ZANOTTE SHOES V. NLRC241 SCRA 261VITUG, J.
result of the work to be done and to the means and methods by which the
FACTS
1. Private respondents Joseph Lluz, et. al averred that they started to work
for petitioners Zanotte Shoes/ Leonardo Lorenzo between 1975 to 1987.
They alleged that they worked for a minimum of 12 hours daily, including
Sundays and holidays when needed and that they were paid on piece-work
basis.
2. Private respondents claimed that it angered petitioner Lorenzo when they
requested to be made members of the SSS and that when they demanded
an increase in their pay rates, they were prevented from entering the work
premises. Private respondents filed a complaint for illegal discharge against
petitioners.
3. Petitioners, in their Answer, claim that their business operations were only
seasonal, normally twice a year- one in June and another in December, when
heavy job orders would come in. They contend that private respondents
were engaged on purely contractual basis and paid the rates conformably
with their respective agreements.
4. The Labor Arbiter rendered judgment in favor of private respondents. He
declared that there was an employer-employee relationship between
petitioners and private respondents and that the latter were regular
employees of the former. The Labor Arbiter concluded that there is neither
dismissal nor abandonment, but ordered petitioners to pay the private
respondents their separation pay.5.The NLRC, on appeal, affirmed the Labor
Arbiter’s decision
ISSUE Whether or not there is an employer-employee relationship between
petitioners and private respondents
HELD YES. There is an employer-employee relationship between petitioners
and private respondents. The work of private respondents is clearly related
to and in the pursuit of the principal activity of the petitioners. The indicia
used for determining the existence of an employer-employee relationship, all
extant in the case at bench, include: (1) the selection and engagement of
the employee, (2) the payment of wages, (3)the power of dismissal,
and(4)the employer’s power to control the employee with respect to the
work is to be accomplished. The last requirement, so herein posed as an
issue, refers to the existence of the right to control and not necessarily to the
actual exercise of the right. The Court, however, finds the award of
separation pay to be unwarranted.. The Labor Arbiter, sustained by the
NLRC, concluded that there was neither dismissal nor abandonment. The fact
of the matter is that petitioners have repeatedly indicated their willingness to
accept the private respondents, but the latter have steadfastly refused the
offer. For being without any clear legal basis, the award of separation pay
must thus be set aside. There is nothing, however, that prevents petitioners
from voluntarily giving private respondents some amounts on ex gratia basis.
COCA-COLA BOTTLERS PHILS. V. CLIMACO (G.R. NO. 146881)
FACTS: Respondent Dr. Climaco is a medical doctor who was hired by
petitioner Coca-Cola by virtue of a Retainer Agreement. Despite the non-
renewal of the agreement, respondent continued to perform his functions as
company doctor. He inquired from petitioner if it was agreeable recognizing
him as a regular employee but the management refused to do so. This
prompted respondent to file a complaint seeking recognition as a regular
employee. While the case was pending, respondent received a letter from
petitioner concluding their retainer agreement which then prompted him to
file a complaint for illegal dismissal. The Labor Arbiters in the 2 complaints
both found for petitioner finding no employer-employee relationship existed
between the parties. NLRC tribunal affirmed. CA reversed the decision.
Issue: Whether or not employer-employee relationship exists between the
parties.
Ruling: NO.
The Court, in determining the existence of an employer-employee
relationship, has invariably adhered to the four-fold test: (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,” considered to be the most important element.
The Court agrees with the finding of the Labor Arbiter and the NLRC that the
circumstances of this case show that no employer-employee relationship
exists between the parties. Petitioner company lacked the power of control
over the performance by respondent of his duties. The Comprehensive
Medical Plan which contains the respondent‘s objectives, duties and
obligations, does not tell respondent “how to conduct his physical
examination, how to immunize, or how to diagnose and treat his patients,
employees of petitioner company, in each case.” It provided guidelines
merely to ensure that the end result was achieved, but did not control the
means and methods by which respondent performed his assigned tasks.
The Court finds that the schedule of work and the requirement to be on call
for emergency cases do not amount to such control, but are necessary
incidents to the Retainership Agreement. The provision that respondent was
on call during emergency cases did not make him a regular employee.
The Court also notes that the Retainership Agreement granted to both
parties the power to terminate their relationship upon giving a 30-day notice.
Hence, petitioner company did not wield the sole power of dismissal or
termination.
WELLINGTON INVESTMENT VS TRAJANO
Facts:
Upon an inspection of the Wellington Flour Mills, owned and operated by
petitioner, the latter was accused of non-payment of regular holidays falling
on a Sunday for monthly-paid employees.
Petitioner’s Arguments:
Monthly salary of the monthly-paid employees already includes holiday pay
for all the regular holidays.
To pay for the extra days (regular holidays on a Sunday), as compelled by
the Order of the DOLE, it is in effect being compelled to pay for alleged extra
working days.
DOLE’s Contentions:
Regular holidays falling on Sundays have precluded the enjoyment by the
employees of a non-working day and the employees consequently have to
work for additional days.
When a regular holiday falls on a Sunday, an extra or additional working day
is created and the employer has the obligation to pay its employees for the
extra day.
Issue: Whether or not a monthly-paid employee is entitled to an additional
pay aside from his usual holiday pay, whenever a regular holiday falls on a
Sunday.
Held: No. To agree with DOLE’s theory would increase the number of days
in a year, instead of 365 days, as basis for computation of salary for
monthly-paid employees. There is no provision of law requiring employers to
make adjustments in the monthly salary rate set by them to take account of
the legal holiday falling on Sundays or to reckon a year at more than 365
days.
PRODUCERS BANK V NLRC GR No. 100701, March 28, 2001
FACTS: Private respondent filed a complaint against petitioner charging the
company with diminution of benefits, non-compliance with Wage Order No. 6
and non-payment of holiday pay. They contended that the decrease in the
mid-year and year-end bonuses constituted a diminution of the employees’™
salaries.
ISSUE: Is the contention meritorious?
HELD: No. Private respondents contention, that the decrease in the mid-
year and year-end bonuses constituted a diminution of the employees’
salaries, is not correct, for bonuses are not part of labor standards in the
same class as salaries, cost of living allowances, holiday pay, and leave
benefits, which are provided by the Labor Code. Petitioner was not only
experiencing a decline in its profits, but was reeling from tremendous losses
triggered by a bank-run which began in 1983. In such a depressed financial
condition, petitioner cannot be legally compelled to continue paying the
same amount of bonuses to its employees.
A bonus is an amount granted and paid to an employee for his industry and
loyalty which contributed to the success of the employer’s business and
made possible the realization of profits. It is an act of generosity granted by
an enlightened employer to spur the employee to greater efforts for the
success of the business and realization of bigger profits.12 The granting of a
bonus is a management prerogative, something given in addition to what is
ordinarily received by or strictly due the recipient.13 Thus, a bonus is not a
demandable and enforceable obligation,14 except when it is made part of
the wage, salary or compensation of the employee.15
However, an employer cannot be forced to distribute bonuses which it can
no longer afford to pay. To hold otherwise would be to penalize the
employer for his past generosity. Thus, in Traders Royal Bank v. NLRC,16 we
held that –
It is clear x x x that the petitioner may not be obliged to pay bonuses to its
employees. The matter of giving them bonuses over and above their lawful
salaries and allowances is entirely dependent on the profits, if any, realized
by the Bank from its operations during the past year.
JOSE RIZAL COLLEGE VS NLRC
The National Alliance of Teachers sued Jose Rizal College for alleged
nonpayment of unworked holidays from 1975 to 1977. The members of the
Alliance concerned are faculty members who are paid on the basis of student
contract hour.
ISSUE: Whether or not the school faculty are entitled to unworked holiday
pay.
HELD: As far as unworked regular holidays are concerned, the teachers are
not entitled to holiday pay. Regular holidays specified as such by law are
known to both school and faculty members as no class days;” certainly the
latter do not expect payment for said unworked days, and this was clearly in
their minds when they entered into the teaching contracts.
On the other hand, the teachers are entitled to be paid for unworked special
holidays. Otherwise stated, the faculty member, although forced to take a
rest, does not earn what he should earn on that day. Be it noted that when a
special public holiday is declared, the faculty member paid by the hour is
deprived of expected income, and it does not matter that the school calendar
is extended in view of the days or hours lost, for their income that could be
earned from other sources is lost during the extended days. Similarly, when
classes are called off or shortened on account of typhoons, floods, rallies,
and the like, these faculty members must likewise be paid, whether or not
extensions are ordered.
AVELINO S. ALELIN V. PETRON CORPORATION
DOCTRINE Generally, the contractor is presumed to be a labor-only
contractor, unless such contractor overcomes the burden of proving that it
has the substantial capital, investment, tools and the like. However, where
the principal is the one claiming that the contractor is a legitimate contractor,
said principal has the burden of proving that supposed status. A finding that
a contractor is a ‘labor-only’ contractor is equivalent to declaring that there is
an employer-employee relationship between the principal and the employees
of the supposed contractor.”
FACTS.
Romeo D. Gindang Services (RDG) is owned and operated by Romeo (duh)
who took over the business after his father. RDG fielded laborers to Petron’s
Mandaue Bulk Plant for a long period of time. In 2000, Petron and RDG
entered into a contract for services (for the 1st time) whereby RDG undertook
to provide Petron with janitorial, maintenance, tanker receiving, packaging
and other utility services in its Mandaue Bulk Plant, until such contract was
no longer renewed upon its expiration in Sept 2002. Petitioners Alilin et al,
the laborers fielded by RDG to Petron, filed a complaint for illegal dismissal
against Petron alleging that while RDG was the one who hired and paid
them, the latter was merely a labor-only contractor. Their jobs were directly
related to Petron’s business
They work inside Petron’s premises where they used equipment and tools
furnished by it. They were subject to Petron’s supervision.
RDG agreed with petitioners and denied liability.
Petron counters that RDG is an independent contractor as evidenced by
affidavits from previous RDG employees and Petron’s Mandaue plant
superintendent, RDG’s certification from DOLE and DTI, and many more
documents.
 SAN MIGUEL CORPORATION V MAERC INTEGRATED SEVICES INC., ET. AL
(G.R. NO. 144672)
FACTS: 291 workers filed their complaints against San Miguel Corporation and Maerc
Integrated Services, Inc, for illegal dismissal, underpayment of wages, non-payment
of service incentive leave pays and other labor standards benefits, and for separation
pays The complainants alleged that they were hired by San Miguel Corporation (SMC)
through its agent or intermediary Maerc Integrated Services, Inc. (MAERC) to work in
2 designated workplaces in Mandaue City. They washed and segregated various kinds
of empty bottles used by SMC to sell and distribute its beer beverages to the
consuming public. They were paid on a per piece or pakiao basis except for a few
who worked as checkers and were paid on daily wage basis.
Complainants alleged that long before SMC contracted the services of MAERC a
majority of them had already been working for SMC under the guise of being
employees of another contractor, Jopard Services, until the services of the latter were
terminated on 31 January 1988.
SMC denied liability for the claims and averred that the complainants were not its
employees but of MAERC, an independent contractor whose primary corporate
purpose was to engage in the business of cleaning, receiving, sorting, classifying,
etc., glass and metal containers. In a letter dated 15 May 1991, SMC informed
MAERC of the termination of their service contract by the end of June 1991. SMC
cited its plans to phase out its segregation activities starting 1 June 1991 due to the
installation of labor and cost-saving devices.
When the service contract was terminated, complainants claimed that SMC stopped
them from performing their jobs; that this was tantamount to their being illegally
dismissed by SMC who was their real employer as their activities were directly
related, necessary and desirable to the main business of SMC; and, that MAERC was
merely made a tool or a shield by SMC to avoid its liability under the Labor Code.
MAERC admitted that it recruited the complainants and placed them in the bottle
segregation project of SMC but maintained that it was only conveniently used by SMC
as an intermediary in operating the project. The Labor Arbiter rendered a decision
holding that MAERC was an independent contractor. The National Labor Relations
Commission (NLRC) ruled that MAERC was a labor-only contractor and that
complainants were employees of SMC.
ISSUE: Whether the complainants are employees of petitioner SMC or of respondent
MAERC.
HELD: Employees are those of SMC. In ascertaining an employer-employee
relationship, the following factors are considered: (a) the selection and engagement
of employee; (b) the payment of wages; (c) the power of dismissal; and, (d) the
power to control an employee's conduct.
Evidence discloses that petitioner played a large and indispensable part in the hiring
of MAERC's workers. It also appears that majority of the complainants had already
been working for SMC long before the signing of the service contract between SMC
and MAERC in 1988.
In the case, the incorporators of MAERC admitted having supplied and recruited
workers for SMC even before MAERC was created. The NLRC also found that when
MAERC was organized into a corporation in February 1988, the complainants who
were then already working for SMC were made to go through the motion of applying
for work with Ms. Olga Ouano, President and General Manager of MAERC.
As for the payment of workers' wages, SMC assumed the responsibility of paying for
the mandated overtime, holiday and rest day pays of the MAERC workers. SMC also
paid the employer's share of the SSS and Medicare contributions, the 13th month
pay, incentive leave pay and maternity benefits. These lend credence to the
complaining workers' assertion that while MAERC paid the wages of the complainants,
it merely acted as an agent of SMC.
SMC maintained a constant presence in the workplace through its own checkers. The
responsibility of watching over the MAERC workers by MAERC personnel became
superfluous with the presence of additional checkers from SMC. Control of the
premises in which the contractor's work was performed was also viewed as another
phase of control over the work, and this strongly tended to disprove the
independence of the contractor.
But the most telling evidence is a letter by Mr. Antonio Ouano, Vice-President of
MAERC addressed to Francisco Eizmendi, SMC President and Chief Executive Officer,
asking the latter to reconsider the phasing out of SMC's segregation activities in
Mandaue City. The letter attested to an arrangement entered into by the two (2)
parties which was not reflected in the Contract of Services. A peculiar relationship
mutually beneficial for a time but nonetheless ended in dispute when SMC decided to
prematurely end the contract leaving MAERC to shoulder all the obligations to the
workers.
While MAERC's investments in the form of buildings, tools and equipment amounted
to more than P4 Million, one cannot disregard the fact that it was the SMC which
required MAERC to undertake such investments under the understanding that the
business relationship between petitioner and MAERC would be on a long term basis
 DOLE PHILIPPINES, INC. v. ESTEVA
Facts: Petitioner DOLEFIL is a domestic corporation with its pineapple plantation in
Polomolok, South Cotabato. Respondents are members of the Cannery Multi-Purpose
Cooperative (CAMPCO), which is duly registered with the CDA, and live in
communities surrounding petitioner’ s plantation.
On August 17, 1993, CAMPCO entered into a Service Contract with petitioner, which
stated that the number of CAMPCO members that report for work and the type of
service they performed would depend on the needs of petitioner at any given time.
The Service Contract stated that it shall only be for a period of 6 months, (from 1 July
to 31 December 1993) however, the parties had extended or renewed the same for
the succeeding years without executing another written contract.
On May 5, 1993, the Sangguniang Bayan of Polomolok passed Resolution No. 64
calling the attention of the DOLE Secretary to the worsening working conditions o
f petitioner’s workers and the organization of
contractual workers into several cooperatives to replace the individual labor-only
contractors that used to supply workers to the petitioner.
The DOLE Regional Office thus organized a Task Force to investigate and found that
6 cooperatives were engaged in labor-only contracting, one of which was CAMPCO.
The DOLE Regional Office held a conference where the 6 cooperatives were given the
opportunity to explain the nature of their activities in relation to petitioner, and
petitioner also submitted its position paper.
Nevertheless, DOLE Regional Office found the 6 cooperatives were engaged in
different activities with DOLEFIL with 3 cooperatives (including CAMPCO) engaged in
labor-only contracting activities; and issued an Order to all cooperatives to cease and
desist from engaging in labor-only contracting activities with DOLEFIL.
DOLEFIL brought this case before the Labor Arbiter and NLRC, which both ruled in its
favor. CA ruled for respondents and held that DOLEFIL illegally dismissed its
employees and ordered them reinstated with backwages.
Issues:
1. W/N CAMPCO was a labor-only contractor
2. W/N petitioner is their real employer.
Held: YES. The Court upheld the ruling of the CA. 1. The finding of the DOLE
Secretary that CAMPCO was a labor-only contractor is already conclusive. However,
even if this Court could deviate from said finding, an independent review of the
evidence on record would result in the same conclusion
The existence of an independent and permissible contractor relationship is generally
established by the following: a.
1. whether or not the contractor is carrying on an independent business;
2. the nature and extent of the work;
3. the skill required;
4. the term and duration of the relationship;
5. the right to assign the performance of a specified piece of work;
6. the control and supervision of the work to another;
7. the employer's power with respect to the hiring, firing and payment of the
contractor's workers
PHILIPPINE AIRLINES, INC. v. ENRIQUE LIGAN, et al.
G.R. No. 146408, 30 April 2009
FACTS: Enrique Ligan, et al. and the other respondents were employees of Synergy
Services Corporation (Synergy) which provides manpower for Philippine Airlines. It
was later discovered that Synergy is a labor-only contractor. They were dismissed by
Philippine Airlines on several grounds, one of which is in the guise of retrenchment.
The legality of the dismissal of the Ligan, et al. has been pending before the Court of
Appeals.
Philippine Airlines paid the wages of the Ligan, et al. but contested the employment
status of Roque Pilapil for he is already terminated and Benedicto Auxtero who signed
the ―Release and Quitclaim and Waiver‖. Philippine Airlines therefore pleads to the
court to reconsider its first Decision on the payment of wages and benefits.
ISSUE: Whether or not the Supreme Court shall overrule its first decision regarding
the grant of wages and benefits to Ligan, et al.
HELD: In light of these recent manifestations-informations of the parties, the Court
finds that a modification of the Decision is in order, the claims with respect to Pilapil
and Auxtero having been deemed extinguished even before the promulgation of the
Decision. That Pilapil was a regular employee yields to the final finding of a valid
dismissal in the supervening case involving his own misconduct, while Auxtero’s
attempt at forum-shopping should not be countenanced.
IN ALL OTHER RESPECTS, the Court finds no sufficient reason to deviate from its
Decision, but proceeds, nonetheless, to clarify a few points. While this Court’s
Decision ruled on the regular status of Ligan, et al., it must be deemed to be without
prejudice to the resolution of the issue of illegal dismissal in the proper case.

Notably, subject of the Decision was Ligan, et al.’s complaints for regularization and
under-/non-payment of benefits. The Court did not and could not take cognizance of
the validity of the eventual dismissal of Ligan, et al. because the matter of just or
authorized cause is beyond the issues of the case. That is why the Court did not
order reinstatement for such relief presupposes a finding of illegal dismissal in the
proper case which, as the parties now manifest, pends before the appellate court.
All told, the pending illegal dismissal case in CA-G.R. SP No. 00922 may now take its
course. The Court’s finding that Ligan, et al. are regular employees of PAL neither
frustrates nor preempts the appellate court’s proceedings in resolving the issue of
retrenchment as an authorized cause for termination. If an authorized cause for
dismissal is later found to exist, PAL would still have to pay Ligan, et al. their
corresponding benefits and salary differential up to June 30, 1998. Otherwise, if there
is a finding of illegal dismissal, an order for reinstatement with full backwages does
not conflict with the Court’s declaration of the regular employee status of Ligan, et al.
COCA-COLA BOTTLERS PHILIPPINES V. DELA CRUZ GR No. 184977
December 7, 2009
FACTS: Respondents Dela Cruz, Guasis, Pugal, Hermo, Somero, Jr., Diocares, and
Ichapare were route helpers assigned to work with petitioner Coca-Cola Bottlers's
trucks. Pursuant to their work, respondents go from the Coca- Cola sales offices or
plants to customer outlets such as sari-sari stores, restaurants, groceries,
supermarkets and the like. They likewise claim that they were hired either directly by
the petitioner or by its contractors, but they do not enjoy the full remuneration,
benefits and privileges granted to the petitioners regular sales force. As a result, they
filed to separate complaints for their regularization with money claims against
petitioner. They argued that the services they rendered were necessary and desirable
in the regular business of the petitioner. On the other hand, petitioner Coca-Cola
Bottlers contended that it did not have employer-employee relationship with the
respondents on the ground that it entered into contracts of services with Peerless and
Excellent Partners Cooperative, Inc. which entitled the latter the right to select, hire,
dismiss, supervise, control and discipline and pay the salaries of all personnel they
assign to the petitioner. Respondents disclaimed the contention of the petitioner,
claiming that they worked under the control and supervision of the company’s
supervisors who prepared their work schedules and assignments and that Peerless
was in the nature of a labor-only contractor because of its insufficient capital to
provide services to petitioner. LA: Dismissed the complaint for lack of jurisdiction
after finding that the respondents were employees of Peerless and not of Coca-Cola
Bottlers. NLRC: Affirmed LA's ruling. CA: Reversed the previous decisions and ruled
that Peerless was engaged in labor-only contract based on the respondents™
assertions and the petitioners admissions that Peerless simply supplied the company
with manpower. Furthermore, the Court found no proof in the records that Peerless
met the required capitalization and tools.
ISSUES: 1. Whether or not Peerless and Excellent Partners Cooperative, Inc. is a
labor-only contractor. 2. Whether or not the respondents are regular employees.
RULING: 1.The Court ruled in affirmative. Labor-only contracting shall refer to an
arrangement where the contractor or subcontractor merely recruits, supplies or
places workers to perform a job, work or service for a principal, and any of the
following elements are present: 1. The contractor or subcontractor does not have
sufficient capital or investment which relates to the job, work or service to be
performed and 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; OR, 2. The contractor does not exercise the right to control over the
performance of the work of the contractual-employee. By "right to control, it pertains
to the prerogative of a party to determine, not only the end result sought to be
achieved, but also the means and manner to be used to achieve this end. A key
consideration in resolving whether either of the two elements of a labor-only
contractor is present in a given case is the contract between the company and the
purported contractors. However, the contract between the principal and the
contractor is not the final word on how the contracted workers relate to the principal
and the purported contractor; the relationships must be tested on the basis of how
they actually operate. The facts of the case show that the respondents, acting as
sales route helpers, were only engaged in the marginal work of helping in the sale
and distribution of company products. They only provided the muscle work that sale
and distribution required and were thus necessarily under the companys control and
supervision in doing these tasks. Also, respondents were not independently selling
and distributing company products, using their own equipment, means and methods
of selling and distribution. They only supplied the manpower that helped the
company in the handing of products for sale and distribution. Therefore, Peerless and
Excellent were mere labor-only contractors who had no sufficient capitalization and
equipment to undertake sales and distribution of softdrinks as independent activities
separate from the manufacture of softdrinks, and who had no control and supervision
over the contracted personnel. 2. The Court ruled in affirmative. It found that
respondents, for being engaged in component functions in the main business of the
company under the latters supervision and control, were regular employees who are
entitled to their respective claims.
 ALIVIADO VS. PROCTER AND GAMBLE DIGEST
DECEMBER 19, 2016 G.R. NO. 160506 JUNE 6, 2011
Facts: Petitioners worked as merchandisers of P&G. They all individually signed employment
contracts with either Promm-Gem or SAPS. They were assigned at different outlets,
supermarkets and stores where they handled all the products of P&G. They received their wages
from Promm-Gem or SAPS. SAPS and Promm-Gem imposed disciplinary measures on erring
merchandisers for reasons such as habitual absenteeism, dishonesty or changing day-off without
prior notice. To enhance consumer awareness and acceptance of the products, P&G entered into
contracts with Promm-Gem and SAPS for the promotion and merchandising of its products. In
December 1991, petitioners filed a complaint against P&G for regularization, service incentive
leave pay and other benefits with damages.
Issue: WON P&G is the employer of petitioners.
Held: In order to resolve the issue of whether P&G is the employer of petitioners, it is necessary
to first determine whether Promm-Gem and SAPS are labor-only contractors or legitimate job
contractors Clearly, the law and its implementing rules allow contracting arrangements for the
performance of specific jobs, works or services. However, in order for such outsourcing to be
valid, it must be made to an independent contractor because the current labor rules expressly
prohibit labor-only contracting. To emphasize, there is labor-only contracting when the
contractor or sub-contractor merely recruits, supplies or places workers to perform a job, work
or service for a principal and any of the following elements are present:
1.The contractor or subcontractor does not have substantial capital or investment
which relates to the job, work or service to be performed and 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; or
2.The contractor does not exercise the right to control over the performance of the
work of the contractual
Under the circumstances, Promm-Gem cannot be considered as a labor-only contractor. We find
that it is a legitimate independent contractor.
Considering that SAPS has no substantial capital or investment and the workers it recruited are
performing activities which are directly related to the principal business of P&G, we find that the
former is engaged in “labor-only contracting”.
Where labor-only contracting exists, the Labor Code itself establishes an employer-
employee relationship between the employer and the employees of the labor-only
contractor. The statute establishes this 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.
NORKIS TRADING CORPORATION, vs. JOAQUIN BUENA VISTA.
G.R. No. 182018 October 10, 2012
The respondents were hired and worked by/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 by Norkis
Trading. Instead, they were regarded by Norkis Trading as members of PASAKA, a
cooperative, and which was deemed an independent contractor that merely deployed
the respondents to render services for Norkis Trading. The respondents, believing
that they were regular employees of Norkis Trading, filed on June 9, 1999 with the
DOLE a complaint against Norkis Trading and PASAKA for labor-only contracting and
non-payment of minimum wage and overtime pay. The filing of the complaint for
labor-only contracting allegedly led to the suspension of the respondents’™
membership with PASAKA. O
n October 13, 1999, the respondents were to report back to work but they were
informed by PASAKA that they would be transferred to Norkis Tradings’ sister
company, Porta Coeli Industrial Corporation (Porta Coeli). The respondents opposed
the transfer as it would allegedly result in a change of employers, from Norkis
Trading to Porta Coeli. The respondents also believed that the transfer would result in
a demotion since from being skilled workers in Norkis Trading, they would be reduced
to being utility workers. 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.
ISSUE:
Whether the respondents were illegally dismissed by Norkis Trading
HELD:
YES. 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. Considering, that Porta
Coeli is an entity separate and distinct from Norkis Trading, the respondents™
employment with Norkis Trading was necessarily severed by the change in work
assignment.
 MAKATI HABERDA SHERY INC., JORGE LEDESMA AND CECILIO
INOCENCIO,PETITIONERS VS NLRC, ETC., RESPONDENTS.
G.R. Nos. 83380-81 November 15, 1989
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) July 1984,
the labor organization where the complainants are members filed a complaint for
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.
THELMA DUMPIT-MURILLO VS COURT OF APPEALS
Thelma Dumpit-Murillo was hired by ABC as a newscaster in 1995. Her contract with
the TV station was repeatedly renewed until 1999. She then wrote Jose Javier (VP for
News and Public Affairs of ABC) advising him of her intention to renew the contract.
Javier did not respond. Dumpit then demanded reinstatement as well as her
backwages, service incentive leave pays and other monetary benefits. ABC said they
could only pay her backwages but her other claims had no basis as she was not
entitled thereto because she is considered as a talent and not a regular employee.
Dumpit sued ABC. The Labor Arbiter ruled against Dumpit. The National Labor
Relations Commission reversed the LA. The Court of Appeals reversed the NLRC and
ruled that as per the contract between ABC and Dumpit, Dumpit is a fixed term
employee.
ISSUE: Whether or not Dumpit is a regular employee
HELD: Yes. Dumpit was a regular employee under contemplation of law. The practice
of having fixed-term contracts in the industry does not automatically make all talent
contracts valid and compliant with labor law. The assertion that a talent contract
exists does not necessarily prevent a regular employment status.
The duties of Dumpit as enumerated in her employment contract indicate that ABC
had control over the work of Dumpit. Aside from control, ABC also dictated the work
assignments and payment of petitioner’s wages. ABC also had power to dismiss her.
All these being present, clearly, there existed an employment relationship between
Dumpit and ABC.
In addition, her work was continuous for a period of four years. This repeated
engagement under contract of hire is indicative of the necessity and desirability of the
Dumpit’s work in ABC’s business.
PEOPLE V GOCE
Facts:
On January 12, 1988, an information for illegal recruitment committed by a syndicate
and in large scale, punishable under Articles 38 and 39 of the Labor Code
(Presidential Decree No. 442) as amended by Section 1(b) of Presidential Decree No.
2018, was filed against spouses Dan and Loma Goce and herein accused-appellant
Nelly Agustin in the Regional Trial Court of Manila, Branch 5, alleging —
Four of the complainants testified for the prosecution. Rogelio Salado was the first to
take the witness stand and he declared that sometime in March or April, 1987 he was
introduced by Lorenzo Alvarez, his brother-in-law and a co-applicant, to Nelly Agustin
in the latter's residence at Factor, Dongalo, Parañaque, Metro Manila. Representing
herself as the manager of the Clover Placement Agency, Agustin showed him a job
order as proof that he could readily be deployed for overseas employment. Salado
learned that he had to pay P5,000.00 as processing fee, which amount he gave
sometime in April or May of the same year. He was issued the corresponding receipt.
Also in April or May, 1987, Salado, accompanied by five other applicants who were
his relatives, went to the office of the placement agency at Nakpil Street, Ermita,
Manila where he saw Agustin and met the spouses Dan and Loma Goce, owners of
the agency. He submitted his bio-data and learned from Loma Goce that he had to
give P12,000.00, instead of the original amount of P5,000.00 for the placement fee.
Although surprised at the new and higher sum, they subsequently agreed as long as
there was an assurance that they could leave for abroad.
Only herein appellant Agustin testified for the defense. She asserted that Dan and
Loma Goce were her neighbors at Tambo, Parañaque and that they were licensed
recruiters and owners of the Clover Placement Agency. Previously, the Goce couple
was able to send her son, Reynaldo Agustin, to Saudi Arabia. Agustin met the
aforementioned complainants through Lorenzo Alvarez who requested her to
introduce them to the Goce couple, to which request she acceded.
Denying any participation in the illegal recruitment and maintaining that the
recruitment was perpetrated only by the Goce couple, Agustin denied any knowledge
of the receipts presented by the prosecution. She insisted that the complainants
included her in the complaint thinking that this would compel her to reveal the
whereabouts of the Goce spouses.
Issue: Whether or not Agustin’s act of introducing couple Goce falls within the
meaning of illegal recruitment and placement under Art 13(b) in relation to Art 34 of
the Labor Code.
Held: The testimonial evidence hereon show that she indeed further committed acts
constitutive of illegal recruitment.
All four prosecution witnesses testified that it was Agustin whom they initially
approached regarding their plans of working overseas. It was from her that they
learned about the fees they had to pay, as well as the papers that they had to
submit. It was after they had talked to her that they met the accused spouses who
owned the placement agency.
As correctly held by the trial court, being an employee of the Goces, it was therefore
logical for appellant to introduce the applicants to said spouses, they being the
owners of the agency. As such, appellant was actually making referrals to the agency
of which she was a part. She was therefore engaging in recruitment activity.
There is illegal recruitment when one gives the impression of having the ability to
send a worker abroad. It is undisputed that appellant gave complainants the distinct
impression that she had the power or ability to send people abroad for work such
that the latter were convinced to give her the money she demanded in order to be so
employed.
DARVIN V COURT OF APPEALS G.R. NO. 125044
Facts: Imelda Darvin was convicted of simple illegal recruitment under the Labor
Code by the RTC. It stemmed from a complaint of one Macaria Toledo who was
convinced by the petitioner that she has the authority to recruit workers for abroad
and can facilitate the necessary papers in connection thereof. In view of this promise,
Macaria gave her P150,000 supposedly intended for US Visa and air fare.
On appeal, the CA affirmed the decision of the trial court in toto, hence this petition.
Issue: Whether or not appellant is guilty beyond reasonable doubt of illegal
recruitment.
Held:
Art. 13 of the Labor Code provides the definition of recruitment and placement as:
...b.) any act of canvassing, enlisting, contracting, transporting, utilizing, hiring, or
procuring workers and includes referrals, contract services, promising or advertising
for employment locally or abroad, whether for profit or not: Provided, that any reason
person or entity which, in any manner, offers or promises for a fee employment to
two or more persons shall be deemed engaged in recruitment and placement.
Art. 38 of the Labor Code provides:
a.)Any recruitment activities, including the prohibited practices enumerated under
Article 43 of the Labor Code, to be undertaken by non-licensees or non-holders of
authority shall be deemed illegal and punishable under Article 39 of the Labor Code.
Applied to the present case, to uphold the conviction of accused-appellant, two
elements need to be shown: (1) the person charged with the crime must have
undertaken recruitment activities: and (2) the said person does not have a license or expenses and processing of documents. He manifestly gave the impression to the
authority to do so. three women that he had the ability to send workers abroad. Misrepresenting himself
as a recruiter of workers for Brunei, he promised them work for a fee and convinced
In the case, the Court found no sufficient evidence to prove that accused-appellant them to give their money for the purpose of getting an employment overseas
offered a job to private respondent. It is not clear that accused gave the impression
that she was capable of providing the private respondent work abroad. What is
established, however, is that the private respondent gave accused-appellant
P150,000.

By themselves, procuring a passport, airline tickets and foreign visa for another
individual, without more, can hardly qualify as recruitment activities. Aside from the
testimony of private respondent, there is nothing to show that appellant engaged in
recruitment activities.

At best, the evidence proffered by the prosecution only goes so far as to create a
suspicion that appellant probably perpetrated the crime charged. But suspicion alone
is insufficient, the required quantum of evidence being proof beyond reasonable
doubt. When the People’s evidence fail to indubitably prove the accused’s authorship
of the crime of which he stand accused, then it is the Court’s duty, and the accused’s
right, to proclaim his innocence.

PEOPLE VS DIAZGR NO. 11217526 JULY 1996

FACTS: Three women (Navarro, Fabricante, and Ramirez) were enrolled at the
Henichi TechnoExchange Cultural Foundation in Davao City, studying Niponggo, when
they were informed by their teacher, Mrs. Aplicador that she knew of a Mr. Paulo Lim
who also knew of one Engineer Erwin Diaz who was recruiting applicants for Brunei.
Accompanied by Mrs. Aplicador, the three women went to Mr. Lim who told them that
his children had already applied with Engr. Diaz. The four women were then
accompanied by Mr. Lim to the CIS Detention Center where Engr. Diaz was already
being detained. After Navarro and Ramirez had already given 20kas placement fee,
Fabricante went to the office of the POEA and found out the Engr. Diaz was not
licensed. Fabricante informed the two women about her discovery and they all
withdrew their applications. Engr. Diaz refunded their payments. The trial court held
Engr. Diaz guilty of illegal recruitment in large scale.

ISSUE: WON Diaz was engaged in illegal recruitment.

HELD: YES. Diaz was neither a licensee nor a holder of authority to qualify him to
lawfully engage in recruitment and placement activity. Appellant told the three
women that he was recruiting contract workers for abroad, particularly Brunei, and
promised them job opportunities if they can produce various amounts of money for
DAVAO FRUITS CORPORATION VS ASSOCIATED LABOR UNIONS, G.R. NO.
85073, AUGUST 24, 1993; 225 SCRA 562

Facts: Respondent ALU for and in behalf of all the rank-and-file workers and
employees of petitioner sought to recover from the latter the 13th month pay
differential for 1982 of said employees, equivalent to their sick, vacation and
maternity leaves, premium for work done on rest days and special holidays, and pay
for regular holidays which petitioner, allegedly in disregard of company practice since
1975, excluded from the computation of the 13th month pay for 1982.

Issue: WON in the computation of the 13th month pay under PD No. 851, payments
for sick, vacation and maternity leaves, premiums for work done on rest days and
special holidays, and pay for regular holidays may be excluded in the computation
and payment thereof.

Held: Yes. Basic salary does not merely exclude the benefits expressly mentioned but
all payments which may be in the form of fringe benefits or allowances.

Sec. 4 of the Supplementary Rules and Regulations Implementing PD No. 851

provides that “overtime pay, earnings and other remunerations which are not part of
the basic salary shall not be included in the computation of the 13th month pay.

Whatever compensation an employee receives for an 8 hour work daily or the daily
wage rate is the basic salary. Any compensation or remuneration other than the daily
wage rate is excluded. It follows therefore, that payments for sick, vacation and
maternity leaves, premiums for work done on rest days and special holidays, as well
as pay for regular holidays, are likewise excluded in computing the basic salary for
the purpose of determining the 13th month pay.
DAVAO INTEGRATED PORT STEVEDORING SERVICES, petitioner, vs. RUBEN
V. ABARQUEZ, at. al., respondents
GR No. 102132
FACTS: Petitioner and private respondent, THE ASSOCIATION OF TRADE UNIONS
(ATU-TUCP), entered into a CBA providing for 2 sections on sick leave with pay
benefits which apply to both the regular non-intermittent workers or those workers
who render a daily eight-hour service to the company as governed by Section 1,
Article VIII of the 1989 CBA, and the intermittent field workers who are members of
the regular labor pool and the present regular extra labor pool, as governed by Sec. 3
thereof. Sec. 1, however, of said CBA had a proviso that only those regular workers
of the company whose work are not intermittent, are entitled to the commutation of
sick leave privilege. A proviso not found in Sec. 3. This caused the new assistant
manager to discontinue the commutation of the unenjoyed portion of the sick leave
with pay benefits of the intermittent workers or its conversion to cash. The Union
objected and brought the matter for voluntary arbitration before the National
Conciliation and Mediation Board with respondent Abarquez acting as voluntary
arbitrator who later issued an award in favor of the Union.
ISSUE: WON intermittent(irregular) workers are entitled to commutation of their
unenjoyed sick leave with pay benefits.
HELD: Yes. The CBA has two (2) sections on sick leave with pay benefits which apply
to two (2) distinct classes of workers in petitioner’s company, namely: (1) the regular
non-intermittent workers or those workers who render a daily eight-hour service to
the company and (2) intermittent field workers who are members of the regular labor
pool and the present regular extra labor pool. Sick leave benefits, like other economic
benefits stipulated in the CBA such as maternity leave and vacation leave benefits,
among others, are by their nature, intended to be replacements for regular income
which otherwise would not be earned because an employee is not working during the
period of said leaves. They are non-contributory in nature, in the sense that the
employees contribute nothing to the operation of the benefits. By their nature, upon
agreement of the parties, they are intended to alleviate the economic condition of the
workers.
***Notes: Petitioner-company is of the mistaken notion that since the privilege of
commutation or conversion to cash of the unenjoyed portion of the sick leave with
pay benefits is found in Section 1, Article VIII, only the regular non-intermittent
workers and no other can avail of the said privilege because of the proviso found in
the last sentence thereof.
States Marine Corp. vs. Cebu Seamen’s Assc. DIGEST
GR L 12444 February 28, 1963
Facts: On September 12, 1952, the respondent union filed with the Court of
Industrial Relations (CIR), a petition (Case No. 740-V) against the States Marine
Corporation, later amended on May 4, 1953, by including as party respondent, the
petitioner Royal Line, Inc. The Union alleged that that after the Minimum Wage Law
had taken effect, the petitioners required their employees on board their vessels, to
pay the sum of P.40 for every meal, while the masters and officers were not required
to pay their meals. The petitioners’ shipping companies, answering, averred that in
enacting Rep. Act No. 602 (Minimum Wage Law), the Congress had in mind that the
amount of P.40 per meal, furnished to employees should be deducted from the daily
wages.
Issue: WON meals are deductable from wages.
Held: It is argued that the food or meals given to the deck officers, marine engineers
and unlicensed crew members in question, were mere “facilities” which should be
deducted from wages, and not “supplements” which, according to said section 19,
should not be deducted from such wages, because it is provided therein: “Nothing in
this Act shall deprive an employee of the right to such fair wage … or in reducing
supplements furnished on the date of enactment.” In the case of Atok-Big Wedge
Assn. v. Atok-Big Wedge Co., L-7349, July 19, 1955; 51 O.G. 3432, the two terms are
defined as follows —
“Supplements”, therefore, constitute extra remuneration or special privileges or
benefits given to or received by the laborers over and above their ordinary earnings
or wages. “Facilities”, on the other hand, are items of expense necessary for the
laborer’s and his family’s existence and subsistence so that by express provision of
law (Sec. 2[g]), they form part of the wage and when furnished by the employer are
deductible therefrom, since if they are not so furnished, the laborer would spend and
pay for them just the same.
Facilities may be charged to or deducted from wages. Supplements, on the other
hand, may not be so charged. Thus, when meals are freely given to crew members of
a vessel while they were on the high seas, not as part of their wages but as a
necessary matter in the maintenance of the health and efficiency of the crew
personnel during the voyage, the deductions made therefrom for the meals should be
returned to them, and the operator of the coastwise vessels affected should continue
giving the same benefit. Petition dismissed.
 NORMA MABEZA VS NLRC
271 SCRA 670 – LABOR LAW – LABOR STANDARDS – WAGES – FACILITIES
VS SUPPLEMENTS
Norma Mabeza was an employee hired by Hotel Supreme in Baguio City. In 1991, an
inspection was made by the Department of Labor and Employment (DOLE) at Hotel
Supreme and the DOLE inspectors discovered several violations by the hotel
management. Immediately, the owner of the hotel, Peter Ng, directed his employees
to execute an affidavit which would purport that they have no complaints whatsoever
against Hotel Supreme. But Mabeza refused to certify said affidavit with the fiscal’s
office so this led to her dismissal. She sued Peter Ng and one of her complaints
against him is underpayment because her wage was less than the minimum wage.
Peter Ng argued that the reason for such low payment was because she was being
given free lodging, water, electricity, and water consumption by the hotel.
ISSUE: Whether or not such amenities provided by the hotel be considered as
facilities which are deductible from Mabeza’s wage.
HELD: No. There are requisites before such can be done and they are:
Proof must be shown that such facilities are customarily furnished by the trade.
The provision of deductible facilities must be voluntarily accepted in writing by the
employee.
Facilities must be charged at fair and reasonable value.
None of these were complied with in the case at bar. More significantly, the food and
lodging, or the electricity and water consumed by Mabeza were not facilities but
supplements. A benefit or privilege granted to an employee for the convenience of
the employer is not a facility. The criterion in making a distinction between the two
not so much lies in the kind (food, lodging) but the purpose. Considering, therefore,
that hotel workers are required to work different shifts and are expected to be
available at various odd hours, their ready availability is a necessary matter in the
operations of a small hotel, such as Hotel Supreme.
JOSE RIZAL COLLEGE VS NLRC
156 SCRA 27
The National Alliance of Teachers sued Jose Rizal College for alleged nonpayment of
unworked holidays from 1975 to 1977. The members of the Alliance concerned are
faculty members who are paid on the basis of student contract hour.
ISSUE: Whether or not the school faculty are entitled to unworked holiday pay.
HELD: As far as unworked regular holidays are concerned, the teachers are not
entitled to holiday pay. Regular holidays specified as such by law are known to both
school and faculty members as no class days;” certainly the latter do not expect
payment for said unworked days, and this was clearly in their minds when they
entered into the teaching contracts.
On the other hand, the teachers are entitled to be paid for unworked special holidays.
Otherwise stated, the faculty member, although forced to take a rest, does not earn
what he should earn on that day. Be it noted that when a special public holiday is
declared, the faculty member paid by the hour is deprived of expected income, and it
does not matter that the school calendar is extended in view of the days or hours
lost, for their income that could be earned from other sources is lost during the
extended days. Similarly, when classes are called off or shortened on account of
typhoons, floods, rallies, and the like, these faculty members must likewise be paid,
whether or not extensions are ordered.
FACTS: Petitioner is a non-stock, non-profit educational institution duly organized
and existing under the laws of the Philippines. It has three groups of employees
categorized as follows: (a) personnel on monthly basis, who receive their monthly
salary uniformly throughout the year, irrespective of the actual number of working
days in a month without deduction for holidays; (b) personnel on daily basis who are
paid on actual days worked and they receive unworked holiday pay and (c) collegiate
faculty who are paid on the basis of student contract hour. Before the start of the
semester they sign contracts with the college undertaking to meet their classes as per
schedule. Unable to receive their corresponding holiday pay, as claimed, from 1975 to
1977, private respondent National Alliance of Teachers and Office Workers (NATOW)
in behalf of the faculty and personnel of Jose Rizal College filed with the Ministry of
Labor a complaint against the college for said alleged non-payment of holiday pay,
docketed as Case No. R04-10-81-72. Due to the failure of the parties to settle their
differences on conciliation, the case was certified for compulsory arbitration where it
was docketed as RB-IV-23037-78.

ISSUE: Whether or not the school faculty who according to their contracts are paid
per lecture hour are entitled to unworked holiday pay.
HELD: After the parties had submitted their respective position papers, the Labor
Arbiter ** rendered a decision on February 5, 1979, the dispositive portion of which
reads: WHEREFORE, judgment is hereby rendered as follows:
1. The faculty and personnel of the respondent Jose Rizal College who are paid their
salary by the month uniformly in a school year, irrespective of the number of working
days in a month, without deduction for holidays, are presumed to be already paid the
10 paid legal holidays and are no longer entitled to separate payment for the said
regular holidays;
2. The personnel of the respondent Jose Rizal College who are paid their wages daily
are entitled to be paid the 10 unworked regular holidays according to the pertinent
provisions of the Rules and Regulations Implementing the Labor Code;
3. Collegiate faculty of the respondent Jose Rizal College who by contract are paid
compensation per student contract hour are not entitled to unworked regular holiday
pay considering that these regular holidays have been excluded in the programming
of the student contact hours. (Rollo. pp. 26-27) On appeal, respondent National
Labor Relations Commission in a decision promulgated on June 2, 1982, modified the
decision appealed from, in the sense that teaching personnel paid by the hour are
declared to be entitled to holiday pay (Rollo. p. 33).
The decision of the NLRC was set aside and a new one was rendered to wit:(a)
exempting petitioner from paying hourly paid faculty members their pay for regular
holidays, whether the same be during the regular semesters of the school year or
during semestral, Christmas, or Holy Week vacations; (b) but ordering petitioner to
pay said faculty members their regular hourly rate on days declared as special
holidays or for some reason classes are called off or shortened for the hours they are
supposed to have taught, whether extensions of class days be ordered or not; in case
of extensions said faculty members shall likewise be paid their hourly rates should
they teach during said extensions
CESAR ODANGO VS. NLRC AND ANTIQUE ELECTRIC COOPERATIVE, INC.
G.R. NO.147420. JUNE 10, 2004
Facts: Petitioners are monthly-paid employees of ANTECO whose workdays are from
Monday to Friday and half of Saturday. After a routine inspection, the Regional
Branch of the Department of Labor and Employment found ANTECO liable for
underpayment of the monthly salaries of its employees. On September 1989, the
DOLE directed ANTECO to pay its employees wage differentials amounting to
P1,427,412.75. ANTECO failed to pay. On various dates in 1995, thirty-three (33)
monthly-paid employees filed complaints with the NLRC praying for payment of wage
differentials, damages and attorney’s fees.
On November 1996, the Labor Arbiter rendered a Decision in favor of petitioners
granting them wage differentials amounting to P1,017,507.73 and attorney’s fees of
10%. ANTECO appealed the Decision to the NLRC where it reversed the Labor
Arbiter’s Decision. The NLRC denied petitioners’ motion for reconsideration.
Petitioners then elevated the case to CA where it dismissed the petition for failure to
comply with Section 3, Rule 46 of the Rules of Court. The Court of Appeals explained
that petitioners failed to allege the specific instances where the NLRC abused its
discretion. The appellate court denied petitioners’ motion for reconsideration. Hence,
this petition.
Issue: Whether or not the petitioners are entitled to money claims.
Ruling: The Court ruled that the petitioners are not entitled to money claims or wage
differentials.
The petitioners claim is based on Section 2, Rule IV, Book III of the Implementing
Rules and Policy Instructions No. 9 issued by the Secretary of Labor which was
declared null and void since in the guise of clarifying the Labor Code’s provisions on
holiday pay, they in effect amended them by enlarging the scope of their exclusion.
Even assuming that Section 2, Rule IV of Book III is valid, their claim will still fail. The
basic rule in this jurisdiction is "no work, no pay." The right to be paid for un-worked
days is generally limited to the ten legal holidays in a year. Petitioners’ claim is based
on a mistaken notion that Section 2, Rule IV of Book III gave rise to a right to be
paid for un-worked days beyond the ten legal holidays. Petitioners’ line of reasoning
is not only a violation of the "no work, no pay" principle, it also gives rise to an
invidious classification, a violation of the equal protection clause.
Facts: Petitioners are monthly-paid employees of ANTECO whose workdays are from
Monday to Friday and half of Saturday. After a routine inspection, the Regional
Branch of the Department of Labor and Employment found ANTECO liable for
underpayment of the monthly salaries of its employees. On September 1989, the
DOLE directed ANTECO to pay its employees wage differentials amounting
toP1,427,412.75. ANTECO failed to pay. On various dates in 1995, thirty-three (33)
monthly-paid employees filed complaints with the NLRC praying for payment of wage
differentials, damages and attorney’s fees. On November 1996, the Labor Arbiter
rendered a Decision in favor of petitioners granting them wage differentials
amounting to P1,017,507.73 and attorney’s fees of 10%. ANTECO appealed the
Decision to the NLRC where it reversed the Labor Arbiter’s Decision. The NLRC denied
petitioners ’motion for reconsideration. Petitioners then elevated the case to CA
where it dismissed the petition for failure to comply with Section 3, Rule 46 of the
Rules of Court. The Court of Appeals explained that petitioners failed to allege the
specific instances where the NLRC abused its discretion. The appellate court denied
petitioners’ motion for reconsideration.
Issue: Whether or not the petitioners are entitled to money claims.
Held: Petitioners are not entitled to money claims or wage differentials. The
petitioners claim is based on Section 2, Rule IV, Book III of the Implementing Rules
and Policy Instructions No. 9 issued by the Secretary of Labor which was declared
null and void since in the guise of clarifying the Labor Code’s provisions on holiday
pay, they in effect amended them by enlarging the scope of their exclusion. Even
assuming that Section 2, Rule IV of Book III is valid, their claim will still fail. The basic
rule in this jurisdiction is "no work, no pay." The right to be paid for un-worked days
is generally limited to the ten legal holidays in a year. Petitioners’ claim is based on a
mistaken notion that Section 2, Rule IV of Book III gave rise to a right to be paid for
un-worked days beyond the ten legal holidays. Petitioners’ line of reasoning is not
only a violation of the "no work, no pay" principle, it also gives rise to an invidious
classification, a violation of the equal protection clause.
WELLINGTON INVESTMENT & MANUFACTURING CORPORATION VS.
TRAJANO [G.R. NO. 114698 JULY 3, 1995]
Facts: By virtue of the routine inspection conducted by a Labor Enforcement Officer,
Wellington Flour Mills owned by the petitioner-company was found non-payment of regular
holidays falling on a Sunday for monthly-paid employees. Wellington argued that the monthly-
paid employees already includes holiday pay for all regular holidays and there is no legal basis
for the finding of alleged non-payment of regular holidays falling on a Sunday. It further
contends that it pays its monthly paid employees a fixed monthly compensation using the “314
factor” which undeniably covers and already includes payment for all the working days in a
month as well as all the 10 un-worked regular holidays within a year. The Regional Director
ordered the petitioner to pay the employees additional compensation corresponding to 4 extra
working days. However, the petitioner argued that the company, using the “314 factor” already
gave complete payment of all compensation due to its workers. Petitioner appealed and was
acted on by the respondent Undersecretary. But still, Regional Director’s decision was affirmed.
Issue: Whether or not a monthly-paid employees, receiving a fixed monthly
compensation, is entitled to an additional pay aside from his usual holiday pay
whenever a regular holiday falls on a Sunday.
Held: Regional Director’s decision, affirmed by the Undersecretary, is nullified and
set aside. Every worker should be paid his regular daily wage during regular holidays;
except in retail and service establishments regularly employing less than 10 workers,
even if the worker does not work on these regular holidays. The Wellington had been
paying its employees a salary of not less than the statutory minimum wage and that
the monthly salary, thus, paid was not less than the statutory minimum wage
multiplied by 365 days divided by 12. Apparently the monthly salary was fixed by
Wellington to provide for compensation for every working day of the year including
holidays specified by law and excluding only Sundays. Wellington leaves no day
unaccounted for, it is paying for all the days of a year with the exception only of 51
Sundays.
------------------------
Facts: The case arose from a routine inspection conducted by a Labor Enforcement Officer on
August 6, 1991 of the Wellington Flour Mills, an establishment owned and operated by petitioner
Wellington Investment and Manufacturing Corporation (hereafter, simply Wellington). The
officer thereafter drew up a report, a copy of which was "explained to and received by"
Wellington's personnel manager, in which he set forth his finding of "non-payment of regular
holidays falling on a Sunday for monthly-paid employees."
Wellington sought reconsideration of the Labor Inspector's report, by letter dated
August 10, 1991. It argued that "the monthly salary of the company's monthly-
salaried employees already includes holiday pay for all regular holidays . . . (and
hence) there is no legal basis for the finding of alleged non-payment of regular
holidays falling on a Sunday."
It expounded on this thesis in a position paper subsequently submitted to the
Regional Director, asserting that it pays its monthly-paid employees a fixed monthly
compensation "using the 314 factor which undeniably covers and already includes
payment for all the working days in a month as well as all the 10 unworked regular
holidays within a year."
Wellington's arguments failed to persuade the Regional Director who, in an Order
issued on July 28, 1992, ruled that "when a regular holiday falls on a Sunday, an
extra or additional working day is created and the employer has the obligation to pay
the employees for the extra day except the last Sunday of August since the payment
for the said holiday is already included in the 314 factor," and accordingly directed
Wellington to pay its employees compensation corresponding to four (4) extra
working days.
Issue: Whether or not a monthly-paid employee, receiving a fixed monthly
compensation, is entitled to an additional pay aside from his usual holiday pay,
whenever a regular holiday falls on a Sunday.
Ruling: Every worker should, according to the Labor Code, "be paid his regular daily
wage during regular holidays, except in retail and service establishments regularly
employing less than ten (10) workers;" this, of course, even if the worker does no
work on these holidays. The regular holidays include: "New Year's Day, Maundy
Thursday, Good Friday, the ninth of April, the first of May, the twelfth of June, the
fourth of July, the thirtieth of November, the twenty-fifth of December, and the day
designated by law for holding a general election (or national referendum or
plebiscite).
Particularly as regards employees "who are uniformly paid by the month, "the
monthly minimum wage shall not be less than the statutory minimum wage multiplied
by 365 days divided by twelve." 12 This monthly salary shall serve as compensation
"for all days in the month whether worked or not," and "irrespective of the number of
working days therein." 13 In other words, whether the month is of thirty (30) or
thirty-one (31) days' duration, or twenty-eight (28) or twenty-nine (29) (as in
February), the employee is entitled to receive the entire monthly salary. So, too, in
the event of the declaration of any special holiday, or any fortuitous cause precluding
work on any particular day or days (such as transportation strikes, riots, or typhoons
or other natural calamities), the employee is entitled to the salary for the entire
month and the employer has no right to deduct the proportionate amount
corresponding to the days when no work was done. The monthly compensation is
evidently intended precisely to avoid computations and adjustments resulting from
the contingencies just mentioned which are routinely made in the case of workers
paid on daily basis.
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 [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.
 REPUBLIC V. ASIAPRO COOPERATIVE (G.R. NO. 172101)
Facts: Respondent Asiapro Cooperative is composed of owners-members with
primary objectives of providing them savings and credit facilities and livelihood
services. In discharge of said objectives, Asiapro entered into several service
contracts with Stanfilco. Sometime later, the cooperative owners-members requested
Stanfilco’s help in registering them with SSS and remitting their contributions.
Petitioner SSS informed Asiapro that being actually a manpower contractor supplying
employees to Stanfilco, it must be the one to register itself with SSS as an employer
and remit the contributions. Respondent continuously ignoring the demand of SSS the
latter filed before the SSC. Asiapro alleges that there exists no employer-employee
relationship between it and its owners-members. SSC ruled in favor of SSS. On
appeal, CA reversed the decision.
Issue: Whether or not there is employer-employee relationship between Asiapro and
its owners-members.
Ruling: YES. In determining the existence of an employer-employee relationship, the
following elements are considered: (1) the selection and engagement of the workers;
(2) the payment of wages by whatever means; (3) the power of dismissal; and (4)
the power to control the worker‘s conduct, with the latter assuming primacy in the
overall consideration. All the aforesaid elements are present in this case.
First. It is expressly provided in the Service Contracts that it is the respondent
cooperative which has the exclusive discretion in the selection and engagement of the
owners-members as well as its team leaders who will be assigned at Stanfilco.
Second. It cannot be doubted then that those stipends or shares in the service
surplus are indeed wages, because these are given to the owners-members as
compensation in rendering services to respondent cooperative‘s client, Stanfilco.
Third. It is also stated in the above-mentioned Service Contracts that it is the
respondent cooperative which has the power to investigate, discipline and remove the
owners-members and its team leaders who were rendering services at Stanfilco.
Fourth. In the case at bar, it is the respondent cooperative which has the sole control
over the manner and means of performing the services under the Service Contracts
with Stanfilco as well as the means and methods of work. Also, the respondent
cooperative is solely and entirely responsible for its owners-members, team leaders
and other representatives at Stanfilco. All these clearly prove that, indeed, there is an
employer-employee relationship between the respondent cooperative and its owners-
members.
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. 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.

Article 110 of the Labor Code does not create a lien in favor of workers or employees The public respondent, therefore, committed grave abuse of discretion when it
for unpaid wages either upon all of the properties or upon any particular property retroactively applied the amendment introduced by R.A. No. 6715 to the case at bar.
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: