SMC Aquaculture Operations entered into a one-year contract, to be renewed month-to-month until terminated with the Sunflower MultiPurpose

Cooperative. Sunflower engaged private respondents to render services at SMCs Bacolod Shrimp Processing Plant at Sta. Fe, Bacolod City. Terms in the contract Messengerial/janitorial; shrimp harvesting/receiving; sanitation/washing/cold storage the cooperative shall employ the necessary personnel and provide adequate equipment, materials, tools and apparatus no employer-employee relationshipSMC and coop; coop and members; SMC and members cooperative is an association of self-employed members, an independent contractor, and an entrepreneur The cooperative undertakes to pay the wages or salaries of its memberworkers 1 year passed, contract deemed renewed every month Employees worked from January 1993 to September 1995 A complaint was filed by private respondents before the NLRC, Regional Arbitration Branch praying to be declared as regular employees of SMC, with claims for recovery of all benefits and privileges enjoyed by SMC rank and file employees. Amended to illegal dismissal (closed plant) SMC alleged that Sunflower is engaged in a legitimate labor contracting and hence the private respondents cannot be considered their employees. Issue: WON the members are employees of SMC? NO Sunflower is a labor-only contractor for the following reasons: 1. NO SUBSTANTIAL CAPITALIZATIONthough issued a Certificate of Registration by the Cooperative Development Authority, it merely shows it had P2,000 in paid-up share capital 2. lot, building, machineries and all other working tools utilized by private respondents in carrying out their

tasks were owned and provided by SMC 3. alleged office is found within the confines of a small carinderia or refreshment (sic) owned by the mother of the Cooperative Chairman Roy Asong and the only equipment used and owned by Sunflower was a typewriter; 4. from the job description integral part of the shrimp processing operations 5. it did not carry on an independent business or undertake the performance of its service contract according to its own manner and method, free from the control and supervision of SMC, 6.is apparent that its role was merely to recruit persons to work for SMCtheir daily time records were signed by SMC supervisors, 7.the control of the premises in which private respondents worked was by SMC and private respondents had been working in the aqua processing plant inside the SMC compound alongside regular SMC shrimp processing workers performing identical jobs under the same SMC supervisors; 8. Sunflower did not cater to clients other than SMC, and with the closure of SMCs Bacolod Shrimp Processing Plant, Sunflower likewise ceased to exist. Since private respondents who were engaged in shrimp processing performed tasks usually necessary or desirable in the aquaculture business of SMC, they should be deemed regular employees of the latter and as such are entitled to all the benefits and rights appurtenant to regular employment. Absent any evidence showing that Sunflower has been dissolved in accordance with law, it is held solidarily liable with SMC for all the rightful claims of private respondents.