G.R. No. 100665 February 13, 1995
ZANOTTE SHOES/LEONARDO LORENZO, petitioners, vs. NATIONAL LABOR RELATIONS COMMISSION, HON. BENIGNO C. VILLARENTE, JR., JOSEPH LLUZ, LOLITO LLUZ, NOEL ADARAYAN, ROGELIO SIRA, VIRGINIA HERESANO, GENELITO HERESANO and CARMELITA DE DIOS, respondents.

FACTS

Private respondents (Joseph Lluz, Noel Adarayan, Rogelio Sira, Lolito Lluz, Virginia Heresano, Genelito Heresano, and Carmelita de Dios) filed a complaint for illegal dismissal and monetary claims against petitioners (Zanotte Shoes/Leonardo Lorenzo). They later confined their complaint to illegal dismissal. They averred they started working for petitioners on various dates from 1975 to 1987, worked at least 12 hours daily including Sundays/holidays when needed, were paid on a piece-work basis, and were prevented from entering the work premises starting October 24, 1988, after they requested SSS membership and a pay increase. Petitioners claimed their business was seasonal (peak in June and December), and private respondents were engaged on a purely contractual basis. The Labor Arbiter ruled in favor of the complainants, declaring an employer-employee relationship existed and that complainants were regular employees. He awarded separation pay and attorney’s fees. The NLRC sustained the Labor Arbiter’s findings and dismissed petitioners’ appeal. The Solicitor General, while concurring on the existence of an employer-employee relationship, moved to modify the NLRC resolution, expressing reservations on the award of separation pay since both the Labor Arbiter and NLRC found there was neither dismissal nor abandonment.

ISSUE

Whether the award of separation pay to private respondents was warranted given the factual findings of the Labor Arbiter and NLRC.

RULING

No, the award of separation pay was not warranted. The Supreme Court upheld the factual findings of the Labor Arbiter and NLRC on the existence of an employer-employee relationship, applying the control test which calls for the existence of the right to control the manner of doing the work, not its actual exercise. However, the Court agreed with the Solicitor General that the award of separation pay was without legal basis. The Labor Arbiter himself concluded there was “neither dismissal nor abandonment but complainants are simply out of job for reasons not attributable to either party,” and petitioners had repeatedly indicated willingness to accept private respondents back, but the latter refused. The NLRC’s rationale for upholding the award was deemed too speculative and conjectural. Since there was no dismissal, the award of separation pay and the corresponding attorney’s fees were ordered deleted. The Court modified the questioned resolutions accordingly.