JHONDEL ESTABAYA et. al , Petitioners, v. WYETH PHILS, INC. et.

al, Respondents
CA-G.R. SP No. 143555, Court of Appeals, 2nd Division, Manila
October 28, 2016
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Facts:

Respondent Wyeth Philippines, Inc. (“Wyeth”) is engaged in the business of manufacturing nutritional
products for infants, children, pregnant and lactating mothers. In the course of its operations of
developing premium-quality nutritional products, it entered into service agreements with respondents
cooperatives, Serman Cooperative (“Serman”) and Ako Ikaw may-Ari ng Kooperatiba (“AIMKO”) for
general support services which includes among others, janitorial and sanitation services for the
production area. Upon expiration of their service agreements on May 31, 2014, the respondent
employees’ co-terminus contracts with the cooperatives also expired and were separated from
employment.

The petitioners filed a case for Illegal Dismissal against Wyeth, Serman and AIMKO contending that they
were regular employees of Wyeth and were dismissed without just cause and due process. They
claimed that they have been with Wyeth even before it engaged the services of Serman and AIMKO as
its contractors. They have been under different contractors that Wyeth engaged over the years and
have been regularly performing the same sanitation tasks within the premises of Wyeth.

The labor arbiter rendered a Decision dated February 27, 2015 dismissing petitioners’ complaint
concluding that there was no employer-employee relationship between petitioners and Wyeth and that
respondents were legitimate job contractors. This was thereafter affirmed by NLRC on July 30, 2015.
Hence the appeal to CA.

First Issue: Whether or not Wyeth is practising end of contract (“ENDO”)?

CA: Wyeth is practising ENDO. Petitioners have been continuously and regularly performing their jobs
from the time they were detailed at Wyeth. They have been transferred from one manpower agency to
another, but they have continuously maintained their respective jobs in Wyeth. They were given
employment contracts for a limited period of time which is shorter than the period of contract between
the manpower agency and Wyeth.

Second Issue: Whether or not Serman and AIMKO are considered as labor only contracting (“LOC”)?

CA: Serman and AIMKO were both considered as LOC in view of their failure to comply with the
following conditions of DOLE DO18A:

a) Separate, distinct and independent business under his own responsibility according to his own
manner and method free from the control and direction of his principal;
b) Substantial capital or investment; and
c) Compliance with all labor standards, occupational health and safety requirements, security of
tenure, social welfare benefits and other labor laws.
Third Issue: Whether or not petitioners were regular employees of Wyeth and if they were, whether
they were illegally dismissed?

CA: Petitioners were regular employees of Wyeth in view of the following badges of employer-
employee relationship:

1) Wyeth exercised the crucial element of control not only with regard to the result but also on the
means and methods by which the work is to be accomplished namely:

a) Wyeth’s production supervisors were the ones monitoring the petitioners in performing their
jobs and ensuring that they follow the required output to conform to the standards set by
Wyeth;
b) Actual areas of assignment in performing their respective duties were dependent on the
instructions and mandate of Wyeth’s supervisors;
c) Petitioners underwent trainings provided directly by Wyeth;
d) Petitioners were provided with Wyeth’s identification cards in entering Wyeth’s premises; and
e) Wyeth provided the equipment and chemicals used for the sanitation.

2) Workers were performing core functions or work directly related and necessary to Wyeth’s
business.

Petitioners were in-charge of the sanitation of the production area and the manufacturing process of
the milk products starts with the cleaning and ensuring the manufacturing place free from any
contamination, including everything that will come into contact with the area. Undoubtedly, the
work they rendered were necessary, if not indispensable, to Wyeth’s business operations.

The repeated and continuing need for the performance of the job is sufficient evidence of the
necessity, if not indispensability of the activity to the business.

CA Decision: In view of the Court of Appeals findings of a) LOCs for both Serman and AIMKO; b)
Existence of employer-employee relationship between petitioners and Wyeth; c) Illegal Dismissal by
Wyeth due to ENDO, CA ordered Wyeth to reinstate the petitioners to their former positions as regular
employees without loss of seniority rights and other privileges, with the alternative relief of separation
pay in lieu of reinstatement, and to full backwages, inclusive of allowances, and to other benefits or
their monetary equivalent computed from the time the compensation was withheld up to the time of
actual reinstatement or finality of the Decision as the case may be.