**San Miguel Corporation vs. Vicente B. Semillano, et al.**
### Facts:
1. **Employment and Contractual Relations:**
– Vicente B. Semillano and the other respondents were hired by Alilgan Multi-Purpose Coop (AMPCO) in December 1994.
– They worked at San Miguel Corporation’s (SMC) Bottling Plant in Bacolod City, performing tasks such as segregating and cleaning bottles, loading and unloading deliveries, and other tasks as instructed by SMC personnel.
– In February 1995, SMC and AMPCO entered into a Contract of Services which designated AMPCO as the employer.
2. **Complaint for Illegal Dismissal:**
– Respondents were barred from entering SMC’s premises on June 6, 1995, despite being instructed to wait for further orders from SMC personnel, which never came.
– On July 17, 1995, respondents filed a complaint for illegal dismissal against AMPCO and SMC, asserting their status as regular employees of SMC and claiming unpaid wages and benefits.
3. **Labor Arbiter Decision:**
– On April 30, 1998, the Labor Arbiter declared the respondents as regular employees of SMC, ordering SMC to reinstate them with full back wages and an attorney’s fee.
4. **National Labor Relations Commission (NLRC) Proceedings:**
– SMC’s appeal to the NLRC led to an initial decision affirming the Labor Arbiter’s ruling with modifications on July 22, 1998.
– Upon SMC’s motion for reconsideration, NLRC reversed its ruling on February 28, 2002, absolving SMC and holding AMPCO liable as an independent contractor.
5. **Court of Appeals Decision:**
– Respondents appealed to the Court of Appeals (CA), which reversed the NLRC decision on February 19, 2004, reinstating the original decision of the Labor Arbiter.
– The CA ruled that SMC had control over respondents, confirming AMPCO’s status as a labor-only contractor.
6. **Petition for Review:**
– SMC filed a petition for review on certiorari to the Supreme Court, questioning the CA’s findings on employer-employee relationship and jurisdiction.
### Issues:
1. Whether AMPCO is a legitimate job contractor or a labor-only contractor.
2. Whether the respondents are regular employees of SMC.
3. The applicability of the jurisdiction of the Cooperative Development Authority.
4. The principle of control in determining an employer-employee relationship.
### Court’s Decision:
1. **Legitimate Job Contractor:**
– The Supreme Court agreed with the Court of Appeals that AMPCO did not meet the criteria for a legitimate job contractor. Despite substantial capital claims, AMPCO did not demonstrate substantial investment in tools and equipment used in the work performed for SMC.
2. **Employer-Employee Relationship:**
– The control test indicated an employer-employee relationship between SMC and the respondents. SMC had control over respondents through supervisory authority and the power to dismiss by barring them from the workplace.
3. **Jurisdiction:**
– The Supreme Court held that the labor dispute was within the jurisdiction of labor tribunals, not the Cooperative Development Authority, given the nature of the complaint.
### Doctrine:
– An entity is a labor-only contractor if it does not have substantial capital or investment and its workers perform tasks that are directly related to the principal business of the employer. In such cases, the principal (SMC) is considered the true employer and is liable for all employment benefits and claims.
– The control test is determinative of employer-employee relationships, which focuses on whether the employer has the right to control not only the result of the work but also the means and methods by which the work is accomplished.
### Class Notes:
– **Key Concepts:**
1. **Labor-Only Contracting:** Defined under Department Order No. 10, Series of 1997.
2. **Control Test:** The primary test for establishing an employer-employee relationship.
3. **Jurisdiction:** Cooperative disputes generally fall under the Cooperative Development Authority, but labor disputes, especially regarding employment conditions, are within labor tribunals’ jurisdiction.
– **Statutes/Provisions:**
1. **Department Order No. 10, Series of 1997:** Definitions and prohibitions concerning job contracting and labor-only contracting.
2. **Labor Code of the Philippines:** Provisions related to employee rights and employer obligations in regular employment.
### Historical Background:
Historically, this case underscores the struggle of workers to gain recognition and protection under the law, challenging practices aimed at circumventing labor protections through third-party contractors. The case emphasizes the broader legislative and judicial efforts to eliminate labor-only contracting and protect workers’ rights, reflecting the evolving labor standards in the Philippines.
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