Diamond Farms v. SPFL Case Digest

Di amondFar msI nc .v .Sout her nPhi l i ppi nesFe der at i onofLabor( SPFL)wor k e r s G. R.No s .1 73 2 54 5 5 Feb17,2016 F ACTS:Di a mo mo ndFa r mso wn san80 0h ec t a r eba na napl a nt a t i o ni nDa v a o.Pu r s u an tt o R. A.No .6 65 7o rt h eCo mp mp r e he ns i v eAg r a r i a nRe f o r mL a w1 98 8( CARL )c o mm mme r c i a l f ar msshal l bes ubj ec tt oc ompul s or yac qui s i t i onanddi s t r i but i ont hes et heor i gi nal p l an t a t i onwa sc o v er e db yt h el a w.Ho we v ert h eDe pa r t men to fAg r a r i a nRef or m( DAR) gr ant edDFIadef er mentpr i v i l eget oc ont i nueoper at i ont i l l 1980.Duet omar k et i ng pr obl emsandobs er v anc eof“ l ay f ol l ow”ort her es t i ngofapar c el ofl andf orac er t ai n per i odoft i meaf t erex haus t i v eut i l i z at i on,DFIc l os eds omear easofoper at i onandl ai d offempl o y ees .Thes eemp l o y eespe t i t i onerDARt oc anc el DFI ’ sd ef er mentpr i v i l ege. TheDARr ec al l e dt hedef er mentpr i v i l egepur s uantt oCARL. I nor dert omi ni mi z el os ses ,DFIoffer edt ogi v eupi t sr i ght sandi nt er es tov ert heor i gi nal pl ant at i oni nf a v oroft hego v er nmentb ywasofaVol unt ar yOff Off ert oSe l l .DARac c ept ed butonl yt o689. 88hec t ar esofdi s pos i t i on,andt her emai ni ng200hec t ar eswer e r e t ai nedbyDFI .Theawar dedpl ant at i onwast ur nedo v ert oqual i fi edagr ar i anr ef or m b en efi c i a r i e sun de rt h eCARLan dwe r et h es a me mef a r me r swh owe r ewo r k i n gi nt h e or i gi nal pl ant at i on.The ys ubs equent l yor gani z edt hems el v esasamul t i pur pos e cooper at i v e“ DARBMUPCO” . On1996,DARBMUPCO ent er edi nt oaBananaPr oduct i onandPur chaseAgr eeme ment ( BPPA)wi t hDFI .Undert heBPPA,DARBMUPCO andi t smemb mber sasowner soft he awar dedpl ant at i onagr eedt ogr owandcul t i v at eonl yhi ghgr adequal i t yex por t abl e bananast obes ol de x cl us i v el yt oDFI —t hi swaseff ec t i v ef or10y ear s .Bot hpar t i es e nt e r e di n t ot h eSu pp l e me me nt a lt oMe Me mo mo r a nd um Ag r e eme nt( SMA) .Th eSMAs t a t e dt h at DFIs hal l t ak ec ar eoft hel aborc os tar i s i ngf r om t hepac kagi ngoper at i on,c abl e mai n t e na nc e,i r r i g at i o np umpa ndi r r i g at i o nma i nt e na nc e .Fr om t h es t ar t ,DARBMUPCO wa sha mp mp er e db yl a c kofma np owe rs i n c es o me meo fi t sme me mb mb er swe r en otwi l l i n gt owo r k . He nc e ,t oa s s i s tDARBMUPCO,DFIe ng ag e dt h es e r v i c e soft h er e s p on de nt c o nt r a c t o r s( SPFL )wh or e c r u i t edwo r k e r s .Th ee ng ag eme nto fr e s pon de ntwo r k e r s s t ar t eds er i esofl abordi s put es . Sout herPhi l i ppi neFeder at i onofLabor( SPFL) —al egi t i mat el aboror gani z at i onwi t ha l oc al c hapt eri nt hepl ant at i onfi l edapet i t i onf orc er t i fi cat i onel ec t i oni nt heoffic eoft he MedAr bi t eri nDav aoCi t y . SPFLfi l edt hepet i t i ononbehal fofs ome400wor k er s“ j oi nt l y emp mpl oy edbyDFIandDARBMUPCO wor ki ngi nt heawar dedpl ant at i on.DARBMUPCO andDFIden i edt hatt he yar eempl o y er soft her es pondent wor k er s .TheMedAr bi t er gr ant edt hepet i t i onf orc er t i fi c at i onel ec t i on,I tdi r ec t edt hec onduc tofc er t i fi c at i on

e l e c t i o na ndd ec l a r e dt h atDARBMUPCO wa st h ee mp l o y e ro ft h er e s po nd en t wo r k e r s . DARBMUPCO a pp ea l e dt h ec a s es t a t i n gt h atDFIi st h ee mp l o y e ro fSPFL .Th eSe c .o f DOLEdec l ar eds uc h.TheCAs t at edt hatt heDFIwast hes t at ut or yempl o y erofal l r es pondent wor k er s . I SSUE: ( 1 )Wh et h ero rn otDFIo rDARBMUPCO i st h es t a t u t o r ye mp l o y e ro fr e s po nd en t c o nt r a c t o r s —DFI HELD: DFIi st heempl oy erofr es pondentwor k er s .Thi sc as ei nv ol v esj obc ont r ac t i ng,al abor ar r ang emente x pr es s l yal l o wedb yl a w.Cont r ac t i ngors ubc ont r ac t i ngi sanar r angement wher ebyapr i nc i pal agr eest oputourorf ar m outwi t hac ont r ac t orors ubc ont r ac t ort he per f or manc eorc ompl et i onofs pec i fi cj ob.wor kors er v i c ewi t hi nadefi ni t eor pr edet er mi nedper i od,r egar dl es sofwhet hers uc hj ob,wor k ,s er v i c ei st obeper f or med orc ompl et edwi t hi norout s i det hepr emi s esoft hepr i nc i pal .Ar t i c l e106oft heLabor Co det her el at i o nwhi c hma yar i esbe t weenanempl o y er ,ac ont r ac t oran dt he c o nt r a c t o r ’ semp l o y e es .Th eOmn i b usRu l e sI mp l e me nt i n gt h eL ab orCo de di s t i ngui s hesbet weenper mi s si bl ej obc ont r ac t i ng( ori ndependentc ont r ac t or s hi p)and l abor onl ycont r ac t i ng.J obc ont r ac t i ngi sper mi s si bl eundert heCodei ft hec ondi t i ons ar emet : ( a)Thec ont r ac t orc ar r i esonani ndependentbus i nes sandunder t ak est hecont r ac t wor konhi swo nac c o un tu nde rh i swo nr e s pon s i bi l i t yac c or d i n gt oh i sownma nne ra nd met hod ( b)Thec ont r ac t orhassubs t ant i al c api t al ori nv es t menti nt hef or m oft ool s ,equi pment , mac hi ner i es ,wor kpr emi s esandot hermat er i al s . I nc ont r as t ,j obcont r ac t i ngs hal l bedeemedasl abor onl yc ont r ac t i nganar r angement pr ohi bi t edbyl a w,i faper s onwhounder t ak est os uppl ywor k er st oanemppl o y er : ( 1)Doesnothav es ubs t ant i al c api t al ori nv es t menti nt hef or m oft ool s ,equi pment , mac hi ner i es ,wor kp r emi s es ( 2)Wor k er sr ec r u i t edper f or m ac t i v i t ydi r ec t l yr el at edt ot hepr i nc i pal bus i nes sof empl oyer Asagener al r ul e,ac ont r ac t ori spr es umedt obel abor onl yc ont r ac t or ,unl es ss uc h c ont r ac t orov er c omest hebur denofpr ov i ngt hati thadt hes ubs t ant i al c api t al , i nv es t ment ,t ool sandt hel i k e.   Ther ei snoev i denc es howi ngt hatr es pondent s c ont r ac t or sar ei ndependentc ont r ac t or . Th er e s po nd en t c o nt r a c t o r ,DFIa ndDARBMUPCO d i dno to ff era nyp r o oft h at

o r es pondentc ont r ac t or swer enotengagedi nl abor onl yc ont r ac t i ng. i nt hec as eofCar v .Ri l l or az a, i ft heempl oy erc l ai mst hatt hewor k meni sani ndependentc ont r ac t or ,f or wh os eac t shei sno tr es po ns i bl e,t hebur deni sonhi mt os ho w hi si ndepe ndenc e. T os uppl yi t sar gumentt hatr es pondent c ont r ac t or sar et heempl o y er sofr es pondent wor k er sandnotmer el yl abor onl yc ont r ac t or s , DFIs houl dha v epr es ent edpr oofs howi ng t hatr es pondent c ont r ac t orc ar r yonani n dependentbus i nes sandha v es uffic i ent c api t al i z at i on.Ther ec or dds howst hatt her ei snoat t emptont hepar tofDFIt o s ubs t ant i at ei t sar gument .DFIc annotc i t et her es ol ut i onoft heNLRCasbas i ss i nc e nowher edoesi ts ayt hatr es pondent c ont r ac t or sar ei ndependentc ont r ac t or s . Res pondent c ont r ac t orev enadmi t t edt hatt heyar ei nl abor onl ycont r ac t i ngi nt hei r( 1) f or mal appear anc eofc ouns el andmo t i onf ore x cl us i onofi ndi v i dual par t y r es pondent s ( 2)Ver i fi ede x pl an at i onan dmemor andum fi l edbef or et hi sc our t .The ya dmi t t edt hat t heydonothav es ubs t ant i al c api t al ori nv es t menti nt hef or m oft ool s ,equi pment , mac hi ner i es ,wor kpr emi s esandot hermat er i al sandt heyr ec t i fi edwor k er st oper f or m ac t i v i t i esdi r ec t l yr el at edt ot hepr i nc i pal oper at i onoft hei rempl oy er .Thes eadmi s si on ar el egal l ybe i ngonr es pon dent c ont r ac t or sandn eednoe vi denc et opr o v et hem.

Ther ee xi s t sanempl o y er empl o y eer el at i ons hi pbet weent hepr i nc i pal DFIandt he wor k e r s ,r es pondentSPFL.DFIdoesno tden yt hati te ng ag edt hes er v i c esoft he r es pondent c ont r ac t or s .I tdoesnotdi s put et hec l ai msofr es pondent c ont r ac t or st hat t heys entt hei rbi l l i ngt oDFIf orpa ymentandt hatDFI ’ smanagerandper s onnel ar ei n c l os ec ons ul t at i onwi t ht her es pondent c ont r ac t or s . DFIc a nn ota r g uet h atDARBMUPCO i st hep r i n c i p al o ft her e s po nd en t c on t r a c t or s bec aus ei townst heawar dedpl ant at i onwher et he ywor k .I ti si mmat er i al whet her  A i l i nv .Pet r onCor por at i on DARBMUPCO ownst heawar dedpl ant at i on.I nt hecaseo fl t hepr es enc eoft hepowerofc ont r ol ont hepar toft hepr i nc i pal ov ert hewor k erpr ov e t heempl o y er empl o y eer el at i ons hi pbet weent hef or merandt hel at t er .DFIal s o e x er c i s esc ont r ol t hr oughi t smanagerandands uper v i s or spr o vi desf ort hewor k a s si g nme nt sa ndper f or ma nc et ar ge t so ft h er e sp on de nt wor k e r s .Th ema nag er sa nd s uper v i s or sal s ohav et hepowert odi r ec t l yhi r eandt er mi nat et her es pondent wor k er s . Ev i dent l y ,DFIwi el dscont r ol ov ert hewor k er . Thest i pul at i oni nt heBPPAt hatr es pondent wor k er sar enotempl o y eesofDFIi snot c ont r ol l i ngast hepr ov enf ac t sshowot her wi s e.Thel awpr ev ai l sov ert hes t i pul at i onsof t hepar t i es .