Tabas, et.

al
vs.
California Mktg. Corp., et. al
GR No L-80680, 26.01.1989
By Richard Troy A. Colmenares
USA College of Law
6/16/14 10:55 PM
Nature of the Case
A petition for certiorari seeking to annul the labor arbiters decision as upheld on appeal.

Facts
Petitioners petitioned NLRC for reinstatement and payment of various benefits. Respondent California et. al. filed a motion to
dismiss on the ground that there exists no employer-employee relationship (E2e) between respondent and petitioners. On
motion of petitioners, Livi Manpower Services (Livi) was impleaded as party-respondent. Pursuant to the manpower supply
agreement between Livi and petitioners, petitioners were contracted as promotional merchandisers (disers), which
apparently shows the disers are Livis employees. The agreement provided, among others, that California et. al. was not liable
to the disers for violations of the law or any accident while in the performance of their duties. Said agreement also provides
that the disers were contracted on a seasonal basis (renewable every six months) by Califronia, who was responsible for the
cost of living allowance, while Livi had to deliver the payroll for the preceding week to California. The disers were entitled to a
daily allowance, unlike regular employees of California. The petitioners now allege that they are employees of Califronia
entitled to similar benefits as regular employees are. While case is pending, petitioners alleged that California illegally
dismissed them. California admits non-admittance of the disers on the basis of retrenchment due to business losses and
expiration of contract. Livi thus absorbed the employees on a wait-in or standby status. The labor arbiter ruled there is no
employer-employee relationship between petitioners and California, and so denied their money claims. On the other hand, the
labor arbiter imposed attorneys fees and separation pay against Livi.

Issue(s)
(1). Whether petitioner is an employee of California or Livi?
(2). What is the liability of either California or Livi?

Held
(1). The disers are employee of California by operation of law.

E2e is a question of law and cannot be made subject to an agreement (specifically a manpower supply agreement).
The same agreement only binds Livi and California, not the disers. E2e is determined by a four-fold rule, and the most
decisive factor is the presence or absence of the power of control over the putative employees conduct. On the other
hand,labor-only contractor is the same as merely an agent of the employer, which makes the employer and the
agent jointly or severally liable by operation of law (Art. 106 of the Labor Code) liability shouldered by either one or
both. The separate nature of Livi and California businesses does not negate the fact that Livi provided manpower to
pursue the latters business. The disers performed work (merchandising promotions or sale of the products of
California outside Metro Manila, among others) which is an integral part of Californias general business of
manufacturing. Neither is there merit to the argument that the disers were hired on a seasonal basis for the law says
that a casual or contractual employee becomes a regular employee after one year (Art. 218 Labor Code). The disers
are employees of Califronia.

(2). Firstly, the facts show that the disers were contracted for a period of one year (six months contract period each). By
operation of law, they have become regular employees of California, and is thus under the mantle of security of
tenure.

Secondly, the court is not convinced that California suffered much serious business reverses as a result of the
surrounding circumstances (unfavorable political and economic atmosphere, coupled by the EDSA People Power 1).

Decision of the labor arbiter is reversed, ordering the respondent California to: (1) reinstate petitioners with full status
and rights as regular employees; (2) private respondents (California and Livi) to jointly and severally pay backwages
and differential pay from the time the disers acquired regular employment status as well as other benefits provided for
by law; and (3) for private respondents to pay cost of suit and attorneys fees of 10% of all money claims hereby
awarded.