Link to Batch 1:

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Batch 2
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Remaining: 6, 8, 13, 15, 16

1. Ricardo N. Azuelo vs Zameco II Electric Coop

1. RICARDO N. AZUELO, Petitioner, v. ZAMECO II ELECTRIC COOPERATIVE, INC., Respondent
G.R. No. 192573, October 22, 2014
(Non-Applicability of technical rules of procedure in labor cases, not a license to disregard the right of
employer against unreasonable claims.)

FACTS:
Petitioner Ricardo N. Azuelo filed with the Regional Arbitration Branch (RAB) of the National Labor Relations
Commission (NLRC) in San Fernando City, Pampanga (sometime in March 2006), a complaint for illegal dismissal and
non-payment of benefits against respondent ZAMECO II Electric Cooperative, Inc. (ZAMECO). After several
mediations, Labor Arbiter (LA) Mariano L. Bactin ordered the parties to submit their respective position papers on July
14, 2006.

Azuelo, instead of submitting his position paper on the scheduled date, moved that the submission of his position
paper be extended to August 4, 2006 which was granted by LA Bactin. On August 4, 2006, Azuelo again failed to
submit his position paper. LA Bactin then directed Azuelo to submit his position paper on August 22, 2006. On the said
date, Azuelo, instead of submitting his position paper, moved for the issuance of an order directing ZAMECO to
furnish him with a complete copy of the investigation report as regards his dismissal. On November 6, 2006, LA Bactin
issued an order dismissing the case for lack of interest.

On November 21, 2006, Azuelo again filed a complaint with the Regional Arbitration Branch RAB in San Fernando City,
Pampanga, against ZAMECO containing the same allegations in his first complaint. On March 12, 2007 LA Reynaldo V.
Abdon dismissed Azuelo’s second complaint on the ground of res judicata. On September 22, 2008, the NLRC affirmed
the order of the LA. On February 16, 2010, the Court of Appeals (CA) affirmed the decision of the NLRC and denied the
petition for certiorari filed by Azuelo.

ISSUE:

The issue set forth by Azuelo for the Court's resolution is whether the dismissal of his first complaint for illegal
dismissal, on the ground of lack of interest on his part to prosecute the same, bars the filing of another complaint for
illegal dismissal against ZAMECO based on the same allegations.
DECISION:

The petition is denied.

The dismissal of a case for failure to prosecute has the effect of adjudication on the merits, and is necessarily
understood to be with prejudice to the filing of another action, unless otherwise provided in the order of dismissal.
Stated differently, the general rule is that dismissal of a case for failure to prosecute is to be regarded as an
adjudication on the merits and with prejudice to the filing of another action, and the only exception is when the order
of dismissal expressly contains a qualification that the dismissal is without prejudice.

Hence, the Order dated November 6, 2006, which dismissed Azuelo’s first complaint due to his unreasonable failure
to submit his position paper is unqualified. It is thus considered as an adjudication on the merits and with prejudice to
filing of another complaint. Accordingly, the NLRC did not abuse its discretion when it affirmed LA Abdon’s dismissal
of the second complaint for illegal dismissal. Azuelo’s filing of a second complaint for illegal dismissal against ZAMECO
based on the same allegations cannot be permitted lest the rule on res judicata be transgressed.

2. Kapisanang Mangagagawang Pinagyakap vs

NLRC
Facts: The Collective Bargaining Agreement granted P1.33 increase to the worker’s salary.
However, this was deducted from the mandatory P2 wage increase by PD 1123. The IRR provided
an additional exemption, for those already granted at least P60 wage increase, will only pay
difference.

Issue: Whether or not the exemption granted by IRR is void?

Held: Yes, the law only allows the formulation of rules for distressed employees and not the
granting of exemption in other matters.

‘* The Department of Labor and other government agencies charged with the administration and
enforcement of this Code or any of its parts shall promulgate the necessary implementing rules
and regulations. Such rules and regulations shall become effective fifteen (15) days after
announcement of their adoption in newspaper of general circulation.

3. PNOC Energy Development Corp vs NLRC &

Danilo Mercado
Facts:
Danilo Mercado was employed by PNOC EDC and held various positions from clerk to shipping
clerk. He was dismissed on alleged serious acts of dishonesty for misappropriating amount of
PHp680 for the purchase of nipa shingles. That he did not report the Php70 discount that he got
from the supplier. Also Danilo allegedly misappropriated Php8.66 for the fabrication of rubber
stamps. In addition, Danilo was accused of violating company rules and regulations by being
absent from work without leave, without proper turn-over hence causing disruption and delay of
company work activities and for taking a vacation leave without prior leave notice.
Danilo filed a complaint for illegal dismissal and the award of various monetary claims. PNOC
EDC filed its position paper praying for dismissal of the case on the ground that Labor Arbiter and
NLRC has no jurisdiction over the case. That being government owned and controlled
corporation, PNOC EDC is governed by the Civil Service Law as per Section 1, Article XII-B of the
1973 Constitution which provides : The Civil Service embraces every branch, agency, subdivision
and instrumentality of the government including government-owned or controlled corporations.
The Labor Arbiter ruled in favor of Danilo which was affirmed by NLRC ordering PNOC EDC to
reinstate complainant to his former position with full back wages from the time of dismissal, pay
complainant Php10K as his personal share of his savings account with the respondents, moral
damages Php30K, exemplary damages Php20K and attorney’s fee Php5K, proportionate 13th
month Php792.50 for 1985.
Issues:
1. WON matters of employment affecting EDC, a government owned and controlled corporation
are within the jurisdiction of the LA and the NLRC.
2. If yes, WON the LA and NLRC are justified in ordering the reinstatement of private
respondent, payment of his savings, and proportionate 13th month and payment of damages as
well as attorney’s fee.
Held:
1. Yes. That the employees of government-owned and/or controlled corporations, whether
created by special law or formed as subsidiaries under the General Corporation law are governed
by the Civil Service Law and not by the Labor Code, has been supplanted by the present
Constitution. The test in determining whether a government-owned or controlled corporations is
subject to the Civil Service Law are the manner of its creation such that government corporations
created by special charter are subject to its provisions while those incorporated under the General
Corporation Law are not within its coverage. Specifically, the PNOC EDC having been
incorporated under the General Corporation Law was held to be a government owned or
controlled corporation whose employees are subject to the provisions of the Labor Code.
The fact that the case arose at the time when the 1973 Constitution was still in effect, does not
deprive the NLRC of jurisdiction on the premise that it is the 1987 Constitution that governs
because it is the Constitution in place at the time of the decision.
2. Yes. The record shows that PNOC EDC’s accusations of dishonesty and violations of
company rules were not supported by evidence. While it is true that loss of trust or breach of
confidence is a valid ground for dismissing an employee, such loss or breach of trust must have some
basis. As found by the Labor Arbiter, the accusations of petitioner PNOC-EDC against private
respondent Mercado have no basis. Mrs. Leonardo Nodado, from whom the nipa shingles were
purchased, sufficiently explained in her affidavit (Rollo, p. 36) that the total purchase price of P1,680.00
was paid by respondent Mercado as agreed upon. The alleged discount given by Mrs. Nodado is not
supported by evidence as well as the alleged appropriation of P8.66 from the cost of fabrication of
rubber stamps. The Labor Arbiter, likewise, found no evidence to support the alleged violation of
company rules. On the contrary, he found respondent Mercado's explanation in his affidavit (Rollo, pp.
38-40) as to the alleged violations to be satisfactory. Moreover, these findings were never contradicted
by petitioner petitioner PNOC-EDC.

The petition is DENIED and NLRC’s decision was affirmed with modification that moral damages
be reduced to Php10k and exemplary damages to Php5K.

4. Nelson V. Begino vs. ABS-CBN Corp. & Amalia

Villafuerte
Case Digest: Begino v. ABS-CBN
NELSON V. BEGINO, GENER DEL VALLE, MONINA A VILA-LLORIN AND MA.
CRISTINA SUMAYAO, Petitioners, vs. ABS-CBN CORPORATION (FORMERLY, ABS-
CBN BROADCASTING CORPORATION) AND AMALIA VILLAFUERTE, Respondents.

G.R. No. 199166, 20 April 2015.

PEREZ, J.:

Respondent ABS-CBN, through Respondent Villafuerte, engaged the services of Petitioners as

cameramen, editors or reporters for TV Broadcasting. Petitioners signed regularly renewed Talent
Contracts (3 months - 1 year) and Project Assignment Forms which detailed the duration, budget
and daily technical requirements of a particular project. Petitioners were tasked with coverage of
news items for subsequent daily airings in Respondents’ TV Patrol Bicol Program.

The Talent Contract has an exclusivity clause and provides that nothing therein shall be deemed or
construed to establish an employer-employee relationship between the parties.

Petitioners filed against Respondents a complaint for regularization before the NLRC's Arbitration
branch.

In support of their complaint, Petitioners claimed that they worked under the direct control of
Respondent Villafuerte - they were mandated to wear company IDs, they were provided the
necessary equipment, they were informed about the news to be covered the following day, and they
were bound by the company’s policy on attendance and punctuality.
Respondents countered that, pursuant to their Talent Contracts and Project Assignment Forms,
Petitioners were hired as talents to act as reporters, editors and/or cameramen. Respondents further
claimed they never imposed control as to how Petitioners discharged their duties. At most, they
were briefed regarding the general requirements of the project to be executed.

While the case was pending, Petitioners contracts were terminated, prompting the latter to file a
second complaint for illegal dismissal.

The Arbitration Branch ruled that Petitioners were regular employees, and ordered Respondents to
reinstate the Petitioners.

The NLRC affirmed the ruling, but the CA overturned the decision.

ISSUE: W/N Petitioners are regular employees of Respondents.

RULING: Yes.

Of the criteria to determine whether there is an employer-employee relationship, the so-called

"control test" is generally regarded as the most crucial and determinative indicator of the said
relationship.

Under this test, an employer-employee relationship is said to exist where the person for whom the
services are performed reserves the right to control not only the end result but also the manner and
means utilized to achieve the same.

Notwithstanding the nomenclature of their Talent Contracts and/or Project Assignment Forms and
the terms and condition embodied therein, petitioners are regular employees of ABS-CBN.

As cameramen, editors and reporters, it appears that Petitioners were subject to the control and
supervision of Respondents which provided them with the equipment essential for the discharge of
their functions. The exclusivity clause and prohibitions in their Talent Contract were likewise
indicative of Respondents' control over them, however obliquely worded.

Also,the presumption is that when the work done is an integral part of the regular business of the
employer and when the worker does not furnish an independent business or professional service,
such work is a regular employment of such employee and not an independent contractor.

5. South East International Rattan, Inc. vs J.J. Coming

Southeast International Rattan, Inc. vs. Coming, Jesus

Facts:

South East International Rattan, Inc. (SEIRI) is a domestic corporation engaged in the business of
manufacturing and exporting furniture to various countries with principal place of business at Paknaan,
Mandaue City, while Estanislao Agbay, as per records, is the President and General Manager of SEIRI.
Jesus J. Coming was hired by petitioners as Sizing Machine Operator on March 17, 1984. His
work schedule is from 8:00 a.m. to 5:00 p.m. Initially, his compensation was on "pakiao" basis but
sometime in June 1984, it was fixed at P150.00 per day which was paid weekly. In 1990, without
any apparent reason, his employment was interrupted as he was told by petitioners to resume
work in two months time. Being an uneducated person, respondent was persuaded by the
management as well as his brother not to complain, as otherwise petitioners might decide not to
call him back for work. Fearing such consequence, respondent accepted his fate. Nonetheless,
after two months he reported back to work upon order of management. Despite being an employee
for many years with his work performance never questioned by petitioners, respondent was
dismissed on January 1, 2002 without lawful cause. He was told that he will be terminated
because the company is not doing well financially and that he would be called back to work only if
they need his services again. Respondent waited for almost a year but petitioners did not call him
back to work. He finally filed the complaint before the regional arbitration branch.

Labor Arbiter Ernesto F. Carreon ruled that respondent is a regular employee of SEIRI and that the
termination of his employment was illegal.

National Labor Relations Commission (NLRC)-Cebu City vacated and dismissed the complaint of
Respondent, Jesus Coming.

The CA reversed the NLRC and ruled that there existed an employer-employee relationship between
petitioners and respondent who was dismissed without just and valid cause.

Issue:

1. Whether or not an employer-employee relationship exists.

2. Whether or not Respondent, Jesus Coming was illegally dismissed.

Held:

1. Employer-employee exists. The existence of employer-employee relationship jurisprudence has

invariably adhered to the four-fold test, to wit: (1) the selection and engagement of the employee; (2) the
payment of wages; (3) the power of dismissal; and (4) the power to control the employee’s conduct, or the
so-called "control test." In resolving the issue of whether such relationship exists in a given case,
substantial evidence – that amount of relevant evidence which a reasonable mind might accept as
adequate to justify a conclusion – is sufficient. Although no particular form of evidence is required
to prove the existence of the relationship, and any competent and relevant evidence to prove the
relationship may be admitted, a finding that the relationship exists must nonetheless rest on
substantial evidence.

2. As a regular employee, respondent enjoys the right to security of tenure under Article 279 of the Labor
Code and may only be dismissed for a just or authorized cause, otherwise the dismissal becomes
illegal. Respondent, whose employment was terminated without valid cause by petitioners, is
entitled to reinstatement without loss of seniority rights and other privileges and to his full back
wages, inclusive of allowances and other benefits or their monetary equivalent, computed from the
time his compensation was withheld from him up to the time of his actual reinstatement. Where
reinstatement is no longer viable as an option, back wages shall be computed from the time of the
illegal termination up to the finality of the decision. Separation pay equivalent to one month salary
for every year of service should likewise be awarded as an alternative in case reinstatement in not
possible.

_6. Cesar C. Lirio vs Wilmer D. Genovia

Lirio v. Genovia
G.R. No. 169757: November 23, 2011

CESAR C. LIRIO, doing business under the name and style of CELKOR AD SONICMIX,
Petitioner, v. WILMER D. GENOVIA, Respondent.

PERALTA, J.:

FACTS:

Respondent was allegedly hired on August 15, 2001 as studio manager by petitioner Lirio,
owner of Celkor Ad Sonicmix Recording Studio (Celkor). A few days after he started working
as a studio manager, petitioner approached him and told him about his project to produce an
album for his 15-year-old daughter. Petitioner asked respondent to compose and arrange
songs for Celine and promised that he (Lirio) would draft a contract to assure respondent of
his compensation for such services. As agreed upon, the additional services that respondent
would render included composing and arranging musical scores only, while the technical
aspect in producing the album, such as digital editing, mixing and sound engineering would
be performed by respondent in his capacity as studio manager for which he was paid on a
monthly basis.
Respondent reminded petitioner about his compensation as composer and arranger of the
album. Petitioner verbally assured him that he would be duly compensated. By mid-
November 2001, respondent finally finished the compositions and musical arrangements of
the songs to be included in the album.

Thereafter, respondent was tasked by petitioner to prepare official correspondence, establish

contacts and negotiate with various radio stations, malls, publishers, record companies and
manufacturers, record bars and other outlets in preparation for the promotion of the said
album. By early February 2002, the album was in its manufacturing stage.

On February 26, 2002, respondent again reminded petitioner about the contract on his
compensation as composer and arranger of the album. Petitioner told respondent that since
he was practically a nobody and had proven nothing yet in the music industry, respondent did
not deserve a high compensation, and he should be thankful that he was given a job to feed
his family. Petitioner informed respondent that he was entitled only to 20% of the net profit,
and not of the gross sales of the album, and that the salaries he received and would continue
to receive as studio manager of Celkor would be deducted from the said 20% net profit share.
Respondent objected and insisted that he be properly compensated. On March 14, 2002,
petitioner verbally terminated respondent's services, and he was instructed not to report for
work. On July 9, 2002, respondent Wilmer D. Genovia filed a complaint against petitioner for
illegal dismissal, non-payment of commission and award of moral and exemplary damages.

Petitioner asserted that from the aforesaid terms and conditions, his relationship with
respondent is one of an informal partnership under Article 1767 of the New Civil Code, since
they agreed to contribute money, property or industry to a common fund with the intention
of dividing the profits among themselves. Petitioner had no control over the time and manner
by which respondent composed or arranged the songs, except on the result thereof.

ISSUE:

I. Whether or not an employer-employee relationship existed between petitioner and

respondent

HELD:

The elements to determine the existence of an employment relationship are:

(a) the selection and engagement of the employee;

(b) the payment of wages;
(c) the power of dismissal; and
(d) the employer's power to control the employee's conduct.

The most important element is the employer's control of the employee's conduct, not only as
to the result of the work to be done, but also as to the means and methods to accomplish it.

It is settled that no particular form of evidence is required to prove the existence of an

employer-employee relationship. Any competent and relevant evidence to prove the
relationship may be admitted.

In this case, the documentary evidence presented by respondent to prove that he was an
employee of petitioner are as follows: (a) a document denominated as "payroll" certified
correct by petitioner, which showed that respondent received a monthly salary of P7,000.00
(P3,500.00 every 15th of the month and another P3,500.00 every 30th of the month) with the
corresponding deductions due to absences incurred by respondent; and (2) copies of petty
cash vouchers, showing the amounts he received and signed for in the payrolls.

The said documents showed that petitioner hired respondent as an employee and he was paid
monthly wages of P7,000.00. Petitioner wielded the power to dismiss as respondent stated
that he was verbally dismissed by petitioner, and respondent, thereafter, filed an action for
illegal dismissal against petitioner. The power of control refers merely to the existence of the
power. It is not essential for the employer to actually supervise the performance of duties of
the employee, as it is sufficient that the former has a right to wield the power. Nevertheless,
petitioner stated in his Position Paper that it was agreed that he would help and teach
respondent how to use the studio equipment. In such case, petitioner certainly had the power
to check on the progress and work of respondent.

On the other hand, petitioner failed to prove that his relationship with respondent was one of
partnership. Such claim was not supported by any written agreement. It is a well-settled
doctrine, that if doubts exist between the evidence presented by the employer and the
employee, the scales of justice must be tilted in favor of the latter.

Based on the foregoing, it is clear that an employer-employee relationship existed between

petitioner and respondent.
7. Marticio Semblante and Dubrick Pilar vs. CA,
Gallera de Mandaue
FACTS: Peititoners Marticio (Sembiante) and Dubrick Pilar (Pilar) aasert that they were hired by
respondents Spouses Vicente and Maria Luisa Loot, the owners of Gallera De Mandaue (the
Cockpit), as the official Masiador and Sentiador, respectively of the cockpit sometime in 1993.

As the Masiador, Sembiante calls and takes the bet from the game cock owners and other
bettors and orders the start of the cockfight. He also distributes the winnings after deducting the
arriba or deduction or the commision for the cockpit. Meanwhile as Sentenciador, Pilar oversees
the proper grafting of fighting cocks, determine the fighting cocks physical condition and
capabilities to continue the cockfight and eventually declares the result of the cockfight.

On November 14, 2003, however petitoners were denied entry to the cockpit upon the
instructions of respondents and were informed of the termination of their services effective that
date. This prompted petitioners to file a complaint for illegal dismissal against respondents.

ISSUE: Existence of employer employee relationship.

RULING: Petitioners are NOT employees of respondents since their relationship fails to
pass muster the four fold test of the employment. We have repeatedly mentioned in countless
decisions (1) the selection and engagement of the employee 2.) payment of wages 3.) the power
of dismissal 4.) the power to control the employees conduct which is the important element.

_8. Orozco vs. Fifth Division

9. Bernard A. Tenazas, et. al. vs. R. Villegas Taxi

Transport
FACTS:
Bernard Tenazas, Jaime Francisco, and Isidro Endraca filed a complaint for illegal dismissal against
R. Villegas Taxi Transport, and/or Romualdo Villegas and Andy Villegas.

· PETITIONER’S CLAIM
TENAZAS - Taxi unit was sideswiped by another vehicle (damage = P500); fired after reporting
the incident, even threatened w/ physical harm if he was seen on company premises.
FRANCISCO - Dismissed because of the unfounded suspicion that he was organizing a labor
union
EDRACA – Dismissed after falling short of the required boundary for his taxi unit; fell short
because of P700 spent on an urgent repair

· R. VILLEGAS TAXI’S CLAIM

TENAZAS - Company admits that Tenazas is an employee – regular driver. Tenazas was never
terminated; he failed to report back to work after being told to wait for the release of his taxi
(overhauled due to mechanical defects)
FRANCISCO - Company denies that Francisco is an employee

ENDRACA - Company admits that Endraca is an employee – spare driver . Endraca could not
have been terminated in March 2006 because he stopped reporting for work in July 2003 (but
willing to accommodate him again as he was never really dismissed) Tenazas, Francisco, and
Endraca also filed a Motion to Admit Additional Evidence: (a) Joint Affidavit of the petitioners;
(b) Affidavit of Good Faith of Aloney Rivera (co-driver); (c) pictures of the petitioners wearing
company shirts; (d) Tenazas’ Certification/Record of Social Security System (SSS) contributions.

• LA: No illegal dismissal because no proof of an overt act of dismissal committed by R. Villegas
Taxi; Francisco failed to prove he was an employee

• NLRC: Reversed LA; the additional evidence sufficiently established the existence of employer-
employee relationship and illegal dismissal (for all three)
• CA: Tenazas and Endraca were indeed employees and were illegally dismissed, but Francisco
failed to establish his relationship with the company
ISSUE: WON there was an employer-employee relationship (re: Francisco) – NO

HELD:
• The burden of proof rests upon the party who asserts the affirmative of an issue. As Francisco was
claiming to be an employee of R. Villegas Taxi, it is incumbent upon him to proffer evidence to
prove the existence of the relationship.
• There is no hard and fast rule to establish the elements of employer-employee relationship. Any
competent and relevant evidence may be admitted, e.g., identification cards, cash vouchers, social
security registration, appointment letters or employment contracts, payrolls, organization charts,
personnel lists.
• Francisco failed to present substantial evidence to establish the relationship. No documentary
evidence submitted, like an attendance logbook, payroll, SSS record, or any personnel file that
depicts his status as an employee. He could also have at least presented his social security records
stating his contributions, name and address of employer (which Tenazas presented). Another taxi
operator, Emmanuel Villegas, also claimed to be his employer – a fact not denied or questioned by
Francisco in any of his pleadings.
Petition DENIED. SC agreed with CA’s order of reinstatement instead of separation pay.
(*Strained relations must be demonstrated as a fact. In this case, no facts demonstrated that the
relations were so strained as to make reinstatement no longer a feasible option.)

10. Bitoy Javier vs Fly Ace Corporation

G.R. No. 192558 : February 15, 2012

BITOY JAVIER (DANILO P. JAVIER), Petitioner, v. FLY ACE CORPORATION and

FLORDELYN CASTILLO, Respondents.

MENDOZA, J.:

FACTS:
Javier, an employee of Fly Ace performing various work for the latter, filed a complaint before the
NLRC for underpayment of salaries and other labor standard benefits.
He alleged that he reported for work from Monday to Saturday from 7:00 oclock in the morning to
5:00 oclock in the afternoon; that during his employment, he was not issued an identification card
and pay slips by the company; that he reported for work but he was no longer allowed to enter the
company premises by the security guard upon the instruction of Ruben Ong (Mr. Ong), his
superior for the reason that Ong had been courting his daughter Annalyn; that Annalyn tried to talk
to Ong and convince him to spare her father from trouble but he refused to accede; that thereafter,
Javier was terminated from his employment without notice; and that he was neither given the
opportunity to refute the cause/s of his dismissal from work.

For its part, Fly Ace denied the existence of employer-employee relationship between them and
Javier as the latter was only called roughly 5 to 6 times only in a month whenever the vehicle of its
contracted hauler, Milmar Hauling Services, was not available.
Labor Arbiter dismissed the complaint ruling that respondent Fly Ace is not engaged in trucking
business but in the importation and sales of groceries. Since there is a regular hauler to deliver its
products, we give credence to Respondents claim that complainant was contracted on pakyaw
basis.

On appeal, NLRC reversed the decision of the LA. It was of the view that a pakyaw-basis
arrangement did not preclude the existence of employer-employee relationship. Payment by result
is a method of compensation and does not define the essence of the relation. It is a mere method
of computing compensation, not a basis for determining the existence or absence of an employer-
employee relationship. The NLRC further averred that it did not follow that a worker was a job
contractor and not an employee, just because the work he was doing was not directly related to
the employers trade or business or the work may be considered as extra helper as in this case;
and that the relationship of an employer and an employee was determined by law and the same
would prevail whatever the parties may call it. Finding Javier to be a regular employee, the NLRC
ruled that he was entitled to a security of tenure. For failing to present proof of a valid cause for his
termination, Fly Ace was found to be liable for illegal dismissal of Javier who was likewise entitled
to backwages and separation pay in lieu of reinstatement.
However, on appeal, CA reversed the ruling of NLRC

The CA ruled thatJavier’s failure to present salary vouchers, payslips, or other pieces of evidence
to bolster his contention, pointed to the inescapable conclusion that he was not an employee of Fly
Ace. Further, it found that Javiers work was not necessary and desirable to the business or trade
of the company, as it was only when there were scheduled deliveries, which a regular hauling
service could not deliver, that Fly Ace would contract the services of Javier as an extra helper.
Lastly, the CA declared that the facts alleged by Javier did not pass the control test.

He contracted work outside the company premises; he was not required to observe definite hours
of work; he was not required to report daily; and he was free to accept other work elsewhere as
there was no exclusivity of his contracted service to the company, the same being co-terminous
with the trip only. Since no substantial evidence was presented to establish an employer-employee
relationship, the case for illegal dismissal could not prosper. Hence, this appeal.

ISSUE: Whether or not there exist an employer-employee relationship between Javier and
Fly Ace, thereby holding the latter guilty of illegal dismissal.

HELD: The CA's decision was sustained.

LABOR LAW

As the records bear out, the LA and the CA found Javiers claim of employment with Fly Ace as
wanting and deficient. The Court is constrained to agree. Labor officials are enjoined to use
reasonable means to ascertain the facts speedily and objectively with little regard to technicalities
or formalities but nowhere in the rules are they provided a license to completely discount evidence,
or the lack of it. The quantum of proof required, however, must still be satisfied. Hence, when
confronted with conflicting versions on factual matters, it is for them in the exercise of discretion to
determine which party deserves credence on the basis of evidence received, subject only to the
requirement that their decision must be supported by substantial evidence. Accordingly, the
petitioner needs to show by substantial evidence that he was indeed an employee of the company
against which he claims illegal dismissal.

In sum, the rule of thumb remains: the onus probandi falls on petitioner to establish or substantiate
such claim by the requisite quantum of evidence. Whoever claims entitlement to the benefits
provided by law should establish his or her right thereto Sadly, Javier failed to adduce substantial
evidence as basis for the grant of relief.

By way of evidence on this point, all that Javier presented were his self-serving statements
purportedly showing his activities as an employee of Fly Ace. Clearly, Javier failed to pass the
substantiality requirement to support his claim. Hence, the Court sees no reason to depart from the
findings of the CA.

While Javier remains firm in his position that as an employed stevedore of Fly Ace, he was made
to work in the company premises during weekdays arranging and cleaning grocery items for
delivery to clients, no other proof was submitted to fortify his claim.

The Court is of the considerable view that on Javier lies the burden to pass the well-settled tests to
determine the existence of an employer-employee relationship, viz: (1) the selection and
engagement of the employee; (2) the payment of wages; (3) the power of dismissal; and (4) the
power to control the employees conduct. Of these elements, the most important criterion is
whether the employer controls or has reserved the right to control the employee not only as to the
result of the work but also as to the means and methods by which the result is to be accomplished.

DENIED.

11. Timoteo H. Sarona vs. NLRC, Royale Security

Agency
Topic: Piercing the corporate veil
Facts: Sarona had been working as a security guard in Sceptre Security Agency since 1976. In
2003 he was asked to submit a resignation letter as a requirement for applying for a position at
Royale Security Agency. On his first assignment under Royale, Sarona still used the patches and
agency cloths of Sceptre. It was only on his second assignment that he started using those of
Royale. After some time he was informed that he would no longer be given any assignment per the
instructions of Aida Sabalones-Tan (Aida), general manager of Sceptre. This prompted him to file
a complaint for illegal dismissal. He also prayed that the corporate veil of Royale be pierced,
claiming that:
1. Royale was holding office in the same property used by Sceptre as its principal place of
business
2. Sceptre and Royale have the same officers and employees
3. Roso Sabalones, sole proprietor of Sceptre, had ceded in 1999 the license to operate
Sceptre issued by the Philippine National Police to Aida
4. The business name "Sceptre Security & Detective Agency" was registered with the
Department of Trade and Industry (DTI) under the name of Aida in 1999
5. Aida exercised control over the affairs of Sceptre and Royale, as she was, in fact, the one
who dismissed the petitioner from employment
The Labor Arbiter ruled in Sarona's favor, finding him illegally dismissed. The respondents were
ordered to pay the backwages. In lieu of reinstatement, the respondents were ordered to pay the
petitioner separation pay equivalent to his 1 month salary in consideration of his tenure with
Royale, which lasted for only 1 month and 3 days. In this regard, Labor Arbiter refused to pierce
Royale’s corporate veil for the purpose including petitioner’s length of service with Sceptre in the
computation of his separation pay. For the Labor Arbiter, Sceptre is a single proprietorship with no
distinct and separate personality. It is owned by the late Roso Sabalones. In short, the estate of
Roso should have been impleaded as respondent.
On appeal, the NLRC reduced the award of backwages to 3 months only, considering that his
tenure at Royale lasted only 1 month and 3 days. Sarona appealed to the CA. He claimed that
Royale and Sceptre are not separate legal persons for the purpose of computing the amount of his
separation pay and other benefits under the Labor Code.
The CA refused to pierce Royale’s corporate mask.
Issues:
1. Whether Royale’s corporate fiction should be pierced for the purpose of compelling it to
recognize the petitioner’s length of service with Sceptre
2. Whether the petitioner’s backwages should be limited to 3 months' salary instead of from
the date of illegal dismissal to the finality of the court's decision
Decision: Petition granted, the decision of the CA is reversed and set aside. Sarona is entitled to:
1. separation pay computed from April 1976 until the finality of this decision, at the rate of one
month pay per year of service
2. full backwages and other benefits computed from October 1, 2003 (the date Royale illegally
dismissed the petitioner) until the finality of this decision
First issue: Royale is a continuation or successor of Sceptre. A corporation is an artificial
being created by operation of law. It has a personality separate and distinct from the persons
composing it, as well as from any other legal entity to which it may be related. The corporate mask
may be removed or the corporate veil pierced when the corporation is just an alter ego of a person
or of another corporation. For reasons of public policy and in the interest of justice, the corporate
veil will justifiably be impaled only when it becomes a shield for fraud, illegality or inequity
committed against third persons. The doctrine of piercing the corporate veil applies only in 3
basic areas, namely:
1. defeat of public convenience, as when the corporate fiction is used as a vehicle for the
evasion of an existing obligation;
2. fraud cases or when the corporate entity is used to justify a wrong, protect fraud, or defend
a crime; or
3. alter ego cases, where a corporation is merely a farce since it is a mere alter ego or
business conduit of a person, or where the corporation is so organized and controlled and
its affairs are so conducted as to make it merely an instrumentality, agency, conduit or
adjunct of another corporation.
In this regard, the Court finds cogent reason to reverse the CA’s findings. Evidence abound
showing that Royale is a mere continuation or successor of Sceptre and fraudulent objectives are
behind Royale’s incorporation and the petitioner’s subsequent employment therein. These are
plainly suggested by events that the respondents do not dispute and which the CA, the NLRC and
Labor Arbiter accept as fully substantiated but misappreciated:
1. It was Aida who exercised control and supervision over the affairs of both Sceptre and
Royale. Aida took over as early as 1999 when Roso assigned his license to operate
Sceptre to her
 2. Aida caused the registration of the business name "Sceptre Security & Detective Agency"
under her name with the DTI a few months after Roso abdicated his rights to Sceptre in her
favor.
3. As far as Royale is concerned, the respondents do not deny that she has a hand in its
management and operation and possesses control and supervision of its employees
4. That Aida was the one who decided to stop giving any assignments to the petitioner and
summarily dismiss him is an eloquent testament of the power she wields insofar as
Royale’s affairs are concerned.
Aida’s control over Sceptre and Royale does not, by itself, call for a disregard of the corporate
fiction. There must be a showing that a fraudulent intent or illegal purpose is behind the
exercise of such control to warrant the piercing of the corporate veil. That the petitioner was made
to resign from Sceptre and apply with Royale only to be unceremoniously terminated shortly
thereafter leads to the ineluctable conclusion that there was intent to violate the petitioner’s rights
as an employee, particularly his right to security of tenure. The respondents’ scheme reeks of bad
faith and fraud.
For the piercing doctrine to apply, it is of no consequence if Sceptre is a sole proprietorship. It is
the act of hiding behind the separate and distinct personalities of juridical entities to perpetuate
fraud, commit illegal acts, evade one’s obligations that the equitable piercing doctrine was
formulated to address and prevent. Considering that:
1. Sceptre and Royale have the same principal place of business
2. The respondents do not likewise deny that Royale and Sceptre share the same officers and
employees.
3. Petitioner was allowed to use the patches and agency cloths of Sceptre during his first
assignment with Royale
4. Royale also claimed a right to the cash bond which the petitioner posted when he was still
with Sceptre. If Sceptre and Royale are indeed separate entities, Sceptre should have
released the petitioner’s cash bond when he resigned and Royale would have required the
petitioner to post a new cash bond in its favor.
Taking the foregoing in conjunction with Aida’s control over Sceptre’s and Royale’s business
affairs, it is patent that Royale was a mere subterfuge for Aida. Since a sole proprietorship does
not have a separate and distinct personality from that of the owner of the enterprise, the latter is
personally liable.
Effectively, the petitioner cannot be deemed to have changed employers as Royale and Sceptre
are one and the same. His separation pay should be computed from the date he was hired by
Sceptre in April 1976 until the finality of this decision.
Second issue: Computation of backwages. It is axiomatic that if reinstatement is not possible,
the period covered in the computation of backwages is from the time the employee was
unlawfully terminated until the finality of the decision finding illegal dismissal. It should not
be limited to an amount equivalent to 3 months of his salary. Backwages is a remedy affording the
employee a way to recover what he has lost by reason of the unlawful dismissal. In awarding
backwages, the primordial consideration is the income that should have accrued to the employee
from the time that he was dismissed up to his reinstatement and the length of service prior to
his dismissal is definitely inconsequential.
 12. Phil. Bank of Communications vs. NLRC
Topic: Independent Contractor and Labor only contractor
PHILIPPINE BANK OF COMMUNICATIONS v. NLRC
GR No. L-66598; 19 December 1986

FACTS:
An agreement was entered into by herein Petitioner, Philippine Bank of Communications
and Corporate Executive Search Inc, in January 1976. Said agreement mandated the latter to
provide for “Temporary Services” to the former consisting of the services of eleven (11)
messengers. Among the eleven messengers was private respondent Ricardo Orpiada. He then
rendered services to the bank, within the premises of said bank, along with other people. The
contract period was described to commence from January 1976 onwards. Consequently, there were
questions as to when the Private Respondent started working in the bank. The letter-agreement
stated that he started working there in January 1976, contrary to the position paper submitted by the
CESI to the NLRC, which averred that he was hired by the CESI to work with the bank as Tempo
Service Employee on 25 June 1975. His services were then terminated in October 1976, when the
Petitioner requested to CESI to withdraw his services because they were no longer needed. Private
respondent then moved to file a complaint against Petitioner for illegal dismissal and failure to pay
the 13th month pay pursuant to PD 851 before the Department of Labor (now Ministry of Labor).
The Department dismissed his complaint because he failed to prove that an employer-employee
relationship existed between him and the bank.
Despite the foregoing order, Orpiada succeeded in having his complaint certified for compulsory
arbitration before the NLRC. The NLRC then ordered the bank to reinstate Orpiada and to pay his
full back wages and the latter’s 13th month pay for the year 1976. Hence, this petition for certiorari.

ISSUE:
Whether or not the relationship is one of employer and job (independent) contractor or one
of employer and "labor-only" contractor.
HELD:
The relationship between the Bank and CESI was that of “labor-only” contractor. In the
present case, the undertaking of CESI was to provide its client, herein Petitioner bank, with a
certain number of persons able to carry out the work of messengers. Such undertaking of CESI was
complied with when the requisite number of persons were assigned or seconded to the petitioner
bank. Orpiada utilized the premises and office equipment of the bank and not those of CESI.
Messengerial work, the delivery of documents to designated persons whether within or without the
bank premises, is of course directly related to the day-to-day operations of the bank.
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 the same 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.

NOTES:
1. There is an employer-employee relationship between Petitioner Bank and private respondent
Orpiada.
a. Power to select employees: While it is true that the CESI hired Orpiada, the selection was
subject to the acceptance of the bank. In this case, it was clear that the bank accepted him. CESI
hired Orpiada precisely for the purpose of assigning or seconding him to the bank.
b. Payment of wages: The bank remitted to CESI amounts corresponding to the daily service rate
of Orpiada, in which the CESI paid to Orpiado the wage pertaining to him.
c. Power to dismiss employees: The bank requested CESI to withdraw Orpiada’s assignment, and
CESI did in fact, withdraw such assignment. Since the purpose of CESI in hiring Orpiada was to
assign him to the bank, when his services were terminated by the bank, his employment to CESI
was also terminated.
d. Power to control: It should be noted immediately that Orpiada performed his sections within
the bank's premises, and not within the office premises of (CESI) As such, Orpiada must have been
subject to at least the same control and supervision that the bank exercises over any other person
physically within its premises and rendering services to or for the bank, in other words, any
employee or staff member of the bank. It seems unreasonable to suppose that the bank would have
allowed Orpiada and the other persons assigned to the bank by CE SI to remain within the bank's
premises and there render services to the bank, without subjecting them to a substantial measure of
control and supervision, whether in respect of the manner in which they discharged their functions,
or in respect of the end results of their functions or activities, or both
2. There is "labor-only" contracting where 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 the workers recruited and placed by such person are performing activities which
are directly related to the principal business of such employer. In such cases, the person or
intermediary shall be considered merely as an agent of the employer who shall be responsible to the
workers in the same manner and extent as if the latter were directly employed by him.
3. Under the general rule set out in the first and second paragraphs of Article 106 of the Labor
Code, 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.
4. 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.
5. 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. A similar situation obtains where there is "labor only"
contracting.
6. The "labor-only" contractor ---- i.e. "the person or intermediary" ---- is considered "merely as
an agent of the employer." The employer is made by the statute responsible to the employees of the
"labor only" contractor as if such employees had been directly employed by the employer.
7. Thus, where "labor only" contracting exists in a given case, the statute itself implies or
establishes an employer-employee relationship between the employer (the owner of the project) and
the employees of the "labor only" contractor, this time for a comprehensive purpose: "employer for
purposes of this Code, to prevent any violation or circumvention of any provision of this Code."
The law in effect holds both the employer and the "labor-only" contractor responsible to the latter's
employees for the more effective safeguarding of the employees' rights under the Labor Code. The
definition of "labor-only" contracting in Rule VIII, Book III of the Implementing Rules must be
read in conjunction with the definition of job contracting given in Section 8 of the same Rules.

13. San Miguel Corp. vs. Semillano

G.R. No. 164257 : July 5, 2010

SAN MIGUEL CORPORATION, Petitioner, v. VICENTE B. SEMILLANO, NELSON MONDEJAR, JOVITO

REMADA, ALILGILAN MULTI-PURPOSE COOP (AMPCO) and MERLYN V. POLIDARIO, Respondents.

MENDOZA, J.:

FACTS:
AMPCO hired the services of Vicente et al. [Vicente Semillano, Nelson Mondejar, Jovito Remada and Alex
Hawod, respondents herein]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. As a result, Vicente et al. failed to claim the rights and benefits ordinarily accorded a
regular employee of SMC. In fact, they were not paid their 13th month pay. On June 6, 1995, they were not
allowed to enter the premises of SMC. The project manager of AMPCO, Merlyn Polidario, told them to wait
for further instructions from the SMCs supervisor. Vicente et al. waited for one month, unfortunately, they
never heard a word from SMC.

Consequently, Vicente et al., as complainants, filed a COMPLAINT FOR ILLEGAL DISMISSAL with the Labor
Arbiter against respondents.
Labor Arbiter (LA) rendered his decision declaring herein complainants as regular employees of San Miguel
Corporation. Petitioner appealed the LA Decision to the NLRC. Initially, the NLRC Fourth Division affirmed
with modifications the findings of the LA.

Petitioner SMC moved for a reconsideration of the foregoing decision. NLRC acted on the motion and
reversed its earlier ruling. It absolved petitioner from liability and instead held AMPCO, as employer of
respondents, liable to pay for respondents backwages, accrued salaries, allowances, and attorneys fees. In
holding that AMPCO was an independent contractor, NLRC was of the view that the law only required
substantial capital or investment. Since AMPCO had "substantial capital of nearly one (1) million" then it
qualified as an independent contractor. The NLRC added that even under the control test, AMPCO would
be the real employer of the respondents, since it had assumed the entire charge and control of
respondents services. Hence, an employer-employee relationship existed between AMPCO and the
respondents.

Respondents timely filed their motion for reconsideration of the NLRC resolution but it was denied. Feeling
aggrieved over the turnaround by the NLRC, the respondents filed a petition for review on certiorari under
Rule 65 with the Court of Appeals (CA), which favorably acted on it.

In overturning the commissions ruling, the Court of Appeals ironically applied the same control test that
the NLRC used to resolve the issue of who the actual employer was. The CA, however, found that petitioner
SMC wielded (i) the power of control over respondent, as SMC personnel supervised respondents
performance of loading and unloading of beer bottles, and (ii) the power of dismissal, as respondents were
refused entry by SMC to its premises and were instructed by the AMPCO manager "to wait for further
instructions from the SMCs supervisor." The CA added that AMPCO was a labor-only contractor since "a
capital of nearly one million pesos" was insufficient for it to qualify as an independent contractor.

ISSUE:

Whether or not AMPCO is a legitimate job contractor?

HELD:

The test to determine the existence of independent contractorship is whether or not the 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 as to the results of the work.

The existence of an independent and permissible contractor relationship is generally established by the
following criteria: 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 a specified piece 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 the premises, tools, appliances, materials, and labor; and the mode,
manner and terms of payment.

Despite the fact that the service contracts contain stipulations which are earmarks of independent
contractorship, they do not make it legally so. The language of a contract is neither determinative nor
conclusive of the relationship between the parties. Petitioner SMC and AMPCO cannot dictate, by a
declaration in a contract, the character of AMPCOs business, that is, whether as labor-only contractor, or
job contractor. AMPCOs character should be measured in terms of, and determined by, the criteria set by
statute. At a closer look, AMPCOs actual status and participation regarding respondents employment
clearly belie the contents of the written service contract.

Petitioner cannot rely either on AMPCOs Certificate of Registration as an Independent Contractor issued by
the proper Regional Office of the DOLE to prove its claim. It 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. In distinguishing between permissible job contracting and prohibited labor-only contracting, the
totality of the facts and the surrounding circumstances of the case are to be considered.

Petitioner also argues that among the permissible contracting arrangements include "work or services not
directly related or not integral to the main business or operation of the principal including work related to
manufacturing processes of manufacturing establishments." The Court is not persuaded. The evidence is
clear that respondents performed activities which were 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.

Petitioner claims that the present case is outside the jurisdiction of the labor tribunals because respondent
Vicente Semillano is a member of AMPCO, not SMC. Precisely, he has joined the others in filing this
complaint because it is his position that petitioner SMC is his true employer and liable for all his claims
under the Labor Code.

Thus, petitioner SMC, as principal employer, is solidarily liable with AMPCO, the labor-only contractor, for
all the rightful claims of respondents. Under this set-up, AMPCO, as the "labor-only" contractor, is deemed
an agent of the principal (SMC). The law makes the principal responsible over the employees of the "labor-
only" contractor as if the principal itself directly hired the employees.

DENIED
14. FVR Skills and Services Exponents, Inc. vs Jovert
Seva
FACTS:
This a petition for review on certiorari challenging the rulings of Court of Appeals (CA) affirming
the decision of the National Labor Relations Commission (NLRC) dated April 28, 2011 and its
resolution dated June 16, 2011. The NLRC rulings in turn reversed and set aside the June 4, 2010
decision of the Labor Arbiter.
The twenty eight (28) respondents in this case were employees of petitioner FVR Skills and Services
Exponents, Inc, an independent contractor engaged in the business of providing of providing
janitorial and other manpower services to its clients. As early as 1998, some of the respondents had
already been under petitioner’s employ. When the one-year contract for janitorial services between
petitioner and Robinsons Land Corporation was no longer extended, petitioner dismissed the 28
respondents prompting them (respondents) to file a complaint for illegal dismissal. The Labor
Arbiter who handled the case ruled that respondents were not regular employees and held that they
were project employees whose duration of employment was dependent on the petitioner’s service
contract with Robinsons. The NLRC reversed the LA rulings and held that respondents were
regular employees since they had been under petitioner’s employ for more than a year already. On
appeal, the CA affirmed the NLRC’s decision and noted that respondents’ jobs as janitors, service
crews and sanitation aides were necessary or desirable to the petitioner’s business of providing
services to its clients.
ISSUE:
Whether or not respondents are considered regular employee.
DECISION:
According to Article 280 (now article 294) of the Labor Code governs determination of whether an
employee is a regular or project employee
Under this provision, there are two kinds of regular employees, namely:
(1) those who were engaged to perform activities which are usually necessary or desirable in the
usual business or trade of the employer; and
(2) those casual employees who became regular after one year of service, whether continuous or
broken, but only with respect to the activity for which they have been hired.
The primary standard in determining regular employment is the reasonable connection between
the particular activity performed by the employee and the employer's business or trade. From the
factual circumstances, the respondents' work as janitors, service crew, and sanitation aides, are
necessary or desirable to the petitioner's business of providing janitorial and manpower services to
its client.
From the facts above respondents were already employed under the petitioner even before the
service contract with Robinsons. They had been doing the same type of work and occupying said
position from the time they are hired. Petitioner also did not present any evidence to refute the
responds' claim. Further, there was no allegation that the petitioner went out of business after the
non-renewal of the Robinsons contract.
Lastly, under Department Order (DO) 18-02,27 grants contractual employees all the rights and
privileges due a regular employee, including the following:
(a) safe and healthful working conditions;
(b) labor standards such as service incentive leave, rest days, overtime pay, holiday pay, 13th
month pay and separation pay;
(c) social security and welfare benefits;
(d) self-organization, collective bargaining and peaceful concerted action; and
(e) security of tenure.

In this light, although the respondents were assigned as contractual employees to the petitioner's
various clients, under the law, they remain to be the petitioner's regular employees, who are entitled
to all the rights and benefits of regular employment.

Finding their illegal dismissal entitles them the awarding of separation pay, SC agreed with CA's
ruling that instead of reinstatement, respondents should be paid their respective separation pays
equivalent to one (1) month pay for every year of service.

_15. Ronnie L. Abing vs NLRC, Allied Banking Corp.,

_16. Fuji Television Network, Inc. vs, Arlene S.

Espiritu

17. Polyfoam-RGC International Corp. vs. Edgardo

Concepcion
Facts:

1. Edgardo Concepcion, a factory worker at Polyfoam-RGC, discovered his time card was off the
rack. He was informed that he was dismissed from work due to infraction of company rules.

2. Precilla A. Gramaje claimed to be a job contractor to Polyfoam and the real employer of
Concepcion. The Motion for Intervention filed by Gramaje was granted by the Labor Arbiter, who
on the other hand, denied Polyfoam's Motion to Dismiss claiming lack of jurisdiction due to the
absence of employer-employee relationship.

3. Ruling in favor of Concepcion, the Labor Arbiter ordered payment to the former separation pay,
backwages, damages, 13th month pay, attorney's fees - Polyfoam and Gramaje to be solidarily
liable.
4. NLRC, upon appeal by the employers, modified the decision, exonerating Polyfoam from liability
for Concepcion’s claim. All monetary awards have been deleted, except for the separation pay,
which was to be paid solely by Gramaje.

5. Upon appeal - CA reinstated the decision of LA.

Issue/s:

1. W/N Gramaje is an independent job contractor

2. W/N an employer-employee relationship exists between Polyfoam and respondent

3. W/N respondent was illegally dismissed from employment.

Held:

1. No. Gramaje is a Labor-Only Contractor, elements:

(a) The contractor or subcontractor does not have substantial capital or investment to actually
perform the job, work or service under its own account and responsibility; and

(b) The employees recruited, supplied or placed by such contractor or subcontractor are
performing activities which are directly related to the main business of the principal.

The test 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 as to the results of the work."

2. Yes. A finding that a contractor is a "labor-only" contractor, as opposed to permissible job

contracting, is equivalent to declaring that there is an employer-employee relationship between the
principal and the employees of the supposed contractor, and the "labor-only" contractor is
considered as a mere agent of the principal, the real employer. In this case, Polyfoam is the
principal employer and Gramaje is the labor-only contractor. Polyfoam and Gramaje are, therefore,
solidarily liable for the rightful claims of respondent.

3. Yes. Not afforded due process - failed to show any valid or authorized cause under the Labor
Code which allowed it to terminate the services of Concepcion, no notice of explanation, no
opportunity given to contest the legality of his dismissal

Petition is denied
18. Norkis Trading vs. Joaquin Buenavista, et. al
Facts:
The respondents were hired by Norkis Trading, a domestic corporation engaged in the business
of manufacturing and marketing of Yamaha motorcycles and multi-purpose vehicles, on separate
dates and for various positions (operator, assistant operator and welder).
Although they worked for Norkis Trading as skilled workers assigned in the operation of industrial
and welding machines owned and used by Norkis Trading for its business, they were not treated
as regular employees. Instead, they were regarded by Norkis Trading as members of PASAKA, a
cooperative organized under the Cooperative Code of the Philippines, and which was deemed an
independent contractor that merely deployed them to render services for Norkis Trading.
Against the foregoing scenario, the respondents, together with several other complainants with
DOLE filed a complaint against Norkis Trading and PASAKA for labor-only contracting and non-
payment of minimum wage and overtime pay. This led to the suspension of the respondents’
membership with PASAKA. They were charged by PASAKA with a violation of the rule against
commission of acts injurious or prejudicial to the interest or welfare of the cooperative.
The respondents received another set of memoranda from PASAKA, now charging them with the
following violations of the cooperative’s rules and regulations: (1) serious misconduct or willful
disobedience of superior’s instructions or orders; (2) gross and habitual neglect of duties by
abandoning work without permission; (3) absences without filing leave of absence; and (4)
wasting time or loitering on company’s time or leaving their post temporarily without permission
during office hours.
Later, PASAKA informed the respondents of the cooperative’s decision to suspend them for 15
working days for violation of PASAKA rules.
The suspension prompted the respondents to file with the NLRC the complaint for illegal
suspension against Norkis Trading and PASAKA. The 15-day suspension of the respondents was
extended for another period of 15 days.
The respondents were to report back to work but during the hearing in their NLRC case, they were
informed by PASAKA that they would be transferred to Norkis Tradings’ sister company, Porta
Coeli Industrial Corporation (Porta Coeli), as washers of Multicab vehicles. These circumstances
made the respondents amend their complaint for illegal suspension, to include the charges of
unfair labor practice, illegal dismissal, damages and attorney’s fees.
The Labor Arbiter dismissed the complaint. The respondents appealed from the decision of the LA
to the NLRC. In the meantime, DOLE Regional Director ruled that PASAKA was engaged in labor-
only contracting. This Order was later affirmed by the DOLE Secretary. CA affirmed the Orders of
the DOLE Secretary.
However, NLRC held that the respondents were not illegally suspended from work, as it was their
membership in the cooperative that was suspended after they were found to have violated the
cooperative’s rules and regulations. The respondents’ motion for reconsideration was denied by
the NLRC. Finding merit in the petition for certiorari, the CA rendered its decision reversing and
setting aside the decision and resolution of the NLRC. Norkis Trading’s motion for reconsideration
was denied by the CA. Hence, this petition.
Issues:
1. Whether PASAKA is a mere labor-only contractor and thus Norkis Trading is the employer
of the respondents.
2. Whether the transfer is a valid exercise of management prerogative
3. Whether the respondents were illegally terminated

Held:
1. Yes. Norkis Trading is the principal employer of the respondents, considering that PASAKA
is a mere labor-only contractor. Labor-only contracting, a prohibited act, is an arrangement where
the contractor or subcontractor merely recruits, supplies, or places workers to perform a job,
work, or service for a principal. In labor-only contracting, the following elements are present:
(a) the contractor or subcontractor does not have substantial capital or investment to actually
perform the job, work, or service under its own account and responsibility; and
(b) the employees recruited, supplied or placed by such contractor or subcontractor perform
activities which are directly related to the main business of the principal.

PASAKA failed to sufficiently show that it had substantial capital or investment in the form of tools,
equipment, machineries and work premises required from legitimate job contractors. The work
required from the respondents, being welders and/or operators of industrial machines, were also
directly related to Norkis Trading’s principal business of manufacturing. The job contract
supposedly executed by and between PASAKA and Norkis International in 1999 deserved nil
consideration given that the respondents had claimed early on that they began working for Norkis
Trading on various dates from 1993 to 1994. Moreover, the records confirm that Norkis Trading
was still among the clients of PASAKA as of July 1999.

2. No. First, the exercise of management prerogative presupposes that the transfer is only for
positions within the business establishment which is not the case here. Second, the exercise of
management prerogative by employers is not absolute, as it is limited by law and the general
principles of fair play and justice.

3. Yes. The respondents were illegally dismissed by Norkis Trading, not by constructive
dismissal as declared by CA, but by actual dismissal. Where an entity is declared to be a labor-
only contractor, the employees supplied by said contractor to the principal employer become
regular employees of the latter. Having gained regular status, the employees are entitled to
security of tenure and can only be dismissed for just or authorized causes and after they had been
afforded due process. Termination of employment without just or authorized cause and without
observing procedural due process is illegal.

PASAKA informed the respondents that they would be transferred, upon the behest of Norkis
Trading, as Multicab washers or utility workers to Porta Coeli, a sister company of Norkis Trading.
There is then the intention to dismiss, and the actual dismissal of the respondents were sufficiently
established.
19. Benigno M. Vigilia, et al. vs. Philippine College of
Criminology Inc.
Facts:
PCCr is a non-stock educational institution, while the petitioners were janitors, janitresses and
supervisor in the Maintenance Department of PCCr under the supervision and control of Atty.
Florante A. Seril (Atty. Seril). The petitioners, however, were made to understand, upon application
with respondent school, that they were under MBMSI, a corporation engaged in providing janitorial
services to clients. Atty. Seril is also the President and General Manager of MBMSI.

Sometime in 2008, PCCr discovered that the Certificate of Incorporation of MBMSI had been
revoked as of July 2, 2003. On March 16, 2009, PCCr, through its President, respondent Gregory
Alan F. Bautista (Bautista), citing the revocation, terminated the school’s relationship with MBMSI,
resulting in the dismissal of the employees or maintenance personnel under MBMSI, except
Alfonso Bongot (Bongot) who was retired.

In September, 2009, the dismissed employees, led by their supervisor, Benigno Vigilla (Vigilla),
filed their respective complaints for illegal dismissal, reinstatement, back wages, separation pay
(for Bongot), underpayment of salaries, overtime pay, holiday pay, service incentive leave, and
13th month pay against MBMSI, Atty. Seril, PCCr, and Bautista.

In their complaints, they alleged that it was the school, not MBMSI, which was their real employer
because (a) MBMSI’s certification had been revoked; (b) PCCr had direct control over MBMSI’s
operations; (c) there was no contract between MBMSI and PCCr; and (d) the selection and hiring
of employees were undertaken by PCCr.

On the other hand, PCCr and Bautista contended that (a) PCCr could not have illegally dismissed
the complainants because it was not their direct employer; (b) MBMSI was the one who had
complete and direct control over the complainants; and (c) PCCr had a contractual agreement with
MBMSI, thus, making the latter their direct employer.

On September 11, 2009, PCCr submitted several documents before LA Ronaldo Hernandez,
including releases, waivers and quitclaims in favor of MBMSI executed by the complainants to
prove that they were employees of MBMSI and not PCCr.

Petitioners vehemently deny having executed any release, waiver or quitclaim in favor of MBMSI.
They insist that PCCr forged the documents just to evade their legal obligations to them, alleging
that the contents of the documents were written by one person, whom they identified as Reynaldo
Chavez, an employee of PCCr, whose handwriting they were familiar with.

LA ruled that (a) PCCr was the real principal employer of the complainants; (b) MBMSI was a mere
adjunct or alter ego/labor-only contractor; (c) the complainants were regular employees of PCCr;
and (d) PCCr/Bautista were in bad faith in dismissing the complainants.
NLRC affirmed the LA’s findings. Nevertheless, the respondents were excused from their liability
by virtue of the releases, waivers and quitclaims executed by the petitioners.

CA denied the petition and affirmed the two Resolutions of the NLRC, and upheld the factual
findings of the NLRC as to the authenticity and due execution of the individual releases, waivers
and quitclaims because of the failure of petitioners to substantiate their claim of forgery and to
overcome the presumption of regularity of a notarized document.

Issues:
(1) WON petitioners executed the said releases, waivers and quitclaims
(2) WON there is solidary liability between the labor-only contractor and the employer

Held:
(1) Yes. Petitioners had several opportunities to question the authenticity of the said documents
but did not do so. The records disclose that during the proceedings before the LA, PCCr submitted
several documents, including the subject releases, waivers and quitclaims executed on September
11, 2009 in favor of MBMSI, but petitioners never put their genuineness and due execution at
issue. These were brought up again by the respondents in their Memorandum of Appeal, but again
petitioners did not bother to dispute them.

It was only after the NLRC’s declaration in its February 11, 2011 Resolution that the claims of
petitioners had been settled amicably by virtue of the releases, waivers and quitclaims, that
petitioners, in their motion for reconsideration,16 denied having executed any of these instruments.
This passiveness and inconsistency of petitioners will not pass the scrutiny of this Court.

We noted that the individual quitclaims, waivers and releases executed by the complainants
showing that they received their separation pay from MBMSI were duly notarized by a Notary
Public. Such notarization gives prima facie evidence of their due execution. Further, said releases,
waivers, and quitclaims were not refuted nor disputed by complainants herein, thus, we have no
recourse but to uphold their due execution.

(2) Yes. As correctly pointed out by the respondents, the basis of the solidary liability of the
principal with those engaged in labor-only contracting is the last paragraph of Article 106 of the
Labor Code, which in part provides: "In such cases labor-only contracting, the person or
intermediary shall be considered merely as an agent of the employer who shall be responsible to
the workers in the same manner and extent as if the latter were directly employed by him."

Section 19 of Department Order No. 18-02 issued by the Department of Labor and Employment
(DOLE), which was still in effect at the time of the promulgation of the subject decision and
resolution, interprets Article 106 of the Labor Code in this wise:
Section 19. Solidary liability. The principal shall be deemed as the direct employer of the
contractual employees and therefore, solidarily liable with the contractor or subcontractor for
whatever monetary claims the contractual employees may have against the former in the case of
violations as provided for in Sections 5 (LaborOnly contracting), 6 (Prohibitions), 8 (Rights of
Contractual Employees) and 16 (Delisting) of these Rules. In addition, the principal shall also be
solidarily liable in case the contract between the principal and contractor or subcontractor is
preterminated for reasons not attributable to the fault of the contractor or subcontractor.

Jurisprudence is also replete with pronouncements that a job-only contractor is solidarily liable with
the employer. One of these is the case of Philippine Bank of Communications v. NLRC34 where
this Court explained the legal effects of a job-only contracting, to wit:

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-employees 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 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.

The "labor-only" contractor-i.e "the person or intermediary" - is considered "merely as an agent of

the employer." The employer is made by the statute responsible to the employees of the "labor
only" contractor as if such employees had been directly employed by the employer. Thus, where
"labor-only" contracting exists in a given case, the statute itself implies or establishes an employer-
employee relationship between the employer (the owner of the project) and the employees of the
"labor only" contractor, this time for a comprehensive purpose: "employer for purposes of this
Code, to prevent any violation or circumvention of any provision of this Code." The law in effect
holds both the employer and the "laboronly" contractor responsible to the latter's employees for the
more effective safeguarding of the employees' rights under the Labor Code.

20. Superior Packaging Corp. vs. Arnel Balagsay

20. Superior Packaging Corporation vs. Arnel Balagsay, ET AL. - Ruel Ruiz
G.R. NO. 178909, 10 OCT 2012

Facts:
This is the case of a manufacturer charged to be jointly and solidarily liable being the principal of the
respondents’ agency for:
1. Underpayment of wages
2. Non-payment of premium pay for worked rest
3. Overtime pay
4. Non-payment of salary

The petitioner engaged the services of Lancer to provide reliever services to its business which involves the
manufacture and sale of commercial and industrial corrugated boxes.

The respondents were engaged for 4 months to load, unload and segregate the corrugated boxes.

DOLE conducted an inspections of the petitioner’s premises and found several violations:
1. Non-presentation of payrolls and daily time records
2. Non-submission of annual report of safety organization
3. Medical and accident/illness reports
4. Non- registration of establishment under Rule 1020 of Occupation and Health Standards
5. No Trained first aide

DOLE to issue an order in favor of the respondents against the petitioner for failure to appear in the
summary investigation

Petitioner and its president were ordered to pay the respondent in the amount of Php840k.

Petitioner filed a motion for consideration claiming that respondents are not its employees but of Lancer
and the latter is paid for the services rendered.

DOLE denied the motion for the petitioner failure to support its claim that respondents are not its
employees.
Even if they were employed by Lancer, the petitioner still cannot escape liability as per Sec. 13 of
Department Order No. 10 series of 1997 makes a principal jointly and severally liable with the contractor.

Petitioner and the president appeal with the CA and was likewise denied and affirmed DOLE’s decision with
the modification that the president was absolved of any personal liability.

Petitioner claimed that no evidence showing the respondents rendered overtime work and worked on their
rest days.

Likewise, petitioner denied that it is engaged in labor-only contracting and is consequently an indirect
employer.

Petitioner also denied the existence of employee-employer relationship.

Issue:

1. WON Superior Packaging Corporation (petitioner) may be held liable with Lancer Staffing &
Services Network, Inc. for respondents unpaid money claim.
2. WON DOLE acted within its authority.
Held:

1. Yes. Lancer was not an independent contractor but was engaged in labor-only contracting and
therefore an indirect employer of the respondents and liable to the latter for their unpaid money
claims.

Finding that a contractor is a labor-only contractor is equivalent to declaring that there is an employee-
employer relationship between the principal and the employees of the supposed contractor and the latter
is considered as a mere agent of the principal.

Labor only contracting – any person who undertakes to supply workers to employer shall be deemed to be
engaged in such where such person:
a. Does not have substantial capital or investment in the form of tools, equipment, machineries, work
premises and other material
b. The workers recruited and placed by such persons are performing activities related to the principal
business or operations of the employer in which workers are habitually employed.
Labor only contracting is prohibited and the person acting as contractor shall be considered merely as an
agent of the employer who shall be responsible to the workers in the same manner and extent as if the
latter were directly employed by him.

The petitioner likewise failed to produce any written service contract that might serve as proof of its
alleged agreement with Lancer.
In the case at bar, Lancer was clearly has no substantial capital investment for the daily operations

2. Yes. As it falls within the purview of its visitorial and enforcement power under Art. 128 (b) of the Labor
Code. DOLE has the power to determine the existence of employee-employer relationship with is merely
preliminary, incidental and collateral to the DOLE’s primary function of enforcing labor standards
provisions which is subject to judicial review and NOT by the NLRC.

21. Eparwa Security and Janitorial Services, Inc. vs.

Liceo de Cagayan University
The Facts- On 1 December 1997, Eparwa and LDCU, through their representatives, entered into a Contract for Security
Services.
“5. For and in consideration of this security, protective and safety services, [LDCU] agrees to pay [Eparwa] FIVE
THOUSAND PESOS ONLY (P5,000.00), Philippine Currency per guard a month payable within fifteen (15) days after
[Eparwa] presents its service invoice. [Eparwa] shall furnish [LDCU] a monthly copy of SSS contribution of guards and
monthly payroll of each guard assigned at [LDCUs] premises on a monthly basis”

On 21 December 1998, 11 security guards (security guards) whom Eparwa assigned to LDCU from 1 December 1997 to
30 November 1998 filed a complaint before the National Labor Relations Commissions (NLRC) against both Eparwa and
LDCU for underpayment of salary, legal holiday pay, 13th month pay, rest day, service incentive leave, night shift
differential, overtime pay, and payment for attorneys fees.

LDCU made a cross-claim and prayed that Eparwa should reimburse LDCU for any payment to the security guards.

The Issue - Whether LDCU alone ultimately liable to the security guards for the wage differentials and premium for
holiday and rest day pay?

Decision -

For the security guards, the actual source of the payment of their wage differentials and premium for holiday and rest
day work does not matter as long as they are paid. This is the import of Eparwa and LDCUs solidary liability. Creditors,
such as the security guards, may collect from anyone of the solidary debtors. Solidary liability does not mean that, as
between themselves, two solidary debtors are liable for only half of the payment.

LDCUs ultimate liability comes into play because of the expiration of the Contract for Security Services. There is no
privity of contract between the security guards and LDCU, but LDCUs liability to the security guards remains because of
Articles 106, 107 and 109 of the Labor Code. Eparwa is already precluded from asking LDCU for an adjustment in the
contract price because of the expiration of the contract, but Eparwas liability to the security guards remains because of
their employer-employee relationship. In lieu of an adjustment in the contract price, Eparwa may claim reimbursement
from LDCU for any payment it may make to the security guards. However, LDCU cannot claim any reimbursement from
Eparwa for any payment it may make to the security guards.

22. Royale Homes Mktg. Corp. vs. Fidel P. Alcantara

Facts: Royale Homes, a corporation engaged in marketing real estates, appointed Alcantara as its
Marketing Director for a fixed period of one year. His work consisted mainly of marketing Royale
Homes’ real estate inventories on an exclusive basis. Royale Homes reappointed him for several
consecutive years, the last of which covered the period January 1 to December 31,2003. Alcantara
filed a complaint for Illegal Dismissal against Royale. Alcantara alleged that he is a regular
employee of Royale Homes since he is performing tasks that are necessary and desirable to its
business and that the acts of the executive officers of Royale Homes amounted to his dismissal
from work without any valid or just cause and in gross disregard of the proper procedure for
dismissing employees. Royale Homes, on the other hand and, denied that Alcantara is its employee.
It argued that the appointment paper of Alcantara is clear that it engaged his services as an
independent sales contractor for a fixed term of one year only. He never received any salary, 13th
month pay, overtime pay or holiday pay from Royale Homes as he was paid purely on commission
basis. In addition, Royale Homes had no control on how Alcantara would accomplish his tasks and
responsibilities as he was free to solicit sales at any time and by any manner which he may deem
appropriate and necessary. According to Royale Homes, Alcantara decided to leave the company
after his wife, who was once connected with it as a sales agent, had formed a brokerage company
that directly competed with its business, and even recruited some of its sales agents. Two months
after he relinquished his post, however, Alcantara appeared in Royale Homes and submitted a letter
claiming that he was illegally dismissed. The Labor Arbiter rendered a Decision holding that
Alcantara is an employee of Royale Homes and that the pre termination of his contract was against
the law. The NLRC rendered its Decision, ruling that Alcantara is not an employee but a a mere
independent contractor of Royale Homes. It based its ruling mainly on his employment contract.
The CA promulgated its Decision granting Alcantara’s petitionand reversing the NLRC’s Decision.
Applying the four fold and economic reality tests, it held that Alcantara is an employee of Royale
Homes.

Issue: Whether or not Mr. Fidel P. Alcantara is an employee of Royale Homes Marketing
Corporation.

Ruling: The Court disagrees. It is convinced that Alcantara is not an employee of Royale Homes,
but a mere independent contractor. The NLRC is, therefore, correct in concluding that the Labor
Arbiter has no jurisdiction over the case and that the same is cognizable by the regular courts. Not
every form of control is indicative of employer-employee relationship. A person who performs
work for another and is subjected to its rules, regulations, and code of ethics does not necessarily
become an employee. As long as the level of control does not interfere with the means and methods
of accomplishing the assigned tasks, the rules imposed by the hiring party on the hired party do not
amount to the labor law concept of control that is indicative of employer-employee relationship.
WHEREFORE, the instant Petition is hereby GRANTED. The June 23, 2010 Decision of the Court
of Appeals in CA-G.R. SP No. 109998 is REVERSED and SET ASIDE. The February 23, 2009
Decision of the National Labor Relations Commission is REINSTATED and AFFIRMED. SO
ORDERED.

23. Global Resource for Outsourced Workers, Inc. vs

Abraham C. Velasco & Nanette T. Velasco
Global Resource for Outsourced Workers, Inc. vs. Abraham & Nanette Velasco
GR No. 196883

Facts: Petitioner GROW is a domestic corporation engaged in the placement of workers for overseas
deployment. Respondents Sps. Velasco were hired by MS Retail through GROW as circus performer and
circus performer assistant at MS Retail’s store in Kuwait. In the employment contract, Abraham and Nanette
were entitled to $2,303 and $531respectively with work schedule: 4 shows/day, 6 days/week, 48
hours/month. Also stipulated that MS Retail may determine hours of work assigned “from time to time in
accordance with the general and particular requirements of the operation” and that “they may be asked to
carry out duties as the business may require.” When the spouses arrived in Kuwait, they were informed that
the 48 hours/month was just a typographical error and the correct number was 48 hours/week, to which they
complied. Sps. Velasco went to Thailand on approved leaved. They sent an email to MS Retail saying that
they would not be able to return because of political protests in Thailand and that they would be back on
September 10, 2008. However, contrary to their representation, they returned to the Philippines on
September 9, 2008. On September 17, 2008, MS Retail sent an email warning that if they do not return, they
would be dismissed. Sps. Velasco ignored the email and they were then dismissed on September 23, 2008.
Unknown to MS Retail, Sps. Velasco had already filed a case for constructive dismissal, breach of contract,
payment of contract and damages. They claimed that they were made to work 48 hours per week without
overtime pay and that they were assigned to work not related to circus performers. Hence they were
constructively dismissed. LA found them to have been constructively dismissed without cause but overtime
pay denied because it was just a typographical error. NLRC dismissed complaint on the ground of
abandonment. The CA rendered a decision holding that while respondents were validly terminated, the
petitioners failed to follow twin notice rule.

Issue: Whether or not Sps. Velasco are entitled to overtime pay.

Held: Sps. Velasco are not entitled to overtime pay. Obligations arising from contract, like an employment
contract have the force of law between the contracted parties and should be complied with in good faith.
However, when the contract is vague like in the case at bar, the Court has to determine the real intention.
The respondents were informed of the error and despite working for more than half a year where they could
have complained, they did nothing and without any protest. It was only at the LA that they raised this which
indicates that it was a mere afterthought. Also, an evaluation of the contract shows that it was the true
intention of the parties for 48 hours a week and not a month. Intent and not the text of a contract prevails. To
hold otherwise would defeat purpose of agreements.