COOPERATIVE AS A CONTRACOR

COOPERATIVE AS A CONTRACOR
OLDARICO S. TRAVEÑO, et.al. -vs- BOBONGON BANANA GROWERS MULTI-PURPOSE COOPERATIVE, TIMOG AGRICULTURAL CORPORATION, DIAMOND FARMS, INC., and DOLE ASIA PHILIPPINES, G.R. No. 164205 September 3, 2009 CARPIO MORALES, J.:

Oldarico Traveño and his 16 co-petitionersclaim to have been hired in 1992 by Timog Agricultural Corporation (TACOR) and Diamond Farms, Inc. (DFI), to work at a banana plantation at Davao Del Norte, converted from rice and corn lands, whose owners agreed to the conversion upon being convinced that TACOR and DFI could provide the needed capital, expertise, and equipment. Petitioners helped prepare the lands and planted the banana suckers.

While they worked under the direct control of supervisors assigned by TACOR and DFI, these companies used different schemes to make it appear that they were hired through independent contractors; that despite the successive changes in the names of their employers they continued to perform the same work under the direct control of TACOR and DFI supervisors. Under the last scheme adopted by these companies, the nominal individual contractors were required to join a cooperative and became members of Bobongon Banana Growers Multi-purpose Cooperative (the Cooperative).

The Labor Arbiter, found the Cooperative guilty of illegal dismissal, a decision sustained by the Labor Arbiter.

Instead of remanding the case to the appellate court, the Supreme Court decided to resolve the issue whether DFI (with which TACOR had been merged) and DPI should be held solidarily liable with the Cooperative for petitioners’ illegal dismissal and money claims.

Job contracting or subcontracting refers to an arrangement where a principal agrees to farm out with a contractor or subcontractor the performance of a specific job, work or service within a definite or predetermined period, regardless of whether such job, work or service is to be performed or completed within or outside the premises of the principal. This arrangement does not exist in the present case.

DFI did not farm out to the Cooperative the performance of a specific job, work, or service. It entered into a Banana Production and Purchase Agreement with the Cooperative, where the Cooperative would handle and fund the production of bananas and operation of the plantation covering lands owned by its members , while DFI committed to provide financial and technical assistance, supply of information and equipment in growing, packing, and shipping bananas. The Cooperative would hire its own workers and pay their wages and benefits, and sell exclusively to DFI all export quality bananas that met the specifications.

The Contract between the Cooperative and DFI, is a joint venture. The rules on job contracting are inappropriate. The Court abides by the autonomy of contracts principle under Article 1306 of the Civil Code.

The Petitioners’ claim fails the four-fold test.

On selection and engagement, DFI has a total lack of knowledge on who actually were engaged by the Cooperative to work in the banana plantation. No employment contract was submitted to substantiate how petitioners were hired and by whom.

On the payment of wages, it was the Cooperative that paid the same.

On the power of dismissal, and the power of control, both were retained by the Cooperative.

There being no employer-employee relationship between petitioners and the Cooperative’s co-respondents, the latter are not solidarily liable with the Cooperative for petitioners’ illegal dismissal and money claims.

The social justice policy of labor laws and the Constitution is not meant to be oppressive of capital.