COCA-COLA BOTTLERS PHILIPPINES V.

DELA CRUZ
GR No. 184977
December 7, 2009

Brion, J.

FACTS:
Respondents Dela Cruz, Guasis, Pugal, Hermo, Somero, Jr., Diocares, and Ichapare
were route helpers assigned to work with petitioner Coca-Cola Bottlers's trucks.
Pursuant to their work, respondents go from the Coca- Cola sales offices or plants to
customer outlets such as sari-sari stores, restaurants, groceries, supermarkets and the
like. They likewise claim that they were hired either directly by the petitioner or by its
contractors, but they do not enjoy the full remuneration, benefits and privileges granted
to the petitioners regular sales force. As a result, they filed to separate complaints for
their regularization with money claims against petitioner. They argued that the services
they rendered were necessary and desirable in the regular business of the petitioner. On
the other hand, petitioner Coca-Cola Bottlers contended that it did not have employeremployee relationship with the respondents on the ground that it entered into contracts
of services with Peerless and Excellent Partners Cooperative, Inc. which entitled the
latter the right to select, hire, dismiss, supervise, control and discipline and pay the
salaries of all personnel they assign to the petitioner. Respondents disclaimed the
contention of the petitioner, claiming that they worked under the control and supervision
of the companys supervisors who prepared their work schedules and assignments and
that Peerless was in the nature of a labor-only contractor because of its insufficient
capital to provide services to petitioner.

LA: Dismissed the complaint for lack of jurisdiction after finding that the respondents
were employees of Peerless and not of Coca-Cola Bottlers.
NLRC: Affirmed LA's ruling.
CA: Reversed the previous decisions and ruled that Peerless was engaged in labor-only
contract based on the respondents assertions and the petitioners admissions that
Peerless simply supplied the company with manpower. Furthermore, the Court found no
proof in the records that Peerless met the required capitalization and tools.

ISSUES:

1. Whether or not Peerless and Excellent Partners Cooperative, Inc. is a labor-only

contractor.
2. Whether or not the respondents are regular employees.

RULING:
1.The Court ruled in affirmative.
Labor-only contracting shall refer to an arrangement where the contractor or
subcontractor merely recruits, supplies or places workers to perform a job, work or
service for a principal, and any of the following elements are present: 1. The contractor
or subcontractor does not have sufficient capital or investment which relates to the job,
work or service to be performed and the employees recruited, supplied or placed by
such contractor or subcontractor are performing activities which are directly related to
the main business of the principal; OR, 2. The contractor does not exercise the right to
control over the performance of the work of the contractual-employee.

By "right to control, it pertains to the prerogative of a party to determine, not only the
end result sought to be achieved, but also the means and manner to be used to achieve
this end.

A key consideration in resolving whether either of the two elements of a labor-only

contractor is present in a given case is the contract between the company and the
purported contractors. However, the contract between the principal and the contractor is
not the final word on how the contracted workers relate to the principal and the purported
contractor; the relationships must be tested on the basis of how they actually operate.

The facts of the case show that the respondents, acting as sales route helpers, were
only engaged in the marginal work of helping in the sale and distribution of company
products. They only provided the muscle work that sale and distribution required and
were thus necessarily under the companys control and supervision in doing these tasks.
Also, respondents were not independently selling and distributing company products,
using their own equipment, means and methods of selling and distribution. They only
supplied the manpower that helped the company in the handing of products for sale and
distribution. Therefore, Peerless and Excellent were mere labor-only contractors who
had no sufficient capitalization and equipment to undertake sales and distribution of
softdrinks as independent activities separate from the manufacture of softdrinks, and
who had no control and supervision over the contracted personnel.

2. The Court ruled in affirmative.

It found that respondents, for being engaged in component functions in the main
business of the company under the latters supervision and control, were regular
employees who are entitled to their respective claims.