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1) Escario VS NLRC 333 SCRA 257

Facts:

Petitioners are merchandisers of respondent company. They

withdraw stocks from the warehouse , fix the prices, price-tagging, displaying

the products and inventory. They were paid by the company through an

agent to avoid liability. They claim that they were under the

control and supervision of the company. They asked for regularization of

their status. They were then given notice of their termination. The

company denied any employer-employee relationship. They claim that they

used an agent or independent contractors to sell the merchandise. The LaborArbiter ruled that there was an employer-employee relationship. The NLRC

set aside the decision and said that there was no such relationship. The agent

was a legitimate independent contractor.

Issue:

Whether or not the petitioners are employees of the company.

Held:

The Court ruled that there is no employer-employee relationship

and that petitioners are employees of the agent. The agent is a legitimate

independent contractor. Labor-only contractor occurs only when the

contractor merely recruits, supplies or places workers to perform a job for a

principal. The labor-only contractor doesnt have substantial capital or

investment and the workers recruited perform activities directly related tothe principal business of the employer. There is permissible contracting only

when the contractor carries an independent business and undertakes the

contract in his own manner and method, free from the control of the

principal and the contractor has substantial capital or investment. The agent,

and not the company, also exercises control over the petitioners. No

documents were submitted to prove that the companyexercised control over

them. The agent hired the petitioners. The agent also pays the petitioners,

no evidence was submitted showing that it was the company paying them

and not the agent. It was also the agent who terminated their services. By

petitioning for regularization, the petitioners concede that they are not

regular employees.

2) CORPORAL SR. VS. NLRC 341 SCRA 658

Facts:

5 male barbers and 2 female manicurists (Petitioners) worked at

New Look Barbershop, a sole proprietorship owned and managed by Vicente

Lao which in 1982 was taken over by Lao Enteng Co., Inc., (respondent

corporation) a corporation formed by Vicente Laos children. The petitioners

were allowed to work there until April 1985 when they were told that the

barbershop building was sold and their services are no longer needed.

Petitioners filed with the Arbitration branch of NLRC a complaint for illegal

dismissal, illegal deduction, separation pay, non-payment of 13th month pay

and salary differential. Also they seek for refund ofP1.00 collected from each

of them daily as salary of the barbershops sweeper. Respondent Corporation

alleged that petitioners were Joint Venture (JV) partners receiving

50%commission (Petitioners admitted in receiving 50-60%), therefore no

employer-employee relationship existed. And assuming arguendo that

employer-employee relationship existed, petitioners were not entitled to

separation pay since cessation of the business was due to serious businesslosses. Also, they allege that the barbershop had always been a JV

partnership with the operation and management left entirely to petitioners

and that the former had no control over the latter who could freely come

and goes they wish. Lastly, they allege that some of the petitioners were

allowed to register in SSS only as an act of accommodation. The Labor Arbiter

dismissed the complaint and found that there was a JV and no employer-

employee relationship. Also that the business was closed due to serious

business losses or f inancial reverses and the law does not compel the

establishment to pay separation pay to whoever were its employees. On

appeal, NLRC affirmed the decision but held that petitioners were considered

independent contractors and not employees. The MR was also denied by

NLRC, hence, this petition on certiorari.

Issue:

WON there was an employer-employee relationship.

Held:

YES. Petitioners are employees of Respondent Corporation and

shall be accorded the benefits given in Art. 283 of the Labor Code granting

separation pay equivalent to 1 month pay for every year of service and also

to 13th month pay. The other claims of petitioners are found to be without

basis.

3. SMC VS Semillano July 05, 2010

Facts:

AMPCO hired Vicente et al on different dates assigned to work in

SMCs Bottling Plant situated at Brgy. Granada Sta. Fe, Bacolod City, in orde

to perform the following tasks: segregating bottles removing dirt filing them

in designated places loading and unloading bottles to and from the delivery

trucks, and performing other tasks as ordered by SMCs officers. They were

required to work inside the SMC premises using SMCs equipment. They

rendered service with SMC for more than 6 months. Subsequently, SMC

entered into a Contract of Services with AMPCO designating the latter as the

employer of Vicente, et al. Vicente et al. failed to claim the rights & benefits

ordinarily accorded a regular SMC employee. They were not paid their 13th

month pay. On June 6, 1995, they were not allowed to enter the SMC

premises as the AMPCO project manager told them to wait for furthe

instructions from SMCs supervisor. Unfortunately, Vicente et al. never heard

from SMC. They filed a COMPLAINT FOR ILLEGAL DISMISSAL

ISSUE:

Is AMPCO a legitimate job contractor?

Held:

Respondent performed activities which directly related to

petitioners main line of business. Petitioner is primarily engaged in

manufacturing and marketing of beer products, and respondents work o

segregating and cleaning bottles is unarguably an important part of it

manufacturing and marketing process

SMC, as principal employer, is solidarily liable with AMPCO, the labor-only

contractor. AMPCO, as the "labor-only" contractor, is deemed an agent o

SMC. The law makes the principal responsible over the employees of the

"labor-only" contractor as if the principal itself directly hired the employees.

4. Baguio vs NLRC, 202 SCRA 465

Facts:

Baguio Country Club Corporation (corporation) is a recreationa

establishment certified by the ministry of labor and employment as an

entertainment -service establishment. Private respondent Jimmy Calamba

was employed by corporation on a day to day basis in various capacities as

laborer and dishwasher for a period of ten months. Calamba was hired again

as a gardener and rehired as such when he was dismissed by the petitione

corporation. Calamba filed a complaint against petitioner corporation with

the ministry of labor (DOLE) for unfair labor practice, illegal dismissal andnon-payment of 13th month pay. The executive labor arbiter ruled in favor o

Calamba, declaring the latter as a regular employee and ordering petitione

corporation to reinstate Calamba to the position of gardener without loss o

seniority and with full backwages, benefits and privileges from the time of his

dismissal up to the reinstatement including 13th month pay. Petitione

corporation filed an appeal to the NLRC contending that Calamba was a

contractual employee whose employment was for a fixed and specific period

as set forth and evidenced by Calambas contracts of employment. However

the NLRC dismissed the appeal for lack of merit. The latter argued tha

Calamba having rendered services as laborer, gardener, and dishwasher fo

more than one year, was a regular employee at the time his employment was

terminated. Hence, this petition.

Issue:

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Whether or not Calamba is a regular employee at the time his employment

was terminated.

Held:

YES. The court held that an employment shall be deemed to be

regular where the employee has been engaged to perform activities which

are usually necessary or desirable in the usual business or trade of the

employer. Also, if the employee has been performing the job for at least one

year, even if the performance is not continuous or merely intermittent, the

law deems the repeated and continuing need for its performance as

sufficient evidence of the necessity if not indispensability of that activity tothe business. Hence, the employment is also considered regular, but only

with respect to such activity and while such activity exists. In the case at bar,

the records reveal that Calamba was repeatedly re-hired to perform tasks

ranging from dishwashing and gardening, aside from performing

maintenance work. Such repeated rehiring and the continuing need for his

service are sufficient evidence of the necessity and indispensability of his

service to the petitioners business or trade. Owing to Calambas length of

service with the petitioners corporation, he became a regular employee, by

operation of law, one year after he was employed.

4. PAL vs Ligan, 548 scra 181

Facts:

PAL (as owner) and Synergy Services Corp (as contractor) entered

into an Agreement where the latter undertook to provide loading, unloading,delivery and other related services. It was expressly stated that Synergy was

an independent contractor and that no employer-employee relationship

would exist between its employees and PAL. Ligan et al (laborer-

respondents) filed complaints against PAL and Synergy for 1) underpayment,

on-payment of 13thmonth pay/holiday pay/premium pay etc and for 2)

regularization of employment. The Labor Arbiter found Synergy an

independent contractor and dismissed the complaint against PAL for

regularization. NLRC set aside this decision and held that Synergy was a

labor-only contractor.CA affirmed NLRCs decision.

Issue:

WON Synergy is a legitimate contractor? No. SC held Synergy a labor-only

contractor.

Held:

In this case, the work performed by the respondents were directly

related to the main business of PAL. Also, the equipment used as station

loaders such as trailers and conveyors were all owned by PAL.PAL and

Synergy also failed to substantiate their claim that the latter had substantial

capital, and only after the CA decision was rendered did it try to prove such

fact. It was found that respondents worked alongside PALs regular

employees who performed the same work.PAL tried to disprove the its right

to control; however, the Court found that the Agreement stipulated that the

contractor shall comply with the owners rules, regulations, procedures, and

directives.PAL in fact admitted that it fixes the work schedule of respondents.

Also, PALs managers and supervisors approved respondents weekly work

assignments and were referred to as station attendants "of cargo operation

and airfreight services of PAL. Respondents having performed tasks which

are usually necessary and desirable in the air transportation business of PAL,they should be deemed its regular employees and Synergy as a labor-only

contractor. The Court ordered PAL to accept respondents as regular

employees, pay wages and benefits due, plus salary differentials. Case

remanded to LA for determination of monetary liabilities.

5. SMC vs MAERC IS, 405 scra 579

Facts:

Brought before this court is a petition seeking for a review of the

Court of Appeals' judgment. The facts are as follows. 291 workers filed

complaints against San Miguel Corporation and Maerc Integrated Services,

Inc. for illegal dismissal, underpayment of wages, non-payment of service

incentive leave pays and other labor standards benefits, and for separation

pays from 25 June to 24 October 1991. The complainants alleged that they

were hired by SMC through its agent or intermediary Maerc. They were paid

on a per piece orpakiaobasis except for a few who worked as checkers and

were paid on daily wage basis.

SMC denied liability for the claims and averred that the

complainants were not its employees but of MAERC. When the service

contract was terminated, complainants claimed that SMC stopped them from

performing their jobs; that this was tantamount to their being illegally

dismissed by SMC who was their real employer; and, that MAERC was merely

made a tool or a shield by SMC to avoid its liability under the Labor Code.

On 31 January 1995 the Labor Arbiter rendered a decision holding

that MAERC was an independent contractor.He dismissed the complaints fo

illegal dismissal but held that MAERC and SMC were jointly and severally

liable to pay complainants their wage differentials. The National Labo

Relations Commission (NLRC) ruled in its 7 January 1997 decision that MAERC

was a labor-only contractor and that complainants were employees of SMC

but still held SMC to be jointly and severally liable with MAERC for

complainants' separation benefits. On 28 April 2000 the Court of Appeals

denied the petition and affirmed the decision of the NLRC.

Issue:

Whether or not the complainants are employees of petitione

SMC or of respondent MAERC.

SC Ruling:

Evidence discloses that petitioner played a large and

indispensable part in the hiring of MAERC's workers. It also appears that

majority of the complainants had already been working for SMC long before

the signing of the service contract between SMC and MAERC in 1988.In labor-only contracting, the statute creates an employer

employee relationship for a comprehensive purpose: to prevent a

circumvention of labor laws. The contractor is considered merely an agent o

the principal employer and the latter is responsible to the employees of the

labor-only contractor as if such employees had been directly employed by

the principal employer. The principal employer therefore becomes solidarily

liable with the labor-only contractor for all the rightful claims of the

employees.

This distinction between job contractor and labor-only contractor

however, will not discharge SMC from paying the separation benefits of the

workers, inasmuch as MAERC was shown to be a labor-only contractor; in

which case, petitioner's liability is that of a direct employer and thus

solidarily liable with MAERC.

Respondent Maerc Integrated Services, Inc. is declared to be a

labor-only contractor. Accordingly, both petitioner San Miguel Corporation

and respondent Maerc Integrated Services, Inc., are ordered to jointly andseverally pay complainants (private respondents herein) separation benefit

and wage differentials as may be finally recomputed by the Labor Arbiter as

herein directed, plus attorney's fees to be computed on the basis of ten

percent (10%) of the amounts which complainants may recover pursuant to

Art. 111 of the Labor Code, as well as an indemnity fee of P2,000.00 to each

complainant.

6. New Golden City Builders vs CA, GR No. 154715

Facts:

Petitioner entered into a construction contract with Prince David

Development Corporation. Petitioner engaged the services of Nilo Layno

Builders to do the specialized concrete works, forms works and steel rebars

works. Pursuant to the contract, Nilo Layno Builders hired privaterespondents to perform work at the project. After the completion of the

phase for which Nilo Layno Builders was contracted, private respondent

filed a complaint against petitioner and its president for unfair labor practice

non-payment of 13th month pay, service incentive leave, illegal dismissal and

severance pay, in lieu of reinstatement. The Labor Arbiter ruled in favor o

respondents, but dismissed the charges for illegal dismissal including thei

prayers for backwages and unfair labor practice and other monetary claims

except their 13th month pay and service incentive leave pay. It was also

found that Nilo Layno Builders was a labor-only-contractor, thus private

respondents were deemed employees of the petitioner. Both parties

appealed to the National Labor Relations Commission, which affirmed the

Labor Arbiter's decision with modification that private respondents were

illegally dismissed. Since petitioner's motion for reconsideration was denied

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it instituted a special civil action for certiorari with the Court of Appeals, but

the latter denied the same.

Issue:

Whether Nilo Layno Builders was an "independent contractor" or

a "labor-only" contractor

Ruling:

Under Section 8, Rule VIII, Book III, of the Omnibus Rules

Implementing the Labor Code, an independent contractor is one who

undertakes "job contracting," i.e., a person who: (a) carries on an

independent business and undertakes the contract work on his own account

under his own responsibility according to his own manner and method, free

from the control and direction of his employer or principal in all matters

connected with the performance of the work except as to the results thereof;

and (b) has substantial capital or investment in the form of tools,

equipments, machineries, work premises, and other materials which are

necessary in the conduct of the business. Jurisprudential holdings are to the

effect that in determining the existence of an independent contractor

relationship, several factors may be considered, such as, but not necessarily

confined to, whether or not the contractor is carrying on an independent

business; the nature and extent of the work; the skill required; the term and

duration of the relationship; the right to assign the performance of specified

pieces of work; the control and supervision of the work to another; the

employer's power with respect to the hiring, firing and payment of the

contractor's workers; the control of the premises; the duty to supply

premises, tools, appliances, materials and labor; and the mode, manner and

terms of payment.Nilo Layno Builders is a duly licensed labor contractor carrying on

an independent business for a specialized work that involves the use of some

particular, unusual and peculiar skills and expertise, like concrete works,

form works and steel rebars works. As a licensed labor contractor, it

complied with the conditions set forth in Section 5, Rule VII-A, Book III, Rules

to Implement the Labor Code, among others, proof of financial capability and

list of equipment, tools, machineries and implements to be used in the

business. Further, it entered into a written contract with the petitioner, a

requirement under Section 3, Rule VII-A, Book III, Rules to Implement the

Labor Code to assure the employees of the minimum labor standards and

benefits provided by existing laws.

The test to determine the existence of independent

contractorship is whether one claiming to be an independent contractor has

contracted to do the work according to his own methods and without being

subject to the control of the employer, except only to the results of the work.

This is exactly the situation obtaining in the case at bar. Nilo LaynoBuilders hired its own employees, the private respondents, to do specialized

work in the Prince David Project of the petitioner. The means and methods

adopted by the private respondents were directed by Nilo Layno Builders

except that, from time to time, the engineers of the petitioner visited the site

to check whether the work was in accord with the plans and specifications of

the principal. As admitted by Nilo G. Layno, he undertook the contract work

on his own account and responsibility, free from interference from any other

persons, except as to the results; that he was the one paying the salaries of

private respondents; and that as employer of the private respondents, he

had the power to terminate or dismiss them for just and valid cause.

Indubitably, the Court finds that Nilo Layno Builders maintained effective

supervision and control over the private complainants.

8. Neri vs NLRC 224 scra 717

Facts: Respondents are sued by two employees of Building Care

Corporation, which provides janitorial and other specific services to various

firms, to compel Far Bast Bank and Trust Company to recognize them as its

regular employees and be paid the same wages which its employees receive.

Building Care Corporation (BCC, for brevity), in the proceedings

below, established that it had substantial capitalization of P1 Million or a

stockholders equity of P1.5 Million. Thus the Labor Arbiter ruled that BCC

was only job contracting and that consequently its employees were not

employees of Far East Bank and Trust Company (FEBTC, for brevity). on

appeal, this factual finding was affirmed by respondent National Labor

Relations Commission (NLRC, for brevity). Nevertheless, petitioners insist

before us that BCC is engaged in "labor-only" contracting hence, they

conclude, they are employees of respondent FEBTC.

On 28 June 1989, petitioners instituted complaints against FEBTC

and BCC before Regional Arbitration Branch No. 10 of the Department o

Labor and Employment to compel the bank to accept them as regular

employees and for it to pay the differential between the wages being paid

them by BCC and those received by FEBTC employees with similar length o

service.

Issue:

Whether or not BCC is only a job contracting company, hence

petitioners are not regular employees of FEBTC.

SC Ruling:

Based on the foregoing, BCC cannot be considered a "labor-only

contractor because it has substantial capital. While there may be no evidence

that it has investment in the form of tools, equipment, machineries, wor

premises, among others, it is enough that it has substantial capital, as was

established before the Labor Arbiter as well as the NLRC. In other words, the

law does not require both substantial capital and investment in the form o

tools, equipment, machineries, etc. This is clear from the use of the

conjunction "or". If the intention was to require the contractor to prove that

he has both capital and the requisite investment, then the conjunction "and"

should have been used. But, having established that it has substantial capital

it was no longer necessary for BCC to further adduce evidence to prove tha

it does not fall within the purview of "labor-only" contracting. There is even

no need for it to refute petitioners' contention that the activities they

perform are directly related to the principal business of respondent bank.

More importantly, under the terms and conditions of the

contract, it was BCC alone which had the power to reassign petitioners. Thei

deployment to FEBTC was not subject to the bank's acceptance. Cabelin wa

promoted to messenger because the FEBTC branch manager promised BCCthat two (2) additional janitors would be hired from the company if the

promotion was to be effected. Furthermore, BCC was to be paid in lump sum

unlike in the situation in Philippine Bank of Communications where the

contractor, CESI, was to be paid at a daily rate on a per person basis. And, the

contract therein stipulated that the CESI was merely to provide manpower

that would render temporary services. In the case at bar, Neri and Cabelin

were to perform specific special services. Consequently, petitioners canno

be held to be employees of FEBTC as BCC "carries an independent business"

and undertaken the performance of its contract with various client

according to its "own manner and method, free from the control and

supervision" of its principals in all matters "except as to the results thereof."

The Petition for Certiorari is dismissed.

9. Phil. Bank Comm. vs NLRC 146 scra 347

Facts:

Petitioner Philippine Bank of Communications and the Corporate

Executive Search Inc. (CESI) entered into a letter agreement dated January

1976 under which CESI undertook to provide "Tempo[rary] Services" to

petitioner consisting of the "temporary services" of eleven (11) messengers

The contract period is described as being "from January 1976 ---- ." The

petitioner in truth undertook to pay a "daily service rate of P18," on a per

person basis.

Ricardo Orpiada was thus assigned to work with the petitioner bank. As such

he rendered services to the bank, within the premises of the bank and

alongside other people also rendering services to the bank. There was some

question as to when Ricardo Orpiada commenced rendering services to the

bank. As noted above, the letter agreement was dated January 1976

However, the position paper submitted by CESI to the National Labo

Relations Commission stated that CESI hired Ricardo Orpiada on 25 June

1975 as a Tempo Service employee, and assigned him to work with thepetitioner bank "as evidenced by the appointment memo issued to him on 25

June 1975-." Be that as it may, on or about October 1976, the petitioner

requested CESI to withdraw Orpiada's assignment because, in the allegation

of the bank, Orpiada's services "were no longer needed."

On 29 October 1976, Orpiada instituted a complaint in the Department o

Labor (now Ministry of Labor and Employment) against the petitioner fo

illegal dismissal and failure to pay the 13th month pay provided for in

Presidential Decree No. 851. This complaint was docketed as Case No. RO4

10-10184-76-E. After investigation, the Office of the Regional Director

Regional Office No. IV of the Department of Labor, issued an order dismissing

Orpiada's complaint for failure of Mr. Orpiada to show the existence of an

employer-employee relationship between the bank and himself.

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Accordingly, on 2 April 1984, the bank filed the present petition for certiorari

with this Court seeking to annul and set aside (a) the decision of respondent

Labor Arbiter Dogelio dated 12 September 1977 in Labor Case No. RB-IV-

1118-77 and (b) the decision of the NLRC promulgated on 29 December 1983

affirming with some modifications the decision of the Labor Arbiter. This

Court granted a temporary restraining order on 11 April 1984.

Issue:

Whether or not the relationship is one of employer and job

(independent) contractor or one of employer and "labor-only"

contractor.

SC Ruling:

Under the general rule set out in the first and second paragraphs

of Article 106, an employer who enters into a contract with a contractor for

the performance of work for the employer, does not thereby create an

employer-employee relationship between himself and the employees of the

contractor. Thus, the employees of the contractor remain the contractor's

employees and his alone. Nonetheless, when a contractor fails to pay the

wages of his employees in accordance with the Labor Code, the employer

who contracted out the job to the contractor becomes jointly and severally

liable with his contractor to the employees of the latter "to the extent of the

work performed under the contract" as if such employer were the employer

of the contractor's employees. The law itself, in other words, establishes an

employer-employee relationship between the employer and the job

contractor's employees for a limited purpose, i.e., in order to ensure that the

latter get paid the wages due to them.

Succinctly put, CESI is not a parcel delivery company: as its name

indicates, it is a recruitment and placement corporation placing bodies, as it

were, in different client companies for longer or shorter periods of time. It is

this factor that, to our mind, distinguishes this case from American President

Lines v. Clave et al., 114 SCRA 826 (1982) if indeed such distinguishing way is

needed.

We hold that, in the circumstances of this case, CESI was engaged in "labor-

only" contracting vis-a-vis the petitioner bank and in respect of Ricardo

Orpiada, and that consequently, the petitioner bank is liable to Orpiada as if

Orpiada had been directly employed not only by CESI but also by the bank. It

may well be that the bank may in turn proceed against CESI to obtain

reimbursement of, or some contribution to, the amounts which the bank will

have to pay to Orpiada; but this it is not necessary to determine here.

The petition for certiorari is denied and the decision promulgatedon 29 December 1983 of the National Labor Relations Commission is

affirmed.

10. GSIS VS NLRC GR No. 157647

Facts:

LSWA entered into a Security Service Contract to provide security

guards to the properties of the GSIS at the contract rate of P3,000.00 per

guard per month. During the effectivity of the contract, LSWA requested the

GSIS for an upward adjustment of the contract rate in view of Wage Order

No. 1 and Wage Order No. 2, issued by the RTWPB. Acting on the request,

the GSIS, approved the upward adjustments of the contract price from

P3,000.00 to P3,716.07 per guard, per month effective November 1, 1990 to

January 7, 1991, and P4,200.00 effective January 8, 1991 to May 31, 1991.

LSWA assigned security guards. (hereafter complainants) to guard

one of GSIS's properties In 1993, GSIS terminated the Security Service

Contract with LSWA. In 1994, complainants filed complaints against LSWA for

underpayment of wages and non-payment of labor standard benefits from

March 1991 to March 1993. LSWA filed a Third-Party Complaint against GSIS

for underpayment of complainants' wages.

GSIS avers that it cannot twice be held liable for complainants'

salary differentials since it fully paid complainants' salaries by incorporating

in the Security Service Contract the salary rate increases mandated by Wage

Order Nos. 1 and 2; otherwise, it would be unjust enrichment on the part of

complainants and/or LSWA at its expense. It submits that Articles 106 and

107 of the Labor Code were not contemplated by its framers to cover

principals or clients of service contractors who had already paid for the

wages of the contractor or subcontractor.

SC Ruling :

The petition is bereft of merit. In this case, the GSIS cannot evade

liability by claiming that it had fully paid complainants' salaries by

incorporating in the Security Service Contract the salary rate increases

mandated by Wage Order Nos. 1 and 2.

The joint and several liability of the employer or principal was

enacted to ensure compliance with the provisions of the Code, principally

those on statutory minimum wage. The contractor or subcontractor is made

liable by virtue of his or her status as a direct employer, and the principal as

the indirect employer of the contractor's employees. This liability facilitates

if not guarantees, payment of the workers' compensation, thus, giving the

workers ample protection as mandated by the 1987 Constitution. This is no

unduly burdensome to the employer. Should the indirect employer be

constrained to pay the workers, it can recover whatever amount it had paid

in accordance with the terms of the service contract between itself and the

contractor (Rosewood Processing vs. NLRC).

Thus, the Court does not agree with the GSIS's claim that a double

burden would be imposed upon the latter because it would be paying twice

for complainants' services. Such fears are unfounded. Under Article 1217 o

the Civil Code, if the GSIS should pay the money claims of complainants, it

has the right to recover from LSWA whatever amount it has paid in

accordance with the terms of the service contract between the LSWA and

the GSIS. Joint and solidary liability is simply meant to assure aggrievedworkers of immediate and sufficient payment of what is due them. This is in

line with the policy of the State to protect and alleviate the plight of the

working class.

11. FILSYN vs NLRC, 257 SCRA 336

Facts:

On 4 April 1991 FILSYN, a domestic corporation engaged in the

manufacture of polyester fiber, contracted with De Lima Trading and Genera

Services (DE LIMA) for the performance of specific janitorial servicesPursuan

to the agreement Felipe Loterte, among others, was deployed at FILSYN to

take care of the plants and maintain general cleanliness around the premises

On 24 February 1992 Loterte sued FILSYN and DE LIMA as

alternative defendants

for illegal dismissal, underpayment of wages, non

payment of legal holiday pay, service incentive leave pay and 13th month pay

alleging that he was first assigned to perform janitorial work at FILSYN in

1981 by the La Saga General Services; that the La Saga was changed to DE

LIMA on August 1991; that when a movement to demand increased wages

and 13th month pay arose among the workers on December 1991 he was

accused by a certain Dodie La Flores of having posted in the bulletin board at

FILSYN an article attributing to management a secret understanding to block

the demand; and, for denying responsibility, his gate pass was

unceremoniously cancelled on 6 February 1992 and he was subsequently

dismissed.

Loterte was classified by the Labor Arbiter as a regular employee

on the ground that he performed tasks usually necessary or desirable in the

main business of FILSYN for more than ten (10) years or since 1981. FILSYN

was declared to be the real employer of Loterte and DE LIMA as a mere labo

contractor.

Hence, FILSYN was adjudged liable for Loterte's reinstatementpayment of salary differentials and back wages and other benefits. Hence

this petition for certiorari by FILSYN.

Issue:

Whether or not there exists an employer-employee relationship

between FILSYN and private respondent Felipe Loterte.

SC Ruling:

DE LIMA is an independent job contractor, therefore no direc

employer-employee relationship exists between petitioner FILSYN and

private respondent Felipe Loterte. The relationship between petitione

Filipinas Synthetic Fiber Corporation (FILSYN) and private respondent De Lima

Trading and General Services (DE LIMA) is one of job contractorship.

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Under the Labor Code, two (2) elements must exist for a finding of

labor-only contracting: (a) the person supplying workers to an employer does

not have substantial capital or investment in the form of tools, equipment,

machineries, work premises, among others, and (b) the workers recruited

and placed by such persons are performing activities directly related to the

principal business of such employer.

These two (2) elements do not exist in the instant case. As pointed

out by petitioner, private respondent DE LIMA is a going concern duly

registered with the Securities and Exchange Commission with substantial

capitalization of P1,600,000.00, P400,000.00 of which is actually subscribed.

Hence, it cannot be considered as engaged in labor-only contracting being a

highly capitalized venture. Moreover, while the janitorial services performed

by Felipe Loterte pursuant to the agreement between FILSYN and DE LIMA

may be considered directly related to the principal business of FILSYN which

is the manufacture of polyester fiber, nevertheless, they are not necessary in

its operation. On the contrary, they are merely incidental thereto, as

opposed to being integral, without which production and company sales will

not suffer. Judicial notice has already been taken of the general practice in

private as well as in government institutions and industries of hiring janitorial

services on an independent contractor basis.

Respondent De Lima Trading and General Services (DE LIMA) are

ordered to reinstate private respondent FELIPE LOTERTE to his former

position or its equivalent without loss of seniority rights. And private

respondent De Lima Trading and General Services (DE LIMA) is ordered

jointly and severally with petitioner Filipinas Synthetic Fiber Corporation

(FILSYN) to pay private respondent FELIPE LOTERTE hi salary differentials,

13th month pay, service incentive leave pay, and backwages withoutprejudice to FILSYN seeking reimbursement from DE LIMA for whatever

amount the former may pay or have paid the latter.

12. Bro Labor Unity Movement vs Zamora Gr. No. 48645

Facts:

The petitioners are workers who have been employed at the San

Miguel Parola Glass Factory as pahinantesor kargadors for almost seven

years. They worked exclusively at the SMC plant, never having been assigned

to other companies or departments of San Miguel Corp, even when the

volume of work was at its minimum. Their work was neither regular nor

continuous, depending on the volume of bottles to be loaded and unloaded,

as well as the business activity of the company. However, work exceeded the

eight-hour day and sometimes, necessitated work on Sundays and holidays. -

for this, they were neither paid overtime nor compensation.

Sometime in 1969, the workers organized and affiliated

themselves with Brotherhood Labor Unity Movement (BLUM). They wanted

to be paid to overtime and holiday pay. They pressed the SMC management

to hear their grievances. BLUM filed a notice of strike with the Bureau of

Labor Relations in connection with the dismissal of some of its members. San

Miguel refused to bargain with the union alleging that the workers are not

their employees but the employees of an independent labor contracting firm,

Guaranteed Labor Contractor.

The workers were then dismissed from their jobs and denied entrance to the

glass factory despite their regularly reporting for work. A complaint was filed

for illegal dismissal and unfair labor practices.

Issue:

Whether or not there was employer-employee (ER-

EE)relationship between the workers and San Miguel Corp.

Held:

YES. In determining if there is an existence of the (ER-EE)

relationship, the four-fold test was used by the Supreme Court. In the case,

the records fail to show that San Miguel entered into mere oral agreements

of employment with the workers. Considering the length of time that the

petitioners have worked with the company, there is justification to conclude

that they were engaged to perform activities necessary in the usual business

or trade. Despite past shutdowns of the glass plant, the workers promptly

returned to their jobs. The term of the petitioners employment appears

indefinite and the continuity and habituality of the petitioners work bolster

the claim of an employee status.

As for the payment of the workers wages, the contention that the

independent contractors were paid a lump sum representing only the

salaries the workers were entitled to have no merit. The amount paid by San

Miguel to the contracting firm is no business expense or capital outlay of the

latter. What the contractor receives is a percentage from the total earnings

of all the workers plus an additional amount from the earnings of each

individual worker.

The power of dismissal by the employer was evident when thepetitioners had already been refused entry to the premises. It is apparen

that the closure of the warehouse was a ploy to get rid of the petitioners,

who were then agitating the company for reforms and benefits.

The inter-office memoranda submitted in evidence prove the

companys control over the workers. That San Miguel has the power to

recommend penalties or dismissal is the strongest indication of the

companys right of control over the workers as direct employer.

13. Broadway Motors, Inc vs NLRC 169 scra 841

FACTS

By virtue of a written undated "Work Contract," private

respondent Vicente Apolinario, sometime in March 1967, began work as an

auto painter in the premises

of petitioner Broadway Motors, Inc. Apolinario worked as an auto painter fo

a period of eighteen (18) years, until 23 January 1985 when he was barred

from entering the premises of petitioner, and his relationship with it

effectively terminated, because of his alleged involvement in a fistfight with

the shop superintendent, Apolinario complained for illegal dismissal. The

Labor Arbiter (LA) dismissed the complaint on the ground that Apolinario

having supplied the workers-himself included-who performed the auto

painting jobs for petitioner, was a mere contractor thus not to be considered

as the latter's employee. Apolinario appealed to the NLRC. NLRC found that

there was a valid and binding employer-employee relationship. Since

Apolinario was dismissed without any investigation by petitioner Corporation

to ascertain his participation in the fistfight within company premises, his

dismissal was, illegal.

ISSUE

Whether or not the termination was valid or illegal.

HELD

YES. The dismissal is illegal. Firstly, there is an employer-employee

relationship and whenever there is such the employer cannot just validly

terminate the services of an employee without just cause. The petitioner

insists that there is a valid labor contract to justify its act of unilaterally

dismissing the services of Apolinario et. al. which he cannot do if there is a

valid and binding employer-employee relationship. Apolinario was hired

directly by petitioner to work as an auto painter, evidenced by the undated

Work Contract. That petitioner reserved unto itself the power of dismissal is

evident from the fact that petitioner unilaterally undertook to terminate

Apolinario's relationships with itself. Such act of termination is unjustified forbeing in contravention of the procedural due process which is accorded to

employees to safeguard their constitutionally protected right of security o

tenure. Even though it appears that he was the one who supplied the labor

their performance and work were closely supervised by the petitioner's

supervisior. Petitioner Corporation was the one who supplied all the tools

necessary for Apolinario and his men to carry out assigned painting jobs

There was, furthermore, no evidence adduced by petitioner to show that

Apolinario had substantial capital investment. We conclude that while there

is present in the relationship between petitioner Corporation and private

respondent some factors suggestive of an owner-independent contracto

relationship (e.g., the manner of payment of compensation to Apolinario and

his 'Contract Workers"), many other factors are present which demonstrate

that the relationship is properly characterized as one of employer-employee.

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14. Beta Electric Corporation vs NLRC GR No. 86408

FACTS

The petitioner hired the private respondent as clerk typist III

effective December 15, 1986 until January 16, 1987, and was subsequently

rehired on January 16, 1987 up to February 15, 1987. On February 15, 1987,

it gave her another extension up to March 15, 1987. On March 15, 1987, it

gave her a further extension until April 30,

1987. On May 1, 1987, she was given until May 31, 1987. On June 1, 1987,

she was given up to June 30, 1987. Her appointments were covered by

corresponding written contracts. On June 22, 1987, her services were

terminated without notice or investigation. On the same day, she went to the

labor arbiter on a complaint for illegal dismissal. As the court has indicated,

both the labor arbiter and the respondent National Labor Relations

Commission ruled for her. The petitioner argues mainly that the private

respondent's appointment was temporary and hence she may be terminated

at will.

ISSUE

Whether or not private respondent is temporary employee.

HELD

NO. The private respondent was to all intents and purposes, and

at the very least, a probationary employee, who became regular upon the

expiration of six months. Under Article 281 of the Labor Code, a probationary

employee is "considered a regular employee" if he has been "allowed to

work after the probationary period." The fact that her employment has beena contract-to- contract basis can not alter the character of employment,

because contracts can not override the mandate of law. Hence, by operation

of law, she has become a regular employee. In the case at bar, the private

employee was employed from December 15, 1986 until June 22, 1987 when

she was ordered laid off. Her tenure having exceeded six months, she

attained regular employment.

15. Tabas vs California Manufacturing Co. Inc. 169 SCRA 497

FACTS

Petitioners were the employees of Livi Manpower Services. They

were assigned tothe respondent pursuant to a manpower supply agreement

as promotional merchandisers. It was provided in the agreement that: 1)

California would have no control or supervision over the workers as to how

they perform or accomplish their work, Livi is an independent contractor

and that it has the sole responsibility of complying with all the existing as

well as future laws, rules and regulations pertinent to employment of labor,

3) the assignment to California was seasonal and contractual, and 4)

payroll, including COLA and holiday pay shall be delivered Livi at Californias

premises. Petitioners were made to sign 6-month employment contracts

which were renewed for the same period. Unlike regular employees of

California, they did not receive fringe benefits and bonuses and were paid

only a daily allowance. Petitioners contend that they have become regular

employees of California. Subsequent to their claim for regularization,

California no longer re-hired them. Livi, on the other hand, claims the

workers as its employees and that it is an independent contractor. Labor

Arbiter found that no employer-employee relationship existed. The NLRC

affirmed the ruling.

ISSUE

Is there an employer-employee relationship between California and the

petitioners?

HELD

YES. The existence of an employer-employee relationship is a

question of law and cannot be made subject to agreement. The stipulations

in the manpower supply agreement will not erase either partys obligations

as an employer. Livi is a labor-only contractor, notwithstanding the

provisions in the agreement. The nature

of ones business is not determined by self-serving appellations but by test

provided by statute and the prevailing case law. Californias contention that

the workers are not performing activities which are directly related to its

general business of manufacturing is untenable. The promotion or sale of

products, including the task of occasional price tagging, is an integral part of

the manufacturing business. Livi as a placement agency had simply supplied

the manpower necessary for California to carry out its merchandising

activities, using the latters premises and equipment. Merchandising i

likewise not a specific project because it is an activity

related to the day-to-day operations of California. Based on Article 106 of the

Labor Code, the labor-only contractor is considered merely an agent of the

employer and liability must be shouldered by either one or by both

Petitioners are ordered reinstated as regular employees.

16. FLores VS Nuestro 160 SCRA 568

FACTS

The petitioner, Herminio Flores and his wife, worked fo

respondent, Fortunato Nuestro in his funeral parlor since June 1976 as

helper-utility man and as

bookkeeper and cahier respectively. On October 7, 1980, respondent

registered the petitioner spouses with the SSS, as his employee. Thereafter

the spouses received an increase in their respective salaries. On October 30

1982, Herminio and Nuestro had an altercation, during which the latte

physically assaulted the former. Herminio then filed a complaint for physica

injuries against Nuestro. As a result of the incident, the Flores family had to

leave their quarters at the funeral

parlor and seek protection from the Pilar, Bataan Police. Thereafter

petitioners filed illegal dismissal charges against respondent. On the part of

the respondent, he denied the existence of employer-employee relationship

and further alleged that petitioners were the ones to voluntarily abandon

their work

ISSUE

Was there an employee-employer relationship in this case?

HELD

YES. There was an employee-employer relationship. That the

respondent registered the petitioners with the Social Security System is proof

that they were indeed his employees. The coverage of the Social Security

Law is predicated on the existence of an employer-employee relationship.

17. Continental Marble VS NLRC 161 SCRA 151

FACTS

Rodito Nasayao claimed that sometime in May 1974, he was

appointed plant manager of Continental Marble with an alleged

compensation of P3,000.00 a month or 25% of the monthly net income o

the company, whichever is greater. When the company failed to pay hissalary for the months of May, June and July 1974, Nasayao filed a complaint

with NLRC. Continental Marble denied that Rodito Nasayao was it

employee. They claimed that the undertaking agreed by the parties was a

joint venture, a sort of partnership, wherein Nasayao was to keep the

machinery in good working condition and in return, he would get the

contracts from end-users for the installation of marble products, in which the

company would not interfere. In addition, Nasayao was to receive an amount

equivalent to 25% of the net profits that the petitioner corporation would

realize, should there be any. Since there had been no profits during said

period, private respondent was not entitled to any amount.

ISSUE

Whether or not the private respondent Nasayao was employed as

plant manager of petitioner Continental Marble Corporation.

HELD

NO. There was nothing in the record which would support the

claim of Rodito Nasayao that he was an employee of the petitioner

corporation. He was not included in the company payroll nor in the list of

company employees furnished by the Social Security System. Most of all the

element of control is lacking. It appears that the petitioner had no contro

over the conduct of Rodito Nasayao in the performance of his work. He

decided for himself on what was to be done and worked at his own pleasure

He was not subject to indefinite hours or conditions of work and in turn was

compensated according to the results of his on effort. He has a free hand in

running the company and its business, so much so, that the petitioner did not

know until very later that Nasayao collected old accounts receivables, no

covered by their agreement, which he converted to his personal use.

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18. SMC vs NLRC 174 SCRA 510

FACTS

The complainants were former securtiy guards of the petitioner

which dismissed them for falsification of their time cards. They made false

entries in their time cards showing tha they reported for work on February

19 and 20, 1983 when the truth was that they went on a hunting trip to San

Juan, Batangas, with their chief, Major Martin Asaytuno, then head of the

Adminsitrative Services Department of the Securtiy Directorate of the

petitioner. The Labor Arbiter found that the complainants did go on a

hunting trip upon the invitation of their department head, Major Asaytuno.

They went along to please him because they believed that his invitation was

equivalent to a command. Being an army man, Asaytuno expected total

obedience from his subordinates. But the Labor Arbiter as well as the NLRC

reinstated the complainants on the ground that the complainants were not

guilty of serious misconduct, fraud, and willful breach of trust.

ISSUE

Whether or not complainants are guilty of serious misconduct.

HELD

Although it may be conceded that the private respondents acted

under some degree of moral compulsion when they agreed to accompany

Major Asaytuno on a hunting trip, they were certainly under no compulsion

from him to falsify their time cards and thereby defraud the company by

collecting wages for the dates whey they did not report for work. The

falsification and fraud which the private respondents committed against their

employer were inexcusable. Their acts constituted dishonesty and seriousmisconduct, lawful grounds for their dismissal under Art 282 subpars. (a) and

(c)of the Labor Code.

19. Mabeza vs NLRC 271 scra 670

FACTS

Norma Mabeza was an employee of Hotel Supreme in Baguio City.

Sometime around May 1991, she and her co-employees were asked by the

hotels

management to sign an instrument attesting to the latters compliance with

minimum wage order and other labor standard provisions of law. Mabeza

signed the affidavit but refused to go to the Prosecutors Office to swear to

the veracity of its contents. The affidavit was drawn by the management was

for the purpose of refuting the findings of the Labor Inspector of DOLE in an

inspection conducted in the establishment of the private respondent. After

Mabeza refused to proceed to the Prosecutors Office, she was ordered by

management to turn over the keys to her living quarters and to remove all

her belongings from the hotel premises. She thereafter filed a leave of

absence which was denied by management. When she attempted to return

to work of May 10, 1991, she was advised to just continue

with her unofficial leave of absence. Petitioner filed a complaint for illegal

dismissal. She alleged in her complaint the underpayment of wages, non-

payment of holiday pay, service incentive leave pay, 13th month pay, night

differential and other benefits. Private respondent avers on the other hand

that petitioner abandoned her job without notice to management. They also

contend that there was no basis for the money claim for underpayment and

other benefits as these were paid in the form of facilities to petitioner and

the hotels other employees.

ISSUE

Whether or not the wages received by the employees of privaterespondent are below the minimum set by law.

HELD

YES. The Labor Arbiter accepted hook, line and sinker the private

respondents bare claim that the reason the monetary benefits received by

petitioner between 1981 to 1987 were less than the minimum wage was

because petitioner did not factor in the meals, lodging, electric consumption

and the water she received during the period in her computations. Granting

that means and lodging were provided and indeed constituted facilities, such

facilities could not be deducted without the employer complying first with

certain legal requirements. Without satisfying these requirements, the

employer simply cannot deduct the value from the employees wages. First

proof must be shown that such facilities are customarily furnished by the

trade. Second, the provision of deductible facilities must be voluntarily

accepted in writing by the employee. Finally, facilities must be charged at fair

and reasonable value. These requirements were not met in the instance

case. More significantly, the food and lodging or the electricity and wate

consumed by the petitioner were not facilities but supplements. A benefit o

privilege granted to an employee for the convenience of the employer is not

a facility. The criterion in making a distinction between the two not so much

lies in the king (food, lodgingn) but the purpose. Considering therefore, tha

hotel workers are required to work different shifts and are expected to be

available at various odd hours, their ready availability is necessary matter in

the operations of a small hotel, such as the private respondents hotel.

19. Eagle Security Agency vs NLRC 173 SCRA 479

FACTS:

Employees of Eagle Security Agency, security guards in the

Philippine Tuberculosis Society, Inc.,filed a complaint against ESA and PTSI fo

unpaid wage increases granted under four wage orders. PTSIalleged that the

wage increases should be borne exclusively by ESA, pursuant to the provision

in theircontract, while the latter contended that, under the wage orders, the

former should be held liable for thesame.

ISSUE:

WON ESA and PTSI should be jointly and severally liable for the

wage increases.

HELD:

YES. The joint and several liability of the contractor and the

principal is mandated by the LaborCode to assure compliance of the

provisions therein including the statutory minimum wage. The contractori

made liable by virtue of his status as direct employer. The principal, on theother hand, is made theindirect employer of the contractor's employees fo

purposes of paying the employees their wages shouldthe contractor be

unable to pay them. The solidary liability, however, does not preclude the

right ofreimbursement from the co-debtor by the one who paid.

20. Alliance Trade Unions vs NLRC GR No. 140689

FACTS:

The Board of Directors of Bankard, Inc. approved a New Salary

Scale, which increased the hiring wage of new employees and, consequently,

adjusted the salaries of the employees who fell below the new wage.

Bankard Employees Union-WATU requested BI to increase in the salary of its

old, regular employees, but the latter refused.

ISSUE:

WON there was wage distortion, which should be corrected.HELD:

NO. There are four elements of wage distortion: (1) an existing

hierarchy of positions with corresponding salary rates; (2) a significant

change in the salary rate of a lower pay class without a concomitant increase

in the salary rate of a higher one; (3) the elimination of the distinction

between the two levels; and (4) the existence of the distortion in the same

region of the country. The entry of new employees to the company ipso facto

places them under any of the levels mentioned in the new salary scale.

The mere factual existence of wage distortion does not ipso facto

result to an obligation to rectify it, absent a law or other source of obligation

which requires its rectification.

21. KILU VS Drilon

FACTS Kimberly-Clark Philippines, Inc. (KIMBERLY, for brevity) executed a

three-year collective bargaining agreement (CBA) with United Kimberly-Clark

Employees Union-Philippine Transport and General Workers' Organization

(UKCEU-PTGWO) which expired on June 30, 1986. Within the 60-day freedom

period prior to the expiration of and during the negotiations for the renewa

of the aforementioned CBA, some members of the bargaining unit formed

another union called "Kimberly Independent Labor Union for Solidarity

Activism and Nationalism- Organized Labor Association in Line Industries and

Agriculture (KILUSAN-OLALIA). On April 21, 1986, KILUSAN-OLALIA filed a

petition for certification election in the Ministry of Labor and Employment

(MOLE). KIMBERLY and (UKCEU-PTGWO) did not object to the holding of a

certification election but objected to the inclusion of the so-called

contractual workers whose employment with KIMBERLY was coursed

through an independent contractor, Rank Manpower Company (RANK fo

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short), as among the qualified voters. On June 2, 1986, Med-Arbiter Bonifacio

Marasigan, who was handling the certification election case, issued an order

declaring those casuals who have worked at least six (6) months as appearing

in the payroll months prior to the filing of the instant petition on April 21,

1986 as eligible to vote in the certification election. During the pre-election

conference, 64 casual workers were challenged by KIMBERLY and (UKCEU-

PTGWO) on the ground that they are not employees, of KIMBERLY but of

RANK. It was agreed by all the parties that the 64 voters shall be allowed to

cast their votes but that their ballots shall be segregated and subject to

challenge proceedings. On July 2, 1986, KILUSAN-OLALIA filed with the med-

arbiter a "Protest and Motion to Open and Count Challenged Votes" on the

ground that the 64 workers are employees of KIMBERLY within the meaning

of Article 212(e) of the Labor Code. On July 7, 1986, KIMBERLY filed an

opposition to the protest and motion, asserting that there is no employer-

employee relationship between the casual workers and the company. On

November 13, 1986, then Minister Sanchez rendered a decision declaring

that the other casual employees not performing janitorial and yard

maintenance services were deemed labor-only contractual and since labor-

only contracting is prohibited, such employees were held to have attained

the status of regular employees, the regularization being effective as of the

date of the decision. On November 25, 1986, KIMBERLY filed a motion for

reconsideration with respect to the regularization of contractual workers.

ISSUE

Whether those engaged in janitorial or yard maintenance as well

as the other casual employees attained the status of regular employee on

November 13, 1986.

HELD

YES. The law thus provides for two kinds of regular employees,

namely: 1. those who are engaged to perform activities which are usually

necessary or

desirable in the usual business or trade of the employer; and 2. those who

have rendered at least one year of service, whether continuous or broken,

with respect to the activity in which they are employed. The individual

petitioners herein who have been adjudged to be regular employees fall

under the second category. These are the mechanics, electricians, machinists

machine shop helpers, warehouse helpers, painters, carpenters, pipefitters

and masons. It is not disputed that these workers have been in the employ of

KIMBERLY for more than one year at the time of the filing of the Petition for

certification election by KILUSAN-OLALIA. Owing

to their length of service with the company, these workers became regular

employees, by operation of law, one year after they were employed by

KIMBERLY through RANK. While the actual regularization of these employeesentails the mechanical act of issuing regular appointment papers and

compliance with such other operating procedures as may be adopted by the

employer, it is more in keeping with the intent and spirit of the law to rule

that the status of regular employment attaches to the casual worker on the

day immediately after the end of his first year of service. To rule otherwise,

and to instead make their regularization dependent on the happening of

some contingency or the fulfillment of certain requirements, is to impose a

burden on the employee which is not sanctioned by law. That the first stated

position is the situation contemplated and sanctioned by law is further

enhanced by the absence of a statutory limitation before regular status can

be acquired by a

casual employee. The law is explicit. As long as the employee has rendered at

least one year of service, he becomes a regular employee with respect to the

activity in which he is employed. The law does not provide the qualification

that the employee must first be issued a regular appointment or must first beformally declared as such before he can acquire a regular status. Obviously,

where the law does not distinguish, no distinction should be drawn.

22. Coca Cola Phil. vs Dela Cruz GR No. 184977

FACTS

Respondents Dela Cruz and company filed complaints with money

claims for regularization against Coca-Cola Bottlers (company) and Peers

Integrated Service (contractor1). Respondents claim to be regular employees

based on the fact that they are route helpers which are necessary and

desirable to regular business of the employer. They also claimed that they

worked under the control and supervision of the company while the

contractors did not have sufficient capital making said contract a labor-only

contract. The company denied the relationship stating that they entered into

contracts of services with Peers and Excellent (contractor2) who retained the

right to select, hire, dismiss, supervise, control and discipline and pay the

salaries of all personnel. They also pointed out that they are in the business

of manufacturing, not distribution, hence not necessary and desirable

ISSUE:

W/N the CA erred in holding that there was an ER-EE. (NO)

HELD:

The CA noted that both the contracts for Peerless and the

Excellent show that their obligation was solely to provide the company with

the services of contractual employees, and nothing more. These contracted

services were for the handling and delivery of the companys products and

allied services. Following D.O. 18-02 and the contracts that spoke purely o

the supply of labor. The case of Magsalin described in a very significant way

the manufacture of soft drinks and the

companys sales and distribution activities in relation with one another. The

CA was correct when it concluded that the contracted personnel who served

as route helpers were really engaged in functions directly related to the

overall business of the petitioner. This led to the further CA conclusion that

the contracted personnel were under the companys supervision and contro

since sales and distribution were in fact not the purported contractors

independent, discrete and separable activities, but were component parts o

sales and distribution operations that the company controlled in its sof

drinks business.

23. Coca Cola Phil vs Agito GR No. 179546

FACTS:

Petitioner (Coke) is a domestic corporation engaged in

manufacturing, bottling and distributing soft drink beverages and other allied

products. Respondents were salesmen assigned at Coke Lagro Sales Office

for years but were not regularized. Coke averred that respondents were

employees of Interserve who were tasked to perform contracted services in

accordance with the provisions of the Contract of Services executed between

Coke and Interserve on 23 March 2002. Said Contract constituted legitimate

job contracting, given that the latter was a bona fide independent contracto

with substantial capital or investment in the form of tools, equipment, and

machinery necessary in the conduct of its business.

To prove the status of Interserve as an independent contractor

petitioner presented the following pieces of evidence: (1) the Articles o

Incorporation of Interserve; (2) the Certificate of Registration of Interservewith the Bureau of Internal Revenue; (3) the Income Tax Return, with

Audited Financial Statements, of Interserve for 2001; and (4) the Certificate

of Registration of Interserve as an independent job contractor, issued by the

Department of Labor and Employment (DOLE). As a result, petitione

asserted that respondents were employees of Interserve, since it was the

latter which hired them, paid their wages, and supervised their work, as

proven by: (1) respondents Personal Data Files in the records of Interserve

(2) respondents Contract of Temporary Employment with Interserve; and (3

the payroll records of Interserve.

ISSUE:

Whether or not an employer-employee relationship exist

between petitioner Coca-Cola Bottlers Phils. Inc. and respondents.

HELD:

With the finding that Interserve was engaged in prohibited laboronly contracting, petitioner shall be deemed the true employer o

respondents. As regular employees of petitioner, respondents cannot be

dismissed except for just or authorized causes, none of which were alleged o

proven to exist in this case, the only defense of petitioner against the charge

of illegal dismissal being that respondents were not its employees. Records

also failed to show that petitioner afforded respondents the twin

requirements of procedural due process, i.e., notice and hearing, prior to

their dismissal. Respondents were not served notices informing them of the

particular acts for which their dismissal was sought. Nor were they required

to give their side regarding the charges made against them. Certainly, the

respondents dismissal was not carried out in accordance with law and

therefore, illegal.

24. Babas vs Lorenzo Shipping Corp. GR No. 186091

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FACTS:

Lorenzo Shipping Corporation (LSC) is a duly organized domestic

corporation engaged in the shipping industry. LSC entered into a General

Equipment Maintenance Repair and Management Services Agreement

(Agreement) with Best Manpower Services, Inc. (BMSI). Under the

Agreement, BMSI undertook to provide maintenance and repair services to

LSCs container vans, heavy equipment, trailer chassis, and generator sets.

BMSI further undertook to provide checkers to inspect all containers

received for loading to and/or unloading from its vessels. Simultaneous with

the execution of the Agreement, LSC leased its equipment, tools, and

tractors to BMSI. The period of lease was coterminous with the Agreement.

BMSI then hired petitioners on various dates to work at LSC as checkers,

welders, utility men, clerks, forklift operators, motor pool and machine shop

workers, technicians, trailer drivers, and mechanics. In September 2003,

petitioners filed with the Labor Arbiter (LA) a complaint for regularization

against LSC and BMSI. On October 1, 2003, LSC terminated the Agreement,

effective October 31, 2003. Consequently, petitioners lost their

employment. BMSI asserted that it is an independent contractor. It averred

that it was willing to regularize petitioners; however, some of them lacked

the requisite qualifications for the job. LSC averred that petitioners were

employees of BMSI and were assigned to LSC by virtue of the Agreement.

BMSI is an independent job contractor with substantial capital or investment

in the form of tools, equipment, and machinery necessary in the conduct of

its business. The Agreement between LSC and BMSI constituted legitimate

job contracting. Thus, petitioners were employees of BMSI and not of LSC.

The Labor Arbiter dismissed petitioners complaint on the ground thatpetitioners were employees of BMSI. It was BMSI which hired petitioners,

paid their wages, and exercised control over them. The NLRC reversed the

Labor Arbiter

Issue:

Whether or not respondent was engaged in labor-only contracting.

Held:

Yes. In De Los Santos v. NLRC, the character of the business, i.e.,

whether as labor-only contractor or as job contractor, should be measured in

terms of, and determined by, the criteria set by statute. The parties cannot

dictate by the mere expedience of a unilateral declaration in a contract the

character of their business.The CA erred in considering BMSIs Certificate ofRegistration as sufficient proof that it is an independent contractor.

Jurisprudence states that a Certificate of Registration issued by the

Department of Labor and Employment is not conclusive evidence of suchstatus. The fact of registration simply prevents the legal presumption of

being a mere labor-only contractor from arising.

25. Sevilla Trading Co. vs Semana, 428 scra 239

FACTS:

On appeal is the Decision of the Court of Appeals (CA) sustaining

the sustaining the Decision of Accredited Voluntary Arbitrator Tomas E.

Semana.

For two to three years prior to 1999, petitioner Sevilla Trading Company

(Petitioner), a domestic corporation engaged in trading business, organized

and existing under Philippine laws, added to the base figure, in its

computation of the 13th-month pay of its employees, the amount of other

benefits received by the employees which are beyond the basic pay.

Petitioner claimed that it entrusted the preparation of the payroll to its officestaff, including the computation and payment of the 13th-month pay and

other benefits. When it changed its person in charge of the payroll in the

process of computerizing its payroll, and after audit was conducted, it

allegedly discovered the error of including non-basic pay or other benefits in

the base figure used in the computation of the 13th-month pay of its

employees. It cited the Rules and Regulations Implementing P.D. No. 851

which stated:Basic salary shall include all remunerations or earnings paid by

an employer to an employee for services rendered but may not include cost-

of-living allowances granted pursuant to P.D. No. 525 or Letter of Instruction

No. 174, profit-sharing payments, and all allowances and monetary benefits

which are not considered or integrated as part of the regular or basic salary

of the employee at the time of the promulgation of the Decree on December

16, 1975.Petitioner then effected a change in the computation of the

thirteenth month pay, as follows: 13th-month pay = net basic pay Hence, the

new computation reduced the employees thirteenth month pay. The daily

piece-rate workers represented by private respondent Sevilla Trading

Workers Union SUPER (Union, for short), a duly organized and registered

union, through the Grievance Machinery in their Collective Bargaining

Agreement, contested the new computation and reduction of thei

thirteenth month pay. The parties failed to resolve the issue. The Union

alleged that petitioner violated the rule prohibiting the elimination o

diminution of employees benefits as provided for in Art. 100 of the Labor

Code, as amended. They claimed that paid leaves, like sick leave, vacation

leave, paternity leave, union leave, bereavement leave, holiday pay and

other leaves with pay in the CBA should be included in the base figure in the

computation of their 13th-month pay.

ISSUE:

WONa voluntary act of the employer which was favorable to the

employees though not conforming to law, has ripened into a practice and

therefore can be withdrawn, reduced, diminished, discontinued o

eliminated?

HELD:

NO. As such the SC affirms the decision of the Accredited

Voluntary Arbitrator Tomas E. Semana granting to pay corresponding back

wages to all covered and entitled employees arising from the exclusion o

said benefits in the computation of 13th-month pay. With regard to the

lenght of time the company practice should have been exercised to

constitute voluntary employer practice which cannot be unilaterally

withdrawn by the employer. In the case at bar

26. Nestle Philippines VS NLRC 193 scra 504

FACTS

After the four (4) bargaining agreements separately covering Nestle

Philippines employees expired, the Union of Filipro Employees (UFE) wa

certified the sole and exclusive bargaining agent for all rank-and-file

employees at the Cagayan de Oro factory as well as in the Cebu/Davao Sale

Office. During negotiations, the employees at the Cabuyao factory resorted

to a slowdown and walkouts prompting the petitioner to shut down the

factory. Thereafter, UFE declared a bargaining deadlock. On September 2

1987, the Secretary of Labor assumed jurisdiction and issued a return to

work order. In spite of that order, the union struck without notice in

Alabang/Cabuyao factory, the Cagayan de Oro factory and Makati office. The

company dismissed the union officers and members of the negotiating pane

who participated in the illegal strike. On March 30, 1988, the petitioner were

able to conclude a CBA with the union at theCebu/Davao Sales office and on August 5, 1988 with the Cagayan de Oro

factory workers. UFE assailed the validity of the agreements and filed a case

of unfair labor practice against Nestle. After the conciliation efforts of the

National Conciliation and Mediation Board yielded negative results, the

dispute was certified to the NLRC by the Secretary of Labor.

The NLRC issued a resolution regarding the retirement plan of the worker

which provides:

a. For 15 years of service or less = 100% of the employees monthly salary for

year of service

b. More than 15 but less than 20 = 125% of the employees monthly salary

for

year of service

c. 20 years or more = 150% of the employees monthly salary for year of

service

Petitioner questions the retirement plan contending that since i

is non-contributory, Nestle has the sole and exclusive prerogative to define

the terms of the plan because workers have no vested and demandable

rights thereunder, the grant thereof being not contractual but gratuitous.

ISSUE

Whether or not Nestle has the sole and exclusive prerogative to

define the terms of the plan being non-contributory.

HELD

NO. The companys contention that the retirement plan is non

negotiable, is not well taken. The inclusion of the retirement plan in the

collective bargaining agreements part of the package of economic benefit

extended by the company to its employees to provide them a measure o

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financial security after they shall have ceased to be employed in the

company, reward their loyalty, boost their morale and efficiency and

promote industrial peace, gives a contractual character to the plan so that it

may not be terminated or modified at the will by either party. The

petitioners contention that employees have no vested or demandable right

to a noncontributory retirement plan, has no merit for employees do have a

vested and demandable right over existing benefits voluntarily granted to

them by their employer. The latter may not unilaterally withdraw, eliminate

or diminish such benefits.

27. Davao Fruits Corporation vs Associated Labor Union 225 scra 562

Facts:

Respondent ALU for and in behalf of all the rank-and-file workers

and employees of petitioner sought to recover from the latter the 13th

month pay differential for 1982 of said employees, equivalent to their sick,

vacation and maternity leaves, premium for work done on rest days and

special holidays, and pay for regular holidays which petitioner, allegedly in

disregard of company practice since 1975, excluded from the computation of

the 13th month pay for 1982.

Issue:

WON in the computation of the 13th month pay under PD No.

851, payments for sick, vacation and maternity leaves, premiums for work

done on rest days and special holidays, and pay for regular holidays may be

excluded in the computation and payment thereof.

Held:Yes. Basic salary does not merely exclude the benefits expressly

mentioned but all payments which may be in the form of fringe benefits or

allowances.

Sec. 4 of the Supplementary Rules and Regulations Implementing PD No. 851

provides that overtime pay, earnings and other remunerations which are

not part of the basic salary shall not be included in the computation of the

13th month pay.

Whatever compensation an employee receives for an 8 hour work daily or

the daily wage rate is the basic salary. Any compensation or remuneration

other than the daily wage rate is excluded. It follows therefore, that

payments for sick, vacation and maternity leaves, premiums for work done

on rest days and special holidays, as well as pay for regular holidays, are

likewise excluded in computing the basic salary for the purpose of

determining the 13th month pay.

28. Davao Integrated Port Stevedoring Services vs Abarqyez 220 scra 197

Facts

Company provided for sick leave benefits for its employees,

convertible to cash. Both regular employees and workpool employees enjoy

said benefits. However, the employer withdrew this benefit from the

workpool.

Issue:

Are the irregular workers are entitle to commutation of their

unenjoyed sick leave with pay benefits?

Held: Yes. The CBA was clear: the CBA considers two kinds of workers

who enjoy the sick leave benefits:

* REGULAR EMPLOYEES enjoy the 15-day fixed sick leave

* INTERMITTENT EMPLOYEES enjoy variable number of sick leave but should

not exceed 15 days

It is not disputed that both classes of workers are entitled to sick

leave with pay benefits provided they comply with the conditions set forth

under Section 1 in relation to the last paragraph of Section 3, to wit:

(1) the employee-applicant must be regular or must have rendered at least

one year of service with the company; and

(2) the application must be accompanied by a certification from a company-

designated physician.

Since this ripened into company practice, it cannot be unilaterally

withdrawn by the employer - or else violation of LC when an existing

employer practice becomes an enforceable right: a considerable amount o

time has lapsed and said act has been practiced or exercised or done by the

employer.

29. Globe Mackay Cable vs NLRC 163 scra 71

FACTS

Wage Order No. 6 increased the cost-of-living allowance of non

agricultural workers in the private sector. Petitioner corporation (GMCR

complied with the said Wage Order by paying its monthly-paid employees

the mandated P3.00 per day COLA. However, in computing said COLA, GMCR

multiplied the P3.00 daily COLA by 22 days, which is the number of working

days in the company. Respondent Union disagreed with the computation o

the monthly COLA claiming that the daily COLA rate of P3.00 should be

multiplied by 30 days to arrive at the monthly COLA rate. The union alleged

furthermore that prior to the effectivity of Wage Order No. 6, GMCR had

been computing and paying the monthly COLA on the basis of thirty (30) day

per month and that this constituted an employer practice, which should not

be unilaterally withdrawn. The Labor Arbiter ruled that the monthly COLA

should be computed on the basis of twenty two (22) days, since the evidence

showed that there are only 22 paid days in a month for monthly-paid

employees in the company. To compel the respondent company to use 30

days in a month to compute the allowance and retain 22 days for vacation

and sick leave, overtime pay and other benefits is inconsistent and palpably

unjust. If 30 days is used as divisor, then it must be used for the computation

of all benefits, not just the allowance. But this is not fair to complainants, notto mention that it will contravene the provision of the parties' CBA. However

the NLRC reversed the Labor Arbiter and held that petitioner was guilty o

illegal deductions, upon the following considerations: (1) that the P3.00 daily

COLA should be paid and computed on the basis of thirty (30) days instead o

twenty two (22) days since workers paid on a monthly basis are entitled to

COLA on Saturdays, Sundays and legal holidays "even if unworked;" (2) that

the full allowance enjoyed by monthly-paid employees before the CBA

executed in 1982 constituted voluntary employer practice, which cannot be

unilaterally withdrawn.

ISSUES

Can the COLA be unilaterally withdrawn by the employer?

HELD

Payment in full by petitioner of the COLA before the execution o

the CBA in 1982 and in compliance with Wage Orders Nos. 1 (26 March 1981

to 5 (11 June 1984), should not be construed as constitutive of voluntaryemployer practice, which cannot now be unilaterally withdrawn by

petitioner. To be considered as such, it should have been practiced over a

long period of time, and must be shown to have been consistent and

deliberate. Adequate proof is wanting in this respect. The test of long

practice has been enunciated in Oceanic Pharmaceutical Employees Union

vs. Inciong such that respondent company agreed to continue giving holiday

pay knowing fully well that said employees are not covered by the law

requiring payment of holiday pay." Absent clear administrative guidelines

petitioner cannot be faulted for erroneous application of the law. Paymen

may be said to have been made by reason of a mistake in the construction o

application of a "doubtful or difficult question of law." Since it is a past erro

that is being corrected, no vested right may be said to have arisen nor any

diminution of benefit under Article 100 of the Labor Code may be said to

have resulted by virtue of the correction.

30. Asis vs Minister of Labor 171 scra 237

Facts:

The petitioner was the appointed Legal Counsel of the Centra

Azucarera de Pilar Later on, concurrently with his position as Legal Counsel

he was named Head of its Manpower and Services Department. In addition

to his basic salaries and other fringe benefits, his employer granted him, and

a few other officials of the company, a monthly ration of 200 liters of

gasoline and a small tank of liquefied petroleum gas (LPG). This monthly

ration was temporarily revoked some five (5) years later as a form of cos

reduction measure. He filed a case with the Ministry of Labor, who in turn

rendered a judgment in his favor, however when it was found that he was

responsible for provoking other employees to file actions against his

employer, the Ministry of Labor reversed its decision. The private respondent

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