Wyeth Philippines, Inc. v. Estabaya

THIRD DIVISION

[G.R. No. 231082. October 6, 2021.]

WYETH PHILIPPINES, INC., petitioner, vs.JHONDEL J. ESTABAYA, JULIUS C. GENOVA, JONATHAN A. MATOSENO, GREGORIO D. ILAGAN, MARK ANDREW M. GOTENGCO, RONIE M. SANTILLAN, ROJEY O. TEJERO, ET AL., respondents.

[G.R. No. 231102. October 6, 2021.]

SERMAN COOPERATIVE, petitioner, vs.JHONDEL ESTABAYA, ET AL., respondents.

NOTICE

Sirs/Mesdames :

Please take notice that the Court, Third Division, issued a Resolution datedOctober 6, 2021, which reads as follows: HTcADC

"G.R. No. 231082 (Wyeth Philippines, Inc., Petitioner vs. Jhondel J. Estabaya, Julius C. Genova, Jonathan A. Matoseno, Gregorio D. Ilagan, Mark Andrew M. Gotengco, Ronie M. Santillan, Rojey O. Tejero, et al., Respondents); and G.R. No. 231102 (Serman Cooperative, Petitioner vs.Jhondel Estabaya, et al., Respondents.) — These are consolidated Petitions for Review on Certiorari1 under Rule 45 assailing the Decision 2 dated 28 October 2016 and Resolution 3 dated 11 April 2017 of the Court of Appeals (CA) in CA-G.R. SP No. 143555. The CA reversed and set aside the Resolutions dated 30 July 2015 4 and 29 September 2015 5 of the National Labor Relations Commission (NLRC) in NLRC LAC No. 06-001504-15 and declared that Serman Cooperative (Serman) and Ako Ikaw May-Ari ng Kooperatiba (AIMKO) were engaged in labor-only contracting and that respondents were illegally dismissed.

Antecedents

Wyeth Philippines, Inc. (Wyeth) is engaged in the business of manufacturing milk products. In the course of its operations, Wyeth entered into separate agreements with Serman and AIMKO for certain services. 6

Serman is registered with the Cooperative Development Authority. 7 It has paid-up capital shares of Php3,223,000 (2012) 8 and is registered with the Department of Labor and Employment (DOLE). 9 On the other hand, AIMKO is also registered with the Cooperative Development Authority and the DOLE. 10 It has paid-up capital shares of Php13,686,829.82 (2012) and Php23,757,429.30 (2013). 11

Pursuant to the service agreements, Serman and AIMKO deployed their respective personnel to Wyeth to perform the contracted services. Under the contract, Serman undertook to provide the following services to Wyeth; 12

1. Performs sorting of all finished Goods based on Request to Sort (RTS) recommended by the Quality Assurance Division.

2. Cartoning of 44g Sachets.

3. Cartoning of Finished Goods in Sachet packs for export requirements.

4. Sieving of rework powder in the sieving section.

5. Tapping of sachets in the Packaging Section.

6. Acts as reliever due to unscheduled absences. As Reliever, the following functions shall be performed:

a. Preparation of bulk materials in the Macro Dispensing Section

b. Dumping of bulk materials in the Compounding Section

7. In case of absence of a regular employee, assists other Operators in:

a. Unwrapping and pushing of pallets of empty cans into the depalletizer infeed conveyor.

b. Assists in the manual palletizing of finished products in case the automatic cartoner and palletizer bogs down.

c. Observes the can blower and immediately notifies a regular employee in cases there are hammed cans in the conveyor. Pushes [an] emergency stop button to prevent further damage of the equipment.

8. During shutdown, assists the regular employees in the dismantling and cleaning of equipment in the filling room.

9. Quality Assurance Raw Materials Sampler — performs sampling on all new raw material deliveries, in house premixes and rework powder according to approved Standard Operating Procedures (SOPs) and specifications.

10. Provides support to WYETH programs such as follows [sic]:

a. Team building

b. Safety measures

c. Survival training

d. Disaster, emergency preparedness

e. First-Aid

On the other hand, AIMKO committed to perform these general support services for Wyeth: 13

1. Forklift Operator — material handling of all outgoing materials (finish[ed] goods, packaging materials, raw materials, non-rework powders) at outbound loading dock. Documentation of all materials transferred.

2. Stability Staff — assist in handling stability samples enrolled in stability studies intended for product evaluation.

3. Warehouse Supervisor — oversees the overall performance of forklift operators, material handles and sanitation crews. Ensures that continuous work is sustained in warehouse operations.

4. Material Handler — assists in stock location/labelling/stretch wrapping. Assists in stock or material receiving/transfer/loading/unloading and recording.

5. Sanitation Crew — assigned areas are cleaned, free from dirt, loose papers and other trash. Collected trashes regularly transfer[red]/deposited to designated garbage site. Comfort rooms are cleaned and disinfected. General upkeep, cleaning and routine maintenance of assigned area.

6. Driver — on time pick-up/delivery/loading or unloading of documents or materials/tools/products/goods and other items as required from source to designated customer/recipient/destination. Assigned vehicle is kept in good working condition, regularly cleaned maintained [sic]. Vehicle trouble/repair works needed are relayed to Wyeth authorized representative.

7. Export Repalletizer — assists in loading activity from re-palletizing stocks to loading export shipment.

8. Production Supervisor Cleaner — supervises the cleaning and sanitation activities of Production Cleaners. Oversees overall performance of Production Cleaners. Ensures timely completion of all cleaning and sanitation activities.

9. Production Leadman Cleaner — acts as Supervisor in the absence of Production Supervisor Cleaner. Provides timely reports on the progress or status of the assigned task.

10. Production Cleaner — provide general support services including but not limited to production cleaning and sanitation.

11. PPU Inspector — conducts review of Certificate of Analysis (COA) for raw materials and packaging materials. Creates raw materials lots.

12. Labeller — facilitate labeling activities at on-site and off-site warehouses.

The personnel deployed to perform these services were: 14

AIMKO	SERMAN
Jhondel J. Estabaya	Jeffry E. Mojica
Julius C. Genova	Redentor P. Malsi
Jonathan A. Matoseño	Segundo Diola
Gregorio D. Ilagan	Richard M. Olivar
Mark Andrew M. Gotengco	Ronwaldo M. Nuñez
Ronie M. Santillan	Joseph M. Santos
Rojey D. Tejero
Robert Q. Solpico
Efren V. Cabang
Johnlee O. Sampang
Christopher N. Regardia
Michael S. Estero
Joel P. Dela Peña
Edwin R. Cezar
Zaldy A. De Guzman
Hernan S. Soldevilla, Jr.
Joseph J. Raz
Gilbert P. Decena
Celso M. Gacos, Jr.
Edwin C. Panganiban
Arnel R. Pajac
John G. Bautista
John Philip B. Icban
Conrad S. Sandoy, Jr.
Arjay M. Tolentino
Mark Anthony B. Burgos
Mark Gerald M. Sumiran
Julius V. Barace
Restituto M. Rivera 15

After several extensions, the service agreements expired on 31 May 2014 for Serman and 30 November 2014 for AIMKO. Serman claimed that the contract of service of its personnel (Mojica, et al.) was "co-extensive" with its contract with the principal, Wyeth; thus, the expiration of the service agreement with Wyeth would also mean the end of Mojica, et al.'s contract of service. AIMKO, for its part, recalled its personnel (Estabaya, et al.) supposedly for re-assignment to a different principal. 16

As a result, the above-named personnel (collectively, respondents) filed separate complaints for illegal dismissal and regularization against Wyeth, Serman, and AIMKO. They claimed that they have been continuously and regularly performing their jobs at Wyeth. Even when Wyeth would change the manpower agencies that would perform the Sanitation and Production processes, they remained and would merely be given employment contracts for limited periods of time. Respondents also alleged that they were tasked to ensure the sanitation and assist in the production process in Wyeth. They were specifically assigned to the Production Area for sieving, dispensing, macro/inventory, and to the Sanitation Department as sanitation crew for dryer sanitation, equipment/material handler/custodian, pallet washing, hallway and hand washing, laundry washing, shoe washing, shoe change cleaning, ladies'/men's locker, engineering laundry, loading dock, clinic and administration offices. In performing their tasks, respondents claimed that they were under the direct control of Wyeth's supervisors and inspectors. 17

Ruling of the Labor Arbiter

The Labor Arbiter (LA) ruled that Serman and AIMKO were engaged in permissible job contracting, finding that they both had substantial capitalization and were registered as independent contractors with DOLE and other government agencies. It was further ruled that based on the four-fold test, respondents were the employees of Serman and AIMKO. On the issue of illegal dismissal, the LA found no evidence to show that respondents were terminated, except for the respondents' unsubstantiated allegation. 18 In the Decision dated 27 February 2015, the LA disposed of the case, thus:

WHEREFORE, premises considered, the complaint for illegal dismissal and regularization is hereby DISMISSED for lack of merit.

All other claims are DENIED for lack of merit.

SO ORDERED.19

Aggrieved, respondents appealed to the NLRC.

Ruling of the NLRC

Upon review on appeal, the NLRC agreed with the LA. It held that respondents were employees of Serman and AIMKO, and that they were not illegally dismissed. 20 Thus, the disposition in its Resolution dated 30 July 2015 reads:

WHEREFORE, premises considered, the Decision dated February 27, 2015 is AFFIRMED in its entirety.

SO ORDERED. 21

The NLRC maintained its ruling and denied reconsideration. 22 Respondents elevated the matter to the CA via a petition for certiorari.

Ruling of the CA

The CA reversed and set aside the common findings and conclusion of the LA and the NLRC in its Decision dated 28 October 2016, 23 to wit:

WHEREFORE, the petition is GRANTED. The two Resolutions dated July 30, 2015 and September 29, 2015 of the National Labor Relations Commission (NLRC) in NLRC LAC NO. 06-001504-15 are hereby REVERSED and SET ASIDE and in lieu thereof, a NEW ONE finding respondents Serman Cooperative and Ako Ikaw May-Ari ng Kooperatiba to be engaged in prohibited labor-only contracting and finding respondent Wyeth Philippines, Inc. as the employer of herein petitioners Jhondel J. Estabaya, Julius C. Genova, Jonathan A. Matoseño, Gregorio D. Ilagan, Mark Andrew M. Gotengco, Ronie M. Santillan, Rojey D. Tejero, Robert Q. Solpico, Efren V. Cabanig. Johnlee O. Sampang, Christopher N. Rigardia, Michael S. Estero, Joel Dela Peña, Edwin Cesar, Jeffry E. Mojica, Redentor Malsi, Segundo Diola, Richard Olivar, Zaldy A. De Guzman, Hernan S. Soldevilla, Jr., Joseph J. Raz, Gilbert P. Decena, Celso M. Gacos, Jr., Edwin C. Panganiban, Arnel R. Pajac, John G. Bautista, John Philip B. Icban, Conrad S. Sandoy, Jr., Arjay M. Tolentino, Mark Anthony B. Burgos, Mark Gerald M. Sumiran, Julius V. Barace, Restitutu M. Rivera, Ronwaldo M. Nuñez, and Joseph M. Santos. Consequently, respondent Wyeth is ordered to reinstate petitioners to their former positions as regular employees without loss of seniority rights and other privileges. However, in case reinstatement is not feasible, respondents Wyeth, Serman and AIMKO are adjudged jointly and solidarity liable to pay petitioners separation pay of one month for every year of service. In addition, respondents Wyeth, Serman and AIMKO are solidarily liable to pay petitioners full backwages from the time their compensation was withheld until actual reinstatement or if reinstatement is no longer feasible, until finality of this decision.

SO ORDERED. 24

The CA concluded that Serman and AIMKO were engaged in labor-only contracting. Respondents' work of cleaning the manufacturing area was necessary, if not indispensable, to Wyeth's operations. Further, Wyeth exercised the power of control over respondents. As such, respondents were Wyeth's employees and were it legally dismissed. 25

Petitioners moved for reconsideration, which was denied. 26 Wyeth and Serman separately filed their petitions for review before this Court docketed as G.R. No. 231082 and G.R. No. 231102, respectively. In the Resolution dated 13 December 2017, the Court resolved to consolidate the two petitions since they were assailing the same CA Decision and Resolution, stemmed from the same antecedent facts, and have common parties and issues. 27

Issue

Did the CA commit reversible error when it reversed and set aside the NLRC's Resolutions dated 30 July 2015 and 29 September 2015 declaring respondents as employees of Serman and AIMKO, and thus, were not illegally dismissed?

Ruling of the Court

The petitions are denied.

To determine if respondents were illegally dismissed, it is necessary to establish their true employer, which is essentially a question of fact. There is a question of fact if there is a need to evaluate the evidence. The Court is not a trier of facts, and this doctrine applies with greater force in labor cases. Factual questions are for the labor tribunals to resolve. 28 In this case, the factual issues have already been determined by the LA and the NLRC.

Nonetheless, one of the recognized exceptions to the rule is when the findings of the CA are contrary to those of the LA and the NLRC, 29 as in this case. Thus, to put an end to the issue and to finally resolve the dispute, the Court will delve into the factual questions.

The resolution of these cases rests on the determination of whether Serman and AIMKO are legitimate job contractors. Since the controversy happened in 2014, the applicable rule is Section 4 of DOLE Department Order No. 18-A, s. 2011, 30 which provides:

Section 4. Legitimate Contracting or Subcontracting. — Contracting or subcontracting shall be legitimate if all the following circumstances concur:

(a) The contractor must be registered in accordance with these Rules and carries a distinct and independent business and undertakes to perform the job, work or service on its own responsibility, according to its own manner and method, and free from control and direction of the principal in all matters connected with the performance of the work except as to the results thereof;

(b) The contractor has substantial capital and/or investment; and

(c) The Service Agreement ensures compliance with all the rights and benefits under Labor Laws.

On the other hand, Section 6 of the same Department Order states:

Section 6. Prohibition Against Labor-only Contracting. — Labor-only contracting is hereby declared prohibited. For this purpose, labor only contracting shall refer to an arrangement where:

(a) The contractor does not have substantial capital or investments in the form of tools, equipment, machineries, work premises, among others, and the employees recruited and placed are performing activities which are usually necessary or desirable to the operation of the company, or directly related to the main business of the principal 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; or

(b) The contractor does not exercise the right to control over the performance of the work of the employee.

Based on the foregoing requirements, there was compliance with Section 4 insofar as: (a) both are registered in accordance with Department Order No. 18-A; 31 (b) both have substantial capital; 32 (c) both of their service agreements with Wyeth provides for an assurance of compliance with all the rights and benefits under labor laws. 33

However, using the definition under Section 6, the Court finds that Serman and AIMKO had no control over the performance of work and type of activities performed by respondents.

Judicial notice of recent

The Court takes notice of the recently decided cases of Serman Cooperative vs. Annalyn E. Montarde, et al. and Wyeth Philippines, Inc. vs. Annalyn E. Montarde, et al. (Montarde), 34 which involve similar facts and issues.

In these cases, Serman entered into a service agreement with Wyeth. Petitioners therein (Montarde, et al.) accordingly executed their respective contracts of service with Serman stating that their contracts shall be "co-extensive" with Serman's service agreement with Wyeth. After the workers' contracts expired, they filed their complaints for illegal dismissal, regularization, damages, and attorney's fees, among others, against Serman and Wyeth.

The LA and the NLRC ruled that Montarde, et al., were Serman's employees. However, the CA reversed the labor tribunals' ruling based on the following findings: (1) the workers were performing jobs that were necessary and desirable, even indispensable, to the operations of Wyeth; and (2) the service agreement reveals the extent of Wyeth's involvement in the supervision and control of the workers' performance of their tasks. This Court affirmed the CA's ruling and held, thus:

It cannot be denied that the workers were performing duties and activities "usually necessary or desirable in the Usual business or trade of the employer" pursuant to Article 280 of the Labor Code. The continuous rehiring of the employees negates the claim of Serman and Wyeth that the tasks the workers performed were only ancillary to the manufacturing business of Wyeth. Workers assigned at the compounding area are indispensable to the operations of Wyeth because they ensure the safety of Wyeth's products by checking the expiration dates and the condition of the sachets. They were also responsible for the cartoning of the sachets for distribution and exportation. Furthermore, the repeated and continuing need to rehire complainants is sufficient evidence of the necessity, if not indispensability, of their work to the business of manufacturing and distribution of milk products.

Admittedly, in performing the contracted out tasks, the parties specifically declared that:

c. SERMAN shall be free to use any means and methods not contrary to law, regulations and the provisions and spirit of this Agreement, which it believes will best enable it to perform the Services. SERMAN shall not be subject to the control and supervision of WYETH insofar as the means and methods to be employed by SERMAN, it being understood that WYETH is interested only in the results of SERMAN work under this Agreement.

In addition, Serman was required to assign its own personnel who will monitor the performance of the workers. The service agreement states:

3.5. SERMAN shall designate and make available to WYETH at all times a competent representative, who shall be part of SERMAN Personnel, with full authority to deal with WYETH on all matters pertaining to the implementation and enforcement of this Agreement and the performance of the Services. The representative shall coordinate with WYETH throughout the duration of this Agreement to ensure the accomplishment of WYETH's desired result.

However, despite the cited provisions, the underlying authority to choose who may continue to perform the contracted out tasks still lies with Wyeth. The service agreement provides:

3.6. SERMAN shall at all times maintain efficient and effective discipline over its Personnel. WYETH shall have the right to report to SERMAN and protest any untoward act, negligence, misconduct, malfeasance, misfeasance or nonfeasance of any Personnel. Although SERMAN alone shall have the right to discipline the Personnel, WYETH may request SERMAN to recall and change any undesirable or erring Personnel. SERMAN shall not continue to assign any Personnel whose trustworthiness, dependability or efficiency is doubted by WYETH. SERMAN shall ensure that, at all times, the Personnel shall not commit any act prejudicial or injurious to the name, reputation, business, and interest of WYETH.

To Our mind, Wyeth's right to recall erring workers and request for their replacement is a manifestation of Wyeth's control over them. The procedure in requesting for the recall of workers is actually an indirect exercise of Wyeth's power to dismiss workers deployed by Serman who fail to meet the former's standards. The extent of Wyeth's involvement in the supervision, control, and even the dismissal of the workers is a strong indication of Wyeth's control over them as a direct employer.

Under the "control test," the employer is the person who has the power to control both the end achieved by his or her employees, and the manner and means they use to achieve that end. In this case, it must be highlighted that Wyeth requires Serman to observe certain standards in the performance of the contracted out tasks through its Key Performance Indicators which include the following categories: (1) 100% Safety Compliance; (2) 100% Compliance on the eCGMP of the principal; (3) zero incidence of unauthorized tardiness and absences; and (4) zero incidence of rejection related to scope of work performance. Requiring observance of these key indicators is considered a manifestation of Wyeth's exercise of control and supervision. Wyeth cannot be reasonably expected to simply allow the workers to perform the contracted out tasks without adherence to these standards considering that the business of manufacturing and sale of nutritional products for infants, children, and mothers requires strict quality control. It is settled that "it is not essential that the employer actually exercises the power of control, as the ability to wield the same is sufficient." 35

The Court essentially ruled that Serman's personnel performed activities that were necessary and desirable to Wyeth's business, and that Wyeth had direct control over the workers.

Upon an examination of the records of the instant petitions, the Court finds that the following factual antecedents and circumstances attendant in the Montarde cases are also present:

(a) Serman entered into a service agreement with Wyeth; 36

(b) the duration of the 'workers' contracts of service with Serman is "co-extensive" with Serman's service agreement with Wyeth;

(c) the list of services to be performed; 37 and,

(d) the provisions of the service agreement are the same, particularly those referring to Wyeth's right to recall and request Serman to replace any erring personnel 38 and key performance indicators. 39

Considering these similarities, the Court will refer to Montarde as may be appropriate.

Respondents' activities are not

In Montarde, the Court ruled that the workers were performing duties and activities "usually necessary or desirable in the usual business or trade of the employer[.]" First, the workers were "checking the expiration dates and the condition of the sachets. They were also responsible for the cartoning of the sachets for distribution and exportation." Second, the repeated and continuing need to rehire the workers is sufficient evidence of necessity, if not indispensability, of their work to Wyeth's business.

These two elements are absent in these present cases.

Serman alleged that respondents Mojica, Olivar, Diola, and Malsi were production helpers 40 and respondents Santos and Nuñez were ROH samplers. 41 With respect to AIMKO, it claimed that it only provided janitorial services, and was only worded as sanitation for better designation.

On the other hand, respondents alleged that they were assigned in the Production Area for sieving, dispensing, macro/inventory, and in the Sanitation Department as sanitation crew. Notably, respondents did not specify the tasks they performed while assigned at the Production Area. None of these activities are similar to the activities identified in Montarde. On the matter of rehiring, respondents alleged that they were repeatedly rehired by Wyeth through different contractors. However, this was not proved by any evidence on record.

In the assailed Decision, the CA considered the sanitation/janitorial services as necessary, if not indispensable, to the operation of Wyeth. The pertinent CA ruling reads:

As already stated, petitioners are in-charge of the sanitation of the production area and that the manufacturing process of the milk products of Wyeth starts with the cleaning and ensuring the manufacturing place free from any contamination, including everything that will come into contact with the area. Undoubtedly, the work they rendered are necessary, if not indispensable, to Wyeth's business operations. 42

In these cases, AIMKO's janitorial/sanitation services cannot be deemed as necessary to Wyeth's business. It is a fact that all businesses engaged in manufacturing would require their premises to be clean as this is only good manufacturing practice. However, it does not make the janitorial/sanitation services essential elements of Wyeth's business, which is developing and manufacturing of milk products.

The Court finds that janitorial and sanitation services are essentially the same. To determine if these activities are necessary or desirable to the operation of the company, or directly related to the main business of the principal, the Court takes judicial notice of the practice adopted in several government and private institutions and industries of hiring janitorial services on an "independent contractor basis." 43 In this respect, although janitorial services may be considered directly related to the principal business of an employer, as with every business, the Court deems them unnecessary in the conduct of the employer's principal business. 44

Nonetheless, while respondents' activities were not necessary or desirable to Wyeth's operations, Serman and AIMKO failed to prove that they met the requirement of freedom from the control of Wyeth.

Wyeth exercised control based on the

The CA found that control over respondents rested in Wyeth based on these observations:

In the instant case, petitioners worked at the respondent Wyeth's premises. The latter did not dispute the fact that it has production supervisors to monitor the petitioners in performing their jobs and see to it that they followed the required output to conform to the standards set by Wyeth; that the petitioners underwent trainings provided by respondent Wyeth; that they were provided with identification cards in order to be permitted to enter the work premises of respondent Wyeth; that they were engaged to perform a twelve-hour (12) hour of duty each day; and that, the actual areas of assignment in performing their respective duties are dependent on the instruction and mandate of the superiors-employees of respondent Wyeth. 45

Wyeth countered the finding of control. It underscored the testimony of its Sanitation Supervisor, Leoner B. Bayotas, who stated that AIMKO and Serman, through their designated supervisors, provided respondents' work assignments, schedules, and other details of their work. AIMKO and Serman also gave instructions as to the performance of their respective work assignments and monitored their performance. 46

On the trainings and identification cards provided to respondents, Wyeth claimed that these merely pertained to general policies on safety, security, hygiene, health, and environment. The certificates for said trainings were issued by a third party. Meanwhile, the identification cards were merely issued as access badges to Wyeth premises and to distinguish respondents from Wyeth's own employees. 47

In Montarde, the Court ruled that Wyeth exercised control over Montarde, et al., based on its contractual right to recall erring workers, request their replacement, and to require Serman to observe Wyeth's standards in the performance of the contracted tasks through its Key Performance Indicators (KPI).

The KPI include the following categories: (1) 100% Safety Compliance; (2) 100% Compliance on the eCGMP of the principal; (3) zero incidence of unauthorized tardiness and absences; and (4) zero incidence of rejection related to scope of work performance. The Court now examines the facts of these cases in light of these standards.

Recall erring workers and request for

Serman's and AIMKO's service agreements 48 with Wyeth have the provisions on the latter's right to request replacement of the contractor's erring workers and KPI. Requesting contractors to replace the latter's workers deployed to perform the services has long been associated with control. The case of Lakas sa Industriya ng Kapatirang Haligi ng Alyansa-Pinagbuklod ng Manggagawang Promo ng Burlingame v. Burlingame Corp.49 involved a similar contractual provision, and the Court therein ruled:

The contract also provides that "any personnel found to be inefficient, troublesome, uncooperative and not observing the rules and regulations set forth by Burlingame shall be reported to F. Garil and may be replaced upon request." Corollary to this circumstance would be the exercise of control and supervision by Burlingame over workers supplied by F. Garil in order to establish the inefficient, troublesome, and uncooperative nature of undesirable personnel. Also implied in the provision on replacement of personnel carried upon request by Burlingame is the power to fire personnel.

These are indications that F. Garil was not left alone in the supervision and control of its alleged employees. Consequently, it can be concluded that F. Garil was not an independent contractor since it did not carry a distinct business free from the control and supervision of Burlingame.

KPI

KPI can be said to refer to the end result. However, it is also connected with the performance of the contracted work since it shows that Wyeth is concerned with how the job is to be performed, including the workers' attendance. By imposing these standards upon Serman and AIMKO, Wyeth is effectively dictating how the job should be done because the contractors have to follow the KPI in the performance of its services. This arrangement strips the contractors of their independence in the manner of completing the task.

To summarize, Wyeth exercised control over respondents based on its contractual right to request their replacement and require compliance with the KPI. Therefore, Serman and AIMKO are deemed to be labor-only contractors and are considered to be Wyeth's agents.

In labor-only contracting, the statute creates an employer-employee relationship for a comprehensive purpose: to prevent a circumvention of labor laws. The contractor is considered merely an agent of the principal employer and the latter is responsible for the employees of the labor-only contractor as if such employees had been directly employed by the principal employer. The principal employer therefore becomes solidarily liable with the labor-only contractor for all the rightful claims of the employees. 50

All told, the expiration of the service agreements is not a just or authorized cause to lawfully sever respondents' employment. Respondents are therefore considered to have been illegally dismissed.

However, the Court must further modify the CA Decision. The CA declared Wyeth, Serman, and AIMKO solidarily liable to all the respondents to pay their backwages and separation pay, in case reinstatement is not feasible. This is incorrect. The respondents consisted of two (2) groups: one is under Serman, and the other is under AIMKO. Serman and AIMKO therefore acted as agents of Wyeth only with respect to the personnel specifically under them.

WHEREFORE, the petition is DENIED. The Court of Appeals' Decision dated 28 October 2016 and Resolution dated 11 April 2017 are AFFIRMED with MODIFICATION in that the solidary liability of the parties shall be as follows:

1. Wyeth Philippines, Inc. and Serman Cooperative are solidarily liable to pay Jeffry E. Mojica, Redentor Malsi, Segundo Diola, Richard Olivar, Ronaldo M. Nuñez, and Joseph M. Santos separation pay of one (1) month per year of service, in case reinstatement is not feasible; and backwages computed from the time their compensation was withheld until their actual reinstatement, or until finality of this Resolution, if reinstatement is not feasible.

2. Wyeth Philippines, Inc. and Ako Ikaw May-Ari ng Kooperatiba (AIMKO) are solidarily liable to pay Jhondel J. Estabaya, Julius C. Genova, Jonathan A. Matoseño, Gregorio D. Ilagan, Mark Andrew M. Gotengco, Ronie M. Santillan, Rojey D. Tejero, Robert Q. Solpico, Efren V. Cabanig, Johnlee O. Sampang, Christopher N. Rigardia, Michael S. Estero, Joel Dela Peña, Edwin Cesar, Zaldy A. De Guzman, Hernan S. Soldevilla, Jr., Joseph J. Raz, Gilbert P. Decena, Celso M. Gacos, Jr., Edwin C. Panganiban, Arnel R. Pajac, John G. Bautista, John Philip B. Icban, Conrad S. Sandoy, Jr., Arjay M. Tolentino, Mark Anthony B. Burgos, Mark Gerald M. Sumiran, Julius V. Barace, and Restituto M. Rivera separation pay of one (1) month per year of service, in case reinstatement is not feasible; and back wages computed from the time their compensation was withheld until their actual reinstatement, or until finality of this Resolution, if reinstatement is not feasible.

All payments to be made shall earn legal interest at the rate of six percent (6%) per annum from the date of finality of this Resolution. aScITE

SO ORDERED." (Dimaampao, J., designated additional member per Special Order No. 2839).

By authority of the Court:

(SGD.) MISAEL DOMINGO C. BATTUNG IIIDivision Clerk of Court

Footnotes

1. Rollo (G.R. No. 231082), pp. 9-57; Rollo (G.R. No. 231102), pp. 11-36.

2. Rollo (G.R. No. 231082), pp. 63-76; Penned by Associate Justice Socorro B. Inting and concurred in by Associate Justices Remedios A. Salazar-Fernando and Marie Christine Azcarraga-Jacob of the Special Second (2nd) Division, Court of Appeals, Manila.

3. Id. at 83-85.

4. Id. at 87-112.

5. Id. at 143-145.

6. Id. at 885-906, 1246-1255.

7. Rollo (G.R. 231102), p. 129.

8. Rollo (G.R. 231032), p. 911.

9. Id. at 130.

10. Id. at 1245, 1265.

11. Id. at 1285.

12. Id. at 895.

13. Id. at 1247-1248.

14. Id. at 11-13.

15. Restitutu M. Rivera in other parts the rollo.

16. Id. at 943, 1264.

17. Id. at 1834-1835.

18. Id. at 155-178.

19. Id. at 178.

20. Id. at 87-112.

21. Id. at 111.

22. Id. at 143-145.

23. Id. at 63-76.

24. Id. at 74-75.

25. Id. at 70-74.

26. Id. at 83-85.

27. Id. at 1881.

28. Alfaro v. Court of Appeals, 416 Phil. 310 (2001), G.R. No. 140812, 28 August 2001 [Per J. Panganiban, Third Division].

29. See Torreda v. Investment and Capital Corporation of the Philippines, G.R. No. 224881, 05 September 2018, [Per J. Gesmundo, Third Division].

30. Rules Implementing Articles 106 to 109 of the Labor Code, as amended, DOLE Department Order No. 13-A, Series of 2011, 14 November 2011.

31. Rollo (G.R. 231082), pp. 911 and 130.

32. Id. at 130, 895.

33. Id. at 885-906, 1246-1255.

34. Serman Cooperative v. Montarde, G.R. Nos. 246760-61 & 246764-65, 09 December 2020 [Per J. Carandang, First Division].

35. Id.

36. Rollo (G.R. No. 231082), pp. 885-906.

37. Id. at 895.

38. Id. at Section 3.6, p. 887.

39. Id. at 903.

40. Responsible for tapping milk pouches to ensure these do not have holes and for placing scoops on the bucket conveyor.

41. Responsible for bringing raw material samples to the QA.

42. Rollo (G.R. No. 231082), pp. 71-72.

43. Coca Cola Bottlers Phils., Inc. v. National Labor Relations Commission, G.R. No. 120466, 17 May 1999, 366 PHIL. 581-593 [Per J. Bellosillo, Second Division].

44. Id.

45. Rollo (G.R. No. 231082), p. 72.

46. Id. at 25-26.

47. Id. at 40-42.

48. Id. at 887, 1249.

49. 552 Phil. 58 (2007), G.R. No. 162833, 15 June 2007 [Per J. Quisumbing, Second Division].

50. San Miguel Corp. v. MAERC Integrated Services, Inc., 453 Phil. 543 (2003), G.R. No. 144672, 10 July 2003 [Per J. Bellosillo, Second Division].