Labor Law

MAFINCO TRADING CORPORATION vs. OPLE 1976 March 25 2nd Division G.R. No. L-37790 Independent Contractor, Employer- Employee Relationship




A labor union called FOITAF (in behalf of Repomanta and Moralde) lodged a complaint against Mafinco Trading, alleging that Mafinco unlawfully dismissed both individuals. Repomanta and Mafinco executed a peddling contract whereby Repomanta agreed to “buy and sell” Cosmos soft drinks. Rey Moralde entered into a similar contract. The contracts were to remain in force for one year unless sooner terminated by either party upon five days’ notice to the other. Based on this stipulation, Mafinco terminated its contracts with Repomanta and Moralde.


Mafinco argued that Repomanta and Moralde were not its employees but were independent contractors and employers in their own right. The old NLRC ruled in favor of Mafinco, but Labor Sec. Ople reversed the decision, asserting that both Repomanta and Moralde are employees of Mafinco.

Ople’s decision highlighted that these peddling contracts were pseudo contracts devised to evade coverage under the labor laws.

According to Mafinco, the relationship between them is not of employee-employer, but that of buyer and seller.



Are Repomanta and Moralde employees of Mafinco?


  1. They are independent contractors.[1]

Repomanta and Moralde voluntarily executed with Mafinco formal peddling contracts which indicate the manner in which they would sell Cosmos softdrinks. Such signifies that they were acting as independent businessmen. Using the contract itself as the sole criterion, the termination should be characterized as simply the exercise of a right freely stipulated upon by the parties.


Further, the tests for determining the existence of employer-employee relationship is not met: (1) Selection and Engagement of Employee; (2) Payment of Wages; (3) Power of Dismissal; (4) Power of Control.


(1) Selection and Engagement of Employee

Nothing in the Agreement to Peddle Soft Drinks in the case of Cosmos and in the Peddling Contract in the case of Mafinco, will reveal and we cannot logically infer therefrom, that the Peddlers were engaged as employees of Cosmos or Mafinco.

(2) Payment of Wages

On the basis of the clear terms of the Agreement or Contract, no mention is made of the wages of the Peddlers; neither can an inference be made that any salary or wage is given to Peddlers.

(3) Power of Dismissal

A search of the alleged dismissal however shows that the identical letters both dated December 7, 1972 addressed to the said complainants were not actually what complainants pictured them to be, but the termination of the peddling contract in accordance with paragraph 9 of said Contract.

(4) Power of Control.

As to the aspect of employer-employee relation, therefore, between Cosmos or Mafinco and the Peddlers, your Committee does not have sufficient basis to reasonably sustain the stand of the Peddlers that there is such power of control.

[1] INDEPENDENT CONTRACTOR: ‘An independent contractor is one who exercises independent employment and contracts to do a piece of work according to his own methods and without being subject to control of his employer except as to the result of the work.


Factors to determine existence of independent contract: (a) independent business; (b) work is part of employee’s general business; (c) nature and extent of work; (d) skill required; (e) term and duration of relationship, etc. . .

Terrence Anton T. Callao

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