G.R. No.

149011

San Miguel Corporation v. Aballa

June 28, 2005

Facts:

A service agreement between San Miguel Corporation and Sunflower Multi-Purpose

Cooperative was signed and will continue to be renewed each month until it is cancelled. Respondent
Prospero Aballa provided assistance to SMC. Aballa filed a complaint with the National Labour Relations
Commission (NLRC) to have them recognized as regular workers after a year. Due to significant
commercial losses, SMC filed a Notice of Closure, and the labour arbitrator dismissed the suit. The
National Labour Relations Commission (NLRC) rejected Aballa's appeal after determining that Sunflower
was an independent contractor. The Court of Appeals overturned the ruling, finding that it was evident
from the agreement that an employer-employee relationship was not intended.

Issue:

Whether the Aballa and the others were employees of San Miguel corporation

Ruling:

YES. If the contractor has agreed to operate independently without being under the employer's
supervision, that person is considered an independent contractor. The legislation establishes an
employer-employee connection in cases of genuine labour contracting to guarantee that wages are
paid, with the major employer being jointly and severally accountable for the work contractor's wages in
the event that the contractor fails to pay. In labor-only contracting, the primary employer is liable to the
labor-only contractor's workers in the same way as they would be if the major employer had hired them
directly.

The existence of an employer-employee relationship between SMC and private respondents was
denied in the Contract of Services between SMC and Sunflower. However, it appears that SMC owned
and provided the land, structure, equipment, and other working tools utilized by Aballa et al. Janitorial
and messenger services were acknowledged as directly relevant to the employer's main business, and
the task given to Aballa et al. was directly tied to SMC's aquaculture activities. Sunflower only recruited
people to work for SMC; it did not operate a separate business or carry out its service agreement on its
own.
 In conclusion, SMC and Aballa have a working connection as Aballa, who processed shrimp,
should be regarded as regular workers of SMC and entitled to all benefits and privileges.