G.R. No. 179546 , February 13, 2009
Coca-Cola Bottlers Phils., Inc., Petitioner, vs. Alan M. Agito, Regolo S. Oca III, Ernesto G. Alariao, Jr., Alfonso Paa, Jr., Dempster P. Ong, Urriquia T. Arvin, Gil H. Francisco, and Edwin M. Golez, Respondents.

FACTS

Respondents filed complaints before the NLRC against petitioner Coca-Cola Bottlers Phils., Inc. and several contractors, including Interserve Management & Manpower Resources, Inc., for regularization, reinstatement with backwages, and nonpayment of 13th month pay. Respondents alleged they were salesmen assigned at petitioner’s Lagro Sales Office, had been employed for years, and were terminated without just cause and due process. Petitioner contended that respondents were employees of Interserve, an independent contractor, pursuant to a Contract of Services executed between them. Petitioner presented Interserve’s Articles of Incorporation, BIR Certificate, Financial Statements, and DOLE Certificate of Registration as an independent job contractor, along with respondents’ Personal Data Files, Contracts of Temporary Employment with Interserve, and Interserve’s payroll records to prove this relationship. The Labor Arbiter ruled that respondents were employees of Interserve, not petitioner, noting Interserve’s registration and assets, and that it maintained employee records and remitted contributions. The NLRC affirmed this decision. The Court of Appeals reversed, finding Interserve to be a labor-only contractor due to insufficient capital for the contracted services, the use of petitioner’s equipment and facilities, and petitioner’s control over respondents’ work as evidenced by Daily Sales Monitoring Reports, a Conventional Route System Proposed Set-up, and memoranda issued by petitioner’s supervisors. The appellate court also noted that respondents’ functions of delivering, distributing, and selling products were directly related and necessary to petitioner’s main business.

ISSUE

Whether an employer-employee relationship existed between petitioner and respondents, rendering Interserve a labor-only contractor and respondents regular employees of petitioner.

RULING

The Supreme Court denied the petition and affirmed the Decision of the Court of Appeals. The Court ruled that Interserve was a labor-only contractor, and thus respondents were regular employees of petitioner. The Court found that the elements of labor-only contracting were present: Interserve did not have substantial capital or investment relative to the job, as its reported assets were insufficient for the scale of petitioner’s soft drink delivery operations, and respondents performed activities directly related to petitioner’s main business of manufacturing, distributing, and selling beverages. Furthermore, petitioner exercised control over the means and methods of respondents’ work, as shown by the sales monitoring reports, route system set-up, and disciplinary memoranda issued by petitioner’s supervisors. The Court held that the Contract of Service between petitioner and Interserve was essentially for the supply of manpower, not a specific job. Consequently, Interserve was deemed merely an agent of petitioner, and the employer-employee relationship was between petitioner and respondents.