Brotherhood Labor Unity Movement of

the Phil. v. Zamora

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.  These are:
·         The selection and engagement of the employee
·         Payment of wages
·         Power of dismissal
·         Control Test- the employer’s power to control the employee with respect to the means and methods by
which work is to be accomplished
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 petitioner’s employment appears indefinite and the continuity and habituality of the petitioner’s 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 where 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 company’s control over the workers. That
San Miguel has the power to recommend penalties or dismissal is the strongest indication of the
company’s right of control over the workers as direct employer.

*SC ordered San Miguel to reinstate the petitioners with 3 years backwages.
TIRAZONA v. PHILIPPINE EDS TECHNO-SERVICE (PET) INC
FACTS: The petitioner, a managerial employee who was holding a position of trust and
confidence, was admonished by the latter of her improper handling of a situation involving a
rank-and-file employee. She admitted having read a supposed confidential letter for the PET
directors containing a  legal opinion of the respondent's counsel regarding the status of her
employment. As a consequence, she was terminated for willful breach of trust reposed upon
by her employer. She claimed having been denied of due process.
 
ISSUE: Was her dismissal justified?
 
HELD: Yes. The petitioner has given the respondent more than enough reasons to distrust
her. The arrogance and hostility she has shown towards the company her stubborn
uncompromising stance in almost all  instances justify the company's termination of her
employment.

Tabas vs. California Manufacturing Co., Inc. [169 SCRA 497,

GR 80680]
Posted by Pius Morados on November 17, 2011

(Labor Standards – Both employer and labor only contractor may be liable)
Facts: Petitioners filed a petition in the NLRC for reinstatement and payment of various benefits against California
Manufacturing Company. The respondent company then denied the existence of an employer-employee relationship
between the company and the petitioners.
Pursuant to a manpower supply agreement, it appears that the petitioners prior their involvement with California
Manufacturing Company were employees of Livi Manpower service, an independent contractor, which assigned them
to work as “promotional merchandisers.” The agreement provides that:

California “has no control or supervisions whatsoever over [Livi’s] workers with respect to how they accomplish their
work or perform [Californias] obligation” It was further expressly stipulated that the assignment of workers to
California shall be on a “seasonal and contractual basis”; that “[c]ost of living allowance and the 10 legal holidays will
be charged directly to [California] at cost “; and that “[p]ayroll for the preceding [sic] week [shall] be delivered by [Livi]
at [California’s] premises.”

Issue: WON principal employer is liable.

Held: Yes. The existence of an employer-employee relation cannot be made the subject of an agreement.
Based on Article 106, “labor-only” contractor is considered merely as an agent of the employer, and the liability must
be shouldered by either one or shared by both.

There is no doubt that in the case at bar, Livi performs “manpower services”, meaning to say, it contracts out labor in
favor of clients. We hold that it is one notwithstanding its vehement claims to the contrary, and notwithstanding the
provision of the contract that it is “an independent contractor.”  The nature of one’s business is not determined by
self-serving appellations one attaches thereto but by the tests provided by statute and prevailing case law.  The bare
fact that Livi maintains a separate line of business does not extinguish the equal fact that it has provided California
with workers to pursue the latter’s own business. In this connection, we do not agree that the petitioners had been
made to perform activities ‘which are not directly related to the general business of manufacturing,” California’s
purported “principal operation activity.”  Livi, as a placement agency, had simply supplied California with the
manpower necessary to carry out its (California’s) merchandising activities, using its (California’s) premises and
equipment.

Social Security System v. Court of Appeals, G.R.

No. L-41299, 21 February 1983
09JAN
En Banc
[MELENCIO-HERRERA, J.]
FACTS: Spouses David B. Cruz and Socorro Concio Cruz applied for and were granted a real estate loan
by the SSS with their residential lot located at Lozada Street, Sto. Rosario, Pateros, Rizal. Claiming that
the conditions of mortgage have been broken, SSS filed an application for foreclosure of real estate
mortgage.
The Cruz spouses, together with their daughter Lorna C. Cruz, instituted before the Court of First Instance
of Rizal an action for damages and attorney’s fees against the Social Security System (SSS) and the
Provincial Sheriff of Rizal alleging, among other things, that they had fully and religiously paid their
monthly amortizations and had not defaulted in any payment.

ISSUE: Can the SSS, exercising governmental functions, be held liable for damages?
HELD: YES.
There should be no question on this score considering that the SSS is a juridical entity with a personality
of its own. It has corporate powers separate and distinct from the Government. SSS’ own organic act
specifically provides that it can sue and be sued in Court. These words “sue and be sued” embrace all
civil process incident to a legal action. So that, even assuming that the SSS, as it claims, enjoys immunity
from suit as an entity performing governmental functions, by virtue of the explicit provision of the
aforecited enabling law, the Government must be deemed to have waived immunity in respect of the
SSS, although it does not thereby concede its liability. That statutory law has given to the private-citizen a
remedy for the enforcement and protection of his rights. The SSS thereby has been required to submit to
the jurisdiction of the Courts, subject to its right to interpose any lawful defense. Whether the SSS
performs governmental or proprietary functions thus becomes unnecessary to belabor. For by that waiver,
a private citizen may bring a suit against it for varied objectives, such as, in this case, to obtain
compensation in damages arising from contract and even for tort.

Nelly Acta Martinez, petitioner,

vs NLRC, etc. respondents.
Ponente: Bellosillo

Facts:
Raul Martinez was an operator of two taxicab units under business
name PAMATX and another two units under business name TIGERTX.
Private respondents worked for him as drivers. When Martinez died,
he left behind his mother, Nelly Martinez as his sole heir.
July 1992, the drivers lodged complaint against Raul and Nelly
before the labor arbiter for violation of PD 851 and illegal
dismissal. They alleged that they have been regular drivers of Raul
earning 400 a day, not once during their employment that they
received 13th month pay. When Nelly assumed the management of the
units, she informed the drivers that she will sell the units for
she can't manage it, but later did not proceed with her plan and
assigned the units to other drivers instead.

Nelly traversed that the 13th month pay was personal to Raul and
therefore didn't survive the death of Raul. Nelly contend too that
the drivers were not entitled of the benefits of PD 851 because
paid on purely boundary basis which are not covered by PD 851, the
relationship was not employer-employee but that od lessee-lessor. 

On 30 August 1993 the Labor Arbiter dismissed the complaint on the

following grounds:  (a) private respondents' claims being personal
were extinguished upon the death of Raul Martinez; (b) petitioner
was a mere housewife who did not possess the required competence to
manage the business; and, (c) private respondents were not entitled
to 13th    month    pay    because the existence of employer-
employee relationship was doubtful on account of the boundary
system adopted by the parties.

However, respondent National Labor Relations Commission viewed the

case differently.  According to NLRC, (a) private respondents were
regular drivers because payment of wages, which is one of the
essential requisites for the existence of employment relation, may
either be fixed, on commission, boundary, piece-rate or task basis;
(b) the management of the business passed on to petitioner who even
replaced private respondents with a new set of drivers; and, (c)
the claims of private respondents survived the death of Raul
Martinez considering that the business did not cease operation
outright but continued presumably, in the absence of proof of sale,
up to the moment.  

On 28 January 1994 respondent NLRC thus set aside the appealed

decision, and as alternative to reinstatement, ordered petitioner
to grant respondents separation pay equivalent to one (1) month
salary for every year of service a fraction of six (6) months being
considered as one (1) whole year. On 30 September 1994 the motion
for reconsideration was denied. Hence, this recourse of petitioner.

Ruling:
The claim for 13th month pay pertains to the personal obligation of
Raul Martinez which did not survive his death.  The rule is settled
that unless expressly assumed, labor contracts are not enforceable
against the transferee of an enterprise.  In the present case,
petitioner does not only disavow that she continued the operation
of the business of her son but also disputes the existence of labor
contracts between her son and private respondents. 

The reason for the rule is that labor contracts are in personam,
and that claims for backwages earned from the former employer
cannot be filed against the new owners of an enterprise. Nor is the
new operator of a business liable for claims for retirement pay of
employees. Thus the claim of private respondents should have been
filed instead in the intestate proceedings involving the estate of
Raul Martinez in accordance with Sec. 5, Rule 86, of the Rules of
Court.

In National Labor Union v. Dinglasan,[9] this Court ruled that the

relationship between jeepney owners/operators on one hand and
jeepney drivers on the other under the boundary system is that of
employer-employee and not of lessor-lessee.  

In the present case, however, private respondents simply assumed

the continuance of an employer-employee relationship between them
and petitioner, when she took over the operation of  the  business
after  the death of her son Raul Martinez, without any supporting
evidence.  Consequently, we cannot sustain for lack of basis the
factual finding of respondent NLRC on the existence of employer-
employee  relationship between petitioner and private respondents.
Clearly, such finding emanates from grave abuse of discretion.
With this conclusion, consideration of the issue on illegal
dismissal becomes futile and irrelevant.

WHEREFORE, the petition is GRANTED.  The Decision of respondent

National Labor Relations Commission dated 28 January 1994 ordering
petitioner Nelly Acta Martinez to grant respondents separation pay
as well as its Order of 30 September 1994 denying reconsideration
is  SET  ASIDE.  The Decision of the Labor Arbiter dated 30 August
1993 dismissing the complaint is  REINSTATED. 
DBP VS. NLRC ET AL DIGEST
DECEMBER 19, 2016  ~ VBDIAZ

DEVELOPMENT BANK OF THE PHILIPPINES, petitioner, vs. THE

NATIONAL LABOR RELATIONS COMMISSION, ONG PENG, ET AL.,
respondents.,

G.R. No. 100264-81;     Jan 29, 1993

FACTS:

November 14, 1986, private respondents filed with DOLE- Daet, Camarines Norte, 17
individual complaints against Republic Hardwood Inc. (RHI) for unpaid wages and
separation pay. These complaints were thereafter endorsed to Regional Arbitration
Branch of the NLRC since the petitioners had already been terminated from
employment.
RHI alleged that it had ceased to operate in 1983 due to the government ban against
tree-cutting and that in May 24, 1981, its sawmill was totally burned resulting in
enormous losses and that due to its financial setbacks, RHI failed to pay its loan with
the DBP. RHI contended that since DBP foreclosed its mortgaged assets on
September 24,1985, then any adjudication of monetary claims in favor of its former
employees must be satisfied against DBP. Private respondent impleaded DBP.
Labor Arbiter  favored private respondents and held RHI and DBP jointly and
severally liable to private respondents. DBP appealed to the NLRC. NLRC affirmed
LA’s judgment. DBP filed M.R. but it was dismissed. Thus, this petition for certiorari.
ISSUE:

(1) Whether the private respondents are entitled to separation pay.

(2) Whether the private respondents’ separation pay should be preferred than the
DBP’s lien over the RHI’s mortgaged assets.
RULING:

Yes. Despite the enormous losses incurred by RHI due to the fire that gutted the
sawmill in 1981 and despite the logging ban in 1953, the uncontroverted claims for
separation pay show that most of the private respondents still worked up to the end of
1985. RHI would still have continued its business had not the petitioner foreclosed all
of its assets and properties on September 24, 1985. Thus, the closure of RHI’s
business was not primarily brought about by serious business losses. Such closure was
a consequence of DBP’s foreclosure of RHI’s assets. The Supreme Court applied
Article 283 which provides:
“. . . in cases of closures or cessation of operations of establishment or undertaking
not due to serious business losses or financial reverses, the separation pay shall be
equivalent to 1 month pay or at least 1/2 month pay for every year of service,
whichever is higher. . . .”
(2) No. Because of the petitioner’s assertion that LA and NLRC incorrectly applied
the provisions of Article 110 of the Labor Code, the Supreme Court was constrained
to grant the petition for certiorari.
Article 110 must be read in relation to the Civil Code concerning the classification,
concurrence and preference of credits, which is application in insolvency proceedings
where the claims of all creditors, preferred or non-preferred, may be adjudicated in a
binding manner. Before the workers’ preference provided by Article 110 may be
invoked, there must first be a declaration of bankruptcy or a judicial liquidation of the
employer’s business.
NLRC committed grave abuse of discretion when it affirmed the LA’s ruling.
DBP’s lien on RHI’s mortgaged assets, being a mortgage credit, is a special preferred
credit under Article 2242 of the Civil Code while the workers’ preference is
an ordinary preferred credit under Article 2244.
A distinction should be made between a preference of credit and a lien. A preference
applies only to claims which do not attach to specific properties. A lien creates a
charge on a particular property. The right of first preference as regards unpaid wages
recognized by Article 110 does not constitute a lien on the property of the insolvent
debtor in favor of workers. It is but a preference of credit in their favor, a preference
in application. It is a method adopted to determine and specify the order in which
credits should be paid in the final distribution of the proceeds of the insolvent’s assets.
It is a right to a first preference in the discharge of the funds of the judgment debtor.
Article 110 of the Labor Code does not create a lien in favor of workers or employees
for unpaid wages either upon all of the properties or upon any particular property
owned by their employer. Claims for unpaid wages do not therefore fall at all within
the category of specially preferred claims established under Articles 2241 and 2242 of
the Civil Code, except to the extent that such claims for unpaid wages are already
covered by Article 2241, (6)- (claims for laborers’ wages, on the goods manufactured
or the work done); or by Article 2242,(3)- (claims of laborers and other workers
engaged in the construction, reconstruction or repair of buildings, canals and other
works, upon said buildings, canals and other works.
Since claims for unpaid wages fall outside the scope of Article 2241 (6) and 2242 (3),
and not attached to any specific property, they would come within the category of
ordinary preferred credits under Article 2244.
(Note: SC favored DBP kasi yung mortgage nila against RHI was executed prior to
the amendment of Article 110. The amendment can’t be given retroactive effect daw.
Pero sa present, 1st  priority na talaga ang laborer’s unpaid wages  regardless kung
may mortgage or wala ang ibang creditors ng employer)
Article 110 of the Labor Code has been amended by R.A. No. 6715 and now reads:
“Article 110. Worker preference in case of bankruptcy. – In the event of bankruptcy
or liquidation of an employers business, his workers shall enjoy first preference as
regards their unpaid wages and other monetary claims, any provision of law to the
contrary notwithstanding. Such unpaid wages, and monetary claims shall be paid in
full before the claims of the Government and other creditors may be paid.”
The amendment “expands worker preference to cover not only unpaid wages but also
other monetary claims to which even claims of the Government must be deemed
subordinate.” Hence, under the new law, even mortgage credits are subordinate to
workers’ claims.
R.A. No. 6715, however, took effect only on March 21, 1989. The amendment cannot
therefore be retroactively applied to, nor can it affect, the mortgage credit which was
secured by the petitioner several years prior to its effectivity.
Even if Article 110 and its Implementing Rule, as amended, should be interpreted to
mean `absolute preference,’ the same should be given only prospective effect in line
with the cardinal rule that laws shall have no retroactive effect, unless the contrary is
provided. To give Article 110 retroactive effect would be to wipe out the mortgage in
DBP’s favor and expose it to a risk which it sought to protect itself against by
requiring a collateral in the form of real property.
The public respondent, therefore, committed grave abuse of discretion when it
retroactively applied the amendment introduced by R.A. No. 6715 to the case at bar.
Petition GRANTED. Decision of NLRC SET ASIDE.

Great Pacific Life Assurance Corporation vs. Judico

G.R. No. 73887. December 21, 1989

P- Great Pacific Life Assurance Corporation

R- Honorato Judico

Employer-Employee Relationship; Conditions of Employment

Facts:

Honorato Judico filed a complaint for illegal dismissal against Grepalife and prayed for award of money
claims. The LA dismissed the complaint on the ground that the employer-employee relations did not
exist between the parties, but ordered Grepalife to pay complainant the sum of P1,000.00 by reason of
Christian Charity. Both appealed to NLRC.

The NLRC reversed the LA ruling by declaring Judico a regular employee as defined under Art. 281 of the
Labor Code.

Grepalife argued that Judico is not its employee because his compensation was in the form of
commissions and bonuses based on actual production (insurance plans sold and premium collections).

Issue:

WoN employer-employee relationship existed between the parties.

Ruling:

Yes, there exists an er-ee relation between Grepalife and Judico because the element of control
by the former on the latter was present.

The test to determine whether employer-employee relationship exists is when the “employee”
was controlled by the “employer” not only as to the kind of work, the amount of results, the kind of
performance, but also the power of dismissal.

In this case, Judico received a definite minimum amount per week as his wage known as “sales
reserve”. He was assigned a definite place in the office to work on when he is not in the field, was
burdened with the job of collection, was required to make regular reports to the company, and for
which an anemic performance would mean a dismissal. Undoubtedly, by nature of his position and
work, Judico had been a regular employee of Grepalife, and is therefore entitled to the protection of the
law and could not just be terminated without valid and justifiable cause.
 Thus, the appealed decision is affirmed in toto.

Labor Law Digest: PHILIPPINE FUJI XEROX

CORPORATION, et al v. NLRC et al [G.R. No.
111501. March 5, 1996]
PHILIPPINE FUJI XEROX CORPORATION, et al v. NLRC et al 
[G.R. No. 111501. March 5, 1996]

Facts:
Fuji Xerox entered into an agreement under which Skillpower, Inc. supplied workers to
operate copier machines of Fuji Xerox as part of the latters Xerox Copier Project in its sales
offices. Private respondent Pedro Garado was assigned as key operator at Fuji Xerox
branch at Buendia, Makati  in February of 1980.

In February of 1983, Garado went on leave and his place was taken over by a substitute.
Upon his return in March, he discovered that there was a spoilage of over 600 copies.
Afraid that he might be blamed for the spoilage, he tried to talk to a service technician of
Fuji Xerox into stopping the meter of the machine.

The technician refused Garados request, but this incident came to the knowledge of Fuji
Xerox which, on May 31, 1983, reported the matter to Skillpower, Inc. The next day,
Skillpower, Inc. wrote Garado, ordering him to explain. In the meantime, it suspended him
from work. Garado filed a complaint for illegal dismissal.

The Labor Arbiter held in a decision rendered on October 30, 1986 that Garado was an
employee of Skillpower, Inc., and that he had merely been assigned by Skillpower, Inc. to
Fuji Xerox. Hence, the dismissal.

On the other hand, the NLRC found Garado to be in fact an employee of petitioner Fuji
Xerox and by it to have been illegally dismissed.

Hence the present petition. Fuji Xerox argues that Skillpower, Inc. is an independent
contractor and that Garado is its employee for the following reasons:
(1) Garado was recruited by Skillpower, Inc.;
(2) The work done by Garado was not necessary to the conduct of the business of Fuji Xerox;
(3) Garados salaries and benefits were paid directly by Skillpower, Inc.;
(4) Garado worked under the control of Skillpower, Inc.; and
(5) Skillpower, Inc. is a highly-capitalized business venture.

ISSUE:
(1) Whether or not Skillpower Inc. is an independent contractor and Garado was its
employee?
HELD:
NO. Skillpower is a labor-only contractor and Garado is not its employee, based on the
following findings:

(1) Garado was recruited by Skillpower, Inc. solely for assignment to Fuji Xerox to work in
the latters Xerox Copier Project. When Garado was first assigned to work at Fuji Xerox, he
had never been assigned to any other company so much so that by 1984, he was already a
member of the union which petitioned the company for his regularization.

(2) The Xerox Copier Project of petitioners promotes goodwill for the company. It may not
generate income for the company but there are activities which a company may find
necessary to engage in because they ultimately redound to its benefit. Operating the
company's copiers at its branches advertises the quality of their products and promotes the
company's reputation and public image. It also advertises the utility and convenience of
having a copier machine. It is noteworthy that while not operated for profit the copying
service is not intended either to be promotional, as, indeed, petitioner charged a fee for the
copies made.
Here, the service being rendered by private respondent was not a specific or special skill
that Skillpower, Inc. was in the business of providing. 

(3) Private respondent was made to understand that he was an employee of Skillpower,

Inc., and not of the client to which he was assigned. Garado signed a contract entitled
Appointment as Contract Worker, in which it was stated that his status was that of a
contract worker for a definite period from January 1, 1983 to June 30, 1983. As such,
private respondents employment was considered temporary, to terminate automatically six
(6) months afterwards, without necessity of any notice and without entitling private
respondent to separation or termination pay. Therefore, the termination of the contract or
any renewal or extension thereof did not entitle him to become an employee of the client
and the latter was not under any obligation to appoint him as such, notwithstanding the total
duration of the contract or any extension or renewal thereof.

(4) Two letters reveal the role which Fuji Xerox played in the dismissal of the private
respondent. They dispel any doubt that Fuji Xerox exercised disciplinary authority over
Garado and that Skillpower, Inc. issued the order of dismissal merely in obedience to the
decision of petitioner.

(5) Petitioner Fuji Xerox argues that Skillpower, Inc. had typewriters and service vehicles for
the conduct of its business independently of the petitioner. But typewriters and vehicles
bear no direct relationship to the job for which Skillpower, Inc. contracted its service of
operating copier machines and offering copying services to the public. The fact is that
Skillpower, Inc. did not have copying machines of its own. What it did was simply to supply
manpower to Fuji Xerox. The phrase substantial capital and investment in the form of tools,
equipment, machineries, work premises, and other materials which are necessary in the
conduct of his business, in the Implementing Rules clearly contemplates tools, equipment,
etc., which are directly related to the service it is being contracted to render. One who does
not have an independent business for undertaking the job contracted for is just an agent of
the employer.
Petition for certiorari is DISMISSED.