Case Digest: San Miguel Corporation v. Aballa, G.R. No. 149011, June 28, 2005

  • In 1993, San Miguel Corporation (SMC) and Sunflower Multi-Purpose Cooperative (Sunflower) entered into a one-year Contract of Services to provide messengerial/janitorial, shrimp harvesting and cold storage services for SMC. The contract specified no employer-employee relationship between SMC and Sunflower or its members.
  • In 1995, workers filed a complaint seeking regular employment status and benefits. SMC closed its Bacolod Shrimp Processing Plant in September 1995.
    • LA: Ruled in favor of SMC, stating Sunflower was an independent contractor.
    • NLRC: Reversed NLRC decision, considering Sunflower as an agent of SMC, facilitating its manpower requirements.
WoN respondents are employees of SMC. YES

The language of a contract is not, however, determinative of the parties’ relationship; rather it is the totality of the facts and surrounding circumstances of the case.

The court ruled that Sunflower did not have substantial capital or investment in the form of tools, equipment, machineries, work premises, and other materials to qualify as an independent contractor. The court noted that all the necessary equipment, facilities, and tools used by the workers were owned and provided by SMC, the principal employer. 

Moreover, Sunflower did not have an independent business and catered exclusively to SMC. Private respondents were performing tasks directly related to SMC's business and should be considered regular employees entitled to benefits and rights accorded to regular employment.

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