MANILA, Philippines — The Supreme Court (SC) First Division has ruled that warehouse “pickers” are indispensable to the beverage business, declaring them regular employees of Coca-Cola Beverages Philippines, Inc. In a Decision promulgated on August 6, 2025, and penned by Associate Justice Ramon Paul Hernando, the Court reversed a Court of Appeals ruling and found that the intermediary manpower agencies involved were merely engaged in prohibited “labor-only” contracting.
The case centered on Eduardo V. Macalino and three other colleagues who served as warehouse general crew or “pickers” at Coca-Cola’s Tarlac City plant. Their duties involved retrieving, arranging, and preparing products on pallets for delivery. While they were officially hired by Macslink-PSV Services, Inc. (Macslink) and deployed through The Redsystems Company, Inc. (TRCI), the workers argued they were actually employees of Coca-Cola. Their legal battle began in May 2017 after Macslink abruptly closed its operations due to alleged financial difficulties, leading to their immediate termination.
Substantial Capital Is Not a Shield
In its ruling, the Supreme Court emphasized that having substantial capitalization does not automatically make a company a legitimate job contractor. While Coca-Cola argued that Macslink was an independent contractor with millions in paid-up capital, the Court noted that Macslink failed to prove it possessed the tools and equipment necessary for the work. Instead, the evidence showed that the warehouse, tools, and delivery trucks were all owned by Coca-Cola.
The Court reiterated the two-pronged test for labor-only contracting: a contractor is “labor-only” if it lacks substantial investment in equipment and the employees perform activities directly related to the principal’s main business, or if the contractor does not exercise the right of control. The SC found that despite Macslink’s financial records, it acted merely as a supplier of manpower. The Court held that the “indispensability” of the work is a primary indicator of a regular employment relationship, regardless of the labels used in project employment contracts.
Indispensable Roles
The Supreme Court specifically addressed the role of warehouse pickers, characterizing their work as essential to Coca-Cola’s core business of manufacturing and distributing beverages. The Court reasoned that the orderly distribution of products would be impossible without the pickers who inspect, pallets, and prepare goods for shipment. Since the workers were repeatedly rehired for years to perform the same vital tasks inside Coca-Cola’s premises, the law deems their services necessary and desirable to the company’s usual trade.
The ruling noted that the multi-layered arrangement—where Coca-Cola contracted TRCI, which then contracted Macslink—served as a scheme to prevent workers from attaining regular status. By using these intermediaries as a shield, Coca-Cola attempted to evade the legal obligations of a direct employer. However, the Court pierced this arrangement, ruling that when a contractor is found to be “labor-only,” the principal employer (Coca-Cola) is legally considered the direct employer of the workers.
Solidary Liability and Mandatory Compensation
Finding that the workers were illegally dismissed without just cause or due process, the Supreme Court held Coca-Cola, TRCI, and Macslink solidarily liable for the workers’ claims. Because the closure of Macslink was used as a justification for the sudden “lay-off” of regularized staff, the Court ordered the companies to pay full backwages, inclusive of allowances and benefits, computed from the time of their dismissal in May 2017 until the finality of the decision.
While the Labor Arbiter had initially ordered reinstatement, the Supreme Court opted to award separation pay instead, citing the considerable lapse of time since the start of the litigation. Each worker is entitled to one month’s salary for every year of service. The Court also awarded attorney’s fees equivalent to 10% of the total monetary award and imposed a legal interest of 6% per annum on all grants until fully paid. The case has been remanded to the Labor Arbiter for the detailed computation of the millions in backwages and benefits owed to the petitioners.
