THIRD DIVISION
G.R. Nos. 173254-55 & 173263, January 13, 2016
DIAMOND FARMS, INC., Petitioner, v. SOUTHERN PHILIPPINES FEDERATION OF LABOR (SPFL)-WORKERS SOLIDARITY OF DARBMUPCO/DIAMOND-SPFL, DIAMOND FARMS AGRARIAN REFORM BENEFICIARIES MULTI-PURPOSE COOPERATIVE (DARBMUPCO), VOLTER LOPEZ, RUEL ROMERO, PATRICK) CAPRECHO, REY DIMACALI, ELESIO EMANEL, VICTOR SINGSON, NILDA DIMACALI, PREMITIVO* DIAZ, RUDY VISTAL, ROGER MONTERO, JOSISIMO GOMEZ AND MANUEL MOSQUERA, Respondents.
D E C I S I O N
JARDELEZA, J.:
We resolve in this Petition for Review1 under Rule 45 of the Rules of Court, the issue of who among Diamond Farms, Inc. ("DFI"), Diamond Farms Agrarian Reform Beneficiaries Multi-Purpose Cooperative ("DARBMUPCO") and the individual contractors2 ("respondent-contractors") is the employer of the 400 employees ("respondent-workers").
DFI challenges the March 31, 2006 Decision3 and May 30, 2006 Resolution4 of the Court Appeals, Special Twenty-Second Division, Cagayan De Oro City for being contrary to law and jurisprudence. The Decision dismissed DFI's Petition for Certiorari in C.A.-G.R. SP Nos. 53806 and 61607 and granted DARBMUPCO's Petition for Certiorari in C.A.-G.R. SP No. 59958. It declared DFI as the statutory employer of the respondent-workers.
On the first issue, the CA agreed with the ruling of the SOLE56 that DFI is the statutory employer of the respondent-workers. It noted that the DFI hired the respondent-contractors, who in turn procured their own men to work in the land owned by DARBMUPCO. Further, DFI admitted that the respondent-contractors worked under the direction and supervision of DFI's managers and personnel. DFI also paid for the respondent-contractors' services.57 The CA said that the fact that the respondent-workers worked in the land owned by DARBMUPCO is immaterial. "Ownership of the land is not one of the four (4) elements generally considered to establish employer-employee relationship."58
(1) "Whether DFI or DARBMUPCO is the statutory employer of the [respondent-workers] in these petitions; and (2) Whether or not a certification election may be conducted pending the resolution of the petition for certiorari filed before this Court, the main issue of which is the identity of the employer of the [respondent-workers] in these petitions."
WHEREFORE, premises considered, this Court hereby ORDERS:DFI filed a Motion for Reconsideration of the CA Decision which was denied in a Resolution dated May 30, 2006.65SO ORDERED.64ChanRoblesVirtualawlibrary
(1) the DISMISSAL of the petitions in C.A.-G.R. SP No. 53806 and C.A.-G.R. SP No. 61607; and (2) the GRANTING of the petition in C.A.-G.R. SP No. 59958 and the SETTING ASIDE of the assailed resolutions of the NLRC dated 24 May 1999, 30 July 1999 and 26 June 2000, respectively.
ART. 106. Contractor or subcontracting. - Whenever an employer enters into a contract with another person for the performance of the formers 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.The Omnibus Rules Implementing the Labor Code73 distinguishes between permissible job contracting (or independent contractorship) and labor-only contracting. Job contracting is permissible under the Code if the following conditions are met:
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.
In contrast, job contracting shall be deemed as labor-only contracting, an arrangement prohibited by law, if a person who undertakes to supply workers to an employer:
(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.74
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 the substantial capital, investment, tools and the like.76
(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 person are performing activities which are directly related to the principal business or operations of the employer in which workers are habitually employed.75
"In regard to the first assignment of error, the defendant company pretends to show through Venancio Nasol's own testimony that he was an independent contractor who undertook to construct a railway line between Maropadlusan and Mantalisay, but as far as the record shows, Nasol did not testify that the defendant company had no control over him as to the manner or methods he employed in pursuing his work. On the contrary, he stated that he was not bonded, and that he only depended upon the Manila Railroad for money to be paid to his laborers. As stated by counsel for the plaintiffs, the word 'independent contractor' means 'one who exercises independent employment and contracts to do a piece of work according to his own methods and without being subject to control of his employer except as to result of the work.' furthermore, if the employer claims that the workmen is an independent contractor, for whose acts he is not responsible, the burden is on him to show his independence.To support its argument that respondent-contractors are the employers of respondent-workers, and not merely labor-only contractors, DFI should have presented proof showing that respondent-contractors carry on an independent business and have sufficient capitalization. The record, however, is bereft of showing of even an attempt on the part of DFI to substantiate its argument.
Tested by these definitions and by the fact that the defendant has presented piactically no evidence to determine whether Venancio Nasol was in reality an independent contractor or not, we are inclined to think that he is nothing but an intermediary between the defendant and certain laborers. It is indeed difficult to find that Nasol is an independent contractor; a person who possesses no capital or money of his own to pay his obligations to them, who files no bond to answer for any fulfillment of his contract with his employer and specially subject to the control and supervision of his employer, falls short of the requisites or conditions necessary for the common and independent contractor."78 (Citations omitted; Emphasis supplied.)
The foregoing admissions are legally binding on respondent-contractors.83 Judicial admissions made by parties in the pleadings, or in the course of the trial or other proceedings in the same case are conclusive and so does not require further evidence to prove them.84 Here, the respondent-contractors voluntarily pleaded that they are labor-only contractors; hence, these admissions bind them.
- Herein respondents, Voltaire Lopez, Jr., et al., were commissioned and contracted by petitioner, Diamond Farms, Inc. (DFI) to recruit farm workers, who are the complaining [respondent-workers] (as represented by Southern Philippines Federation of Labor (SPFL) in this appeal by certiorari), in order to perform specific farm activities, such as pruning, dcleafing, fertilizer application, bud inject, stem spray, drainage, bagging, etc., on banana plantation lands awarded to private respondent, Diamond Farms Agrarian Reform Beneficiaries Multi-Purpose Cooperative (DARBMUPCO) and on banana planted lands owned and managed by petitioner, DFI.
- All farm tools, implements and equipment necessary to performance of such farm activities were supplied by petitioner DFI to respondents Voltaire Lopez, Jr., et. al. as well as to respondents-SPFL, et. al. Herein respondents Voltaire Lopez, Jr. et. al. had no adequate capital to acquire or purchase such tools, implements, equipment, etc.
- Herein respondents Voltaire Lopez, Jr., et. al. as well as rcspondents-SPFL, et. al. were being directly supervised, controlled and managed by petitioner DFI farm managers and supervisors, specifically on work assignments and performance targets. DFI managers and supervisors, at their sole discretion and prerogative, could directly hire and terminate any or all of the respondents-SPFL, et. al., including any or all of the herein respondents Voltaire Lopez, Jr., et. al.
- Attendance/Time sheets of respondents-SPFL, et. al. were being prepared by herein respondents Voltaire Lopez, Jr., et. al., and correspondingly submitted to petitioner DFI. Payment of wages to respondents-SPFL, et. al. were being paid for by petitioner DFI thru herein respondents Voltaire Lopez, [Jr.], et. al. The latter were also receiving their wages/salaries from petitioner DFI for monitoring/leading/recruiting the respondents- SPFL, et. al.
- No monies were being paid directly by private respondent DARBMUPCO to respondents-SPFL, et al., nor to herein respondents Voltaire Lopez, [Jr.], et. al. Nor did respondent DARBMUPCO directly intervene much less supervise any or all of [the] respondents- SPFL, et. al. including herein respondents Voltaire Lopez, Jr.. et. al.82 (Emphasis supplied.)
The records show that it is DFI which hired the individual [respondent-contractors] who in turn hired their own men to work in the 689.88 hectares land of DARBMUPCO as well as in the managed area of the plantation. DFI admits [that] these [respondent-contractors] worked under the direction and supervision of the DFI. managers and personnel. DFI paid the [respondent-contractors] for the services rendered in the plantation and the [respondent-contractors] in turn pay their workers after they [respondent-contractors] received payment from DFI xxx DARBMUPCO did not have anything to do with the hiring, supervision and payment of the wages of the workers-respondents thru the contractors-respondents. xxx87 (Emphasis supplied.)DFI does not deny that it engaged the services of the respondent-contractors. It does not dispute the claims of respondent-contractors that they sent their billing to DFI for payment; and that DFI's managers and personnel are in close consultation with the respondent-contractors.88
[A] finding that a contractor is a 'labor-only' contractor is equivalent to declaring that there is an employer-employee relationship between the principal and the employees of the supposed contractor." In this case, the employer-employee relationship between Pctron and petitioners becomes all the more apparent due to the presence of the power of control on the part of the former over the latter.That DFI is the employer of the respondent-workers is bolstered by the CA's finding that DFI exercises control over the respondent-workers.98 DFI, through its manager and supervisors provides for the work assignments and performance targets of the respondent-workers. The managers and supervisors also have the power to directly hire and terminate the respondent-workers.99 Evidently, DFI wields control over the respondent-workers.
It was held in Orozco v. The Fifth Division of the Hon. Court of Appeals that:This Court has constantly adhered to the "fourfold test" to determine whether there exists an employer-employee relationship between the parties. The four elements of an employment relationship are: (a) the selection and engagement of the employee; (b) the payment of wages; (c) the power of dismissal; and (d) the power to control the employee's conduct.Of these four elements, it is the power to control which is the most crucial and most determinative factor, so important, in fact, that, the other elements may even be disregarded.
Hence, the facts that petitioners were hired by Romeo or his father and that their salaries were paid by them do not detract from the conclusion that there exists an employer-employee relationship between the parties due to Pctron's power of control over the petitioners. One manifestation of the power of control is the power to transfer employees from one work assignment to another. Here, Petron could order petitioners to do work outside of their regular "maintenance/utility" job. Also, petitioners were required to report for work everyday at the bulk plant, observe an 8:00 a.m. to 5:00 p.m. daily work schedule, and wear proper uniform and safety helmets as prescribed by the safety and security measures being implemented within the bulk plant. All these imply control. In an industry where safety is of paramount concern, control and supervision over sensitive operations, such as those performed by the petitioners, are inevitable if not at all necessary. Indeed, Petron deals with commodities that are highly volatile and flammable which, if mishandled or not properly attended to, may cause serious injuries and damage to property and the environment. Naturally, supervision by Petron is essential in every aspect of its product handling in order not to compromise the integrity, quality and safety of the products that it distributes to the consuming public.97 (Citations omitted; Emphasis supplied)
In labor-only contracting, it is the law which creates an employer-employee relationship between the principal and the workers of the labor-only contractor.103UNDERTAKING OF THE FIRST PARTY xxx
3. THE FIRST PARTY [DARBMUPCO] shall be responsible for the proper conduct, safety, benefits and general welfare of its members working in the plantation and specifically render free and harmless the SECOND PARTY [DPI] of any expense, liability or claims arising therefrom. It is clearly recognized, by the FIRST PARTY that its members and other personnel utilized in the performance of its function under this agreement are not employees of the SECOND PARTY.102 (Emphasis supplied)
The existence of an employer-employees relation is a question of law and being such, it cannot be made the subject of agreement. Hence, the fact that the manpower supply agreement between Livi and California had specifically designated the former as the petitioners' employer and had absolved the latter from any liability as an employer, will not erase either party's obligations as an employer, if an employer-employee relation otherwise exists between the workers and either firm. xxx105 (Emphasis supplied.)Clearly, DFI is the true employer of the respondent-workers; respondent-contractors are only agents of DFI. Under Article 106 of the Labor Code, DFI shall be solidarily liable with the respondent-contractors for the rightful claims of the respondent-workers, to the same manner and extent, as if the latter are directly employed by DFI.106
Endnotes:
* Also referred to as Primitive in other parts of the records.
** Designated as additional Member per Raffle dated November 4, 2015.
1Rollo, pp. 9-39.
2 Voller Lopez, Ruel Romero, Patricio Caprecho, Rey Dimacali, filesio Ilmanel, Victor Singson, Nilda Dimacali, Premitivo Diaz, Rudy Vistal, Roger Montero, Josisimo Gomez and Manuel Mosquera.
3 Penned by Associate Justice Myrna Dimaranan Vidal and concurred in by Associate Justices Romulo V. Borja and Ricardo R. Rosario. Rollo, pp. 42-73.
4 Penned by Associate Justice Myrna Dimaranan Vidal and concurred in by Associate Justices Romulo V. Borja and Edgardo A. Camello (in lieu of Associate Justice Rosario, on leave). Id. at 76-77.
5Id. at 50.
6 The pertinent portion of Republic Act No. 6657 provides:chanRoblesvirtualLawlibrary
Section 11. Commercial Farming. — Commercial farms, which are private agricultural lands devoted to commercial livestock, poultry and swine raising, and aquaculture including saltbeds, fishponds and prawn ponds, fruit farms, orchards, vegetable and cut-flower farms, and cacao, coffee and rubber plantations, shall be subject to immediate compulsory acquisition and distribution after (10) years from the effectivity of the Act. In the case of new farms, the ten-year period shall begin from the first year of commercial production and operation, as determined by the DAR. During the ten-year period, the government shall initiate the steps necessary to acquire these lands, upon payment of just compensation for the land and the improvements thereon, preferably in favor of organized cooperatives or associations, which shall hereafter manage the said lands for the worker-beneficiaries. xxx.
7Rollo, p. 50.
8Id.
9Id.
10Id.; Republic Act No. 6657 reads:Section 11. Commercial Farming. xxx If the DAR determines that the purposes for which this deferment is granted no longer exist, such areas shall automatically be subject to redistribution.11Rollo, p. 50.
12Id. at 51.
13Id.
14Rollo, p. 14.
15 CA rollo (CA-G.R. SP No. 59958), pp. 108-112.
16 Petition for Review, rollo, p. 14.
17 CA rollo (CA-G.R. SP No. 59958), p. 109.
18Id. at 108.
19Id. at 113-114.
20Id. at 113.
21 CA rollo (CA-G.R. SP No. 53806), p. 53.
22Rollo, p. 52 citing CA rollo (CA-G.R. SP No. 53806), p. 53.
23 CA rollo (CA-G.R. SP No. 53806), pp. 57-60.
24Id. at 76.
25 CA rollo (CA-G.R. SP No. 61607), pp. 125-131.
26Id. at 128-129.
27 CA rollo (CA-G.R. SP No. 53806), pp. 86-88.
28Id. at 88.
29Id. at 95.
30Id. at 47-56.
31 RAB-11-05-00598-97. Decision of the LA dated January 22, 1999, CA rollo (CA-G.R. SP No. 59958), p. 88.
32 RAB-11-09-00865-97. Id.
33 CA rollo (CA-G.R. SP No. 59958), p. 95.
34Id. at 83-100.
35 Pertaining to Rolando Alonsagay, Edilberlo Amoguis and Socrates Fdilon who were former contractors of DPI. Id. at 97.
36Id. at 98.
37Id. at 99-100.
38Id. at 100.
39Id. at 55-62.
40Id. at 60.
41Id. at 61.
42 NLRC's Resolutio/dated July 30, 1999, id. at 64-67.
43 NLRC's Resolujjftn dated June 26, 2000, id. at 69-71.
44Id. at 14-53.
45Rollo, p. 18.
46Id. at 58.
47 CA rollo (CA-G.R. SP No. 61607), pp. 137-139.
48Id. at 144-147.
49Id. at 148-150
50Id. at 165-167.
51Id. at 166-167.
52Id. at 172.
53Id. at 10-23.
54Id. at 389.
55Rollo, pp. 60-61.
56 In C.A.-G.R. SP No. 53806 (certification election).
57Rollo, pp. 64-65.
58Id. at 65.
59Id. at 67.
60Id. at 67- 68.
61 In C.A. G.R. No. 61607.
62Rollo, p. 69.
63Id. at 69-72.
64Id. at 72.
65Id. at 76-77.
66Id.at 90-111.
67Id. at 513-518. Only Voltaire Lopez, Jr., Ruel Romero, Patricio Capricho, Rudy Vistal, Roger Montero, Zosimo Gomez and Manuel Mosquera prepared the Verified Explanation and Memorandum. Elesio Emanel and Prcmitivo Dias were already deceased.
In a Resolution dated January 16, 2012, this Court dispensed with the memorandum of Rey Dimacali, Nilda Dimacali, Primitvo Diaz, Elesio Emanel and Victor Singson; id. at 566.
68 In a Manifestation dated December 17, 2012, Alvaro Lague, Sr.—the President of SPFL—asked for this Court's indulgence in view of SPFL's failure to report the death of its counsels. He admitted that SPFL has been negligent in representing the respondent-workers and such was caused by "inter-organization conflict and serious splitting among its leaders." SPFL also informed this Court of the new address where notices and resolutions should be sent; id., at 606-607.
In a Resolution dated March 6, 2013, this Court required SPFL to cause the entry of appearance of its new counsel, id. at 611. However, SPFL failed to comply. Hence, this Court issued a Resolution dated September L8, 2013 reiterating the order for SPFL to cause the entry of appearance of its new counsel. SPFL, again, failed to comply, id. at 618. On July 23, 2014, we resolved to issue a show cause order against Lague, Sr. for his failure to comply with this Court's abovementioned resolutions; id. at 651.
69 DOLE Department Order No. 10 (1997), Amending the Rules Implementing Books III and VI of the Labor Code, as amended, Section 4(d).
70 DOLE Department Order No. 10 (1997), Section 3.
71 Presidential Decree No. 442 (1974).
72Polyfoam-RGC International Corporation v. Concepcion, G.R. No. 172349, June 13, 2012, 672 SCRA 148, 158.
73 The Omnibus Rules Implementing the Labor Code (before its amendment by Department Order No, 10, series of 1997) is the prevailing rule at the time the respondent-workers were employed by respondent-contractors in 1996.
74 Omnibus Rules Implementing the Labor Code, Book III, Rule VIII, Section 8.
75Id., Section 9.
76Alilin v. Petron Corporation, G.R. No. 177592, June 9, 2014, 725 SCR A 342, 346, citing Garden of Memories Park and Life Plan, Inc. v. NLRC, G.R. No. 160278, February 8, 2012, 665 SCRA 293, 306. See also Alps Transportation v. Rodriguez, G.R. No. 186732, June 13, 2013, 698 SCRA 423, 434.
77 102 Phil. 61 (1957).
78Id. at 65-66, citing Andoyo v. Manila Railroad Co., 56 Phil. 852 (1932) (unreported).
79 CA rollo (CA-G.R. S.P. No. 59958), p. 59.
80 Manifestation and Explanation In Lieu of Comment filed before us (reproduced in toto the Formal Appearance of Counsel and Motion for Exclusion of Individual Party-Respondents); rollo, p. 148.
81Id.
82 Verified Explanation and Memorandum. Rollo, pp. 514-515.
83Constantino v. Heirs of Pedro Constantino, Jr., G.R. No. 181508, October 2, 2013, 706 SCRA 580, 596.
84Philippine Long Distance Telephone Company v. Pingol, G.R. No. 182622, September 8, 2010, 630 SCRA 413, 421; citing Damasco v. NLRC, G.R. No. 115755 & 116101, December 4, 2000, 346 SCRA 714, 725, citing Philippine American General Insurance Co., Inc. v. Sweet Lines, Inc., G.R. No. 87434, August 5, 1992, 212 SCRA 194, 204.
85Aklan v. San Miguel Corporation, G.R. No. 168537, December 11, 2008, 573 SCRA 675, 685; citing Aboitiz Haulers, Inc. v. Dimapatoi, G.R. No. 148619, September 19, 2006, 502 SCRA 271, 283. See also Polyfoam-RGC International Corporation v. Concepcion, supra note 73 at 163.
86PCI Automation Center, Inc. v. NLRC, G.R. No. 115920, January 29, 1996, 252 SCRA 493, 503.
87 CA Decision, rollo, pp. 64-65.
88 DFI's Memorandum before the CA, CA rollo (CA-G.R. SP No. 53806), p. 308.
89 Memorandum for the Petitioner, rollo, p. 301.
90Id.
91 CA Decision, rollo, p. 64.
92 SOLE's Resolution dated February 18, 1998, CA rollo (CA-G.R. SP No. 53806), p. 88.
93 LA's Decision dated January 23, 1999, CA rollo (CA-G.R. SP No. 59958), p. 99.
94 NLRC's Resolution dated May 24, 1999, id. at 59-60.
95Emeritus Security and Maintenance Systems, Inc. v. Dailig, G.R. No. 204761, April 2, 2014, 720 SCRA 572, 578-579, citing Bank of Lubao, Inc. v. Manabat, G.R. No. 188722, February 1, 2012, 664 SCRA 772, 779.
96 G.R. No. 177592, June 9, 2014, 725 SCRA 342.
97Id. at 361-362.
98 CA Decision, rollo, pp. 64-65.
99 Verified Explanation and Memorandum, id. at 515.
100Id. at 291.
101Id. at 302.
102 CA rollo (CA-G.R. SP No. 59958), pp. 108-109.
103Aliviado v. Procter & Gamble Phils., Inc., G.R. No. 160506, March 9, 2010, 614 SCRA 563, 580; citing Neri v. NLRC, G.R. Nos. 97008-09, July 23, 1993, 224 SCRA 717, 720, citing Philippine Bank of Communications v. NLRC, G.R. No. L-66598, December 19, 1986, 146 SCRA 347, 356.
104 G.R. No. 80680, January 26, 1989, 169 SCRA 497.
105Id. at 500. See also Insular Life Assurance Co., Ltd v. NLRC (4th Division), G.R. No. 119930, March 12, 1998, 287 SCRA 476, 483.
106Vigilla v. Philippine College of Criminology, Inc., G.R. No. 200094, June 10, 2013, 698 SCRA 247; San Miguel Corporation v. MAERC Integrated Services, Inc., G.R. No. 144672, July 10, 2003, 405 SCRA 579.