CASE 2017-0002: NESTLE PHILIPPINES, INC. VS. BENNY A. PUEDAN, JR., ET AL. (G.R. NO. G.R. No. 220617, 30 JAN 2017, PERLAS-BERNABE, J.) SUBJECT/S: (LABOR-ONLY CONTRACTING; CASE WHEN ALLEGED PRINCIPAL/CONTRACTOR  IS NOT LIABLE)

 

DISPOSITIVE:

 

“WHEREFORE, the petition is GRANTED. The Decision dated March 26, 2015 and the Resolution dated September 17, 2015 of the Court of Appeals in CA-G.R. SP No. 132686 are hereby REVERSED and SET ASIDE. Accordingly, the Decision dated May 30, 2013 and the Resolution dated August 30, 2013 of the National Labor Relations Commission in LAC No. 02-000699-13/ NCR-03-04761-12 are MODIFIED, DELETING petitioner Nestle Philippines, Inc.’s solidary liability with Ocho de Septiembre, Inc. (ODSI) for the latter’s monetary obligations to respondents Benny A. Puedan, Jr., Jayfer D. Limbo, Brodney N. Avila, Arthur C. Aquino, Ryan A. Miranda, Ronald R. Alave, Johnny A. Dimaya, Marlon B. Delos Reyes, Angelito R. Cordova, Edgar S. Barruga, Camilo B. Cordova, Jr., Jeffry B. Languisan, Edison U. Villapando, Jheimey S. Remolin, Mary Luz A. Macatalad, Jenalyn M. Gamurot, Dennis G. Bawag, Raquel A. Abellera, and Ricandro G. Guatno, Jr..

 

SO ORDERED.”

 

 SUBJECTS/DOCTRINES/DIGEST:

 

“However, a closer examination of the Distributorship Agreement reveals that the relationship of NPI and ODSI is not that of a principal and a contractor (regardless of whether labor-only or independent), but that of a seller and a buyer/re-seller. As stipulated in the Distributorship Agreement, NPI agreed to sell its products to ODSI at discounted prices,52 which in tum will be re-sold to identified customers, ensuring in the process the integrity and quality of the said products based on the standards agreed upon by the parties. 53 As aptly explained by NPI, the goods it manufactures are distributed to the market through various distributors, e.g., ODSI, that in tum, re-sell the same to designated outlets through its own employees such as the respondents. Therefore, the reselling activities allegedly performed by the respondents properly pertain to ODSI, whose principal business consists of the “buying, selling, distributing, and marketing goods and commodities of every kind” and “[entering] into all kinds of contracts for the acquisition of such goods [and commodities].”54

 

Thus, contrary to the CA’s findings, the aforementioned stipulations in the Distributorship Agreement hardly demonstrate control on the part of NPI over the means and methods by which ODSI performs its business, nor were they intended to dictate how ODSI shall conduct its business as a distributor. Otherwise stated, the stipulations in the Distributorship Agreement do not operate to control or fix the methodology on how ODSI should do its business as a distributor of NPI products, but merely provide rules of conduct or guidelines towards the achievement of a mutually desired result55 -which in this case is the sale ofNPI products to the end consumer. In Steelcase, Inc. v. Design International Selections, Inc., 56 the Court held that the imposition of minimum standards concerning sales, marketing, finance and operations are nothing more than an exercise of sound business practice to increase sales and maximize profits, to wit:

 

‘Finally, both the CA and DISI rely heavily on the Dealer Performance Expectation required by Steelcase of its distributors to prove that DISI was not functioning independently from Steelcase because the same imposed certain conditions pertaining to business planning, organizational structure, operational effectiveness and efficiency, and financial stability. It is actually logical to expect that Steelcase, being one of the major manufacturers of office systems furniture, would require its dealers to meet several conditions for the grant and continuation of a distributorship agreement. The imposition of minimum standards concerning sales, marketing, finance and operations is nothing more than an exercise of sound business practice to increase sales and maximize profits for the benefit of both Steelcase and its distributors. For as long as these requirements do not impinge on a distributor’s independence, then there is nothing wrong with placing reasonable expectations on them. 57 (Emphasis and underscoring supplied)’

 

Verily, it was only reasonable for NPI -it being a local arm of one of the largest manufacturers of foods and grocery products worldwide -to require its distributors, such as ODSI, to meet various conditions for the grant and continuation of a distributorship agreement for as long as these conditions do not control the means and methods on how ODSI does its distributorship business, as shown in this case. This is to ensure the integrity and quality of the products which will ultimately fall into the hands of the end consumer.

 

Thus, the foregoing circumstances show that ODSI was not a laboronly contractor of NPI; hence, the latter cannot be deemed the true employer of respondents. As a consequence, NPI cannot be held jointly and severally liable to ODSI’ s monetary obligations towards respondents.”


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 scd-2016-0097-nestle-philippines-inc-vs-benny-a-puedan-jr-et-al

 

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