Facts:

The case involves Asia Brewery, Inc. (ABI) as the petitioner and National Labor Relations Commission (NLRC) and Isidro Orate, et al. as respondents. The events leading to the case unfolded in 1991 when ABI entered into a contract with Era Industries (ERA) for the supply of labor to its brewery plant. Under this contract, ERA referred several workers (the private respondents) to ABI. However, upon the termination of this agreement, ABI contracted Cabuyao Maintenance and Services, Inc. (CMSI). The service contract stipulated that CMSI would supply its own labor for maintenance, janitorial, and utility services at ABI’s Beer Division, while absolving ABI from any employment liabilities by alluding to CMSI's responsibility for compliance with labor laws. Following CMSI's takeover, the private respondents were instructed to apply for employment with CMSI and subsequently signed individual agreements that imposed ABI's rules and prohibited strikes.

On July 5, 1991, the pr

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Facts:

Contractual Arrangements and Referrals

• Petitioner Asia Brewery, Inc. (ABI) initially entered into a contract with Era Industries (ERA) for the supply of workers to its brewery plant.
• Following the termination of the ERA contract, ABI entered into another service contract with Cabuyao Maintenance and Services, Inc. (CMSI), which provided for the supply of workers to ABI.

Contract Provisions and the Nature of CMSI

• The CMSI-ABI service contract contained provisions stating that:
• CMSI (the contractor) shall provide its own labor force to ABI (the client) for janitorial, maintenance, utility, and related services.
• Workers or personnel engaged under this contract were strictly those of CMSI, with CMSI warranting its full compliance with labor laws, thereby indemnifying ABI from any liabilities arising under any such law.
• CMSI, upon assuming the contract, instructed private respondents to apply for employment under CMSI, leading to the execution of individual employment agreements that required:
• Compliance with ABI’s rules and regulations.
• Prohibition from joining strikes conducted by ABI’s regular employees.

Allegations and Grievances of the Private Respondents

• Private respondents, who were placed by CMSI at ABI for janitorial and maintenance services, later filed complaints on July 5, 1991, alleging:
• Non-payment of overtime pay.
• Non-payment of legal holiday pay.
• Non-payment of service incentive leave pay.
• Underpayment of night differential pay.
• Non-regularization of employment, among other money claims.
• A supplemental complaint with a motion for immediate reinstatement was filed on July 29, 1991, on the ground of illegal dismissal, citing:
• Non-admission to work when requesting leave for a hearing.
• Confiscation of their identification cards by ABI’s security.
• Disallowance of their entry into ABI’s premises.
• ABI subsequently informed CMSI that the private respondents were “put on hold” pending resolution and requested replacements.

Proceedings Before the Labor Arbiter and NLRC

• The Labor Arbiter was tasked with resolving three main issues:
• Whether private respondents were employees of ABI.
• Whether they were illegally dismissed.
• Whether they are entitled to their monetary claims.
• The Labor Arbiter ruled in favor of the private respondents, finding that:
• CMSI was a labor-only contractor.
• For all intents and purposes, the private respondents were considered regular and permanent employees of ABI, entitling them to their claims.
• On appeal, the National Labor Relations Commission (NLRC) affirmed the Labor Arbiter’s decision, modifying it to render ABI jointly and severally liable with CMSI.

Petitioner’s Contentions and the Supreme Court’s Intervention

• ABI argued that the CMSI-ABI service contract clearly relieved it from any employer-employee liabilities by assigning such obligations to CMSI.
• ABI asserted that the Labor Arbiter and NLRC misappreciated the evidence and committed grave abuse of discretion, thereby challenging jurisdiction and claiming serious errors in the findings of fact.
• The Supreme Court held that it is bound by the findings of fact of the adjudicatory bodies unless there is a clear showing of grave abuse of discretion or lack of jurisdiction.
• The Court found the evidence supported the conclusion that CMSI was a labor-only contractor and, consequently, an employer-employee relationship existed between ABI and the private respondents.

Issue:

Determination of Employment Relationship

• Whether private respondents are to be considered the employees of ABI despite the existence of the service contract with CMSI.

Legality of Dismissal

• Whether the actions taken by ABI, including the refusal to admit private respondents to work and other related incidents, constituted illegal dismissal.

Entitlement to Labor Claims

• Whether private respondents are entitled to their monetary claims for overtime pay, legal holiday pay, service incentive leave pay, underpayment of night differential, and other related benefits.

Ruling:

• (Subscriber-Only)

Ratio:

• (Subscriber-Only)

Doctrine:

• (Subscriber-Only)