Case Digest by Vince Bryan San Pablo

Coca-Cola Bottlers Philippines, Inc. vs. Dela Cruz

G.R. No. 189173, April 6, 2010

Facts:

Respondents Ricky E. Dela Cruz and others filed complaints for regularization with money claims
against Coca-Cola Bottlers Philippines, Inc. (petitioner). They worked as route helpers assigned to
deliver products to customer outlets. They alleged that their services were necessary and desirable in
the regular business of the petitioner. The petitioner argued that they were hired through contracts
with Peerless Integrated Service, Inc. and Excellent Partners Cooperative, Inc. The petitioner claimed
there was no employer-employee relationship between them and the respondents.

Issue:

Whether there exists an employer-employee relationship between the petitioner and the respondents.

Ruling:

The Supreme Court held that an employer-employee relationship existed between the petitioner and
the respondents. The Court applied the criteria set by law to determine the existence of labor-only
contracting. It found that Peerless and Excellent, the contractors, merely supplied labor to the
petitioner without sufficient capital or investment. The contracted personnel performed tasks directly
related to the petitioner's main business, soft drink manufacturing, and were under the petitioner's
control and supervision. This rendered Peerless and Excellent as labor-only contractors, making the
respondents regular employees of the petitioner. The Court emphasized that the language of the
contract is not determinative; the true nature of the relationship must be based on the parties' actual
operations. The Court cited its earlier decision in Magsalin v. National Organization of Workingmen,
which established that functions directly related to the overall business should be considered when
evaluating the nature of work.

The Court also addressed procedural issues raised by the petitioner. It found that the verification and
certification requirements were substantially complied with and that the lack of notarization was a
minor defect that could be overlooked in the interest of substantial justice. It clarified that the
necessity of the contractors as parties was a non-issue in a labor-only contracting situation, as the
contractors were mere representatives of the principal employer whose personality merged with that
of the principal.

Legal Basis of the Ruling:

The Court applied Article 106 of the Labor Code, which allows legitimate contracting and
subcontracting but regulates them for worker protection. It also cited Department Order No. 18-02,
which defined labor-only contracting and provided criteria to determine substantial capitalization and
control by contractors. The Court's ruling emphasized the need to evaluate the actual operations of the
parties rather than relying solely on the language of the contract.

Conclusion:

The Supreme Court ruled that an employer-employee relationship existed between the petitioner and
the respondents due to labor-only contracting. It clarified the criteria for determining labor-only
contracting, stressing the importance of evaluating actual operations rather than contractual language.
Procedural issues raised by the petitioner were addressed, and the Court found the petition without
merit, affirming the decision of the Court of Appeals.