core Issue
Is Romac a legitimate labor contractor or a labor-only contractor?
Ruling
Preliminarily, the Court notes that the core issue is a purely factual
issue which the Court does not generally entertain. For the Court is not
a trier of facts and does not normally embark in the evaluation of
evidence adduced during the trial. This rule, however, admits of
exceptions. One of them is when the factual findings of the
quasi-judicial agencies concerned are conflicting or contradictory with
those of the Court of Appeals, as here. Under this circumstance, it
becomes the duty of the Court to re-examine the records and draw its own
factual findings.
[31]
We now resolve the cases on the merits.
Article 106 of the Labor Code proscribes the practice of labor-only contracting,
viz.:
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 and Employment 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
restricting, 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 employer 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 person 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.[32]
As a general rule, a contractor is presumed to be a labor-only
contractor, unless such contractor overcomes the burden of proving that
it has substantial capital, investment, tools, and the like.
[33]
As a regulated industry, the law requires registration of labor
contractors with the DOLE. Failure to register shall give rise to the
presumption that the contractor is engaged in labor-only contracting.
Section 5 in relation to Section 11 of DO 18-02
[34] governed the registration of labor contractors at the time material to the cases at bar, thus:
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 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 over 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 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.[35]
x x x x
SECTION 11. Registration of Contractors or Subcontractors.
— Consistent with the authority of the Secretary of Labor and
Employment to restrict or prohibit the contracting out of labor through
appropriate regulations, a registration system to govern contracting
arrangements and to be implemented by the Regional Offices is hereby
established.
The registration of contractors and subcontractors shall be necessary
for purposes of establishing an effective labor market information and
monitoring.
Failure to register shall give rise to the presumption that the contractor is engaged in labor-only contracting.[36] (Emphases supplied)
Here, there is no dispute that Romac held the Certificate of Registration No. III-O93-0502-006
[37] as a legitimate and independent labor contractor per DO 18-02,
viz.:
Republic of the Philippines
DEPARTMENT OF LABOR AND EMPLOYMENT
Regional Office No. III
City of San Fernando, Pampanga
This
CERTIFICATE OF REGISTRATION
No. III-O93-0502-006
TIN: 000-267-578-000
is issued to
ROMAC SERVICES & TRADING CO., INC.
776 Sto. Rosario St., Sto. Domingo, Angeles City
For having complied with the requirements as provided in the Labor Code,
as amended, and its Implementing Rules and having paid the registration
fee in the amount of ONE HUNDRED PESOS (P 100.00) per Official Receipt
No. 5226437 dated 23 May 2008.
In witness whereof, and by the authority vested in me by the Labor Code,
as amended, its Implementing Rules[,] specifically Department Order No.
18-02, Series of 2002 entitled Rules Implementing Articles 106 to 109
of the Labor Code[,] as amended, I have hereto set my hand and affixed
the Official Seal of Department of Labor and Employment, Regional Office
No. Ill, City of San Fernando, Pampanga on this 23rd day of
May 2008.
This Certificate of Registration shall be valid until 07 May 2011
subject for renewal every three (3) years pursuant to Section 17 of DO
1802, Series of 2002 unless, sooner cancelled by the Regional Director.
Signed
NATHANIEL V. LACAMBRA
Regional Director
As the primary agency tasked to regulate job contracting, DOLE is
presumed to have regularly performed its official duty when it declared
that Romac had complied with the requirements of the Labor Code and its
implementing rules, and based thereon, conferred upon it the
corresponding certificate of registration as a legitimate and
independent labor contractor.
[38]
We keenly note that the aforesaid certification was not the first but
already the second certification issued by the DOLE conferring Romac the
status of a legitimate labor contractor. The first was issued by the
DOLE pursuant to DO 10, series of 1997.[39] Further, since 1989, Romac has been in the roster of duly registered corporations with the SEC, bearing SEC Reg. No. 165092.[40]
The Court though recognizes that the presumption of legitimacy arising
from one's registration as an independent and legitimate labor
contractor may be defeated whenever it is shown that:
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 over the
performance of the work of the contractual employee.[41]
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."
[42]
As to how much or what constitutes substantial capital, DO 18-A, series
of 2011 dated November 14,2011 defines substantial capital as paid-up
capital stocks/shares of at least P3,000,000.00 in the case of
corporations.
Here, in 2001 alone, Romac already had on record a capital stock of
P20,000,000.00[43] and
ownership of an office building, a commercial lot, various office
equipment, furniture and fixtures, communication equipment, various
service vehicles, and janitorial tools and equipment.[44]
Verily, Romac had sufficient capital to carry on its independent
on-going business as a legitimate contractor or provider of services to
its various clients, including SMFI-MPPP pursuant to the standard of
substantial capital under DO 18-A.
Another. It is a matter of record that apart from SMFI-MPPP, Romac also
supplies services to its several other A-list clients such as Jollibee
Foods Corporation, GMA Network – Regional TV, University of Santo Tomas
Hospital, Philamlife Insurance Company, Coca-Cola Bottlers Philippines,
Inc., and Cosmos Bottling Corporation. In San Miguel Foods, Inc. v. Rivera,[45]
the Court held that the A-list clients listed in the roster of the
labor contractor apart from petitioner, which incidentally is the same
company involved here, strongly indicates that the concerned labor
contractor carried on a legitimate and independent business operations
distinct from the operations of petitioner itself.
As for the element of control, we shall discuss it in light of the
fourfold test: (1) the selection and engagement of the employee; (2)
the payment of wages; (3) the power of dismissal; and (4) the power of control.
First. On different dates, Romac engaged Martinez, et al. as evidenced by the latter's respective Personnel Appointments/Employment Contracts printed on Romac's own letterhead.[46]
Second. In both contracts for Sanitation, Maintenance,
Janitorial, and Housekeeping Services and for Substitute or Reliever
Services which Romac entered into with SMFI-MPPP, Romac unconditionally
assumed the obligation to pay the salaries and other statutory benefits
of Martinez,
et al., viz.:
SECTION 5. CONTRACTOR'S COVENANTS – CONTRACTOR further covenants and agrees to:
x x x x
(i) | While
this Agreement, or any extension thereof, is in effect, pay the wages
or salaries of its employees, personnel[,] and agents, as well as all
benefits, premiums [,] and protection, in accordance with all applicable
laws, rules[,] and regulations, and DOLE DO's, and furnish CLIENT, on
or before the tenth (10th) day of every month, a
sworn certification stating that: (i) CONTRACTOR has paid all wages and
salaries due to the workers for all services rendered by them during the
immediately preceding month, including overtime, if any, and such other
payments and benefits as are required under the Labor Code of the
Philippines, SSS Law [sic], and other laws or regulations relating to
the Home Development Mutual Fund, PhilHealth, [sic] Employees
Compensation Commission, and the like, (ii) that such payments were all
in accordance with the requirements of law, and (iii) that remittances
required to be made to the Bureau of Internal Revenue on behalf of its
employees have been made for the subject reporting period; x x x |
|
|
| x x x x |
True to its undertaking, Romac paid the monthly salary and labor standard benefits to Martinez,
et al. and effected the statutory deductions on their salaries, as shown by the employees' payslips bearing the logo of Romac.
Third. The power of Romac to hire included its inherent power to discipline Martinez,
et al.
[47]
In one instance, Romac found Benedicto Miranda guilty of simple
negligence in the performance of his janitorial task inside the premises
of SMFI-MPPP,
viz.:
Romac Services & Trading Company, Inc.
Disciplinary Action Form
Violator's Name: Benedicto O. Miranda
Dept./Project: SMFI-MPPP
x x x x
Nature of Offense: Negligence
Date of Commission: October 16, 2007
Date Served: October 19, 2007
Due to your violation of the company Rules & Regulations x x x :
Acts of Negligence in the performance of duties or in the care and use
of the company property, equipment[,] or device. (Simple Negligence:
Failure to observe diligence demand[ed] by the situation thereby
exposing the company to unnecessary risk.)
In his explanation letter. Miranda denied the charge:
"Ako po si Benedicto Miranda, janitor[-]sweeper sa
[building] B. Kinuha ko yung basura sa holding return na nasa anim na
crates po [ijyon itinaob ko langpo sa drum. Hindi ko po alam na may
manokpo yung mga basura na nasa crates. Itinapon ko na po sa may
basurahan. Ang mali ko lang po[J hindi ako nakapag[-]log book
Signed
Benedicto Miranda[48]
Romac eventually suspended Miranda for fourteen (14) working days.
In another instance, Bienvenido Millan, Jr. was caught punching in another employee's timecard. He reasoned out:
Ako si Bienvenido Millan, Jr., sumulat po ako para
humingi ng tawad sa nagawa kong kamalian. [H]indi na po mauulit [i]yon.
Sa totoo lang p[o, napag-utusan lang po ako ng [l]eadman ko na i-[punch]
ang time card nya. [S}umunod naman ako dahil siya ang leadman ko at
saka baka pag-initan niya ako kung hindi ako susunod sa kanya. [M]ahal
ko po ang trabaho ko. [D]ito ko po binubuhay ang pamilya ko. Kaya lang
nagkamali ako sa pagsunod sa leadman ko. Pero ipangako ko sa inyo na
hindi na mauulit [i]yon. Pagbutihan ko ang trabaho ko hanggang sa
makakaya ko.
Signed
Bienvenido Millan[49]
Romac, too, eventually suspended Bienvenido and even instructed him to
first report to Romac Corporate Office after serving his suspension for
further instruction:
The ROMAC GROUP
Romac Services & Trading Co., Inc.
To: Bienvenido D. Millan, Jr.
Utility
From: Human Resources Department
Date: June 10, 2009
Re: Suspension
We would like to inform you that in relation to your suspension
regarding the punching log in of other employees[,] we would extend your
suspension starting June 8 up to June 14, 2009.
We would also like to inform you that after the exclusive dates of your
suspension, you should first report to Romac Corporate office on june
15, 2009 for farther instruction.
For your strict compliance.
Received
Bienvenido Millan, Jr.
June 11, 20 09[50]
Significantly, Martinez,
et al. invariably recognized and
respected the authority of Romac to impose disciplinary sanctions on
them for their individual infractions for the entire duration of their
employment with the latter, specifically during their assignment at
SMFI-MPPP.
Fourth. Among the four-fold test, control is the most
important. Under the control test, an employer-employee relationship
exists if the "employer" has reserved the right to control the
"employee" not only as to the result of the work done but also as to the
means and methods by which the same is to be accomplished. Otherwise,
no such relationship exists.[51]
Records show that it was Romac which exercised control over Martinez, et al.
To recall, these employees applied with and were hired by Romac, as
evidenced by their individual employment contracts printed on the
letterhead of Romac. It was Romac which paid the wages and other labor
standard benefits of these employees, as shown by their payrolls and
disbursement vouchers. More, it was Romac which reported them as its
employees to the Social Security System (SSS), Employees Compensation
Commission (ECC), and Philippine Health Insurance Corporation
(PhilHealth), among others. It was also Romac which made the necessary
deductions on their salaries and the proper remittance thereof to these
agencies. Further, Romac exercised the power to dismiss and discipline
as heretofore shown. Finally, it was Romac through its supervisory
personnel Licerio Araza which gave the employees their work schedule,
monitored their attendance, determined the end result of their assigned
tasks, as well as the methods and means by which the end result was to
be accomplished.
The fact alone that Martinez, et. al. were required by SMFI-MPPP
to attend its company-sponsored seminars on Basic Poultry Operations,
Good Manufacturing Practices, Sanitation, and HACCP Overview do not in
any way equate to control. Non sequitur. In any case, the Court
finds the compelling reason behind this initiative: to minimize risks of
exposure to possible violations of sanitation requirements in the food
industry, for any deviation from the sanitation standards prescribed by
law would open SMFI-MPPP to possible closure of business under the Meat
Inspection Code of the Philippines.[52]
In the final analysis, this initiative is truly intended to ensure the
safety and protection of the consuming public who buys the food products
of SMFI-MPPP. Thus, instead of being criticized or suspected of
circumventing the law, SMFI-MPPP should be commended for its corporate
and social sense of responsibility in this regard.
In the same vein, we do not find anything wrong or suspicious about the
itemized billings sent by Romac to SMFI-MPPP, reflecting the employer's
share of Romac to the employees' mandatory contributions to SSS, ECC,
PhilHealth, and Pag-Ibig, and the amounts corresponding to agency fee,
supplies and equipment allowance, and other labor standard benefits such
as overtime pay, night shift differential, and holiday pay.
For one, the style or manner of billing by Romac as well as the
style or manner of paying by SMFI-MPPP, be it itemized or lump-sum, is
perfectly within their discretion. For another, Romac's itemized,
billings and SMFI-MPPP's payments thereof readily reflect, on their
face, whether Romac is indeed compliant with labor standard laws. This
is a legitimate concern of SMFI-MPPP since under Section 19[53]
of DO 18-02 it can be held solidarily liable for the monetary claims of
the contractual employees against the contractor arising from any
violation of their rights.
As for the fact that under the Contract for Sanitation, Maintenance,
Janitorial, and Housekeeping Services and Contract for Substitute or
Reliever Services, Martinez,
et al. performed their respective
tasks in the premises of SMFI-MPPP, we curtly ask – where else should
they perform these tasks? Precisely, Romac was engaged to keep the
premises of SMFI-MPPP clean, safe, and sanitary at all times; hence,
doing it elsewhere simply does not make sense.
In
Manila Electric Co. v. Quisumbing,
[54] the Court recognized that contracting out of services is an exercise of business judgment or management prerogative.
The management cannot be denied the faculty of promoting
efficiency and attaining economy by a study of what units are essential
for its operation. It has the ultimate determination of whether services
should be performed by its personnel or contracted to outside agencies.
While there should be mutual consultation, eventually deference is to
be paid to what management decides. Contracting out of services is an exercise of business judgment or management prerogative.
Absent proof that management acted in a malicious or arbitrary manner,
the Court will not interfere with the exercise of judgment by an
employer. x x x (Emphasis added)
x x x x
We further clarified in
BPI Employees Union-Davao City-FUBU v. Bank of the Philippine Islands[55] that it is within the prerogative of management to farm out any of its activities,
regardless whether such activity is peripheral or core in nature.
What is primordially important is that the service agreement does not
violate the employee's right to security of tenure and payment of
benefits to which he or she is entitled under the law.
So long as the outsourcing does not fall squarely as labor-only
contracting, the arrangement does not ripen into an employer-employee
relationship between the principal and the employees of the legitimate
labor contractor.
In closing, we refer back to the three (3) year old case of
San Miguel Foods, Inc. v. Rivera,[56] viz.:
In the case under consideration, it was sufficiently found
by both the LA and the NLRC that the respondents applied with and were
hired by ICSI, as evidenced by their individual Personal Information
Sheets, employment contracts and Letters of Appointment. Concomitantly,
ICSI issued them their individual identification cards asborne by the
records. Even the payment of respondents' wages and other labor standard
benefits were also made by ICSI, as shown by their payrolls and
disbursement vouchers. More so, ICSI itself reported the respondents as
its employees with the SSS, Philhealth, PAG-IBIG, and BIR. Also, ICSI
was the one that made the necessary deductions on the respondents'
salaries for their contributions (their premium share) thereto, which
were all; properly remitted to the said agencies. As to the power of
dismissal and to discipline, it was also ICSI that exercised the same.
This is evident from the Notice to Explain and Memorandum it issued to
its erring employees who violated its rules and regulations. Contrary to
the claim of the respondents, which the CA affirmed, this Court holds
that the controverted letter dated May 22, 2009 issued by the petitioner
to ICSI contained no instruction from the former for the latter to
transfer or even terminate the respondents. This Court finds
satisfactory the petitioner's explanation that such letter merely
informed ICSI of the changes in their agreement regarding the invoicing
services that the invoicing operations at its head office would be
discontinued and would be transferred to San Fernando, Pampanga. At the
same time, the petitioner was just reminding ICSI to ensure that in the
event there will be employees un willing to comply with the new ternis
and conditions of their agreement, they should be properly dealt with in
accordance with law. Stated differently, the petitioner only wanted to
make sure that ICSI would not renege on its obligations to its
employees. Lastly, the power of control similarly rests upon ICSI. As
previously stated, it was ICSI's officers who have direct supervision
over the respondents. ICSI's Base Controller and OIC were the ones who
gave the respondents their work schedule and monitored their attendance,
respectively.
It is worthy to note this Court's pronouncement in Royale Homes Marketing Corporation v. Alcantara, citing Insular Life Assurance Co., Ltd. v. National Labor Relations Commission, viz.:
Not every form of control, is indicative of
employer-employee relationship. A person wrho performs work for another
and is subjected to its rules, regulations, and code of ethics does not
necessarily become an employee. As long as the level of control does
not interfere with the means and methods of accomplishing the assigned
tasks, the rules imposed by the hiring party on the hired party do not
amount to the labor law concept of control that is indicative of
employer-employee relationship. x x x
x x x x
With all the foregoing, this Court holds that no employer-employee
relationship exists between the petitioner and the respondents. It is an
error, therefore, on the part of the CA to order the petitioner to
reinstate the respondents and to grant them all the benefits and
privileges of regular employees. Not being petitioner's employees, thus,
they cannot attain the regular status. Along side, the petitioner
cannot be charged of constructive illegal dismissal for it is beyond its
power to dismiss the respondents as they were never its employees.
x x x x
While
Rivera involves a different contractor in the person
of ICSI and a different kind of contracted service (invoicing), there
appears to be a uniform corporate standard or set of rules followed by
SMFI in contracting out the invoicing service in
Rivera
and the janitorial services here, to wit: in both cases, the company
chose only those legitimate contractors duly registered with SEC and
DOLE, substantially capitalized, and servicing other A-list clients, as
well; clothed with the power to hire and fire and discipline employees
and most importantly, the power of control over the result of the tasks
performed and the means and methods used to accomplish the same; and
required the tasks to be performed in the company premises.
As it was, in Rivera, the Court found ICSI to be a
legitimate labor contractor and the real employer of employees Rivera,
et al. There is no rhyme or reason to rule otherwise in the present case
considering that Rivera and this case are substantially analogous. What is sauce for the goose is sauce for the gander.
All told, the Court finds and holds that Romac is a legitimate labor contractor and truly the employer of Martinez, et al. Romac could not be said to have dismissed Martinez, et al.
just because of its service contracts with SMFI-MPPP had expired. In
fact, there is no question that Romac offered to reassign Martinez, et al.
to its other clients, but the latter declined because they erroneously
believed that they had become the regular employees of SMFI-MPPP.
ACCORDINGLY, the petition of Martinez, et al. in G.R. No. 231579 is DENIED. On the other hand, the petition of San Miguel Foods, Inc., formerly Magnolia Poultry Processing Plant (SMFI-MPPP) in G.R. No. 231636 is GRANTED.
The Decision dated April 29, 2016 and Resolution dated May 9, 2017 of the Court of Appeals in CA – G.R. SP No. 129575 are REVERSED and SET ASIDE, and the Decision dated September 13, 2012 of the National Labor Relations Commission, REINSTATED. No costs.
SO ORDERED.
Perlas-Bernabe, (Chairperson), Lopez, Rosario, and J. Lopez, JJ., concur.
* Sometimes spelled as Roberto in the records.
** Designated Additional member per Special Order No. 2822 dated April 7, 2021.
[1] Justino D. Bucay, Eduardo
D. Canlas, Edwin Q. Cansino, Reynaldo C. Capili, Emerito D. Capili,
David L. Cayanan, Romeo C. Cortez, Renato T. Franco, Jerwin P. Gadia,
Frederick V. Ilano, Ernesto C. Iñosa, Juanito A. Lobardio, Ernesto L.
Mangio, Garry L. Mañacop, Gelico A. Marzan, Bienvenido D. Millan, Jr.,
Benedicto O. Miranda, Aaron T. Oliquino, Edgar C. Pangilinan, Arnold B.
Perez, Gerardo S. Roxas, Robert Laxamana, Albert Santos, Edgardo Abagat,
Edgardo Villavicencio, Jannel Lord M. Bondoc, and Roel M. Gutierrez.
[2] Penned by Associate
Justice Nina G. Antonio-Valenzuela, concurred in by Associate Justices
Manuel M. Barrios and Agnes Reyes Carpio, all members of the Special
Sixth Division.
[3] Rollo, G.R. 231636, Vol. I, pp. 34-53.
[4] Id. at 55-57.
[5] Rollo, G.R. 231579, Vol. I, pp. 375-380.
[6] Justino D. Bucay, Eduardo
D. Canlas, Edwin Q. Cansino, Reynaldo C. Capili, Emerito D. Capili,
David L. Cayanan, Romeo C. Cortez, Renato T. Franco, Jerwin P. Gadia,
Ernesto C. Iñosa, Juanito A. Lobardio, Ernesto L. Mangio, Garry L.
Mañacop, Gelico A. Marzan, Bienvenido D. Millan, Jr., Benedicto O.
Miranda, Aaron T. Oliquino, Edgar C. Pangilinan, Arnold B. Perez,
Gerardo S. Roxas, Robert Laxamana, Albert Santos, Edgardo Abagat,
Edgardo Villavicencio, and Jannel Lord M. Bondoc.
[7] Wage and benefit
differentials according to the CBA of the regular rank and file
employees for the past 3 years of service with MPPP, sick leave,
vacation leave, signing bonus, full backwages, moral and exemplary
damages, attorney's fees, and costs of suit.
[8] Rollo, G.R. 231579, Vol. I, p. 385.
[9] Id. at 388.
[10] Id. at 370.
[11] Id. at 372.
[12] Rollo, G.R. 231636, Vol. I, pp. 138-160.
[13] Rollo, G.R. 231579, Vol. I, p. 69.
[14] Rollo, G.R. 231579, Vol. II, pp. 534-560.
[15] Rollo, G.R. 231636, Vol. I, p. 182.
[16] Rollo, G.R. 231579, Vol. I, CA Decision, pp. 66-67.
[17] Rollo, G.R. 231636, Vol. I, pp. 76-112.
[18] Rollo, G.R. 231579, Vol. I, p. 432.
[19] Id. at 432.
[20] Rollo, G.R. 231579, Vol. III, pp. 1008-1041.
[21] SECTION 6. Bond. — In
case the decision of the Labor Arbiter or the Regional Director involves
a monetary award, an appeal by the employer may be perfected only upon
the posting of a bond, which shall either be in the form of cash deposit
or surety bond equivalent in amount to the monetary award, exclusive of
damages and attorney's fees. (The 2011 NLRC Rules of Procedure, May 31,
2011).
[22] Rollo, G.R. 231579, Vol. I, pp. 431-432.
[23] Id. at 430-440.
[24] Id. at 437-440.
[25] Rollo, G.R. 231636, pp. 71-74.
[26] Id. at 34-52.
[27] Id. at 52.
[28] Rollo, G.R. 231579, Vol. I, pp. 60-62.
[29] Id. at 9-56.
[30] Rollo, G.R. 231636, pp. 9-24.
[31] See General Milling Corp. v. Viajar, 2013, 702 Phil 532, 540 (2013).
[32] Labor Code of the Philippines, Presidential Decree No. 442 (Amended & Renumbered), July 21, 2015.
[33] See Allied Banking Corp. v. Calumpang, 823 Phil. 1143, 1156-1157, (2018).
[34] Rules Implementing Articles 106 to 109 of the Labor Code, as Amended, DOLE Order No. 18-02, February 21, 2002.
[35] Id.
[36] Id.
[37] Rollo, G.R. No. 231636, Vol. I, p. 208.
[38] See Consolidated Building Maintenance, Inc. v. Asprec, Jr., 832 Phil. 630, 642 (2018).
[39] Rollo, G.R. No. 231636, p. 459.
[40] Id. at 181.
[41] Rules Implementing Articles 106 to 109 of the Labor Code, as Amended, DOLE Order No. 18-02, February 21, 2002.
[42] See Mago v. Sun Power Manufacturing Limited, 824 Phil. 464, 477-478 (2018); citing DO No. 18-02.
[43] Rollo, G.R. No. 231579, Vol III, p. 1072.
[44] Id. at 1073-1074.
[45] 824 Phil. 961, 977 (2018).
[46] Rollo, G.R. 231636, Vol II, pp. 836-857.
[47] See Felicilda v. Uy, 795 Phil. 408, 412 (2016).
[48] Rollo, G.R. No. 2316366, Vol. I, p. 284.
[49] Id. at 243.
[50] Id. at 245.
[51] See Sara v. Agarrado, 248 Phil. 847, 852 (1988).
[52] The Meat Inspection Code of the Philippines, Republic Act No. 9296, May 12,2004.
[53] SECTION 19. Solidary Liability.
— The principal shall be deemed as the direct employer of the
contractual employees and therefore, solidarily liable with the
contractor or subcontractor for whatever monetary claims the contractual
employees may have against the former in the case of violations as
provided for in Sections 5 (Labor-Only contracting), 6 (Prohibitions), 8
(Rights of Contractual Employees) and 16 (Delisting) of these Rules.
(Rules Implementing Articles 106 to 109 of the Labor Code, as Amended,
DOLE Order No. 18-02, February 21, 2002).
[54] 383 Phil. 47, 60 (2000).
[55] 715 Phil. 35, 53 (2013).
[56] Supra 45 at 979-981.
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