(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 [Livi’s] 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 [California’s] 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 one’s 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 latter’s 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,” California’s purported “principal operation activity.” Livi, as a placement agency, had simply supplied California with the manpower necessary to carry out its (California’s) merchandising activities, using its (California’s) premises and equipment.
CASE EATER 