2. Tabasvs California Manufacturing

FACTS

1. Petitioners were the employees of Livi Manpower Services. They were assigned to the respondent pursuant to a manpower supply agreement as promotional merchandisers.

2. It was provided in the agreement that: 1) California would have no control or supervision over the workers as to how they perform or accomplish their work, 2) Livi is an independent contractor and that it has the sole responsibility of complying with all the existing as well as future laws, rules and regulations pertinent to employment of labor, 3) the assignment to California was seasonal and contractual, and 4) payroll, including COLA and holiday pay shall be delivered Livi at Californias premises.

3. Petitioners were made to sign 6-month employment contracts which were renewed for the same period. Unlike regular employees of California, they did not receive fringe benefits and bonuses and were paid only a daily allowance.

4. Petitioners contend that they have become regular employees of California. Subsequent to their claim for regularization, California no longer re-hired them. Livi, on the other hand, claims the workers as its employees and that it is an independent contractor.

5. Labor Arbiter found that no employer-employee relationship existed. The NLRC affirmed the ruling.

ISSUE

Is there an employer-employee relationship between California and the petitioners?

HELD

YES. The existence of an employer-employee relationship is a question of law and cannot be made subject to agreement. The stipulations in the manpower supply agreement will not erase either partys obligations as an employer. Livi is a labor-only contractor, notwithstanding the provisions in the agreement. The nature of ones business is not determined by self-serving appellations but by test provided by statute and the prevailing case law. Californias contention that the workers are not performing activities which are directly related to its general business of manufacturing is untenable. The promotion or sale of products, including the task of occasional price tagging, is an integral part of the manufacturing business. Livi as a placement agency had simply supplied the manpower necessary for California to carry out its merchandising activities, using the latters premises and equipment. Merchandising is likewise not a specific project because it is an activity related to the day-to-day operations of California. Based on Article 106 of the Labor Code, the labor-only contractor is considered merely an agent of the employer and liability must be shouldered by either one or by both. Petitioners are ordered reinstated as regular employees.