1) Escario VS NLRC 333 SCRA 257

Facts:
Petitioners are merchandisers of respondent company. They withdraw stocks from the warehouse , fix the prices, price-tagging, displaying
the products and inventory. They were paid by the company through an agent to avoid liability. They claim that they were under the control and supervision of the
company. They asked for regularization of their status. They were then given notice of their termination. The company denied any employer-employee relationship.
They claim that they used an agent or independent contractors to sell the merchandise. The 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.
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 employer-employee 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:
WON there was an employer-employee relationship.
Held:
YES. Petitioners are employees of Respondent Corporation and shall be accorded the benefits given in Art. 283 of the Labor Code granting separation pay
equivalent to 1 month pay for every year of service and also to 13th month pay. The other claims of petitioners are found to be without basis.
3. SMC VS Semillano July 05, 2010
Facts:
AMPCO hired Vicente et al on different dates assigned to work in SMCs Bottling Plant situated at Brgy. Granada Sta. Fe, Bacolod City, in 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 entertainmentservice 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.
4. PAL vs Ligan, 548 scra 181
Facts:
PAL (as owner) and Synergy Services Corp (as contractor) entered into an Agreement where the latter undertook to provide loading, unloading, delivery
and other related services. It was expressly stated that Synergy was an independent contractor and that no employer-employee relationship would exist between its
employees and PAL. Ligan et al (laborer-respondents) filed complaints against PAL and Synergy for 1) underpayment, on-payment of 13thmonth pay/holiday
pay/premium pay etc and for 2) regularization of employment. The Labor Arbiter found Synergy an independent contractor and dismissed the complaint against PAL
for regularization. NLRC set aside this decision and held that Synergy was a labor-only contractor.CA affirmed NLRCs decision.
Issue:
WON Synergy is a legitimate contractor? No. SC held Synergy a labor-only contractor.
Held:
In this case, the work performed by the respondents were directly related to the main business of PAL. Also, the equipment used as station loaders such as
trailers and conveyors were all owned by PAL.PAL and Synergy also failed to substantiate their claim that the latter had substantial capital, and only after the CA
decision was rendered did it try to prove such fact. It was found that respondents worked alongside PALs regular employees who performed the same work.PAL tried
to disprove the its right to control; however, the Court found that the Agreement stipulated that the contractor shall comply with the owners rules, regulations,
procedures, and directives.PAL in fact admitted that it fixes the work schedule of respondents. Also, PALs managers and supervisors approved respondents weekly
work assignments and were referred to as station attendants "of cargo operation and airfreight services of PAL. Respondents having performed tasks which are
usually necessary and desirable in the air transportation business of PAL, they should be deemed its regular employees and Synergy as a labor-only contractor. The
Court ordered PAL to accept respondents as regular employees, pay wages and benefits due, plus salary differentials. Case remanded to LA for determination of
monetary liabilities.
5. SMC vs MAERC IS, 405 scra 579
Facts:
Brought before this court is a petition seeking for a review of the Court of Appeals' judgment. The facts are as follows. 291 workers filed complaints against
San Miguel Corporation and Maerc Integrated Services, Inc. for illegal dismissal, underpayment of wages, non-payment of service incentive leave pays and other labor
standards benefits, and for separation pays from 25 June to 24 October 1991. The complainants alleged that they were hired by SMC through its agent or
intermediary Maerc. They were paid on a per piece 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.
SC Ruling:
Evidence discloses that petitioner played a large and indispensable part in the hiring of MAERC's workers. It also appears that majority of the complainants
had already been working for SMC long before the signing of the service contract between SMC and MAERC in 1988.
In labor-only contracting, the statute creates an employer-employee relationship for a comprehensive purpose: to prevent a circumvention of labor laws.
The contractor is considered merely an agent 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
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 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:
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. RO4-10-10184-76-E. After investigation,
the Office of the Regional Director, Regional Office No. IV of the Department of Labor, issued an order dismissing Orpiada's complaint for failure of Mr. Orpiada to
show the existence of an employer-employee relationship between the bank and himself.
Accordingly, on 2 April 1984, the bank filed the present petition for certiorari with this Court seeking to annul and set aside (a) the decision of respondent Labor
Arbiter Dogelio dated 12 September 1977 in Labor Case No. RB-IV-1118-77 and (b) the decision of the NLRC promulgated on 29 December 1983 affirming with some
modifications the decision of the Labor Arbiter. This Court granted a temporary restraining order on 11 April 1984.
Issue:
Whether or not the relationship is one of employer and job (independent) contractor or one of employer and "labor-only" contractor.
SC Ruling:
Under the general rule set out in the first and second paragraphs of Article 106, an employer who enters into a contract with a contractor for the
performance of work for the employer, does not thereby create an employer-employee relationship between himself and the employees of the contractor. Thus, the
employees of the contractor remain the contractor's employees and his alone. Nonetheless, when a contractor fails to pay the wages of his employees in accordance
with the Labor Code, the employer who contracted out the job to the contractor becomes jointly and severally liable with his contractor to the employees of the
latter "to the extent of the work performed under the contract" as if such employer were the employer of the contractor's employees. The law itself, in other words,
establishes an employer-employee relationship between the employer and the job contractor's employees for a limited purpose, i.e., in order to ensure that the
latter get paid the wages due to them.

Succinctly put, CESI is not a parcel delivery company: as its name indicates, it is a recruitment and placement corporation placing bodies, as it were, in
different client companies for longer or shorter periods of time. It is this factor that, to our mind, distinguishes this case from American President Lines v. Clave et al.,
114 SCRA 826 (1982) if indeed such distinguishing way is needed.
We hold that, in the circumstances of this case, CESI was engaged in "labor-only" contracting vis-a-vis the petitioner bank and in respect of Ricardo Orpiada, and that
consequently, the petitioner bank is liable to Orpiada as if Orpiada had been directly employed not only by CESI but also by the bank. It may well be that the bank
may in turn proceed against CESI to obtain reimbursement of, or some contribution to, the amounts which the bank will have to pay to Orpiada; but this it is not
necessary to determine here.
The petition for certiorari is denied and the decision 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, non-payment of legal
holiday pay, service incentive leave pay and 13th month pay alleging that he was first assigned to perform janitorial work at FILSYN in 1981 by the La Saga General
Services; that the La Saga was changed to DE LIMA on August 1991; that when a movement to demand increased wages and 13th month pay arose among the
workers on December 1991 he was accused by a certain Dodie La Flores of having posted in the bulletin board at FILSYN an article attributing to management a secret
understanding to block the demand; and, for denying responsibility, his gate pass was unceremoniously cancelled on 6 February 1992 and he was subsequently
dismissed.
Loterte was classified by the Labor Arbiter as a regular employee on the ground that he performed tasks usually necessary or desirable in the main
business of FILSYN for more than ten (10) years or since 1981. FILSYN was declared to be the real employer of Loterte and DE LIMA as a mere 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 (ER-EE)relationship between the workers and San Miguel Corp.
Held:
YES. In determining if there is an existence of the (ER-EE) relationship, the four-fold test was used by the Supreme Court. In the case, the records fail to
show that San Miguel entered into mere oral agreements of employment with the workers. Considering the length of time that the petitioners have worked with the
company, there is justification to conclude that they were engaged to perform activities necessary in the usual business or trade. Despite past shutdowns of the glass
plant, the workers promptly returned to their jobs. The term of the petitioners employment appears indefinite and the continuity and habituality of the petitioners
work 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 ownerindependent 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.
15. Tabas vs California Manufacturing Co. Inc. 169 SCRA 497
FACTS
Petitioners were the employees of Livi Manpower Services. They were assigned tothe respondent pursuant to a manpower supply agreement as
promotional merchandisers. It was provided in the agreement that: 1) California would have no control or supervision over the workers as to how they perform or
accomplish their work, Livi is an independent contractor and that it has the sole responsibility of complying with all the existing as well as future laws, rules and
regulations pertinent to employment of labor, 3) the assignment to California was seasonal and contractual, and 4) payroll, including COLA and holiday pay shall be
delivered Livi at Californias premises. Petitioners were made to sign 6-month employment contracts which were renewed for the same period. Unlike regular
employees of California, they did not receive fringe benefits and bonuses and were paid only a daily allowance. Petitioners contend that they have become regular
employees of California. Subsequent to their claim for regularization, California no longer re-hired them. Livi, on the other hand, claims the workers as its employees
and that it is an independent contractor. Labor Arbiter found that no employer-employee relationship existed. The NLRC affirmed the ruling.
ISSUE
Is there an employer-employee relationship between California and the petitioners?
HELD
YES. The existence of an employer-employee relationship is a question of law and cannot be made subject to agreement. The stipulations in the manpower
supply agreement will not erase either partys obligations as an employer. Livi is a labor-only contractor, notwithstanding the provisions in the agreement. The nature
of ones business is not determined by self-serving appellations but by test provided by statute and the prevailing case law. Californias contention that the workers
are not performing activities which are directly related to its general business of manufacturing is untenable. The promotion or sale of products, including the task of
occasional price tagging, is an integral part of the manufacturing business. Livi as a placement agency had simply supplied the manpower necessary for California to
carry out its merchandising activities, using the latters premises and equipment. Merchandising 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
YES. There was an employee-employer relationship. That the respondent registered the petitioners with the Social Security System is proof that they were
indeed his employees. The coverage of the Social Security Law is predicated on the existence of an employer-employee relationship.
17. Continental Marble VS NLRC 161 SCRA 151
FACTS
Rodito Nasayao claimed that sometime in May 1974, he was appointed plant manager of Continental Marble with an alleged compensation of P3,000.00 a
month or 25% of the monthly net income 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.
HELD
Although it may be conceded that the private respondents acted under some degree of moral compulsion when they agreed to accompany Major
Asaytuno on a hunting trip, they were certainly under no compulsion from him to falsify their time cards and thereby defraud the company by collecting wages for
the dates whey they did not report for work. The falsification and fraud which the private respondents committed against their employer were inexcusable. Their acts
constituted dishonesty and serious misconduct, lawful grounds for their dismissal under Art 282 subpars. (a) and (c)of the Labor Code.
19. Mabeza vs NLRC 271 scra 670
FACTS
Norma Mabeza was an employee of Hotel Supreme in Baguio City. Sometime around May 1991, she and her co-employees were asked by the hotels
management to sign an instrument attesting to the latters compliance with minimum wage order and other labor standard provisions of law. Mabeza signed the
affidavit but refused to go to the Prosecutors Office to swear to the veracity of its contents. The affidavit was drawn by the management was for the purpose of
refuting the findings of the Labor Inspector of DOLE in an inspection conducted in the establishment of the private respondent. After Mabeza refused to proceed to
the Prosecutors Office, she was ordered by management to turn over the keys to her living quarters and to remove all her belongings from the hotel premises. She
thereafter filed a leave of absence which was denied by management. When she attempted to return to work of May 10, 1991, she was advised to just continue
with her unofficial leave of absence. Petitioner filed a complaint for illegal dismissal. She alleged in her complaint the underpayment of wages, non-payment of
holiday pay, service incentive leave pay, 13th month pay, night differential and other benefits. Private respondent avers on the other hand that petitioner abandoned
her job without notice to management. They also contend that there was no basis for the money claim for underpayment and other benefits as these were paid in
the form of facilities to petitioner and the hotels other employees.
ISSUE
Whether or not the wages received by the employees of 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 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.
ISSUE:
WON ESA and PTSI should be jointly and severally liable for the wage increases.
HELD:
YES. The joint and several liability of the contractor and the principal is mandated by the LaborCode to assure compliance of the provisions therein
including the statutory minimum wage. The 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.