DOLE PH v.

Esteva et al (members of the cooperative AUTHOR:

named CAMPCO)
GR 161115
Independent Contractor and Labor-only Contractors
FACTS: (chronological order)
1. DOLE and CAMPCO entered into a Service Contract. CAMPCO is a cooperative.
1.1 The Service Contract provided that DOLE will pay CAMPCO 220,000 for the assistance with the daily
operations of DOLE, and the performance of odd jobs as may be assigned.
1.2 Further the Service Contract provided that:
1.2.1 CAMPCO will carry on an independent legitimate business and must comply with all laws;
1.2.2 CAMPCO must provide all the tools and equipment necessary in the performance of their work;
1.2.3 CAMPCO must comply with the attached scope of work, specifications, and safety practices
1.2.4 CAMPCO must undertake the work is its own account, in its own responsibility, and according to his
manner and own method free from control of the company.
1.2.5 CAMPCO must pay the minimum wage, SSS, Medicare, etc.
1.2.6 The period is 6 months.
2. After the expiration of the contract, the members of CAMPCO continued working.
3. Meanwhile, the SB of Polomolok, South Cotabato passed a resolution addressed to then DOLE Sec. Confessor
bringing to their attention the worsening condition of the workers in their area.
3.1 Also, bringing to their attention the scheme of organizing of contractual workers into several cooperatives to
replace individual labor-only contractors that used to supply workers to DOLE.
4. The Dept of Labor formed a task force that investigated the alleged labor-only contracting activities of the
cooperatives
5. The legal counsel of DOLE wrote to the Dept. of Labor seeking to correct the misinformation that theyre involved in
labor-only contracting.
5.1 Also, he states that DOLE was not hiring coop members to replace their regular workers, which they
dismissed for redundancy.
5.2 That the cooperatives were formed by the dependents and the relatives of the permanent workers of the
employees of DOLE.
5.3 That these cooperatives were authorized by the constitution and by-laws to engage in the job contracting
business.
6. The Regional Director identified several cooperatives (one of which was CAMPCO) that was engaged in labor only
contracting.
7. The Regional Director issued CDO to stop the operations of these cooperatives
8. The cooperatives appealed alleging that the Regional Director committed serious error in law in ordering the CDO.
9. Sec. of Labor dismissed the appeal holding that the RD has jurisdiction in issuing a CDO.
10. MR was also denied.
11. The decision lapsed into finality.
12. Separately, some members of CAMPCO were put in a stay at home status and were no longer furnished work.
13. Later, the respondents filed a complaint for illegal dismissal, regularization, wage differential, damages and
attorneys fees.
13.1 In the complaint, the respondents alleged that all the tools and implements were provided by DOLE;
13.2 That CAMPCO doesnt have substantial capital and doesnt have the necessary tools.
13.3 The training was also provided by DOLE.
13.4 That before starting work, they must undergo such training and that the training was conducted by employees
of DOLE.
13.5 They were given specific tasks by the supervisors of DOLE and they worked at the premises of DOLE.
13.6 And just like the regular employees of DOLE, they were subject to the same rules and regulations.
13.7 All in all, they alleged that they should be treated as regular employees of DOLE.
13.8 As proof of their claim, they presented the CDO order that was affirmed by the Sec. of labor (see #9-#11

above).
14. DOLE denied that the respondents were its employees.
14.1 DOLE explained that it needed to engage external services to augment its workforce.
14.2 And that a similar issue was the subject of a labor case which was ruled on by a labor arbiter. The arbiter
ruled that such employees were seasonal workers. The decision of the LA was affirmed by the NLRC.
14.3 And after the case was decided with finality, DOLE decided to discontinue with the complaining workers. And
it was then that they engaged the services of CAMPCO to provide the additional service.
14.4 Petitioner also contends that the respondents were co-owners of CAMPCO;
14.5 That CAMPCO was a duly-organized and a registered cooperative.
14.6 That CAMPCO was engaged in legitimate job-contracting with its owner-members
14.7 That since CAMPCO held itself out to DOLE as a legitimate job contractor, the respondents (as ownermembers of the coop) are estopped from denying or refuting the same.
14.8 They averred that the services rendered by CAMPCO constituted permissible job contracting under DO 10
s1997 of the Dept. of Labor.
15. LA: ruled in favor of DOLE.
16. Respondents appealed the decision to the NLRC reiterating their position.
17. NLRC: dismissed the appeal and affirmed the LAs decision.
18. Respondents filed a petition for certiorari under R65.
19. CA: the decision of the NLRC is set aside.
20. Hence, this petition.
ISSUE(S):
Whether or not CAMPCO is engaged in labor-only contracting?
HELD:
RATIO:

Criteria to determine the existence of an independent and permissible contractor relationship.The

existence of an independent and permissible contractor relationship is generally established by the
following criteria: whether or not the contractor is carrying on an independent business; the nature and
extent of the work; the skill required; the term and duration of the relationship; the right to assign the
performance of a specified piece of work; the control and supervision of the work to another; the employers
power with respect to the hiring, firing and payment of the contractors workers; the control of the
premises; the duty to supply the premises tools, appliances, materials and labor; and the mode, manner
and terms of payment.
The declaration that CAMPCO is indeed engaged in the prohibited activities of labor-only contracting,
then consequently, an employer-employee relationship is deemed to exist between petitioner and
respondents, since CAMPCO shall be considered as a mere agent or intermediary of petitioner. Since
respondents are now recognized as employees of petitioner, this Court is tasked to determine the nature of
their employment. In consideration of all the attendant circumstances in this case, this Court concludes
that respondents are regular employees of petitioner.
In the instant Petition, petitioner is engaged in the manufacture and production of pineapple products for
export. Respondents rendered services as processing attendant, feeder of canned pineapple and pineapple
processing, nata de coco processing attendant, fruit cocktail processing attendant, and etc., functions they
performed alongside regular employees of the petitioner. There is no doubt that the activities performed by

respondents are necessary or desirable to the usual business of petitioner.

Respondents, as regular employees of petitioner, are entitled to security of tenure. They could only be
removed based on just and authorized causes as provided for in the Labor Code, as amended, and after
they are accorded procedural due process. Therefore, petitioners acts of placing some of the respondents
on stay home status and not giving them work assignments for more than six months were already
tantamount to constructive and illegal dismissal.