San Miguel Corporation vs. SemillanoG.R. No. 164257. July 5, 2010.Petitioner: San Miguel CorporationRepon!ent: "i#ente$. Se%illano, NelonMon!e&ar, Jo'itoRe%a!a, (langilanMulti)PurpoeCoop*(MPC+, an! Merlyn ". Poli!arioPonente: J. CarpioBrief: Semillano et al were hired by AMPCO to work for San Miguel Corporations bottling plant. Aftermonths!they were refused entry to the plants premises! promptinghim to file a "ase for illegal dismissal againstAMPCOandSMC. SMCraisedthedefensethatAMPCOistheiremployer be"ause AMPCOisanindependent "ontra"tor. #nder their ser$i"e "ontra"t! AMPCO agreed to pro$ide the materials! tools ande%uipment needed to "arry out the ser$i"es and e&er"ised e&"lusi$e dis"retion o$er their personnel andthe determination of their wages. Affirming the CA de"ision! SC held that SMC was their a"tual employerbe"ause'()SMCwieldedthepowerof "ontrol andpowerof dimissal* '+) AMPCOwasalabor,only"ontra"tor. -o"trine:.he fa"t that AMPCO is registered in a""ordan"e with the /ules does not mean it "annot be a labor,only"ontra"tor. .he fa"t of registration merely pre$ents the assumption of labor,only "ontra"ting from arising. RELEVANT FACTS: Semillano et al were hired by AMPCO to work for San Miguel Corporations bottling plant. Aftermonths! they were refused entry to the plants premises! promptinghim to file a "ase forillegal dismissal against AMPCO and SMC. o .he"omplainants"laimedthat theywerefillersof SMCBottlingPlant! engagedina"ti$ities ne"essary and desirable in the usual business of SMC. .hey assert! therefore!that they are regular employees of SMC.A lso! AMPCO and SMC failed to gi$e them their(0th month pay! and that they were pre$ented from entering the premises of SMC. SMCraisedthedefensethatAMPCOistheir employer be"ause AMPCOisanindependent"ontra"tor be"ause its ser$i"e "ontra"t pro$ides that AMPCO will pro$ide the materials! tools ande%uipment needed to "arry out the ser$i"es "ontra"ted out by SMC* and that AMPCO shall ha$ee&"lusi$e dis"retion o$er its personnel! and that it also determines their wages. CA held that Semillano et al were regular employees of SMC sin"e '() SMC e&er"ised power of"ontrol and power of dismissal o$er Semillano et al* and '+) AMPCO was engaged in labor,only"ontra"ting(sin"e its "apital of nearly one million pesos was insuffi"ient to %ualify as anindependent "ontra"tor. 1Department of Labor and Employment (DOLE) Department Order No. 10, Series of 1997, defnes job contracting and laboronly contracting as follows: Sec.8.Job contracting.There is job contracting permissible under the Code if the following conditions are met: ISSUE: 1hether or not AMPCO is a legitimate 2ob "ontra"tor, 3OHEL:AM!C" is not a legitimate #o$ %ontra%tor& $ut a la$or'onl( %ontra%tor .he test to determine the e&isten"e of independent "ontra"torship is whether or not the one "laiming to be an independent "ontra"tor has "ontra"ted to do the work a""ording to his own methods and without being sub2e"t to the "ontrol of the employer! e&"ept only as to the results of the work+. (1)The contractor carries on an independent business and undertakes the contract work on his own a""ount under his own responsibility a""ording to his own manner and method! free from the "ontrol and dire"tion of his employer or prin"ipal in all matters "onne"ted with the performan"e of the work e&"ept as to the results thereof* and +) .he "ontra"tor has substantial "apital or in$estment in the form of tools! e%uipment! ma"hineries! work premises! and other materials whi"h are ne"essary in the "ondu"t of his business. Se". 4. -a.oronly #ontra#ting.5'a) Any person who undertakes to supply workers to an employer shall bedeemed to be engaged in labor only "ontra"ting where su"h person: '() -oes not ha$e substantial "apital or in$estment in the form of tools! e%uipment! ma"hineries! work premises and other materials* and '+) .he workers re"ruited and pla"ed by su"h persons are performing a"ti$ities whi"h are dire"tly related to the prin"ipal business or operations of the employer in whi"h workers are habitually employed. 'b) 6aboronly "ontra"ting as defined herein is hereby prohibited and the person a"ting as "ontra"tor shall be "onsidered merely as an agent or intermediary of the employer who shall be responsible to the workers in the same manner and e&tent as if the latter were dire"tly employed by him. '") 7or "ases not falling under this Arti"le! the Se"retary of 6abor shall determine through appropriate orders whether or not the "ontra"ting out of labor is permissible in the light of the "ir"umstan"es of ea"h "ase and after "onsidering the operating needs of the employer and the rights of the workers in$ol$ed. 8n su"h "ase! he may pres"ribe "onditions and restri"tions to insure the prote"tion and welfare of the workers.9 2 .he e&isten"e of an independent and permissible "ontra"tor relationship is generally established by thefollowing "riteria: whether or not the "ontra"tor is "arrying on an independent business* the nature and e&tent of the work* the skill re%uired* the term and duration of the relationship* the right to assign the performan"e of a spe"ified pie"e of work* the"ontrol and super$ision of the work to another* the employers power with respe"t to the hiring! firing and payment of the "ontra"tors workers* the "ontrol of the premises* the duty to supply the premises! tools! applian"es! materials! and labor* and the mode! manner and terms of payment. Although there are many signs that AMPCO is indeed an independent "ontra"tor! other fa"tors0pro$e otherwise.AMPCOs a"tual status and employement regarding respondents employmentbelie their written "ontra"t. .he fa"ts show that:o AMPCO did not ha$e substantial "apital or in$estment. .he 36/C stated that AMPCOsmain business is trading! maintaining a store "atering to members and the publi" : thusmaking its a"ti$ity of 2ob "ontra"ting with SMC only a sideline. .hus AMPCOs substantial"apital is in$ested and used in its trading business.o AMPCO did not ha$e substantial tools and e%uipment for use in segregation and pilingfor SMC. 8t did not ha$e fi&ed assets that it "ould ha$e used in any way for the "ompletionof its "ontra"tedser$i"ewiththepetitioner. .hetoolsande%uipment usedbytherespondents are owned by SMC! thus pro$ing that AMPCOhas no independentbusiness.o AMPCO did not e&er"ise e&"lusi$e dire"tion in the dis"harge of respondents! based onMerlynPolidariosinstru"tionstotherespondentsto;wait forfurtherinstru"tionsfromSMCs super$isor9 after being pre$ented from enteringSMC premises. SMC thereforewielded the power of "ontrol. .he language of a "ontra"t is neither determinati$e nor "on"lusi$e of the relationship between theparties5the prin"ipal and the "ontra"tor "annot di"tate! by a de"laration in a "ontra"t! the "hara"ter of the latters business! that is! whether as laboronly "ontra"tor! or 2ob "ontra"tor. 3either "antheyrelyonAMPCOsCertifi"ateof /egistrationasan8ndependent Contra"torissued by the proper /egional offi"e of the -O6