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NESTLE v. PUEDAN Search Cases

NESTLE PHILIPPINES INC., Petitioner VS. BENNY A. PUEDAN, et. Search

al., Respondent
G.R. No. 220617 Public Cases
January 30, 2017 April

February
FACTS: January

June
On July 6, 2012, the respondents filed a complaint against the
petitioner for illegal dismissal and demanding for separation pay, March

nominal damages and attorney’s fees. The respondents alleged that

Ocho de Setiembre Inc. (ODSI) and Nestle Philippines Inc. (NPI) hired
them to sell various products of NPI in the assigned covered area.
After sometime, the respondents demanded that they be considered
regular employees of NPI but they were directed to sign contracts of
employment with ODSI instead. However, the respondents refused to
comply with such directives resulting from their dismissal from their
position. The contention of the respondents is that ODSI is a labor-
only contractor and, thus, they should be deemed regular employees
of NPI and there was no just or authorized cause for their dismissal.
The ODSI averred that it is a company engaged in the business of
buying, selling, distributing, and marketing of goods and commodities
of every kind and it enters into all kinds of contracts for the acquisition
thereof. According to ODSI the respondents were hired as its
employees to execute the Distributorship Agreement with the NPI.
Unfortunately, the business relationship between the NPI and ODSI
turned sour and eventually NPI downsized its marketing and
promotional support from ODSI and termination of the Distributorship
Agreement. Meanwhile, ODSI argues with the respondents that they
were not dismissed but merely on floating status. However, the NPI
did not file any position paper or appear in the scheduled conferences.

The Labor Arbiter concluded that all the impleaded respondents

therein (i.e. including NPI) should be held liable for the payment of
nominal damages plus attorney’s fees.

The aggrieved respondents appealed to National Labor Relation

Commission (NLRC) and the NLRC reversed and set aside the Labor
Arbiter ruling. The NLRC ordered ODSI and NPI to pay each of the
respondents and entitled to separation pay and to nominal damages.
The respondents moved for a partial reconsideration arguing since it
was ODSI that closed down operations and not the NPI, therefore NPI
should reinstate them. However, the NLRC denied the motion.

Moreover, the NPI was dissatisfied hence filed a petition for

certiorari before the Court of Appeals (CA) which the CA affirmed the
NLRC ruling.

ISSUE:

Whether or not Nestle Philippines Inc. (NPI) and Ocho de

Setiembre Inc. (ODSI) are deemed jointly and severely liable for the
respondent’s monetary claims.

HELD:

No. The Distributorship Agreement between the Nestle

Philippines inc. (NPI) and Ocho de Setiembre Inc. (ODSI) is not that of
a principal and a contractor, but that of a seller and a buyer/re-seller.
Based on the stipulated in the Distributorship Agreement NPI agreed
to sell its products to ODSI at discounted prices. According to NPI the
goods it manufactures are distributed to the market through various
distributor including ODSI, that in turn, re-sell the same to the
designated outlets through its own employees as the respondents.
Therefore, the reselling activities allegedly performed by the
respondents properly pertain to ODSI only.

In effect, ODSI was not a labor-only contractor of NPI hence the

NPI cannot be deemed the true employer of the respondents.
Therefore, NPI cannot be held jointly and severely liable to ODSI’s
monetary obligation towards the respondents.

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