Neil S. Chua 3LM1 San Miguel Corporation vs. Semillano G.R. No. 164257. July 5, 2010.

Petitioner: San Miguel Corporation

March 3, 2012 Labor Standards

Respondent: Vicente B. Semillano, Nelson Mondejar, Jovito Remada, Alangilan Multi-Purpose Coop (AMPCO) and Merlyn V. Polidario Ponente: J. Carpio RELEVANT FACTS: Semillano et al filed a complaint for illegal dismissal with the Labor Arbiter against AMPCO, Merlyn V. Polidario, SMC and Rufino I. Yatar on July 17, 1995. The complainants claimed that they were fillers of SMC Bottling Plant, engaged in activities necessary and desirable in the usual business of SMC. They assert, therefore, that they are regular employees of SMC. SMC utilized AMPCO, thus making it appear that the latter was the complainants employer, with intentions of evading the responsibility of paying the benefits due to the complainants. The complainants th further claim that AMPCO and SMC failed to give them their 13 month pay, and that they were prevented from entering the premises of SMC. In its defense, SMC raised that it is not the employer of the complainants; that AMPCO is their employer because it is an independent contractor. AMPCO directly paid their salaries and respective benefits. On April 30, 1988, Labor Arbiter Jesus N. Rodriguez, Jr. rendered his decision in favor of Semillano et al, ordering that the complainants be reinstated without loss of seniority rights and payment of full backwages; and to pay the complainants counsel attorneys fees 10% of the total award. The complainants filed a motion for partial execution of the LAs decision, but SMC filed its opposition to the motion. Semillano et al appealed the LA decision to the NLRC. The Fourth Division affirmed the decision of the LA, with minor modifications in favour of Semillano et al. SMC moved for a reconsideration of the NLRCs decision on February 28, 2002. The NLRC reversed its earlier ruling, and instead held AMPCO liable to pay for the respondents backwages, salaries , allowances and attorneys fees. The respondents filed their motion for reconsideration, but this was denied. Feeling aggrieved, respondents filed a petition for review on certiorari with the Court of Appeals, which acted favourably in May 24, 2008. It applied the same control test that the NLRC used, but found that SMC exercised control over the respondents, and had the power of dismissal as well. The CA added that AMPCO was engaged in labor-only contracting since its capital of nearly one million pesos was insufficient to qualify as an independent contractor. SMC filed a motion for reconsideration, but this was denied by the CA. A petition for review on certiorari was filed with the Supreme Court thereafter. SMC argues that the CA erred in assuming that it exercised control over the respondents simply because they worked within the premises of the company. SMC relied on the provision of its service contract with AMPCO, wherein it was stipulated that the latter was to provide the materials, tools and equipment

needed to carry out the services contracted out by SMC. The contract also provides that AMPCO shall have exclusive discretion over its personnel, and that it also determines their wages. SMC added that the respondents actions are for their regularization as employees of SMC something that is not recognized or allowed by law.

ISSUE: HELD: Whether or not AMPCO is a legitimate job contractor.

Generally, the findings of the LA and NLRC are regarded with much respect and finality when supported with sufficient evidence and affirmed by the CA. Although there are many signs that AMPCO is indeed an independent contractor, other factors prove otherwise. First, the LA found no evidence that AMPCO had substantial capital or investment. The NLRC stated that AMPCOs main business is trading, maintaining a store catering to members and the public thus making its activity of job contracting with SMC only a sideline. Thus AMPCOs substantial capital is invested and used in its trading business. The petitioner could not prove that AMPCO had substantial tools and equipment for use in segregation and piling for SMC. The NLCR earlier pointed out that AMPCO had no fixed assets that it could have used in any way for the completion of its contracted service with the petitioner. The only logical conclusion is that the tools and equipment used by the respondents are owned by SMC, thus proving that AMPCO has no independent business. The Court is not convinced that AMPCO exercised exclusive direction in the discharge of respondents, based on Merlyn Polidarios instructions to the respondents to wait for further instructions from SMCs supervisor after being prevented from entering SMC premises. Therefore, it would be logical to conclude that SMC wielded the power of control. AMPCOs Certificate of Registration as an Independent Contractor issued by the proper Regional office of the DOLE is not conclusive evidence. The totality of facts and surrounding circumstances must also be considered. Therefore, SMC (principal employer) is liable along with AMPCO (labor-only contractor) for all the respondents rightful claims. The petition is DENIED, and the February 19, 2004 decision of the CA AFFIRMED.