Facts:

The case involves Shoppers Gain Supermart, represented by Jerry Tan, Jack Tan, and the heirs of James Tan (petitioners), against the National Labor Relations Commission (NLRC) and various employees of Shoppers Gain Supermart (respondents). The events leading to the case began in December 1990 when Shoppers Gain Supermart, due to the non-renewal of its lease contract, decided to terminate its contracts with three manpower agencies that supplied workers under "labor only" contracts. The 34 private respondents had been employed in various capacities such as cashiers, baggers, and warehousemen from 1982 to 1990. Following the closure, the petitioners paid separation benefits to their regular employees but not to the private respondents, whom they claimed were not their employees. The private respondents filed a complaint for illegal dismissal, leading to a decision by the labor arbiter on December 27, 1991, which found the petitioners guilty of labor-only contracting an...

Facts:

Background of the Case:

• The 34 private respondents worked for Shoppers Gain Supermart (SGS) from 1982 to 1990 in various roles such as merchandisers, cashiers, baggers, sales personnel, and warehousemen.
• They were part of a pool of workers supplied by three manpower agencies under "labor-only" contracts.
• In December 1990, SGS terminated its contracts with the manpower agencies due to the non-renewal of its lease contract and applied for business retirement.
• SGS paid separation benefits to its regular employees but not to the private respondents, arguing that there was no employer-employee relationship with them.

Labor Arbiter's Decision:

• The labor arbiter ruled that SGS was guilty of "labor-only" contracting and ordered SGS and the manpower agencies to pay the private respondents:
  • One month of backwages.
  • Separation pay of one month for every year of service.
  • Underpayment of wages, unpaid salaries, service incentive leave pay, proportionate 13th month pay, and a refund of a cash bond.
  • Attorney’s fees.

NLRC Decision:

• The National Labor Relations Commission (NLRC) affirmed the labor arbiter’s decision but modified it by deducting the 13th month and service incentive leave pay already paid to the employees.

Issue:

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Ruling:

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Ratio:

1. Employer-Employee Relationship:

   • The Court applied the four-fold test to determine the existence of an employer-employee relationship: (1) selection and engagement of employees, (2) payment of wages, (3) power of dismissal, and (4) power of control.
   • The Court found that SGS exercised control over the private respondents, making them direct employees under the law.

2. Illegal Dismissal:

   • The Court emphasized that while the closure of the business was a valid ground for termination, the employer must comply with the due process requirement of providing written notice to the employees and the Department of Labor and Employment.

3. Monetary Awards:

   • The Court held that the private respondents were entitled to backwages, separation pay, and attorney’s fees due to the illegal dismissal.

4. Joint and Several Liability:

   • The Court reiterated that corporate officers can be held jointly and severally liable for the corporation’s obligations, especially when the corporation has been dissolved.

Final Decision:

• The Supreme Court dismissed the petition, affirming the NLRC’s decision with modifications. The private respondents were entitled to their monetary awards, and the individual petitioners were held jointly and severally liable with SGS.