Tabas vs. California Manufacturing Co., Inc.

[169 SCRA 497, GR 80680]

Posted by Pius Morados on November 17, 2011
(Labor Standards Both employer and labor only contractor may be liable)
Facts: Petitioners filed a petition in the NLRC for reinstatement and payment of various benefits
against California Manufacturing Company. The respondent company then denied the existence
of an employer-employee relationship between the company and the petitioners.
Pursuant to a manpower supply agreement, it appears that the petitioners prior their
involvement with California Manufacturing Company were employees of Livi Manpower
service, an independent contractor, which assigned them to work as promotional
merchandisers. The agreement provides that:
California has no control or supervisions whatsoever over [Livis] workers with respect to how
they accomplish their work or perform [Californias] obligation It was further expressly
stipulated that the assignment of workers to California shall be on a seasonal and contractual
basis; that [c]ost of living allowance and the 10 legal holidays will be charged directly to
[California] at cost ; and that [p]ayroll for the preceding [sic] week [shall] be delivered by [Livi]
at [Californias] premises.
Issue: WON principal employer is liable.
Held: Yes. The existence of an employer-employee relation cannot be made the subject of an
agreement.
Based on Article 106, labor-only contractor is considered merely as an agent of the employer,
and the liability must be shouldered by either one or shared by both.
There is no doubt that in the case at bar, Livi performs manpower services, meaning to say, it
contracts out labor in favor of clients. We hold that it is one notwithstanding its vehement
claims to the contrary, and notwithstanding the provision of the contract that it is an
independent contractor. The nature of ones business is not determined by self-serving
appellations one attaches thereto but by the tests provided by statute and prevailing case
law. The bare fact that Livi maintains a separate line of business does not extinguish the equal
fact that it has provided California with workers to pursue the latters own business. In this
connection, we do not agree that the petitioners had been made to perform activities which
are not directly related to the general business of manufacturing, Californias purported
principal operation activity. Livi, as a placement agency, had simply supplied California with
the manpower necessary to carry out its (Californias) merchandising activities, using its
(Californias) premises and equipment.