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[G.R. No. 147510.June 25, 2001]

SPFL vs. HON. LAGUESMA, et al.

SECOND DIVISION

Gentlemen:

Quoted hereunder, for your information, is a resolution of this Court dated JUN 25 2001.

G.R. No. 147510(Southern Philippines Federation of Labor (SPFL) v. Hon. Bienvenido E. Laguesma, Undersecretary of Labor, Asia Brewery, Inc., and Timog Integrated Factors Corporation, et al.)

On January 19, 1994, petitioner Southern Philippines Federation of Labor (SPFL) filed, on behalf of its affiliate, Asia Brewery Employees Union APFL (ABEU-SPFL), a petition for certification election with the Department of Labor (DOLE). Petitioner prayed that after due hearing, an order be issued declaring respondent Asia Brewery, Inc. (ABI) as the employer of the employees belonging to the bargaining unit and that a certification election be duly conducted among the rank-and-file employees of respondent company. Petitioner union alleged, among other things, that it is a legitimate labor organization duly registered with the DOLE; that ABI is an establishment engaged in the business of brewing beer; that the proposed bargaining unit was composed of about 340 rank-and-file employees in the Bottling, Electrical, General Services, Materials, Processing and Utility Departments of ABI; that all these employees are under the employ of respondent Timog Integrated Factors Corporation (Timog), a labor-only contractor, and are performing work which are usually necessary and desirable to the main business of respondent ABI; that ABI is the direct employer of the employees; and that no certification election had been conducted among the employees during the 12 months preceding the date of the filing of the petition.

In its answer, ABI denied that it was the employer of the members of the union, but that it was respondent Timog; that the proposed bargaining unit included employees not belonging to the rank-and-file; that the petition did not contain the sufficient number of employees constituting the bargaining unit; and that the petition should be denied for lack of legal and factual basis.

On April 13, 1994, Asia Brewery Incorporated and/or Timog Integrated Factors Corporation Employees Union-FFW filed a motion for intervention. Among other things, it alleged that it was a legitimate labor organization affiliated with the Federation of Free Workers (FFW); that respondents 'ABI and/or Timog had about 340 rank-and-file workers assigned in the Bottling, Electrical, General Services, Materials. Processing and Utility Departments of respondent ABI; and that no certification election had been conducted among the employees belonging to said bargaining unit during the last 12 months preceding the date of the filing of their petition.

On May 13, 1994, respondent Timog filed a motion for intervention and an answer-in-intervention averring that it was an independent contractor of respondent ABI and was the real and actual employer of the members of the petitioner union; that by reason thereof, they should have been impleaded as a proper party in the petition of the petitioner union; and that the petition was defective for including union members who were not rank-and-file employees and for failure to obtain the required number of rank-and-file employees required by law to constitute a bargaining unit. To prove its allegations, respondent Timog submitted copies of the following: its certificate of filing of the articles of incorporation; its articles of incorporation; its appointment letters to the union officers of the petitioner union hiring them as its employees which were accepted and duly signed by them; and its pay slips to its employees, including the union officers, which were duly received and signed by them.

In reply to respondent Timog's motion for intervention, petitioner union argued that Timog failed to submit any contract to prove the existence of a contractor-contractee relationship with respondent ABI; that respondent Timog did not have substantial capital or investment in the form of tools, equipment, machineries and work premises; and that the workers recruited and placed by respondent Timog were performing activities which are directly related to the principal business of respondent ABI.

By way of rejoinder, Timog claimed that it carried an independent business and undertook its work in its own manner and method, free from the control and direction of ABI in all matters connected with the performance of the work except as to the results thereof; that it had substantial capital or investment in the form of equipment, work premises and other materials which were necessary in the conduct of its business. In support thereof, Timog submitted copies of the following documents, to wit: (1) a copy of the existing Operation and Maintenance Agreement entered into by and between ABI and Timog; (2) a copy of the existing contract of lease entered into by and between ABI and Timog whereby the former leased to the latter a portion of its field office to be used by Timog in connection with said Operation and Maintenance Agreement; (3) pictures of Timog's work premises which were covered by said contract of lease; (4) a copy of the deed of absolute sale of chattel executed by and between ABI and Timog dated February 1, 1992 to prove that Timog had substantial capital and investment in the form of tools, equipment and other materials which were necessary in the conduct of its business and in the performance of its contractual obligations; (5) copies of the affidavits of the members of the petitioner union declaring, among others, that they were employees of Timog and not respondent ABI; and (6) proofs of SSS contribution payments for the months of October, November and December 1993 made by Timog as employer of the members of petitioner union.

On July 18, 1994, the med-arbiter issued an order, the dispositive portion of which reads:

WHEREFORE, premises considered, an order is hereby issued:

1. Dismissing the petition as against respondent Asia Brewery Incorporated, not being the employer of the members of the petitioner in the proposed bargaining unit;

2. Finding respondent Timog integrated Factors Corporation as the employer of the members of the petitioner of the proposed bargaining unit;

3. Ordering the conduct of a certification election to be participated in by the rank-and-file workers of Timog Integrated Factors Corporation at its premises at Ipil El Salvador. Oriental with the following choices:

a. ASIA BREWERY EMPLOYEES UNION-SPFL;

b. TIMOG INTEGRATED FACTORS CORPORATION EMPLOYEES UNION-FFW; and

c. NO UNION.

Pre-election conference is set on August 4, 1994, at 10:00 a.m. at the Regional Office to determine the qualifications of the voters and to thresh out the mechanics of the election.

Respondent Timog is directed to submit five (5) copies of the list of rank-and-file workers at Ipil, El Salvador, Misamis Oriental taken from the payroll of October 1-30, 1993 indicating their names, positions and dates of employment and to bring the aforementioned payroll during the pre-election conference lot verification purposes.

Further, respondent/employer Timog is likewise directed to post photostat copies of the order immediately within its premises. Let copies of the order be furnished the parties.

SO ORDERED.

On appeal, the Department of Labor affirmed with modification, on April 20, 1995, the med-arbiter's order. The dispositive portion of its decision reads:

WHEREFORE, the appeal filed [by] the petitioner is hereby DISMISSED for lack of merit while the appeal filed by respondent Asia Brewery Inc. is hereby Granted. Thus, the Med-Arbiter's Order is hereby affirmed subject to the modification that SPFL shall amend the charter issued to Asia Brewery Employees Union to reflect its real employer which is Timog Integrated Factors Corporation and shall make the necessary amendments/changes in the registration of the local before the appropriate body in this Department.

SO ORDERED.

Petitioner union's motion for reconsideration was later denied in an order dated July 26, 1995.

On appeal, the Court of Appeals affirmed the decision of the DOLE. Hence, this petition for review on certiorari.

Petitioner union contends that Timog is a labor-only contractor of ABI, not a job contractor. It alleges that the employees supplied by Timog do work that relate to the principal business of ABI; that while Timog has an authorized capital stock of P500,000.00, only P125,000.00 is actually subscribed and, that, as such, it does not have substantial capital or investment required of job contractors. Petitioner reiterates its contention that ABI should be declared the employer of the employees belonging to the petitioner union and that a certification election be duly conducted among the rank-and-file employees belonging to the bottling, electrical, general services, materials, processing and utility departments, and such other positions necessary and directly related to the business of ABI

After due consideration, the Court finds the petition to be without merit.

The determination as to whether Timog is a job contractor or a labor-only contractor is a question of fact. The Court finds no reason to set aside the factual findings of the med-arbiter affirmed by the Secretary of Labor and, later, by the appeals court that indeed Timog is a job contractor.

Under Book III, Rule VIII, 18 of the Omnibus Rules Implementing the Labor Code, there is "job contracting" permissible under the Code if the following conditions are satisfied: (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 (Bordeos v. National Labor Relations Commission, 262 SCRA 424 (1996)). In this case, the Court of Appeals found that Timog is engaged in the business of providing general services to the public, that it has an existing Operation and Maintenance Agreement with ABI; that pursuant to the agreement. Timog is the employer of the employees belonging to the petitioner union, that Timog issued appointments to the union officers of the petitioner union when it hired them as its employees; that as shown by SSS contribution payment receipts, Timog paid the wages of the employees and remitted their SSS premiums; and that the deed of absolute sale of chattel show that Timog had substantial capital and investment in terms of tools, equipment, machineries and work premises. Hence, petitioner's mere assertion that its members are employees of ABI cannot stand.

Anent petitioner's claim that Timog does not have substantial capital or investment, suffice it to state that the amount of its subscribed capital stock does not affect its viability as a job contractor of respondent ABI. Art. 13 of Corporation Code provides that at least twenty-five (25%) percent of the authorized capital stock as stated in the articles of incorporation must be subscribed at the time of incorporation, and at least twenty-five (25%) percent of the total subscription must be paid upon subscription. In this case, Timog is a corporation duly registered with the Securities and Exchange Commission. The total amount of capital stock actually subscribed is P125,000.00 and the total amount of the subscribed capital stock actually paid is P125,000.00. More importantly, Art. 106 of the Labor Code does not require a specific amount of subscribed capital stock as a factor in determining substantial capital or investment of a company for it to qualify as a job contractor.

WHEREFORE, the petition is DENIED for lack of showing that the Court of Appeals committed any reversible error.

Very truly yours,

(Sgd.) TOMASITA B. MAGAY-DRIS
Clerk of Court


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