Practice question
A beverage company contracts with a genuinely independent distributor that uses its own relevant resources, runs a distinct business and controls its workers' methods, while the beverage company specifies only agreed outputs. The service agreement preserves labor rights and all applicable requirements are met. A critic says the distribution link alone makes the arrangement labor-only contracting. Which is best?
- The critic is right because every distribution contract is prohibited.
- Own resources are always irrelevant.
- Distribution workers can never have any employment rights.
- Every service agreement is immune from review.
- Relatedness alone does not establish labor-only contracting; the assumed independent undertaking must be distinguished from a mere manpower supply under principal control.
Legal references
- DOLE Department Order 174 s. 2017, primary issuance reproduced: https://palscon.org/public/assets/img/labor-laws-advisory/DO%20174-17%20Rules%20Implementing%20%20Articles%20106%20to%20109%20of%20the%20Labor%20Code,%20As%20Amended.pdf — Sections 3(h),5,7–8.
- Macalino v Coca-Cola Beverages Philippines, G.R. 275357 and 275955, August 6 2025, main opinion: https://elibrary.judiciary.gov.ph/thebookshelf/showdocs/1/70006
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