July 1984, the labor organization where the
Tan vs. Lagrama complainants are members filed a complaint for
G.R. No. 151228, August 15, 2002
Facts
Lagrama works for Tan as painter of billboards and
murals for the motion pictures shown at the theaters
managed by Tan for more than 10years
Lagrama was dismissed for having urinated in his
working area
Lagrama filed a complaint for illegal dismissal and non
payment of benefits
Tan asserted that Lagrama was an independent
contractor as he was paid in piece-work basis
Issue
W/N Lagrama is an independent contractor or an
employee of Tan?
Ruling
Lagrama is an employee not an independent contractor
Applying Four Fold Test
A. Power of Control - Evidence shows that the
Lagrama performed his work as painter and under the
supervision and control of Tan.
1. Lagrama worked in a designated work area inside the
theater of Tan for the use of which petitioner prescribed
rules, which rules included the observance of
cleanliness and hygeine and prohibition against
urinating in the work area and any other place other
than rest rooms and
2. Tan's control over Lagrama's work extended not only
the use of work area but also the result of Lagrama;s
work and the manner and means by which the work
was to be accomplished
3. Lagrama is not an independent contractor because he
did not enjoy independence and freedom from the
control and supervision of Tan and he was subjected
to Tan's control over the means and methods by which
his work is to be performed and accomplished
B. Payment of Wages
1. Lagrama worked for Tan on a fixed piece work basis is
of no moment. Payment by result is a method of
compensation and does not define the essence of the
relation.
2. Tat Lagrama was not reported as an employee to the
SSS is not conclusive, on the question whether he was
an employee, otherwise Tan would be rewarded for his
failure or even neglect to perform his obligation.
C. Power of Dismissal by Tan stating that he had
the right to fire Lagrama, Tan in effect acknowledged
Lagrama to be his employee
D. Power of Selection and Engagement of
Employees Tan engaged the services of Lagrama
without the intervention of third party
G.R. Nos. 83380-81 November 15, 1989
Makati Haberda Shery Inc., Jorge Ledesma and
Cecilio Inocencio, petitioners
vs NLRC, etc., respondents.
Ponente: Fernan
Facts:
This is a petition assailing the decision of NLRC
affirming the decision of Labor Arbiter finding Haberda
guilty of illegal dismissal and ordering him to reinstate
the dismissed workers and in concluding that there is
employer-employee relationship between workers and
Haberda.
The complainants were working for Haberda as tailors,
seamstress, sewers, basters and plantsadoras. Paid
on a piece-rate basis with allowance when they report
for work before 9:30am everyday.(MON-SAT)
underpayment of basic wage, living allowance, non-
payment of overtime work, non-payment of holiday
pay, non-payment of service incentive pay ad other
benefits under wage orders.
During the pendency, Haberda dismiss the workers for
the alleged job acceptance from another, which was
denied by the workers and countered by filing a
complaint for illegal dismissal. Which was granted by
NLRC. Hence, this petition raising the issues on:
Issues: (1) employer-employee relationship? (2)
workers entitled to monetary claims? (3) were
respondents illegally dismissed?
Ruling:
(1) There is employer-employee relationship. The facts
at bar indubitably reveal that the most important
requisite of control is present. As gleaned from the
operations of petitioner, when a customer enters into a
contract with the haberdashery or its proprietor, the
latter directs an employee who may be a tailor, pattern
maker, sewer or "plantsadora" to take the customer's
measurements, and to sew the pants, coat or shirt as
specified by the customer. Supervision is actively
manifested in all these aspects the manner and
quality of cutting, sewing and ironing.
(2) Because the workers were proven to be regular
employees, they shall be entitled to minimum wages.
Plus the respondents didn't appealed when the Labor
Arbiter granted the minimum wage award to the
workers in the first place. But workers are not entitled
to incentive pay and other benefits because piece-rate
workers are paid at fixed amount for performing work
irrespective of the time consumed.
(3) There was no illegal dismissal to the two workers
accused of the copied Barong Tagalog design,
because when they were asked to explain to their
employer, the workers did not but instead go AWOL.
Imposing disciplinary sanctions upon an employee for
just and valid cause is within the rights of the employer.
G.R. No. 123938 May 21, 1998
Labor Congress of the Philippines vs. NLRC
Ponente: J. Davide, Jr.
Doctrine:
Application of LC Article 286(n) in determination of
status of piece workers as regular workers versus LC
Article 86 definition
Facts:
The 99 persons (Ana Marie Ocampo, Mary Intal, et al)
as private petitioners in the proceeding (represented by
the Labor Congress of the Phils.) were rank-and-file
employees of private respondent Empire Food
Products (a food and fruit processing company), hired
on various dates.
Ocampo et al filed against Empire an NLRC complaint
for payment of money claims and for violation of labor
standards laws. Alongside this they also filed a petition
for direct certification for the Labor Congress to be their
bargaining representative. On Oct. 23, 1990,
petitioners represented by LCP, and private
respondents Gonzalo and Evelyn Kehyeng (Kehyeng
spouses) entered into a Memorandum of Agreement,
recognizing the following:
Status of LCP as sole and exclusive
Bargaining Agent and Representative for all
rank and file employees of the Empire Food
Products regarding "wages, hours of work,
1
 and other terms and conditions of
employment";
With regard to the NLRC complaint, all
parties agree to resolve the issues during the
Collective Bargaining Agreement;
Proper adjustment of wages, withdrawal of
case from the Calendar of NLRC, non-
interference or any ULP act, etc.
On Oct. 24, 1990, the Mediator Arbiter approved the
memorandum and certified LCP as the sole and
exclusive bargaining agent for the rank-and-file
employees of Empire.
On November 1990, LCP President Navarro submitted
to Empire a proposal for collective bargaining.
However, on January 1991, the private petitioners Ana
Marie et al filed a complaint for:
Unfair Labor Practices via Illegal Lockout and
Dismissal;
Union-Busting through harassment, threats
and interference to the right for self-
organization;
Violation of the Oct. 23, 1990 memorandum
Underpayment of wages
Actual, moral and exemplary damages
Labor Arbiter (Part 1):
Absolved Empire for ULP, union busting,
violation of the memorandum of agreement,
underpayment of wages and denied
petitioners' prayer for actual, moral and
exemplary damages.
Denied prayer for actual, moral and
exemplary damages
Directed reinstatement of complainants, due
to the fact that Empire did not keep its payroll
records as per requirement of the DOLE.
Admonition to Empire given as well re: further
harassment and intimidation.
NLRC (Part 1):
Remanded case to Labor Arbiter for further
proceedings due to overlooking the
testimonies of some of the individual
complainants which are now on record.
Labor Arbiter (Part 2):
Complainants failed to present with
definiteness and clarity the particular act or
acts constitutive of unfair labor practice.
Declaration of ULP connotes a finding of
prima facie evidence of probability that a
criminal offense may have been committed so
as to warrant the filing of a criminal
information before the regular court.
As regards the issue of harassment, threats
and interference with the rights of employees
to self-organization which is actually an
ingredient of unfair labor practice,
complainants failed to specify what type of
threats or intimidation was committed and
who committed the same.
NLRC (Part 2):
Affirmed LA decision Part 2.
Petitioners:
The fact that they are piece workers does not
imply that they are not regular employees
entitled for reinstatement.
LA and NLRC decisions were not supported
by substantial evidence;
Abandonment of work was not proved by
substantial evidence;
Much credit given to the Kehyeng spouses
self-serving arguments.
Respondents:
Ana Marie, et al were piece workers hence
they are exempt from labor standards benefits
Issues:
1. [RELEVANT] WON the petitioners are entitled
to labor standard benefits, considering their
status as piece rate workers.
2. WON the actions of Ana Marie, et al
constituted abandonment of work.
Held:
1. YES, petitioners are entitled to labor
standards benefits, namely, holiday pay,
premium pay, 13th month pay and service
incentive leave.
2. NO, failure to appear to work did not
constitute abandonment,
Ratio:
Supreme Court decision cites that Ana Marie, et al,
despite being pakyao or piece workers does not imply
that they are not regular employees entitled to
reinstatement. Applying the two-fold test from LC
Article 286(n) [Art. 280 (old)], the SC found that the
supposedly piece workers had three factors in their
favor:
a) The nature of the tasks of Ana Marie, et al of
repacking snack food items was
NECESSARY and DESIRABLE in the usual
business of Empire Foods, which is a food
and fruit processing company. According to
Tabas vs California Manufacturing,
merchandisers of processed food who
coordinates for sales of processed food was a
necessity and was desirable for the day-to-
day operations of a food processing
company. With more reason would the job of
food packers be necessary for the day-to-day
operations of a food processing plant.
b) Ana Marie et al worked throughout the year,
with their employment being independent
from a specific project or season.
c) The length of time that petitioners fulfilled the
requirement of Article 286(n).
Therefore, the SC considered the employees as
regular employees despite their status as piece
workers, according them benefits such as holiday pay,
premium pay, 13th month pay and service incentive
leave.
The Rules Implementing the Labor Code exclude
certain employees from receiving benefits such as
nighttime pay, holiday pay, service incentive leave and
13th month pay, inter alia, "field personnel and other
employees whose time and performance is
unsupervised by the employer, including those who are
engaged on task or contract basis, purely commission
basis, or those who are paid a fixed amount for
performing work irrespective of the time consumed in
the performance thereof." However, petitioners as
piece-rate workers do not fall within this group. Not only
did the employees labor under the control of Empire,
the employees also worked throughout the year to fulfil
their quota as basis for compensation.
Further, in Section 8 (b), Rule IV, Book III, piece
workers are specifically mentioned as being entitled to
holiday pay.
Sec. 8. Holiday pay of certain employees.
2
 (b) Where a covered employee is paid
by results or output, such as payment on
piece work, his holiday pay shall not be less
than his average daily earnings for the last
seven (7) actual working days preceding the
regular holiday: Provided, however, that in no
case shall the holiday pay be less than the
applicable statutory minimum wage rate.
In addition, the Revised Guidelines on the
Implementation of the 13th Month Pay Law, in view of
the modifications to P.D. No. 851 19 by Memorandum
Order No. 28, clearly exclude the employer of piece
rate workers from those exempted from paying 13th
month pay, to wit:
2. EXEMPTED EMPLOYERS - The
following employers are still not covered by
P.D. No. 851:
d. Employers of those who
are paid on purely commission,
boundary or task basis, and those
who are paid a fixed amount for
performing specific work,
irrespective of the time consumed in
the performance thereof, except
where the workers are paid on piece-
rate basis in which case the
employer shall grant the required
13th month pay to such workers.
However, the Revised Guidelines as well as the Rules
and Regulations identify those workers who fall under
the piece-rate category as those who are paid a
standard amount for every piece or unit of work
produced that is more or less regularly replicated,
without regard to the time spent in producing the same.
They should also be paid for overtime pay, even though
Sec. 2(e), Rule I, Book III of the Implementing Rules
states that:
workers who are paid by results including
those who are paid on piece-work, takay,
pakiao, or task basis, if their output rates are
in accordance with the standards prescribed
under Sec. 8, Rule VII, Book III, of these
regulations, or where such rates have been
fixed by the Secretary of Labor in accordance
with the aforesaid section, are not entitled to
receive overtime pay.
In this case, Empire Foods did not allege that they
adheredtothestandardsset forthin Sec. 8, Rule
VII, Book III, norwiththeratesprescribedbythe
SecretaryofLabor. Therefore, even though they are
piece workers, they are entitled to overtime pay
With regard to the issue of abandonment of work, the
SC cited the Office of Solicitor Generals observations:
In finding that petitioner employees
abandoned their work, the Labor Arbiter and
the NLRC relied on the testimony of Security
Guard Rolando Cairo that on January 21,
1991, petitioners refused to work. As a result
of their failure to work, the cheese curls ready
for repacking on said date were spoiled
The failure to work for one day, which
resulted in the spoilage of cheese curls does
not amount to abandonment of work. In fact
two (2) days after the reported abandonment
of work or on January 23, 1991, petitioners
filed a complaint for, among others, unfair
labor practice, illegal lockout and/or illegal
dismissal.
Furthermore, the SC stressed that the burden of
proving the existence of just cause for dismissing an
employee, such as abandonment, rests on the
employer. According to the SC, Empire Foods failed to
discharge this burden as basis for dismissing the
employees.
Also, the SC considered that, in terminating the
employees for abandonment of work, Empire failed to
serve to the employees a written notice of termination
(as required by the Two-Notice rule and Section 2, Rule
XIV, Book V of the Omnibus Rules), violating the
employees right to security of tenure and the
constitutional right to due process.
Jimenez, at al. vs. NLRC and Juanatas
G.R. No. 116960, 2 April 1996
By: Bam Medina
FACTS:
Petition for certiorari assailing the decision of
NLRC which denied the petitioners motion for
reconsideration.
The private respondents Juantas (father and
son) filed a claim for unpaid
wages/commissions, separation pay and
damages against JJ s Trucking and/or Dr.
Bernardo Jimenez.
The Juantas allege that they were hired by
herein petitioner Bernardo Jimenez as driver,
mechanic and helper, respectively, in his
trucking firm, JJ Trucking. They were
assigned to a ten-wheeler truck to haul soft
drinks of Coca-Cola Bottling Company and
paid on commission basis, initially fixed at
17% but later increased to 20%. They further
allege that they only receive partial
commissions and that there was an unpaid
balance when they were unjustly terminated.
Petitioners contend that that respondent
Fredelito Juanatas was not an employee of
the firm but was merely a helper of his father
Pedro and that all commissions were dully
paid and that the truck driven by respondent
Pedro Juanatas was sold to one Winston
Flores in 1991 and, therefore, private
respondents were not illegally dismissed.
LABOR ARBITER
o ordering respondents JJs Trucking
and/or Dr. Bernardo Jimenez to pay
jointly and severally complainant
Pedro Juanatas (father) a separation
pay of FIFTEEN THOUSAND FIFTY
(P15,050.00) PESOS, plus
attorneys fee equivalent to ten
percent (10%) of the award.
o The complaint of Fredelito Juanatas
(son) is hereby dismissed for lack of
merit.
NLRC modified the decision of the Labor
Arbiter
o Fredelito Juanatas is hereby
declared respondents employee
and shares in (the) commission and
separation pay awarded to
complainant Pedro Juanatas, his
father.
o Respondent JJs Trucking and Dr.
Bernardo Jimenez are jointly and
severally liable to pay complainants
their unpaid commissions in the total
amount of Eighty Four Thousand
Three Hundred Eighty Seven Pesos
and 05/100 (P84,387.05).
o The award of attorneys fees is
reduced accordingly to eight
3
 thousand four hundred thirty eight
pesos and 70/100 (P8,438.70).
ISSUES:
1. Whether or not Fredelito Juantas is an
employee of JJs Trucking
2. Whether or not there was a grave abuse of
discretion on the part of NLRC
3. Whether or not the private respondents were
not paid their commissions in full
(IMPORTANT ISSUE)
HELD/RATIO:
1. No, Fredelito is not an employee because his
case does not fall under the four fold test
2. NLRC erred in holding that the son, Fredelito,
was an employee of petitioners.
3. YES, right of respondent Pedro Juanatas to
be paid a commission equivalent to 17%, later
increased to 20%, of the gross income is not
disputed by petitioners.
a. private respondents admit receipt of
partial payment but the petitioners
still have to present proof of full
payment, in the case the petitioners
have the burden of proving such full
payment but the petitioners failed to
do so.
b. The petitioners merely submitted a
notebook showing the alleged vales
of private respondents for the year
1990,15 the same is inadmissible
and cannot be given probative value
considering that it is not properly
accomplished, is undated and
unsigned, and is thus uncertain as to
its origin and authenticity
JUDGMENT:
Decision of NLRC affirmed with a modification that
Fredelito Juantas is NOT an employee of the
petitioners.
VIRGINIA G. NERI and JOSE CABELIN, petitioners,
vs. NATIONAL LABOR RELATIONS COMMISSION
FAR EAST BANK & TRUST COMPANY (FEBTC) and
BUILDING CARE CORPORATION, respondents.
G.R. Nos. 97008-09 July 23, 1993
Petitioners instituted complaints against FEBTC and
BCC to compel the bank to accept them as regular
employees and for it to pay the differential between the
wages being paid them by BCC and those received by
FEBTC employees with similar length of service. They
contended that BCC in engaged in labor-only
contracting because it failed to adduce evidence
purporting to show that it invested in the form of tools,
equipment, machineries, work premises and other
materials which are necessary in the conduct of its
business. Moreover, petitioners argue that they
perform duties which are directly related to the principal
business or operation of FEBTC.
It is well-settled that there is labor-only contracting
where: (a) the person supplying workers to an
employer does not have substantial capital or
investment in the form of tools, equipment,
machineries, work premises, among others; and, (b)
the workers recruited and placed by such person are
performing activities which are directly related to the
principal business of the employer.
The Supreme Court ruled that respondent BCC need
not prove that it made investments in the form of tools,
equipment, machineries, work premises, among
others, because it has established that it has sufficient
capitalization. This fact was both determined by the
Labor Arbiter and the NLRC as BCC had a capital stock
of P1 million fully subscribed and paid for. BCC is
therefore a highly capitalized venture and cannot be
deemed engaged in labor-only contracting.
While there may be no evidence that it has investment
in the form of tools, equipment, machineries, work
premises, among others, it is enough that it has
substantial capital, as was established before the
Labor Arbiter as well as the NLRC. The law does not
require both substantial capital and investment in the
form of tools, equipment, machineries, etc. This is clear
from the use of the conjunction "or" instead of and.
Having established that it has substantial capital, it was
no longer necessary for BCC to further adduce
evidence to prove that it does not fall within the purview
of "labor-only" contracting. There is even no need for it
to refute petitioners' contention that the activities they
perform are directly related to the principal business of
respondent bank.
On the other hand, the Court has already taken judicial
notice of the general practice adopted in several
government and private institutions and industries of
hiring independent contractors to perform special
services. These services range from janitorial, security
and even technical or other specific services such as
those performed by petitioners Neri and Cabelin. While
these services may be considered directly related to
the principal business of the employer, nevertheless,
they are not necessary in the conduct of the principal
business of the employer.
Petition dismissed.
MANILA WATER COMPANY, INC., petitioner, vs.
HERMINIO D. PENA, et. al., respondents. [G.R. No.
158255. July 8, 2004]
Petitioner Manila Water Company, Inc. is one of the
two private concessionaires contracted by the
Metropolitan Waterworks and Sewerage System
(MWSS) to manage the water distribution system in the
East Zone of Metro Manila. Under the Concession
Agreement, petitioner undertook to absorb former
employees of the MWSS whose names and positions
were in the list furnished by the latter, while the
employment of those not in the list was terminated on
the day petitioner took over the operation of the East
Zone, which was on August 1, 1997. Private
respondents, being contractual collectors of the
MWSS, were among the 121 employees not included
in the list; nevertheless, petitioner engaged their
services without written contract from August 1, 1997
to August 31, 1997. Thereafter, on September 1, 1997,
they signed a three-month contract to perform
collection services for eight branches of petitioner in
the East Zone.
Before the end of the three-month contract, the 121
collectors incorporated the Association Collectors
Group, Inc. (ACGI), which was contracted by petitioner
to collect charges for the Balara Branch. Subsequently,
most of the 121 collectors were asked by the petitioner
to transfer to the First Classic Courier Services, a newly
registered corporation. Only private respondents
remained with ACGI. Petitioner continued to transact
with ACGI to do its collection needs until February 8,
1999, when petitioner terminated its contract with
ACGI.
Private respondents filed a complaint for illegal
dismissal and money claims against petitioner,
contending that they were petitioners employees as all
the methods and procedures of their collections were
controlled by the latter.
ACGI is considered merely an agent of the petitioner.
In labor-only contracting, the statute creates an
employer-employee relationship for a comprehensive
purpose: to prevent a circumvention of labor laws. The
contractor is considered merely an agent of the
principal employer and the latter is responsible to the
employees of the labor-only contractor as if such
employees had been directly employed by the principal
employer. Since ACGI is only a labor-only contractor,
4
the workers it supplied should be considered as
employees of the petitioner.
DOLE Phils. vs. Esteva, G.R. No. 161115, November
30, 2006
FACTS:
Petitioner is a corporation duly recognized and existing
in accordance with Philippine laws, engaged principally
in the production and processing of pineapple for the
export market. Its plantation is located in Polomolok,
South Cotabato .
Respondents are members of the Cannery Multi-
Purpose Cooperative (CAMPCO). CAMPCO was
organized in accordance with R.A. No. 6938, otherwise
known as the Cooperative Code of the Philippines , and
duly registered with the Cooperative Development
Authority (CDA) on 6 January 1993. Members of
CAMPCO live in communities surrounding petitioners
plantation and are relatives of petitioners employees.
On 17 August 1993, petitioner and CAMPCO entered
into a Service Contract. The Service Contract referred
to petitioner as the Company, while CAMPCO was
the Contractor. The said contract was good for six
months.
Pursuant to the contract, CAMPCO members rendered
services to petitioner. The parties apparently extended
or renewed the same for the succeeding years without
executing another written contract.
However, due to investigations and reliable
information, the Regional Director of DOLE exercised
his visitorial and enforcement power and found out that
CAMPCO is engaged in labor-only contracting together
with two other cooperatives.
The Law cited was Section 9, Rule VIII, Book III of the
Omnibus Rules Implementing the Labor Code.
(pertaining to Labor-only contracting 1. no
substantial capital; 2. work is directly related to the
principal business of the principal b. in such case, the
one who alleges as contractor is deemed an agent of
the principal while the latter will latter is considered the
indirect employer for purposes of enforcement of the
labor rights.)
Before the NLRC, respondents contended that they
have been working more than one year too petitioner.
While some of the respondents were still working for
petitioner, others were put on stay home status on
varying dates in the years 1994, 1995, and 1996 and
were no longer furnished with work thereafter. They,
then, filed a case before the NLRC for illegal dismissal,
regularization, wage differentials, damages and
attorneys fees.
Respondents argued that they should be considered
regular employees of petitioner given that: 1. they were
performing jobs that were usually necessary and
desirable in the usual business of petitioner; 2.
petitioner exercised control over respondents, not only
as to the results, but also as to the manner by which
they performed their assigned tasks; and 3. CAMPCO,
a labor-only contractor, was merely a conduit of
petitioner. As regular employees of petitioner,
respondents asserted that they were entitled to security
of tenure and those placed on stay home status for
more than six months had been constructively and
illegally dismissed. Respondents further claimed
entitlement to wage differential, moral damages, and
attorneys fees.
NLRC affirmed the Labor Arbiters decision. CA also
affirmed.
ISSUES: Whether the lower courts were correct in
ruling that Petitioner is the employer of respondents
and that CAMPCO be considered merely as agent of
the company
HELD:
In summary, this Court finds that CAMPCO was a
labor-only contractor and, thus, petitioner is the real
employer of the respondents, with CAMPCO acting
only as the agent or intermediary of petitioner. Due to
the nature of their work and length of their service,
respondents should be considered as regular
employees of petitioner. Petitioner constructively
dismissed a number of the respondents by placing
them on "stay home status" for over six months, and
was therefore guilty of illegal dismissal. Petitioner must
accord respondents the status of regular employees,
and reinstate the respondents who it constructively and
illegally dismissed, to their previous positions, without
loss of seniority rights and other benefits, and pay
these respondents backwages from the date of filing
of the Complaint with the NLRC on 19 December 1996
up to actual reinstatement.
CRITERIA TO ESTABLISH THE EXISTENCE OF AN
INDEPENDENT AND PERMISSIBLE CONTRACTOR
RELATIONSHIP
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
SEVERAL FACTORS ARE PRESENT IN THE CASE
TO ESTABLISH A LABOR- ONLY CONTRACTING
ARRANGEMENT BY BETWEEN THE
MANAGEMENT AND CAMPCO
While there is present in the relationship of petitioner
and CAMPCO some factors suggestive of an
independent contractor relationship (i.e., CAMPCO
chose who among its members should be sent to work
for petitioner; petitioner paid CAMPCO the wages of
the members, plus a percentage thereof as
administrative charge; CAMPCO paid the wages of the
members who rendered service to petitioner), many
other factors are present which would indicate a labor-
only contracting arrangement between petitioner and
CAMPCO.
First, although petitioner touts the multi-million pesos
assets of CAMPCO, it does well to remember that such
were amassed in the years following its establishment.
In 1993, when CAMPCO was established and the
Service Contract between petitioner and CAMPCO
was entered into, CAMPCO only had P6,600.00 paid-
up capital, which could hardly be considered
substantial. It only managed to increase its
capitalization and assets in the succeeding years by
continually and defiantly engaging in what had been
declared by authorized DOLE officials as labor-only
contracting.
Second, CAMPCO did not carry out an independent
business from petitioner. It was precisely established
to render services to petitioner to augment its
workforce during peak seasons. Petitioner was its only
client. Even as CAMPCO had its own office and office
equipment, these were mainly used for administrative
purposes; the tools, machineries, and equipment
actually used by CAMPCO members when rendering
services to the petitioner belonged to the latter.
Third, petitioner exercised control over the CAMPCO
members, including respondents. Petitioner attempts
to refute control by alleging the presence of a
CAMPCO supervisor in the work premises. Yet, the
mere presence within the premises of a supervisor
from the cooperative did not necessarily mean that
CAMPCO had control over its members. Section 8(1),
5
Rule VIII, Book III of the implementing rules of the
Labor Code, as amended, required for permissible job
contracting that the contractor undertakes the contract
work on his account, under his own responsibility,
according to his own manner and method, free from the
control and direction of his employer or principal in all
matters connected with the performance of the work
except as to the results thereof. As alleged by the
respondents, and unrebutted by petitioner, CAMPCO
members, before working for the petitioner, had to
undergo instructions and pass the training provided by
petitioners personnel. It was petitioner who
determined and prepared the work assignments of the
CAMPCO members. CAMPCO members worked
within petitioners plantation and processing plants
alongside regular employees performing identical jobs,
a circumstance recognized as an indicium of a labor-
only contractorship.
Fourth, CAMPCO was not engaged to perform a
specific and special job or service. In the Service
Contract of 1993, CAMPCO agreed to assist petitioner
in its daily operations, and perform odd jobs as may be
assigned. CAMPCO complied with this venture by
assigning members to petitioner. Apart from that, no
other particular job, work or service was required from
CAMPCO, and it is apparent, with such an
arrangement, that CAMPCO merely acted as a
recruitment agency for petitioner. Since the
undertaking of CAMPCO did not involve the
performance of a specific job, but rather the supply of
manpower only, CAMPCO clearly conducted itself as a
labor-only contractor.
Lastly, CAMPCO members, including respondents,
performed activities directly related to the principal
business of petitioner. They worked as can processing
attendant, feeder of canned pineapple and pineapple
processing, nata de coco processing attendant, fruit
cocktail processing attendant, and etc., functions which
were, not only directly related, but were very vital to
petitioners business of production and processing of
pineapple products for export.
The findings enumerated in the preceding paragraphs
only support what DOLE Regional Director Parel and
DOLE Undersecretary Trajano had long before
conclusively established, that CAMPCO was a mere
labor-only contractor
EMPLOYER- EMPLOYEE RELATIONSHIP EXIST
BETWEEN THE PETITIONER AND THE
RESPONDENT WITH THE DECLARATION THAT
CAMPCO WAS ENGAGED IN THE PROHIBITED
ACTS OF LABOR-ONLY CONTRACTING
The declaration that CAMPCO is indeed engaged in
the prohibited activities of labor-only contracting, then
consequently, an employer-employee relationship is
deemed to exist between petitioner and respondents,
since CAMPCO shall be considered as a mere agent
or intermediary of petitioner
RESPONDENTS ARE CONSIDERED REGULAR
EMPLOYEES FOR THEY PERFORMED ACTIVITIES
THAT ARE NECESSARY OR DESIRABLE TO THE
USUAL BUSINESS OF THE PETITIONER
Since respondents are now recognized as employees
of petitioner, this Court is tasked to determine the
nature of their employment. In consideration of all the
attendant circumstances in this case, this Court
concludes that respondents are regular employees of
petitioner.
In the instant Petition, petitioner is engaged in the
manufacture and production of pineapple products for
export. Respondents rendered services as processing
attendant, feeder of canned pineapple and pineapple
processing, nata de coco processing attendant, fruit
cocktail processing attendant, and etc., functions they
performed alongside regular employees of the
petitioner. There is no doubt that the activities
performed by respondents are necessary or desirable
to the usual business of petitioner.
Petitioner likewise want this Court to believe that
respondents employment was dependent on the
peaks in operation, work backlogs, absenteeism, and
excessive leaves. However, bearing in mind that
respondents all claimed to have worked for petitioner
for over a year, a claim which petitioner failed to rebut,
then respondents continued employment clearly
demonstrates the continuing necessity and
indispensability of respondents employment to the
business of petitioner.
THE COMPANYS ACT OF PLACING SOME OF THE
RESPONDENTS ON "STAY HOME STATUS" AND
NOT GIVING THEM WORK ASSIGNMENTS FOR
MORE THAN SIX MONTHS WERE ALREADY
TANTAMOUNT TO CONSTRUCTIVE AND ILLEGAL
DISMISSAL
Respondents, as regular employees of petitioner, are
entitled to security of tenure. They could only be
removed based on just and authorized causes as
provided for in the Labor Code, as amended, and after
they are accorded procedural due process. Therefore,
petitioners acts of placing some of the respondents on
"stay home status" and not giving them work
assignments for more than six months were already
tantamount to constructive and illegal dismissal
Insular Life v. NLRC (Nov. 15, 1989)
FACTS:
Insular Life (company) and Basiao entered into a
contract by which Basiao was authorized to solicit for
insurance in accordance with the rules of the company.
He would also receive compensation, in the form
of commissions. The contract also contained the
relations of the parties, duties of the agent and the acts
prohibited to him including the modes of termination.
After 4 years, the parties entered into another contract
an Agency Managers Contact and to implement his
end of it, Basiao organized an agency while
concurrently fulfilling his commitment under the
first contract. The company terminated the Agency
Managers Contract. Basiao sued the company in a
civil action. Thus ,the company terminated Basiaos
engagement under the first contract and stopped
payment of his commissions.
ISSUE:
W/N Basiao had become the companys employee by
virtue of the contract, thereby placing his claim for
unpaid commissions
HELD:
No. Rules and regulations governing the conduct of
the business are provided for in the Insurance Code.
These rules merely serve as guidelines towards the
achievement of the mutually desired result without
dictating the means or methods to be employed in
attaining it. Its aim is only to promote the result, thereby
creating no employer-employee relationship. It is
usual and expected for an insurance company to
promulgate a set of rules toguide its commission
agents in selling its policies which prescribe the
qualifications of persons who may be insured. None
of these really invades the agents contractual
prerogative to adopt his own selling methods or to sell
insurance at his own time and convenience, hence
6
cannot justifiable be said to establish an employer-
employee relationship between Basiao and the
company. The respondents limit themselves to
pointing out that Basiaos contract with the company
bound him
toobserve and conform to such rules. No showing that
such rules were in fact promulgated which effectively
controlled or restricted his choice of methods of selling
insurance. Therefore, Basiao was not an employee of
the petitioner, but a commission agent, an independent
contract whose claim for unpaid commissions should
have been litigated in an ordinary civil action.
Wherefore, the complain of Basiao is dismissed.
SAN MIGUEL CORPORATION, petitioner, vs.
PROSPERO A. ABALLA, et. Al., and the COURT OF
APPEALS, respondents. [G.R. No. 149011. June
28, 2005]
Petitioner SMC entered into a one-year contract with
the Sunflower Multi-Purpose Cooperative. Sunflower
engaged private respondents to render services at
SMCs Bacolod Shrimp Processing Plant at Sta. Fe,
Bacolod City. A complaint was filed by private
respondents before the NLRC, Regional Arbitration
Branch No. VI, Bacolod City, praying to be declared as
regular employees of SMC, with claims for recovery of
all benefits and privileges enjoyed by SMC rank and file
employees. SMC alleged that Sunflower is engaged in
a legitimate labor contracting and hence the private
respondents cannot be considered their employees.
Supreme Court ruled otherwise. Sunflower is a labor-
only contractor for the following reasons: 1. although
Sunflower was issued a Certificate of Registration by
the Cooperative Development Authority, it merely
shows it had P2,000 in paid-up share capital which
amount cannot be considered substantial
capitalization; 2. its lot, building, machineries and all
other working tools utilized by private respondents in
carrying out their tasks were owned and provided by
SMC and the alleged office is found within the confines
of a small carinderia or refreshment (sic) owned by Eddie A. Jara, sent a letter to the respondent
the mother of the Cooperative Chairman Roy Asong
and the only equipment used and owned by Sunflower
was a typewriter; 3. from the job description provided
by SMC itself, the work- shrimp harvesting, receiving
and packing- assigned to private respondents, formed
an integral part of the shrimp processing operations of
SMC; 4. it did not carry on an independent business or
undertake the performance of its service contract
according to its own manner and method, free from the
control and supervision of SMC, as it is apparent that
its role was merely to recruit persons to work for SMC-
their daily time records were signed by SMC
supervisors, the control of the premises in which
private respondents worked was by SMC and private
respondents had been working in the aqua processing
plant inside the SMC compound alongside regular
SMC shrimp processing workers performing identical
jobs under the same SMC supervisors; 5. Sunflower
did not cater to clients other than SMC, and with the
closure of SMCs Bacolod Shrimp Processing Plant,
Sunflower likewise ceased to exist.
Since private respondents who were engaged in
shrimp processing performed tasks usually necessary
or desirable in the aquaculture business of SMC, they
should be deemed regular employees of the latter and
as such are entitled to all the benefits and rights
appurtenant to regular employment. Absent any
evidence showing that Sunflower has been dissolved
in accordance with law, it is held solidarily liable with
SMC for all the rightful claims of private respondents.
Republic of the Philippines/SSc/SSS vs. Asiapro
Cooperative
Facts:
Respondent Asiapro, as a cooperative, is composed of
owners-members. Under its by-laws, owners-
members are of two categories, to wit: (1) regular
member, who is entitled to all the rights and privileges
of membership; and (2) associate member, who has no
right to vote and be voted upon and shall be entitled
only to such rights and privileges provided in its by-
laws. Its primary objectives are to provide savings and
credit facilities and to develop other livelihood services
for its owners-members. In the discharge of the
aforesaid primary objectives, respondent cooperative
entered into several Service Contracts with Stanfilco -
a division of DOLE Philippines, Inc. and a company
based in Bukidnon. The owners-members do not
receive compensation or wages from the respondent
cooperative. Instead, they receive a share in the
service surplus which the respondent cooperative
earns from different areas of trade it engages in, such
as the income derived from the said Service Contracts
with Stanfilco. The owners-members get their income
from the service surplus generated by the quality and
amount of services they rendered, which is determined
by the Board of Directors of the respondent
cooperative.
In order to enjoy the benefits under the Social Security
Law of 1997, the owners-members of the respondent
cooperative, who were assigned to Stanfilco requested
the services of the latter to register them with petitioner
SSS as self-employed and to remit their contributions
as such. Also, to comply with Section 19-A of Republic
Act No. 1161, as amended by Republic Act No. 8282,
the SSS contributions of the said owners-members
were equal to the share of both the employer and the
employee.
On 26 September 2002, however, petitioner SSS
through its Vice-President for Mindanao Division, Atty.
cooperative, addressed to its Chief Executive Officer
(CEO) and General Manager Leo G. Parma, informing
the latter that based on the Service Contracts it
executed with Stanfilco, respondent cooperative is
actually a manpower contractor supplying employees
to Stanfilco and for that reason, it is an employer of its
owners-members working with Stanfilco. Thus,
respondent cooperative should register itself with
petitioner SSS as an employer and make the
corresponding report and remittance of premium
contributions in accordance with the Social Security
Law of 1997. On 9 October 2002, respondent
cooperative, through its counsel, sent a reply to
petitioner SSSs letter asserting that it is not an
employer because its owners-members are the
cooperative itself; hence, it cannot be its own employer.
Again, on 21 October 2002, petitioner SSS sent a letter
to respondent cooperative ordering the latter to register
as an employer and report its owners-members as
employees for compulsory coverage with the petitioner
SSS. Respondent cooperative continuously ignored
the demand of petitioner SSS.
Accordingly, petitioner SSS, on 12 June 2003, filed a
Petition before petitioner SSC against the respondent
cooperative and Stanfilco praying that the respondent
cooperative or, in the alternative, Stanfilco be directed
to register as an employer and to report respondent
cooperatives owners-members as covered employees
under the compulsory coverage of SSS and to remit the
necessary contributions in accordance with the Social
Security Law of 1997. The same was docketed as SSC
Case No. 6-15507-03. Respondent cooperative filed
7
its Answer with Motion to Dismiss alleging that no
employer-employee relationship exists between it and
its owners-members, thus, petitioner SSC has no
jurisdiction over the respondent cooperative. Stanfilco,
on the other hand, filed an Answer with Cross-claim
against the respondent cooperative.
Issues:
Whether the petitioner SSC has jurisdiction over the
petition-complaint filed before it by petitioner SSS
against the respondent cooperative.
There is an employer-employee relationship between
[respondent cooperative] and its [owners-members].
Held:
Petitioner SSCs jurisdiction is clearly stated in Section
5 of Republic Act No. 8282 as well as in Section 1, Rule
III of the 1997 SSS Revised Rules of Procedure.
Section 5 of Republic Act No. 8282 provides:
SEC. 5. Settlement of Disputes. (a) Any dispute
arising under this Act with respect to coverage,
benefits, contributions and penalties thereon or any
other matter related thereto, shall be cognizable by the
Commission, x x x.
Similarly, Section 1, Rule III of the 1997 SSS Revised
Rules of Procedure states:
Section 1. Jurisdiction. Any dispute arising
under the Social Security Act with respect to coverage,
entitlement of benefits, collection and settlement of
contributions and penalties thereon, or any other
matter related thereto, shall be cognizable by the
Commission after the SSS through its President,
Manager or Officer-in-charge of the
Department/Branch/Representative Office concerned
had first taken action thereon in writing.
It is clear then from the aforesaid provisions that any
issue regarding the compulsory coverage of the SSS is
well within the exclusive domain of the petitioner SSC.
It is important to note, though, that the mandatory
coverage under the SSS Law is premised on the
existence of an employer-employee relationship
except in cases of compulsory coverage of the self-
employed.
In this case, the petition-complaint filed by the
petitioner SSS before the petitioner SSC against the
respondent cooperative and Stanfilco alleges that the
owners-members of the respondent cooperative are
subject to the compulsory coverage of the SSS
because they are employees of the respondent
cooperative. Consequently, the respondent
cooperative being the employer of its owners-members
must register as employer and report its owners-
members as covered members of the SSS and remit
the necessary premium contributions in accordance
with the Social Security Law of 1997. Accordingly,
based on the aforesaid allegations in the petition-
complaint filed before the petitioner SSC, the case
clearly falls within its jurisdiction. As previously pointed
out by this Court, an employee-employer relationship
actually exists between the respondent cooperative
and its owners-members. The four elements in the
four-fold test for the existence of an employment
relationship have been complied with. The respondent
cooperative must not be allowed to deny its
employment relationship with its owners-members by
invoking the questionable Service Contracts provision,
when in actuality, it does exist. The existence of an
employer-employee relationship cannot be negated by
expressly repudiating it in a contract, when the terms
and surrounding circumstances show otherwise. The
employment status of a person is defined and
prescribed by law and not by what the parties say it
should be.
The question involved here is whether an employer-
employee relationship can exist between the
cooperative and an owner-member. In fact, a closer
look at Cooperative Rural Bank of Davao City, Inc. will
show that it actually recognized that an owner-member
of a cooperative can be its own employee.
It is settled that the contracting parties may establish
such stipulations, clauses, terms and conditions as
they want, and their agreement would have the force of
law between them. However, the agreed terms and
conditions must not be contrary to law, morals,
customs, public policy or public order. The Service
Contract provision in question must be struck down for
being contrary to law and public policy since it is
apparently being used by the respondent cooperative
merely to circumvent the compulsory coverage of its
employees, who are also its owners-members, by the
Social Security Law.
It bears stressing, too, that a cooperative acquires
juridical personality upon its registration with the
Cooperative Development Authority. It has its Board of
Directors, which directs and supervises its business;
meaning, its Board of Directors is the one in charge in
the conduct and management of its affairs. With that,
a cooperative can be likened to a corporation with a
personality separate and distinct from its owners-
members. Consequently, an owner-member of a
cooperative can be an employee of the latter and an
employer-employee relationship can exist between
them.
In the present case, it is not disputed that the
respondent cooperative had registered itself with the
Cooperative Development Authority, as evidenced by
its Certificate of Registration No. 0-623-2460. In its by-
laws, its Board of Directors directs, controls, and
supervises the business and manages the property of
the respondent cooperative. Clearly then, the
management of the affairs of the respondent
cooperative is vested in its Board of Directors and not
in its owners-members as a whole. Therefore, it is
completely logical that the respondent cooperative, as
a juridical person represented by its Board of Directors,
can enter into an employment with its owners-
members.
In sum, having declared that there is an employer-
employee relationship between the respondent
cooperative and its owners-member, we conclude that
the petitioner SSC has jurisdiction over the petition-
complaint filed before it by the petitioner SSS.
Philippine Bank of Communications vs. National
Labor Relations Commission
GR No. L-66598 December 19, 1986
Facts:
Petitioner Philippine Bank of Communications and the
Corporate Executive Search, Inc. (CESI) entered into
an agreement under which CESI would provide
Temporary Services to petitioner consisting of eleven
(11) messengers, one of them was Orpiada. The
contract period was described as from January 1976
although it appeared that Orpiada had been assigned
to the bank since June 1975.
He rendered messengerial services to the bank, within
its promises, together with other the others doing a
similar job. In or about October 1976, the bank
8
requested CESI to withdraw Orpiadas assignment
because Orpiadas services were no longer needed.
Orpiada filed a complaint against the bank for illegal
dismissal and failure to pay the 13th- month pay. The
bank impleaded CESI as an additional respondent. The
Labor Arbiter ruled in favor of Orpiada. Hence, this
petition for certiorari filed by the bank.
Issue: Whether or not an employer-employee
relationship existed between the bank and private
respondent Orpiada.
Ruling:
Yes. There is an employer-employee relationship that
existed between the bank and Orpiada. The fact that
Orpiada worked or rendered services to the bank for a
period of about sixteen (16) months made him an
employee of the bank. Under the Labor Code, any
employee who has rendered at least one (1) year of
service, whether such service is continuous or not,
shall be considered a regular employee. Thus,
Orpiadas services may not be terminated by the bank
except for a just cause or when authorized under the
Labor Code. CESI was engaged in labor-only
contracting. Therefore, the petitioner bank is liable to
Orpiada as if Orpiada had been directly employed, not
only by CESI but also by the bank.
Tabas vs. California Manufacturing Co., Inc. [169
SCRA 497, GR 80680]
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 [Livis] 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
[Californias] 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 ones
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 latters 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, Californias purported principal
operation activity. Livi, as a placement agency, had
simply supplied California with the manpower
necessary to carry out its (Californias) merchandising
activities, using its (Californias) premises and
equipment.
ROLANDO E. ESCARIO, et. Al; petitioners, vs.
NATIONAL LABOR RELATIONS COMMISSION,
CALIFORNIA MANUFACTURING CO. INC. AND
DONNA LOUISE ADVERTISING AND MARKETING
ASSOCIATES INCORPORATED, respondents. G.R.
No. 124055. June 8, 2000
Private respondents California Marketing Co., Inc. is a
domestic corporation principally engaged in the
manufacturing of food products and distribution of such
products to wholesalers and retailers. Private
respondent Donna Louis Advertising and Marketing
Associates, Inc. is a duly registered promotional firm.
Petitioners alleged that they were employed by CMC
as merchandisers. They alleged that the hiring, control
and supervision of workers and the payment of the
salaries were all covered by CMC through its agent D.L
Admark in order CMC to avoid its liability under the law.
Petitioners filed a case against CMC before the labor
arbiter for regularization of their employment status.
During the pendency of the case, D.L Admark
terminated the services of the petitioners. The
complaint was amended to include alleged dismissal.
CMC filed a motion to implead as party-defendant D.L
Admark, the latter filed a motion to intervene. Both
motions were granted. CMC denied being petitioners
employer while D.L Admark asserted it is the employer
of the petitioners.
The labor arbiter found petitioners as employees of
CMC as they were engaged in activities that are
necessary and desirable in the usual business/trade of
CMC. On appeal, the NLRC set aside the labor arbiters
decision. But ordered the reinstatement of the
petitioners in D.L Admark petitioners filed a motion for
consideration before the NLRC which was denied for
lack of merit. Hence the petition.
Issue:
Whether or not D.L Admark is a labor-only
contractor or as independent contractor.
Decision:
The Supreme Court denied the petition.
There is labor-only contracting when the contractor or
subcontractor merely recruits, supplies or places
workers to perform a job, work or service for a principa.
In labor only contracting, the following elements are
present:
The person supplying workers to an employer does not
have substantial capital or investment in the form of
tools, equipments, machineries, wok premise, among
other tools.
9
The workers recruited and placed by such person
performing activities which are directly related to the
principal business of the employer.
In contract, there is permissible job contracting when a
principal agrees to put out or farm out with a contractor
or a subcontractor the performance/completion of a
specific job, work or services within a definite or
predetermined period, regardless of whether such
job/services is to be performed or completed within or
outside the premises of the principal. In this
arrangement, the following conditions must concur.
The contractor carries on a distinct and independent
business and undertakes the contract work on his
account under the responsibility according to his own
manual and methods, free from the control and
direction of his employer or principal in all matters
connected with the performance of his employer work
except as to the results thereof; and
The contractor has substantial capital / investment
which are necessary in the conduct of his business.
The court reiterated that it is not enough to show
substantial capitalization on investment. In addition the
following factors need be considered
whether the contractor is carrying on an independent
business
the nature and extent of the work
the skill required
the term and duration of the relationship
the right to assign the performance of specified pieces
of work
the control and supervision of the workers
the power of the employer with respect to the hiring,
firing and payment of workers of the contractor
the control of the premises
the duty to supply premises, tools, appliances,
materials and labor
mode, manner and terms of payment
Based on the foregoing criteria, the court found that D.L
Admark is a legitimate independent contractor.
Applying the four-fold test, D.L Admark was found to be
the employer of the petitioners. The Supreme Court
affirmed the NLRCs ruling.
Jaguar Security and Investigation Agency vs. Sales
Facts:
Petitioner Jaguar Security and Investigation Agency
("Jaguar") is a private corporation engaged in the
business of providing security services to its clients,
one of whom is Delta Milling Industries, Inc. ("Delta").
Private respondents Rodolfo Sales, Melvin Tamayo,
Dionisio Caranyagan, Jesus Silva, Jr., Jaime Moron
and Daneth Fetalvero were hired as security guards by
Jaguar. They were assigned at the premises of Delta
in Libis, Quezon City. Caranyagan and Tamayo were
terminated by Jaguar on May 26, 1998 and August 21,
1998, respectively. Allegedly their dismissals were
arbitrary and illegal. Sales, Moron, Fetalvero and Silva
remained with Jaguar. All the guard-employees, claim
for monetary benefits such as underpayment, overtime
pay, rest day and holiday premium pay, underpaid 13th
month pay, night shift differential, five days service and
incentive leave pay. In addition to these money claims,
Caranyagan and Tamayo argue that they were entitled
to separation pay and back wages, for the time they
were illegally dismissed until finality of the decision.
Furthermore, all respondents claim for moral and
exemplary damages.
On September 18, 1998, respondent security guards
instituted the instant labor case before the labor arbiter.
On May 25, 1999, the labor arbiter rendered a decision
in favor of private respondents Sales, et al., the
dispositive portion of which provides:
"WHEREFORE, judgment is hereby rendered
dismissing the charges of illegal dismissal on the part
of the complainants MELVIN R. TAMAYO and
DIONISIO C. CARANYAGAN for lack of merit but
ordering respondents JAGUAR SECURITY AND
INVESTIGATION AGENCY and DELTA MILLING
INDUSTRIES, INC., to jointly and severally pay all the
six complainants, namely: RODOLFO A. SALES,
MELVIN R. TAMAYO, JAIME MORON and DANETH
FETALVERO the following money claims for their
services rendered from April 24, 1995 to April 24, 1998:
a) wage differentials
b) overtime pay differentials (4 hours a day)
c) rest day pay
d) holiday pay
e) holiday premium pay
f) 13th month pay differentials
g) five days service incentive leave pay per year
subject to the exception earlier cited.
The Research and Information Unit of this Commission
is hereby directed to compute and quantify the above
awards and submit a report thereon within 15 days
from receipt of this decision.
For purposes of any appeal, the appeal bond is
tentatively set at P100,000.00.
All other claims are DISMISSED for lack of merit.
SO ORDERED."
On July 1, 1999, petitioner Jaguar filed a partial appeal
questioning the failure of public respondent NLRC to
resolve its cross-claim against Delta as the party
ultimately liable for payment of the monetary award to
the security guards.
In its Resolution dated September 19, 2000, the NLRC
dismissed the appeal, holding that it was not the proper
forum to raise the issue. It went on to say that Jaguar,
being the direct employer of the security guards, is the
one principally liable to the employees. Thus, it directed
petitioner to file a separate civil action for recovery of
the amount before the regular court having jurisdiction
over the subject matter, for the purpose of proving the
liability of Delta.
Jaguar sought reconsideration of the dismissal, but the
Commission denied the same in its Resolution dated
November 9, 2001.
Petitioner filed a petition for certiorari with the CA,
which, in the herein assailed Decision dated October
21, 2002 and Resolution dated February 13, 2004,
dismissed the petition for lack of merit.
Issue: Whether or not petitioner may claim
reimbursement from Delta Milling through a cross-
claim filed with the labor court?
Held:
The Court ruled in the negative.
The jurisdiction of labor courts extends only to cases
where an employer-employee relationship exists.
In the present case, there exists no employer-
employee relationship between petitioner and Delta
Milling. In its cross-claim, petitioner is not seeking any
10
relief under the Labor Code but merely reimbursement
of the monetary benefits claims awarded and to be paid
to the guard employees. There is no labor dispute
involved in the cross-claim against Delta Milling.
Rather, the cross-claim involves a civil dispute between
petitioner and Delta Milling. Petitioner's cross-claim is
within the realm of civil law, and jurisdiction over it
belongs to the regular courts.

Moreover, the liability of Delta Milling to reimburse

petitioner will only arise if and when petitioner actually
pays its employees the adjudged liabilities. Payment,
which means not only the delivery of money but also
the performance, in any other manner, of the
obligation, is the operative fact which will entitle either
of the solidary debtors to seek reimbursement for the
share which corresponds to each of the debtors. In this
case, it appears that petitioner has yet to pay the guard
employees.

The petition is DENIED.

11