MARVIN O. DAGUINOD, petitioner, v. SOUTHGATE FOODS
INC., represented by MAUREEN O. FERRER and GENERATION ONE RESOURCE SERVICE AND
MULTIPURPOSE COOPERATIVE: represented by RESTY CRUZ, respondents
G.R. No. 227795 | February 20, 2019
TOPIC:
Contract and Subcontracting of Labor
FACTS:
Petitioner Marvin Daguinod was assigned as
counter crew/cashier of Jollibee Alphaland pursuant to a Service Agreement that
Generation One Resource Service and Multi-Purpose Cooperative will provide
“specified non-core functions and operational activities” for the franchise
operator Southgate Foods, Inc’s Jollibee Alphaland branch.
Daguinod also executed a Service Contract
with Generation One which stated that Generation One was contracted by
Southgate to perform “specified peripheral and support services.” In the
Service Contract, Daguinod was referred to as a service provider and member of
Generation One cooperative. The specific work responsibilities to be performed
by Daguinod were left blank. The period of Daguinod’s services was stated as
“beginning Sept. 9, 2010 until the end of the project.”
To become a member of Generation One,
Daguinod was required to pay a membership fee of P250.00 and participate in
“capital build-up and savings program” which obligated him to acquire 150
paid-up share in Generation One, valued at P1,500.00. Prior to his
employment/membership in Generation One cooperative, Daguinod was employed
directly bu Southgate as counter crew.
On April 10, 2011, Daguinod was accused of
theft and was then dismissed.
ISSUES:
Whether Generation One is a legitimate
labor contractor
RULING:
Generation One is not a legitimate labor
contract, thus, Daguinod is a regular employee of Southgate.
Under Section 4(a) of DO 18-02, legitimate
labor contracting or subcontracting refers to an arrangement whereby a
principal agrees to put out or farm out with a contractor or subcontractor the
performance or completion of a specific job, work, or service within a definite
or predetermined period, regardless of whether such job, work or service is to
be performed or completed within or outside the premises of the principal. The
“principal” refers to any employer who puts out or farms out a job service or
work to a contractor or subcontractor.
Meanwhile, labor-only contracting is
prohibited and defined under Section 5 of DO 18-02. When there is labor-only
contracting, Section 7 of DO 18-02 states that the principal shall be deemed
the employer of the contractual employee.
In Garden of Memories Park and Life Plan,
Inc. v. NLRC, the Court said that in determining the existence of an
independent contractor relationship, several factors may be considered, such
as, but not necessarily confined to, 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 specified pieces 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 premises, tools, appliances, materials and labor; and the mode, manner
and terms of payment.
On the other hand, there is labor-only
contracting where: (a) 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 (b) the workers recruited and
placed by such person are performing activities which are directly related to
the principal business of the employer.
Based on this, one of the factors in
determining whether there is a labor-only contracting is the nature of the
employee’s job; whether the work he performs is necessary and desirable to the
business.
In this particular case, Daguinod was
assigned to perform cash control activities which entails gathering of orders
and assembling food on the tray for dine-in customers or for take-out. As
cashier, Daguinod was also tasked to receive payments and give change. These
tasks are undoubtedly necessary and desirable for a business like that of
Jollibee. It is not merely a non-core or peripheral activity as Generation One
and Southgate claim. These circumstance lead to no other conclusion than that
Daguinod was a regular employee of Southgate and that Generation One was a mere
agent of Southgate.
The ownership of substantial capital in the
form of tools, equipment, machineries, work premises, and other properties, by
the contractor is another factor in establishing whether it is legitimate.
Generation One submitted only one Income Tax Return for the year December 2010 but did not submit any Audited
Financial Statements to show its assets, liabilities, and equity. It only submitted
notes to the AFS for the year ended 2010 which does not show a complete picture
of its financial standing. In fine, the documents submitted are insufficient to
prove that Generation One possesses substantial capital to be considered a
legitimate labor contractor.
Generation One cannot rely either on their
Certificate of Registration as an Independent Contractor issued by the DOLE. In
San Miguel Corporation v. Semillano, the Court ruled that it is not a
conclusive evidence of being a legitimate labor contractor. 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.
A perusal of Daguinod’s Service Contract
shows that the specific work responsibilities were unspecified, leaving the
“other requirements to perform the services to be part of the orientation at
the designated place of assignment,” thus, suggesting that the right to
determine not only the end to be achieved, but also the manner and means to
achieve that end, was reposed in Southgate. Consequently, Southgate shall be
deemed as the direct employer of Daguinod.
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