(Update: The decision is still subject to a Motion for Reconsideration filed by Alaska Milk Corporation on February 10, 2020.)
PETITIONER Alaska Milk Corp. (Alaska) is engaged in the business of manufacturing dairy products. Respondents Sonny O. Bate, Florentino M. Combite and John Bryan S. Oliver, were originally members of petitioner Asiapro Multipurpose Cooperative (Asiapro) but transferred to 5S Manpower Services (5S) on June 26, 2013.
Through several Joint Operating Agreements, Asiapro and 5S undertook to provide Alaska with personnel who would perform auxiliary functions at its San Pedro, Laguna plant. As production helpers, the respondents performed various post-production activities. They prepared raw materials, operated machinery and monitored the release of defective products. Additionally, they assisted other workers by packaging finished milk products for delivery.
Sometime in 2013, the respondents were informed through a memorandum that their assignment at Alaska was to be terminated later that year. On Oct. 15, 2013, they were relieved of duty. Thus, they filed complaints for illegal dismissal, regularization and payment of money claims against petitioner Alaska.
Alaska invoked the defense that 5S is a legitimate job contractor. Hence, the respondents are its employees.
Is there merit to this defense?
Ruling: No.
5S, for its part, failed to prove that it possessed substantial capital or investments, and since it never bothered to appeal the adverse Court of Appeals decision, this burden of proof shifted to Alaska. For one, the record is bereft of any financial statements revealing the paid-up capital of 5S. In fact, the Labor Arbiter, in ruling that 5S was a legitimate independent contractor, relied not on the latter’s capitalization, but on the showing that 5S had total assets amounting to P8,373,044. However, a sum of assets, without more, is insufficient to prove that an entity is engaged in valid job contracting.
In the plain language of Department Order 18-2, such assets must be manifested as investments relating to the job, work or service to be performed, and as clarified by Department Order 18-A, these investments may come in form of tools, equipment, machineries and work premises, among others. While the labor tribunals believed that 5S had an adequate amount of assets, it was never established that the contractor furnished its worker-members with the tools or equipment necessary to carry out the services of a production helper at Alaska’s milk manufacturing plant. This heavily militates against the ability of 5S to engage in its own independent business. Certainly, Alaska, considering that the services in question were rendered to San Pedro plant, could have easily adduced evidence showing that the respondents, in the performance of their duties, used tools and equipment provided by 5S.
Nevertheless, Alaska failed to even mention what these tools and equipment were, averring instead that 5S, based on its total assets, is an independent job contractor. The Court will not readily presume that said assets were those contemplated by the rules, especially since Alaska’s bare allegation, a conclusion of law, no less, is not supported by the evidence on record.
On this score alone, 5S cannot be considered a legitimate job contractor.
Moreover, unlike Asiapro, it was not shown that 5S had clients other than Alaska. Worse, 5S merely has five regular employees, and does not own any tools, machinery or equipment that its worker-members can use in the performance of their duties. These, taken together, make it highly improbable that 5S had the ability to carry on its own independent business, and are detrimental to the claim that 5S is a legitimate job contractor. (Alaska Milk Corp. vs. Ruben P. Paez, et al., G.R. 237277, Nov. 27, 2019).