1) Escario VS NLRC 333 SCRA 257

WON there was an employer-employee relationship.

Facts:

Held:

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 Labor
Arbiter 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.

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.

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 to
the 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) CORPORALSR.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 business
losses. 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 employeremployee relationship. Also that the business was closed due to serious
business losses or financial 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:

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 order
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 further
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 of
segregating and cleaning bottles is unarguably an important part of its
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 of
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 recreational
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 petitioner
corporation. Calamba filed a complaint against petitioner corporation with
the ministry of labor (DOLE) for unfair labor practice, illegal dismissal and
non-payment of 13th month pay. The executive labor arbiter ruled in favor of
Calamba, declaring the latter as a regular employee and ordering petitioner
corporation to reinstate Calamba to the position of gardener without loss of
seniority and with full backwages, benefits and privileges from the time of his
dismissal up to the reinstatement including 13th month pay. Petitioner
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 that
Calamba having rendered services as laborer, gardener, and dishwasher for
more than one year, was a regular employee at the time his employment was
terminated. Hence, this petition.
Issue:

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 to
the 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.

were hired by SMC through its agent or intermediary Maerc. They were paid
on a per piece or pakiao basis 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 for
illegal dismissal but held that MAERC and SMC were jointly and severally
liable to pay complainants their wage differentials. The National Labor
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 petitioner
SMC or of respondent MAERC.

4. PAL vs Ligan, 548 scra 181

SC Ruling:
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 (laborerrespondents) 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

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 employeremployee relationship for a comprehensive purpose: to prevent a
circumvention of labor laws. The contractor is considered merely an agent of
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 and
severally pay complainants (private respondents herein) separation benefits
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 private
respondents to perform work at the project. After the completion of the
phase for which Nilo Layno Builders was contracted, private respondents
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 of
respondents, but dismissed the charges for illegal dismissal including their
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,

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

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

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 of
service.
Issue:

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 Layno
Builders 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

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, work
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 of
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 that
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. Their
deployment to FEBTC was not subject to the bank's acceptance. Cabelin was
promoted to messenger because the FEBTC branch manager promised BCC
that 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 cannot
be held to be employees of FEBTC as BCC "carries an independent business"
and undertaken the performance of its contract with various clients
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 Labor
Relations Commission stated that CESI hired Ricardo Orpiada on 25 June
1975 as a Tempo Service employee, and assigned him to work with the
petitioner 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 of
Labor (now Ministry of Labor and Employment) against the petitioner for
illegal dismissal and failure to pay the 13th month pay provided for in
Presidential Decree No. 851. This complaint was docketed as Case No. RO410-10184-76-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.

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-IV1118-77 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 "laboronly" 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 promulgated
on 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 not
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 of
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 aggrieved
workers 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 General
Services (DE LIMA) for the performance of specific janitorial services Pursuant
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, nonpayment 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 labor
contractor. Hence, FILSYN was adjudged liable for Loterte's reinstatement,
payment 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 direct
employer-employee relationship exists between petitioner FILSYN and
private respondent Felipe Loterte. The relationship between petitioner
Filipinas Synthetic Fiber Corporation (FILSYN) and private respondent De Lima
Trading and General Services (DE LIMA) is one of job contractorship.

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 without
prejudice 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 pahinantes or 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
EE)relationship between the workers and San Miguel Corp.

(ER-

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 bolsters
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 the
petitioners had already been refused entry to the premises. It is apparent
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 for
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 for
being in contravention of the procedural due process which is accorded to
employees to safeguard their constitutionally protected right of security of
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 contractor
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.

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 been
a 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.

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 is
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 for
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 latter
physically assaulted the former. Herminio then filed a complaint for physical
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

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

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.

FACTS

17. Continental Marble VS NLRC 161 SCRA 151

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

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 of
the company, whichever is greater. When the company failed to pay his
salary for the months of May, June and July 1974, Nasayao filed a complaint
with NLRC. Continental Marble denied that Rodito Nasayao was its
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 control
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, not
covered by their agreement, which he converted to his personal use.

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.

and reasonable value. These requirements were not met in the instance
case. More significantly, the food and lodging or the electricity and water
consumed by the petitioner were not facilities but supplements. A benefit or
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, that
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 for
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.

HELD

ISSUE:

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 serious
misconduct, lawful grounds for their dismissal under Art 282 subpars. (a) and
(c)of the Labor Code.

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

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, nonpayment 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.

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

ISSUE
Whether or not the wages received by the employees of private
respondent 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

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 renewal
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 for

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 (UKCEUPTGWO) 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 medarbiter 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 employeremployee 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 laboronly 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.

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:

ISSUE

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 of
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 control
since sales and distribution were in fact not the purported contractors
independent, discrete and separable activities, but were component parts of
sales and distribution operations that the company controlled in its soft
drinks business.

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.

23. Coca Cola Phil vs Agito GR No. 179546

HELD

FACTS:

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 employees
entails 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 be
formally 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

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 contractor
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 of
Incorporation of Interserve; (2) the Certificate of Registration of Interserve
with 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, petitioner
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 exists
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 of
respondents. As regular employees of petitioner, respondents cannot be
dismissed except for just or authorized causes, none of which were alleged or
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

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 that
petitioners 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 of
Registration 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 such
status. 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

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 their
thirteenth month pay. The parties failed to resolve the issue. The Union
alleged that petitioner violated the rule prohibiting the elimination or
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 or
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 of
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) was
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 Sales
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 panel
who participated in the illegal strike. On March 30, 1988, the petitioner were
able to conclude a CBA with the union at the
Cebu/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.

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 office
staff, 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 costof-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

The NLRC issued a resolution regarding the retirement plan of the workers
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 it
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 nonnegotiable, is not well taken. The inclusion of the retirement plan in the
collective bargaining agreements part of the package of economic benefits
extended by the company to its employees to provide them a measure of

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?

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 of
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 nonagricultural 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 of
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) days
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, not
to mention that it will contravene the provision of the parties' CBA. However,
the NLRC reversed the Labor Arbiter and held that petitioner was guilty of
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 of
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 of
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 voluntary
employer 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. Payment
may be said to have been made by reason of a mistake in the construction or
application of a "doubtful or difficult question of law." Since it is a past error
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.

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 companydesignated physician.

30. Asis vs Minister of Labor 171 scra 237

Facts:
The petitioner was the appointed Legal Counsel of the Central
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 cost
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

points out that they can no longer accept the petitioner for they have
already lost their trust and confidence in him.

Whether or not the suspension of the monthly ration of fuel and

LPG of the petitioner as a cost-reduction measure would constitute a
diminution of benefits.

workers by reason of their having previously rendered services to their

employer; as such, they fall within the scope of " remuneration or earnings
for services rendered or to be rendered ."Liability for separation pay
might indeed have the effect of penalty, so far as the employer is concerned.
So far as concerns the employees, however, separation pay is additional
remuneration to which they become entitled because, having previously
rendered services, they are separated from the employer's service.

Ruling:

33. DBP vs NLRC 183 328

Issues:

No, the suspension of the monthly ration of fuel and LPG of the
petitioner as a cost-reduction measure would not constitute a diminution of
benefits.
The temporary revocation had been occasioned

FACTS:

Whether or not the company was obliged to grant the wage

increase under the Wage Order issued as a matter of practice
Ruling:
No. It is not obliged to grant the wage increase. The wage order
provides that only those in the private sector in the NCR receiving the daily
minimum wage rate of 223 per day would receive an increase, thereby
setting the wage rate to 250 pesos. There is no dispute that when the wage
order was issued, the lowest paid employee of the company was receiving a
wage higher than 250 pesos. As such, employees had not right to demand for
the increase.

Lirag Textile Mills, Inc. (LIRAG) was a mortgage debtor of DBP.

Private respondent Labor Alliance for National Development (LAND) was the
bargaining representative of the more or less 800 former rank and file
employees of LIRAG. LIRAG started terminating the services of its employees
on the ground of retrenchment. LIRAG has since ceased operations
presumably due to financial reverses. Joselito Albay, one of the employees
dismissed filed a complaint before the National Labor Relations
Commission(NLRC) against LIRAG for illegal dismissal, LAND, on behalf of 180
dismissed members, also filed a Complaint against LIRAG. In a Decision, Labor
Arbiter Apolinar L. Sevilla ordered LIRAG to pay the individual complainants.
The NLRC affirmed. Judgment Writ of Execution was issued. DBP extra
judicially foreclosed the mortgaged properties for failure of LIRAG to pay its
mortgage obligation. As the only bidder at the foreclosure sale, DBP acquired
said mortgaged properties. Since DBP was the sole mortgagee, no actual
payment was made, the amount of the bid having been merely credited in
partial satisfaction of LIRAG's indebtedness. By reason of said foreclosure,
the Writ of Execution issued in favor of the complainants remained
unsatisfied. A Notice of Levy on Execution on the properties of LIRAG was
then entered. library LAND filed a "Motion for Writ of Execution and
Garnishment" of the proceeds of the foreclosure sale. Labor Arbiter Sevilla
granted the Writ of Garnishment and directed DBP to remit to the NLRC the
sum of P6,292,380.00 out of the proceeds of the foreclosed properties of
LIRAG sold at public auction in order to satisfy the judgment previously
rendered.DBP sought reconsideration. Public respondent, Labor Arbiter
Isabel P. Ortiguerra denied reconsideration. DBP appealed that denial to the
NLRC. In the meantime, by virtue of Proclamation Nos. 50 and 50-A, the
Asset Privatization Trust (APT) became the transferee of the DBP foreclosed
assets of LIRAG. A partial Compromise Agreement was entered into between
APT and LAND (Litex Chapter) whereby APT paid the complainantsemployees, ex gratia, the sum of P750,000.00 "in full settlement of their
claims, past and present, with respect to all assets of LITEX transferred by
DBP to APT." That amount was received by LAND's local President. LAND,
through its national President ,NLRC affirmed the appealed Order and
dismissed the DBP appeal.

32. Republic vs Peralta 150 scra 37

ISSUE:

FACTS:

WON the proceeds of LIRAG's properties foreclosed by DBP

should first satisfy the unpaid wages of the workers

31. Pag-asa Steel Work vs CA 486 scra 475

Facts:
RTWPB issued a Wage Order providing for an increase of 13 pesos
in the salaries of employees receiving the minimum wage and a consequent
increase in the rate to 198. Subsequent to this, petitioner-company and the
Union entered into a Collective Bargaining Agreement which granted an
increase of 15 pesos for the first year, 25 for the second year and 30 for the
third year. Months later, a wage order was issued by the NCR providing for a
25 pesos increase in the salary of employees receiving the minimum wage
and increased the minimum wage to 223.50. Petitioner paid the 25 pesos
increase to all its employees. A year after, the employees were granted the
second year increase provided in the CBA. On that same year, a wage order
was issued which provided for the setting of the new minimum wage at
250.00 or an increase of 26 pesos. The Union then requested the company to
implement the latest wage order. Petitioner company rejected, claiming that
since none of the employees were receiving a daily salary rate lower than
250 and there was no wage distortion, it was not obliged to grant the wage
increase.
Issue:

The Republic of the Philippines seeks the review on certiorari of

the Order of the CFI of Manila in its Civil Case No. 108395entitled "In the
Matter of Voluntary Insolvency of Quality Tobacco Corporation, Quality
Tobacco.- In its questioned Order, the trial court held that the above
enumerated claims of USTC and FOITAF (hereafter collectively referred to as
the "Unions") for separation pay of the irrespective members embodied in
final awards of the NLRC whereto be preferred over the claims of the Bureau
of Customs and the BIR. The trial court, in so ruling, relied primarily upon
Article110 of the Labor Code.- The Solicitor General, in seeking the reversal
of the questioned Orders, argues that Article 110 of the Labor Code is not
applicable as it speaks of "wages," a term which he asserts does not include
the
separation pay claimed by the Unions."Separation pay," the Solicitor General
contends: is given to a laborer for a separation from employment computed
on the basis of the number of years the laborer was employed by the
employer; it is a form of penalty or damage against the employer in favor of
the employee for the latter's dismissal or separation from service
ISSUE
WON separation pay is included in the term wages
HELD
YES. For the specific purposes of Article 110 and in the context of
insolvency termination or separation pay is reasonably regarded as forming
part of the remuneration or other money benefits accruing to employees or

Held:
No. The right to preference given to workers under Article 110 of
the Labor Code cannot exist in any effective way prior to the time its
presentation in distribution proceedings. It will find application when, in
proceedings such as insolvency, such unpaid wages shall be paid in full
before the " claims of the Government and other creditors" may be paid But,
for an orderly settlement of a debtors assets. all creditors must be convened,
their claims ascertained and inventoried, and thereafter the preferences
determined in the course of judicial proceedings which have for their object
the subjection of the property of the debtor to the payment oh his debts or
other lawful obligations. Thereby, an orderly determination of preference of
creditors' claims is assured.

X. Songco vs NLRC (183 scra 610)

FACTS:
Zuellig (M) Inc. filed with the Department of Labor (Regional
Office No. 4) a clearance to terminate the services of petitioners Jose Songco,
Romeo Cipres and Amancio Manuel due to alleged financial losses. However,
the petitioners argued that the company is not suffering any losses and the
real reason for their termination was their membership in the union. At the
last hearing of the case, the petitioner manifested that they no longer
contesting their dismissal, however, they argued that they should be granted
a separation pay. Each of the petitioners was receiving a monthly salary of
P40, 000.00 plus commissions for every sale they made. Under the CBA
entered by the Zuellig Inc. and the petitioners, in Article XIV, Section 1(a),
Any employee, who is separated from employment due to old age, sickness,
death or permanent lay-off not due to the fault of said employee shall
receive from the company a retirement gratuity in an amount equivalent to
one months salary per year of service. One month of salary as used in this
paragraph shall be deemed equivalent to the salary at date of retirement;
years of service shall be deemed equivalent to total service credits, a fraction
of at least six months being considered one year, including probationary
employment. Other basis for petitioners contention are Article 284 of the
Labor Code with regards to reduction of personnel and Sections 9(b) and 10
of Rule 1, Book VI of the Rules Implementing the Labor Code. The Labor
Arbiter rendered his decision directing the company to pay the complainants
separation pay equivalent to their one month salary (exclusive of
commissions, allowances, etc.) for every year of service that they have
worked with the company. The petitioners appealed to the NLRC but it was
denied. Petitioner Romeo Cipres filed a Notice of Voluntary Abandonment
and Withdrawal of petition contending that he had received, to his full and
complete satisfaction, his separation pay. Hence, this petition.
ISSUE:
Whether or not earned sales commissions and allowances should
be included in the monthly salary of petitioners for the purpose of
computation of their separation pay.
HELD:
The petition is granted. Petitioners contention that in arriving at
the correct and legal amount of separation pay due to them, whether under
the Labor Code or the CBA, their basic salary, earned sales commissions and
allowances should be added together. Insofar as whether the allowances
should be included in the monthly salary of petitioners for the purpose of
computation of their separation pay is concerned, this has been settled in
the case of Santos vs. NLRC, 76721, in the computation of backwages and
separation pay, account must be taken not only of the basic salary of
petitioner but also of her transportation and emergency living allowances. In
the issue of whether commission should be included in the computation of
their separation pay, it is proper to define first commission. Blacks