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UNIVERSITY OF SAN CARLOS

COLLEGE OF LAW

COMPENDIUM OF LABOR STANDARDS LAW

FINAL CASE DIGESTS 2014

_________________________________

IN PARTIAL FULFILLMENT

FOR THE REQUIREMENTS IN

LLB 242N (LABOR STANDARDS LAW)

_________________________________

SUBMITTED BY:

MIKKO GABRIEL L. VALENDEZ

JD – 2 (EH306)

SUBMITTED TO:

ATTY. JEFFERSON M. MARQUEZ

OCTOBER 16, 2014


LABOR STANDARDS LAW

LIST OF LABOR STANDARD CASES

JURISDICTION OF THE LABOR ARBITER

1. Tolosa vs. NLRC, G.R. No. 149578, April 20. Ace Navigation Co. Inc. et al., vs.
10, 2003 Fernandez, G.R. No. 197309, October 10,
2. Austria vs. NLRC, 312 SCRA 413 2012
3. Eviota vs. Court of Appeals, 407 SCRA 394 21. Cosare vs. Broadcom Asia, Inc. GR No.
4. Dynamic Signmaker Outdoor Advertising 201298, February 5, 2014, citing 2010
Services vs. Potongan, G.R. No. 156589, Matling Industrial and Commercial Corp et
June 27, 2005 al., vs. Coros, GR No. 157802 and 2011
5. Metromedia Times Corp., vs. Pastorin, G.R. Real vs. Sangu Phils., Inc., et al., G.R. No.
No. 154295, July 29, 2005 168757
6. Yusen Air & Sea Service Phils vs. Villamor,
G.R. No. 154942, August 16, 2005 2011 NLRC RULES OF PROCEDURE
7. Duty Free Phils., vs. Mojica, G.R. No.
22. T/SGP Larkins vs. NLRC, G.R. No. 92432,
166365, September 30, 2005
February 23, 1995
8. Easycall Communication Phils., vs. King,
23. UERM Memorial Medical Center vs.
G.R. No. 145901, December 15, 2005
NLRC, G.R. No. 110419, March 3, 1997
9. San Miguel Foods Inc., vs. San Miguel Corp
24. Phil Tranco Services vs. NLRC, G.R. No.
Employees Union-PTGWO, G.R. No.
124100, April 1, 1998
168569, October 5, 2007
25. St. Martin Funeral Homes vs. NLRC, G.R.
10. Leyte IV Electric Cooperative Inc vs.
No. 130866, September 16, 1998
LEYECO IV Employees Union-ALU, G.R.
26. Ludo & Luym Corp., vs. Saornido, G.R. No.
No. 1577745, October 19, 2007
140960, January 20, 2003
11. Atty Garcia vs. Eastern Telecommunications
27. Hansin Engineering & Construction vs. CA,
Phils., et al., GR No. 173115 & 173163-64,
G.R. No. 165910, April 10, 2006
April 16, 2009
28. Phil. Journalist Inc. vs. NLRC, G.R. No.
12. Halaguena et al., vs. Phil Airlines GR No.
166421, Sept. 5, 2006
172013, Oct 2, 2009
29. Balagtas Multi-purpose Coop. Vs. CA, G.R.
13. Okol vs. Slimmer‘s World International, et
No. 159268, Oct. 27, 2006
al., G.R. No. 160146, December 11, 2009
30. St. Martin Funeral Homes vs. NLRC, G.R.
14. Hugo et al., vs. Light Rail Transit Authority,
No. 142351, Nov. 22, 2006
G.R. No. 181866, March 18, 2010
31. DOLE Phils. Vs. Esteva, G.R. No. 161115,
15. Matling Industrial and Commercial Corp et
Nov. 30, 2006
al., vs. Coros, GR No. 157802, Oct. 13,
32. Intercontinental Broadcasting Corp., vs.
2010
Panganiban, G.R. No. 151407, February 6,
16. Manila Electric Co. et al., vs. Lim, GR No.
2007
184769, Oct. 5, 2010
33. Far East Agricutural Supply vs. Lebatigue,
17. Hongkong and Shanghai Banking Corp., vs.
G.R. No. 162813, February 12, 2007
Sps. Broqueza, GR No. 178610, Nov. 17,
34. Letran Calamba Faculty & Employees
2010
Association vs. NLRC, G.R. No. 156225,
18. Real vs. Sangu Phils., Inc., et al., G.R. No.
January 29, 2008
168757, January 19, 2011
35. Metro Transit Organization vs. Piglas
19. Portillo vs. Rudolf Lietz, Inc. et al., G.R.
NFWU-KMU et al., G.R. No. 175460, April
No. 196539, October 10, 2012
14, 2008

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LABOR STANDARDS LAW

36. J.K. Mercado & Sons Agricultural 56. Granspan Development Corp., vs. Bernardo,
Enterprises, Inc., vs Sto. Tomas, G.R.No. G.R. No. 141464, Sept. 21, 2005
158084, August 29, 2008 57. Acevedo vs. Advanstar Co., G.R. No.
37. J. Phil. Marine Inc., vs. NLRC, G.R. No. 157656, Nov. 11, 2005
1753661, August 11, 2008; but see Ilagan 58. Big AA Manufacturer vs. Antonio, G.R. No.
vs. Court of Appeals, G.R. No. 162089, July 1608504, March 3, 2006
9, 2008 59. DOLE Phils. Vs. Esteva, G.R. No. 161115,
38. Sy vs. ALC Industries, G.R. No. 168339, Nov. 30, 2006
October 10, 2008 60. San Miguel Vs. NLRC, G.R. No. 147566,
39. PCI Travel Corp., vs. NLRC, G.R. No. Dec. 6, 2006 citing Maerc Integrated
154379, October 31, 2008 Services case
40. Lopez vs. Q. C. Sports Club, G.R. No. 61. Eparwa Security & Janitorial Services vs.
164032, January 19, 2009 Liceo De Cagayan Univ. G.R. No. 150402,
41. Lockheed Detective & Watchman Agency, Nov. 28, 2006, citing Eagle Security case
G.R. No. 185918, April 18, 2012 62. Lapanday Agri Development Corp., vs.
42. Portillo vs. Rudolf Lietz, Inc. et al., G.R. Court of Appeals, 324 SCRA 39
No. 196539, October 10, 2012 63. Escario vs. NLRC, 333 SCRA 257 [2000]
43. Building Care Corp. vs. Macaraeg, G.R. No. 64. Aboitiz Haulers vs. Dimapatoi, G.R. No.
198357, December 10, 2012 148619, Sept. 19, 2006
65. GSIS vs. NLRC, G.R. No. 157647, October
OTHER IMPORTANT LABOR PROVISIONS 15, 2007, citing Rosewood Processing vs.
NLRC, 290 SCRA 408
A.CONTRACTING ARRANGEMENT 66. Republic of the Phils/SSC/SSS vs. Asiapro
Cooperative, G.R. No. 172101, November
23, 2007
44. PBCom vs. NLRC, 146 SCRA 347 [1986] 67. Almeda et al., vs. Asahi Glass, G.R. No.
45. Neri vs. NLRC, 224 SCRA 717 [1993] 177785, Sept 3, 2008
46. Filipinas Synthetic Fiber Corp., vs. NLRC, 68. Sasan, Sr et al., vs. NLRC and EPCIB, G.R.
257 SCRA 336 [1996] No. 176240, October 17, 2008
47. Maraquinot vs. NLRC, 284 SCRA 539 69. Purefoods Corp., vs. NLRC et al., G.R. No.
[1998] 172241, November 20, 2008
48. Urbanes Jr. vs. Sec. Of Labor, G.R. No. 70. Maranaw Hotels and Resort vs. Court of
122791, Feb. 19, 2003 Appeals, et al., G.R. No. 149660, Jan. 20,
49. San Miguel vs. Maerc Integrated Services, 2009
G.R. No. 144672, July 10, 2003 71. CCBPI vs. Agito et al., G.R. No. 179546,
50. Mariveles Shipyard vs. CA, G.R. No. Feb. 13, 2009
144134, Nov. 11, 2003 72. South Davao Development Company et al.,
51. New Golden City Builders vs. CA, G.R. No. vs. Gamo et al., GR No. 171814, May 8,
154715, Dec. 11, 2003 2009
52. National Food Authority vs. Maceda 73. Traveno et al., vs. Bobongon Banana
SecurIty Agency, G.R. No. 163448, March Growers Multi-purpose Cooperative et al.,
8, 2005 GR No. 164205, Sept. 3, 2009
53. Abella vs. PLDT, G.R. No. 159469, June 8, 74. Locsin et al., vs. PLDT, GR No. 185251,
2005 Oct 2, 2009
54. San Miguel vs. Aballa, G.R. No. 149011, 75. Aliviado et al vs. Procter & Gamble Phils
June 28, 2005 GR No. 160506, March 9, 2010
55. Manila Electric Co., vs. Benamira, G.R. No. 76. San Miguel Corp. vs. Semillano et al., GR
145271, July 14, 2005 No. 164257, July 5, 201

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LABOR STANDARDS LAW

77. Manila Water Co. vs. Dalumpines, GR No. 96. Brahm Industries vs. NLRC, 280 SCRA 824
175501, Oct. 4, 2010 [1997]
78. Teng vs. Pahagac, GR No. 169704, 97. Heirs of Aniban vs. NLRC, 282 SCRA 377
November 17, 2010 [1997]
79. GSIS vs. NLRC et al., GR No. 180045, 98. Sapio vs. Undaloc Construction et al., G.R.
Nov. 17, 2010 No. 155034, May 22, 2008
80. Sy et al., vs. Fairland Knitcraft Co Inc. G.R. 99. Atty. Ortiz vs. San Miguel Corp., G.R. No.
No. 189658, December 12, 2011 151983-84, July 31, 2008
81. Polyfoam-RGC International Corp., vs. 100. Masmud vs. NLRC et al., G.R. No. 183385,
Concepcion, G.R. No. 172349, June 13, Feb. 13, 2009
2012 101. Kaisahan at kapatiran ng mga Manggagawa
82. Superior Packaging Corp., vs. Balagsay et at Kawani sa MWC-East Zone Union vs.
al., G.R. No. 178909, October 10, 2012 Manila Water Company, G.R. No. 174179,
83. Digital Telecommunications Phils Inc. vs. November 16, 2011
Digitel Employees Union et al., G.R. No. 102. Malvar vs. Kraft Food Phils Inc. et al., G.R.
184903-04, October 10, 2012 No. 183952, Sept. 9, 2013
84. Norkis Trading Corp., vs. Buenavista, et al.,
G.R. No. 182018, October 10, 2012 D.SPECIAL TYPES OF WORKERS
85. Goya Inc. vs. Goya Inc. Employees Union-
FFW G.R. No. 170054, Jan. 21, 2013 103. Bernardo vs. NLRC, 310 SCRA 186 [1999]
86. Vigilla et al., vs. Phil. College of E. EMPLOYMENT OF WOMEN
Criminology Inc., G.R. No. 200094, June
10, 2013 104. PT&T vs. NLRC, 272 SCRA 596 [1997]
87. BPI Employees Union-Davao city-FUBU 105. Del Monte Phils vs. Velasco, G.R. No.
vs. Bank of the Phil Islands et al., G.R. No.
153477, March 6, 2007
174912, July 24, 2013
106. Co vs. Vargas, G.R. No. 195167, November
B.WORKER'S PREFERENCE
16, 2011
88. DBP vs. NLRC, 242 SCRA 59 [1995]
F. EMPLOYMENT OF CHILDREN
89. Batongbuhay Gold Mines vs. De la Serna,
G. EMPLOYMENT OF HOUSEHELPER
312 SCRA 45
90. Barayoga vs. Asset Privatization Trust, G.R. 107. Ultra Villa Food Haus vs. Geniston, 309
No. 160073, October 24, 2005 SCRA 17 [1999]
91. Phil. Airlines vs. Zamora, G.R. No. 166996,
Feb. 6, 2007 108. Remington Industrial Sales Corp., vs.
92. Phil. Airlines vs. Phil. Airlines Employees Castaneda, G.R. No. 169295-96, Nov. 20,
Association, 525 SCRA 29 [2007], citing 2006 citing Apex Mining
Rubberworld vs. NLRC, 305 SCRA 721
Co vs. Vargas, G.R. No. 195167, November
[1999]
93. Garcia vs. Phil Air Lines, G.R. No. 164856, 16, 2011
January 20, 2009 H. EMPLOYMENT OF HOMEWORKERS
C.ATTORNEY'S FEES & APPEARANCE OF I. EMPLOYMENT OF NON-RESIDENT
LAWYERS ALIENS
94. Bank of the Philippines Island vs. NLRC, J. EMPLOYMENT OF STUDENTS &
171 SCRA 556 WORKING SCHOLAR
95. Traders Royal Bank Employees Union vs. K.EMPLOYMENT OF ACADEMIC/NON-
NLRC, 269 SCRA 733 [1997]

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LABOR STANDARDS LAW

ACADEMIC PERSONNEL IN PRIVATE 119. Sim vs. NLRC et al., G.R. No. 157376,
EDUCATIONAL INSTITUTION October 2, 2007

109. University of the east et al., vs. Pepanio, G.r. 120. Bahia Shipping Services vs. Chua, G.R. No.
No. 193897, Jan. 23, 2013 162195, April 8, 2008

110. Colegio Del Santisimo Rosario et al., vs. 121. Masangkay vs. Trans-Global Maritime
Rojo, G.R. No. 170388, Sept. 4, 2013 citing Agency Inc., et al., G.R. No. 172800,
Mercado et al., vs. AMA Computer College- October 17, 2008
Paranaque City, GR No. 183572, April 13, 122. Magsaysay Maritime Corp., et al., vs.
2010 Velasquez, et al., G.R. No. 179802, Nov 14,
111. Herrera-Manaois vs. St. Scholasticas 2008
College, GR No. 188914, December 11, 123. Serrano vs. Gallant Maritime Services et al.,
2013 G.R. No. 167614, March 24, 2009 – En
MEDICAL, DENTAL AND OCCUPATIONAL Banc
SAFETY 124. Becmen Service Exporter and Promotion
112. Tolosa vs. NLRC, G.R. No. 149578, April Inc., vs. Spouses Cuaresma, GR Nos.
10, 2003 182978-79 & 184298-99, April 7, 2009

113. U-Bix Corp., vs. Bandiola, 525 SCRA 566 125. People vs. Domingo, GR No. 181475, April
[2007] 7, 2009

114. Ocean Builders Construction vs. Sps. 126. ATCI Overseas Corp. et al., vs. Echin, GR
Cubacub, GR No. 150898, April 13, 2011 No. 178551, Oct. 11, 2010

MIGRANT WORKER'S ACT & OVERSEAS 127. Yap vs. Thenamaris Ship Management et
FILIPINO ACT OF 1995 & RECRUITMENT al., G.R. No. 179532, May 30, 2011
AND PLACEMENT 128. Skippers United Pacific vs. Doza et al., G.R.
115. ISS Indochina Corp., vs. Ferrer, G.R. No. No. 175558, February 8, 2012
156381, Oct. 14, 2005 129. International Management Services vs.
116. People vs. Capt. Gasacao, G.R. No. 168449, Logarta, G.R. No. 163657, April 18, 2012
Nov. 11, 2005 130. Pert/Cpm Manpower Exponent Co., Inc. vs.
117. Acuna vs. CA, G.R. No. 159832, May 5, Vinuya et al., G.R. No. 197528, September
2006 8, 2012

118. Asian International Manpower Services vs. 131. Hon. Sto. Tomas, et al., vs. Salac et al., G.R.
CA, G.R. No. 169652, October 9, 2006 No. 152642 & 152710, November 13, 2012

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1. Tolosa vs. NLRC G.R. No. 149578, April 10, alleged that the reasonable causal rule should be
2003 applied in her favor.

Facts: Petitioner is the wife of Capt. Tolosa who was Issue: Whether or not the Labor Arbiter has
hired to be the master of M/V Lady Dona with jurisdiction over the subject matter?
private respondents Garate and Asis as Chief Mate
and Second Mate of the vessel respectively. Capt. Ruling: No, the Labor Arbiter does not have
Tolosa was hired by co-private respondent Qwana- jurisdiction over the subject matter. The Court ruled
Kaiun through the manning agent Asia Bulk that labor arbiters and the NLRC have no power to
Transport Phils., Inc. The voyage was from grant reliefs from claims that do not arise from
Yokohama, Japan to Long Beach, California. Capt. employer-employee relationships. They have no
Tolosa was given a compensation of US$1,700 jurisdiction over torts that do not have a reasonable
monthly plus US$400 overtime allowance monthly. causal connection to any of the claims provided for in
Upon embarkation, Capt. Tolosa‘s health was still in the Labor Code, other labor statutes, or collective
good shape but after being drenched in rainwater bargaining agreements.
after embarkation, he suffered Loose Bowel
It has been emphasized that the allegation of the
Movement and fever which led eventually to his
complaint determines the nature of the action and
death after several days.
consequently, the jurisdiction of the courts. The
Petitioner filed a Complaint/Position Paper with the Court was convinced that the allegations were in the
Philippine Overseas Employment Agency against nature of an action based on quasi-delict or tort
private respondents herein but because of the resulting from gross negligence. Even though Labor
amendatory law expanding the jurisdiction of the Arbiters have jurisdiction to grant damages under the
National Labor Relations Commission (NLRC), the Civil Code, these reliefs must still be based on an
case was raffled to a Labor Arbiter. She sought to action that has a reasonable causal connection with
recover (a) loss of earning capacity as ‗actual the Labor Code, other labor statutes, or collective
damages‘ and (b) blacklisting imputing gross bargaining agreements. It is the character of the
negligence to private respondents Garate and Asis. principal relief that appears essential in this
She anchored her claim on Article 161 of the Labor connection.
Code regarding Assistance of Employer.
In the case at hand, loss of earning capacity and
Private respondents, on the other hand, asserted that blacklisting cannot be equated to wages, overtime
the Labor Arbiter has no jurisdiction as the complaint compensation or separation pays. They arise from
is based on torts which the regular courts have causes within the realm of civil law. Petitioner cannot
jurisdiction. also anchor her claim on Article 161 as this does not
grant or specify a claim or relief.
The Labor Arbiter ruled in favor of petitioner
granting her the relief sought. On appeal, the NLRC
reversed the Labor Arbiter‘s Decision. It ruled that 2. Austria vs. NLRC G.R. No. 124382
the Labor Arbiter had no jurisdiction over the subject August 16, 1999
matter. The Court of Appeals affirmed the NLRC. It
ruled that the case did not arise from a quasi-delict or Facts:
tort and not from an employee-employer relationship Private Respondent Central Philippine Union Mission
Corporation of the Seventh-Day Adventists (SDA) is
nor does it have any reasonable causal connection for
a religious corporation duly organized and existing
damages to be awarded incident to an employee- under Philippine law. Austria was a Pastor of the
employer relationship. Hence, this instant petition. SDA until 1991, when his services were terminated.

Petitioner argued that her cause of action is not based Austria worked with the SDA for 28 years from 1963
on negligence but on Art. 161 of the Labor Code. She to 1991. He began his work with the SDA as a
literature evangelist, selling literature of the SDA

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LABOR STANDARDS LAW

over the island of Negros. From then on, he worked While the matter at hand relates to the church and its
his way up the ladder and got promoted several religious minister it does not ipso facto give the case
times. He was elevated to the position of Pastor and a religious significance. What is involved here is the
the finally as a District Pastor in Negros with 12 relationship of the church as an employer and the
churches under his jurisdiction. minister as an employee. The matter of terminating
an employee, which is purely secular in nature, is
On various occasions, Austria received several different from the ecclesiastical act of expelling a
communications the treasurer of the Negros Mission member from the religious congregation. As such, the
asking him to admit accountability and responsibility State, through the Labor Arbiter and the NLRC, has
for the church tithes and offerings. After several the right to take cognizance of the case and to
meetings were held and an investigation was made on determine whether the SDA, as employer, rightfully
the matter, Austria received a letter of dismissal citing exercised its management prerogative to dismiss an
misappropriation of denominational funds, willful employee. This is in consonance with the mandate of
breach of trust, serious misconduct, gross and the Constitution to afford full protection to labor.
habitual neglect of duties, and commission of an
offense against the person of employer's duly Under the Labor Code, the provision which governs
authorized representative, as grounds for the the dismissal of employees, is comprehensive enough
termination of his services. to include religious corporations, such as the SDA, in
its coverage. Article 278 of the Labor Code on post-
Reacting against the adverse decision of the SDA, employment states that "the provisions of this Title
Austria filed a before the Labor Arbiter for illegal shall apply to all establishments or undertakings,
dismissal against the SDA and its officers and prayed whether for profit or not." Obviously, the cited article
for reinstatement with backwages and benefits, moral does not make any exception in favor of a religious
and exemplary damages and other labor law benefits. corporation. This is made more evident by the fact
that the Rules Implementing the Labor Code,
particularly, Section 1, Rule 1, Book VI on the
The SDA contended that by virtue of the doctrine of
Termination of Employment and Retirement,
separation of church and state, the Labor Arbiter and
categorically includes religious institutions in the
the NLRC have no jurisdiction to entertain the
coverage of the law, to wit:
complaint filed by Austria. Since the matter at bar
allegedly involves the discipline of a religious
minister, it is to be considered a purely ecclesiastical Sec. 1. Coverage. — This Rule shall apply
affair to which the State has no right to interfere. to all establishments and undertakings,
whether operated for profit or not, including
educational, medical, charitable and
Issue:
Do the Labor Arbiter and the NLRC have jurisdiction religious institutions and organizations, in
to try and decide the complaint filed by Austria cases of regular employment with the
exception of the Government and its
against the SDA?
political subdivisions including government-
owned or controlled corporations.
Ruling:
Yes, they have jurisdiction.

The principle of separation of church and state finds 3. Eviota vs. Court of Appeals 407 SCRA 394
no application here. The case at bar does not concern
an ecclesiastical or purely religious affair as to bar FACTS:
the State from taking cognizance of the same. An
ecclesiastical affair involves the relationship between Sometime on January 26, 1998, the respondent
the church and its members and relate to matters of
Standard Chartered Bank and petitioner Eduardo G.
faith, religious doctrines, worship and governance of
the congregation. To be concrete, examples of this Eviota executed a contract of employment under
so-called ecclesiastical affairs to which the State which the petitioner was employed by the respondent
cannot meddle are proceedings for excommunication, bank as Compensation and Benefits Manager, VP
ordinations of religious ministers, administration of (M21). Petitioner came up with many proposals
sacraments and other activities with attached which the bank approved and made preparations of.
religious significance.
He was also given privileges like car, renovation of

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LABOR STANDARDS LAW

the office, and even a trip to Singapore at the material allegations of the complaint and the reliefs
company‘s expense. However, the petitioner abruptly prayed for in relation to the law involved. Not every
resigned from the respondent bank barely a month controversy or money claim by an employee against
after his employment and rejoined his former the employer or vice-versa is within the exclusive
employer. On June 19, 1998, the respondent bank jurisdiction of the labor arbiter. A money claim by a
filed a complaint against the petitioner with the RTC worker against the employer or vice-versa is within
of Makati City for damages brought about his abrupt the exclusive jurisdiction of the labor arbiter only if
resignation. Though petitioner reimbursed part of the there is a reasonable causal connection between the
amount demanded by Standard, he was not able topay claim asserted and employee-employer
it full. Standard alleged that assuming arguendo that relation. Absent such a link, the complaint will be
had the right to terminate his employment with the cognizable by the regular courts of justice. Actions
Bank for no reason, the manner in and circumstances between employees and employer where the
under Eviota which he exercised the same are clearly employer-employee relationship is merely incidental
abusive and contrary to the rules governing human and the cause of action precedes from a different
relations, governed by the Civil Code. Further, source of obligation is within the exclusive
Standard alleged that petitioner also violated the jurisdiction of the regular court. The jurisdiction of
Labor Code when he terminated his employment the Labor Arbiter under Article 217of the Labor
without one (1) notice in advance. This stipulation Code, as amended, is limited to disputes arising from
was also provided in the employment contract of an employer-employee relationship which can only
Eviota with Standard, which would also constitute be resolved by reference to the Labor Code of the
breach of contract. The petitioner filed a motion to Philippines, other labor laws or their collective
dismiss the complaint on the ground that the action bargaining agreements. Jurisprudence has evolved
for damages of the respondent bank was within the the rule that claims for damages under paragraph 4 of
exclusive jurisdiction of the Labo Arbiter under Article 217, to be cognizable by the Labor Arbiter,
paragraph 4, Article 217 of the Labor Code of the must have a reasonable causal connection with any of
Philippines, as amended. The petitioner averred that the claims provided for in that article. Only if there is
the respondent bank‘s claim for damages arose out of such a connection with the other claims can the claim
or were in connection with his employer-employee for damages be considered as arising from employer-
relationship with the respondent bank or some aspect employee relations. In this case, the private
or incident of such relationship. The respondent bank respondent‘s first cause of action for damages is
opposed the motion, claiming that its action for anchored on the petitioner‘s employment of deceit
damages was within the exclusive jurisdiction of the and of making the private respondent believe that he
trial court. Although its claims for damages would fulfil his obligation under the employment
incidentally involved an employer-employee contract with assiduousness and earnestness. The
relationship, the said claims are actually predicated petitioner volte face when, without the requisite
on the petitioner‘s acts and omissions which are thirty-day notice under the contract and the Labor
separately, specifically and distinctly governed by the Code of the Philippines, as amended, he abandoned
New Civil Code. his office and rejoined his former employer; thus,
forcing the private respondent to hire
a replacement. The private respondent was left in
a lurch, and its corporate plans and program in
ISSUE: Whether or not the RTC had jurisdiction
jeopardy and disarray. Moreover, the petitioner took
over the case.
off with the private respondent‘s computer diskette,
papers and documents containing confidential
information on employee compensation and other
HELD: The SC held that the RTC has jurisdiction. bank matters. On its second cause of action, the
Case law has it that the nature of an action and the petitioner simply walked away from his employment
subject matter thereof, as well as which court has with the private respondent sans any written notice,
jurisdiction over the same, are determined by the to the prejudice of the private respondent, its banking

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LABOR STANDARDS LAW

operations and the conduct of its business. Anent its By February 21, 1996, respondent‘s salary was
third cause of action, the petitioner made false and withheld7 and was advised to take a leave of absence
derogatory statements that the private respondent until further notice.8
reneged on its obligations under their contract of
employment; thus, depicting the private respondent Respondent later received on February 28, 1996 a
letter from petitioner Filomeno P. Hernandez,
as unworthy of trust. The primary relief sought is for
President/General Manager of the corporation,
liquidated damages for breach of a "inviting" him to answer the following charges:
contractual obligation. The other items demanded are
not labor benefits demanded by workers generally 1.) That on February 21, 1996, at around 9:00 A.M.
taken cognizance of in labor disputes, such as you entered the company fabrication shop where you
payment of wages, overtime compensation or were assigned as supervisor and caused to create fire
separation pay. The items claimed are the natural by secretly switching ‗on‘ the idle plastic oven and
consequences flowing from breach of an obligation, grounded the 2 electric machine welders while the
‗strike‘ was on-going outside the premises.
intrinsically a civil dispute. It is evident that the
causes of action of the private respondent against the
Witnesses also in the persons of Mr. Luis Mimay,
petitioner do not involve the provisions of the Labor and his men found out later what you have done and
Code of the Philippines and other labor laws but the noticed the electric current and the burning of the
New Civil Code. Thus, the said causes of action are oven already very hot. You secretly left the premises
intrinsically civil. There is no causal relationship and had not for the said witnesses and contractors,
between the causes of action of the private you had vehemently caused to burn the company‘s
respondent‘s causes of action against the petitioner main building and its offices.
and their employer-employee relationship. The fact
2.) That you allegedly on several occasions, urged
that the private respondent was the erstwhile
strongly the same group of contractors led by Mr.
employer of the petitioner under an existing Luis Mimay, working on some left over jobs at the
employment contract before the latter abandoned his factory, to slow down work or not to work at all in
employment is merely incidental. Petition is denied. sympathy to the ‗strikers‘who are in the ranking files.
Those proved also that as our trusted staff and
4. DYNAMIC SIGNMAKER OUTDOOR supervisor you have caused disruption of work of the
ADVERTISING SERVICES, INC. vs. contractors. The company suffered losses in its
FRANCISCO POTONGAN G.R. No. 156589 failure to accomplish its job projects on due dates.
June 27, 2005 Your actuations and actions proved disastrous to the
company‘s interest. Considering these circumstances,
we urge you to reply your side on these matters so
FACTS:
that we could institute proper corresponding action
based on the above in 5 days time from receipt of this
In 1987, respondent started working for petitioner letter.9 (Underscoring supplied)
corporation as a Production Supervisor at a monthly
salary ofP16,000.00.3
By letter of March 4, 1996, respondent through
counsel, denied the charges proffered against him, he
In early February 1996, the union of rank and file insisting that they were fabricated to justify his
employees of petitioner corporation, termination due to suspicions that he was a strike-
the BigkisManggagawasaDynamicSignmakers sympathizer.10 In the same letter, respondent
Outdoor Advertising Services – expressed his openness to the conduct of a full-blown
KilusanngManggagawangMakabayan (KMM- investigation of the case by the NLRC.11
Katipunan),4declared a strike on account of which
petitioner corporation replaced all its supervisors and
Respondent later filed on January 29, 1997 a
designated, by letter memorandum5 dated February
complaint against herein petitioners for illegal
16, 1996, certain persons to take over the operations
dismissal, reinstatement, backwages and damages
of the corporation including Rufino Hornilla 6 who
with the Regional Arbitration Branch of the NLRC,
took over petitioner‘s functions.
docketed as NLRC Case No. RAB-IV-1-8738-97-
RI,12 the case subject of the petition.

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LABOR STANDARDS LAW

Respondent complained that although he was not sent cause to terminate herein petitioner from
a formal notice of termination, he was effectively employment. In fact during the pendency of the
dismissed from employment for after he was asked to complaint for illegal dismissal by the petitioner
take a leave of absence on February 21, 1996, as he against private respondents, the latter in a letter dated
did, and he was not instructed nor allowed to return March 1, 1999, ordered petitioner to report back to
to work, nor paid his salaries.13 work immediately. This in itself proves that herein
private respondents believe that there exists no valid
By Decision30 of September 30, 2002, the appellate and just grounds (sic) to terminate herein petitioners
court reversed the NLRC decision, it holding that from his employment.42 (Underscoring supplied)
respondent was denied due process and was
dismissed without cause when he was replaced by It upholds too the award to respondent of attorney‘s
RufinoHornilla and instructed to go on leave fees in the amount of P50,000.00, he having been
indefinitely.31 forced to litigate and thereby incur expenses to
protect his rights and interests. 43
In reversing the NLRC decision, the appellate court
noted that it was on account of respondent‘s Clutching at straws, petitioners fault the appellate
replacement as Operations Manager and the court for failure to recognize the final and executory
instruction for him to go on indefinite leave that it nature of the June 24, 1996 NLRC Decision rendered
took almost a year for him to file the complaint for in the consolidated cases and for affirming the
illegal dismissal. Hence, the appellate court nullification of said decision, with respect to
concluded, he should not be faulted for laches. Nor, respondent, which could be attacked only by direct
said the appellate court, could respondent be deemed action.44
to have abandoned his work on receipt of petitioner‘s
counsel‘s return to work March 1, 1999 letter because Contrary to petitioners‘ position, the validity of a
prior thereto he had considered himself illegally judgment or order of a court or quasi-judicial tribunal
terminated as in fact he had filed on January 29, 1997 which has become final and executory may be
the complaint for illegal dismissal.32 attacked when the records show that it lacked
jurisdiction to render the judgment.45 For a judgment
ISSUE: rendered against one in a case where jurisdiction over
his person was not acquired is void, and a void
Petitioners insist that respondent was not illegally judgment maybe assailed or impugned at any
dismissed, "management [having] merely opted to time either directly or collaterally by means of a
reorganize," hence, the award to him of full petition filed in the same or separate case, or by
backwages, reinstatement or separation pay, and resisting such judgment in any action or proceeding
attorney‘s fees is bereft of factual and legal basis.33 wherein it is invoked.46

HELD: Petitioners in fact do not even dispute respondent‘s


claim that no summons was ever issued and served
This Court upholds then the appellate court‘s finding on him either personally or through registered mail as
that respondent was constructively dismissed: required under Rule III, Sections 3 and 6 of the Rules
of Procedure of the NLRC, as amended by
Resolution No. 01-02, Series of 2002:
There is no doubt, therefore, that the petitioner in this
case was effectively terminated from employment by
respondent when he was replaced as Operations SEC. 3. Issuance of Summons. Within two (2) days
Manager and instructed to take a leave indefinitely. from receipt of a case, the Labor Arbiter shall issue
the required summons, attaching thereto a copy of the
Petitioner was neither transferred nor reassigned to
complaint/petition and supporting documents, if any.
another office or position contrary to what public
The summons, together with a copy of the complaint,
respondent seems to allude. Petitioner was simply
replaced and instructed to take a leave indefinitely. shall specify the date, time and place of the
"In cases of illegal dismissal, the burden is on the conciliation and mediation conference in two (2)
settings.
employer to prove that there was a valid ground for
dismissal." Medenilla vs. Philippne Veterans Bank,
328 SCRA 1, 7. We failed to extract from the record xxx
any evidence to show that there exists valid and just

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LABOR STANDARDS LAW

SEC. 6. Service of Notices and Resolutions. a) Respondent, because of tardiness was


Notices or summonses and copies of orders, shall be
supposedly terminated by the petitioner company, but
served on the parties to the case personally by the
bailiff or duly authorized public officer within three because of the timely intervention of the union, the
(3) days from receipt thereof or by registered mail, dismissal was not effected.
provided that in special circumstances, service of However, he incurred another infraction
summons may be effected in accordance with the
when he obtained a loan from a magazine dealer
pertinent provisions of the Rules of Court; xxx
and when he was not able to pay the loan, he
Supplementary or applied by analogy to these stopped collecting the outstanding dues of the
provisions are the provisions and prevailing dealer/creditor. After requiring him to explain,
jurisprudence in Civil Procedure. Where there is then respondent admitted his failure to pay the loan but
no service of summons on or a voluntary general
appearance by the defendant, the court acquires no gave no definitive explanation for the same.
jurisdiction to pronounce a judgment in the cause.47 Thereafter, he was penalized with
suspension. He was also not allowed to do field
At all events, even if administrative tribunals work, and was transferred to a new position. Despite
exercising quasi-judicial powers are not strictly the completion of his suspension, respondent stopped
bound by procedural requirements, they are still
bound by law and equity to observe the fundamental reporting for work and sent a letter communicating
requirements of due process.48 his refusal to accept the transfer. He then filed a
complaint for constructive dismissal, non-payment of
Res inter aliosactanocerenondebet. Things done backwages and other money claims with the labor
between strangers ought not to injure those who are
arbiter.
not parties to them.49

WHEREFORE, the instant petition is hereby


DENIED. The decision of the appellate court is The complaint was resolved in favor of
hereby AFFIRMED with the MODIFICATION that respondent. Petitioner lodged an appeal with the
if reinstatement is no longer possible due to strained NLRC, raising as a ground the lack of jurisdiction of
relations between the parties, petitioners are ordered
the labor arbiter over respondent‘s complaint.
to pay respondent, Francisco Potongan, separation
pay equivalent to One Month salary for every year of Significally, this issue was not raised by petitioner in
service, computed from the time he was first the proceedings before the Labor Arbiter.
employed until the finality of this decision.
The NLRC reversed the decision of the LA
SO ORDERED.
and ruled that the LA has no jurisdiction over the
case, it being a grievance issue properly cognizable
5. METROMEDIA TIMES CORPORATION by the voluntary arbitrator. However, the CA
and/or ROBINA GOKONGWIE PE, v. Johnny reinstated the ruling of the CA. The CA held that the
Pastorin G.R. NO. 154295. July 29, 2005 active participation of the party against whom the
action was brought, coupled with his failure to object
to the jurisdiction of the court or quasi-judicial body
FACTS:
where the action is pending, is tantamount to an
Johnny Pastorin (Respondent) was
invocation of that jurisdiction and a willingness to
employed by Metromedia Times Corporation
abide by the resolution of the case and will bar said
(Petitioner) on 10 December 1990 as a Field
party from later on impugning the court or body‘s
Representative/Collector. His task entailed the
jurisdiction.
periodic collection of receivables from dealers of
petitioner's newspapers.
ISSUE:

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LABOR STANDARDS LAW

Whether or not petitioner is estopped from jurisdiction. Here, the principle of estoppel applies.
questioning the jurisdiction of the LA during appeal. The rule that jurisdiction is conferred by law, and
does not depend upon the will of the parties, has no
HELD: bearing thereon.
The SC held that petitioner is not estopped
from questioning the jurisdiction of the LA during Applying the general rule that estoppel
appeal. does not confer jurisdiction, petitioner is not
estopped from assailing the jurisdiction of the
The general rule is that the jurisdiction of labor arbiter before the NLRC on appeal.
a court over the subject matter of the action is a
matter of law and may not be conferred by Decision of the CA is set aside.
consent or agreement of the parties. The lack of
jurisdiction of a court may be raised at any stage of
the proceedings, even on appeal. This doctrine has
been qualified by recent pronouncements which YUSEN AIR AND SEA SERVICE
stemmed principally from the ruling in the cited case PHILIPPINES, INCORPORATED,petitioner
of Sibonghanoy. It is to be regretted, however, that
the holding in said case had been applied to situations vs.
which were obviously not contemplated therein. The
ISAGANI A. VILLAMOR,respondent
exceptional circumstances involved in Sibonghanoy
which justified the departure from the accepted
Facts:
concept of non-waivability of objection to
jurisdiction has been ignored and, instead a blanket -Petitioner,is engaged in the business of freight
doctrine had been repeatedly upheld that rendered the forwarding. As such, it is contracted by clients to
supposed ruling in Sibonghanoy not as the exception, pick-up, unpack, consolidate, deliver, transport and
distribute all kinds of cargoes, acts as cargo or freight
but rather the general rule, virtually overthrowing accommodation and enters into charter parties for the
altogether the time honored principle that the issue of carriage of all kinds of cargoes or freight.
jurisdiction is not lost by waiver or by estoppel.
-On 1993, petitioner hired respondent as branch
The operation of the principle of estoppel on manager in its Cebu Office. Later, petitioner
reclassified respondent‘s position to that of Division
the question of jurisdiction seemingly depends upon Manager, which position respondent held until his
whether the lower court actually had jurisdiction or resignation on February 1, 2002.
not. If it had no jurisdiction, but the case was
tried and decided upon the theory that it had - Immediately after his resignation, respondent
started working for Aspac International, a
jurisdiction, the parties are not barred, on appeal,
corporation engaged in the same line of business as
from assailing such jurisdiction, for the same that of petitioner.
'must exist as a matter of law, and may not be
conferred by consent of the parties or by estoppel. - On February 11, 2002,petitioner filed against
However, if the lower court had jurisdiction, and the respondent a complaint[3] for injunction and damages
with prayer for a temporary restraining order, the
case was heard and decided upon a given theory,
complaint alleged,inter alia, as follows:
such, for instance, as that the court had no
jurisdiction, the party who induced it to adopt such
theory will not be permitted, on appeal, to assume an
inconsistent position—that the lower court had 7. That [respondent]
duly signed an

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undertaking to abide by - the 2-year prohibition against employment in a


the policies of the competing company which petitioner seeks to
[Petitioner] which enforce thru injunction, had already expired
includes the provision on sometime in February 2004. Necessarily, upon the
the employees‘ expiration of said period, a suit seeking the issuance
responsibility and of a writ of injunction becomes functusoficio and
obligation in cases of therefore moot.
conflict of interest, which
reads:

2nd issue:

No employee may engage in any business or With regards to the claim for damages
undertaking that is directly or indirectly in
competition with that of the company and its
*whether petitioner's claim for damages
affiliates or engage directly or indirectly in any
arose from employer-employee relations between the
undertaking or activity prejudicial to the interests of
parties.
the company or to the performance of his/her job or
work assignments. The same provision will be
implemented for a period of two (2) years from
the date of an employee’s resignation, termination
or separation from the company. HELD:

-Petitioner thus prayed for a judgment enjoining


respondent from ―further pursuing his work at Aspac
International”, and awarding it P2,000,000 as actual In Dai-Chi Electronics Manufacturing vs.
damages; P300,000 as exemplary damages; Villarama,with a substantially similar factual
backdrop, we held that an action for breach of
- respondent filed against petitioner a case for illegal contractual obligation is intrinsically a civil dispute.
dismissal before the National Labor Relations
Commission.

- Meanwhile, instead of filing his answer, There, a complaint for damages was filed with
respondent filed a Motion to Dismiss,arguing that the the regular court by an employer against a former
RTC has no jurisdiction over the subject matter of employee who allegedly violated the non-compete
said case because an employer-employee relationship provision of their employment contract when, within
is involved. two years from the date of the employee‘s
resignation, he applied with, and was hired by a
corporation engaged in the same line of business as
that of his former employer. The employer sought to
1st issue: recover liquidated damages. The trial court ruled that
it had no jurisdiction over the subject matter of the
controversy because the complaint was for damages
With regards to the 2 yr prohibition
arising from employer-employee relations, citing
Article 217 (4) of the Labor Code, as amended by
R.A. No. 6715, which stated that it is the Labor
Arbiter who had original and exclusive jurisdiction
HELD: over the subject matter of the case.

-The petition is impressed with merit. When the case was elevated to this Court, we
held that the claim for damages did not arise from
employer-employee relations, to wit:

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LABOR STANDARDS LAW

exempla
ry and
Petitioner does not ask for any relief under the other
Labor Code of the Philippines. It seeks to recover forms of
damages agreed upon in the contract as redress for damages
private respondent‘s breach of his contractual arising
obligation to its ―damage and prejudice‖. Such cause from the
of action is within the realm of Civil Law. employe
r-
employe
e
relations
-Indeed, jurisprudence has evolved the rule that ;"
claims for damages under paragraph 4 of Article 217,
to be cognizable by the Labor Arbiter, must have a
reasonable causal connection with any of the claims
provided for in that article. Only if there is such a
connection with the other claims can a claim for xxx xxx xxx
damages be considered as arising from employer-
employee relations.

- In San Miguel Corporation vs. National Labor


Relations Commission
Article 217, as amended by Section 9 of RA
6715, provides:

“While paragraph 3 above refers to ―all money


claims of workers,‖ it is not necessary to suppose that
Art. 217. Jurisdiction of the entire universe of money claims that might be
Labor Arbiters and the asserted by workers against their employers has been
Commission. — (a) Except as absorbed into the original and exclusive jurisdiction
otherwise provided under this of Labor Arbiters. In the first place, paragraph 3
Code, the Labor Arbiters shall have should be read not in isolation from but rather within
original and exclusive jurisdiction the context formed by paragraph 1 (relating to unfair
to hear and decide, within thirty labor practices), paragraph 2 (relating to claims
(30) calendar days after the concerning terms and conditions of employment),
submission of the case by the paragraph 4 (claims relating to household services, a
parties for decision without particular species of employer-employee relations),
extension, even in the absence of and paragraph 5 (relating to certain activities
stenographic notes, the following prohibited to employees or employers). It is evident
cases involving all workers, that there is a unifying element which runs through
whether agricultural or non- paragraph 1 to 5 and that is, that they all refer to
agricultural: cases or disputes arising out of or in connection with
an employer-employee relationship.

xxx xxx xxx


For it cannot be presumed that money claims of
workers which do not arise out of or in connection
with their employer-employee relationship, and
which would therefore fall within the general
4. Clai jurisdiction of regular courts of justice, were intended
ms for by the legislative authority to be taken away from the
actual, jurisdiction of the courts and lodged with Labor
moral, Arbiters on an exclusive basis. The Court, therefore,

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LABOR STANDARDS LAW

believes and so holds that the ―money claims of  The Labor Arbiter awarded the back wages
workers‖ referred to in paragraph 3 of Article 217 including an order for reinstatement; this
embraces money claims which arise out of or in was, however, reversed by NLRC;
connection with the employer-employee relationship,
or some aspect or incident of such relationship. Put a  A motion for reconsideration was likewise
little differently, that money claims of workers which dismissed by NLRC;
now fall within the original and exclusive jurisdiction  A petition for Certiorari under Rule 65 was
of Labor Arbiters are those money claims which have filed by Mojica before the CA, which court
some reasonable causal connection with the granted the reliefs prayed for; Duty Free
employer-employee relationship.‖ petitioned before the SC;

Issue

-With the reality that the stipulation refers to the post- 1. Whether the filing by Mojica of the
employment relations of the parties. complaint before the NLRC was proper
2. What is the nature of DFP?
3. What is the tribunal clothed with jurisdiction
to try civil service cases?
For sure, a plain and cursory reading of the
complaint will readily reveal that the subject matter is Held
one of claim for damages arising from a breach of
contract, which is within the ambit of the regular 1. No, DFP being a government agency
court‘s jurisdiction attached with DOT, complaints against it are
not cognizable by NLRC. 2

DFP was created under Executive Order


Duty Free Philippines v. Rossano Mojica, GR No.
(EO) No. 46 on September 4, 1986 primarily
166365, 30 September 2005, First Division,
to augment the service facilities for tourists
Ynares-Santiago1
and to generate foreign exchange and
Principles of law: Complaints of civil service revenue for the government. In order for the
employees come under the jurisdiction of the CSC government to exercise direct and effective
and not NLRC; any decision of the Labor Arbiter control and regulation over the tax and duty
involving a CS employee is void for want of free shops, their establishment and operation
jurisdiction was vested in the Ministry, now Department
of Tourism (DOT), through its
Facts implementing arm, the Philippine Tourism
Authority (PTA). All the net profits from
 Mojica was an employee of Duty Free the merchandising operations of the shops
Philippines who was charged with neglect accrued to the DOT.
resulting to considerable damage to or loss
of materials, assets and properties of DFP; 2. EO No. 292 or The Administrative Code of
 Hence, the discipline committee of Duty 1987 empowered the Civil Service
Free considered her resigned with forfeiture Commission to hear and decide
of all benefits except salary and accrued administrative cases instituted by or brought
leave credits; before it directly or on appeal, including
 As a result a complaint for illegal dismissal contested appointments, and review
with prayer of full back wages and decisions and actions of its offices and of the
reinstatement was filed by Mojica before the agencies attached to it.
NLRC;
2 Note that it was initially decided upon by the Labor
1 19 August 2014. Arbiter. NLRC in fact dismissed the petition

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LABOR STANDARDS LAW

2. Whether or not respondent Edward King


was validly dismissed

8. Easycall Communications Phils., Inc vs. Ruling:


Edward King
SC ruled first with jurisdiction as it is decisive. If
NLRC has no jurisdiction, then it would be
Facts: unnecessary to talk about the validity of dismissal.

Petitioner Easycall Communications Phils., Inc was a Petitioner contends that it is SEC, and not the NLRC,
domestic corporation engaged in the business of who has jurisdiction since respondent was a
message handling. On May 1992, petitioner, through ―corporate officer.‖ Is respondent a corporate officer?
its general manager, Roberto Malonzo, hired the Here, petitioner failed to prove that respondent was a
services of respondent as assistant to the general corporate officer.
manager. He was given the responsibility of ensuring
―Corporate officers‖ are those officers who
that the expansion plans outside Metro Manila and
are given that character under the
Metro Cebu were achieved as soon as possible.
Corporation Code. Under Section 25
In an Memo dated Aug 14, Mr. RT Casas, thereof, the ―corporate officers‖ are the
respondent‘s immediate superior, recommended his president, secretary, treasurer and such other
promotion to assistant vice president for nationwide officers as may be provided by the by-laws.
expansion. On December 22, respondent was
Since petitioner failed to satisfy burden of proof that
appointed to the even higher position. His promotion
was required of it, we cannot sanction its claim that
was based his performance for the preceding 6
respondent was a corporate officer whose removal
months of his appointment. As VP, he became
was cognizable by the SEC under PD 902-A and not
responsible for the sales and rentals of pager units in
by NLRC.
the expansion areas. He also coordinated with the
dealers. An ―office‖ is created by the charter of the
corporation and the officer is elected by the
Sometime in March 1993, Malonzo reviewed King‘s
directors and stockholders. On the other
sales performance. He also scrutinized status of
hand, employee occupies no office and
petitioner‘s Nationwide Expansion program (NEP)
generally is employed not by the action of
which was under King‘s responsibility. The
the directors or stockholders but by the
management then confronted respondent. On April
managing officer of the corporation who
1993, Rockwell Gohu, petitioner‘s deputy manager,
also determines compensation of employee.
talked to respondent and told him that Malonzo
wanted respondent‘s resignation. He then wrote a Respondent was appointed VP by Malonzo,
letter confronting Malonzo. petitioner‘s manager, not by the board of directors. It
was also Malozo who determined respondent‘s
On April 19 1993, he received a termination letter
compensation package. Thus, respondent was an
from Malonzo effective April 30 with the reason that
employee, not a corporate officer. The CA was
the management is no longer confident with him for
correct in ruling that jurisdiction over the case was
the position he‘s occupying. Aggrieved, respondent
properly with NLRC, not with SEC.
filed a complaint for illegal dismissal with NLRC.
LA found the termination ground for loss of Validity of the Dismissal
confidence valid. On appeal, NLRC affirmed that
decision of LA but ordered petitioner to indemnify While loss of confidence is a valid ground for
respondent for lack of due process. MR dismissed. dismissing the employee, it should not be simulated.
Filed certiorari before CA.CA held NLRC lacked It must not be indiscriminately used as a shield by the
jurisdiction and that there was illegal dismissal. employer against a claim that the dismissal was
Petitioner filed MR, denied. Hence, this petition. arbitrary.
Issue/s: Loss of trust and confidence must be based
on a willful breach and founded on cleary
1. Whether or not NLRC had jurisdiction over established facts. A breach is willful if it is
the case of respondent‘s illegal dismissal done intentionally, knowingly and

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LABOR STANDARDS LAW

purposely, without justifiable excuse as On November 9, 1992, some employees of


opposed to carelessness, thoughtlessness and SMFI's Finance Department, through the Union
heedlessness. It cannot be from mere represented by Edgar Moraleda, brought a
carelessness. grievance against Finance Manager Gideon
Montesa (Montesa), for "discrimination,
In this case, LA‘s finding, was that sales record of favoritism, unfair labor practices, not flexible
respondent at the time he spent work in the field were [sic], harassment, promoting divisiveness and
clear indications of complainant‘s inefficiency and/or sectarianism, etc.," before SMFI Plant Operations
negligence. Inefficiency implies incompetence, Manager George Nava in accordance with Step 1 of
ignorance and carelessness. They were not sufficient the grievance machinery adopted in the Collective
to claim a loss of confidence as a ground for Bargaining Agreement (CBA) forged by SMFI and
dismissal. the Union.

Moreover, the promotion of the employee negates the


The Union sought:
employer‘s claim that it has lost its trust and
confidence on the employee. The lack of cause in
respondent‘s dismissal was aggravated by the 1. review, evaluation & upgrading of all
absence of due process. The twin requirements of Finance staff and
notice and hearing constitute the essential elements of
due process. 2. promotion of G.Q. Montesa to other SMC
affiliates & subsidiaries.
The law requires the employer to furnish the
employee sought to be dismissed 2 written January 14, 1993- A grievance meeting was
notices before termination can be legally held by SMFI informing the Union that a ―work
effected: management review‖ to be completed on March 1993
would be done to address the grievence, asking the
1. Written notice apprising the employee finance personnel to give it their attention.
of the particular acts for which his
dismissal is sought to afford him an
opportunity to be heard and defend The "work management review" was not
himself completed by March 1993, however, prompting the
2. Subsequent notice informing Union to, on March 26, 1993, elevate the grievance
employer‘s decision. to Step 2.

The procedure above is MANDATORY and its Almost nine months after the grievance
absence taints the dismissal with illegality. In the meeting was held or on October 6, 1993, SMFI
case at bar, respondent was only served with 1 notice rendered a "Decision on Step 1 Grievance" stating
– notice of his termination. that it was still in the process of completing the "work
management review," hence, the Union's requests
Petition is DENIED. CA is affirmed. could not be granted.

October 20, 1993- The Union filed a


complaint before the NLRC Arbitration brance
9. SAN MIGUEL FOODS, INC. v. SAN MIGUEL against SMFI, its president and Montesa for "unfair
CORPORATION EMPLOYEES UNION- labor practice, [and] unjust discrimination in
PTWGO G.R. NO. 168569 October 5, 2007 matters of promotion . . . " It prayed that SMFI et
al. be ordered to promote the therein named
FACTS: employees "with the corresponding pay increases or
adjustment including payment of salary differentials
At the time material to the case, respondent, plus attorney's fees[,] and to cease and desist from
San Miguel Corporation Employees Union - PTWGO committing the same unjust discrimination in matters
(the Union), was the sole bargaining agent of all the of promotion."7
monthly paid employees of petitioner San Miguel
Foods, Incorporated (SMFI). Instead of filing a position paper as is
required for step 2, SMFI filed for a motion to
dismiss instead on the ground that that the issues

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LABOR STANDARDS LAW

raised in the complaint were grievance issues and, Arbiter shall be non-litigious in
therefore, "should be resolved in the grievance nature. Subject to the requirements
machinery provided in [the] collective bargaining of due process, the technicalities
agreements [sic] of the parties or in the mandated of law and procedure and the
provision of voluntary arbitration which is also rules obtaining in the courts of
provided in the CBA." law shall not strictly apply
thereto. The Labor Arbiter may
ISSUE: avail himself of all reasonable
means to ascertain the facts of the
controversy speedily, including
Whether respondent's complaint is one for unfair
ocular inspection and examination
labor practice (ULP) over which a Labor Arbiter has
of well-informed persons.
jurisdiction
(Emphasis and underscoring
supplied)cralawlibrary
RULING:
Section 1 of Rule 8 of the Rules of Court
The jurisdiction of Labor Arbiters, should thus not be strictly applied to a case filed
enumerated in Article 217 of the Labor Code, before a Labor Arbiter. In determining jurisdiction
includes complaints for ULP. over a case, allegations made in the complaint, as
well as those in the position paper, may thus be
SMFI argues that the allegations in the considered.
Union's complaint filed before the Labor Arbiter do
not establish a cause of action for ULP, the Union
having merely contended that SMFI was guilty
thereof without specifying the ultimate facts upon
On the questioned promotions, the Union
which it was based. It cites Section 1 of Rule 8 of
did not allege that they were done to encourage or
the Rules of Court as applying suppletorily to the
discourage membership in a labor organization. In
proceedings before the Labor Arbiter, which Section
reads: fact, those promoted were members of the
complaining Union. The promotions do not thus
amount to ULP under Article 248(e) of the Labor
Section 1. In general. - Every Code.
pleading shall contain in a
methodical and logical form, a
plain concise and direct statement
of the ultimate facts on which the
party pleading relies for his claim . As for the alleged ULP committed under
.. Article 248(i), for violation of a CBA, this Article is
qualified by Article 261 of the Labor Code, the
Alleging that the Union failed to comply pertinent portion of which latter Article reads:
with this Rule, SMFI concludes that the Labor
Arbiter has no jurisdiction over its complaint. x xx violations of a Collective
Bargaining Agreement, except
A perusal of the complaint shows that, those which are gross in
indeed, the particular acts of ULP alleged to have character, shall no longer be
been committed by SMFI were not specified; neither treated as unfair labor practice
and shall be resolved as grievances
were the ultimate facts in support thereof. In its
under the Collective Bargaining
Position Paper, however, the Union detailed the
Agreement. For purposes of this
particular acts of ULP attributed to SMFI and the
article, gross violations of
ultimate facts in support thereof.
Collective Bargaining Agreement
shall mean flagrant and/or
Section 7, Rule V of the New Rules of Procedure of malicious refusal to comply with
the NLRC provides: the economic provisions of such
agreement. (Emphasis and
Nature of Proceedings. - The underscoring
proceedings before the Labor supplied)cralawlibrary

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LABOR STANDARDS LAW

Silva v. NLRC instructs that for a disregarded the seniority rule under the CBA when
its petition before said court merely raised a question
ULP case to be cognizable by the Labor of jurisdiction. The Court of Appeals having affirmed
Arbiter, and the NLRC to exercise its appellate the NLRC decision finding that the Labor Arbiter has
jurisdiction, the allegations in the complaint should jurisdiction over the Union's complaint and thus
show prima facie the concurrence of two things, remanding it to the Labor Arbiter for continuation of
namely: (1) gross violation of the CBA; AND (2) proceedings thereon, the appellate court's said
the violation pertains to the economic provisions finding may be taken to have been made only for
of the CBA.17 (Emphasis and underscoring the purpose of determining jurisdiction.
supplied)cralawlibrary

As reflected in the above-quoted allegations


of the Union in its Position Paper, the Union charges LEYTE IV ELECTRIC COOPERATIVE, INC.,
SMFI to have violated the grievance machinery vs LEYECO IV Employees Union- ALU,
provision in the CBA. The grievance machinery G.R. No. 157775
provision in the CBA is not an economic October 19, 2007
provision, however, hence, the second
requirement for a Labor Arbiter to exercise Facts: The Leyte IV Electric Cooperative, Inc.
jurisdiction of a ULP is not present. (petitioner) and Leyeco IV Employees Union-ALU
(respondent) entered into a Collective Bargaining
The Union likewise charges SMFI, however, Agreement covering petitioner rank-and-file
to have violated the Job Security provision in the employees, for a period of five (5) years.
CBA, specifically the seniority rule, in that SMFI
"appointed less senior employees to positions at its The Regional Vice-President, Vicente P. Casilan (for
Finance Department, consequently intentionally by-
passing more senior employees who are deserving of respondent), sent a letter to petitioner demanding
said appointment." holiday pay and in effect enforcing the CBA.
Petitioner sent a letter-reply to respondent claiming
Article 4 of the Labor Code that it had already paid all employees all the holiday
provides that "All doubts in the pay by reviewing the pay slips.
implementation and
interpretation of the provisions After exhausting the procedures of the grievance
of this Code, including machinery, both parties agreed to submit their issues
implementing rules and for arbitration of the National Conciliation and
regulations, shall be resolved in
Mediation Board (NCMB). Petitioner claimed that
favor of labor." Since the
seniority rule in the promotion payment was presumed since the formula used in
of employees has a bearing on determining the daily rate of pay of the covered
salary and benefits, it may, employees is Basic Monthly Salary divided by 30
following a liberal construction days or Basic Monthly Salary multiplied by 12
of Article 261 of the Labor divided by 360 days, thus with said formula, the
Code, be considered an employees are already paid their regular and special
"economic provision" of the
days, the days when no work is done, the 51 un-
CBA.
worked Sundays and the 51 un-worked Saturdays.
As above-stated, the Union charges SMFI to
Issue: WON Leyte IV Electric Cooperative is liable
have promoted less senior employees, thus bypassing
others who were more senior and equally or more for underpayment of holiday pay.
qualified. It may not be seriously disputed that this
charge is a gross or flagrant violation of the Held: Leyte IV Electric Cooperative is not liable for
seniority rule under the CBA, a ULP over which underpayment of holiday pay.
the Labor Arbiter has jurisdiction.
The Voluntary Arbitrator gravely abused its
SMFI, at all events, questions why the Court discretion in giving a strict or literal interpretation of
of Appeals came out with a finding that it (SMFI) the CBA provisions that the holiday pay be reflected

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LABOR STANDARDS LAW

in the payroll slips. Such literal interpretation ignores being given their holiday pay. Thus, the Voluntary
the admission of respondent in its Position Paper that Arbitrator should not have simply brushed aside
the employees were paid all the days of the month petitioner's divisor formula. In granting respondent's
even if not worked. In light of such admission, claim of non-payment of holiday pay, a "double
petitioner's submission of its 360 divisor in the burden" was imposed upon petitioner because it was
computation of employees' salaries gains being made to pay twice for its employees' holiday
significance. pay when payment thereof had already been included
in the computation of their monthly salaries.
This ruling was applied in Wellington Investment and
Manufacturing Corporation v. Trajano, 43 Producers
Bank of the Philippines v. National Labor Relations
Commission. In this case, the monthly salary was 11.) GR No. 173115 & 173163-64, April 16, 2009
fixed by Wellington to provide for compensation for Atty Garcia vs. Eastern
Telecommunications Phils., et al.,
every working day of the year including the holidays
specified by law — and excluding only Sundays. In FACTS:
fixing the salary, Wellington used what it called the
"314 factor"; that is, it simply deducted 51 Sundays Atty. Virgilio R. Garcia was placed under
from the 365 days normally comprising a year and preventive suspension for complaints of sexual
used the difference, 314, as basis for determining the harassment. After the period of preventive
suspension, Atty. Garcia was terminated as Vice
monthly salary. The monthly salary thus fixed
President and Head of Business Support Services and
actually covered payment for 314 days of the year, Human Resource Departments of the Eastern
including regular and special holidays, as well as Telecommunications Philippines, Inc. (ETPI) by
days when no work was done by reason of fortuitous Atty. Salvador C. Hizon, President/Chief Executive
cause, such as transportation strike, riot, or typhoon Officer of ETPI. Aggrieved by his termination from
or other natural calamity, or cause not attributable to ETPI, Atty. Garcia filed a case before the National
the employees. Labor Relations Commission (NLRC) for illegal
dismissal with prayer for full back wages.
It was also applied in Odango v. National Labor
The Labor Arbiter ruled that the preventive
Relations Commission, where Court ruled that the
suspension and the subsequent dismissal of Atty.
use of a divisor that was less than 365 days cannot Garcia are illegal. However, the NLRC, on appeal,
make the employer automatically liable for dismissed the case for lack of jurisdiction.
underpayment of holiday pay. In said case, the Unperturbed, Atty. Garcia appealed the dismissal of
employees were required to work only from Monday the case to the Court of Appeals (CA). Upon review
to Friday and half of Saturday. Thus, the minimum of the case, the appellate court dismissed the case for
lack of merit. The appellate court ruled that Atty.
allowable divisor is 287, which is the result of 365
Garcia, being the Vice President for Business
days, less 52 Sundays and less 26 Saturdays (or 52 Support Services and Human Resource Departments
half Saturdays). Any divisor below 287 days meant of ETPI, was a corporate officer at the time he was
that the employees were deprived of their holiday pay removed. Being a corporate officer, his removal was
for some or all of the ten legal holidays. The 304-day a corporate act and/or an intra-corporate controversy,
divisor used by the employer was clearly above the the jurisdiction of which rested with the Securities
minimum of 287 days. and Exchange Commission (now with the Regional
Trial Court), and not the Labor Arbiter and the
In this case, the employees are required to work only NLRC. It added that ETPI and Atty. Hizon were not
estopped from questioning the jurisdiction of the
from Monday to Friday. Thus, the minimum
Labor Arbiter before the NLRC on appeal, inasmuch
allowable divisor is 263, which is arrived at by as said issue was seasonably raised by ETPI and
deducting 51 un-worked Sundays and 51 un-worked Atty. Hizon in their reply memorandum before the
Saturdays from 365 days. Considering that petitioner Labor Arbiter.
used the 360-day divisor, which is clearly above the
minimum, indubitably, petitioner's employees are Atty. Garcia is now before us via a Petition
for Review, which he filed on 3 August 2006. The

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LABOR STANDARDS LAW

petition was docketed as G.R. No. 173115. On 8 cashier, auditor or general manager. The number of
August 2006, he filed an Amended Petition for corporate officers is thus limited by law and by the
Review.He prays that the decision of the NLRC dated corporation‘s by-laws.
21 March 2003 and its resolution dated 16 December
2003, and the decision of the Court of Appeals dated In the case before us, the by-laws of ETPI
24 March 2006 and its resolution dated 14 June 2006, provide:
be reconsidered and set aside and that the decision of
the Labor Arbiter dated 30 September 2002 be ARTICLE V
affirmed and reinstated.
Officers
ISSUE: Whether or not the Labor Arbiter has the
jurisdiction over the case Section 1. Number. – The
officers of the Company shall be a
RULING:Labor Arbiter has no jurisdiction over the Chairman of the Board, a President,
case one or more Vice-Presidents, a
Treasurer, a Secretary, an Assistant
The Supreme Court, in a long line of cases, Secretary, and such other officers
has decreed that a corporate officer‘s dismissal or as may be from time to time be
removal is always a corporate act and/or an intra- elected or appointed by the Board
corporate controversy, over which the Securities and of Directors. One person may hold
Exchange Commission [SEC] (now the Regional any two compatible offices.
Trial Court) has original and exclusive jurisdiction.
Atty. Garcia tries to deny he is an officer of
We have ruled that an intra-corporate ETPI. Not being a corporate officer, he argues that
controversy is one which pertains to any of the the Labor Arbiter has jurisdiction over the case. One
following relationships: (1) between the corporation, of the corporate officers provided for in the by-laws
partnership or association and the public; (2) between of ETPI is the Vice-President. It can be gathered
the corporation, partnership or association and the from Atty. Garcia‘s complaint-affidavit that he was
State insofar as the former‘s franchise, permit or Vice President for Business Support Services and
license to operate is concerned;(3) between the Human Resource Departments of ETPI when his
corporation, partnership or association and employment was terminated effective 16 April
its stockholders, partners, members or officers; and 2000. It is therefore clear from the by-laws and from
(4) among the stockholders, partners or associates Atty. Garcia himself that he is a corporate
themselves. InLozon v. National Labor Relations officer. One who is included in the by-laws of a
Commission,we declared that Presidential Decree No. corporation in its roster of corporate officers is an
902-A confers on the SEC original and exclusive officer of said corporation and not a mere
jurisdiction to hear and decide controversies and employee. Being a corporate officer, his removal is
cases involving intra-corporate and partnership deemed to be an intra-corporate dispute cognizable
relations between or among the corporation, officers by the SEC and not by the Labor Arbiter.
and stockholders and partners, including their
elections or appointments …xxx… We agree with both the NLRC and the Court
of Appeals that Atty. Garcia‘s ouster as Vice-
Before a dismissal or removal could President, who is a corporate officer of ETPI,
properly fall within the jurisdiction of the SEC, it has partakes of the nature of an intra-corporate
to be first established that the person removed or controversy, jurisdiction over which is vested in the
dismissed was a corporate officer. ―Corporate SEC (now the RTC). The Labor Arbiter thus erred in
officers‖ in the context of Presidential Decree No. assuming jurisdiction over the case filed by Atty.
902-Aare those officers of the corporation who are Garcia, because he had no jurisdiction over the
given that character by the Corporation Code or by subject matter of the controversy.
the corporation‘s by-laws. There are three specific
officers whom a corporation must have under Section
25 of the Corporation Code. These are the president,
secretary and the treasurer. The number of officers is
not limited to these three. A corporation may have
such other officers as may be provided for by its by-
laws like, but not limited to, the vice-president,

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12.)HALAGUEÑA vs. PHILIPPINE AIRLINES (RTC) of Makati City against respondent for the
INCORPORATED invalidity of Section 144, Part A of the PAL-FASAP
CBA.
G.R. No. 172013
Respondent questioned the jurisdiction of the RTC
October 2, 2009 as the case make out a labor dispute arising from
employer-employee relationship .

On August 9, 2004, the RTC issued an Order


Facts:
upholding its jurisdiction over the present case. The
Petitioners were employed as female flight RTC reasoned that the instant case, the thrust of the
attendants of respondent Philippine Airlines (PAL) Petition is Sec. 144 of the subject CBA which is
on different dates prior to November 22, 1996. They allegedly discriminatory as it discriminates against
are members of the Flight Attendants and Stewards female flight attendants, in violation of the
Association of the Philippines (FASAP), a labor Constitution, the Labor Code, and the CEDAW. The
organization certified as the sole and exclusive allegations in the Petition do not make out a labor
certified bargaining representative of the flight dispute arising from employer-employee relationship
attendants, flight stewards and pursers of respondent. as none is shown to exist.

On July 11, 2001, respondent and FASAP Aggrieved, respondent, on October 8, 2004 appealed
entered into a Collective Bargaining Agreement[3] the case to the CA praying that the order of the RTC,
incorporating the terms and conditions of their which denied its objection to its jurisdiction, be
agreement for the years 2000 to 2005, hereinafter annuled and set aside for having been issued without
referred to as PAL-FASAP CBA. and/or with grave abuse of discretion amounting to
lack of jurisdiction.
The controversy of this petition is the the
constitutionality of Section 144, Part A of their The CA rendered a Decision, dated August 31, 2005,
PAL-FASAP CBA, it provides that: granting the respondent's petition, and ruled that the
lower court is by us declared to have NO
― A. For the Cabin Attendants hired before 22 JURISDICTION OVER THE CASE.
November 1996:
Hence, this petition.
3. Compulsory Retirement
Issue:
Subject to the grooming standards
provisions of this Agreement, compulsory The main issue in this case is whether the RTC has
retirement shall be fifty-five (55) for jurisdiction over the petitioners' action challenging
females and sixty (60) for males. Xxxx” the legality or constitutionality of the provisions on
the compulsory retirement age contained in the CBA
between respondent PAL and FASAP.

Petitioners and several female cabin crews


challenged the aforementioned CBA provision on
compulsory retirement averring that the provision is Ruling:
discriminatory, and demanded for an equal treatment
The petition is meritorious.
with their male counterparts.
Jurisdiction of the court is determined on the basis of
On July 29, 2004, petitioners filed a Special Civil
the material allegations of the complaint and the
Action for Declaratory Relief with Prayer for the
character of the relief prayed for irrespective of
Issuance of Temporary Restraining Order and Writ of
whether plaintiff is entitled to such relief.
Preliminary Injunction with the Regional Trial Court

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In the case at bar, the allegations in the petition for power to determine and settle the issues at hand.
declaratory relief plainly show that petitioners' cause They have no jurisdiction and competence to decide
of action is the annulment of Section 144, Part A of constitutional issues relative to the questioned
the PAL-FASAP CBA. compulsory retirement age. Their exercise of
jurisdiction is futile, as it is like vesting power to
The Supreme Court held that from the petitioners' someone who cannot wield it.
allegations and relief prayed for in its petition it was
clear that the issue raised by the women flight Although the CBA provides for a procedure for the
attendants is whether Section 144, Part A of the PAL- adjustment of grievances, such referral to the
FASAP CBA is unlawful and unconstitutional. grievance machinery and thereafter to voluntary
Therefore the subject of litigation is incapable of arbitration would be inappropriate to the petitioners,
pecuniary estimation, hence, exclusively cognizable because the union and the management have
by the RTC, pursuant to Section 19 (1) of Batas unanimouslyagreed to the terms of the CBA and
PambansaBlg. 129, as amended. Being an ordinary their interest is unified.
civil action, the same is beyond the jurisdiction of
labor tribunals. WHEREFORE, the Decision of the Court of Appeals,
are hereby REVERSED and SET ASIDE.
The jurisdiction of labor arbiters and the NLRC
under Article 217 of the Labor Code is limited to
disputes arising from an employer-employee
13. Okol vs. Slimmer’s World International, et al,
relationship which can only be resolved by reference
G.R. No. 160146, December 11, 2009
to the Labor Code, other labor statutes, or their
collective bargaining agreement. Facts:

Not all controversy or money claim by an Respondent, Slimmers World International,


employee against the employer or vice-versa is employed petitioner Leslie Okol initially as a
within the exclusive jurisdiction of the labor management trainee. She rose up the ranks to become
arbiter. Actions between employees and employer Head Office Manager and then Director and Vice
where the employer-employee relationship is merely President until her dismissal.
incidental and the cause of action precedes from a
Prior to her dismissal, respondent preventively
different source of obligation is within the suspended Okol which arose from the seizure by the
exclusive jurisdiction of the regular court. Bureau of Customs of seven Precor Elliptical
Machines and seven Precor Treadmills belonging to
Thus, where the principal relief sought is to be or consigned to Slimmers World. Okol received a
resolved not by reference to the Labor Code or other memorandum extending her suspension until pending
labor relations statute or a collective bargaining the outcome of the investigation on the Precor
agreement but by the general civil law, the equipment importation. Okol received another
jurisdiction over the dispute belongs to the regular memorandum requiring her to explain why no
disciplinary action should be taken against her.
courts of justice and not to the labor arbiter and the
Thereafter, Okol filed her written explanation but
NLRC. respondents found it to be unsatisfactory.Through a
letter signed by its president Ronald Joseph Moy,
Here in the instant case, the employer-employee Slimmers World terminated Okol‘s employment.
relationship between the parties is merely incidental
and the cause of action ultimately arose from Okol filed a complaint with the Arbitration branch of
different sources of obligation, i.e., the Constitution the NLRC against respondents for illegal suspension,
and Convention on the Elimination of All Forms of illegal dismissal, unpaid commissions, damages and
attorney‘s fees, with prayer for reinstatement and
Discrimination Against Women (CEDAW).
payment of back wages. Respondents filed a motion
to dismiss on the ground that NLRC had no
The Supreme Court also holds that the grievance
jurisdiction over the subject matter of the complaint,
machinery and voluntary arbitrators do not have the with a reservation of their right to file a Position

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Paper at the proper time. The Labor Arbiter granted Clearly, from the documents submitted by
the motion to dismiss ruling that Okol was the vice respondents, petitioner was a director and officer of
president, and since it involved a corporate officer, Slimmers World. The charges of illegal suspension,
the dispute was an intra-corporate controversy falling illegal dismissal unpaid commissions, reinstatement
outside the jurisdiction of the Arbitration branch. and back wages imputed by petitioner against
respondent falls squarely within the ambit of intra-
Okol filed an appeal with the NLRC, and it reversed corporation disputes. It is not a simple labor problem
and set aside the labor arbiter‘s decision, ordering the but a matter that comes within the area of corporate
reinstatement of Okol with payment of full back affairs and management and is a corporate
wages and other indemnities. controversy in contemplation of the Corporation
Code, subject to the jurisdiction of the regular courts.
Respondents filed a Motion for Reconsideration with Thus the appellate court correctly ruled that it is not
the NLR, contending that the relief prayed for was the NLRC but the regular courts which have
confined only to the question of jurisdiction. jurisdiction over the present case.
However, the NLRC not only decided the case on the
merits but did so in the absence of position papers
from both parties.
14.) Hugo et al., vs. Light Rail Transit Authority,
Respondents then filed an appeal with the Court of G.R. No. 181866, March 18, 2010
Appeals which set aside the NLRC‘s Resolution and
affirmed the Labor Arbiter‘s order. The Court of Facts:
Appeals ruled that the case, being an intra-corporate
dispute, falls within the jurisdiction of the regular Respondent Light Rail Transit Authority (LRTA), a
courts pursuant to Republic Act No. 8799. Okol filed government-owned and controlled corporation,
a motion for Reconsideration which was denied,
constructed a light rail transit system which traverses
hence this petition for Review on Certiorari.
from Baclaran in Parañaque City to Monumento in
Issue: Kalookan City, Metro Manila pursuant to its mandate
under its charter, Executive Order No. 603, Series of
WON the NLRC has jurisdiction over the illegal 1980, as amended.
dismissal case filed by the petitioner
To effectively carry out its mandate, LRTA entered
Ruling: into a ten-year Agreement for the Management and
Operation of the Metro Manila Light Rail Transit
The petition lacks merit. Petitioner insists that even System (the Agreement) from June 8, 1984 until June
as vice president, the work she performed conforms
8, 1994 with Metro Transit Organization, Inc.
to that of an employee. Mere title or designation in a
corporation will not, by itself, determine the (METRO).
existence of an employer-employee relationship. It is
the ―four-fold‖ test. Respondents, on the other hand, One of the stipulations in the Agreement was:
maintain that petitioner was a corporate officer at the
time of her dismissal. METRO shall be free to employ such
employees and officers as it shall deem
Sec 25 of the Corporation Code enumerates corporate necessary in order to carry out the
officers as the president, secretary, treasurer and such requirements of the Agreement. Such
other officers as may be provided for in the by-laws. employees and officers shall be the
In Tabang v. NLRC, 12 we held that an "office" is employees of METRO and not of LRTA.
created by the charter of the corporation and the
officer is elected by the directors or stockholders. On METRO shall prepare a compensation
the other hand, an "employee" usually occupies no schedule for the salaries and fringe
office and generally is employed not by action of the benefits of its personnel (Article 3, par.
directors or stockholders but by the managing officer 3.05).
of the corporation who also determines the
compensation to be paid to such employee. METRO thus hired its own employees including
herein petitioners-members of the Pinag-

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LABOR STANDARDS LAW

isangLakasngManggagawasa METRO, Inc.-National corporation with original charter,


Federation of Labor, otherwise known as PIGLAS- are covered by civil service rules.
METRO, INC.-NFL-KMU (the Union), the certified Herein private respondent workers cannot
exclusive collective bargaining representative of have the best of two worlds, e.g., be
METRO's rank-and-file employees. considered government employees of
petitioner LRTA, yet allowed to strike as
When the Agreement expired on July 31, 2000, private employees under our labor laws. x
LRTA did not renew it. It instead took over the xx.
management and operations of the light rail transit
system, hiring new personnel for the purpose. x xxx
METRO thus considered the employment of all its
personnel terminated effective September 30, 2000. . . . [I]t is inappropriate to pierce
the corporate veil of petitioner
Petitioners filed a complaint for illegal dismissal and
METRO. x xx.
unfair labor practice with prayer for reinstatement
and damages against METRO and LRTA before the
In the instant case, petitioner
NCR Arbitration Branch, National Labor Relations
METRO, formerly Meralco Transit
Commission (NLRC).
Organization, Inc., was originally
owned by the Manila Electric
Company and registered with the
Issue: Securities and Exchange
Commission more than a decade
 Whether or not the Labor Arbiter's decision before the labor dispute. It then
against LRTA was rendered without entered into a ten-year agreement
jurisdiction. with petitioner LRTA in 1984.
And, even if petitioner LRTA
Ruling:
eventually purchased METRO in
The Labor Arbiter and the NLRC do not have 1989, both parties maintained their
jurisdiction over LRTA. Petitioners themselves separate and distinct juridical
admitted in their complaint that LRTA "is a personality and allowed the
government agency organized and existing pursuant agreement to proceed. In 1990, this
to anoriginal charter (Executive Order No. 603)," and Court, in Light Rail Transit
that they are employees of METRO. Authority v. Commission on
Audit (G.R. No. 88365, January 9,
Light Rail Transit Authority v. Venus, Jr., which has 1990), even upheld the validity of
a similar factual backdrop, holds that LRTA, being a the said agreement. Consequently,
government-owned or controlled corporation created the agreement was extended
by an original charter, is beyond the reach of the beyond its ten-year period. In 1995,
Department of Labor and Employment which has METRO's separate juridical
jurisdiction over workers in the private sector, viz: identity was again recognized when
it entered into a collective
. . . [E]mployees of petitioner METRO bargaining agreement with the
cannot be considered as employees of workers' union. All these years,
petitioner LRTA. The employees hired by METRO's distinct corporate
METRO are covered by the Labor Code and personality continued quiescently,
are under the jurisdiction of the Department separate and apart from the
of Labor and Employment, whereas the juridical personality of petitioner
employees of petitioner LRTA, a LRTA.
government-owned and controlled

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The labor dispute only arose in


2000, after a deadlock occurred The petitioners moved to dismiss the complaint
during the collective bargaining contending that the complaint pertained to the
jurisdiction of the Securities and Exchange
between petitioner METRO and the
Commission (SEC) due to the controversy being
workers' union. This alone is not a intra-corporate inasmuch as the respondent was a
justification to pierce the corporate member of Matling‘s Board of Directors aside from
veil of petitioner METRO and being its Vice-President for Finance and
make petitioner LRTA liable to Administration prior to his termination.
private respondent workers. There
are no badges of fraud or any The respondent opposed the petitioners‘ motion
to dismiss, insisting that his status as a member of
wrongdoing to pierce the corporate
Matling‘s Board of Directors was doubtful,
veil of petitioner METRO. considering that he had not been formally elected as
such; that he did not own a single share of stock in
x xxx Matling, considering that he had been made to sign in
blank an undated indorsement of the certificate of
In sum, petitioner LRTA cannot stock he had been given in 1992; that Matling had
be held liable to the employees of taken back and retained the certificate of stock in its
custody; and that even assuming that he had been a
petitioner METRO.
Director of Matling, he had been removed as the Vice
President for Finance and Administration, not as a
IN FINE, the Labor Arbiter's decision against LRTA Director, a fact that the notice of his termination
was rendered without jurisdiction, hence, it is void, dated April 10, 2000 showed.
thus rendering it improper for the remand of the case
to the NLRC, as ordered by the appellate court, for it The petitioners‘ motion to dismiss was granted by the
(NLRC) to give due course to LRTA's appeal. Labor Arbiter ruling that the respondent was a
corporate officer because he was occupying the
A final word. It bears emphasis that this Court's position of Vice President for Finance and
present Decision treats only with respect to the Labor Administration and at the same time was a Member
of the Board of Directors of Matling; and that his
Arbiter's decision against respondent LRTA.
removal was a corporate act of Matling and the
controversy resulting from such removal was under
the jurisdiction of the SEC, pursuant to Section 5,
paragraph (c) of Presidential Decree No. 902.
15. Matling Industrial Corporation vs. Coros
Respondent appealed to the NLRC, which set
This is a petition for review on aside the dismissal, concluding that the
certiorari assailing the decisionin the case respondent‘s complaint for illegal dismissal was
entitled Matling Industrial and Commercial properly cognizable by the LA, not by the SEC,
Corporation, et al. v. Ricardo R. Coros and National because he was not a corporate officer by virtue of
Labor Relations Commission, whereby by the Court his position in Matling, albeit high ranking and
of Appeals (CA) sustained the ruling of the National managerial, not being among the positions listed in
Labor Relations Commission (NLRC) to the effect Matling‘s Constitution and By-Laws.
that the LA had jurisdiction because the respondent
was not a corporate officer of petitioner Matling The petitioners sought
Industrial and Commercial Corporation (Matling). reconsideration reiterating that the respondent, being
a member of the Board of Directors, was a corporate
FACTS: officer whose removal was not within the LA‘s
jurisdiction.
Respondent, Vice-President for Finance and
Administration of Matling was dismissed, thus, he Nonetheless, on April 30, 2001, the NLRC denied the
filed a complaint for illegal suspension and illegal petitioners‘ motion for reconsideration.
dismissal against Matling and some of its corporate
officers (petitioners) in the NLRC, Sub-Regional Thus, the petitioners elevated the issue to the
Arbitration Branch XII, Iligan City. CA by petition for certiorari, contending that the

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NLRC committed grave abuse of discretion the controversy involves the election or appointment
amounting to lack of jurisdiction in reversing the of a director, trustee, officer, or manager of
correct decision of the LA. The CA dismissed the such corporation, partnership, or association. Such
petition contending that: controversy, among others, is known as an intra-
corporate dispute.
The position of vice-president for administration and
finance, which Coros used to hold in the corporation, The petitioners contend that the position of
was not created by the corporation‘s board of Vice President for Finance and Administration was a
directors but only by its president or executive vice- corporate office, having been created by Matling‘s
president pursuant to the by-laws of the corporation. President pursuant to By-Law No. V.
Moreover, Coros‘ appointment to said position was
not made through any act of the board of directors The respondent counters that Matling‘s By-
or stockholders of the corporation. Consequently, the Laws did not list his position as Vice President for
position to which Coros was appointed and later on Finance and Administration as one of the corporate
removed from, is not a corporate office despite its offices; that Matling‘s By-Law No. III listed only
nomenclature, but an ordinary office in the four corporate officers, namely: President, Executive
corporation. Vice President, Secretary, and Treasurer; that the
corporate offices contemplated in the phrase ―and
Coros‘ alleged illegal dismissal therefrom is, such other officers as may be provided for in the by-
therefore, within the jurisdiction of the labor arbiter. laws‖ found in Section 25 of the Corporation
Code should be clearly and expressly stated in the
The CA denied the petitioners‘ motion for By-Laws; that the fact that Matling‘s By-Law No. III
reconsideration on April 2, 2003. dealt with Directors & Officers while its By-Law No.
V dealt with Officers proved that there was a
differentiation between the officers mentioned in the
two provisions, with those classified under By-Law
ISSUES: No. V being ordinary or non-corporate officers; and
that the officer, to be considered as a corporate
Whether or not respondent Coros was a officer, must be elected by the Board of Directors or
corporate officer of Matling the stockholders, for the President could only appoint
Whether or not the Labort Arbiter has an employee to a position pursuant to By-Law No. V.
jurisdiction over the case
The court favors the respondents contention.
Section 25 of the Corporation Code provides that a
RULING: position must be expressly mentioned in the By-Laws
in order to be considered as a corporate office. Thus,
First Issue the creation of an office pursuant to or under a By-
Law enabling provision is not enough to make a
As a rule, the illegal dismissal of an officer or position a corporate office. Moreover, the Board of
other employee of a private employer is properly Directors of Matling could not validly delegate the
cognizable by the LA. This is provided for in Article power to create a corporate office to the President, in
217 (a) 2 of the Labor Code. light of Section 25 of the Corporation Code requiring
the Board of Directors itself to elect the corporate
Where the complaint for illegal dismissal officers. Verily, the power to elect
concerns a corporate officer, however, the the corporate officers was a discretionary power that
controversy falls under the jurisdiction of the the law exclusively vested in the Board of Directors,
Securities and Exchange Commission (SEC), because and could not be delegated to subordinate officers or
the controversy arises out of intra-corporate or agents. The office of Vice President for Finance and
partnership relations between and among Administration created by Matling‘s President
stockholders, members, or associates, or between any pursuant to By Law No. V was an ordinary, not a
or all of them and the corporation, partnership, or corporate, office.
association of which they are stockholders, members,
or associates, respectively; and between such The power to create new offices and the power
corporation, partnership, or association and the State to appoint the officers to occupy them vested by By-
insofar as the controversy concerns their individual Law No. V merely allowed Matling‘s President to
franchise or right to exist as such entity; or because create non-corporate offices to be occupied by

UNIVERSITY OF SAN CARLOS SCHOOL OF LAW AND GOVERNANCE 27


LABOR STANDARDS LAW

ordinary employees of Matling. Such powers were WHEREFORE, the petition for review
incidental to the President‘s duties as the executive on certiorari is denied.
head of Matling to assist him in the daily operations
of the business.
16.) Manila Electric Co. et al., vs. Lim, GR No.
Second Issue 184769, Oct. 5, 201056.

Petitioners further content that because the Facts:


respondent was a Director/stockholder of
Matling, the NLRC had no jurisdiction over Rosario G. Lim (respondent), also known as Cherry
his complaint, considering that any case for illegal Lim, is an administrative clerk at the Manila Electric
dismissal brought by a stockholder/officer against the
Company (MERALCO). Her workplace received
corporation was an intra-corporate matter that must
fall under the jurisdiction of the SEC conformably threats through letter and it was directed to her, thus
with the context of PD No. 902-A. the human resource in her workplace directed her
transfer to other branch. From bulacan she was
This contention also has no merit. transferred to muntinlupa.

The criteria for distinguishing between Respondent appealed the transfer through letter, she
corporate officers who may be ousted from office at requested for voice dialogue with the head of HR
will, on one hand, and ordinary corporate employees
administration. She wanted to voice out her concerns
who may only be terminated for just cause, on the
other hand, do not depend on the nature of the on the matter of her transfer and that there was no
services performed, but on the manner of creation of due process when the direct order was issued, and the
the office. In the respondent‘s case, he was grueling effort to travel from her home to the place
supposedly at once an employee, a stockholder, and a where she was transferred were not considered and
Director of Matling. The circumstances surrounding also it violates the CBA with regards to the job
his appointment to office must be fully considered to security, and she also expressed her thoughts on the
determine whether the dismissal constituted an intra-
letter, for her the letter was suspicious, doubtful or
corporate controversy or a labor termination dispute.
We must also consider whether his status as Director just mere jokes if the letter ever existed.
and stockholder had any relation at all to his
appointment and subsequent dismissal as Vice She received no response from the company, thus she
President for Finance and Administration. filed a petition for habeas data, in RTC of bulacan.
Where she got a favorable decision, The trial court
The respondent was not appointed as Vice justified its ruling by declaring that, inter alia,
President for Finance and Administration because of recourse to a writ of habeas data should extend not
his being a stockholder or Director of Matling. He only to victims of extra-legal killings and political
had started working for Matling on September 8,
activists but also to ordinary citizens, like respondent
1966, and had been employed continuously for 33
years until his termination on April 17, 2000, first as whose rights to life and security are jeopardized by
a bookkeeper, and his climb in 1987 to his last petitioners‘ refusal to provide her with information or
position as Vice President for Finance and data on the reported threats to her person..
Administration had been gradual but steady.
Thus, this petition for review in Supreme Court.
Even though he might have become a
stockholder of Matling in 1992, his promotion to the Issue:
position of Vice President for Finance and
Administration in 1987 was by virtue of the length of Whether or not, writ of habeas data is applicable in
quality service he had rendered as an employee of the case at bar.
Matling. His subsequent acquisition of the status of
Director/stockholder had no relation to his Ruling:
promotion. Besides, his status of Director/stockholder
was unaffected by his dismissal from employment as No, the habeas data rule, in general, is designed to
Vice President for Finance and Administration. protect by means of judicial complaint the image,

UNIVERSITY OF SAN CARLOS SCHOOL OF LAW AND GOVERNANCE 28


LABOR STANDARDS LAW

privacy, honor, information, and freedom of Manager, he committed gross acts of misconduct
information of an individual. It is meant to provide a detrimental to the company since 2000. He was almost
forum to enforce one‘s right to the truth and to
always absent, and neglected to supervise the employees
informational privacy, thus safeguarding the
constitutional guarantees of a person‘s right to life, resulting in complaints from various clients about
liberty and security against abuse in this age of employees‘ performance.
information technology.

Respondent‘s plea that she be spared from complying The Labor Arbiter (2003)found no convincing
with MERALCO‘s Memorandum directing her proof of the causes for which petitioner was terminated and
reassignment to the Alabang Sector, under the guise
noted that there was complete absence of due process in the
of a quest for information or data allegedly in
possession of petitioners, does not fall within the manner of his termination. It declared petitioner as having
province of a writ of habeas data.Respondent been illegally dismissed and ordered for his reinstatment to
trivializes these threats and accusations from hisformer positions without loss of seniority rights and
unknown individuals in her earlier-quoted portion of
her July 10, 2008 letter as ―highly suspicious, other privileges and to pay their full backwages from the
doubtful or are just mere jokes if they existed at all.‖ time of dismissal until actually reinstated, plus attorney‘s
fees.
18.) Real vs. Sangu Phils., Inc., et al., G.R. No.
168757, January 19, 2011
On appeal, the NLRC dismissed the petitioner‘s
Facts: complaint established petitioner‘s status as a stockholder
and as a corporate officer and hence, his action against
Renato Real was the Manager of respondent
respondent corporation is an intra-corporate controversy
corporation Sangu Philippines. Heclaimed to have been
over which the Labor Arbiter has no jurisdiction.
illegaly dismissed through Board Resolution 2001-
03adopted by respondentcorporation‘s Board of Directors
removing him from his position as manager. Petitioner
Issues:
complained that he was neither notified of the Board
Meeting during which said board resolution was passed nor
formally charged with any infraction. He just received
from respondents a letterdated March 26, 2001 stating that Whether or not petitioner‘s complaint for illegal dismissal
he has been terminated from service effective March 25, constitutes an intra-corporate controversy and thus, beyond
2001 for the following reasons: (1) continuous absences at the jurisdiction of the Labor Arbiter.
his post at Ogino Philippines Inc. for several months which
was detrimental to the corporation‘s operation; (2) loss of Ruling:
trust and confidence; and, (3) to cut down operational
No intra-corporate relationship between the parties.
expenses to reduce further losses being experienced by
respondent corporation.
[A]n intra-corporate controversy is one
Respondentsrefuted petitioner‘s claim of illegal which arises between a stockholder and
dismissal by alleging that after petitioner was appointed the corporation. There is no distinction,
qualification nor any exemption

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LABOR STANDARDS LAW

whatsoever. The provision is broad and ‗To determine


covers all kinds of controversies whether a case involves an
between stockholders and corporations. intra-corporate controversy,
and is to be heard and
decided by the branches of
the RTC specifically
However, the better policy in
designated by the Court to try
determining whether a dispute is intra-corporate
and decide such cases, two
or not is to consider concurrent factors such as
elements must concur: (a) the
the status or relationship of the parties or the
status or relationship of the
nature of the question that is subject of their
parties, and (2) the nature of
controversy.
the question that is the
subject of their controversy.

Two-tier test in determining the existence of intra-


corporate controversy
The first element
requires that the controversy
must arise out of intra-
Under the nature of the corporate or partnership
controversy test, the incidents of that relations between any or all
relationship must also be considered for of the parties and the
the purpose of ascertaining whether the corporation, partnership, or
controversy itself is intra-corporate. association of which they are
The controversy must not only be not stockholders, members or
rooted in the existence of an intra- associates, between any or all
corporate relationship, but must as well of them and the corporation,
pertain to the enforcement of the partnership or association of
parties‘ correlative rights and which they are stockholders,
obligations under the Corporation Code members or associates,
and the internal and intra-corporate respectively; and between
regulatory rules of the corporation. If such corporation, partnership,
the relationship and its incidents are or association and the State
merely incidental to the controversy or insofar as it concerns the
if there will still be conflict even if the individual franchises. The
relationship does not exist, then no second element requires that
intra-corporate controversy exists. the dispute among the parties
be intrinsically connected
with the regulation of the
corporation. If the nature of
The Court then combined the
the controversy involves
two tests and declared that jurisdiction
matters that are purely civil in
should be determined by considering
character, necessarily, the
not only the status or relationship of the
case does not involve an
parties, but also the nature of the
intra-corporate controversy.‘
question under controversy.
[Citations omitted.]

There is no merit in respondents‘ contention that


the fact alone that petitioner is a stockholder and director of

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LABOR STANDARDS LAW

respondent corporation automatically classifies this case as RULING:


an intra-corporate controversy. To reiterate, not all
conflicts between the stockholders and the corporation are
classified as intra-corporate. There are other factors to To determine whether a case involves an intra-
corporate controversy, and is to be heard and decided
consider in determining whether the dispute involves
by the branches of the RTC specifically designated
corporate matters as to consider them as intra-corporate by the Court to try and decide such cases, two
elements must concur: (a) the status or relationship of
controversies. the parties, and (2) the nature of the question that is
the subject of their controversy.
18. RENATO REAL, Petitioner, vs. SANGU
PHILIPPINES, INC. and/ or KIICHI ABE,
Respondents. [G.R. No. 168757, January 19, 2011]
The first element requires that the controversy must
DEL CASTILLO, J.: arise out of intra-corporate or partnership relations
between any or all of the parties and the corporation
FACTS: x x . The second element requires that the dispute
among the parties be intrinsically connected with the
regulation of the corporation. If the nature of the
controversy involves matters that are purely civil in
character, necessarily, the case does not involve an
Renato Real was the Manager of respondent intra-corporate controversy.
corporation Sangu Philippines, Inc. which is engaged
in the business of providing manpower for general
services. He filed a complaint for illegal dismissal
against the respondents stating that he was neither
notified of the Board meeting during which his Guided by this recent jurisprudence, we thus find no
removal was discussed nor was he formally charged merit in respondents‘ contention that the fact alone
with any infraction. that petitioner is a stockholder and director of
respondent corporation automatically classifies this
case as an intra-corporate controversy. To reiterate,
not all conflicts between the stockholders and the
corporation are classified as intra-corporate. There
Respondents, on the other hand, said that Real are other factors to consider in determining whether
committed gross acts of misconduct detrimental to the dispute involves corporate matters as to consider
the company since 2000. The LA declared petitioner them as intra-corporate controversies.
as having been illegally dismissed. Sangu appealed to
NLRC and established petitioner‘s status as a
stockholder and as a corporate officer and hence, his
action against respondent corporation is an intra-
corporate controversy over which the Labor Arbiter 19. PORTILLO VS. RUDOLF LIETZ, INC. ET
has no jurisdiction. NLRC modified the LA‘s AL. G.R. NO. 196539, OCTOBER 10, 2012
decision. On appeal, the CA affirmed the decision of
NLRC.
Petition for certiorari assailing the Resolutionll dated
Hence, this petition. 14 October 2010 of the Court of Appeals in CA-G.R.
SP No. I 065g I which modified its Decisionl dated
31 March 2009, thus allowing the legal compensation
or petitioner Marietta N. Portillo's (Portillo) monetary
ISSUE: WON petitioner‘s complaint for illegal claims against respondent corporation Rudolf Lietz,
dismissal constitutes an intra-corporate controversy. Inc.'s (Lietz Inc.)ςrνll claim for liquidated damages
arising from Portillos alleged violation of the
"Goodwill Clause" in the employment contract
executed by the parties.

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LABOR STANDARDS LAW

Facts 14 September 2005, Portillo filed a


complaint with the National Labor Relations
In a letter agreement dated 3 May 1991, Commission (NLRC) for non-payment of 1 months
signed by individual respondent Rudolf Lietz salary two (2) months commission, 13th month pay,
(Rudolf) and conformed to by Portillo, the latter was plus moral, exemplary and actual damages and
hired by the former under the following terms and attorney‘s fees. In its position paper, Lietz Inc.
conditions:
admitted liability for Portillos money claims in the
A copy of [Lietz Inc.s] work rules total amount of P110,662.16. However, Lietz Inc.
and policies on personnel is enclosed and an raised the defense of legal compensation: Portillos
inherent part of the terms and conditions of
money claims should be offset against her liability to
employment.
Lietz Inc. for liquidated damages in the amount of
We acknowledge your proposal in ₱869,633.09l for Portillos alleged breach of the
your application specifically to the effect "Goodwill Clause" in the employment contract when
that you will not engage in any other gainful
she became employed with Ed Keller Philippines,
employment by yourself or with any other
company either directly or indirectly without Limited.
written consent of [Lietz Inc.], and we
hereby accept and henceforth consider your On 25 May 2007, Labor Arbiter granted
proposal an undertaking on your part, a Portillos complaint ordering respondents Rudolf
breach of which will render you liable to Lietz, Inc. to pay complainant Marietta N. Portillo the
[Lietz Inc.] for liquidated damages. amount of Php110,662.16 representing her salary and
commissions, including 13th month pay.‚rνll
On her tenth year with Lietz Inc.,
specifically on 1 February 2002, Portillo was Lietz Inc. filed a petition for certiorari
promoted to Sales Representative and received a before the Court of Appeals, alleging grave abuse of
corresponding increase in basic monthly salary and discretion in the labor tribunal‘s rulings. The CA
sales quota. In this regard, Portillo signed another
initially affirmed the labor tribunals, but on motion
letter agreement containing a "Goodwill Clause:"
for reconsideration, modified its previous decision.
Three years thereafter, on 6 June 2005, While upholding the monetary award in favor of
Portillo resigned from Lietz Inc. During her exit
Portillo in the aggregate sum P110, 662.16, the CA
interview, Portillo declared that she intended to
engage in businessa rice dealership, selling rice in allowed legal compensation or set-off of such award
wholesale. On 15 June 2005, Lietz Inc. accepted of monetary claims by her liability to Lietz Inc. for
Portillos resignation and reminded her of the liquidated damages arising from her violation of the
"Goodwill Clause" in the last letter agreement she ―Goodwill Clause‖ in her employment contract with
had signed. Upon receipt thereof, Portillo jotted a them. Portillo‘s motion for reconsideration was
note thereon that the latest contract she had signed in denied. Hence, this petition for certiorari before the
February 2004 did not contain any "Goodwill
SC.
Clause" referred to by Lietz Inc. In response thereto,
Lietz Inc. categorically wrote
Please be informed that the standard
prescription of prohibiting employees from Issue
engaging in business or seeking employment
with organizations that directly or indirectly Whether Portillo‘s money claimes for unpaid salaries
compete against [Lietz Inc.] for three (3) may be offset against Lietz Inc.‘s claim for liquidated
years after resignation remains in effect. damages
Subsequently, Lietz Inc. learned that Portillo
had been hired by Ed Keller Philippines, Limited to
head its Pharma Raw Material Department. Ed Keller
Limited is purportedly a direct competitor of Lietz Ruling
Inc.
Paragraph 4 of Article 217 of the Labor

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LABOR STANDARDS LAW

Code appears to have caused the reliance by the original and exclusive jurisdiction of Labor
Court of Appeals on the "causal connection between Arbiters are those money claims which have some
Portillo‘s monetary claims against respondents and reasonable causal connection with the employer-
the latter‘s claim from liquidated damages against the employee relationship.
former."
In Dai-Chi Electronics Manufacturing
Art. 217. Jurisdiction of Labor Arbiters Corporation v. Villarama, Jr.,νwhich reiterated the
and the Commission. San Miguel ruling and allied jurisprudence, we
pronounced that a non-compete clause, as in the
(a) Except as otherwise provided under this
"Goodwill Clause" referred to in the present case,
code, the Arbiters shall have original and
with a stipulation that a violation thereof makes the
exclusive jurisdiction to hear and decide,
employee liable to his former employer for liquidated
within thirty (30) calendar days after the
damages, refers to post-employment relations of the
submission of the case by the parties for
parties
decision without extension, even in the
absence of stenographic notes, the following
case involving all workers, whether
That the "Goodwill Clause" in this case is
agricultural or nonagricultural
likewise a postemployment issue should brook no
4. Claims for actual, moral, exemplary and argument. There is no dispute as to the cessation of
other forms of damages arising from the Portillos employment with Lietz Inc. She simply
employer-employee relations; (Underscoring claims her unpaid salaries and commissions, which
supplied) Lietz Inc. does not contest. At that juncture, Portillo
was no longer an employee of Lietz Inc. The
Evidently, the Court of Appeals is
"Goodwill Clause" or the "Non-Compete Clause" is a
convinced that the claim for liquidated damages
contractual undertaking effective after the cessation
emanates from the "Goodwill Clause of the
of the employment relationship between the parties.
employment contract and, therefore, is a claim for
In accordance with jurisprudence, breach of the
damages arising from the employeremployee
undertaking is a civil law dispute, not a labor law
relations.
case.
Singapore Airlines Limited v. Pa, we
It is clear, therefore, that while Portillos
established that not all disputes between an employer
claim for unpaid salaries is a money claim that arises
and his employee(s) fall within the jurisdiction of the
out of or in connection with an employer-employee
labor tribunals. We differentiated between
relationship, Lietz Inc.s claim against Portillo for
abandonment per se and the manner and consequent
violation of the goodwill clause is a money claim
effects of such abandonment and ruled that the first,
based on an act done after the cessation of the
is a labor case, while the second, is a civil law case.
employment relationship. And, while the jurisdiction
Stated differently, petitioner seeks over Portillos claim is vested in the labor arbiter, the
protection under the civil laws and claims no jurisdiction over Lietz Inc.s claim rests on the regular
benefits under the Labor Code. The primary relief courts. Thus:
sought is for liquidated damages for breach of a
As it is, petitioner does not ask for
contractual obligation. The other items demanded
any relief under the Labor Code. It merely
are not labor benefits demanded by workers
seeks to recover damages based on the
generally taken cognizance of in labor disputes,
parties' contract of employment as redress
such as payment of wages, overtime compensation
for respondent's breach thereof. Such cause
or separation pay. The items claimed are the
of action is within the realm of Civil Law,
natural consequences flowing from breach of an
and jurisdiction over the controversy
obligation, intrinsically a civil dispute.
belongs to the regular courts. More so must
The Court, therefore, believes and so this be in the present case, what with the
holds that the "money claims of workers" reality that the stipulation refers to the
referred to in paragraph 3 of Article 217 postemployment relations of the parties.
embraces money claims which arise out of or in
The Court of Appeals was misguided. Its conclusion
connection with the employer-employee
was incorrect.
relationship, or some aspect or incident of such
relationship. Put a little differently, that money There is no causal connection between the
claims of workers which now fall within the petitioner employees claim for unpaid wages and the

UNIVERSITY OF SAN CARLOS SCHOOL OF LAW AND GOVERNANCE 33


LABOR STANDARDS LAW

respondent employers claim for damages for the damages, plus attorneys fees, against Ace Navigation
alleged "Goodwill Clause" violation. Portillos claim Co., Inc., Vela International Marine Ltd., and/or
for unpaid salaries did not have anything to do with Rodolfo Pamintuan (petitioners).
her alleged violation of the employment contract as,
in fact, her separation from employment is not The petitioners moved to dismiss the
"rooted" in the alleged contractual violation. She complaint,contending that the labor arbiter had no
resigned from her employment. She was not jurisdiction over the dispute. They argued that
dismissed. Portillos entitlement to the unpaid salaries exclusive original jurisdiction is with the voluntary
is not even contested. Indeed, Lietz Inc.s argument arbitrator or panel of voluntary arbitrators, pursuant
about legal compensation necessarily admits that it to Section 29 of the POEA Standard Employment
owes the money claimed by Portillo. Contract (POEA-SEC), since the parties are covered
Indeed, the application of compensation in by the AMOSUP-TCC or AMOSUP-VELA
this case is effectively barred by Article 113 of the collective bargaining agreement (CBA). Under
Labor Code which prohibits wage deductions except Section 14 of the CBA, a dispute between a seafarer
in three circumstances: and the company shall be settled through the
grievance machinery and mandatory voluntary
ART. 113. Wage Deduction. No employer, arbitration.
in his own behalf or in behalf of any person,
shall make any deduction from wages of his Fernandez opposed the motion. He argued
employees, that inasmuch as his complaint involves a money
except:chanroblesvirtuallawlibrary claim, original and exclusive jurisdiction over the
(a) In cases where the worker is insured with case is vested with the labor arbiter.
his consent by the employer, and the
deduction is to recompense the employer for The Compulsory Arbitration Rulings
the amount paid by him as premium on the
insurance; On December 9, 2008, Labor Arbiter
(b) For union dues, in cases where the right Romelita N. Rioflorido denied the motion to dismiss,
of the worker or his union to check-off has holding that under Section 10 of Republic Act (R.A.)
been recognized by the employer or No. 8042, the Migrant Workers and Overseas
authorized in writing by the individual Filipinos Act of 1995, the labor arbiter has original
worker concerned; and and exclusive jurisdiction over money claims arising
out of an employer-employee relationship or by
(c) In cases where the employer is virtue of any law or contract, notwithstanding any
authorized by law or regulations issued by provision of law to the contrary.
the Secretary of Labor.
WHEREFORE, the petition is The petitioners appealed to the NLRC, but
GRANTED. the labor agency denied the appeal. It agreed with the
labor arbiter that the case involves a money claim and
is within the jurisdiction of the labor arbiter, in
20.)G.R. No. 197309: October 10, 2012 accordance with Section 10 of R.A. No. 8042.
Additionally, it declared that the denial of the motion
ACE NAVIGATION CO., INC., VELA to dismiss is an interlocutory order which is not
INTERNATIONAL MARINE LTD., and/or appealable. Accordingly, it remanded the case to the
RODOLFO labor arbiter for further proceedings. The petitioners
PAMINTUAN, Petitioners, v. TEODORICO moved for reconsideration, but the NLRC denied the
FERNANDEZ, assisted by GLENITA motion, prompting the petitioners to elevate the case
FERNANDEZ,Respondent. to the CA through a petition for certiorari under Rule
65 of the Rules of Court.
Facts:
Issues:
On October 9, 2008, seaman Teodorico
Fernandez (Fernandez), assisted by his wife, Glenita Whether or not the challenge to the labor
Fernandez, filed with the National Labor Relations arbiter‘s denial of their motion to dismiss by way of
Commission (NLRC) a complaint for disability an appeal to the NLRC is proper?(negative)
benefits, with prayer for moral and exemplary

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LABOR STANDARDS LAW

Ruling: the interpretation or implementation of their


Collective Bargaining Agreement and those arising
No appeal from an interlocutory order shall from the interpretation or enforcement of company
be entertained. To discourage frivolous or dilatory personnel policies.
appeals, including those taken from interlocutory
orders, the Commission may censure or cite in Article 261 of the Labor Code (Jurisdiction of
contempt the erring parties and their counsels, or Voluntary Arbitrators or panel of Voluntary
subject them to reasonable fine or penalty. Arbitrators):

In Indiana Aerospace University v. Comm. The Voluntary Arbitrator or panel of


on Higher Educ.,ll the Court declared that "[a]n order Voluntary Arbitrators shall have original and
denying a motion to dismiss is interlocutory"; the exclusive jurisdiction to hear and decide all
proper remedy in this situation is to appeal after a unresolved grievances arising from the interpretation
decision has been rendered. Clearly, the denial of the or implementation of the Collective Bargaining
petitioner‘s motion to dismiss in the present case was Agreement and those arising from the interpretation
an interlocutory order and, therefore, not subject to or enforcement of company personnel policies.
appeal.
Article 262 of the Labor Code (Jurisdiction over
other labor disputes) declares:

The Voluntary Arbitrator or panel of


Voluntary Arbitrators, upon agreement of the parties,
Issues: shall also hear and decide all other labor disputes
including unfair labor practices and bargaining
deadlocks.
Who has the original and exclusive
jurisdiction over Fernandez disability claim the labor
arbiter under Section 10 of R.A. No. 8042, or the Further, the POEA-SEC, which governs the
voluntary arbitration mechanism as prescribed in the employment of Filipino seafarers, provides in its
parties CBA and the POEA-SEC?(latter) Section 29 on Dispute Settlement procedure:

Ruling: In cases of claims and disputes arising from this


employment, the parties covered by a collective
The answer lies in the States labor relations bargaining agreement shall submit the claim or
policy laid down in the Constitution and fleshed out dispute to the original and exclusive jurisdiction of
in the enabling statute, the Labor Code. Section 3, the voluntary arbitrator or panel of voluntary
arbitrators. If the parties are not covered by a
Article XIII (on Social Justice and Human Rights) of
the Constitution declares: collective bargaining agreement, the parties may at
their option submit the claim or dispute to either the
original and exclusive jurisdiction of the National
The State shall promote the principle of Labor Relations Commission (NLRC), pursuant to
shared responsibility between workers and employers Republic Act (RA) 8042 otherwise known as the
and the preferential use of voluntary modes in Migrant Workers and Overseas Filipinos Act of 1995
settling disputes, including conciliation, and shall or to the original and exclusive jurisdiction of the
enforce their mutual compliance therewith to foster voluntary arbitrator or panel of voluntary arbitrators.
industrial peace. If there is no provision as to the voluntary arbitrators
to be appointed by the parties, the same shall be
Article 260 of the Labor Code (Grievance machinery appointed from the accredited voluntary arbitrators of
and voluntary arbitration) states: the National Conciliation and Mediation Board of the
Department of Labor and Employment.
The parties to a Collective Bargaining
Agreement shall include therein provisions that will Under the above-quoted constitutional and
ensure the mutual observance of its terms and legal provisions, the voluntary arbitrator or panel
conditions. They shall establish machinery for the of voluntary arbitrators has original and exclusive
adjustment and resolution of grievances arising from jurisdiction over Fernandezs disability claim.

UNIVERSITY OF SAN CARLOS SCHOOL OF LAW AND GOVERNANCE 35


LABOR STANDARDS LAW

There is no dispute that the claim arose out of its incorporators was Cosare, having been assigned
Fernandezs employment with the petitioners and that 100 shares of stock.
their relationship is covered by a CBA the
AMOSUP/TCC or the AMOSUP-VELA CBA. The In October 2001, Cosare was promoted to the
CBA provides for a grievance procedure for the position of Assistant Vice President for Sales and
resolution of grievances or disputes which occur
Head of the Technical Coordination. In 2009,
during the employment relationship and, like the
grievance machinery created under Article 261 of the however, Cosare was asked to tender his resignation
Labor Code, it is a two-tiered mechanism, with in exchange for ―financial assistance‖ in t h e a m o
voluntary arbitration as the last step. u n t o f ₱300,000.00. He refused to comply with the
directive.
Consistent with this finding, Fernandezs
contention that his complaint for disability benefits is Thereafter, Cosare received a memo charging him of
a money claim that falls within the original and serious misconduct and willful breach of trust and
exclusive jurisdiction of the labor arbiter under was, thus, suspended from having access to any and
Section 10 of R.A. No. 8042 is untenable. We all company files/records and use of company assets.
likewise reject his argument that he never referred his
He was likewise barred from entering the company
claim to the grievance machinery (so that no
unresolved grievance exists as required under Article premises and prevented from retrieving his personal
261 of the Labor Code), and that the parties to the belongings. Aggrieved, Cosare filed a labor
case are not the union and the employer.ll Needless complaint against Broadcom claiming that he was
to state, no such distinction exists in the parties CBA constructively dismissed from his employment.
and the POEA-SEC.
The Labor Arbiter dismissed the complaint on the
It bears stressing at this point that we are ground that Cosare failed to establish that he was
upholding the jurisdiction of the voluntary arbitrator constructively dismissed. On appeal, the NLRC
or panel of voluntary arbitrators over the present reversed the Labor Arbiter‘s decision. Broadcom
dispute, not only because of the clear language of the
assailed the NLRC‘s ruling, raising the new argument
parties CBA on the matter; more importantly, we so
uphold the voluntary arbitrators jurisdiction, in that the case involved an intra-corporate controversy
recognition of the States express preference for and thus, within the jurisdiction of the RTC and not
voluntary modes of dispute settlement, such as of the Labor Arbiter.
conciliation and voluntary arbitration as expressed in
the Constitution, the law and the rules. The CA granted Broadcom‘s petition and agreed that
the case involved an intra-corporate controversy
It is settled that when the parties have which, pursuant to Presidential Decree No. 902-A, as
validly agreed on a procedure for resolving amended, was within the exclusive jurisdiction of the
grievances and to submit a dispute to voluntary RTC. The CA found that Cosare was indeed a
arbitration then that procedure should be strictly
stockholder of Broadcom, and that he was listed as
observed.
one of the directors. Moreover, he held the position
of AVP for Sales which is listed as a corporate office.
Hence, aggrieved by the decision of the CA, he raised
it to the SC.

21 G .R. No. 201298 February 5, 2014 ISSUE:

Cosare vs. Broadcom Asia Inc. Whether or not this involved a n intra-corporate
controversy.
FACTS:
RULING:
Broadcom Asia Inc. (Broadcom) is engaged in the
business of selling b r o a d c a s t equipment needed No.
by television networks and production houses. One of

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LABOR STANDARDS LAW

The Supreme Court held that the mere fact the Third Aircraft Generation Squadron (3 AGS) at
that an employee was a stockholder and an officer at Clark Air Base, Pampanga.
the time he was illegally dismissed will not
necessarily make the case an intra-corporate dispute. On August 10, 1988, 3 AGS terminated the contract
for the maintenance and upkeep of the dormitories
The Supreme Court reversed the CA and with the De Guzman Custodial Services. The
explained the definition of corporate officers for the employees thereof, including private respondents,
were allowed to continue working for 3 AGS. It was
purpose of identifying an intra-corporate controversy. left to the new contractor, the JAC Maintenance
Citing Garcia v. Eastern Telecommunications Services owned by Joselito Cunanan, to decide
Philippines Inc. (G.R. No. 173115, April 16, 2009), whether it would retain their services.
the Court said that corporate officers, in the context
of PD 902-A, are those officers of the corporation Joselito Cunanan, however, chose to bring in his own
who are given that character by the Corporation Code workers. As a result, the workers of the De Guzman
or by the corporation‘s by-laws. The Court further Custodial Services were requested to surrender their
held that an ―office‖ is created by the charter of the base passes to Lt. Col. Frankhauser or to petitioner.
corporation and the officer is elected by the directors
On August 12, 1988, private respondents filed a
and stockholders of the corporation.
complaint with the Regional Arbitration Branch No.
III of the NLRC, San Fernando, Pampanga, against
The Court explained that two circumstances
petitioner, Lt. Col. Frankhauser, and Cunanan for
must concur in order for an individual to be illegal dismissal and underpayment of wages. On
considered a corporate officer, namely: (1) the September 9, 1988, private respondents amended
creation of the position is under the corporation‘s by- their complaint and added therein claims for
laws; and (2) the election of the officer is by the emergency cost of living allowance, thirteenth-month
directors or stockholders. It is only when the officer pay, service incentive leave pay and holiday
claiming to have been illegally dismissed is classified premiums.
as such corporate officer that the issue is deemed an
Petitioner and Lt. Col. Frankhauser failed to answer
intra-corporate dispute which falls within the
the complaint and to appear at the hearings. They,
jurisdiction of the trial courts. likewise, failed to submit their position paper, which
the Labor Arbiter deemed a waiver on their part to do
Broadcom failed to sufficiently establish so. The case was therefore submitted for decision on
that the position of AVP for Sales was created by the basis of private respondents' position paper and
virtue of an act of its board of directors, and that supporting documents.
Cosare was specifically elected or appointed to such
position by the directors. Considering that the On November 21, 1988, the Labor Arbiter rendered a
dispute particularly relates to Cosare‘s rights and decision granting all the claims of private
obligations as a regular officer of Broadcom, instead respondents. He found both Lt. Col. Frankhauser and
petitioner "guilty of illegal dismissal" and ordered
of a stockholder of the corporation, the controversy
them to reinstate private respondents with full back
cannot be deemed intra-corporate, the Court wages, or if that is no longer possible, to pay private
concluded respondents' separation pay.

Petitioner appealed to the NLRC claiming that the


Labor Arbiter never acquired jurisdiction over her
22. T/SGP Larkins vs. NLRC, G.R. No. 92432, person because no summons or copies of the
February 23, 1995 complaints, both original and amended, were ever
served on her.
Facts:
Issue:
Petitioner was a member of the United States Air
Force (USAF) assigned to oversee the dormitories of Whether or not Labor Arbiter acquired jurisdiction
over petitioners‘ person because no summons or

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LABOR STANDARDS LAW

copies of the complaints, both original and amended, Lastly, notices of hearing are not summonses. It is
were ever served. basic that the Labor Arbiter cannot acquire
jurisdiction over the person without being served
with summons. In the absence of service of summons
or a valid waiver thereof, the hearings and judgment
rendered by the Labor Arbiter are null and void
Ruling:
(cf. Vda. de Macoy v. Court of Appeals,supra.)
Labor Arbiter acquired no jurisdiction over the case
Petitioner, in the case at bench, appealed to the
and the person of petitioner.
NLRC and participated in the oral argument before
the said body. This, however, does not constitute a
Firstly, the "Agreement Between the Republic of the waiver of the lack of summons and a voluntary
Philippines and the United States of America submission of her person to the jurisdiction of the
Concerning Military Bases," otherwise known as the Labor Arbiter. If an appearance before the NLRC is
R.P. — U.S. Military Bases Agreement, governed the precisely to question the jurisdiction of the said
rights, duties, authority, and the exercise thereof by agency over the person of the defendant, then this
Philippine and American nationals inside the U.S. appearance is not equivalent to service of summons
military bases in the country. (De los Santos v. Montera, 221 SCRA 15 [1993]).

Article XIV is the governing procedure for service of The petition for certiorari is GRANTED.
summons on persons inside U.S. military bases.

Summonses and other processes issued by Philippine


courts and administrative agencies for United States 23. UERM Memorial Medical Center vs. NLRC,
Armed Forces personnel within any U.S. base in the
G.R. No. 110419, March 3, 1997
Philippines could be served therein only with the
permission of the Base Commander. If he withholds
giving his permission, he should instead designate
another person to serve the process, and obtain the
server's affidavit for filing with the appropriate court. FACTS:

On 12 April 1988, Policy Instruction No. 54 was


Respondent Labor Arbiter did not follow said
issued by the SOLE, which reads:
procedure. He instead, addressed the summons to Lt.
Col. Frankhauser and not the Base Commander.

Secondly, under Base Labor Agreement of May 27, ―the personnel in subject hospitals and clinics are
1968, any dispute or disagreement between the
entitled to a full weekly wage of seven days if they
United States Armed Forces and Filipino employees
should be settled under grievance or labor relations have completed the 40-hour/5-day workweek in any
procedures established therein (Art. II) or by the given workweek.‖
arbitration process provided in the Romualdez-
Bosworth Memorandum of Agreement dated
September 5, 1985. If no agreement was reached or if
the grievance procedure failed, the dispute was Petitioners challenged the validity of said Policy
appealable by either party to a Joint Labor Instruction and refused to pay the salaries of the
Committee established in Article III of the Base private respondents for Saturdays and Sundays.
Labor Agreement.

Therefore, no jurisdiction was ever acquired by the


Labor Arbiter over the case and the person of Within the reglementary period for appeal, the
petitioner and the judgment rendered is null and void petitioners filed their Notice and Memorandum of
(Filmerco Commercial Co. v. Intermediate Appellate Appeal with a Real Estate Bond consisting of land
Court,supra.; Sy v. Navarro, 81 SCRA 458 [1978]). and various improvements therein worth
P102,345,650.

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LABOR STANDARDS LAW

Relations Commission (246 SCRA 801 [1995]), we


held: "The intention of the lawmakers to make the
The private respondents moved to dismiss the appeal bond an indispensable requisite for the perfection of
on the ground that Article 223 of the Labor Code, as an appeal by the employer is underscored by the
amended, requires the posting of a cash or surety provision that an appeal by the employer may be
bond. The NLRC directed petitioners to post a cash perfected "only upon the posting of a cash or surety
or surety bond of P17,082,448.56 with a warning that bond." The word "only" makes it perfectly clear, that
failure to do so would cause the dismissal of the the lawmakers intended the posting of a cash or
appeal. surety bond by the employer to be the exclusive
means by which an employer's appeal may be
perfected. The requirement is intended to discourage
The NLRC directed petitioners to post a cash or employers from using an appeal to delay, or even
surety bond of P17,082,448.56 with a warning that evade, their obligation to satisfy their employees' just
failure to do so would cause the dismissal of the and lawful claims. Considering, however, that the
appeal. current policy is not to strictly follow technical rules
but rather to take into account the spirit and intention
of the Labor Code, it would be prudent for us to look
into the merits of the case, especially since petitioner
ISSUE: whether or not in perfecting an appeal to the disputes the allegation that private respondent was
National Labor Relations Commission (NLRC) a illegally dismissed."
property bond is excluded by the two forms of appeal
bond — cash or surety — as enumerated in Article
223 of the Labor Code.
In the case at bar, the judgment involved is more than
P17 million and its precipitate execution can
adversely affect the existence of petitioner medical
HELD: The applicable law is Article 223 of the center. Likewise, the issues involved are not
Labor Code, as amended by Republic Act No. 6715, insignificant and they deserve a full discourse by our
which provides: "In case of a judgment involving a quasi-judicial and judicial authorities. We are also
monetary award, an appeal by the employer may be confident that the real property bond posted by the
perfected only upon the posting of a cash or surety petitioners sufficiently protects the interests of
bond issued by a reputable bonding company duly private respondents should they finally prevail. It is
accredited by the Commission in the amount not disputed that the real property offered by
equivalent to the monetary award in the judgment petitioners is worth P102,345,650. The judgment in
appealed from." We have given a liberal favor of private respondent is only a little more than
interpretation to this provision. In YBL (Your Bus P17 million.
Line) v. NLRC, 190 SCRA 164 (1990) we ruled: ". . .
that while Article 223 of the Labor Code, as amended The case is remanded to the NLRC for continuation
by Republic Act No. 6715, requiring a cash or surety of proceedings.
bond in the amount equivalent to the monetary award
in the judgment appealed from for the appeal to be
perfected, may be considered a jurisdictional
24. PHIL. TRANCO SERVICES VS. NLRC
requirement, nevertheless, adhering to the principle
April 1, 1998, G.R. No. 124100
that substantial justice is better served by allowing
the appeal on the merits threshed out by the NLRC, Facts:
the Court finds and so holds that the foregoing Nieva was employed as a driver by
requirement of the law should be given a liberal petitioner assigned to the Legaspi City-Pasay City
interpretation." Then too, in Oriental Mindoro route. Nieva sideswiped an owner-type jeep and a
Electric Cooperative, Inc. v. National Labor criminal complaint was filed against him. Philtranco
posted a bail bond for Nieva. After having been

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LABOR STANDARDS LAW

suspended, he was told to wait until his case was As a result, Amelita removed the authority from
settled. The case was finally settled he was requested respondent Aricayos and his wife from taking part in
to file a new application as he was no longer managing St. Martin‘s operations.
considered an employee of Philtranco, allegedly for Aggrieved, respondent Aricayos accused St.
being absent without leave from October 19 to Martin of his illegal dismissal as Operations Manager
November 20, 1989. of the company. He believed that the cause of his
Nieva filed a complaint for illegal dismissal termination was Amelita‘s suspicion that he pocketed
and demanded for 13th month pay with the NLRC‘s PhP 38,000.00 which was set aside for payment to
National Capital Region Arbitration Branch in the BIR of St. Martin‘s valued added taxes.On
Manila. Philtranco filed a motion to dismiss on the October 25, 1996, the Labor Arbiter rendered a
ground of improper venue, stating that the complaint Decision, in favor of petitioner declaring that his
should have been lodged with the NLRC‘s Regional office had no jurisdiction over the case.
Arbitration Branch in Legaspi City, not only because NLRC issued a Resolution annulling the
Nieva was a resident thereof, but also because the Arbiter‘s Decision and remanded the case to him for
latter was hired, assigned, and based in Legaspi City. appropriate proceedings, to determine the factual
issue of the existence of employer-employee
Issue: relationship between the parties. When its motion for
Whether or not NLRC‘s NCR Arbitration reconsideration was rejected by the NLRC, petitioner
Branch in Manila was a proper venue for the filing of filed a petition for certiorari under Rule 65 before this
Nieva‘s complaints for illegal dismissal Court, docketed as G.R. No. 130866.
On September 16, 1998, this Court through
Ruling: Justice Jose Vitug, rendered the landmark Decision in
The filing of the complaint with the National this case then docketed as G.R. No. 130866, holding
Capital Region Arbitration Branch was proper, for the first time that all petitions for certiorari under
Manila being considered as part of Nieva‘s Rule 65 assailing the decisions of the NLRC should
workplace by reason of his plying the Legaspi City- henceforth be filed with the CA
Pasay City route. In fact, Section 1(a), Rule IV of the
New Rules of Procedure of the NLRC is merely Issue: WON a petitioner can file his petition for
permissive. Provisions on venue are intended to certiorari under Rule65 to assail the decision of a
assure convenience for the employee and his lower court like NLRC.
witnesses and to promote the ends of justice provided
that it is not oppressive to the employer. Ruling:
A petition for certiorari under Rule65 must
first be filed at the Court of Appeals. Said court has a
concurrent jurisdiction on petitions for certiorari,
mandamus, prohibitions. This is in consonance with
25 St. Martin Funeral Homes vs. NLRC, G.R. No. the hierarchy of courts.
142351, Nov. 22, 2006
Facts:
The owner of petitioner St. Martin Funeral 26. Ludo & Luym Corp., vs. Saornido, G.R. No.
Homes, Inc. (St. Martin) is AmelitaMalabed. Prior to 140960, January 20, 2003
January 1996, Amelita‘s mother managed the funeral
parlor. In 1995, Aricayos was granted financial
assistance by Amelita‘s mother. As a sign of
appreciation, respondent extended assistance in Facts:
managing St. Martin without compensation and no
written employment contract between Amelita‘s Petitioner LUDO & LUYM CORPORATION
mother and respondent Aricayos; furthermore, (LUDO for brevity) is a domestic corporation engaged
respondent Aricayos was not even listed as an
in the manufacture of coconut oil, corn starch, glucose
employee in the Company‘s payroll.
When Amelita‘s mother died in January and related products. It operates a manufacturing
1996, Amelita took over as manager of St. Martin. plant located at Tupas Street, Cebu City and a wharf
Much to her chagrin, she found out that St. Martin where raw materials and finished products are
had arrearages in the payment of BIR taxes and other shipped out
fees owing to the government, but company records
tended to show that payments were made thereon.

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LABOR STANDARDS LAW

In the course of its business operations, LUDO AND SIXTY ONE CENTAVOS
engaged the arrastre services of Cresencio Lu (P5,707,261.61)
Arrastre Services (CLAS) for the loading and
unloading of its finished products at the
wharf. Accordingly, several arrastre workers were petitioner raises the following issues:
deployed by CLAS to perform the services needed by  WHETHER OR NOT BENEFITS
LUDO CONSISTING OF SALARY
INCREASES, VACATION
These arrastre workers were subsequently hired, on LEAVE AND SICK LEAVE
different dates, as regular rank-and-file employees of BENEFITS FOR THE YEARS
LUDO every time the latter needed additional 1977 TO 1987 ARE ALREADY
manpower services. Said employees thereafter joined BARRED BY PRESCRIPTION
respondent union, the LUDO Employees Union WHEN PRIVATE
(LEU), which acted as the exclusive bargaining agent RESPONDENTS FILED THEIR
of the rank-and-file employees. CASE IN JANUARY 1999
On April 13, 1992, respondent union entered into a
collective bargaining agreement with LUDO which
provides certain benefits to the employees, the
amount of which vary according to the length of  Petitioner contends that the appellate court
service rendered by the availing employee. gravely erred when it upheld the award of
the union requested LUDO to include in its members‘ benefits which were beyond the terms of
period of service the time during which they rendered submission agreement. Petitioner asserts that
arrastre services to LUDO through the CLAS so that the arbitrator must confine its adjudication to
they could get higher benefits. LUDO failed to act those issues submitted by the parties for
on the request. Thus, the matter was submitted for arbitration, which in this case is the sole issue
voluntary arbitration. of the date of regularization of the
workers. Hence, the award of benefits by the
The parties accordingly executed a submission arbitrator was done in excess of jurisdiction
agreement raising the sole issue of the date of  Respondents, for their part, aver that the
regularization of the workers for resolution by the three-year prescriptive period is reckoned only
Voluntary Arbitrator. from the time the obligor declares his refusal to
decision dated April 18, 1997, the Voluntary comply with his obligation in clear and
Arbitrator ruled that: (1) the respondent employees unequivocal terms. In this case, respondents
were engaged in activities necessary and desirable to maintain that LUDO merely promised to review
the business of petitioner, and (2) CLAS is a labor- the company records in response to respondents‘
only contractor of petitioner.[2] It disposed of the case demand for adjustment in the date of their
thus: regularization without making a categorical
statement of refusal
 the 214 complainants, as listed in the
Ruling
Annex A, shall be considered regular
employees of the respondents six (6)  we held in San Jose vs. NLRC, that the
months from the first day of service at jurisdiction of the Labor Arbiter and the
CLAS; Voluntary Arbitrator or Panel of Voluntary
Arbitrators over the cases enumerated in the
 the said complainants, being entitled to Labor Code, Articles 217, 261 and 262, can
the CBA benefits during the regular possibly include money claims in one form
employment, are awarded a) sick leave, or another.] Comparatively, in Reformist
b) vacation leave & c) annual wage and Union of R.B. Liner, Inc. vs. NLRC
salary increases during such period in compulsory arbitration has been defined
the amount of FIVE MILLION SEVEN both as ―the process of settlement of labor
disputes by a government agency which has
HUNDRED SEVEN THOUSAND
the authority to investigate and to make an
TWO HUNDRED SIXTY ONE PESOS award which is binding on all the parties,
and as a mode of arbitration where the

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LABOR STANDARDS LAW

parties are compelled to accept the In April 1998, 712 employees filed complaints for
resolution of their dispute through illegal dismissal and for payment of benefits against
arbitration by a third party petitioners, before the NLRC. The complainants
 In general, the arbitrator is expected to averred that they were regular employees of Hanjin
decide those questions expressly stated and
and that they were separated from employment
limited in the submission
agreement. However, since arbitration is the without any lawful or just cause. Only 521 of the
final resort for the adjudication of disputes, complainants affixed their signatures in the
the arbitrator can assume that he has the complaints.
power to make a final settlement
 While the submission agreement mentioned Petitioners alleged that the complainants were mere
only the determination of the date or project employees in its Bohol Irrigation Project and
regularization, law and jurisprudence give that 2 of the workers were charged with qualified
the voluntary arbitrator enough leeway of theft before the RTC. Some of the complainants had
authority as well as adequate prerogative to
already migrated to USA or had died, while 117 of
accomplish the reason for which the law on
voluntary arbitration was created – speedy them were still under the employ of Hanjin.
labor justice. Petitioner stated that some of the complainants had
 Since the parties had continued their voluntarily resigned; 14 were absent without prior
negotiations even after the matter was raised approved leave; 15 had signed a Motion to Withdraw
before the Grievance Procedure and the from the complaint; and many of the complainants
voluntary arbitration, the respondents had were separated on account of the completion of the
not refused to comply with their duty. They
project. However, petitioners failed to append any
just wanted the complainants to present
some proofs. The complainant‘s cause of document to support their claim.
action had not therefore accrued
yet. Besides, in the earlier voluntary Labor Arbiter rendered judgment in favor of the 428
arbitration case aforementioned involving complainants, granting separation pay and attorney's
exactly the same issue and employees fees to each of them stating that the complainants
similarly situated as the complainants‘, the were regular employees of petitioner and their claims
same defense was raised and dismissed by for underpayment, holiday pay, premium pay for
Honorable Thelma Jordan, Voluntary
holiday and rest day, 13th month pay, and service
Arbitrator.
incentive leave would be computed after sufficient
data were made available. Petitioners appealed the
decision to the NLRC, which affirmed with
27. Hansin Engineering & Construction vs. CA, modification the Labor Arbiter's ruling. Petitioners
G.R. No. 165910, April 10, 2006 filed a Motion for the Reconsideration of the decision
(with a motion to conduct clarificatory hearings)
Facts:

Hanjin is a construction company that had been NLRC partially granted petitioners' motion.
contracted by the Philippine Government for the Unsatisfied, petitioners filed a Petition for Certiorari
construction of various foreign-financed projects. under Rule 65 of the Revised Rules of Court in the
Hanjin and the Philippine Government entered into CA. CA dismissed the petition and affirmed the
contracts for the construction of the Malinao Dam at NLRC's ruling that the dismissed employees were
Pilar, Bohol, with a projected completion period of regular employees. The CA stressed that petitioners
1,050 calendar days, including main canal and lateral failed to refute the claim of the respondents that they
projects for 750 days. From August 1995 to August were regular employees. Petitioners moved to
1996, Hanjin contracted the services of 712 reconsider the decision, which the CA denied.
carpenters, masons, truck drivers, helpers, laborers,
heavy equipment operators, leadmen, engineers,
steelmen, mechanics, electricians and others.
Issue: WON respondents are project employees.

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Complainants herein were, therefore, non-project


employees, but regular employees. Admittedly, being
Ruling: a duly licensed contractor firm in the Philippines,
respondent is the awardee of several construction
While respondent alleged that "complainants all
projects and in many occasions it has been given the
signed a contract of employment at the time they
priority in the awarding of subsequent projects.
were hired indicating therein the particular project
they will be working on, the period and other In the light of the above facts and circumstances, the
conditions provided in their contracts which respondent's main defense that completion of the
complainants fully knew and understood," nowhere project worked on by the complainants constitute a
in the records can the said contracts be found. valid cause of termination is unsustainable. To repeat,
Moreover, let it be stressed that under DO No. 19, there is no substantial evidence on record to sustain
Series of 1993 on project employment, six (6) this contention. The mere allegation of the
indicators are enumerated therein and one of which is respondents that under their employment contracts
that: "(T)he termination of his employment in the the complainants were made to understand that they
particular project/undertaking is reported to the were project employees is definitely not persuasive or
Department of Labor and Employment (DOLE) unworthy of credence. The best evidence of which
Regional Office having jurisdiction over the would have been the alleged contracts. These
workplace within 30 days following the date of his employees signed duly notarized waivers/quitclaims
separation from work x x x." and who did not recant later. In the absence of
evidence showing the contrary, said quitclaims were
In this particular case, the records do not show that a
executed voluntarily and without any force or
similar report was ever made by respondent to the
intimidation.
Department of Labor and Employment. Such failure
of respondent employer to report to the nearest Petitioners submitted to the NLRC dubious machine
employment office of the Department of Labor, the copies of only some of respondents? contracts,
termination of the workers it claimed as project including alleged employment termination reports
employees at the time it completed the project, is submitted to the DOLE. The NLRC found the
proof that complainants were not project employees. contracts barren of probative weight and utterly
insufficient to buttress the contention of petitioners
The principal test for determining whether particular
that respondents were only project employees.
employees are properly characterized as project
employees is: whether or not the project employees Contrary to the representation of respondent's
were assigned to carry out a specific project or counsel, the original copies of the reports made to
undertaking, the duration of which were specified at DOLE were never produced and submitted to this
the time the employees were engaged for that project. Commission. Neither were they presented for
Predetermination of the duration or period of project comparison with the machine copies. These machine
employment is essential in resolving whether one is a copies were not also certified as true copies by the
project employee or not. In the instant case, the DOLE.
completion of the project for which the complainants
were hired was not determined at the start of their The actual continuous employment of complainants
employment, there being no substantial proof thereof. by respondent Hanjin since 1991 until 1995
The fact that complainants had rendered more than overcomes the piecemeal "appointments" covering
one year of service at the time of their dismissal and for periods of six (6) months or less. From these short
there being no substantial evidence to support that term but repeated "appointments," it is apparent that
they were engaged to work on a specific project or the periods have been imposed to preclude the
undertaking, overturns respondent‘s allegation that acquisition of tenurial security by the employee and
complainants were project employees hired for a which kind of employment contracts should be
specific fixed project for a limited period of time. disregarded for being contrary to public policy.

UNIVERSITY OF SAN CARLOS SCHOOL OF LAW AND GOVERNANCE 43


LABOR STANDARDS LAW

The appellate court, the NLRC and the Labor Arbiter Thereafter, the parties executed a Compromise
are thus one in finding that respondents were not Agreement dated July 9, 2001, where PJI undertook
project employees, and in sustaining respondents'
to reinstate the 31 complainant-employees effective
claim of illegal dismissal due to petitioners? failure to
July 1, 2001 without loss of seniority rights and
adduce contrary evidence. Well-settled is the rule that
benefits; 17 of them who were previously retrenched
findings of fact of quasi-judicial agencies, like the
NLRC, are accorded not only respect but at times were agreed to be given full and complete payment of
even finality if such findings are supported by their respective monetary claims, while 14 others
substantial evidence. Such findings of facts can only would be paid their monetary claims minus what they
be set aside upon showing of grave abuse of received by way of separation pay. The compromise
discretion, fraud or error of law, none of which have agreement was submitted to the NLRC for approval.
been shown in this case. The compromise agreement was approved and was
deemed closed and terminated.
28. ) G.R. No. 166421
The Union filed another Notice of Strike on July 1,
PHILIPPINE JOURNALISTS, INC., BOBBY 2002 claiming that 29 employees where illegally
DELA CRUZ, ARNOLD BANARES and ATTY. dismissed. After the retrenchment program was
RUBY RUIZ BRUNO,petitioners, implemented, the members-employees who
vs. continued working were made to sign 5 month
NATIONAL LABOR RELATIONS
contract and was threatened to be dismissed if they
COMMISSION, HON. COMMS. LOURDES
JAVIER, TITO GENILO and ERNESTO refused to conform to 40% to 50% salary deduction.
VERCELES, JOURNAL EMPLOYEES UNION,
and THE COURT OF APPEALS, respondents The NLRC forthwith issued another Resolution on
July 25, 2002, declaring that the Clarificatory Motion
The Philippine Journalists, Inc. (PJI) is a domestic of complainants Floro Andrin, Jr. and Jazen M.
corporation engaged in the publication and sale of Jilhani had been mooted by the compromise
newspapers and magazines. The exclusive bargaining agreement as they appeared to be included in
agent of all the rank-and-file employees in the paragraph 2.c and paragraph 2.d, respectively thereof.
company is the Journal Employees Union (Union for As to the seven others who had filed a motion for
brevity).
clarification, the NLRC held that they should have
filed individual affidavits to establish their claims or
Sometime in April 2005, the Union filed a notice of
moved to consolidate their cases with the certified
strike before the National Conciliation and Mediation
case. Thus, the NLRC granted the computation of
Board (NCMB), claiming that PJI was guilty of
their benefits as shown in the individual affidavits of
unfair labor practice. PJI was then going to
the complainants. However, as to the prayer to
implement a retrenchment program due to "over-
declare the Union guilty of unfair labor practice, to
staffing or bloated work force and continuing actual
continue with the CBA negotiation and to pay moral
losses sustained by the company for the past three
and exemplary damages, the NLRC ruled that there
years resulting in negative stockholders equity
was no sufficient factual and legal basis to modify its
of P127.0 million.
resolution. Thus, the compromise agreement was
After submitting their respective papers, in its approved and NCMB-NCR-NS-03-087-00 was
resolution dated May 31, 2001, the NLRC declared deemed closed and terminated.
that the 31 complainants were illegally dismissed and
In its Resolution dated July 31, 2003, the NLRC
that there was no basis for the petitioners
ruled that the complainants were not illegally
retrenchment program thus it ordered their
dismissed. The May 31, 2001 Resolution declaring
reinstatement to their former position without loss of
the retrenchment program illegal did not attain
seniority rights and other other benefits, with
finality as "it had been academically mooted by the
payment of unpaid salaries, bonuses and backwages.
compromise agreement entered into between both

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LABOR STANDARDS LAW

parties on July 9, 2001." According to the agreed upon by the parties, in conformity with the
Commission, it was on the basis of this agreement basic policy of the State "to promote and emphasize
that the July 25, 2002 Resolution which declared the the primacy of free collective bargaining and
case closed and terminated was issued. Thus, the negotiations, including voluntary arbitration,
May 31, 2001 Resolution could not be made the basis mediation and conciliation, as modes of settling labor
to justify the alleged continued employment or industrial disputes.
regularity of the 29 complainants subsequent to their
retrenchment. ART. 227 Compromise Agreements. – Any
compromise settlement, including those involving
The NLRC also declared that by their separate acts of labor standard laws, voluntarily agreed upon by the
entering into fixed-term employment contracts with parties with the assistance of the Bureau or the
petitioner after their separation from employment by regional office of the Department of Labor, shall be
virtue of retrenchment, they are deemed to have final and binding upon the parties. The National
admitted the validity of their separation from Labor Relations Commission or any court shall not
employment and are thus estopped from questioning assume jurisdiction over issues involved therein
it. The NLRC dismissed the case for lack of merit, except in case of noncompliance thereof or if there is
but directed the company to "give preference to the prima facie evidence that the settlement was obtained
separated 29 complainants should they apply for re- through fraud, misrepresentation, or coercion.
employment."
Thus, a judgment rendered in accordance with a
In its Decision dated August 17, 2004, the appellate compromise agreement is not appealable, and is
court held that the NLRC gravely abused its immediately executory unless a motion is filed to set
discretion in ruling for PJI. The compromise aside the agreement on the ground of fraud, mistake,
agreement referred only to the award given by the or duress, in which case an appeal may be taken
NLRC to the complainants in the said case, that against the order denying the motion. Under Article
is, the obligation of the employer to the 2037 of the Civil Code, "a compromise has upon the
complainants. The CA also ruled that the dismissed parties the effect and authority of res judicata," even
employees were not barred from pursuing their when effected without judicial approval; and under
monetary claims despite the fact that they had the principle of res judicata, an issue which had
accepted their separation pay and signed their already been laid to rest by the parties themselves can
quitclaims. no longer be relitigated.

Issue: Adjective law governing judicial compromises


annunciate that once approved by the court, a judicial
The primary issue before the Court is whether an
NLRC Resolution, which includes a pronouncement compromise is not appealable and it thereby becomes
that the members of a union had been illegally immediately executory but this rule must be
dismissed, is abandoned or rendered ―moot and understood to refer and apply only to those who are
academic‖ by a compromise agreement subsequently bound by the compromise and, on the assumption
entered into between the dismissed employees and that they are the only parties to the case, the litigation
the employer and if such a compromise agreement comes to an end except only as regards to its
constitutes res judicata to a new complaint later filed compliance and the fulfillment by the parties of their
by other union members-employees, not parties to the respective obligations thereunder. The reason for the
agreement, who likewise claim to have been illegally
rule, said the Court in Domingo v. Court of Appeals
dismissed.
[325 Phil. 469], is that when both parties so enter
Held: into the agreement to put a close to a pending
litigation between them and ask that a decision be
Article 227 of the Labor Code of the Philippines rendered in conformity therewith, it would only be
authorizes compromise agreements voluntarily "natural to presume that such action constitutes an

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LABOR STANDARDS LAW

implicit waiver of the right to appeal" against that Clearly, the situation in the case at bar is one of the
decision. The order approving the compromise things the provision on security of tenure seeks to
agreement thus becomes a final act, and it forms part prevent.
and parcel of the judgment that can be enforced by a
writ of execution unless otherwise enjoined by a Lastly, it could not be said that the employees in this
restraining order. case are barred from pursuing their claims because of
their acceptance of separation pay and their signing
Thus, contrary to the allegation of petitioners, the of quitclaims. It is settled that ―quitclaims, waivers
execution and subsequent approval by the NLRC of and/or complete releases executed by employees do
the agreement forged between it and the respondent not stop them from pursuing their claims – if there is
Union did not render the NLRC resolution a showing of undue pressure or duress. The basic
ineffectual, nor rendered it "moot and academic." reason for this is that such quitclaims, waivers and/or
The agreement becomes part of the judgment of the complete releases being figuratively exacted through
court or tribunal, and as a logical consequence, there the barrel of a gun, are against public policy and
is an implicit waiver of the right to appeal. therefore null and void ab initio (ACD Investigation
Security Agency, Inc. v. Pablo D. Daquera, G.R. No.
In any event, the compromise agreement cannot bind 147473, March 30, 2004).‖ In the case at bar, the
a party who did not voluntarily take part in the employees were faced with impending termination.
settlement itself and gave specific individual consent. As such, it was but natural for them to accept
It must be remembered that a compromise agreement whatever monetary benefits that they could get.
is also a contract; it requires the consent of the
parties, and it is only then that the agreement may be
29. Balagtas Multi Purpose Coop. vs. CA, G.R.
considered as voluntarily entered into. No. 159268, Oct. 27, 2006

A careful perusal of the wordings of the compromise Facts:


agreement will show that the parties agreed that the Balagtas Multi-Purpose Cooperative, Inc. is
only issue to be resolved was the question of the a duly organized and existing cooperative under the
monetary claim of several employees. laws of the Philippines. Sometime in April 1991,
Balagtas hired Josefina G. Hipolito-Herrero, as part
time manager in its office. Subsequently, Josefina
The findings of the appellate court are in accord with
made known of her intention to take a leave of
the evidence on record, and we note with approval
absence. Her proposal was immediately approved.
the following pronouncement:
However, after the lapse of her leave of absence,
Josefina did not report for work anymore. Later on,
Respondents alleged that it hired contractual she filed her resignation.
employees majority of whom were those retrenched Consequently Josefina filed a complaint
because of the increased but uncertain demand for its with the Provincial Office of the Department of
publications. Respondent did this almost immediately Labor in Malolos, Bulacan for illegal dismissal, and
after its alleged retrenchment program. Another non-payment of 13th month pay or Christmas Bonus.
telling feature in the scheme of respondent is the fact She also prayed for reinstatement and paid
backwages as well as moral damages.
that these contractual employees were given contracts
The Labor Arbiter rendered judgment in
of five (5) month durations and thereafter, were
favor of complainant and against respondents and
offered regular employment with salaries lower than ordered the latter to pay the former 13th month pay,
their previous salaries. The Labor Code explicitly backwages and separation pay. Aggrieved, herein
prohibits the diminution of employee‘s benefits. petitioners appealed the decision to NLRC but failed

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LABOR STANDARDS LAW

to post either a cash or surety bond as required by cited by petitioners cannot be taken in
Article 223 of the Labor Code. They filed a isolation and must be interpreted in relation
manifestation and motion instead, stating, that under to the Cooperative Code in its entirety.
Republic Act No. 6938, Article 62(7) of the Exceptions are to be strictly but reasonably
Cooperative Code of the Philippines, petitioners are construed; they extend only so far as their
exempt from putting up a bond in an appeal from the language warrants, and all doubts should be
decision of the inferior court. NLRC ordered resolved in favor of the general provision
respondents to post a cash or surety bond in the rather than the exceptions.
amount of P218,000.00, within 10 inextendible days 2. No. Article 119 of the Cooperative Code
from receipt of the Order, failure of which shall itself expressly embodies the legislative
constitute a waiver and non-perfection of the appeal. intention to extend the coverage of labor
Balagtas appealed to CA, which dismissed the statutes to cooperatives. For this reason,
petition holding that the exemption from putting up a petitioners must comply with the
bond by a cooperative applies to cases decided by requirement set forth in Article 223 of the
inferior courts only. Labor Code in order to perfect their appeal
to the NLRC. It must be pointed out that the
Issues: right to appeal is not a constitutional, natural
1. WON cooperatives are exempted from filing or inherent right. It is a privilege of statutory
a cash or surety bond required to perfect an origin and, therefore, available only if
employer‘s appeal under Section 223 of granted or provided by statute. The law may
Presidential Decree No. 442 (the Labor validly provide limitations or qualifications
Code); thereto or relief to the prevailing party in the
event an appeal is interposed by the losing
2. WON a certification issued by the party.
Cooperative Development Authority
constitutes substantial compliance with the In this case, the obvious and logical
requirement for the posting of a bond. purpose of an appeal bond is to insure,
during the period of appeal, against any
occurrence that would defeat or diminish
Ruling: recovery by the employee under the
1. No. Petitioners argue that there are certain judgment if the latter is subsequently
benefits and privileges expressly granted to affirmed.
cooperative under the Cooperative Code. It Therefore, no error can be ascribed
invoked the provision on Article 62 to the CA for holding that the phrase
regarding the exemption from payment of an ―inferior courts‖ appearing in Article 62
appeal bond, to wit: (7)All cooperatives paragraph (7) of the Cooperative Code does
shall be exempt from putting up a bond for not extend to ―quasi-judicial agencies‖ and
bringing an appeal against the decision of an that, petitioners are not exempt from posting
inferior court or for seeking to set aside any the appeal bond required under Article 223
third party claim: Provided, That a of the Labor Code.
certification of the Authority showing that
the net assets of the cooperative are in
excess of the amount of the bond required
by the court in similar cases shall be
accepted by the court as a sufficient bond.

However, it is only one among a


number of such privileges which appear
under the article entitled ―Tax and Other
Exemptions‖ of the code. The provision

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LABOR STANDARDS LAW

30. ST. MARTIN FUNERAL HOMES vs. Petitioner asserts that LA already concluded that
NATIONAL LABOR RELATIONS there was no EE-ER relationship based on the
COMMISSION (NLRC) (Nov. 22, 2006) position papers and memoranda of the parties. On the
other hand, respondent Aricayos supports the
FACTS: pronouncement of the NLRC as affirmed by the CA
that there was no determination of the existence of
Complainant, herein private respondent Aricayos,
EE-ER relationship.
filed a petition for illegal dismissal with prayer for
reinstatement, payment of back wages and damages Thus, this is petition for review on certiorari under
against petitioner St. Martin Funeral Homes. The Rule 45 seeking to reverse the decision of the CA
initiatory pleading was filed before the NLRC which affirmed the NLRC in remanding the
RAB. complaint of respondent Aricayos to the Labor
Arbiter.
The owner of St. Marting Funeral Homes is Amelita
Malabed. Amelita‘s mother managed the funeral ISSUE:
parlor. Respondent Aricayos, on the other hand, was
formerly an overseas contract worker. Aricayos, in WON the LA made a determination of the presence
1995, was granted financial assistance by of an EE-ER relationship between St. Martin and
Amelita’s mother. As a sign of appreciation, Aricayos based on the evidence on record. Further,
Aricayos extended assistance to Amelita’s mother WON it is within the authority of the LA to set the
in managing St. Martin without compensation. labor case for hearing to be able to determine the
There was no written employment contract between veracity of the conflicting positions of the parties.
them, Aricayos was not even listed as an employee in
the Company‘s payroll.

When Amelita took over, after her mother‘s death, RULING:


she saw that there were some arrears in the payment
While a formal trial or hearing is discretionary on
of BIR taxes. Thus, Amelita removed the authority
the part of the Labor Arbiter, when there are
from Aricayos and his wife from taking part in
factual issues that require a formal presentation of
managing St. Martin’s operations. Thus, Aricayos
evidence in a hearing, the Labor Arbiter cannot
accused St. Martin of his illegal dismissal as
simply rely on the position papers, more so, on
Operations Manager on the ground of Amelita‘s
mere unsubstantiated claims of parties.
suspicion that he pocketed money for payment of
BIR taxes.

LA rendered a decision in favor of St. Martins stating APPLICATION:


that it had no jurisdiction over the case, citing Dela
Salle University vs. NLRC , as it is the civil court In In the case at bar, there are certain admissions by
which has jurisdiction to determine whether there is petitioner St. Martin that should have prodded the
an employer-employee relationship. NLRC, however, Labor Arbiter to conduct a hearing for a more in-
reversed the decision stating that LA is so authorized depth examination of the contrasting positions of the
to threshed out the issue of the existence of parties, namely:
employer-employee relationship when the facts are
1. That respondent helped Amelita's mother
not too clear so as the ends of justice would better be
manage the funeral parlor business by
served. MR of petitioner was denied by NLRC. P
running errands for her,
filed for certiorari under Rule 65. The case was
2. Overseeing the business from 1995 up to
remanded to the CA and CA affirmed the decision of
January 1996 when the mother died,
NLRC.
3. And that after Amelita made changes in the
business operation, private respondent and

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LABOR STANDARDS LAW

his wife were no longer allowed to damages and attorney‘s fees. Petitioner denied that
participate in the management of St. Martin. respondents were its employees. It explained that it
found the need to engage external services to
These facts, as admitted by the petitioner and the augment its regular workforce, which was affected by
affidavits of St. Martin's witnesses, could have peaks in operation, work backlogs, absenteeism, and
been examined more in detail by the Labor excessive leaves. It used to engage the services of
Arbiter in a hearing to convince himself that there individual workers for definite periods specified in
their employment contracts and never exceeding one
was indeed no employment relationship between year. However, such an arrangement became the
the parties as he originally found. subject of a labor case, in which petitioner was
accused of preventing the regularization of such
CA decision affirmed. Petition DENIED.
workers.

ISSUES:

1. Whether or not the court of appeals was


31. DOLE Philippines, Inc. vs. Medel Esteva, et al. correct when it made its own factual
[GR No. 161115 November 30, 2006] findings and disregarded the factual
findings of the labor arbiter and the
FACTS: NLRC.

Petitioner is a corporation engaged 2. Whether or not CAMPCO was a mere


principally in the production and processing of labor-only contractor.
pineapple for the export market. Respondents are
members of the Cannery Multi-Purpose Cooperative RULING:
(CAMPCO). CAMPCO was organized in
accordance with Republic Act No. 6938, otherwise Yes. The Court in the exercise of its equity
known as the Cooperative Code of the Philippines. jurisdiction may look into the records of the case and
Pursuant to the Service Contract, CAMPCO members re-examine the questioned findings. As a corollary,
rendered services to petitioner. The number of this Court is clothed with ample authority to review
CAMPCO members that report for work and the type matters, even if they are not assigned as errors in
of service they performed depended on the needs of their appeal, if it finds that their consideration is
petitioner at any given time. Although the Service necessary to arrive at a just decision of the case. The
Contract specifically stated that it shall only be for a same principles are now necessarily adhered to and
period of six months, i.e., from 1 July to 31 are applied by the Court of Appeals in its expanded
December 1993, the parties had apparently extended jurisdiction over labor cases elevated through a
or renewed the same for the succeeding years without petition for certiorari; thus, we see no error on its part
executing another written contract. It was under when it made anew a factual determination of the
these circumstances that respondents came to work matters and on that basis reversed the ruling of the
for petitioner. DOLE organized a Task Force that NLRC.
conducted an investigation into the alleged labor-only
contracting activities of the cooperatives. The Task Yes. CAMPCO was a mere labor-only
Force identified six cooperatives that were engaged contractor. First, although petitioner touts the multi-
in labor-only contracting, one of which was million pesos assets of CAMPCO, it does well to
CAMPCO. In this case, respondents alleged that they remember that such were amassed in the years
started working for petitioner at various times in the following its establishment. In 1993, when
years 1993 and 1994, by virtue of the Service CAMPCO was established and the Service Contract
Contract executed between CAMPCO and petitioner. between petitioner and CAMPCO was entered into,
All of the respondents had already rendered more CAMPCO only had P6,600.00 paid-up capital, which
than one year of service to petitioner. While some of could hardly be considered substantial. It only
the respondents were still working for petitioner, managed to increase its capitalization and assets in
others were put on ―stay home status‖ on varying the succeeding years by continually and defiantly
dates in the years 1994, 1995, and 1996 and were no engaging in what had been declared by authorized
longer furnished with work thereafter. Together, DOLE officials as labor-only contracting. Second,
respondents filed a Complaint with the NLRC for CAMPCO did not carry out an independent business
illegal dismissal, regularization, wage differentials, from petitioner. It was precisely established to render

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LABOR STANDARDS LAW

services to petitioner to augment its workforce during activities of labor-only contracting, then
peak seasons. Petitioner was its only client. Even as consequently, an employer-employee relationship is
CAMPCO had its own office and office equipment, deemed to exist between petitioner and respondents,
these were mainly used for administrative purposes; since CAMPCO shall be considered as a mere agent
the tools, machineries, and equipment actually used or intermediary of petitioner.
by CAMPCO members when rendering services to
the petitioner belonged to the latter. Third, petitioner Since respondents are now recognized as
exercised control over the CAMPCO members, employees of petitioner, this Court is tasked to
including respondents. Petitioner attempts to refute determine the nature of their employment. In
control by alleging the presence of a CAMPCO consideration of all the attendant circumstances in
supervisor in the work premises. Yet, the mere this case, this Court concludes that respondents are
presence within the premises of a supervisor from the regular employees of petitioner. As such, they are
cooperative did not necessarily mean that CAMPCO entitled to security of tenure. They could only be
had control over its members. Section 8(1), Rule removed based on just and authorized causes as
VIII, Book III of the implementing rules of the Labor provided for in the Labor Code, as amended, and
Code, as amended, required for permissible job after they are accorded procedural due process.
contracting that the contractor undertakes the contract Therefore, petitioner‘s acts of placing some of the
work on his account, under his own responsibility, respondents on ―stay home status‖ and not giving
according to his own manner and method, free from them work assignments for more than six months
the control and direction of his employer or principal were already tantamount to constructive and illegal
in all matters connected with the performance of the dismissal.
work except as to the results thereof. As alleged by
the respondents, and unrebutted by petitioner,
CAMPCO members, before working for the
petitioner, had to undergo instructions and pass the 32)G.R. No. 151407, February 6, 2007
training provided by petitioner‘s personnel. It was
petitioner who determined and prepared the work INTERCONTINENTAL BROADCASTING
assignments of the CAMPCO members. CAMPCO CORP. VS. PANGANIBAN
members worked within petitioner‘s plantation and
processing plants alongside regular employees
performing identical jobs, a circumstance recognized FACTS:
as an indicium of a labor-only contractorship. Fourth, Ireneo Panganiban (respondent) was employed as
CAMPCO was not engaged to perform a specific and Assistant General Manager of the Intercontinental
special job or service. In the Service Contract of Broadcasting Corporation (petitioner) from May
1993, CAMPCO agreed to assist petitioner in its 1986 until his preventive suspension on August 26,
daily operations, and perform odd jobs as may be 1988. Respondent resigned from his employment on
assigned. CAMPCO complied with this venture by September 2, 1988.
assigning members to petitioner. Apart from that, no
other particular job, work or service was required On April 12, 1989, respondent filed a civil case with
from CAMPCO, and it is apparent, with such an the RTC of Quezon City, Branch 93 against the
arrangement, that CAMPCO merely acted as a members of the Board of Administrators (BOA) of
recruitment agency for petitioner. Since the petitioner alleging, among others, non-payment of his
undertaking of CAMPCO did not involve the unpaid commissions. A motion to dismiss was filed
performance of a specific job, but rather the supply of by Joselito Santiago, one of the defendants, on the
manpower only, CAMPCO clearly conducted itself ground of lack of jurisdiction, as respondent‘s claim
as a labor-only contractor. Lastly, CAMPCO was a labor money claim, but this was denied by the
members, including respondents, performed activities RTC. Thus, Santiago filed a petition for certiorari
directly related to the principal business of with the CA which granted Santiago‘s petition for
petitioner. They worked as can processing attendant, lack of jurisdiction and set aside the RTC‘s Orders.
feeder of canned pineapple and pineapple processing, Thereafter, respondent was elected by the BOA as
nata de coco processing attendant, fruit cocktail Vice-President for Marketing in July 1992. He
processing attendant, and etc., functions which were, resigned in April 1993. On July 24, 1996, respondent
not only directly related, but were very vital to filed against petitioner a complaint for illegal
petitioner‘s business of production and processing of dismissal, separation pay, retirement benefits, unpaid
pineapple products for export. The declaration that commissions, and damages. The Labor Arbiter (LA)
CAMPCO is indeed engaged in the prohibited

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LABOR STANDARDS LAW

ordered respondent‘s reinstatement with full 33. G.R. No. 162813, February 12, 2007, Far East
backwages, and the payment of his unpaid Agricultural Supply, Inc. and/or Alexander Uy vs.
commission, damages and attorney‘s fees. Petitioner Jimmy Lebatique and the Honorable Court Of
appealed to the NLRC but due to petitioner‘s failure
Appeals
to post a bond, the appeal was dismissed. The
decision was deemed final and executory.
ISSUE:
FACTS:
WON respondent‘s claim for unpaid commissions
has already prescribed. The case originated from a complaint for illegal
RULING: dismissal and nonpayment of overtime pay filed by
Jimmy Lebatique, a truck driver against his
Yes. Respondent‘s claim had already prescribed as of
September 1991. In addition, the claims of private employer, Far East Agricultural Supply Inc.
respondent for reinstatement, backwages and benefits
in conjunction with his employment from 1986 to Lebatique was employed March 1996 and was tasked
1988 have prescribed. to deliver animal feeds to the company‘s clients.

The applicable law in this case is Article 291 of the On January 24, 200o, Lebatique complained about
Labor Code which provides that ―all money claims not being payed overtime pay. That same day when
arising from employer-employee relations accruing
he complained, he was suspended by Far East‘s
during the effectivity of this Code shall be filed
within three (3) years from the time the cause of General Manager Manuel Uy for his alleged illegal
action accrued; otherwise they shall be forever use of company vehicle, and was prohibited from
barred.‖ entering the company premises when he reported to
work the next day.
The term ―money claims‖ covers all money claims
arising from an employer-employee relation the
Lebatique sought the assistance of the DOLE Public
prescription of an action is interrupted by (a) the
filing of an action, (b) a written extrajudicial demand Assistance and Complaints Unit for the issue on the
by the creditor, and (c) a written acknowledgment of nonpayment of his Overtime pay.
the debt by the debtor.
Two days after seeking the assistance of the DOLE,
On this point, the Court ruled that although the
he received a telegram from Far East requiring him to
commencement of a civil action stops the running of
the statute of prescription or limitations, its dismissal report to work. Upon his return, Alexander Uy
or voluntary abandonment by plaintiff leaves the confronted him about his complaint and after talking
parties in exactly the same position as though no to Manuel, Alexander terminated Lebatique.
action had been commenced at all. Hence, while the
filing of Civil Case could have interrupted the The Labor Arbiter ruled in favor of Lebatique but this
running of the three-year prescriptive period, its decision was overturned by the NLRC who stated
consequent dismissal by the CA due to lack of that Lebatique was merely suspended and that he is a
jurisdiction effectively canceled the tolling of the field personnel not entitled to overtime pay, service
prescriptive period within which to file his money
incentive leave pay and 13th month pay. The Court of
claim, leaving respondent in exactly the same
position as though no civil case had been filed at all. Appeals reinstated the Arbiter‘s ruling so petitioner
The running of the three-year prescriptive period not appealed to the Supreme Court by way of review on
having been interrupted by the filing of Civil Case certiorari.
respondent‘s cause of action had already prescribed
on September 2, 1991, three years after his cessation ISSUE/S:
of employment on September 2, 1988. Consequently,
when respondent filed his complaint for illegal The case revolves around two specific points on (1)
dismissal, separation pay, retirement benefits, and whether or not Lebatique was illegally dismissed and
damages in July 24, 1996, his claim, clearly, had on (2) whether or not he is a field personnel who is
already been barred by prescription.
not entitled to overtime pay.

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LABOR STANDARDS LAW

(2) they are not given the discretion to


solicit, select and contact prospective clients; and
RULING:
(3) Far East issued a directive that company
The case was remanded to the Labor Arbiter for drivers should stay at the client‘s premises during
further proceedings to determine truck-ban hours which is from 5:00 to 9:00 a.m. and
5:00 to 9:00 p.m.
the amount of overtime pay and other monetary
benefits due to Lebatique because: 34. LETRAN CALAMBA FACULTY and
EMPLOYEES ASSOCIATION, petitioner, vs.
 Lebatique was illegally dismissed NATIONAL LABOR RELATIONS
COMMISSION and COLEGIO DE SANJUAN
In cases of illegal dismissal, the burden is on the DE LETRAN CALAMBA, INC.,respondent.
employer to prove that the termination was for a valid
cause and in this case the petitioners failed to FACTS:
discharge such burden. On October 8, 1992, the Letran Calamba
Faculty and Employees Association filed with
As to the petitioner‘s claims that Lebatique was not Regional Arbitration Branch No. IV of the NLRC a
Complaint against Colegio de San Juan de Letran,
dismissed but that he abandoned his work after being
Calamba, Inc for collection of various monetary
suspended, ―an employee who takes steps to protest claims due its members. The complaint alleges
his layoff cannot by any stretch of imagination be among many things, that in the computation for 13 th
said to have abandoned his work‖. Lebatique‘s filing month pay of its academic personnel respondent does
of the complaint is ―proof enough of his desire to not include as basis therefor their compensation for
return to work, thus negating any suggestion of overloads, that respondent has not paid the wage
abandonment.‖ increase, the salary increase due to the non-academic
personnel as a result of job grading has not been
given, that the acts of the respondent has resulted in
 Lebatique is not a field personnel
diminution of benefits of the faculty members. In its
position paper, respondent denied all the allegations.
The definition of a "field personnel" is not merely
Prior to the filing of the above-mentioned
concerned with the location where the employee complaint, petitioner filed a separate complaint
regularly performs his duties but also with the fact against the respondent for money claims with
that the employee‘s performance is unsupervised by Regional Office No. IV of the Department of Labor
the employer. A field personnel are those who and Employment (DOLE). On the other hand,
regularly perform their duties away from the pending resolution in another NLRC case, responden
principal place of business of the employer and school filed with Regional Arbitration Branch No. IV
of the NLRC a petition to declare as illegal the strike
whose actual hours of work in the field cannot be
staged by petitioner.
determined with reasonable certainty. In order to On September 28, 1998, the Labor Arbiter
determine whether an employee is a field employee, (LA) handling the consolidated cases rendered a
it is also necessary to ascertain if actual hours of Decision dismissing the money claims and declaring
work in the field can be determined with reasonable the strike illegal. Upon appeal to the NLRC, the
certainty by the employer. In so doing, an inquiry petition was dismissed. Petitioner then availed of an
must be made as to whether or not the employee‘s action for certiorari with the CA but was also
dismissed.
time and performance are constantly supervised by
the employer. ISSUES:
1. Whether or nor the CA erred in holding that
Given the above definition, Lebatique is not a field the factual findings of the NLRCcannot be
personnel for the following reasons: revied in certiorari proceedings?
2. Whether or not the teaching overload should
(1) company drivers, including Lebatique, be included in the basis in the computation
are directed to deliver the goods at a specified time of their 13th month pay?
and place;

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RULING: Operations Agreement (MOA) with the Light Rail


On the first issue… Transit Authority (LRTA) for the operation of the
The Court finds no error in the ruling of the Light Rail Transit (LRT) Baclaran-Monumento Line.
CA that since nowhere in the petition is there any For purposes of collective bargaining agreement
acceptable demonstration that the LA or the NLRC (CBA), petitioner MTO‘s rank and file employees
acted either with grave abuse of discretion or without formed the Pinag-isang Lakas ng Manggagawa sa
or in excess of its jurisdiction, the appellate court has Metro, Inc.-National Federation of Labor
no reason to look into the correctness of the (PIGLAS).
evaluation of evidence which supports the labor
tribunals' findings of fact. Petitioners MTO and PIGLAS entered into a
The findings of the Labor Arbiter, when CBA covering the period of 13 February 1995 to 13
affirmed by the NLRC and the CA, are binding on February 2000. Thereafter, PIGLAS renegotiated the
the Supreme Court unless patently erroneous. Thus, CBA demanding higher benefits.
in a petitioner for review on certiorari, this Court‘s
jurisdiction is limited to reviewing errors of law in On 25 July 2000, due to a bargaining deadlock,
the absence of any showing that the factual findings PIGLAS filed a Notice of Strike before the National
complained of are devoid of support in the records or Conciliation and Mediation Board (NCMB).
are glaringly erroneous.
In petitions for review on certiorari like the The striking PIGLAS members refused to
instant case, the Court invariably sustains the accede to the Return to Work Order. Following their
unanimous factual findings of the LA, the NLRC and continued non-compliance, on 28 July 2000, the
the CA, specially when such findings are supported LRTA formally informed petitioner MTO that it had
by substantial evidence and there is no cogent basis issued a Board Resolution which: (1) allowed the
to reverse the same, as in this case.22 expiration after 31 July 2000 of LRTA‘s MOA with
petitioner MTO; and (2) directed the LRTA to take
On the second issue over the operations and maintenance of the LRT
Settled is the doctrine that when an Line. By virtue of said Resolution, petitioner MTO
administrative or executive agency renders an sent termination notices to its employees, including
opinion or issues a statement of policy, it merely herein respondents.
interprets a pre-existing law and the administrative
interpretation is at best advisory for it is the courts Resultantly, respondents filed with the
that finally determine what the law means. Hence, Labor Arbiter Complaints[4] against petitioners and
while the DOLE order may not be applicable, the the LRTA for the following: (1) illegal dismissal; (2)
Court finds that overload pay should be excluded unfair labor practice for union busting; (3) moral and
from the computation of the 13th month pay of exemplary damages; and (4) attorney‘s fees.
petitioner‘s members.
In the same manner that payment for On 13 September 2004, the Labor Arbiter
overtime work and work performed during special rendered judgment in favor of respondents.
holidays is considered as additional compensation
apart and distinct from an employee's regular wage or Petitioners appealed to the National Labor
basic salary, an overload pay, owing to its very nature Relations Commission (NLRC). In a Resolution
and definition, may not be considered as part of a dated 19 May 2006, the NLRC dismissed petitioners‘
teacher's regular or basic salary, because it is being appeal for non-perfection since it failed to post the
paid for additional work performed in excess of the required bond.
regular teaching load.
Without filing a Motion for Reconsideration
of the afore-quoted NLRC Resolution, petitioners
filed a Petition for Certiorari with the Court of
35. Metro Transit Organization vs. Piglas NFWU- Appeals assailing the same.
KMU et al., G.R. No. 175460, April 14, 2008
They have not, however, filed a motion for
Facts: reconsideration of the ruling prior to filing the
petition. This renders the petition fatally defective.
Petitioner Metro Transit Organization, Inc.
(MTO) is a government owned and controlled
corporation which entered into a Management and Issue:

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Whether or not the non-filing of motion of Rules of Court, promulgated by authority of law,
reconsideration to the NLRC is a ground for have the force and effect of law.[
dismissal of the appeal
As borne by the records, petitioners filed a
Held: property bond which was conditionally accepted by
the NLRC subject to the following conditions
We agree in the Court of Appeals‘ finding specified in its 24 February 2006Order:
that petitioners‘ case does not fall under any of the
recognized exceptions to the filing of a motion for The conditional acceptance of petitioner‘s property
reconsideration, to wit: (1) when the issue raised is bond was subject to the submission of the following:
purely of law; (2) when public interest is involved; 1) Certified copy of Board Resolution or a Certificate
(3) in case of urgency; or when the questions raised from the Corporate Secretary of Light Rail Transit
are the same as those that have already been squarely Authority stating that the Corporation President is
argued and exhaustively passed upon by the lower authorized by a Board Resolution to submit title as
court. As the Court of Appeals reasoned, the issue guarantee of judgment award; 2) Certified Copy of
before the NLRC is both factual and legal at the same the Titles issued by the Registry of Deeds of Pasay
time, involving as it does the requirements of the City; 3) Certified Copy of the current tax declarations
property bond for the perfection of the appeal, as well of Titles; 4) Tax clearance from the City Treasurer of
as the finding that petitioners failed to perfect the Pasay City; 5) Appraisal report of an accredited
same. Evidently, the burden is on petitioners seeking appraisal company attesting to the fair market value
exception to the rule to show sufficient justification of property within ten (10) days from receipt of this
for dispensing with the requirement. Order. Failure to comply therewith will result in the
Certiorari cannot be resorted to as a shield from the dismissal of the appeal for non-perfection thereof.
adverse consequences of petitioners' own omission of
the filing of the required motion for reconsideration.

Nonetheless, even if we are to disregard the 36. J. K. MERCADO & SONS AGRICULTURAL
petitioners‘ procedural faux pas with the Court of ENTERPRISES, INC., vs. STO. TOMAS
Appeals, and proceed to review the propriety of the
19 May 2006 NLRC Resolution, we still arrive at the
conclusion that the NLRC did not err in denying FACTS:
petitioners‘ appeal for its failure to file a bond in
accordance with the Rules of Procedure of the On December 3, 1993, the Regional Tripartite Wages
NLRC. and Productivity Board, Region XI, issued Wage
Order No. RTWPB-XI-03, granting a Cost of Living
In cases involving a monetary award, an Allowance (COLA) to covered workers.
employer seeking to appeal the decision of the Labor
Arbiter to the NLRC is unconditionally required by On January 28, 1994, petitioner filed an application
Article 223of the Labor Code to post a cash or surety
for exemption from the coverage of the aforesaid
bond equivalent to the amount of the monetary award
wage order. Thus, however, was denied by the
adjudged. It should be stressed that the intention of
regional wage board in an Order dated April 11,
lawmakers to make the bond an indispensable
1994.
requisite for the perfection of an appeal by the
employer is underscored by the provision that an
appeal by the employer may be perfected only upon Notwithstanding the said order, private respondents
the posting of a cash or surety bond. The word were not given the benefits due them under Wage
―only‖ makes it perfectly clear that the lawmakers Order No. RTWPB-XI-03.
intended the posting of a cash or surety bond by the
employer to be the exclusive means by which an On July 10, 1998, private respondents filed an Urgent
employer‘s appeal may be perfected. Moreover, it Motion for Writ of Execution, and Writ of
bears stressing that the perfection of an appeal in the Garnishment seeking the enforcement of subject
manner and within the period prescribed by law is not wage order against several entities including herein
only mandatory but jurisdictional, and failure to petitioner.
conform to the rules will render the judgment sought
to be reviewed final and unappealable. It cannot be On October 7, 1998, the OIC-Regional Director,
overemphasized that the NLRC Rules, akin to the Region XI, issued a Writ of Execution for the

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enforcement of the Order dated April 11, 1994 of the RULING:


Regional Tripartite Wages and Productivity Board.
A. NO.
On November 17, 1998 and November 23, 1998,
respectively, petitioner filed a Motion to Quash the Art. 291 of the Labor Code applies to money claims
Writ of Execution and a Supplemental Motion to the in general and provides for a 3-year prescriptive
Motion to Quash. Petitioner argued that herein period to file them.
private respondents' right had already prescribed due
to their failure to move for the execution of the April
On the other hand, respondent employees' money
11, 1994 Order within the period provided under
claims in this case had been reduced to a judgment, in
Article 291 of the Labor Code, as amended, or within
the form of a Wage Order, which has become final
three (3) years from the finality of the said order.
and executory. The prescription applicable, therefore,
is not the general one that applies to money claims,
Ruling that the benefits which remained unpaid have but the specific one applying to judgments. Thus, the
not prescribed and that the private respondents need right to enforce the judgment, having been exercised
not file a claim to be entitled thereto, the Regional within five years, has not yet prescribed.
Director denied the Motion to Quash in an Order
dated January 7, 1999. Stated otherwise, a claimant has three years to press a
money claim. Once judgment is rendered in her
Not satisfied with the denial of its motion to quash, favor, she has five years to ask for execution of the
petitioner filed a Notice of Appeal on January 29, judgment, counted from its finality. This is consistent
1999. with the rule on statutory construction that a general
provision should yield to a specific one and with the
Petitioner argued on appeal that the Regional mandate of social justice that doubts should be
Director abused his discretion in issuing the writ of resolved in favor of labor.
execution since it was not a party to the case.
Petitioner likewise argued that the Regional Director B. NO.
abused his discretion in issuing the writ of execution
in the absence of any motion filed by private
Clearly, petitioner's contention is premised on the
respondents. Petitioner likewise claimed that since
mistaken belief that the right of private respondents
more than three (3) years have already elapsed from
to recover their wage differential or COLA under
the time of the finality of the order dated April 11,
Wage Order No. 03 is still a contestable issue.
1994, the right of private respondents to claim the
benefits under the same had already prescribed.
It must be emphasized that the order dated April 11,
1994 had long become final and executory. Petitioner
However, the appeal to the CA was denied. On
did not appeal the said order. Having failed to avail
March 2, 2001, petitioner filed a Motion for
of the remedy of appeal of the said order, petitioner
Reconsideration but the same was denied for lack of cannot belatedly avoid its duty to comply with the
merit by public respondent in an Order dated March said order by insisting that a money claim must first
14, 2002. Hence, this petition.
be filed by herein private respondents. A contrary
ruling would result to absurdity and would even
ISSUES: unjustly benefit petitioner who for quite sometime
had exerted every effort to avoid the obligation of
WON the claim of the private respondents for cost of giving the wage differential or COLA granted under
living allowance (COLA) pursuant to Wage Order Wage Order No. 3.
No. RTWPB-XI-03 has already prescribed because of
the failure of the respondents to make the appropriate
claim within the three (3) year prescriptive period
provided by Article 291 of the Labor Code, as
37. J. Phil. Marine Inc., vs. NLRC, G.R. No.
amended.
1753661, August 11, 2008
Facts:
WON a money claim must be filed first by private Warlito E. Dumalaog (respondent), who
respondents against petitioner for the latter's refusal served as cook aboard vessels plying overseas, filed
to pay the COLA granted under WO on March 4, 2002 before the National Labor

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LABOR STANDARDS LAW

Relations Commission (NLRC) a pro-forma case of non-compliance thereof or if there is prima


complaint1 against petitioners ─ manning agency J- facie evidence that the settlement was obtained
Phil Marine, Inc. (J-Phil), its then president Jesus through fraud, misrepresentation, or coercion.
Candava, and its foreign principal Norman Shipping That a client has undoubtedly the right to
Services ─ for unpaid money claims, moral and compromise a suit without the intervention of his
exemplary damages, and attorney‘s fees. lawyer24 cannot be gainsaid, the only qualification
Respondent thereafter filed two amended being that if such compromise is entered into with the
pro forma complaints2 praying for the award of intent of defrauding the lawyer of the fees justly due
overtime pay, vacation leave pay, sick leave pay, and him, the compromise must be subject to the said
disability/medical benefits, he having, by his claim, fees.25 In the case at bar, there is no showing that
contracted enlargement of the heart and severe respondent intended to defraud his counsel of his
thyroid enlargement in the discharge of his duties as fees. In fact, the Quitclaim and Release, the execution
cook which rendered him disabled. of which was witnessed by petitioner J-Phil‘s
Respondent‘s total claim against petitioners president Eulalio C. Candava and one Antonio C.
was P864,343.30 plus P117,557.60 representing Casim, notes that the 20% attorney‘s fees would be
interest and P195,928.66 representing attorney‘s "paid 12 April 2007 – P90,000."
fees.3
By Decision4 of August 29, 2003, Labor
Arbiter Fe Superiaso-Cellan dismissed respondent‘s 38. Sy vs. ALC Industries, G.R. No. 168339,
complaint for lack of merit. October 10, 2008
On appeal,5 the NLRC, by Decision of
September 27, 2004, reversed the Labor Arbiter‘s
decision and awarded US$50,000.00 disability Facts:
benefit to respondent. It dismissed respondent‘s other Petitioner was hired by respondent
claims, however, for lack of basis or jurisdiction.6 corporation ALCII as a supervisor in its purchasing
Petitioners‘ Motion for Reconsideration7 having been office. She was thereafter assigned to ALCII's
denied by the NLRC,8 they filed a petition for construction project in Davao City as business
certiorari9 before the Court of Appeals. manager and supervisor of the Administrative
By Resolution10 of September 22, 2005, the Division. Her Davao assignment was from May 1997
Court of Appeals dismissed petitioners‘ petition for, to April 15, 1999.
inter alia, failure to attach to the petition all material Petitioner alleged that respondents refused
documents, and for defective verification and to pay her salary beginning August 1998 and
certification. Petitioners‘ Motion for Reconsideration allowances beginning June 1998, despite her almost
of the appellate court‘s Resolution was denied;11 weekly verbal follow-up. Petitioner filed a complaint
hence, they filed the present Petition for Review on before the labor arbiter for unpaid salaries and
Certiorari. allowances. Despite several notices and warnings,
During the pendency of the case before this respondents did not file a position paper to controvert
Court, respondent, against the advice of his counsel, petitioner's claims. The case was submitted for
entered into a compromise agreement with resolution based solely on petitioner's allegations and
petitioners. He thereupon signed a Quitclaim and evidence.
Release subscribed and sworn to before the Labor In his June 30, 2000 decision, the labor
Arbiter. arbiter ordered ALCII and/or Dexter Ceriales to pay
Issues: petitioner P282,560 representing her unpaid salary
WON the compromise agreement is valid even and allowance.
without the intervention of the counsel. Respondents filed an appeal with motion for
Held: reduction of bond in the National Labor Relations
Yes. The compromise agreement is valid even Commission (NLRC) without posting any cash or
without the intervention of the counsel. surety bond. In a resolution dated September 6, 2001,
Article 227 of the Labor Code provides: the NLRC dismissed respondents' appeal. It ruled that
Any compromise settlement, including those respondents failed to adduce substantial evidence to
involving labor standard laws, voluntarily agreed support their arguments of non-liability. Moreover, it
upon by the parties with the assistance of the found no justifiable reason to grant a reduction in the
Department of Labor, shall be final and binding upon required bond.
the parties. The National Labor Relations Respondents were able to file a motion for
Commission or any court shall not assume reconsideration on time, accompanied by a joint
jurisdiction over issues involved therein except in undertaking/declaration in lieu of the cash or surety

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bond. Nevertheless, respondents' motion for The explanation advanced by respondents for their
reconsideration was denied. failure to pay the appeal bond belies their claim. The
On August 2, 2002, respondents filed a NLRC found that respondents did not pay the appeal
motion for clarification but this was likewise denied. bond on the mistaken notion that they were not liable
Respondents questioned the NLRC's denial of their for the monetary award and had already ceased
motion for clarification and reconsideration in the CA operations due to bankruptcy. Respondents belatedly
via a petition for certiorari and prohibition. filed a bond with their motion for reconsideration of
In its March 30, 2005 decision, the CA set the NLRC's dismissal of their appeal. We cannot
aside the resolutions of the NLRC and the decision of countenance such flagrant disregard of established
the labor arbiter and dismissed petitioner's complaint. rules of procedure on appeals.
Moreover, the filing of a joint
Issue: WON the decision of the Labor Arbiter has undertaking/declaration, filed way beyond the ten-
become final and executory. day reglementary period for perfecting an appeal and
as a substitute for the cash or surety bond, did not
Ruling: operate to validate the lost appeal.
Article 223. APPEAL. - Decisions, awards, The decision of the labor arbiter therefore
or orders of the Labor Arbiter are final and became final and executory for failure of respondents
executory unless appealed to the Commission by to perfect their appeal within the reglementary
any or both parties within ten calendar days from period. Clearly, the CA no longer had jurisdiction to
receipt of such decisions, awards, or orders. xxx. entertain respondents' appeal from the labor arbiter's
In case of a judgment involving a monetary decision.
award, an appeal by the employer may be Respondents point out that we have
perfected only upon the posting of a cash or occasionally allowed exceptions to mandatory and
surety bond issued by a reputable bonding jurisdictional requirements in the perfection of
company duly accredited by the appeals, such as disregarding unintended lapses on
Commission in the amount equivalent to the the basis of strong and compelling reasons. This is
monetary award in the judgment appealed true. However, the obvious motive behind
from. (emphasis supplied) respondents' plea for liberality is to thwart petitioner's
Section 1, Rule VI of the Rules of Procedure claims. This we cannot allow. Respondents' lapses
of the NLRC, as amended, likewise provides that the were far from unintentional. They were deliberate
appeal must be filed within ten days from receipt of attempts to circumvent established rules.
the decision, resolution or order of the labor arbiter. Respondents' other contention that they were
Moreover, Section 6 of the same rules provides that deprived of due process is likewise devoid of merit.
an appeal by the employer may be perfected only Due process is satisfied when the parties are afforded
upon the posting of a cash or surety bond. As the fair and reasonable opportunity to explain their
right to appeal is merely a statutory privilege, it must respective sides of the controversy. In Mariveles
be exercised only in the manner and in accordance Shipyard Corp. v. CA, we held:
with the provisions of the law. Otherwise, the right to The requirements of due process in labor
appeal is lost. cases before a Labor Arbiter is satisfied
In a long line of cases, we have ruled that when the parties are given the
the payment of the appeal bond is a jurisdictional opportunity to submit their position
requisite for the perfection of an appeal to the NLRC. papers to which they are supposed to attach
The lawmakers intended to make the posting of a all the supporting documents or
cash or surety bond by the employer the exclusive documentary evidence that would prove
means by which an employer's appeal may be their respective claims, in the event that the
perfected. The rationale for this rule is: Labor Arbiter determines that no formal
The requirement that the employer post a hearing would be conducted or that such
cash or surety bond to perfect its/his appeal hearing was not necessary. (emphasis
is apparently intended to assure the workers supplied).
that if they prevail in the case, they will We ruled in Times Transportation Company, Inc. v.
receive the money judgment in their favor Sotelo:
upon the dismissal of the employers' appeal. To extend the period of appeal is to prolong
It was intended to discourage employers the resolution of the case, a circumstance
from using an appeal to delay, or even which would give the employer the
evade, their obligation to satisfy their opportunity to wear out the energy and
employee's just and lawful claims. meager resources of the workers to the point

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that they would be constrained to give up for shopping was signed by Company‘s President
less than what they deserve in law.
without proof that he is authorized by the corporation
to sign it trough resolution.
Issue:
39.) PCI TRAVEL CORPORATION,petitioner
Vs NLRC WON the CA was correct in dismissing the
Facts: case based on the aforementioned technical grounds.
Sometime in 1994, respondent NUBE- Ruling.
AMEXPEA/PCI Travel Employees Union filed a No. the Court of Appeals erred in its
Complaint for unfair labor practice against petitioner decision. The case must be remanded to the CA for
PCI Travel Corporation. It claimed that petitioner resolution on the merits.
had been filling up positions left by regular rank-and- Reasoning.
file with contractual employees, but were performing President of the corporation can sign the verification
work which were usually necessary and desirable in and certification without need of a board resolution,
the usual business or trade of the petitioner. there thus exists a compelling reason for the
Respondent prayed that the Labor Arbiter order the reinstatement of the petition before the Court of
petitioner to pay the ―contractual employees‖ the Appeals. A perusal of the petition
differentials between the wages/benefits of regular for certiorari would reveal that petitioner intended to
employees and the actual wages/benefits paid to them show the grave abuse of discretion committed by the
from the first day of their employment, plus moral labor tribunals in not allowing the petitioner the
and exemplary damages, and attorney‘s fees of not ample opportunity to submit its position paper on the
less than P300,000.00 per employee. alleged violation of the CBA. The Labor Arbiter and
Petitioner moved to dismiss the complaint on the the NLRC viewed it as a waiver on its part and
ground that the Union was not the real party-in- hastened to rule that ‖since the complainant‘s
interest. Subsequently, petitioner manifested that allegations remain unrebutted, they are deemed
while it was ready and willing to prove that said correct and valid.‖ Due process dictates that a person
employees were provided by independent legitimate should be given the opportunity to be
contractors and that it was not engaged in labor-only heard. Unfortunately, this was not accorded to the
contracting in a position paper yet to be submitted, petitioner and such right was even foreclosed when
petitioner prayed that the Labor Arbiter first resolve the appellate court dismissed the petition before it on
the issues raised in their motion to dismiss. technical grounds. The policy of our judicial system
Labor Arbiter ruled that motion to dismiss is a is to encourage full adjudication of the merits of an
prohibited pleading. Labor arbiter decided that the appeal. Ends of justice are better served when both
petitioner is guilty of unfair labor practices. parties are heard and the controversy decided on its
Petitioner filed petition for certiorari with the Court merits. Thus, in the exercise of its equity
of Appeals. However, the CA dismissed the appeal jurisdiction, the Court will not hesitate to reverse the
for failure of the petitioner to attach the necessary dismissal of appeals that are grounded merely on
documents and pleading in support for the relief they technicalities.
sought. Additionally, the verification for non-forum

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40. Lolita Lopez et al. vs. Quezon City Sports provision of the Collective Bargaining
Club, Inc. Agreement, the strike it staged on August
Facts: 12, 1998 is hereby declared illegal and
consequently, pursuant to Article 264 of the
In this case, there are two actions. First, the one Labor Code, the individual respondents,
initiated by the labor organization and the other namely: RONILO C. LEE, EDUARDO V.
initiated by the employer. In the first case, the SANTIA, CECILLE C. PANGAN, ROMEO
Kasapiang Manggagawa sa Quezon City Sports Club M. MORGA, GENARO C. BANDO AND
(union) claims that it is a registered independent ALEX J. SANTIAGO, who admitted in
labor organization and the incumbent collective paragraph 1 of their position paper that they
bargaining agent of Quezon City Sports Club are officers/members of the complaining
(QCSC). They filed a complaint for unfair labor Union are hereby declared to have lost their
practice against QCSC on 12 November 1997. employment status.

The Union averred that it was ordered to submit a Back to the first case, the Labor Arbiter (Joel Lustria)
new information sheet. It immediately wrote a letter found QCSC guilty of unfair labor practice. QCSC
addressed to the general manager, Angel Sadang, to appealed from the labor arbiter‘s decision. It also
inquire about the information sheet, only to be filed a motion for reduction of the appeal bond to
insulted by the latter. The members of the union were P4,000,000.00. The NLRC ordered the posting of an
not paid their salaries on 30 June 1997. A QCSC additional P6,000,000.00). QCSC filed a supplement
board member, Antonio Chua allegedly harassed one to its appeal, citing the Dinopol decision.
of the employees and told him not to join the strike
and even promised a promotion. On 4 July 1997, the
union wrote a letter to the management for the release
of the members‘ salaries for the period 16-30 June Meanwhile, the National Labor Relations
1997, implementation of Wage Order No. 5, and Commission (NLRC) rendered a decision granting
granting of wage increases mandated by the the appeal and reversing the Lustria decision. The
Collective Bargaining Agreement (CBA). When its NLRC said that the Dinopol Decision in the illegal
letter went unanswered, the union filed a notice of strike case must prevail over the Lustria Decision
strike on 10 July 1997 for violation of Article 248 because of the established doctrine of primacy and
(a)(c)(e) of the Labor Code, nonpayment of overtime finality of decision. In the illegal strike case, Ronilo
pay, refusal to hear its grievances, and malicious Lee, Eduardo Santia, Cecille Pangan, Romeo Morga,
refusal to comply with the economic provisions of Genaro Bando and Alex Santiago lost or forfeited
the CBA. After conducting a strike vote, it staged a their employment on the day the illegal strike was
strike on 12 August 1997. On 16 August 1997, the staged. The NLRC said that the forfeiture of their
QCSC placed some of its employees under temporary employment status carries with it the extinction of
lay-off status due to redundancy. their right to demand for and be entitled to the
economic benefits accorded to them by law and the
The second case: It appears that on 22 December existing CBA.
1997, QCSC also filed a petition for cancellation of
registration against the union and to declare the The other complainants (petitioners) meanwhile filed
union‘s strike on August 12, 1997 as illegal. This a motion for reconsideration, which was denied by
action by QCSC is docketed as NLRC CASE NO. the NLRC. They filed a petition for certiorari under
00-09-0663-97. The Labor Arbiter Ernesto Dinopol Rule 65 before the Court of Appeals but was denied.
declared the strike of the union illegal in its decision
Issues:
dated October 9, 1998 (Dinopol decision). The
dispositive reads: 1. Do the simultaneous filing of the motion to reduce
the appeal bond and posting of the reduced amount of
WHEREFORE, in view of the Union‘s
bond within the reglementary period for appeal
having violated the no-strike-no-lockout

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constitute substantial compliance with Article 223 of reduce the bond; (3) a liberal interpretation of the
the Labor Code? requirement of an appeal bond would serve the
desired objective of resolving controversies on the
2. Whether the NLRC erred in declaring them to merits; or (4) the appellants, at the very least,
have lost their employment contrary to the Dinopol exhibited their willingness and/or good faith by
decision which only affected a few of the employees posting a partial bond during the reglementary
who were union members. period. Applying these jurisprudential guidelines, we
find and hold that the NLRC did not err in reducing
Ruling:
the amount of the appeal bond and considering the
First issue: appeal as having been filed within the reglementary
period.
Under the Rules, appeals involving monetary awards
are perfected only upon compliance with the The posting of the amount of P4,000,000.00
following mandatory requisites, namely: (1) payment simultaneously with the filing of the motion to reduce
of the appeal fees; (2) filing of the memorandum of the bond to that amount, as well as the filing of the
appeal; and (3) payment of the required cash or memorandum of appeal, all within the reglementary
surety bond. period, altogether constitute substantial compliance
with the Rules.
Thus, the posting of a bond is indispensable to the
perfection of an appeal in cases involving monetary Second issue:
awards from the decision of the labor arbiter. The
We rule in favor of petitioners.
filing of the bond is not only mandatory but also a
jurisdictional requirement that must be complied with The assailed Dinopol decision involves a complaint
in order to confer jurisdiction upon the NLRC. Non- for illegal strike filed by QCSC on the ground of a
compliance with the requirement renders the decision ―no-strike no lockout‖ provision in the CBA. The
of the labor arbiter final and executory. This challenged decision was rendered in accordance with
requirement is intended to assure the workers that if law and is supported by factual evidence on record.
they prevail in the case, they will receive the money In the notice of strike, the union did not state in
judgment in their favor upon the dismissal of the particular the acts, which allegedly constitute unfair
employer‘s appeal. It is intended to discourage labor practice. Moreover, by virtue of the ―no-strike
employers from using an appeal to delay or evade no lockout‖ provision in the CBA, the union was
their obligation to satisfy their employees‘ just and prohibited from staging an economic strike, i.e., to
lawful claims. force wage or other concessions from the employer,
which he is not required by law to grant. However, it
However, Section 6 of the New Rules of Procedure
should be noted that while the strike declared by the
of the NLRC also mandates, among others, that no
union was held illegal, only the union officers were
motion to reduce bond shall be entertained except on
declared as having lost their employment status.
meritorious grounds and upon the posting of a bond
In effect, there was a ruling only with respect to
in a reasonable amount in relation to the monetary
some union members while the status of all others
award. Hence, the NLRC has the full discretion to
had remained disputed.
grant or deny the motion to reduce the amount of the
appeal bond. There is no conflict between the Dinopol and the
Lustria decisions. While both rulings involve the
In the case of Nicol v. Footjoy Industrial Corporation
same parties and same issues, there is a distinction
ruled that the bond requirement on appeals involving
between the remedies sought by the parties in these
monetary awards had been and could be relaxed in
two cases. In the Dinopol decision, it was QCSC
meritorious cases such as: (1) there was substantial
which filed a petition to declare the illegality of the
compliance with the Rules; (2) the surrounding facts
12 August 1997 strike by the union. The consequence
and circumstances constitute meritorious grounds to
of the declaration of an illegal strike is termination

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from employment, which the Labor Arbiter did so A writ of execution was issued by the Labor Arbiter,
rule in said case. However, not all union members which was later on quashed upon motion by
were terminated. In fact, only a few union officers respondent. The quashal was reversed by the NLRC.
were validly dismissed in accordance with Article Upon reconsideration, the NLRC reconsidered and
264 of the Labor Code (the six named). Corollarily, modified that the satisfaction of the award will be
the other union members who had merely only against the funds of respondent which are not
participated in the strike but had not committed any identified as public funds. The NRLC‘s order and
illegal acts were not dismissed from employment. resolution having become final, an alias writ of
Hence, the NLRC erred in declaring the employment execution was issued. A notice of garnishment was
status of all employees as having been lost or served upon PNB Diliman Branch. Upon learning of
forfeited by virtue of the Dinopol decision. the notice, respondent filed an urgent motion to quash
garnishment which was dismissed by the Labor
On the other hand, the Lustria decision involved the Arbiter. Funds from PNB were withdrawn by the
unfair labor practices alleged by the union with sheriff. Respondent filed a petition for certiorari with
particularity. In said case, Labor Arbiter Lustria sided the Court of Appeals. The CA dismissed the petition
with the Union and found QCSC guilty of such ruling that the funds are not public funds but on
practices. As a consequence, the affected employees reconsideration, amended its decision holding still
were granted backwages and separation pay. The that the funds are not public funds but the petition is
grant of backwages and separation pay however was granted because of the case of National
not premised on the declaration of the illegality of the Electrification Administration vs Morales(NEA case)
strike but on the finding that these affected that all money claims against the government must be
employees were constructively dismissed from work, first filed with the Commission on Audit. Petitioner
as evidenced by the layoffs effected by the company. moved for reconsideration but was denied. The
Amended Decision and Resolution are now being
Therefore, with respect to petitioners and union
assailed in this petition for review on certiorari.
officers Alex J. Santiago, Ma. Cecilia Pangan, Ronilo
E. Lee, and Genaro Bando, who apparently had been Issue: Whether or not the funds of respondent were
substituted by present petitioner Teresita Bando, the properly garnished?
Dinopol decision declaring them as having lost their
employment status still stands. Ruling: No, the funds of respondent were not
properly garnished. The Court ruled that the CA
To recapitulate, the NLRC erred in setting aside the correctly cited the NEA case. Respondent is a
Lustria decision, as well as in deleting the award of juridical personality separate and distinct from the
backwages and separation pay, despite the finding government and has the capacity to sue and be sued.
that the affected employees had been constructively Thus, it cannot evade execution, and its funds may be
dismissed. subject to garnishment or levy. However, before
execution may be had, a claim for payment of the
Based on the foregoing, the Lustria decision should
judgment award must first be filed with COA
be upheld and therefore reinstated except as regards
pursuant to Commonwealth Act No. 327.
the four petitioners.
42. Portillo vs. Rudolf Lietz, Inc. et al., G.R. No.
41. Lockheed Detective & Watchman Agency vs
196539, October 10, 2012
UP G.R. No. 185918, April 18, 2012
Facts:
Facts: Petitioner entered into a contract for security
Portillo was a Sales Representative of Rudolf Lietz,
services with respondent. An NLRC Decision
Inc. pharmaceutical business. Portillo signed an
holding respondent solidarily liable with petitioner to
employment contract containing a ‗Goodwill Clause‖
security guards for P12,142,522.69 became final and
as follows:
executory.

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“It remains understood and you agreed that, While Portillo‘s claim for unpaid salaries is a money
on the termination of your employment by claim that arises out of or in connection with an
act of either you or [Lietz Inc.], and for a employer-employee relationship, Lietz‘ claim
period of three (3) years thereafter, you against Portillo for violation of the goodwill clause is
shall not engage directly or indirectly as a money claim based on an act done after the
employee, manager, proprietor, or solicitor cessation of the employment relationship. And,
for yourself or others in a similar or while the jurisdiction over Portillo’s claim is
competitive business or the same character vested in the labor arbiter, the jurisdiction over
of work which you were employed by [Lietz Lietz Inc.’s claim rests on the regular courts.
Inc.] to do and perform. Should you breach
this good will clause of this Contract, you The difference in the nature of the credits that one
shall pay [Lietz Inc.] as liquidated damages has against the other, conversely, the nature of the
the amount of 100% of your gross debt one owes another, which difference in turn
compensation over the last 12 months, it results in the difference of the forum where the
being agreed that this sum is reasonable and different credits can be enforced, prevents the
just.” application of compensation. The labor tribunal does
not have jurisdiction over the civil case of breach of
Portillo subsequently resigned from her employment contract.
with Lietz. She demanded from Lietz Inc. for the
payment of her remaining salaries and commissions,
which were not paid to her upon such resignation.
Later, and within the 3-year prohibitory period, Lietz
learned that Portillo was hired by Ed Keller 43. Building Care Corp. vs. Macaraeg, G.R. No.
Philippine as head of its Pharma Raw Material 198357, December 10, 2012
Department. Ed Keller is direct competitor of Lietz.
Petitioners are in the business of providing security
As Portillo‘s demand for remaining salaries and services to their clients. They hired respondent as a
commissions from Lietz still went unheeded, she security guard beginning August 25, 1996, assigning
filed a complaint with the NLRC for non-payment of her at Genato Building in Caloocan City. However,
1½ months‘ salary, 2 months‘ commission, 13th on March 9, 2008, respondent was relieved of her
month pay, plus moral, exemplary and actual post. She was re-assigned to Bayview Park Hotel
damages and attorney‘s fees. from March 9-13, 2008, but after said period, she was
allegedly no longer given any assignment. Thus, on
In its position paper, Lietz admitted liability for
September 9, 2008, respondent filed a complaint
Portillo‘s money claims. However, Lietz raised the
against petitioners for illegal dismissal,
defense of legal compensation: Portillo‘s money
underpayment of salaries, non-payment of separation
claims should be offset against her liability to Lietz
pay and refund of cash bond. Conciliation and
for liquidated damages for Portillo‘s breach of the
mediation proceedings failed, so the parties
―Goodwill Clause‖ in the employment contract when
were ordered to submit their respective position
she became employed with Ed Keller.
papers.
Issue:
Should the claims of Portillo against Lietz for unpaid
wages, commissions, etc. be offset against her Respondent claimed that petitioners failed to give her
liability to Lietz for damages from breach of the an assignment for more than nine months, amounting
―Goodwill Clause‖ in the contract? to constructive dismissal, and this compelled her to
file the complaint for illegal dismissal.
Ruling:
No, it should not be offset.

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On the other hand, petitioners that respondent was relaxed in the interest of justice, it is well-settled that these are tools
relieved from her post as requested by the client designed to facilitate the adjudication of cases. The relaxation of
because of her habitual tardiness, persistent procedural rules in the interest of justice was never intended to
borrowing of money from employees and tenants of be a license for erring litigants to violate the rules
the client, and sleeping on the job. Respondent filed a with impunity. Liberality in the interpretation and
complaint for illegal dismissal with the Labor application of the rules can be invoked only in proper cases and
Arbiter. under justifiable causes and circumstances. While litigation is not
a game of technicalities, every case must be prosecuted in
accordance with the prescribed procedure to ensure an orderly
and speedy administration of justice.
The Labor Arbiter (LA) in favor of petitioners,
holding that the dismissal of Macaraeg was valid, but
ordered the former to pay a certain sum as financial
assistance. The Appeal which respondent filed with The later case of Daikoku Electronics Phils., Inc.
the NLRC was for having been filed out of time. v. Raza, further explained that:
Hence, NLRC declared that the LA's Decision had
become final and executory on June 16, 2009.

To be sure, the relaxation of procedural rules cannot be made


without any valid reasons proffered for or underpinning it. To
Respondent elevated the case to the CA via a petition merit liberality, petitioner must show reasonable cause justifying
for certiorari. The CA reversed and set aside the its non-compliance with the rules and must convince the Court
decision of NLRC and declared Macaraeg to have that the outright dismissal of the petition would defeat the
been illegally dismissed. Petitioners were ordered to administration of substantial justice. x x x The desired leniency
reinstate petitioner without loss of seniority rights, cannot be accorded absent valid and compelling reasons for such
benefits and privileges; and to pay her backwages a procedural lapse. x x x
and other monetary benefits during the period of
her illegal dismissal up to actual reinstatement.
Petitioners' motion for reconsideration was denied.
In this case, the justifications given by the CA for its
Hence, the present petition.
liberality by choosing to overlook the belated filing
of the appeal are, the importance of the issue raised,
i.e., whether respondent was illegally dismissed; and
ISSUE: the belief that respondent should be "afforded the
amplest opportunity for the proper and just
Whether the CA erred in liberally applying the rules determination of his cause, free from the constraints
of procedure and ruling that respondent's appeal of technicalities," considering that the belated filing
should be allowed and resolved on the merits despite of respondent's appeal before the NLRC was the fault
having been filed out of time. of respondent's former counsel. Note, however, that neither
respondent nor her former counsel gave any explanation or
reason citing extraordinary circumstances for her
RULING: lawyer's failure to abide by the rules for filing an
appeal. Respondent merely insisted that she had not
The Court cannot sustain the CA's Decision. It should been remiss in following up her case with said
be emphasized that the resort to a liberal application, lawyer. It is, however, an oft-repeated ruling that
or suspension of the application of procedural rules, the negligence and mistakes of counsel bind the
must remain as the exception to the well-settled client. A departure from this rule would bring
principle that rules must be complied with for the about never-ending suits, so long as lawyers could
orderly administration of justice. In Marohomsalic v. allege their own fault or negligence to support
Cole, the Court stated: While procedural rules may be

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the client‘s case and obtain remedies and reliefs with the petitioner bank "as evidenced by the
already lost by the operation of law. appointment memo issued to him on 25 June 1975. "
Be that as it may, on or about October 1976, the
petitioner requested (CESI) to withdraw Orpiada's
assignment because, in the allegation of the bank,
It should also be borne in mind that the right of the Orpiada's services "were no longer needed."
winning party to enjoy the finality of the resolution of
the case is also an essential part of public policy and On 29 October 1976, Orpiada instituted a complaint
in the Department of Labor (now Ministry of Labor
the orderly administration of justice. Hence, such
and Employment) against the petitioner for illegal
right is just as weighty or equally important as the dismissal and failure to pay the 13th month pay
right of the losing party to appeal or seek provided for in Presidential Decree No. 851. This
reconsideration within the prescribed period. complaint was docketed as Case No. R04-1010184-
76-E.After investigation, the Office of the Regional
Director, Regional Office No. IV of the Department
of Labor, issued an order dismissing Orpiada's
When the Labor Arbiter's Decision became final, complaint for failure of Mr.Orpiada to show the
petitioners attained a vested right to said judgment. existence of an employer-employee relationship
between the bank and himself.
44. PHILIPPINE BANK OF
COMMUNICATIONS vs. Despite the foregoing order, Orpiada succeeded in
THE NATIONAL LABOR RELATIONS having his complaint certified for compulsory
COMMISSION et al. G.R. No. L-66598 arbitration in Case No. RB-IV-11187-77
December 19, 1986 entitled "Ricardo Orpiada, complaint vs. Philippine
Bank of Communications, respondent." During the
FACTS: compulsory arbitration proceedings, CESI was
brought into the picture as an additional respondent
by the bank. Both the bank and (CESI) stoutly
Petitioner Philippine Bank of Communications and maintained that (CESI) (and not the bank) was the
the Corporate Executive Search Inc. (CESI) entered employer of Orpiada.
into a letter agreement dated January 1976 under
which (CESI) undertook to provide "Tempo[rary]
Services" to petitioner Consisting of the "temporary ISSUE:
services" of eleven (11) messengers. The contract
period is described as being "from January 1976—." Whether or not an employer-employee relationship
The petitioner in truth undertook to pay a "daily existed between the petitioner bank and private
service rate of P18, " on a per person basis. respondent Ricardo Orpiada. The petitioner bank
maintains that no employer-employee relationship
Attached to the letter agreement was a "List of was established between itself and Ricardo Orpiada
Messengers assigned at Philippine Bank of and that Ricardo Orpiada was an employee of (CESI)
Communications" which list included, as item No. 5 and not of the bank.
thereof, the name of private respondent Ricardo
Orpiada. The second ("payment of wages") and third ("power
of dismissal") factors suggest that the relevant
Ricardo Orpiada was thus assigned to work with the relationship was that subsisting between (CESI) and
petitioner bank. As such, he rendered services to the Orpiada, a relationship conceded by (CESI) to be one
bank, within the premises of the bank and alongside between employer and employee. Upon the other
other people also rendering services to the bank. hand, the first ("selection and engagement") and
There was some question as to when Ricardo Orpiada fourth ("control of employee's conduct") factors
commenced rendering services to the bank. As noted indicate that some direct relationship did exist
above, the letter agreement was dated January 1976. between Orpiada and the bank and that such
relationship may be assimilated to employment.
However, the position paper submitted by (CESI) to
the National Labor Relations Commission stated that Perhaps the most important circumstance which
(CESI) hired Ricardo Orpiada on 25 June 1975 as a emerges from an examination of the facts of the tri-
Tempo Service employee, and assigned him to work lateral relationship between the bank, (CESI) and
Orpiada is that the employer-employee relationship

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LABOR STANDARDS LAW

between (CESI) and Orpiada was established Employment," of the Omnibus Rules Implementing
precisely in anticipation of, and for the very purpose the Labor Code provides as follows:
of making possible, the secondment of Orpiada to the
bank. It is therefore necessary to confront the task of In contrast, job contracting-contracting out a
determining the appropriate characterization of the particular job to an independent contractor is defined
relationship between the bank and (CESI) was that by the Implementing Rules as follows:
relationship one of employer and job (independent)
contractor or one of employer and "labor-only" The definition of "labor-only" contracting in Rule
contractor? VIII, Book III of the Implementing Rules must be
read in conjunction with the definition of job
Under the general rule set out in the first and second contracting given in Section 8 of the same Rules. The
paragraphs of Article 106, an employer who enters undertaking given by CESI in favor of the bank was
into a contract with a contractor for the performance not the performance of a specific — job for instance,
of work for the employer, does not thereby create an the carriage and delivery of documents and parcels to
employer-employes relationship between himself and the addresses thereof. There appear to be many
the employees of the contractor. Thus, the employees companies today which perform this discrete service,
of the contractor remain the contractor's employees companies with their own personnel who pick up
and his alone. Nonetheless when a contractor fails to documents and packages from the offices of a client
pay the wages of his employees in accordance with or customer, and who deliver such materials utilizing
the Labor Code, the employer who contracted out the their own delivery vans or motorcycles to the
job to the contractor becomes jointly and severally addresses. In the present case, the undertaking of
liable with his contractor to the employees of the (CESI) was toprovideits client-thebank-with a certain
latter "to the extent of the work performed under the number of persons able to carry out the work of
contract" as such employer were the employer of the messengers. Such undertaking of CESI was complied
contractor's employees. The law itself, in other with when the requisite number of persons were
words, establishes an employer-employee assigned or seconded to the petitioner bank. Orpiada
relationship between the employer and the job utilized the premises and office equipment of the
contractor's employees for a limited purpose, i.e., in bank and not those of (CESI) Messengerial work-the
order to ensure that the latter get paid the wages due delivery of documents to designated persons whether
to them. within or without the bank premises — is of course
directly related to the day-to-day operations of the
A similar situation obtains where there is "labor only" bank. Section 9(2) quoted above does notrequire for
contracting. The "labor-only" contractor-i.e "the its applicability that the petitioner must be engaged in
person or intermediary" is considered "merely as an the delivery of items as a distinct and separate line of
agent of the employer. " The employer is made by the business.
statute responsible to the employees of the "labor
only" contractor as if such employees had been Succinctly put, CESI is not a parcel delivery
directly employed by the employer. Thus, where company: as its name indicates, it is a recruitment
"labor only" contracting exists in a given case, the and placement corporation placing bodies, as it were,
statute itself implies or establishes an employer- in d ifferent client companies for longer or shorter
employee relationship between the employer (the periods of time. It is this factor that, to our mind,
owner of the project) and the employees of the "labor distinguishes this case from American President v.
only" contractor, this time for Clave et al, 114 SCRA 826 (1982) if indeed
a comprehensive purpose: "employer for purposes distinguishing way is needed.
of this Code, to prevent any violation or
circumvention of any provision of this Code. " The The bank urged that the letter agreement entered into
law in effect holds both the employer and the "labor- with CESI was designed to enable the bank to obtain
only" contractor responsible to the latter's employees
the temporary services of people necessary to enable
for the more effective safeguarding of the employees'
the bank to cope with peak loads, to replace
rights under the Labor Code.
temporary workers who were out on vacation or sick
leave, and to handle specialized work. There is, of
Both the petitioner bank and (CESI) have insisted course, nothing illegal about hiring persons to carry
that (CESI) was not a "labor only" contractor. Section out "a specific project or undertaking the completion
9 of Rule VIII of Book III entitled "Conditions of or termination of which [was] determined at the time
of the engagement of [the] employee, or where the

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work or service to be performed is seasonal in nature 45. VIRGINIA G. NERI and JOSE CABELIN
and the employment is for the duration of the season" vs. NATIONAL LABOR RELATIONS
(Article 281, Labor Code).<äre||anº•1àw> The letter COMMISSION FAR EAST BANK & TRUST
agreement itself, however, merely required (CESI) to COMPANY (FEBTC) and BUILDING CARE
furnish the bank with eleven 11) messengers for " a CORPORATION
contract period from January 19, 1976 —." The G.R. No. Nos. 97008-09 July 23, 1993
eleven (11) messengers were thus supposed to render
"temporary" services for an indefinite or unstated
period of time. Ricardo Orpiada himself was assigned FACTS:
to the bank's offices from 25 June 1975 and rendered
services to the bank until sometime in October 1976,
Neri and Cabelinapllied for and were hired
or a period of about sixteen months. Under the Labor
by respondent BCC, a corporation engaged in
Code, however, any employee who has rendered at
providing technical, maintenance, engineering,
least one year of service, whether such service is housekeeping, security and other specific services to
continuous or not, shall be considered a regular its clientele.They were assigned to work in the
employee (Article 281, Second paragraph).
Cagayan de Oro City Branch of respondent FEBTC
Assuming, therefore, that Orpiada could properly be
on 1 May 1979 and 1 August 1980, respectively, Neri
regarded as a casual (as distinguished from a regular)
a radio/telex operator and Cabelin as janitor, before
employee of the bank, he became entitled to be
being promoted to messenger on 1 April
regarded as a regular employee of the bank as soon as 1989.chanroblesvirtualawlibrarychanrobles virtual
he had completed one year of service to the bank. law library
Employers may not terminate the service of a regular
employee except for a just cause or when authorized
under the Labor Code (Article 280, Labor Code). It is On 28 June 1989, petitioners instituted
not difficult to see that to uphold the contractual complaints against FEBTC and BCC before Regional
arrangement between the bank and (CESI) would in Arbitration Branch No. 10 of the Department of
effect be to permit employers to avoid the necessity Labor and Employment to recognize them as its
of hiring regular or permanent employees and to regular employees and be paid the same wages which
enable them to keep their employees indefinitely on a its employees receive.
temporary or casual status, thus to deny them security
of tenure in their jobs. Article 106 of the Labor Code On 16 November 1989, the Labor Arbiter
is precisely designed to prevent such a result. dismissed the complaint for lack of merit.Respondent
BCC was considered an independent contractor
We hold that, in the circumstances 'instances of this because it proved it had substantial capital. Thus,
case, (CESI) was engaged in "labor-only" or petitioners were held to be regular employees of
attracting vis-a-vis the petitioner and in respect c BCC, not FEBTC. The dismissal was appealed to
Ricardo Orpiada, and that consequently, the NLRC which on 28 September 1990 affirmed the
petitioner bank is liable to Orpiada as if Orpiada had decision on appeal. On 22 October 1990, NLRC
been directly, employed not only by (CESI) but also denied reconsideration of its affirmance,prompting
by the bank. It may well be that the bank may in turn petitioners to seek redress from this Court.
proceed against (CESI) to obtain reimbursement of,
or some contribution to, the amounts which the bank Nevertheless, petitioners insist before that
will have to pay to Orpiada; but this it is not BCC is engaged in "labor-only" contracting hence,
necessary to determine here. they conclude, they are employees of respondent
FEBTC.
WHEREFORE, the petition for certiorari is DENIED
and the decision promulgated on 29 December 1983
of the National Labor Relations Commission is ISSUE:
AFFIRMED. The Temporary Restraining Order Whether or not BCC is only a job
issued by this Court on 11 April 1984 is hereby lifted. contracting company, hence petitioners are
Costs against petitioner. not regular employees of FEBTC.
RULING:
SO ORDERED. We cannot sustain the petition.
Respondent BCC need not prove that it
made investments in the form of tools, equipment,
machineries, work premises, among others, because it

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has established that it has sufficient capitalization. petitioners were performing activities directly
The Labor Arbiter and the NLRC both determined related to the principal business of the bank,
that BCC had a capital stock of P1 million fully under the "right of control" test they must still be
subscribed and paid for.BCC is therefore a highly considered employees of BCC. In the case of
capitalized venture and cannot be deemed petitioner Neri, it is admitted that FEBTC issued a
engaged in "labor-only" contracting. job description which detailed her functions as a
It is well-settled that there is "labor-only" radio/telex operator. However, a cursory reading of
contracting where: the job description shows that what was sought to be
(a) the person supplying workers to an controlled by FEBTC was actually the end-result
employer does not have substantial of the task,e.g., that the daily incoming and outgoing
capital or investment in the form of telegraphic transfer of funds received and relayed by
tools, equipment, machineries, work her, respectively, tallies with that of the register. The
premises, among others; and, guidelines were laid down merely to ensure that the
(b) the workers recruited and placed by desired end-result was achieved. It did not, however,
such person are performing activities tell Neri how the radio/telex machine should be
which are directly related to the operated.
principal business of the employer. More importantly, under the terms and
conditions of the contract, it was BCC alone which
Article 106 of the Labor Code defines had the power to reassign petitioners. Their
"labor-only" contracting thus deployment to FEBTC was not subject to the bank's
Art. 106. Contractor or acceptance. Cabelin was promoted to messenger
subcontractor. . . . . There is "labor- because the FEBTC branch manager promised BCC
only" contracting where the person that two (2) additional janitors would be hired from
supplying workers to an employer the company if the promotion was to be effected.
does not have substantial capital or Furthermore, BCC was to be paid in lump sum unlike
investment in the form of tools, in the situation in Philippine Bank of
equipment, machineries, work Communications where the contractor, CESI, was to
premises, among others, and the be paid at a daily rate on a per person basis. And, the
workers recruited by such persons contract therein stipulated that the CESI was merely
are performing activities which are to provide manpower that would render temporary
directly related to the principal services. In the case at bar, Neri and Cabelin were to
business of such employer . . . . perform specific special services. Consequently,
(emphasis supplied). petitioners cannot be held to be employees of FEBTC
as BCC "carries an independent business" and
Based on the foregoing, BCC cannot be undertaken the performance of its contract with
considered a "labor-only" contractor because it various clients according to its "own manner and
has substantial capital. While there may be no method, free from the control and supervision" of its
evidence that it has investment in the form of tools, principals in all matters "except as to the results
equipment, machineries, work premises, among thereof."
others, it is enough that it has substantial capital, as The Petition for Certiorari is dismissed.
was established before the Labor Arbiter as well as
the NLRC. In other words, the law does not require
both substantial capital and investment in the form of 46. Filipinas Synthetic Fiber Corporation vs. NLRC, et al.
tools, equipment, machineries, etc. This is clear from
the use of the conjunction "or". If the intention was to [257 SCRA 336 June 14, 1996]
require the contractor to prove that he has both
capital and the requisite investment, then the Facts:
conjunction "and" should have been used. But, On 4 April 1991 FILSYN, a domestic corporation
having established that it has substantial capital, it engaged in the manufacture of polyester fiber,
was no longer necessary for BCC to further adduce contracted with De Lima Trading andGeneral
evidence to prove that it does not fall within the Services (DE LIMA) for the performance of specific
purview of "labor-only" contracting. There is even no janitorial services Pursuant to the agreement Felipe
need for it to refute petitioners' contention that the Loterte, among others, wasdeployed at FILSYN to
activities they perform are directly related to the take care of the plants and maintain general
principal business of respondent bank. cleanliness around the premises.On 24 February 1992
Even assuming ex argumentithat Loterte sued FILSYN and DE LIMA as alternative

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defendants for illegal dismissal, underpayment of substantial capitalization of P1,600,000.00,


wages,non-payment of legal holiday pay, service P400,000.00 of which is actuallysubscribed. Hence, it
incentive leave pay and 13th month pay alleging that cannot be considered as engaged in labor-only
he was first assigned to perform janitorial work contracting being a highly capitalized venture.
atFILSYN in 1981 by the La Saga General Services; Moreover, while the janitorialservices performed by
that the La Saga was changed to DE LIMA on Felipe Loterte pursuant to the agreement between
August 1991; that when a movement todemand FILSYN and DE LIMA may be considered directly
increased wages and 13th month pay arose among the related to theprincipal business of FILSYN which is
workers on December 1991 he was accused by a the manufacture of polyester fiber, nevertheless, they
certain Dodie La Flores of havingposted in the are not necessary in its operation. On the
bulletin board at FILSYN an article attributing to contrary,they are merely incidental thereto, as
management a secret understanding to block the opposed to being integral, without which production
demand; and, for denyingresponsibility, his gate and company sales will not suffer. Judicial notice
pass was unceremoniously cancelled on 6 February hasalready been taken of the general practice in
1992 and he was subsequently dismissed private as well as in government institutions and
industries of hiring janitorial services on
Loterte was classified by the Labor Arbiter as a anindependent contractor basis.
regular employee on the ground that he performed
tasks usually necessary or desirablein the main Respondent De Lima Trading and General Services
business of FILSYN for more than ten (10) years or (DE LIMA) are ordered to reinstate private
since 1981. FILSYN was declared to be the real respondent FELIPE LOTERTE to hisformer position
employer of Loterte and DELIMA as a mere labor or its equivalent without loss of seniority rights. And
contractor. Hence, FILSYN was adjudged liable for private respondent De Lima Trading and General
Loterte's reinstatement, payment of salary Services (DE LIMA) isordered jointly and severally
differentials and back wages and other with petitioner Filipinas Synthetic Fiber Corporation
benefits. Hence, this petition for certiorari (FILSYN) to pay private respondent FELIPE
by FILSYN. LOTERTE his salary differentials, 13th month
pay, service incentive leave pay, and backwages
Issue: without prejudice to FILSYN seeking reimbursement
Whether or not there exists an employer-employee from DELIMA for whatever amount the former may
relationship between FILSYN and private respondent pay or have paid the latter
Felipe Loterte.

SC Ruling: 47. Alejandro Maraguinot and Paulino Enero v.


NLRC, GR No. 120969, 22 January 1998, Davide,
DE LIMA is an independent job contractor, therefore First Division
no direct employer-employee relationship exists
between petitioner FILSYN andprivate respondent Facts
Felipe Loterte. The relationship between petitioner
Filipinas Synthetic Fiber Corporation (FILSYN) and Maraguinot and Enero were both hired by Vic del
private respondent DeLima Trading and General
Rosario to work for his projects under Viva films;
Services (DE LIMA) is one of job-contractorship.
Sometime in 1992, they asked for their salary to be
Under the Labor Code, two (2) elements must exist
for a finding of labor-only contracting: (a) the person adjusted according to the minimum wage;
supplying workers to anemployer does not have
substantial capital or investment in the form of tools, It is to be noted that at the time, Maraguinot was
equipment, machineries, work premises, among having a salary of only 475 per week (this was in
others, and (b) theworkers recruited and placed by 1991);
such persons are performing activities directly
related to the principal business of such employer. Both Maraguinot and Enero asked their supervisors
for their wage to be adjusted according to the
These two (2) elements do not exist in the instant minimum wage however, they were told that their
case. As pointed out by petitioner, private respondent
concern is to be aired to the owner of Viva;
DE LIMA is a going concernduly registered with the
Securities and Exchange Commission with

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They were told that their wage will be adjusted but petitioner pulled out his agency‘s services from the
they have to sign a blank employment contract; premises of the SSS. Petitioner, on June 29, 1994,
Enero did not accept and so he was fired; filed a complaint with the DOLE-NCR against the
SSS seeking the implementation of Wage Order No.
Maraguinot was fired but was asked to return few NCR-03.
SSS prayed for the dismissal of the complaint on the
days after;
ground that petitioner is not the real party in interest
and has no legal capacity to file the same. In any
He was once again asked to sign a blank employment
event, it argued that if it had any obligation, it was to
contract in exchange of the adjustment of his salary the security guards. Morever, it contended that the
according to the minimum wage; this, he did not security guards assigned to the SSS do not have any
accede to, hence, he was fired; legal basis to file a complaint against it for lack of
contractual privity.
A case was filed by the two against Viva but NLRC The Regional Director held in favor of petitioner
ruled in favour of Viva saying that there was really ordering SSS to pay complainant the sum of P
no employer-employee relationship between them; 1,600,858.46 representing the wage differentials
under Wage Order No. NCR-03 of the 168 Security
Issue Guards of Catalina Security Agency covering the
period from December 16, 1993 to June 24, 1994.
1. Whether there was employer-employee The SSS moved to reconsider the September 16,
1994 Order of the Regional Director, praying that the
relationship between Viva and the
computation be revised. The amount was reduced to
complainants that would merit a filing of an P 1,237,740.00.
illegal dismissal case? The SSS appealed to the Secretary of Labor upon
several assigned errors. Thereafter, the Secretary of
Held Labor, by Order of June 22, 1995, set aside the order
of the Regional Director and remanded the records of
1. Yes, the complainants are employees of the case "for recomputation of the wage differentials
Viva. In fact in most cases, it was Viva that using P 5,281.00 as the basis of the wage
paid the complainants. Further, the argument adjustment." And the Secretary held petitioner‘s
of Viva that they are contractual employees security agency "Jointly and severally liable for wage
is untenable for the reason that the differentials, the amount of which should be paid
directly to the security guards concerned."
complainants are employed on long-term
Issues:
basis.
1. Whether or not the Secretary of Labor has
jurisdiction to review appeals from decisions
of the Regional Directors.
2. Whether or not SSS is liable to pay
48. Urbanes Jr. vs. Sec. of Labor, G.R. No. petitioner for wage differentials.
122791, Feb. 19, 2003 Contentions:
Petitioner asserts that the Secretary of Labor does not
Facts: have jurisdiction to review appeals from decisions of
Petitioner Placido O. Urbanes, Jr., doing business the Regional Directors in complaints filed under
under the name and style of Catalina Security Article 129 of the Labor Code. Petitioner thus
Agency, entered into an agreement to provide contends that as the appeal of SSS was filed with the
security services to respondent Social Security wrong forum, it should have been dismissed.
System (SSS). The SSS, on the other hand, contends that Article
During the effectivity of the agreement, petitioner, by 128, not Article 129, is applicable to the case. Article
letter of May 16, 1994, requested the SSS for the 128.
upward adjustment of their contract rate in view of Held:
Wage Order No. NCR-03 which was issued by the Neither the petitioner’s contention nor the SSS’s is
Regional Tripartite Wages and Productivity Board- impressed with merit.Lapanday Agricultural
NCR. Development Corporation v. Court of
Petitioner sent several letters dated June 7 and June 8, Appealsinstructs so. In that case, the security agency
1994, reiterating the request. On June 24, 1994, filed a complaint before the RTC against the

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principal or client Lapanday for the upward In the event that the contractor or
adjustment of the contract rate in accordance with subcontractor fails to pay the wage of his
Wage Order Nos. 5 and 6. Lapanday argued that it is employees in accordance with this Code, the
the National Labor Relations Commission, not the employer shall be jointly and severally liable
civil courts, which has jurisdiction to resolve the with his contractor or subcontractor to such
issue in the case, it involving the enforcement of employees to the extent of the work
wage adjustment and other benefits due the agency‘s performed under the contract, in the same
security guards as mandated by several wage orders. manner and extent that he is liable to
Holding that the RTC has jurisdiction over the employees directly employed by him.
controversy, this Court ruled: ART. 107 INDIRECT EMPLOYER. The
We agree with the respondent that the RTC provisions of the immediately preceding
has jurisdiction over the subject matter of Article shall likewise apply to any person,
the present case. It is well settled in law and partnership, association or corporation
jurisprudence that where no employer- which, not being an employer, contracts
employee relationship exists between the with an independent contractor for the
parties and no issue is involved which may performance of any work, task, job or
be resolved by reference to the Labor Code, project.
other labor statutes or any collective ART. 109. SOLIDARY LIABILTY. The
bargaining agreement, it is the Regional provisions of existing laws to the contrary
Trial Court that has jurisdiction. In its notwithstanding, every employer or indirect
complaint, private respondent is not seeking employer shall be held responsible with his
any relief under the Labor Code but seeks contractor or subcontractor for any violation
payment of a sum of money and damages on of any provision of this Code. For purposes
account of petitioner's alleged breach of its of determining the extent of their civil
obligation under their Guard Service liability under this Chapter, they shall be
Contract. The action is within the realm of considered as direct employers.
civil law hence jurisdiction over the case As to the second issue, the liability of the
belongs to the regular courts. While the SSS to reimburse petitioner arises only if and when
resolution of the issue involves the petitioner pays his employee-security guards "the
application of labor laws, reference to the increases" mandated by Wage Order No. NCR-03.
labor code was only for the determination of The records do not show that petitioner has
the solidary liability of the petitioner to the paid the mandated increases to the security guards.
respondent where no employer-employee The security guards in fact have filed a complaint
relation exists. with the NLRC against petitioner relative to, among
In the case at bar, even if petitioner filed the other things, underpayment of wages.
complaint on his and also on behalf of the security
guards, the relief sought has to do with the
enforcement of the contract between him and the SSS 49. San Miguel vs. Maerc Integrated Services
which was deemed amended by virtue of Wage Order G.R. No. 144672, July 10, 2003
No. NCR-03. The controversy subject of the case at
bar is thus a civil dispute, the proper forum for the
resolution of which is the civil courts. FACTS:
But even assuming arguendo that
petitioner‘s complaint were filed with the proper
forum, for lack of cause of action it must be 291 workers filed their complaints against
dismissed. Articles 106, 107 and 109 of the Labor San Miguel Corporation and Maerc Integrated
Code provide: Services, Inc, for illegal dismissal, underpayment
ART. 106. CONTRACTOR OR of wages, non-payment of service incentive leave
SUBCONTRACTOR. Whenever an pays and other labor standards benefits, and for
employer enters into contract with another separation pays.
person for the performance of the former‘s
work, the employees of the contractor and of The complainants alleged that they were
the latter‘s subcontractor, if any, shall be hired by San Miguel Corporation (SMC) through its
paid in accordance with the provisions of agent or intermediary Maerc Integrated Services, Inc.
this Code. (MAERC) to work in 2 designated workplaces in
Mandaue City. They washed and segregated various

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kinds of empty bottles used by SMC to sell and Employees are those of SMC.
distribute its beer beverages to the consuming public.
They were paid on a per piece or pakiao basis except In ascertaining an employer-employee
for a few who worked as checkers and were paid on relationship, the following factors are considered:
daily wage basis.
(a) the selection and engagement of
Complainants alleged that long before employee;
SMC contracted the services of MAERC a
majority of them had already been working for (b) the payment of wages;
SMC under the guise of being employees of
another contractor, Jopard Services, until the (c) the power of dismissal; and,
services of the latter were terminated on 31
January 1988. (d) the power to control an
employee's conduct.
SMC denied liability for the claims and
averred that the complainants were not its employees Evidence discloses that petitioner played
but of MAERC, an independent contractor whose a large and indispensable part in the hiring of
primary corporate purpose was to engage in the MAERC's workers. It also appears that majority
business of cleaning, receiving, sorting, classifying, of the complainants had already been working for
etc., glass and metal containers. SMC long before the signing of the service
contract between SMC and MAERC in 1988.
In a letter dated 15 May 1991, SMC
informed MAERC of the termination of their In the case, the incorporators of MAERC
service contract by the end of June 1991. SMC admitted having supplied and recruited workers for
cited its plans to phase out its segregation activities SMC even before MAERC was created. The NLRC
starting 1 June 1991 due to the installation of labor also found that when MAERC was organized into a
and cost-saving devices. corporation in February 1988, the complainants who
were then already working for SMC were made to go
When the service contract was terminated, through the motion of applying for work with Ms.
complainants claimed that SMC stopped them Olga Ouano, President and General Manager of
from performing their jobs; that this was MAERC.
tantamount to their being illegally dismissed by
SMC who was their real employer as their As for the payment of workers' wages, SMC
activities were directly related, necessary and assumed the responsibility of paying for the
desirable to the main business of SMC; and, that mandated overtime, holiday and rest day pays of
MAERC was merely made a tool or a shield by SMC the MAERC workers. SMC also paid the
to avoid its liability under the Labor Code. MAERC employer's share of the SSS and Medicare
admitted that it recruited the complainants and placed contributions, the 13th month pay, incentive leave
them in the bottle segregation project of SMC but pay and maternity benefits. These lend credence
maintained that it was only conveniently used by to the complaining workers' assertion that while
SMC as an intermediary in operating the project. MAERC paid the wages of the complainants, it
merely acted as an agent of SMC.
The Labor Arbiter rendered a decision
holding that MAERC was an independent contractor. SMC maintained a constant presence in the
The National Labor Relations Commission (NLRC) workplace through its own checkers. The
ruled that MAERC was a labor-only contractor and responsibility of watching over the MAERC workers
that complainants were employees of SMC. by MAERC personnel became superfluous with the
presence of additional checkers from SMC. Control
ISSUE: of the premises in which the contractor's work was
performed was also viewed as another phase of
Whether the complainants are employees of control over the work, and this strongly tended to
petitioner SMC or of respondent MAERC. disprove the independence of the contractor.

HELD: But the most telling evidence is a letter by


Mr. Antonio Ouano, Vice-President of MAERC

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addressed to Francisco Eizmendi, SMC President and petitioner invokes that it has already paid all the
Chief Executive Officer, asking the latter to necessary compensation to the private respondents.
reconsider the phasing out of SMC's segregation
activities in Mandaue City. The letter attested to an ISSUE: Whether or not the petitioner should be held
arrangement entered into by the two (2) parties which jointly and severally liable, together with ‗Longest
was not reflected in the Contract of Services. A
Force‘ in the payment of back wages to the private
peculiar relationship mutually beneficial for a time
but nonetheless ended in dispute when SMC decided respondents as affirmed by respondent CA?
to prematurely end the contract leaving MAERC to
shoulder all the obligations to the workers. HELD: Yes.

While MAERC's investments in the form of Under Article 106, par. 2 of the Labor Code, „in the
buildings, tools and equipment amounted to more event that the contractor or subcontractor fails to pay
than P4 Million, one cannot disregard the fact that it wages of his employees…the employer shall be
was the SMC which required MAERC to undertake jointly and severally liable with his contractor or
such investments under the understanding that the subcontractor xxx‟. Also, in Article 107 of the same
business relationship between petitioner and MAERC Code, the law states that ‗…the preceding Article
would be on a long term basis.
shall likewise apply to person, partnership,
NOTES: association or corporation which, not being an
Jurisprudence has it that in determining the existence employer, contracts with an independent
of an independent contractor relationship, several contractor…‟. Pursuant to the mentioned provisions
factors may be considered such as: of the Labor Code, the Court said that, in this case,
o whether the contractor was carrying on the petitioner as an indirect employer, shall truly be
an independent business liable jointly and severally with ‗Longest Force‘ in
o the nature and extent of the work
o the skill required paying backwages and overtime pay to the private
o the term and duration of the relationship respondents. Moreover, the Court emphasized that
o the right to assign the performance of ‗Labor standard are enacted by the legislature to
specified pieces of work alleviate the plight of workers whose wages barely
o the control and supervision of the meet the spiraling costs of their basic needs. Labor
workers laws are considered written in every contract.
o the power of the employer with respect to
Stipulations in violation thereof are considered
the hiring, firing and payment of the
workers of the contractor null„. Therefore, the petitioner should be held jointly
o the control of the premises and severally liable, together with ‗Longest Force‘ to
o i.the duty to supply premises, tools, the private respondents as earlier decided by NLRC,
appliances, materials and labor as affirmed by the CA.
 the mode, manner and terms of payment.
51.) G.R. No. 154715, Dec. 11, 2003
50. Mariveles Shipyard Corp v. Court of Appeals New Golden City Builders vs. CA

G.R. No. 144134, Novemeber 11, 2003 FACTS:

FACTS: Petitioner submits that respondent Court of Petitioner entered into a construction
Appeals (CA) erred in its decisions in the previous contract with Prince David Development Corporation
cases where the petitioner was involved. The latter for the construction of a 17-storey office and
residential condominium building. Petitioner engaged
contend that, among other issues, CA gravely erred in
the services of NiloLayno Builders to do the
its affirmation on the National Labor Relations specialized concrete works, forms works and steel
Commission‗s (NLRC) decision that the petitioner rebars works. Pursuant to the contract, NiloLayno
together with ‗Longest Force‘, a security agency, are Builders hired private respondents to perform work at
jointly and severally liable for the payment of back the project.
wages and overtime pay to private respondents. The
After the completion of the phase for which
NiloLayno Builders was contracted, private

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respondents filed a complaint against petitioner and appliances, materials and labor; and the mode,
its president (NGC Builder and Manuel Sy) for unfair manner and terms of payment.
labor practice, non-payment of 13th month pay,
service incentive leave, illegal dismissal and We are convinced that Nilo Layno Builders
severance pay, in lieu of reinstatement. is undertaking permissible labor or job contracting.
NiloLayno Builders is a duly licensed labor
The Labor Arbiter ruled in favor of contractor carrying on an independent business for a
respondents, but dismissed the charges for illegal specialized work that involves the use of some
dismissal including their prayers for back wages and particular, unusual and peculiar skills and expertise,
unfair labor practice and other monetary claims like concrete works, form works and steel rebars
except their 13th month pay and service incentive works. As a licensed labor contractor, it complied
leave pay. It was also found that NiloLayno Builders with the conditions set forth in Section 5, Rule VII-A,
was a labor-only-contractor, thus private respondents Book III, Rules to Implement the Labor Code, among
were deemed employees of the petitioner. Both others, proof of financial capability and list of
parties appealed to the National Labor Relations equipment, tools, machineries and implements to be
Commission, which affirmed the Labor Arbiter's used in the business. Further, it entered into a written
decision with modification that private respondents contract with the petitioner, a requirement under
were illegally dismissed. Section 3, Rule VII-A, Book III, Rules to Implement
the Labor Code to assure the employees of the
Since petitioner's motion for reconsideration minimum labor standards and benefits provided by
was denied, it instituted a special civil action for existing laws.
certiorariwith the Court of Appeals, but the latter
denied the same; hence, a petition for review in SC. The test to determine the existence of
independent contractorship is whether one claiming
Issue: Whether NiloLayno Builders was an to be an independent contractor has contracted to do
"independent contractor" or a "labor-only" contractor the work according to his own methods and without
being subject to the control of the employer, except
Ruling:NiloLayno Builders is an independent only to the results of the work. This is exactly the
contractor. situation obtaining in the case at bar. NiloLayno
Builders hired its own employees, the private
Under Section 8, Rule VIII, Book III, of the respondents, to do specialized work in the Prince
Omnibus Rules Implementing the Labor Code, an David Project of the petitioner. The means and
independent contractor is one who undertakes "job methods adopted by the private respondents were
contracting," i.e., a person who: (a) carries on an directed by NiloLayno Builders except that, from
independent business and undertakes the contract time to time, the engineers of the petitioner visited
work on his own account under his own the site to check whether the work was in accord with
responsibility according to his own manner and the plans and specifications of the principal. As
method, free from the control and direction of his admitted by Nilo G. Layno, he undertook the contract
employer or principal in all matters connected with work on his own account and responsibility, free
the performance of the work except as to the results from interference from any other persons, except as
thereof; and (b) has substantial capital or investment to the results; that he was the one paying the salaries
in the form of tools, equipment, machineries, work of private respondents; and that as employer of the
premises, and other materials which are necessary in private respondents, he had the power to terminate or
the conduct of the business. Jurisprudential dismiss them for just and valid cause. Indubitably,
holdingsare to the effect that in determining the the Court finds that NiloLayno Builders
existence of an independent contractor relationship, maintained effective supervision and control over the
several factors may be considered, such as, but not private complainants.
necessarily confined to, whether or not the contractor
is carrying on an independent business; the nature Thus, it was plain conjecture on the part of the
and extent of the work; the skill required; the term Labor Arbiter, the NLRC and the Court of Appeals to
and duration of the relationship; the right to assign conclude that Nilo Layno Builders was a labor-only
the performance of specified pieces of work; the contractor merely because it does not have
control and supervision of the work to another; the investment in the form of tools or machineries. They
employer's power with respect to the hiring, firing failed to appreciate the fact that Nilo Layno Builders
and payment of the contractor's workers; the control had substantial capitalization for it did not only
of the premises; the duty to supply premises, tools, provide labor to do the specified project and pay their

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wages, but it furnished the materials to be used in the respect to the increase in the daily wage and
construction. denied the same with respect to the adjustments in
the other benefits and remunerations computed on
In Neri v. NLRC, we held that the labor
the basis of the daily wage.
contractor which sufficiently proved that it had
substantial capital was not engaged in labor-only
Respondent sought the intervention of the Office of
contracting. Thus:
While there may be no evidence that it has the Regional Director, Regional Office No. I.
investment in the form of tools, equipment,
machineries, work premises, among others, it is Despite the advisory of DOLE Regional Director
enough that it has substantial capital, as was sustaining the claim of respondent that the increase
established before the Labor Arbiter as well as the mandated by Republic Act No. 6727 (RA 6727) and
NLRC. In other words, the law does not require both the wage orders issued by the RTWPB is not limited
substantial capital and investment in the form of to the daily pay, NFA maintained its stance that it
tools, equipment, machineries, etc. This is clear from is not liable to pay the corresponding adjustments
the use of the conjunction ―or‖. If the intention was to
require the contractor to prove that he has both in the wage related benefits of respondent’s
capital and the requisite investment, then the security guards.
conjunction ―and‖ should have been used.
Respondent filed with the Regional Trial Court of
Quezon, City, Branch 83, a case for recovery of sum
52.)NFA vs. MASADA SECURITY AGENCY, of money against NFA.
INC.G.R. No. 163448.March 08, 2005
On September 19, 2002, the trial court rendered a
decision in favor of respondent holding that NFA is
liable to pay the security guards‘ wage related
Facts: benefits pursuant to RA 6727.

On September 17, 1996, respondent MASADA NFA appealed to the Court of Appeals but the same
Security Agency, Inc., entered into a one year was dismissed on February 12, 2004.
contract with NFA to provide security services to the
various offices, warehouses and installations of the Hence, this petition.
scope of the NFA Region I.
Issue:
Upon the expiration of said contract, the parties
extended the effectivity of the contract on a monthly Whether or not the liability of principals in service
basis under same terms and condition. contracts under Section 6 of RA 6727 and the wage
orders issued by the Regional Tripartite Wages and
Meanwhile on several occasions, the Regional Productivity Board is limited only to the increment in
Tripartite Wages and Productivity Board issued the minimum wage.
several wage orders mandating increases in the daily
wage rate. Ruling:

Therefore because of the wage orders mandating General rule, payment of the increases in the wage
increase in the wage rates, respondent requested NFA rate of workers is ordinarily shouldered by the
for a corresponding upward adjustment in the employer.
monthly contract rate consisting of the increases in
However, Section 6 of RA 6727, expressly lodged
the daily minimum wage of the security guards as
said obligation to the principals or indirect
well as the corresponding raise in their overtime pay,
employers in construction projects and
holiday pay, 13th month pay, holiday and rest day
establishments providing security, janitorial and
pay.
similar services.
NFA, however, granted the request but only with
Section 6 of RA 6727, provides:

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SEC. 6. In the case of contracts for construction


projects and for security, janitorial and similar
services, the prescribed increases in the wage rates of Although the general rule is that construction of a
the workers shall be borne by the principals or statute by an administrative agency charged with the
clients of the construction/service contractors and the task of interpreting or applying the same is entitled to
contract shall be deemed amended accordingly. In great weight and respect. The Court, however, is not
the event, however, that the principal or client fails to bound to apply said rule where such executive
pay the prescribed wage rates, the interpretation, is clearly erroneous, or when there is
construction/service contractor shall be jointly and no ambiguity in the law interpreted, or when the
severally liable with his principal or client. language of the words used is clear and plain, as in
the case at bar. Besides, administrative
There is merit on the contention of NFA that its interpretations are at best advisory for it is the Court
additional liability under the aforecited provision is that finally determines what the law means.
limited only to the payment of the increment in the
statutory minimum wage rate, i.e., the rate for a Hence, the interpretation given by the labor agencies
regular eight (8) hour work day. in the instant case which went as far as
supplementing what is otherwise not stated in the law
The term ―wage‖ as used in Section 6 of RA 6727 cannot bind this Court.
pertains to no other than the ―statutory minimum
wage‖ which is the lowest wage rate fixed by law So long as the minimum obligation of the principal,
that an employer can pay his worker. Hence, the i.e., payment of the increased statutory minimum
prescribed increases or the additional liability to be wage is complied with, the Wage Rationalization Act
borne by the principal under Section 6 of RA 6727 is is not violated.
the increment or amount added to the
WHEREFORE, the petition is GRANTED
remuneration of an employee for an 8-hour work.

Therefore, since the increase in wage referred to in


Section 6 pertains to the ―statutory minimum wage‖ 53. Abella vs. PLDT, G.R. No. 159469, June 8,
as defined herein, principals in service contracts 2005
cannot be made to pay the corresponding wage
increase in the overtime pay, night shift Facts:
differential, holiday and rest day pay, premium
pay and other benefits granted to workers. Respondent People‘s Security Incorporated
entered into an agreement with the PLDT to provide
Applying the elementary rule on statutory the latter with such number of qualified uniformed
and properly armed security guards for the purpose of
construction that if the statute is clear, plain and free
guarding and protecting PLDT‘s installations and
from ambiguity, it must be given its literal meaning properties from theft, pilferage, intentional damage,
and applied without interpretation. Therefore, the trespass or other unlawful acts. Under the agreement,
presumption is that lawmakers are well aware that the it was expressly provided that there shall be no
word ―wage‖ as used in Section 6 means the statutory employer-employee relationship between the PLDT
minimum wage. If their intention was to extend the and the security guards, which may be supplied to it
obligation of principals in service contracts to the by PSI, and that the latter shall have the entire
charge, control and supervision over the work and
payment of the increment in the other benefits and
services of the supplied security guards. It was
remuneration of workers, it would have so expressly likewise stipulated therein that PSI shall also have the
specified. In not so doing, the only logical exclusive authority to select, engage, and discharge
conclusion is that the legislature intended to limit the its security guards, with full control over their wages,
additional obligation imposed on principals in service salaries or compensation.
contracts to the payment of the increment in the
statutory minimum wage. Consequently, respondent PSI deployed
security guards to the PLDT. The sixty-five (65)

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security guards supplied by respondent PSI filed a or terminated guard may still be assigned to other
Complaint for regularization against the PLDT clients of PSI as in the case of Jonathan Daguno who
alleging that petitioner security guards have been was posted at PLDT on 21 February 1996 but was
employed by the company through the years and that subsequently relieved therefrom and assigned at
PSI acted as the middleman in the payment of the PCIBank Makati Square effective 10 May 1996.
minimum pay to the security guards, but no premium Therefore, the evidence as it stands is at odds with
for work rendered beyond eight hours was paid to petitioners‘ assertion that PSI is an ―in-house‖ agency
them nor were they paid their 13th month pay. In of PLDT so as to call for a piercing of veil of
sum, the Complaint states that inasmuch as the corporate identity
complainants are under the direct control and
supervision of PLDT. Hence they should be It is PSI that determined and paid the
considered as regular employees by the latter. petitioners‘ wages, salaries, and compensation. As
elucidated by the Labor Arbiter, petitioners‘ witness
Issue: Whether or not an employer- employee testified that his wages were collected and withdrawn
relationship exists between petitioners and at the office of PSI and PLDT pays PSI for the
respondent PLDT; security services on a lump-sum basis and that the
wages of complainants are only a portion of the total
Ruling: sum. The signature of the PLDT supervisor in the
Daily Time Records does not ipso facto make PLDT
We considered the following factors in the employer of complainants inasmuch as the Labor
considering the existence of an employer-employee Arbiter had found that the record is replete with
relationship: (1) the selection and engagement of the evidence showing that some of the Daily Time
employee; (2) the payment of wages; (3) the power to Records do not bear the signature of a PLDT
dismiss; and (4) the power to control the employee‘s supervisor yet no complaint was lodged for
conduct. nonpayment of the guard‘s wages evidencing that the
signature of the PLDT‘s supervisor is not a condition
Testimonies during the trial reveal that precedent for the payment of wages of the guards.
interviews and evaluation were conducted by PLDT Notably, it was not disputed that complainants enjoy
to ensure that the standards it set are met by the the benefits and incentives of employees of PSI and
security guards. In fact, PLDT rarely failed to accept that they are reported as employees of PSI with the
security guards referred to by PSI but on account of SSS.
height deficiency. The referral is nothing but for
possible assignment in a designated client which has Lastly, petitioners capitalize on the
the inherent prerogative to accept and reject the delinquency reports prepared by PLDT personnel
assignee for justifiable grounds or even arbitrarily. against some of the security guards as well as
We are thus convinced that the employer-employee certificates of participation in civil disturbance
relationship is deemed perfected even before the course, certificates of attendance in first aid training,
posting of the complainants with the PLDT, as certificate of completion in fire brigade training
assignment only comes after employment. seminar and certificate of completion on restricted
land mobile radio telephone operation to show that
PSI is a legitimate job contractor pursuant to the petitioners are under the direct control and
Section 8, Rule VII, Book II of the Omnibus Rules supervision of PLDT and that the latter has, in fact,
Implementing the Labor Code. It is a registered the power to dismiss them.
corporation duly licensed by the Philippine National
Police to engage in security business. It has The Labor Arbiter found from the evidence
substantial capital and investment in the form of that the delinquency reports were nothing but
guns, ammunitions, communication equipments, reminders of the infractions committed by the
vehicles, office equipments like computer, petitioners while on duty which serve as basis for
typewriters, photocopying machines, etc., and above PLDT to recommend the termination of the
all, it is servicing clients other than PLDT like concerned security guard from PLDT. As already
PCIBank, Crown Triumph, and Philippine Cable, adverted to earlier, termination of services from
among others. Here, the security guards which PSI PLDT did not ipso facto mean dismissal from PSI
had assigned to PLDT are already the former‘s inasmuch as some of those pulled out from PLDT
employees prior to assignment and if the assigned were merely detailed at the other clients of PSI as in
guards to PLDT are rejected by PLDT for reasons the case of Jonathan Daguno, who was merely
germane to the security agreement, then the rejected transferred to PCIBank Makati.

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54.) San Miguel vs. Aballa, G.R. No. 149011, June The contractor is considered merely an agent of the
28, 2005 principal employer and the latter is responsible to the
employees of the labor-only contractor as if such
Facts: employees had been directly employed by the
principal employer.
Petitioner San Miguel Corporation entered into a one-
year contract with the Sunflower Multi-Purpose The following would show that sunflower is engaged
Cooperative. in labor only contracting: What appears is that
Sunflower does not have substantial capitalization or
Sunflower undertook and agreed to perform and
investment in the form of tools, equipment,
provide the company on a non exclusive basis for a
machineries, work premises and other materials to
period of one year the following: Messengerial,
qualify it as an independent contractor.
Janitorial, Shrimp harvesting and Sanitation.
It is gathered that the lot, building, machineries and
Pursuant to the contract, Sunflower engaged private
all other working tools utilized by private
respondents to render services at SMC‘s Bacolod
respondents in carrying out their tasks were owned
Shrimp Processing Plant. The contract was renewed
and provided by SMC.
and private respondent continued to perform their
tasks. Sunflower, during the existence of its service contract
with respondent SMC, did not own a single
Later, private respondents filed a complaint praying
machinery, equipment, or working tool used in the
to be declared as regular employees of SMC, with
processing plant. Everything was owned and
claims of recovery of all benefits and privileges.
provided by respondent SMC. The lot, the building,
Issue: and working facilities are owned by respondent
SMC.
 Whether or not Sunflower is engaged in
labor only contracting And from the job description provided by SMC itself,
the work assigned to private respondents was directly
Ruling: related to the aquaculture operations of SMC.
Undoubtedly, the nature of the work performed by
The test to determine the existence of independent private respondents in shrimp harvesting, receiving
contractorship is whether one claiming to be an and packing formed an integral part of the shrimp
independent contractor has contracted to do the work processing operations of SMC. As for janitorial and
according to his own methods and without being messengerial services, that they are considered
subject to the control of the employer, except only as directly related to the principal business of the
to the results of the work. employer has been jurisprudentially recognized.
Furthermore, Sunflower did not carry on an
In legitimate labor contracting, the law creates an
independent business or undertake the performance
employer-employee relationship for a limited
of its service contract according to its own manner
purpose, i.e., to ensure that the employees are paid
and method, free from the control and supervision of
their wages. The principal employer becomes jointly
its principal, SMC, its apparent role having been
and severally liable with the job contractor, only for
merely to recruit persons to work for SMC.
the payment of the employees‘ wages whenever the
contractor fails to pay the same. Other than that, the Therefore since Sunflower is labor only contracting,
principal employer is not responsible for any claim there is the existence of an employer- employee
made by the employees. relationship between SMC and private respondents.

In labor-only contracting, the statute creates an


employer-employee relationship for a comprehensive
purpose: to prevent a circumvention of labor laws.

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55. Manila Electric Co. vs. Benamira, G.R. No. The clause that MERALCO has the right at
145271, July 14, 2005 all times to inspect the guards of the agency detailed
Facts: in its premises is likewise not indicative of control as
The individual respondents are licensed it is not a unilateral right. The agreement provides
security guards formerly employed by People‘s that the agency is principally mandated to conduct
Security, Inc. and deployed as such at MERALCO‘s inspections, without prejudice to MERALCO‘s right
head office. The security service agreement between to conduct its own inspections.
PSI and MERALCO was terminated. Thereafter, 56 Moreover, ASDAI and AFSISI are not
of PSI‘s security guards, including herein eight ―labor-only‖ contractors. There is ―labor only‖
individual respondents, filed a complaint for unpaid contract when the person acting as contractor is
monetary benefits against PSI and MERALCO. considered merely as an agent or intermediary of the
Meanwhile, the security service agreement between principal who is responsible to the workers in the
respondent Armed Security & Detective Agency, same manner and to the same extent as if they had
Inc., (ASDAI) and MERALCO took effect. been directly employed by him. On the other hand,
Subsequently, the individual respondents were ―job (independent) contracting‖ is present if the
absorbed by ASDAI and retained at MERALCO‘s following conditions are met: (a) the contractor
head office. Later, the security service agreement carries on an independent business and undertakes
between respondent Advance Forces Security & the contract work on his own account under his own
Investigation Services, Inc. (AFSISI) and responsibility according to his own manner and
MERALCO took effect, terminating the previous method, free from the control and direction of his
security service agreement with ASDAI. The employer or principal in all matters connected with
individual respondents amended their complaint to the performance of the work except to the result
implead AFSISI as party respondent. thereof; and (b) the contractor has substantial capital
or investments in the form of tools, equipment,
Issue: Whether or not the individual respondents machineries, work premises and other materials
are employees of MERALCO; which are necessary in the conduct of his business.
Given the above distinction and the provisions of the
Ruling: security service agreements entered into by petitioner
No. In this case, the terms and conditions with ASDAI and AFSISI, we are convinced that
embodied in the security service agreement between ASDAI and AFSISI were engaged in job contracting.
MERALCO and ASDAI expressly recognized The individual respondents can not be
ASDAI as the employer of individual respondents. considered as regular employees of the MERALCO
Under the security service agreement, it was ASDAI for, although security services are necessary and
which (a) selected, engaged or hired and discharged desirable to the business of MERALCO, it is not
the security guards; (b) assigned them to MERALCO directly related to its principal business and may even
according to the number agreed upon; (c) provided be considered unnecessary in the conduct of
the uniform, firearms and ammunition, nightsticks, MERALCO‘s principal business, which is the
flashlights, raincoats and other paraphernalia of the distribution of electricity.
security guards; (d) paid them salaries or wages; and, Furthermore, the fact that the individual
(e) disciplined and supervised them or principally respondents filed their claim for unpaid monetary
controlled their conduct. The agreement even benefits against ASDAI is a clear indication that the
explicitly provided that ―[n]othing herein contained individual respondents acknowledge that ASDAI is
shall be understood to make the security guards under their employer.
this Agreement, employees of the COMPANY, it
being clearly understood that such security guards
shall be considered as they are, employees of the
AGENCY alone.‖ Clearly, the individual respondents
are the employees of ASDAI.
Neither is the stipulation that the agency
cannot pull out any security guard from MERALCO
without its consent an indication of control. It is
simply a security clause designed to prevent the
agency from unilaterally removing its security guards
from their assigned posts at MERALCO‘s premises
to the latter‘s detriment.

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56. Granspan Development Corp., vs. Bernardo, Prado died and was substituted by his surviving
G.R. No. 141464, Sept. 21, 2005 parent, Edgardo Del Prado.

Facts: The CA, ruled in favor of the respondents. The court


ordered that these respondents should be reinstated
The instant controversy stemmed from a complaint and that del prado shall be paid of his separation pay.
for illegal dismissal and non-payment of benefits
filed with the Labor Arbiter by Ricardo Bernardo, Petitioner filed a motion for reconsideration.
Antonino Ceñidoza and Edgar Del Prado, Respondents also filed a motion for reconsideration
respondents, against Grandspan Development and/or clarification praying that the Appellate Court‘s
Corporation, petitioner, and/or its warehouse Decision be modified by awarding respondent Del
manager, Manuel G. Lee, docketed as NLRC Case Prado his backwages. Court of Appeals promulgated
No. RAB-IV-11-4605-92-RI. its Resolution denying petitioner‘s motion for
reconsideration but modifying its Decision in the
Those three respondents alleged in their complaint sense that petitioner and J. Narag Construction are
that they were terminated illegally, the petitioners ordered to pay respondent Del Prado his separation
(granspan development corp) sent them a notice that pay and backwages.
they were terminated on the grounds that they
vandalized the logbooks and for the use of profane Hence, this petition for review on certiorari in SC.
language. Also they alleged that they were employed
by the petitioner, they were given ID and a daily Issues:
salary of 104 php.
Whether or Not there is employer-employee
Petitioner denied these allegations, claiming that they relationship in the case at bar.
are contractors. Thus there is no employee-employer
Ruling:
relationship, And that the warehouse manager
received reports from their supervisor that those Yes, there is employer-employee relationship.
respondents vandalized the company‘s log book,
which violates their company‘s rules and regulations. The SC upheld the CA‘s ruling. CA found that the J.
Narag Construction assigned the respondents to
After the submission of the parties‘ pleadings and perform activities directly related to the main
position papers, the Labor Arbiter rendered a business of the petitioner, all the documents that
Decision dated June 30, 1994 dismissing proved the employment of the respondents were all
respondents‘ complaint. In concluding that approved by the petitioner, such as the payrolls, the
respondents were validly dismissed from using of equipment, materials and supplies of the J.
employment, the Labor Arbiter held that they were narag construction. The termination of the
project employees whose services were terminated respondents also proves that there is employer-
upon completion of the project for which they were employee relationship, since it was the petitioner who
hired. terminated them and the J. Narag construction.
When the case was appealed at the NLRC, the NLRC Being a legitimate independent contractor cannot be
ordered that the case is remanded to the labor arbiter pinned on J. Narag Construction, rather the CA held
for proper proceeding. This prompted both parties to that they are labor-only contractor which was upheld
file motion for reconsideration, which were denied by by the SC too.
the NLRC.
On the basis of the records, we have no reason to
Then respondents filed a petition for certiorari in deviate from the Appellate Court‘s finding that J.
Supreme Court(SC), which was referred to the Court Narag Construction is indeed a labor-only contractor.
of Appeals (CA). While the case was pending, Del These are the reasons: (1) it is not registered as a
building contractor with the SEC; (2) it has no

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contract with petitioner; and (3) there is no proof of Under the agreement, the parties agreed, inter alia,
its financial capability and has no list of equipment, that Jalapadan would promote and sell products of
tools, machineries and implements used in the ACI, solicit from customers and outlets within his
business. designated territory, collect payments from such
customers and account the same to ACI. Jalapadan
The allegations of the petitioners that the respondents was provided with a 6-wheeler truck to facilitate the
are project employees, thus making them contractors sale and delivery of products to customers and outlets
and that their services ended up when the project was from his base of operations. Jalapadan was also
finished is untenable. petitioner could not present authorized to employ and discharge a driver and
employment contracts signed by respondents other assistants as he deemed necessary. It was
showing that their employment was for the duration stipulated, however, that the hired hands would be
of the HCMG or Sogo project. Likewise, as correctly considered his employees, and that he alone would
observed by the Court of Appeals, petitioner failed to be liable for their compensation and actual
present any report terminating the services of expenses, including meals while on duty.
respondents when its projects were actually finished.
Jalapadan hired Arnulfo Acevedo as the
Time and again, we held that failure of the employer driver of the truck assigned to him by ACI. Acevedo
to file termination reports after every project was tasked to sell and deliver stocks to outlets and
completion with the nearest public employment customers, collect payments, and to maintain the
office is an indication that respondents were truck in good and clean condition. He reported for
employees. work from 6:00 a.m. to 8:00 or 9:00 p.m. Acevedo
received a daily wage of P152.00 and was paid on a
Records show that respondents were not served by weekly basis. He also enjoyed sick leave privilege,
petitioner with notices, verbal or written, informing which benefit was convertible into cash. Sometime
them of the particular acts for which their dismissal is in June 1998, he received from Jalapadan a salary
sought. Neither were they required to give their side differential for the period of December 1997 to June
regarding the alleged serious misconduct imputed 1998, following a P15.00 increase in his daily wage.
against them. He received his wages from Jalapadan through
vouchers approved by the latter.

We thus sustain the Court of Appeals ruling that Sometime in July 1998, Acevedo failed to
respondents were deprived of both their substantive comply with Jalapadan‘s instructions. At that time,
and procedural rights to due process and, therefore, they were on their way to Plaridel, Misamis Oriental
the termination of their employment is illegal. on board the truck. Jalapadan ordered Acevedo to
alight from the truck, and threatened to leave him
behind to fend for himself. However, Jalapadan later
asked him to return to work and the latter agreed.
57. ACEVEDO v ADVANSTAR, GR 157656

On October 7, 1998, Acevedo failed to


FACTS:
report for work. The next day, Jalapadan inquired
The Advanstar Company Inc. (ACI) was why he failed to check and wash the truck. Jalapadan
engaged in the distribution and sale of various brands berated Acevedo and ordered him to get his personal
of liquor and alcoholic spirits, including the Tanduay belongings and leave. Acevedo did as he was told.
brand. To effectively launch its vigorous marketing Later, Jalapadan urged Acevedo to go back to work,
operations, ACI hired several salesmen, one of whom stating that they were ―one big family,‖ but Acevedo
was Tony Jalapadan. On September 1, 1994, ACI refused. He then signed a Letterdated October 10,
executed an Agreement for the Sale of Merchandise 1998, informing Jalapadan that he was resigning
with Jalapadan for a period of one year, renewable effective that date.
for another year under the same terms and conditions.

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supplies or places workers to perform a job, work or


However, on October 26, 1998, Acevedo service for a principal. In labor-only contracting, the
filed a complaint against Jalapadan, ACI and its following elements are present:
general manager, Felipe Loi, for illegal dismissal and
for the recovery of backwages and other monetary (a) The contractor or
benefits. subcontractor does not have
substantial capital or investment to
ISSUES: actually perform the job, work or
service under its own account and
1. WON ACI was the employer of Jalapadan---
YES. LABOR-ONLY CONTRACTOR responsibility;
2. WON Acevedo is an employee of ACI---
YES (b) The employees
3. WON Acevedo resigned from his recruited, supplied or placed by
employment---NO such contractor or subcontractor,
are performing activities which are
HELD: directly related to the main
ISSUES 1&2: business of the principal.

The pertinent provision of the Labor Code


on labor-only contracting is paragraph 4 of Article
106, which provides: In such case, the law creates an employee-
employer relationship so that labor laws may not be
There is ―labor-only‖ circumvented. The principal employer becomes
contracting where the person solidarily liable with the labor-only contractor for all
supplying workers to an employer the rightful claims of the employees. The labor-only
does not have substantial capital or contractor is considered merely as an agent of the
investment in the form of tools, employer, the employer having been made, by law,
equipment, machineries, work responsible to the employees of the labor-only
premises, among others, and the contractor as if such employees had been directly
workers recruited and placed by employed by it.
such persons are performing
activities which are directly related On the other hand, permissible job
to the principal business of such contracting or subcontracting refers to an
employer. In such cases, the arrangement whereby a principal agrees to put out or
person or intermediary shall be farm out with the contractor or subcontractor the
considered merely as an agent of performance or completion of a specific job, work or
the employer who shall be service within a definite or predetermined period
responsible to the workers in the regardless of whether such job, work or service is to
same manner and extent as if the be performed or completed within or outside the
latter were directly employed by premises of the principal.
him.

A person is considered engaging in


legitimate job contracting or subcontracting if the
Rule VIII-A, Book III, Section 4(f) of the following conditions concur:
Omnibus Rules Implementing the Labor Code further
defines “labor-only” contracting as an arrangement (a) The contractor or
where the contractor or subcontractor merely recruits, subcontractor carries on a distinct

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and independent business and the control and supervision of the work to another;
undertakes to perform the job, work the employer‘s power with respect to the hiring,
or service on its own account and firing and payment of the contractor‘s workers; the
under its own responsibility control of the premises; the duty to supply premises,
according to its own manner and tools, appliances, materials and labor; and the mode
method, and free from the control and manner or terms of payment.
and direction of the principal in all
matters connected with the
In the present case, the respondents failed to
performance of the work except as
prove that respondent Jalapadan was an independent
to the results thereof;
contractor. Indeed, the substantial evidence on
record shows that he was merely a labor-only
(b) The contractor or contractor.
subcontractor has substantial
capital or investment; and
First. The respondents failed to adduce a
scintilla of evidence that respondent Jalapadan had
(c) The agreement any substantial capital or investment, such as tools
between the principal and and equipment, to perform the work contracted for.
contractor or subcontractor assures There is even no evidence that respondent Jalapadan
the contractual employees had any assets, or that he maintained an office, staff
entitlement to all labor and or a terminal for the truck entrusted to him by
occupational safety and health respondent ACI.
standards, free exercise of the right
to self-organization, security of
Second. Respondent Jalapadan bound and
tenure, and social and welfare
obliged himself to work exclusively for respondent
benefits.
ACI during the terms of the agreement.

Third. Under the agreement, respondent ACI


The test to determine the existence of an had the right to control not only the end to be attained
independent contractorship is whether one who but also the manner and means to be used in
claims to be an independent contractor has accomplishing that end or purpose. Aside from
contracted to do the work according to his own Jalapadan‘s duties/obligations as salesman,
methods and without being subject to the respondent ACI could require him to perform other
employer’s control except only as to the results. duties and obligations. Respondent Jalapadan was,
Each case must be determined by its own facts and likewise, mandated to obey all rules, regulations,
all the features of the relationship are to be orders, and instructions, whether oral or written, of
considered. respondent ACI. He was obliged to work only in the
territory assigned to him, which may be altered at any
In the case of Vinoya v. NLRC, the Court time upon the discretion of ACI. He was also
declared that it is not enough to show substantial prohibited from overpricing or underpricing the
capitalization or investment in the form of tools, products of respondent ACI, and was required to sell
equipment, etc. to determine whether one is an the same according to the prices dictated solely by it.
independent contractor. Other factors that may be While Jalapadan was entitled to a monthly
considered include the following: whether or not the compensation of P3,590.00 payable on a bi-monthly
contractor is carrying on an independent business; the basis and an unspecified commission based on
nature and extent of the work; the skill required; the booking sales fully remitted to respondent ACI, the
term and duration of the relationship; the right to latter had the absolute right to change, at any time,
assign the performance of specified pieces of work; the amount and/or all the payments of such

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compensation and commission. Moreover, notice of


such changes was only for information purposes.
Furthermore, Jalapadan was obliged to inform
respondent ACI of his activities, situation or
whereabouts. Since he did not have any truck for the
delivery of products to customers or outlets, he had to ISSUE 3:
rely on the truck entrusted to him by respondent ACI
or, in lieu thereof, a traveling allowance of P600.00 a Ruling of NLRC and CA which the SC agrees with:
month which could even be changed. Respondent
Jalapadan was prohibited from incurring any other
expenses unless permission was first secured from The only incident
respondent ACI. He was prohibited from using the from which complainant
truck for purposes other than the performance of his drew the conclusion that
duties and responsibilities under the agreement. he was dismissed from
Respondent Jalapadan was mandated to maintain the work is when he was
truck and its accessories in clean and good order and allegedly told to
condition. The agreement was for a period of one disembark from the
year, renewable under the same terms and conditions vehicle. Nothing on
but the parties could terminate the agreement upon record shows that he was
notice to the other. Moreover, while respondent ACI terminated from work. On
did not fix or impose any quota on respondent the contrary, complainant
Jalapadan, it reserved the right to do so. himself reveals that
previously (in July 1995)
he was also told to
Fourth. Respondent Jalapadan was obliged to disembark to be left on the
pay the petitioner‘s monthly wage of P3,648.00, as road by an angry
well as that of his helper, another P4,000.00 a month, Jalapadan, the latter went
totaling P7,648.00, exclusive of other expenses such back to fetch him and told
as meals, gasoline, and the upkeep of the vehicle. On him that ―we are just one
the other hand, respondent Jalapadan received from family.‖ Evidently,
respondent ACI only P3,590.00 a month as [these] incidents were
compensation. He had no other means of income mere expressions of anger
because he was obliged, under the agreement, to on the part of Jalapadan
devote all his time for respondent ACI. Respondent without intention of
Jalapadan‘s claim that he sold the products of the terminating his
respondent ACI for a marked-up price as his employment. Rather, it
commission is belied by their agreement, which was complainant as
precisely prohibited him from selling such products admitted by him – who,
at a different price. Respondent Jalapadan was only this time, refused to return
entitled to a commission based on their booked sales. to work…
Aside from the fact that such commission was not
fixed, there is no evidence on record how much, if
any, respondent Jalapadan received from the
respondent ACI by way of commission. When he testified before the Labor Arbiter,
the petitioner admitted that he was not dismissed
from employment. In fact, respondent Jalapadan
Considering all these, then, the Court
appealed to the petitioner to go back to work, and the
concludes that the petitioner’s wages must have
latter spurned such plea. The Court finds, however,
been paid for by respondent ACI through
respondent Jalapadan, its labor-only contractor.

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that contrary to the rulings of the NLRC and the CA,


the petitioner did not resign from his employment. Neither the petitioner nor the respondents
Reliance on the handwritten letter of resignation explained why the letter was addressed to Tanduay
dated October 10, 1998 signed and thumbmarked by Corporation. Significantly, respondent Jalapadan did
the petitioner is misplaced. The handwritten letter not deny the petitioner‘s claim that the letter was
of resignation signed by the petitioner is inconsistent handwritten by him (Jalapadan). If such claim were
with the respondents‘ claim that respondent true, there is neither rhyme nor reason why Tanduay
Jalapadan was the petitioner‘s employer. This is so Corporation was its addressee. Moreover, it appears
because the said letter is addressed to Tanduay that the letter was coursed through respondent
Corporation, and not to respondent Jalapadan, thus: Jalapadan as salesman of the said corporation, which
is antithetical to the respondents‘ claim that he was
the petitioner‘s employer and an independent
TANDUAY CORPORATION
contractor of respondent ACI.
OZAMIS BRANCH

THRU: MR. TONY


58. Big AA Manufacturer vs. Antonio, G.R. No.
JALAPADAN, SALESMAN
1608504, March 3, 2006

SIR: Facts:

Petitioner is a sole proprietorship registered in the


I HAVE THE HONOR TO
name of its proprietor, Enrico E. Alejo, with office
TENDER MY RESIGNATION, address at 311 Barrio Santol, Balagtas, Bulacan.
EFFECTIVE OCT. 10, 1998, BY
REASON THAT I AM On January 13, 2000, herein respondents Eutiquio
SEARCHING FOR BETTER Antonio,Jay Antonio, Felicisimo Antonio, Leonardo
INCOME. BY VIRTUE THAT Antonio, Sr. and Roberto Fabian filed a complaint for
MY SALARY CURRENTLY IS illegal lay-off and illegal deductions before the
NOT SUFFICIENT FOR MY NLRC‘s Regional Arbitration Branch No. III. They
FAMILY. claimed that they were dismissed on January 11,
2000 and sought separation pay from petitioner.

HOPE AND PRAY FOR In respondents‘ position paper,they alleged that as


YOUR CONSIDERATION AND I regular employees, they worked from 8:00 a.m. to
REMAIN PRAYING FOR THE 5:00 p.m. at petitioner‘s premises using petitioner‘s
tools and equipment and they received P250 per day.
CONTINUOUS SUCCESS OF
Eutiquio was employed as carpenter-foreman from
YOUR MOST PROGRESSIVE 1991-1999; Jay as carpenter from 1993-1999;
COMPANY AND I HAVE NO Felicisimo as carpenter from 1994-1999; and
CLAIM WHATSOEVER. Leonardo, Sr. also as carpenter from 1997-1999.
According to respondents, they were dismissed
without just cause and due process; hence, their
HANDTHUMBMARK prayer for reinstatement and full backwages.
VERY TRULY YOURS,
On the other hand, petitioner denied that respondents
were its regular employees. Instead, petitioner
claimed that Eutiquio Antonio was one of its
(SGD.)________ independent contractors who used the services of the
HANDTHUMBMARK other respondents. According to petitioner, its
ARNULFO ACEBEDO independent contractors were paid by results and
were responsible for the salaries of their own

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workers. Allegedly, there was no employer-employee whether an employment should be considered regular
relationship between petitioner and respondents. or non-regular is the reasonable connection between
However, petitioner stated it allowed respondents to the particular activity performed by the employee in
use its facilities to meet job orders. relation to the usual business or trade of the
employer.
Petitioner also denied that respondents were laid-off,
since they were project employees only. It added that True, certain forms of employment require the
since Eutiquio Antonio had refused a job order of performance of usual or desirable functions and
office tables, their contractual relationship ended. exceed one year but do not necessarily result to
regular employment under Article 280 of the Labor
On June 1, 2000, the Labor Arbiter rendered a Code.Some specific exceptions include project or
decisionordering petitioner to pay separation pay and seasonal employment. Yet, in this case, respondents
backwages. It ruled that respondents were regular cannot be considered project employees. Petitioner
employees because their work as carpenters was had neither shown that respondents were hired for a
necessary and desirable in petitioner‘s business. specific project the duration of which was determined
Since Eutiquio worked in petitioner‘s premises and at the time of their hiring nor identified the specific
was without substantial capital or investment in the project or phase thereof for which respondents were
form of tools, equipment, machinery or work hired.
premises, the Labor Arbiter held that Eutiquio was
not an independent contractor. Noting the absence of We also agree that Eutiquio was not an independent
contracts providing the duration of respondents‘ contractor for he does not carry a distinct and
employment and of reports of project completion to independent business, and he does not possess
the Department of Labor and Employment (DOLE), substantial capital or investment in tools, equipment,
the Labor Arbiter also rejected petitioner‘s allegation machinery or work premises.He works within
that respondents were project employees. The Labor petitioner‘s premises using the latter‘s tools and
Arbiter further held that respondents were materials, as admitted by petitioner. Eutiquio is also
constructively dismissed when the Implementing under petitioner‘s control and supervision. Attesting
Guidelines changed their status from regular to this is petitioner‘s admission that it allowed
employees to project employees. respondents to use its facilities for the "proper
implementation" of job orders. Moreover, the
On appeal, the NLRC modified the Labor Arbiter‘s Implementing Guidelines regulating attendance,
decision by ordering petitioner to reinstate overtime, deadlines, penalties; providing petitioner‘s
respondents to their former positions or to pay them right to fire employees or "contractors"; requiring the
separation pay in case reinstatement was no longer carpentry division to join petitioner‘s exercise
feasible, with full backwages in either case. It ruled program; and providing rules on machine
that respondents were regular employees, not maintenance, all reflect control and supervision over
independent contractors. It further held that petitioner respondents.
failed to justify its reason for terminating respondents
and its failure to comply with the due process Petitioner likewise alleges that it did not dismiss
requirements. respondents as they were not its regular employees;
that respondents failed to sufficiently establish the
Issue: fact of illegal dismissal; and that respondents
abandoned the work after it issued the Implementing
Guidelines.
Whether or not respondents were regular employees
and were illegally dismissed.
Having ruled that respondents are regular employees,
we shall proceed to determine whether respondents
Ruling:
have, as petitioner contends, abandoned their work,
or they have been illegally dismissed.
Respondents are petitioner‘s regular employees.
Respondents were employed for more than one year
The consistent rule is that the employer must
and their work as carpenters was necessary or
affirmatively show rationally adequate evidence that
desirable in petitioner‘s usual trade or business of
the dismissal was for a justifiable cause, failing in
manufacturing office furniture. Under Article 280 of
which would make the termination illegal, as in this
the Labor Code, the applicable test to determine
case.

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LABOR STANDARDS LAW

For accusing respondents of abandonment, petitioner Facts


must present evidence (1) not only of respondents‘
failure to report for work or absence without valid Petitioner is a corporation engaged
reason, but (2) also of respondents‘ clear intention to principally in the production and processing of
sever employer-employee relations as manifested by pineapple for the export market. Respondents are
some overt acts. The second element is the more members of the Cannery Multi-Purpose Cooperative
determinative factor. (CAMPCO). CAMPCO was organized in
accordance with Republic Act No. 6938, otherwise
Here, petitioner‘s argument in support of its known as the Cooperative Code of the Philippines.
abandonment charge was that respondents may have Pursuant to the Service Contract, CAMPCO members
resented its issuance of the Implementing Guidelines. rendered services to petitioner. The number of
This, in our view, fails to establish respondents‘ CAMPCO members that report for work and the type
intention to abandon their jobs. On the contrary, by of service they performed depended on the needs of
filing the complaint for illegal dismissal within two petitioner at any given time. Although the Service
days of their dismissal on January 11, 2000 and by Contract specifically stated that it shall only be for a
seeking reinstatement in their position paper, period of six months, i.e., from 1 July to 31
respondents manifested their intention against December 1993, the parties had apparently extended
severing their employment relationship with or renewed the same for the succeeding years without
petitioner and abandoning their jobs. It is settled that executing another written contract. It was under
an employee who forthwith protests his layoff cannot these circumstances that respondents came to work
be said to have abandoned his work. for petitioner. DOLE organized a Task Force that
conducted an investigation into the alleged labor-only
contracting activities of the cooperatives. The Task
Finally, Article 279 of the Labor Code,provides that a
Force identified six cooperatives that were engaged
regular employee who is unjustly dismissed from
work is entitled to reinstatement without loss of in labor-only contracting, one of which was
seniority rights and other privileges and to his full CAMPCO. In this case, respondents alleged that they
started working for petitioner at various times in the
backwages, inclusive of allowances, and to his other
years 1993 and 1994, by virtue of the Service
benefits or their monetary equivalent computed from
Contract executed between CAMPCO and petitioner.
the time his compensation was withheld from him up
All of the respondents had already rendered more
to the time of his actual reinstatement. If
reinstatement is no longer feasible, separation pay than one year of service to petitioner. While some of
equivalent to one month salary for every year of the respondents were still working for petitioner,
others were put on ―stay home status‖ on varying
service should be awarded as an alternative. This has
dates in the years 1994, 1995, and 1996 and were no
been our consistent ruling in the award of separation
longer furnished with work thereafter. Together,
pay to illegally dismissed employees in lieu of
respondents filed a Complaint with the NLRC for
reinstatement.
illegal dismissal, regularization, wage differentials,
damages and attorney‘s fees. Petitioner denied that
59.) DOLE Philippines, Inc. Vs. Esteva respondents were its employees. It explained that it
G.R. No. 161115, Nov. 30, 2006 found the need to engage external services to
augment its regular workforce, which was affected by
peaks in operation, work backlogs, absenteeism, and
Petition for Review on Certiorari under excessive leaves. It used to engage the services of
Rule 45 of the revised Rules of Civil Procedure individual workers for definite periods specified in
seeking the reversal of the Decision, dated 20 May their employment contracts and never exceeding one
2002, and the Amended Decision, dated 27 year. However, such an arrangement became the
November 2003, both rendered by the Court of subject of a labor case, in which petitioner was
Appeals in CA-G.R. SP No. 63405, which declared accused of preventing the regularization of such
workers.
herein petitioner Dole Philippines, Inc. as the
employer of herein respondents, Medel Esteva and 86 Issues
others; found petitioner guilty of illegal dismissal;  Whether or not the court of appeals
and ordered petitioner to reinstate respondents to was correct when it made its own
their former positions and to pay the latter factual findings and disregarded the
backwages. factual findings of the labor arbiter
and the NLRC.

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 Whether or not CAMPCO was a the respondents, and unrebutted by petitioner,


mere labor-only contractor. CAMPCO members, before working for the
petitioner, had to undergo instructions and pass the
Ruling training provided by petitioner‘s personnel. It was
petitioner who determined and prepared the work
The Court in the exercise of its equity jurisdiction assignments of the CAMPCO members. CAMPCO
may look into the records of the case and re-examine members worked within petitioner‘s plantation and
the questioned findings. As a corollary, this Court is processing plants alongside regular employees
clothed with ample authority to review matters, even performing identical jobs, a circumstance recognized
if they are not assigned as errors in their appeal, if it as an indicium of a labor-only contractorship. Fourth,
finds that their consideration is necessary to arrive at CAMPCO was not engaged to perform a specific and
a just decision of the case. The same principles are special job or service. In the Service Contract of
now necessarily adhered to and are applied by the 1993, CAMPCO agreed to assist petitioner in its
Court of Appeals in its expanded jurisdiction over daily operations, and perform odd jobs as may be
labor cases elevated through a petition for certiorari; assigned. CAMPCO complied with this venture by
thus, we see no error on its part when it made anew a assigning members to petitioner. Apart from that, no
factual determination of the matters and on that basis other particular job, work or service was required
reversed the ruling of the NLRC. from CAMPCO, and it is apparent, with such an
arrangement, that CAMPCO merely acted as a
On the second issue, CAMPCO was a mere labor- recruitment agency for petitioner. Since the
only contractor. First, although petitioner touts the undertaking of CAMPCO did not involve the
multi-million pesos assets of CAMPCO, it does well performance of a specific job, but rather the supply of
to remember that such were amassed in the years manpower only, CAMPCO clearly conducted itself
following its establishment. In 1993, when as a labor-only contractor. Lastly, CAMPCO
CAMPCO was established and the Service Contract members, including respondents, performed activities
between petitioner and CAMPCO was entered into, directly related to the principal business of
CAMPCO only had P6,600.00 paid-up capital, which petitioner. They worked as can processing attendant,
could hardly be considered substantial. It only feeder of canned pineapple and pineapple processing,
managed to increase its capitalization and assets in nata de coco processing attendant, fruit cocktail
the succeeding years by continually and defiantly processing attendant, and etc., functions which were,
engaging in what had been declared by authorized not only directly related, but were very vital to
DOLE officials as labor-only contracting. Second, petitioner‘s business of production and processing of
CAMPCO did not carry out an independent business pineapple products for export.
from petitioner. It was precisely established to render The declaration that CAMPCO is indeed
services to petitioner to augment its workforce during engaged in the prohibited activities of labor-
peak seasons. Petitioner was its only client. Even as only contracting, then consequently, an
CAMPCO had its own office and office equipment, employer-employee relationship is deemed
these were mainly used for administrative purposes; to exist between petitioner and respondents,
the tools, machineries, and equipment actually used since CAMPCO shall be considered as a
by CAMPCO members when rendering services to mere agent or intermediary of petitioner.
the petitioner belonged to the latter. Third, petitioner Since respondents are now recognized as
exercised control over the CAMPCO members, employees of petitioner, this Court is tasked
including respondents. Petitioner attempts to refute to determine the nature of their
control by alleging the presence of a CAMPCO employment. In consideration of all the
supervisor in the work premises. Yet, the mere attendant circumstances in this case, this
presence within the premises of a supervisor from the Court concludes that respondents are regular
cooperative did not necessarily mean that CAMPCO employees of petitioner. As such, they are
had control over its members. Section 8(1), Rule entitled to security of tenure. They could
VIII, Book III of the implementing rules of the Labor only be removed based on just and
Code, as amended, required for permissible job authorized causes as provided for in the
contracting that the contractor undertakes the contract Labor Code, as amended, and after they are
work on his account, under his own responsibility, accorded procedural due process. Therefore,
according to his own manner and method, free from petitioner‘s acts of placing some of the
the control and direction of his employer or principal respondents on ―stay home status‖ and not
in all matters connected with the performance of the giving them work assignments for more than
work except as to the results thereof. As alleged by

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LABOR STANDARDS LAW

six months were already tantamount to reported to the Department of Labor and
constructive and illegal dismissal. Employment.

60.) G.R. No. 147566 December 6, 2006 SMC likewise contends that PHILSSEC
exercised exclusive managerial prerogative over
SAN MIGUEL CORPORATION, petitioner vs.
the complainant as to hiring, payment of salary,
NATIONAL LABOR RELATIONS
dismissal and most importantly, the control over
COMMISSION AND RAFAEL MALIKSI,
his work. SMC was interested only in the result of
respondent.
the work specified in the contract but not as to the
means and methods of accomplishing the same.
Moreover, PHILSSEC has substantial capital of its
FACTS: own. It has an IBM system, 3 computers, 17 IBM
or IBM-compatible computers; it has a building
where the computer training center and main
office are located. What it markets to clients are
On 16 October 1990, Rafael M. Maliksi filed computer programs and training systems on
a complaint against the San Miguel Corporation- computer technology and not the usual labor or
Magnolia Division, herein referred to as SMC and manpower supply to establishment concerns.
Philippine Software Services and Education Moreover, what PHILSSEC set up employing the
Center herein referred to as PHILSSEC to compel complainant, among others, has no relation to the
the said respondents to recognize him as a regular principal business of SMC, which is food and
employee. He amended the complaint on 12 beverage..
November 1990 to include the charge of illegal
dismissal because his services were terminated on The Labor Arbiter declared Maliksi a
31 October 1990. regular employee of PHILSSEC and absolved
SMC from liability. Maliksi appealed to the
NLRC. In turn, in a decision dated January 26,
1998, the NLRC reversed that of the Labor Arbiter
The complainant‘s employment record
by declaring Maliksi a regular employee of the
indicates that he rendered service with Lipercon
petitioner and ordering the latter to reinstate him
Services from 1 April 1981 to February 1982 as
without loss of seniority rights and with full
budget head assigned to SMC-Beer Division, then
benefits.
from July 1983 to April 1985 with Skillpower,
Inc., as accounting clerk assigned to SMC-
Magnolia Division, then from October 1988 to
1989 also with Skillpower, Inc. as acting clerk
assigned to SMC-Magnolia Finance, and from Issue:
October 1989 to 31 October 1990 with PHILSSEC
assigned to Magnolia Finance as accounting clerk. WHETHER OR NOT PRIVATE
The complainant considered himself as an RESPONDENT IS A REGULAR EMPLOYEE
employee of SMC-Magnolia. Lipercon Services, OF PETITIONER SMC DESPITE ITS
Skillpower, Inc. and PHILSSEC are labor-only FINDINGS THAT PHILSSEC IS AN
contractors and any one of which had never been INDEPENDENT JOB CONTRACTOR?
his employer. His dismissal, according to him, was (affirmative)
in retaliation for his filing of the complaint for
regularization in service. His dismissal was illegal
there being no just cause for the action. He was
not accorded due process neither was his dismissal Ruling:

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LABOR STANDARDS LAW

SMC concedes that Maliksi, before his was hired and re-hired by SMC to perform
employment with PHILSSEC, worked in SMC administrative and clerical work that was
from November 1988 to April 1990, but as necessary to SMC’s business on a daily basis.
employee of Skillpower and that he was
previously assigned to SMC between 1981 up to
The act of hiring and re-hiring the
February 1985, ―for periods spread apart.‖ The petitioners over a period of time without
Labor Arbiter found, as earlier stated, that Maliksi considering them as regular employees
evidences bad faith on the part of private
rendered service with Lipercon from 1 April 1981
respondent. The public respondent made a
to February 1982 as budget head assigned to finding to this effect when it stated that the
SMC-Beer Division; from July 1983 to April subsequent re-hiring of petitioners on a
probationary status ―clearly appears to be a
1985 with Skillpower as accounting clerk
convenient subterfuge on the part of management
assigned to SMC-Magnolia Division, then from to prevent complainants (petitioners) from
October 1988 to 1989 also with Skillpower as becoming regular employees.‖

acting clerk assigned to SMC-Magnolia Finance,


and from October 1989 to 31 October 1990 with
Issue:
PHILSSEC assigned to Magnolia Finance as
accounting clerk. In all, it appears that, while
under the employ of either Lipercon or Skillpower, Whether or not individual private respondents
Maliksi has undisputedly rendered service with should first comply with certain requirements, like
submission of NBI and police clearances and
SMC for at least three years and seven months. submission to physicak and medical examinations
and etc?

The Court takes judicial notice of the fact


Ruling:
that Lipercon and Skillpower were declared to be
Considering that the clearances and
labor-only contractors, providing as they do
examinations sought by petitioners from private
manpower services to the public for a fee. The respondents are not 'periodic' in nature but are
existence of an employer-employee relationship is made preconditions for reinstatement, as in fact
the petition filed alleged that reinstatement shall
factual and we give due deference to the factual
be effective upon compliance with such
findings of both the NLRC and the CA that an requirements, which should not be the case
employer-employee relationship existed between because this is not a case of initial hiring, the
workers concerned having rendered years of
SMC and Maliksi. Indeed, having served SMC for
service to petitioners who are considered direct
an aggregate period of more than three (3) years employers, and that regularization is a labor
through employment contracts with these two benefit that should apply to all qualified
employees similarly situated and may not be
labor contractors, Maliksi should be considered as denied merely because some employees were
SMC‘s regular employee. The hard fact is that he allegedly not parties to or were not impleaded
in the voluntary arbitration case, even as the

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LABOR STANDARDS LAW

finding of Labor Arbiter Genilo is to the Ruling:


contrary, this Court finds no grave abuse of
discretion committed by Labor Arbiter Genilo This joint and several liability of the
in issuing the questioned order of October 20, contractor and the principal is mandated by the Labor
1988. Code to assure compliance of theprovisions therein
including the statutory minimum wage. The
contractor is made liable by virtue of his status as
direct employer. The principal,on the other hand, is
61. Eparwa Security and Janitorial Services vs.
made the indirect employer of the contractor's
Liceo De Cagayan University
employees for purposes of paying the employees
Facts: their wages should thecontractor be unable to pay
them. This joint and several liability facilitates, if not
Eparwa and LDCU, through their guarantees, payment of the workers' performance of
representatives, entered into a Contract for Security any work,task, job or project, thus giving the workers
Services. Subsequently, 11 security guardswhom ample protection as mandated by the 1987
Eparwa assigned to LDCU filed a complaint before Constitution. For the security guards, the actual
the NLRC-RAB against both Eparwa and LDCU for source of the payment of their wage differentials and
underpayment of salary, legalholiday pay, 13th premium for holiday and rest day work does not
month pay, rest day, service incentive leave, night matter as long as they are paid. This is the import of
shift differential, overtime pay, and payment for Eparwa and LDCU's solidary liability. Creditors,
attorney's fees. LDCU madea cross-claim and prayed such as the security guards, may collect from anyone
that Eparwa should reimburse LDCU for any of the solidary debtors. Solidary liabilitydoes not
payment to the security guards.The LA found that the mean that, as between themselves, two solidary
security guards are entitled to wage differentials and debtors are liable for only half of the payment.
premium for holiday and rest day work. The LA held LDCU's ultimate liability comes intoplay because of
Eparwa and LDCU solidarily liable pursuant to the expiration of the Contract for Security Services.
Article 109 of the Labor Code and likewise orderd There is no privity of contract between the security
Eparwa to reimburse LDCU for whateveramount the guards and LDCU, butLDCU's liability to the
latter may be required to pay the security guards. On security guards remains because of Articles 106, 107
appeal to the NLRC, Eparwa and LDCU was held and 109 of the Labor Code. Eparwa is already
solidarily liable for the wagedifferentials and precluded from askingLDCU for an adjustment in the
premium for holiday and rest day work, but the contract price because of the expiration of the
NLRC did not require Eparwa to reimburse LDCU contract, but Eparwa's liability to the security guards
for its payments to thesecurity guards. Upon motion remainsbecause of their employer-employee
for reconsideration, NLRC declared that although relationship. In lieu of an adjustment in the contract
Eparwa and LDCU are solidarily liable to the price, Eparwa may claim reimbursement from
security guards forthe monetary award, LDCU alone LDCUfor any payment it may make to the security
is ultimately liable ordering it to reimburse Eparwa guards. However, LDCU cannot claim any
for payments made to the contractual employees. reimbursement from Eparwa for any payment it
Uponappeal to the CA, the appellate court allowed maymake to the security guards.
LDCU to claim reimbursement from Eparwa. Eparwa
then filed an action for certiorari before the SC. 62. Lapanday Agri Development Corp., vs. Court of
Appeals, 324 SCRA 39
Issue:
FACTS:
Whether or not LDCU alone is ultimately liable to
the security guards for the wage differentials and On June 1986 private respondent and plaintiff entered
premium for holiday and rest daypay without any into a Guard Service Contract. Respondent provided
right of reimbursement from Eparwa. security guards in defendant's banana plantation. The
contract called for the payment to a guard of P754.28

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LABOR STANDARDS LAW

on a daily 8-hour basis and an additional P565.72 for over the subject matter of the present case. It is well
a four hour overtime while the shift-in-charge was to settled in law and jurisprudence that where no
be paid P811.40 on a daily 8-hour basis and P808.60 employer-employee relationship exists between the
for the 4-hour overtime. parties and no issue is involved which may be
resolved by reference to the Labor Code, other labor
Wage Orders increasing the minimum wage in 1983 statutes or any collective bargaining agreement, it is
were complied with by the defendant. On June 16, the Regional Trial Court that has jurisdiction.
1984, Wage Order No. 5 was promulgated directing
an increase of P3.00 per day on the minimum wage In its complaint, private respondent is not seeking
of workers in the private sector and a P5.00 increase any relief under the Labor Code but seeks payment of
on the ECOLA. This was followed on November 1, a sum of money and damages on account of
1984 by Wage Order No. 6 which further increased petitioner's alleged breach of its obligation under
said minimum wage by P3.00 on the ECOLA. Both their Guard Service Contract. The action is within the
Wage Orders contain the following provision: realm of civil law hence jurisdiction over the case
belongs to the regular courts. While the resolution of
"In the case of contract for construction projects the issue involves the application of labor laws,
and for security, janitorial and similar services, the reference to the labor code was only for the
increase in the minimum wage and allowances determination of the solidary liability of the petitioner
rates of the workers shall be borne by the principal to the respondent where no employer-employee
or client of the construction/service contractor and relation exists.
the contracts shall be deemed amended
accordingly, subject to the provisions of Sec. 3 (b) The liability of the petitioner to reimburse the
of this order" (Sec. 6 and Sec. 9, Wage Orders No. respondent only arises if and when respondent
5 and 6, respectively). actually pays its employees the increases granted by
Wage Order Nos. 5 and 6. Payment, which means not
- Respondent demanded that its Guard Service only the delivery of money but also the performance,
Contract with defendant be upgraded in compliance in any other manner, of the obligation, is the
with Wage Order Nos. 5 and 6. Plaintiff refused. operative fact which will entitle either of the solidary
Their Contract expired on June 6, 1986 without the debtors to seek reimbursement for the share which
rate adjustment called for Wage Order Nos. 5 and 6 corresponds to each of the debtors.
being implemented. The security agency then filed a
case for the collection of a sum of money with the It is not disputed that the private respondent has not
regional Trial Court that had jurisdiction over the actually paid the security guards the wage increases
case. Lapanday opposed, stating the NLRC was the granted under the Wage Orders in question. Neither
proper forum for the case. is it alleged that there is an extant claim for such
wage adjustments from the security guards
ISSUES: concerned, whose services have already been
terminated by the contractor. Accordingly, private
respondent has no cause of action against petitioner
1. WON RTC has jurisdiction over the case
to recover the wage increases. Needless to stress, the
increases in wages are intended for the benefit of the
2. WON petitioner is liable to the private respondent laborers and the contractor may not assert a claim
for the wage adjustments provided under Wage Order against the principal for salary wage adjustments that
Nos. 5 and 6 and for attorney's fees it has not actually paid. Otherwise, as correctly put by
the respondent, the contractor would be unduly
RULING: enriching itself by recovering wage increases, for its
own benefit.
1. YES
Finally, considering that the private respondent has
The enforcement of the written contract does not fall no cause of action against the petitioner, private
under the jurisdiction of the NLRC because the respondent is not entitled to attorney's fees.
money claims involved therein did not arise from
employer-employee relations between the parties and Petition GRANTED. The complaint of private
is intrinsically a civil dispute. Thus, jurisdiction lies respondent COMMANDO SECURITY SERVICE
with the regular courts. The RTC has jurisdiction AGENCY, INC. is hereby DISMISSED.

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workers to perform a job, work or service for a


principal. In labor-only contracting, the following
63. Escario vs. NLRC, 333 SCRA 257 elements are present:
[2000]
(a) The person supplying workers to an
FACTS: employer does not have
substantial capital or
Petitioners worked as merchandisers for CMC, a
investment in the form of
company engaged in manufacturing and distributing
tools, equipment,
food products. They filed a case against CMC to
machineries, work premises,
regularize their employment status. Pending
among others; and
determination of the case, D.L. Admark, a
promotional firm, dismissed the petitioners. Hence, (b) The workers recruited and placed by
they amended their complaint to include illegal such person are performing
dismissal as a cause of action and impleaded D.L. activities which are directly
Admark as party-defendant. related to the principal
business of the employer. 7
The issue brought to the fore is whether petitioners
are employees of CMC or D.L. Admark. IDESTH In contrast, there is permissible job contracting when
a principal agrees to put out or farm out with a
The Labor Arbiter ruled that petitioners should be
contractor or a subcontractor the performance or
reinstated by CMC as they are employees engaged in
completion of a specific job, work or service within a
activities necessary and desirable in the usual
definite or predetermined period, regardless of
business of CMC. The NLRC, on the other hand,
whether such job or work or service is to be
ruled that D.L. Admark is a legitimate independent
performed or completed within or outside the
contractor, which should be the one to reinstate the
premises of the principal. In this arrangement, the
petitioners with backwages.
following conditions must concur:
Hence, this petition.
(a) The contractor carries on a distinct
ISSUE: whether petitioners are employees of CMC and independent business and
or D.L. Admark. In resolving this, it is necessary to undertakes the contract work
determine whether D.L. Admark is a labor-only on his account under his own
contractor or an independent contractor. responsibility according to
his own manner and method,
free from the control and
direction of his employer or
HELD:the Supreme Court affirmed the decision of principal in all matters
the NLRC, ruling that based on the criteria for connected with the
determining whether there is labor-only contracting performance of his work
or job contracting, the status of D.L. Admark as a job except as to the results
contractor or independent contractor, hence, the true thereof; and cdphil
employer of petitioners, was established in this case.
The Court also affirmed the NLRC finding that D.L. (b) The contractor has substantial capital or
Admark had no just cause in dismissing petitioners investment in the form of tools, equipment,
for allegedly disowning them as their employer. machineries (sic), work premises, and other materials
which are necessary in the conduct of his business.

There is labor-only contracting when the contractor


or sub-contractor merely recruits, supplies or places In the recent case of Alexander Vinoya vs. NLRC, et

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LABOR STANDARDS LAW

al., 9 this Court ruled that in order to be considered the "Phenomenon." 12


an independent contractor it is not enough to show
substantial capitalization or investment in the form of 4) It had its own capital assets to carry
tools, equipment, machinery and work premises. In out its promotion business. It
addition, the following factors need be considered: then had current assets
(a) whether the contractor is carrying on an amounting to P6 million and
independent business; (b) the nature and extent of the is therefore a highly
work; (c) the skill required; (d) the term and duration capitalized venture. 13 It had
of the relationship; (e) the right to assign the an authorized capital stock of
performance of specified pieces of work; (f) the P500,000.00. It owned
control and supervision of the workers; (g) the power several motor vehicles and
of the employer with respect to the hiring, firing and other tools, materials and
payment of workers of the contractor; (h) the control equipment to service its
of the premises; (i) the duty to supply premises, tools, clients. It paid rentals of
appliances, materials, and labor; and (j) the mode, P30,020 for the office space
manner and terms of payment. 10 it occupied.

Based on the foregoing criterion, we find that D.L. 64. ABOITIZ HAULERS VS.DIMAPATOI
Admark is a legitimate independent contractor. Sept. 19, 2006, G.R. No. 148619

Among the circumstances that tend to establish the Facts:


Petitioner Aboitiz Haulers, Inc. is a domestic
status of D.L. Admark as a legitimate job contractor
corporation principally engaged in the nationwide
are: and overseas forwarding and distribution of cargoes.
Private respondents MonaoraiDimapatoi, Cecilia
1) The SEC registration certificate of Agawin, Raul Mamate, Emmanuel Guerrero and
D.L. Admark states that it is a GemenianoBigaw worked as checkers in the Mega
firm engaged in promotional, Warehouse, which is owned by the petitioner, located
advertising, marketing and at the Tabacalera Compound, United Nations
merchandising activities. Avenue, Manila.
Respondents maintain that during their
2) The service contract between CMC employment with the petitioner, they were not paid
and D.L. Admark clearly their regular holiday pay, night shift differential, 5-
day service incentive leave, and overtime premium.
provides that the agreement is
They also averred that illegal deductions were being
for the supply of sales made on their wages, particularly the contributions
promoting merchandising for a Mutual Assistance Fund, a Cash Bond, and
services rather than one of claims for damaged and misrouted cargoes incurred
manpower placement. 11 by petitioner.
On 17 May 1996, respondent Raul Mamate
3) D.L. Admark was actually engaged in filed a complaint before the Department of Labor and
several activities, such as Employment (DOLE) for nonpayment of wages and
other benefits, as well as illegal deductions. The other
advertising, publication,
respondents filed their own complaints. Since the
promotions, marketing and claims of the respondents exceeded Five Thousand
merchandising. It had several Pesos (P5,000.00), the case was referred to the
merchandising contracts with NLRC. Thereafter, respondents filed their complaint
companies like Purefoods, for illegal dismissal and other money claims before
Corona Supply, Nabisco the Arbitration Branch of the NLRC.
Biscuits, and Licron. It was Petitioner claims that respondents are not its
employees, rather they are the employees of Grigio
likewise engaged in the
Security Agency and General Services (Grigio), a
publication business as manpower agency that supplies security guards,
evidenced by its magazine checkers and stuffers. It allegedly entered into a

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Written Contract of Service with Grigio on 1 March may make appropriate distinctions between labor
1994. By virtue of the aforementioned Written only contracting and job contracting as well as
Contract of Service, Grigio supplied petitioner with differentiations within these types of contracting and
security guards, checkers and stuffers for petitioner's determine who among the parties involved shall be
Mega Warehouse. The respondents were among the considered the employer for purposes of this Code, to
checkers that were assigned to the petitioner's prevent any violation or circumvention of any
warehouse. provision of this Code.
Petitioner emphasizes that Grigio retained There is "labor-only" contracting where the
control over the respondents by providing their own person supplying workers to an employer does not
supervisors to oversee Grigio's personnel, as well as have substantial capital or investment in the form of
time cards to monitor the attendance of its personnel. tools, equipment, machineries, work premises, among
Petitioner also alleges that on 9 May 1996, the others, and the workers recruited and placed by such
respondents left the warehouse and did not report to persons are performing activities which directly
work thereafter. As a result of the respondents' related to the principal business of such employer. In
sudden abandonment of their work, there was no such cases, the person or intermediary shall be
orderly and proper turnover of papers and other considered merely as an agent of the employer who
company property in connection with the termination shall be responsible to the workers in the same
of the Written Contract for Services. manner and extent as if the latter were directly
Respondents, on the other hand, claim that employed by him.
most of them worked as checkers in petitioner's The first two paragraphs of Art. 106 set the
warehouse even before 1 March 1994. general rule that a principal is permitted by law to
engage the services of a contractor for the
Issue: performance of a particular job, but the principal,
Whether or not Grigio is a "labor-only" nevertheless, becomes solidarily liable with the
contractor. contractor for the wages of the contractor's
employees. The third paragraph of Art. 106, however,
Ruling: empowers the Secretary of Labor to make
Grigio is a "labor-only" contractor. The first distinctions between permissible job contracting and
issue that needs to be resolved is whether Grigio is a "labor-only" contracting, which is a prohibited act
"labor-only" contractor, which is tantamount to a further defined under the last paragraph. A finding
finding that the petitioner is the employer of the that a contractor is a "labor-only" contractor is
respondents. Article 106 of the Labor Code 24 equivalent to declaring that there is an employer-
explains the relations which may arise between an employee relationship between the principal and the
employer, a contractor and the contractor's employees employees of the supposed contractor, and the "labor-
thus: only" contractor is considered as a mere agent of the
ART. 106. Contractor or principal, the real employer. Section 7 of the Rules
subcontractor. — Whenever an Implementing Articles 106 to 109 of the Labor Code,
employer enters into a contract as amended, reiterates the rules in determining the
with another person for the existence of employer-employee relationship
performance of the former's work, between employer, contractor or subcontractor, and
the employees of the contractor and the contractor's or subcontractor's employee.
of the latter's subcontractor, if any, Section 7. Existence of an
shall be paid in accordance with the employer-employee relationship.
provisions of this Code. — The contractor or subcontractor
In the event that the contractor or shall be considered the employer of
subcontractor fails to pay the wages of his employees the contractual employee for
in accordance with this Code, the employer shall be purposes of enforcing the
jointly and severally liable with his contractor or provisions of the Labor Code and
subcontractor to such employees to the extent of the other social legislation. The
work performed under the contract in the same principal, however, shall be
manner and extent that he is liable to employees solidarily liable with the contractor
directly employed by him. in the event of any violation of any
The Secretary of Labor may, by appropriate provision of the Labor Code,
regulations, restrict or prohibit the contracting out of including the failure to pay wages.
labor to protect the rights of workers established
under this Code. In so prohibiting or restricting, he

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The principal shall be deemed the employer over the performance of the
of the contractual employee in any of the following work of the contractual
cases, as declared by a competent authority: employee.
a. where there is a labor-only contracting; or The foregoing provisions shall be without
b. where the contracting arrangement falls prejudice to the application of Article 248 (C) of the
within the prohibitions provided in Section 6 Labor Code, as amended.
(Prohibitions) hereof. "Substantial capital or investment" refers to
In determining whether or not a "labor-only" capital stocks and subscribed capitalization in the
contracting exists, Art. 106 of the Labor Code and case of corporations, tools, equipment, implements,
Section 5 of the Rules Implementing Articles 106 to machineries and work premises, actually and directly
109 of the Labor Code, as amended, provides the used by the contractor or subcontractor in the
following criteria: (1) where the person supplying performance or completion of the job, work or
workers to an employer does not have substantial service contracted out.
capital or investment in the form of tools, equipment, The "right to control" shall refer to the right
machineries, work premises, among other things; (2) reserved to the person for whom the services of the
the workers recruited and placed by such persons are contractual workers are performed, to determine not
performing activities which are directly related to the only the end to be achieved, but also the manner and
principal business of such employer; and (3) the means to be used in reaching that end.
contractor does not exercise the right to control the The allegation of the petitioner that Grigio is
performance of the work of the contractual employee. an independent job contractor, and, therefore, this
In order that one is considered by law as a "labor- case is one of permissible job contracting, is without
only" contractor, all three aforementioned criteria basis. In this case, the respondents' work, as
need not be present. If the contractor enters into an warehouse checkers, is directly related to the
arrangement characterized by any one of the criteria principal business of the petitioner. Petitioner also
provided, this would be a clear case of "labor-only exercises the right to control and determines not only
contracting." The clear phrasing of Section 5 of the the end to be achieved, but also the manner and
Rules Implementing means to be used in reaching that end. Lastly,
Articles 106 to 109 of the Labor Code, as petitioner failed to sufficiently prove that Grigio had
amended, support this interpretation. "substantial capital or investment."
Section 5. Prohibition The respondents, as checkers, were
against labor-only contracting. — employed to check and inspect these cargoes, a task
Labor-only contracting is hereby which is clearly necessary for the petitioner's
declared prohibited. For this business of forwarding and distributing of cargoes.
purpose, labor-only contracting The petitioner did not dispute the fact that the
shall refer to an arrangement where respondents were hired as checkers as early as 1992.
the contractor or subcontractor The fact that they were employed before the Written
merely recruits, supplies or places Contract of Services took effect on 24 February 1994,
workers to perform a job, work or and continued with their jobs until 1996, after the
service for a principal, and any of said contract had already expired on 24 February
the following elements are is 1995, 29 indicates that the respondents' work was
present: indeed necessary for the petitioner's business. In a
similar case, Guarin v. National Labor Relations
i) The contractor or Commission, the workers' contracts were repeatedly
subcontractor does not have renewed to perform services necessary for the
substantial capital or employer's business. Thus, the Court described the
investment which relates to the arrangement as "labor-only" contracting:
job, work or service to be The jobs assigned to the petitioners as
performed and the employees mechanics, janitors, gardeners, firemen and
recruited, supplied or placed grasscutters were directly related to the business of
by such contractor or Novelty as a garment manufacturer. In the case of
subcontractor are performing Philippine Bank of Communications vs. NLRC, 146
activities which are directly SCRA 347, we ruled that the work of a messenger is
related to the main business of directly related to a bank's operations. In its
the principal; or Comment, Novelty contends that the services which
ii) the contractor does not are directly related to manufacturing garments are
exercise the right to control sewing, textile cutting, designs, dying, quality

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control, personnel, administration, accounting, with AHI's supervisors regarding the operations at the
finance, customs, delivery and similar other Warehouse to ensure safety at the place of work.
activities; and that allegedly, "it is only by stretching He shall see to it that the cargoes are not overlanded,
the imagination that one may conclude that the shortlanded, delivered at a wrong destination, or
services of janitors, janitresses, firemen, grasscutters, misdelivered to consignee's port of destination. Any
mechanics and helpers are directly related to the discrepancy shall be reported immediately to AHI's
business of manufacturing garments" (p. 78, Rollo). Logistic Manager, Mr. Andy Valeroso.
Not so, for the work of gardeners in maintaining The control exercised by petitioner's
clean and well-kept grounds around the factory, supervisors over the performance of respondents was
mechanics to keep the machines functioning to such extent that petitioner's Warehouse Supervisor,
properly, and firemen to look out for fires, are Roger Borromeo, confidently gave an evaluation of
directly related to the daily operations of a garment the performance of respondent MonaoraiDimapatoi,
factory. That fact is confirmed by Novelty's rehiring who likewise felt obliged to obtain such Certification
the workers or renewing the contract with Lipercon from Borromeo.
every year from 1983 to 1986, a period of three (3) Petitioner's control over the respondents is
years. evident. And it is this right to control the employee,
As Lipercon was a "labor-only" contractor, not only as to the result of the work to be done, but
the workers it supplied Novelty became regular also as to the means and methods by which the same
employees of the latter.Where the employees are is to be accomplished, that constitutes the most
tasked to undertake activities usually desirable or important index of the existence of the employer-
necessary in the usual business of the employer, the employee relationship.
contractor is considered as a "labor-only" contractor Lastly, the law casts the burden on the
and such employees are considered as regular contractor to prove that it has substantial capital,
employees of the employer. investment, tools, etc. Employees, on the other hand,
In addition, Grigio did not undertake the need not prove that the contractor does not have
performance of its service contract according to its substantial capital, investment, and tools to engage in
own manner and method, free from the control and job-contracting. In this case, neither Grigio nor the
supervision of its principal. The work activities, work petitioner was able to present any proof that Grigio
shifts, and schedules of the respondents, including the had substantial capital. There was no evidence
time allowed for "recess" were set under the Written pertaining to its capitalization nor its investment in
Contract of Services. This clearly indicates that these tools, equipment or implements actually used in the
matters, which consist of the means and methods by performance or completion of the job, work, or
which the work is to be accomplished, were not service that it was contracted to render. Grigio was
within the absolute control of Grigio. By stipulating merely expected to supply petitioner with manpower
these matters in a contract, Grigio is constrained to to carry out work necessary for its business, to be
follow these provisions and would no longer be able carried out in the manner which petitioner provided
to exercise the freedom to alter these work shifts and in the contract.
schedules at its own convenience. Such being the Thus, Grigio is obviously a "labor-only"
case, Grigio cannot be considered as an independent contractor since it did not have substantial capital or
job contractor. investment which relates to the service performed;
Petitioner's allegation that Grigio retained the respondents performed activities which were
control over the respondents by providing supervisors directly related to the main business of the petitioner;
to monitor the performance of the respondents cannot and Grigio did not exercise control over the
be given much weight. Instead of exercising their performance of the work of the respondents.
own discretion or referring the matter to the officers Consequently, the petitioner is considered as the
of Grigio, Grigio's supervisors were obligated to refer employer of the respondents.
to petitioner's supervisors any discrepancy in the In prohibiting "labor-only" contracting and
performance of the respondents with their specified creating an employer-employee relationship between
duties. The Written Contract of Services provided the principal and the supposed contractor's
that: employees, the law intends to prevent employers
5.c. That the GRIGIO personnel, particularly the from circumventing labor laws intended to protect
supervisors, shall perform the following: employees. In the case of Aurora Land Projects Corp.
The Supervisor for the warehouse operation v. National Labor Relations Commission, this Court
shall monitor the performance and productivity of all pronounced:
the checkers, jacklifters, stuffers/strippers, forklift The question as to whether an employer-
operators, drivers, and helpers. He shall coordinate employee relationship exists in a certain situation

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continues to bedevil the courts. Some businessmen contract rate of P103.00 per eight hours of work or
try to avoid the bringing about of an employer- about P3,100.00 per month.
employee relationship in their enterprises because On August 9, 1994, LSWA filed a Third-
that judicial relation spawns obligations connected Party Complaint against GSIS for underpayment of
with workmen's compensation, social security, complainants' wages.
medicare, minimum wage, termination pay, and In its Position Paper, GSIS alleged that the
unionism. In light of this observation, it behooves Third-Party Complaint states no cause of action
this Court to be ever vigilant in checking the against it; that LSWA obligated itself in the Security
unscrupulous efforts of some of our entrepreneurs, Service Contract to be solely liable for the
primarily aimed at maximizing their return on enforcement of and compliance with all existing
investments at the expense of the lowly workingman. labor laws, rules and regulations; that the GSIS Board
of Trustees approved the upward adjustment on a
month-to-month basis, at P4,200 per guard per
65. GSIS vs. NLRC, G.R. No. 157647, October 15, month, effective January 8, 1991 to May 31, 1991,
2007, citing Rosewood Processing vs. NLRC, 290 under Board Resolution No. 207 dated May 24, 1991,
SCRA 408 which was incorporated in the Security Service
Facts: Contract; that GSIS fully paid the services of the
Tomas Lanting, doing business under the security guards as agreed upon in the Security
name and style of Lanting Security and Watchman Service Contract.
Agency (LSWA) entered into a Security Service
Contract to provide security guards to the properties Issues: Whether GSIS is solidarily liable for
of the Government Service Insurance System (GSIS) payment of complainants-respondnents' salary
at the contract rate of P3,000.00 per guard per month. differentials.
During the effectivity of the contract,
LSWA requested the GSIS for an upward adjustment Ruling:
of the contract rate in view of Section 7 of Wage Yes. Articles 106 and 107 of the Labor Code
Order No. 1 and Section 3 of Wage Order No. 2, provide:
which were issued by the Regional Tripartite Wages ART. 106. Contractor or
and Productivity Board-NCR pursuant to Republic subcontractor. — Whenever an
Act No. 6727, otherwise known as the Wage employer enters into contract with
Rationalization Act. another person for the performance
Acting on the request of LSWA, the GSIS, of the former's work, the employees
through its Board of Trustees and under Board of the contractor and of the latter's
Resolution No. 207, dated May 24, 1991, approved subcontractor, if any, shall be paid
the upward adjustments of the contract price from in accordance with the provisions
P3,000.00 to P3,716.07 per guard, per month of this Code.
effective November 1, 1990 to January 7, 1991, and In the event that the contractor or
P4,200.00 effective January 8, 1991 to May 31, 1991. subcontractor fails to pay the wage of his employees
LSWA assigned security guards Daniel Fanila, in accordance with this Code, the employer shall be
Hector Moreno, IsauroFerrer, Rubin Wilfredo, Jesus jointly and severally liable with his contractor or
Delima Jr., Maria Legaspi, Santiago Noto Jr., and subcontractor to such employees to the extent of the
Virgilio Soriano (hereafter complainants) to guard work performed under the contract, in the same
one of GSIS's properties. manner and extent that he is liable to employees
On March 15, 1993, GSIS terminated the directly employed by him.
Security Service Contract with LSWA. All the ART. 107 Indirect
complainants, except Virgilio Soriano, were absorbed employer. — The provisions of the
by the incoming security agency. On March 7, 1994, immediately preceding Article shall
complainants filed separate complaints against likewise apply to any person,
LSWA for underpayment of wages and non-payment partnership, association or
of labor standard benefits from March 1991 to March corporation which, not being an
15, 1993. Virgilio Soriano also complained of illegal employer, contracts with an
dismissal. independent contractor for the
In its Position Paper, LSWA alleged that performance of any work, task, job
complainants were estopped from claiming that they or project.
were underpaid because they were informed that the In this case, the GSIS cannot evade liability
pay and benefits given to them were based on the by claiming that it had fully paid complainants'

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salaries by incorporating in the Security Service privileges of membership; and (2) associate member,
Contract the salary rate increases mandated by Wage who has no right to vote and be voted upon and shall
Order Nos. 1 and 2 by increasing the contract price be entitled only to such rights and privileges provided
from P3,000.00 to P3,176.07 per guard per month
in its by-laws.
effective November 1, 1990 to January 7, 1991, and
P4,200.00 effective January 8, 1991 to May 31, 1991.
In the discharge of the aforesaid primary objectives,
In Rosewood Processing, Inc. v. National
Labor Relations Commission, 25 the Court explained respondent cooperative entered into several Service
the rationale for the joint and several liability of the Contracts with Stanfilco - a division of DOLE
employer, thus: Philippines, Inc. and a company based in Bukidnon
The joint and several liability of the
employer or principal was enacted to ensure The owners-members do not receive compensation or
compliance with the provisions of the Code, wages from the respondent cooperative. Instead, they
principally those on statutory minimum wage. The receive a share in the service surplus[10] which the
contractor or subcontractor is made liable by virtue of respondent cooperative earns from different areas of
his or her status as a direct employer, and the
trade it engages in, such as the income derived from
principal as the indirect employer of the contractor's
employees. This liability facilitates, if not guarantees, the said Service Contracts with Stanfilco. The
payment of the workers' compensation, thus, giving owners-members get their income from the service
the workers ample protection as mandated by the surplus generated by the quality and amount of
1987 Constitution. This is not unduly burdensome to services they rendered, which is determined by the
the employer. Should the indirect employer be Board of Directors of the respondent cooperative.
constrained to pay the workers, it can recover
whatever amount it had paid in accordance with the
terms of the service contract between itself and the In order to enjoy the benefits under the Social
contractor. Security Law of 1997, the owners-members of the
Thus, the Court does not agree with the
GSIS's claim that a double burden would be imposed respondent cooperative, who were assigned to
upon the latter because it would be paying twice for Stanfilco requested the services of the latter to
complainants' services. Such fears are unfounded.
register them with petitioner SSS as self-employed
Under Article 1217 of the Civil Code, if the GSIS
should pay the money claims of complainants, it has and to remit their contributions as such. Also, to
the right to recover from LSWA whatever amount it comply with Section 19-A of Republic Act No. 1161,
has paid in accordance with the terms of the service
contract between the LSWA and the GSIS. as amended by Republic Act No. 8282, the SSS
Joint and solidary liability is simply meant contributions of the said owners-members were equal
to assure aggrieved workers of immediate and
sufficient payment of what is due them. This is in line to the share of both the employer and the employee.
with the policy of the State to protect and alleviate
the plight of the working class.
SSS said that it is respondent who should register
their owner-members to the SSS as they are the ones
employing the said owner-members.

66. Republic of the Phils/SSC/SSS vs. Asiapro petitioner SSS, on 12 June 2003, filed a
Cooperative, G.R. No. 172101, November 23, 2007 Petition before petitioner SSC against the respondent
cooperative and Stanfilco praying that the respondent
cooperative or, in the alternative, Stanfilco be
directed to register as an employer and to report
Facts:
respondent cooperative‘s owners-members as
Respondent Asiapro, as a cooperative, is composed covered employees under the compulsory coverage
of owners-members. Under its by-laws, owners- of SSS and to remit the necessary contributions in
members are of two categories, to wit: (1) regular accordance with the Social Security Law of 1997
member, who is entitled to all the rights and

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Respondent cooperative filed its Answer with Motion Republic Act No. 6938 and
to Dismiss alleging that no employer-employee composed of owners-members, not
relationship exists between it and its owners- employees.
B. The
members, thus, petitioner SSC has no jurisdiction
rights and
over the respondent cooperative. Stanfilco, on the obligations of the
other hand, filed an Answer with Cross-claim against owners-members
the respondent cooperative. of [respondent]
cooperative are
On 17 February 2004, petitioner SSC issued an Order derived from
their Membership
denying the Motion to Dismiss filed by the Agreements, the
respondent cooperative. The respondent cooperative Cooperatives By-
Laws, and
moved for the reconsideration of the said Order, but Republic Act No.
it was likewise denied in another Order issued by the 6938, and not
from any contract
SSC dated 16 September 2004. of employment or
from the Labor
Laws. Moreover,
respondent cooperative filed a Motion for Extension said owners-
of Time to File a Petition for Review before the members enjoy
Court of Appeals. Subsequently, respondent rights that are not
cooperative filed a Manifestation stating that it was consistent with
no longer filing a Petition for Review. In its place, being mere
respondent cooperative filed a Petition employees of a
company, such as
forCertiorari before the Court of Appeals.
the right to
participate and
Issues presented by each side:
vote in decision-
making for the
Petitioner:
cooperative.
 C.
As
The [petitioner SSC] has jurisdiction over found by
the petition-complaint filed before it by the the
[petitioner SSS] under R.A. No. 8282. Bureau
of
There is an employer-employee relationship Internal
between [respondent cooperative] and its Revenue
[owners-members]. [BIR],
the
Respondent owners-
[Petitioner] SSC member
arbitrarily proceeded with the case s of
as if it has jurisdiction over the [respond
petition a quo, considering that it ent]
failed to first resolve the issue of cooperat
the existence of an employer- ive are
employee relationship between not paid
[respondent] cooperative and its any
owners-members. compens
[Respondent] is not an employer ation
within the contemplation of the income.
Labor Law but is a multi-purpose (Empha
cooperative created pursuant to sis

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supplied
discipline and remove the owners-members and its
.)
team leaders who were rendering services at
Ruling: Stanfilco. Fourth. As earlier opined, of the four
elements of the employer-employee relationship, the
The existence of an employer-employee relationship
―control test‖ is the most important. In the case at
cannot be negated by expressly repudiating it in a
bar, it is the respondent cooperative which has the
contract, when the terms and surrounding
sole control over the manner and means of
circumstances show otherwise. The employment
performing the services under the Service Contracts
status of a person is defined and prescribed by law
with Stanfilco as well as the means and methods of
and not by what the parties say it should be.
work. Also, the respondent cooperative is solely and
First. It is expressly provided in the Service
entirely responsible for its owners-members, team
Contracts that it is the respondent cooperative which
leaders and other representatives at Stanfilco. All
has the exclusive discretion in the selection and
these clearly prove that, indeed, there is an employer-
engagement of the owners-members as well as its
employee relationship between the respondent
team leaders who will be assigned at
cooperative and its owners-members.
Stanfilco. Second. Wages are defined as
―remuneration or earnings, however designated,
It is true that the Service Contracts executed between
capable of being expressed in terms of money,
the respondent cooperative and Stanfilco expressly
whether fixed or ascertained, on a time, task, piece or
provide that there shall be no employer-employee
commission basis, or other method of calculating the
relationship between the respondent cooperative and
same, which is payable by an employer to an
its owners-members. This Court, however, cannot
employee under a written or unwritten contract of
give the said provision force and effect.
employment for work done or to be done, or for
service rendered or to be rendered.‖ In this case,
It bears stressing, too, that a cooperative acquires
the weekly stipends or the so-called shares in the
juridical personality upon its registration with the
service surplus given by the respondent cooperative
Cooperative Development Authority. It has its Board
to its owners-members were in reality wages, as the
of Directors, which directs and supervises its
same were equivalent to an amount not lower than
business; meaning, its Board of Directors is the one
that prescribed by existing labor laws, rules and
in charge in the conduct and management of its
regulations, including the wage order applicable to
affairs. With that, a cooperative can be likened to a
the area and industry; or the same shall not be lower
corporation with a personality separate and distinct
than the prevailing rates of wages. It cannot be
from its owners-members. Consequently, an owner-
doubted then that those stipends or shares in the
member of a cooperative can be an employee of the
service surplus are indeed wages, because these are
latter and an employer-employee relationship can
given to the owners-members as compensation in
exist between them.
rendering services to respondent cooperative‘s client,
In the present case, it is not disputed that the
Stanfilco. Third. It is also stated in the above-
respondent cooperative had registered itself with the
mentioned Service Contracts that it is the respondent
Cooperative Development Authority, as evidenced by
cooperative which has the power to investigate,
its Certificate of Registration No. 0-623-2460. In its

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averred that it was the one who hired petitioners and


by-laws, its Board of Directors directs, controls, and
assigned them to work for respondent on occasions
supervises the business and manages the property of that the latter‘s work force could not meet the
the respondent cooperative. Clearly then, the demands of its customers. Eventually, however,
management of the affairs of the respondent respondent ceased to give job orders to SSASI,
constraining the latter to terminate petitioners‘
cooperative is vested in its Board of Directors and not
employment.
in its owners-members as a whole. Therefore, it is
completely logical that the respondent cooperative, as
a juridical person represented by its Board of Issue: Are Almeda, et al employees of Asahi Glass
Directors, can enter into an employment with its even considering that they were originally hired by
owners-members. San Sebastian Allied Services, Inc.?
As there is employee-employer relationship, SSC
jurisdiction.
Ruling:

67. Almeda et al., vs. Asahi Glass, G.R. No. Yes. Almeda, et al are employees of Asahi Glass.
177785, Sept. 3, 2008
Permissible job contracting or subcontracting refers
Facts: to an arrangement whereby a principal agrees to put
out or farm out to a contractor or subcontractor the
This a complaint for illegal dismissal with claims for performance or completion of a specific job, work or
moral and exemplary damages and attorney‘s fees service within a definite or predetermined period,
filed by Almeda, et al against Asahi Glass and San regardless of whether such job, work or service is to
Sebastian Allied Services, Inc. SSASI. Petitioners be performed or completed within or outside the
alleged that Asahi and SSASI entered into a service premises of the principal. A person is considered
contract whereby SSASI undertook to provide Asahi engaged in legitimate job contracting or
with the necessary manpower for its operations. subcontracting if the following conditions concur:
Pursuant to such a contract, SSASI employed
petitioners Randy Almeda, Edwin Audencial, Nolie (a) The contractor or subcontractor carries on a
Ramirez and Ernesto Calicagan as glass cutters, and distinct and independent business and undertakes to
petitioner Reynaldo Calicagan as Quality Controller, perform the job, work or service on its own account
all assigned to work for respondent. Asahi terminated and under its own responsibility according to its own
its service contract with SSASI, which in turn, manner and method, and free from the control and
terminated the employment of petitioners on the same direction of the principal in all matters connected
date. Believing that SSASI was a labor-only with the performance of the work except as to the
contractor, and having continuously worked as glass results thereof;
cutters and quality controllers for the respondent -
functions which are directly related to its main line of (b) The contractor or subcontractor has substantial
business as glass manufacturer - for three to 11 years, capital or investment; and
petitioners asserted that they should be considered
(c) The agreement between the principal and
regular employees of the Asahi; and that their
contractor or subcontractor assures the contractual
dismissal from employment without the benefit of
employees entitlement to all labor and occupational
due process of law was unlawful.
safety and health standards, free exercise of the right
Asahi claimed that petitioners were employees of to self-organization, security of tenure, and social and
SSASI and were merely assigned by SSASI to work welfare benefits.
for respondent to perform intermittent services
pursuant to an Accreditation Agreement. SSASI

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On the other hand, labor-only contracting, a demand with which respondent could not cope - only
prohibited act, is an arrangement in which the prove even more that the services rendered by
contractor or subcontractor merely recruits, supplies petitioners were indeed part of the main business of
or places workers to perform a job, work or service respondent. It would mean that petitioners
for a principal. In labor-only contracting, the supplemented the regular workforce when the latter
following elements are present: could not comply with the market‘s demand;
necessarily, therefore, petitioners performed the same
(a) The contractor or subcontractor does not have functions as the regular workforce. The
substantial capital or investment to actually perform indispensability of petitioners‘ services was fortified
the job, work or service under its own account and by the length and continuity of their performance,
responsibility; lasting for periods ranging from three to 11 years.

(b) The employees recruited, supplied or placed by More importantly, the Court finds that the crucial
such contractor or subcontractor is performing element of control over petitioners rested in
activities which are directly related to the main respondent. The power of control refers to the
business of the principal. authority of the employer to control the employee not
only with regard to the result of work to be done, but
In labor-only contracting, the statutes create an
also to the means and methods by which the work is
employer-employee relationship for a comprehensive
to be accomplished. It should be borne in mind that
purpose: to prevent circumvention of labor laws. The
the power of control refers merely to the existence of
contractor is considered as merely the agent of the
the power and not to the actual exercise thereof. It is
principal employer and the latter is responsible to the
not essential for the employer to actually supervise
employees of the labor-only contractor as if such
the performance of duties of the employee; it is
employees are directly employed by the principal
enough that the former has a right to wield the power.
employer. Therefore, if SSASI was a labor-only
contractor, then respondent shall be considered as the Petitioners followed the work schedule prepared by
employer of petitioners who must bear the liability respondent. They were required to observe all rules
for the dismissal of the latter, if any. and regulations of the respondent pertaining to,
among other things, the quality of job performance,
An important element of legitimate job contracting is
regularity of job output, and the manner and method
that the contractor has substantial capital or
of accomplishing the jobs. Other than being the one
investment, which respondent failed to prove. There
who hired petitioners, there was absolute lack of
is a dearth of evidence to prove that SSASI possessed
evidence that SSASI exercised control over them or
substantial capital or investment when respondent
their work.
began contractual relations with it more than a
decade before 2003. The Court did not find a single The fact that it was SSASI which dismissed
financial statement or record to attest to the economic petitioners from employment is irrelevant. It is hardly
status and financial capacity of SSASI to venture into proof of control, since it was demonstrated only at
and sustain its own business independent from the end of petitioners‘ employment. What is more,
petitioner. the dismissal of petitioners by SSASI was a mere
result of the termination by respondent of its
Furthermore, the Court is unconvinced by
contractual relations with SSASI.
respondent‘s argument that petitioners were
performing jobs that were not directly related to SSASI is a labor-only contractor; hence, it is
respondent‘s main line of business. Respondent is considered as the agent of respondent. Respondent is
engaged in glass manufacturing. One of the deemed by law as the employer of petitioners.
petitioners served as a quality controller, while the
rest were glass cutters. The only excuse offered by Equally unavailing is respondent‘s stance that its
respondent - that petitioners‘ services were required relationship with petitioners should be governed by
only when there was an increase in the market‘s the Accreditation Agreement stipulating that

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petitioners were to remain employees of SSASI and providing janitorial and related services to business
shall not become regular employees of the establishments, and E-PCIBank was one of its
respondent. A party cannot dictate, by the mere clients. Petitioners were its employees, part of its
pool of janitors/messengers assigned to E-
expedient of a unilateral declaration in a contract, the
PCIBank. The Contract for Services between HI and
character of its business, i.e., whether as labor-only E-PCIBank expired on 15 July 2000. E-PCIBank no
contractor or as job contractor, it being crucial that its longer renewed said contract with HI and, instead,
character be measured in terms of and determined by bidded out its janitorial requirements to two other job
the criteria set by statute. contractors, Able Services and Puritan. HI
designated petitioners to new work assignments, but
68. ROLANDO SASAN, SR., vs NATIONAL the latter refused to comply with the
LABOR RELATIONS COMMISSION same. Petitioners were not dismissed by HI, whether
actually or constructively, thus, petitioners‘
Assailed in this Petition for Review under complaints before the NLRC were without basis.
Rule 45 of the Rules of Court are the On 7 January 2002, on the basis of the
Decision[1] dated 24 April 2006 of the Court of parties‘ position papers and documentary evidence,
Appeals in CA-G.R. SP No. 79912, which affirmed Labor Arbiter Gutierrez rendered a Decision finding
the Decision dated 22 January 2003 of the National that HI was not a legitimate job contractor on the
Labor Relations Commission (NLRC) in NLRC Case ground that it did not possess the required substantial
No. V-000241-2002 finding that Helpmate, Inc. (HI) capital or investment to actually perform the job,
is a legitimate independent job contractor and that the work, or service under its own account and
petitioners were not illegally dismissed from work responsibility as required under the Labor Code. HI
Respondent Equitable-PCI Bank (E- is therefore a labor-only contractor and the real
PCIBank), a banking entity duly organized and employer of petitioners is E-PCIBank which is held
existing under and by virtue of Philippine laws, liable to petitioners.
entered into a Contract for Services with HI, a Aggrieved by the decision of Labor Arbiter
domestic corporation primarily engaged in the Gutierrez, respondents E-PCIBank and HI appealed
business of providing janitorial and messengerial the same to the NLRC, 4th Division, stationed
services. The contract was impliedly renewed every in Cebu City. The NLRC promulgated its Decision
year after year. on 22 January 2003 modifying the ruling of Labor
July 23, 2001, petitioners filed with the Arbiter Gutierrez. The NLRC took into
Arbitration Branch of the NLRC in Cebu City against consideration the documentary evidence presented by
HI and E- PCIBANK for illegal dismissal with HI for the first time on appeal and, on the basis
claims for separation pay, service incentive leave thereof, declared HI as a highly capitalized venture
pay, allowances, damages, attorney‘s fees and costs. with sufficient capitalization, which cannot be
Position papers were submitted. Petitioners considered engaged in ―labor-only contracting.‖
claimed that they had become regular employees of Petitioners moved for a motion for recon
E-PCIbank with respect to activities for which they was denied by NLRC.In the CA, it affirmed the
were employed and that the bank had direct control findings of the NLRC that HI was a legitimate job
and supervision over the means and methods by contractor and that it did not illegally dismiss
which they were to perform their jobs and their petitioners because they were offered new work
dismissal by HI was null and void since they were assignments to various establishments but they
regular employees of E-PCIBANK. refused to.
PCI Bank said that it entered into a Contract Issue:
for Services with HI, an independent job contractor A) Whether HI is a labor-only contactor?
which hired and assigned petitioners to the bank to
perform janitorial and messengerial services thereat. B) E-PCIBank should be deemed petitioners‘
It was HI that paid petitioners‘ wages, monitored principal employer?
petitioners‘ daily time records (DTR) and uniforms,
and exercised direct control and supervision over the Held: A) NO.
petitioners and that therefore HI has every right to
terminate their services legally. E-PCIBank could The court finds that HI is a legitimate job
not be held liable for whatever misdeed HI had contractor.
committed against its employees.
HI, on the other hand, asserted that it was an
independent job contractor engaged in the business of

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HI has a certification of registration issued


by the DOLE. Moreover, the DOLE being the agency In contrast, labor-only contracting, a prohibited act,
primarily responsible for regulating the business of is an arrangement where the contractor or
independent job contractors, we can presume in the subcontractor merely recruits, supplies or places
absence of evidence to the contrary that it thoroughly workers to perform a job, work or service for a
evaluated the requirements submitted by HI as a principal.[37] In labor-only contracting, the following
precondition to the issuance of the Cerificate of elements are present:
Registration.
HI has substantial capital in the amount (a) The contractor or subcontractor does not have
of P20,939,935.72. It has its own building where it substantial capital or investment to actually perform
holds office and it has been engaged in business for the job, work or service under its own account and
more than a decade now.As observed by the Court of responsibility; and
Appeals, surely, such a well-established business
entity cannot be considered a labor-only contractor. (b) The employees recruited, supplied or placed by
The evidence on record also shows that HI is such contractor or subcontractor are performing
carrying on a distinct and independent business from activities which are directly related to the main
E-PCIBank. The employees of HI are assigned to business of the principal.
clients to perform janitorial and messengerial
services, clearly distinguishable from the banking In distinguishing between permissible job
services in which E-PCIBank is engaged. contracting and prohibited labor-only contracting, we
The court declared that while these services elucidated in Vinoya v. National Labor Relations
rendered by the petitioners as janitors, messengers Commission, that it is not enough to show substantial
and drivers are considered directly related to the capitalization or investment in the form of tools,
principal business of a bank, in this case E-PCIBank, equipment, etc. Other facts that may be considered
nevertheless, they are not necessary in the conduct of include the following: whether or not the contractor
its (E-PCIBANK‘s) principal business. is carrying on an independent business; the nature
and extent of the work; the skill required; the term
Permissible job contracting or subcontracting refers and duration of the relationship; the right to assign
to an arrangement whereby a principal agrees to put the performance of specified pieces of work; the
out or farm out to a contractor or subcontractor the control and supervision of the work to another; the
performance or completion of a specific job, work or employer‘s power with respect to the hiring, firing
service within a definite or predetermined period, and payment of the contractor‘s workers; the control
regardless of whether such job, work or service is to of the premises; the duty to supply premises, tools,
be performed or completed within or outside the appliances, materials and labor; and the mode and
premises of the principal.[35] A person is considered manner or terms of payment.[41] Simply put, the
engaged in legitimate job contracting or totality of the facts and the surrounding
subcontracting if the following conditions concur: circumstances of the case are to be
considered.[42] Each case must be determined by its
(a) The contractor or subcontractor carries on own facts and all the features of the relationship are
a distinct and independent business and undertakes to to be considered.
perform the job, work or service on its own account
and under its own responsibility according to its own
manner and method, and free from the control and B )NO.
direction of the principal in all matters connected
with the performance of the work except as to the The presence of the first requisite for the
results thereof; existence of an employer-employee relationship to
wit, the selection and engagement of the employee is
(b) The contractor or subcontractor has shown by the fact that it was HI which selected and
substantial capital or investment; and engaged the services of petitioners as its employees.
On the second requisite regarding the
(c) The agreement between the principal and payment of wages, it was HI who paid
contractor or subcontractor assures the contractual petitioners their wages and who provided their daily
employees entitlement to all labor and occupational time records and uniforms and other materials
safety and health standards, free exercise of the right necessary for the work they performed. Therefore, it
to self-organization, security of tenure, and social and is HI who is responsible for petitioner‘s claims for
welfare benefits.[36] wages and other employee‘s benefits.

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As to the third requisite on the power to employer-employee relationship between Purefoods


control the employee‘s conduct, and the fourth and Neri and the other complainants. Purefoods
requisite regarding the power of dismissal, again E- moved for the reconsideration of the decision but its
PCIBank did not have the power to control motion was denied for lack of merit. Hence, its
petitioners with respect to the means and methods by recourse to the Court of Appeals via a petition for
which their work was to be accomplished. certiorari.
Considering the foregoing, plus taking The Court of Appeals, relying on the case of
judicial notice of the general practice in private, as Escario v. NLRC, held that D.L. Admark is a
well as in government institutions and industries, of legitimate independent contractor. However, it ruled
hiring an independent contractor to perform special that complainants are regular employees of
services, ranging from janitorial, security and even Purefoods. Citing Art. 280 of the Labor Code, the
technical services, we can only conclude that HI is a appellate court found that complainants were
legitimate job contractor. As such legitimate job engaged to perform activities which are usually
contractor, the law creates an employer-employee necessary or desirable in the usual business or trade
relationship between HI and petitioners which of Purefoods, and that they were under the control
renders HI liable for the latter‘s claims. and supervision of Purefoods' supervisors, and not of
D.L. Admark's. It noted that in the Promotions
Agreements between D.L. Admark and Purefoods,
69. Purefoods Corp. vs. NLRC et al., G.R. No. there was no mention of the list of D.L. Admark
172241, November 20, 2008 employees who will handle particular promotions for
petitioner, and that complainants' periods of
FACTS: employment are not fully covered by the Promotions
Lolita Neri (Neri) originally filed a claim for Agreements.
nonpayment of additional wage increase,
regularization, nonpayment of service incentive Issue: Whether or not Neri and the other
leave, underpayment of 13th month pay, and complainants are employees of PUREFOODS or
nonpayment of premium pay for holiday and holiday A.D. ADMARK‘S
pay against Purefoods Corporation (Purefoods). By
July 4, 1992, however, Neri was dismissed from her Ruling:
work as a Deli-Attendant. Subsequently, or on 13 The Court agrees with Purefoods' argument
July 1992, eleven (11) other complainantsjoined that Art. 280 of the Labor Codefinds no application
forces with Neri and together they filed an amended in a trilateral relationship involving a principal, an
complaint, with Neri charging Purefoods with illegal independent job contractor, and the latter's
dismissal.All the other complainants, save for Neri, employees. Indeed, the Court has ruled that said
were still working for Purefoods at the time of the provision is not the yardstick for determining the
filing of the amended complaint. On August 31, existence of an employment relationship because it
1993, Labor declared Neri and the complainants as merely distinguishes between two kinds of
Purefoods' regular employees; and Neri as having employees, i.e., regular employees and casual
been illegally dismissed and entitled to reinstatement employees, for purposes of determining the right of
with payment of backwages. Purefoods filed a partial an employee to certain benefits, to join or form a
appeal, praying that the claims of complainants be union, or to security of tenure; it does not apply
dismissed for lack of merit, or in the alternative, the where the existence of an employment relationship is
case be remanded for formal hearing on the merits in dispute. It is therefore erroneous on the part of the
and to implead D.L. Admark as a party- Court of Appeals to rely on Art. 280 in determining
respondent.The NLRC granted the appeal and whether an employer-employee relationship exists
remanded the case for further hearings on the factual between respondent Neri and Purefoods.
issues. Permissible job contracting or
The case was remanded to Labor Arbiter, subcontracting refers to an arrangement whereby a
who, after finding that Neri is not an employee of principal agrees to put out or farm out with the
petitioner, but rather of D.L. Admark, an contractor or subcontractor the performance or
independent labor contractor, dismissed the completion of a specific job, work or service within a
complaint. A memorandum on appeal was nominally definite or predetermined period regardless of
filed by all the complainants; the NLRC ruled in whether such job, work or service is to be performed
complainants' favor and reversed and set aside the or completed within or outside the premises of the
labor arbiter's decision. According to the NLRC, the principal. In this arrangement, the following
pieces of evidence on record established the conditions must be met: (a)the contractor carries on

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a distinct and independent business and undertakes engaged in promotional, advertising,


the contract work on his account under his own marketing and merchandising activities.
responsibility according to his own manner and 2) The service contract between
method, free from the control and direction of his CMC and D.L. Admark clearly provides that
employer or principal in all matters connected with the agreement is for the supply of sales
the performance of his work except as to the results promoting merchandising services rather
thereof; (b)the contractor has substantial capital or than one of manpower placement.
investment; and(c)the agreement between the 3) D.L. Admark was actually
principal and contractor or subcontractor assures engaged in several activities, such as
the contractual employees' entitlement to all labor advertising, publication, promotions,
and occupational safety and health standards, free marketing and merchandising. It had several
exercise of the right to self-organization, security of merchandising contracts with companies
tenure, and social welfare benefits. like Purefoods, Corona Supply, Nabisco
To support its position that respondent is not Biscuits, and Licron. It was likewise
its employee, Purefoods relies on the following: (i) engaged in the publication business as
the Promotions Agreements it entered into with D.L. evidenced by its magazine the
Admark; (ii) Department Order No. 10 (Series of "Phenomenon."
1997) which defines legitimate contracting or 4) It had its own capital assets to
subcontracting; and (iii) Escario v. NLRC wherein carry out its promotion business. It then had
the Court declared D.L. Admark as a legitimate labor current assets amounting to P6 million and
contractor. is therefore a highly capitalized venture. It
On the other hand, early on, Neri and the had an authorized capital stock of
rest of the complainants admitted that they worked P500,000.00. It owned several motor
for petitioner through D.L. Admark. However, they vehicles and other tools, materials and
also averred that they were under the control and equipment to service its clients. It paid
supervision of petitioner's employees–salesmen, rentals of P30,020 for the office space it
poultry sales managers, deli supervisors–who give occupied.
them work orders and to whom they submit weekly Moreover, applying the four-fold test used
inventory reports and monthly competitive sales in determining employer-employee relationship, the
report. In support of these statements, Neri appended Court found that: the employees therein were selected
several documents (various Identification Cards, and hired by D.L. Admark; D.L. Admark paid their
Certification from Rustan's Supermarkets stating that salaries, as evidenced by the payroll prepared by D.L.
respondent Neri is from Purefoods, Memoranda to Admark and sample contribution forms; D.L.
respondent Neri written by a supervisor from Admark had the power of dismissal as it admitted
Purefoods, letters from Purefoods area sales that it was the one who terminated the employment of
managers introducing complainants as Purefoods the employees; and finally, it was D.L. Admark who
Merchandisers). Purefoods, meanwhile, claims that exercised control and supervision over the
these documents must be taken in the context of the employees.
performance of the service contracted out–promotion Furthermore, it is evident from the
of its products. Promotions Agreements entered into by Purefoods
In the first place, D.L. Admark's status as a that D.L. Admark is a legitimate labor contractor.
legitimate independent contractor has already been A sample agreement reads in part:
established in Escario v. NLRC. In the said case, WHEREAS, The FIRST PARTY is
complainants, through D.L. Admark, worked as engaged in the general promotion business;
merchandisers for California Manufacturing WHEREAS, The SECOND
Corporation (CMC). They filed a case before the PARTY will launch its "Handogsa
labor arbiter for the regularization of their Graduates" promotion project;
employment status with CMC, and while the case WHEREAS, The FIRST PARTY
was pending, D.L. Admark sent termination letters to has offered its services to the SECOND
complainants. The complainants thereafter amended PARTY, in connection with the said
their complaint to include illegal dismissal. The promotion project, and the latter has
Court considered the following circumstances as accepted the said offer;
tending to establish D.L. Admark's status as a NOW, THEREFORE, for and in
legitimate job contractor: consideration of the foregoing premises, and
1) The SEC registration certificate of the mutual convenience between them,
of D.L. Admark states that it is a firm the parties have agreed as follows:

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1. The FIRST PARTY authenticity of the said documents. Even the


shall handle and implement the identification cards presented by Neri are neither
"Handogsa Graduates" promotion binding on Purefoods nor even indicative of her
project of the SECOND PARTY, claimed employee status of Purefoods, issued as they
said project to last from February 1, were by the supermarkets concerned and not by
1992 to July 31, 1992. Purefoods itself. Moreover, the check voucher issued
2. The FIRST PARTY by Purefoods marked "IN PAYMENT OF DL
shall indemnify the SECOND ADMARK DELI ATTENDANTS 12.00 PESOS
PARTY for any loss or damage to ADJUSTMENT JAN 30, 1991 TO JUNE 22, 1992,"
the latter's properties, if such loss signed and received by Neri, is proof that Purefoods
or damage is due to the fault or never considered Neri as its own employee, but rather
negligence of the FIRST PARTY as one of D.L. Admark's deli attendants.
or its agents or employees. We also note that Neri herself admitted in
3. There shall be no her SinumpaangSalaysay and in the hearings that she
employer-employee relationship applied with D.L. Admark and that she worked for
between the FIRST PARTY or its Purefoods through D.L. Admark. Neri was aware
agents or employees and the from the start that D.L. Admark was her employer
SECOND PARTY. and not Purefoods. She had kept her contract with
4. In consideration for the D.L. Admark, and inquired about her employment
services to be rendered by the status with D.L. Admark. It was D.L. Admark, as her
FIRST PARTY to the SECOND employer, which had the final say in, and which
PARTY, the latter shall pay the actually effected, her termination.
former the amount of Two Million In view of the foregoing, we hold that Neri
Six Hundred Fifty Two Thousand is not an employee of Purefoods, but that of D.L.
pesos only (P2,652,000.00) payable Admark. In the absence of employer-employee
as follows: relations between Neri and Purefoods, the
The agreements confirm that D.L. complaint for illegal dismissal and other monetary
Admark is an independent contractor which claims must fail.
Purefoods had engaged to supply general
promotion services, and not mere manpower 70. MARANAW HOTELS and RESPORT CORP.
services, to it. The provisions expressly permit D.L. vs. CA
Admark to handle and implement Purefoods' project,
and categorically state that there shall be no FACTS:
employer-employee relationship between D.L.
Admark's employees and Purefoods. While it may be Private respondent Sheryl Oabel filed a complaint
true that complainants were required to submit for regularization, subsequently converted into
regular reports and were introduced as Purefoods
one for illegal dismissal before LA Madjayran H.
merchandisers, these are not enough to establish
Purefoods' control over them. Even if the report Ajan.
requirements are somehow considered as control
measures, they were imposed only to ensure the Oabel was initially hired by Maranaw Hotels as an
effectiveness of the promotion services rendered by extra beverage attendant on April 24, 1995. This
D.L. Admark. It would be a rare contract of service lasted until February 7, 1997. Oabel worked in
that gives untrammelled freedom to the party hired Century Park Hotel, an establishment owned by the
and eschews any intervention whatsoever in his petitioner. Petitioner then contracted with Manila
performance of the engagement.Indeed, it would be Resource Dev‘t Corp. (MANRED). Subsequently,
foolhardy for any company to completely give the
reins and totally ignore the operations it has Oabel was transferred to MANRED with the latter
contracted out. deporting itself as her employer. MANRED has
Significantly, the pieces of evidence intervened in all stages of the proceedings and has
submitted by Neri do not support her claim of having consistently claimed to be the employer of Oabel.
been a regular employee of Purefoods. We note that Oabel performed the following functions: Secretary
two "Statement of Earnings and Deductions"were Public Relations, Gift Shop Attendant, Waitress, and
issued for the same period, December 1989, and in
Shop Attendant from 1997 – 1998.
one "Statement," someone deliberately erased the
notation "January 1997," thereby casting doubt on the

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In 1998, Oabel filed before LA a petition for RULING:


regularization of employment against petitioner.
However, in the same year, Oabel was dismissed Specific authorization, the Court held, could only
from employment. Thus, Oabel converted her come in the form of a board resolution issued by the
petition into a complaint for illegal dismissal. Board of Directors that specifically authorizes the
counsel to institute the petition and execute the
LA dismissed the complaint claiming that Oabel certification, to make his actions binding on his
never disputed the fact that her work with petitioner principal, i.e.,the corporation.
was on a per function basis or a “need basis” thus
Oabel could not even be considered as a casual Art. 280. Regular and casual employment. —
employee nor a provisional employee. Maranaw The provisions of written agreement to the
consider Oabel, at most, as a project employee contrary notwithstanding and regardless of the
which does not ripen into a regular employee. oral agreement of the parties, an employment
shall be deemed to be regular where the
Oabel appealed before the NLRC. NLRC reversed employee has been engaged to perform
the ruling of LA and held that MANRED is a labor- activities which are usually necessary or
only contractor and Oabel was illegaly dismissed desirable in the usual business or trade of the
for it was done without a valid or just cause. employer, except where the employment has
NLRC grounded these findings on the fat that: been fixed for a specific project or undertaking
the completion or termination of which has
1. Under the terms of the service contract, been determined at the time of the engagement
MANRED shall provide Maranaw not of the employee or where the work or service to
specific jobs or services but personnel; and be performed is seasonal in nature and the
2. That MANDRED had insufficient employment is for the duration of the season.
capitalization and was not sufficiently
equipped to provide specific jobs; and An employment shall be deemed to be casual
3. That the activities performed by Oabel was if it is not covered by the preceding
directly related to and usually necessary or paragraph: Provided, That any employee
desirable in the business of Maranaw. who has rendered at least one year of service,
whether such service is continuous or
Maranaw then filed a petition before the CA. CA broken, shall be considered a regular
dismissed the petition on account of the failure of employee with respect to the activity in
Maranaw to append the board resolution which he is employed and his employment
authorizing the counsel for petitioner to file the shall continue while such activity exists.
petition before the CA.

In the present petition, petitioner invokes,


substantial justice as justification for a reversal of APPLICATION:
the resolution of the CA. Further, Maranaw contends
The procedural aspects placed aside, it may be seen
that the filing of a MR with the certificate of non-
sustained by this court that MANRED is a labor-
forum shopping attached constitutes substantial
only contractor and that the real employer of
compliance with the requirement.
Oabel is Manaraw.
ISSUE:
Further, it appears that Oabel has already rendered
WON there was substantial compliance with respect more than one year of service to the petitioner, for
on the certificate of non-forum shopping. Further, the period of 1995-1998, for which she must already
WON there exists an EE-ER relationship between be considered a regular employee, as stated in Art.
Oabel and Maranaw. 280 of LC.

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Notably, the operations of the hotel itself do not


cease with the end of each even or function and that ISSUES:
there is an ever present need for individuals to
1. Whether or not Inteserve is a legitimate
perform certain tasks necessary in petitioner‘s
job contractor;
business. Thus, although the tasks themselves may 2. Whether or not an employer-employee
vary, the need for sufficient manpower to carry them relationship exists between petitioner
out does not. Thus, in any event, the petitioner Coca-Cola Bottlers Phils. Inc. and
determines the nature of the tasks to be respondents.
performed by Oabel. Therefore, in the process,
exercising control. RULING:

DENIED. No. Inteserve is not a legitimate job


contractor
71. Coca-Cola Bottlers Phils., Inc. vs. Alan M.
Agito, et al. There is "labor-only" contracting where the
[GR No. 179546 February 13, 2009] person supplying workers to an employee does not
have substantial capital or investment in the form of
FACTS: tools, equipment, machineries, work premises, among
others, and the workers recruited and placed by such
Coca-Cola Bottlers Phils. Inc. (COKE), the persons are performing activities which are directly
petitioner herein is a domestic corporation engaged in related to the principal business of such employer. In
manufacturing, bottling and distributing soft drink such cases, the person or intermediary shall be
beverages and other allied products. Respondents considered merely as an agent of the employer who
were salesmen assigned at Coke Lagro Sales Office shall be responsible to the workers in the same
for years but were not regularized. Coke averred that manner and extent as if the latter were directly
respondents were employees of Interserve who were employed by him.
tasked to perform contracted services in accordance
with the provisions of the Contract of Services The afore-quoted provision recognizes two
executed between Coke and Interserve on 23 March possible relations among the parties: (1) the permitted
2002. Said Contract constituted legitimate job legitimate job contract, or (2) the prohibited labor-
contracting, given that the latter was a bona fide only contracting.
independent contractor with substantial capital or
investment in the form of tools, equipment, and A legitimate job contract, wherein an
machinery necessary in the conduct of its business. employer enters into a contract with a job contractor
for the performance of the former's work, is permitted
To prove the status of Interserve as an by law. Thus, the employer-employee relationship
independent contractor, petitioner presented the between the job contractor and his employees is
following pieces of evidence: (1) the Articles of maintained. In legitimate job contracting, the law
Incorporation of Interserve; (2) the Certificate of creates an employer-employee relationship between
Registration of Interserve with the Bureau of Internal the employer and the contractor's employees only for
Revenue; (3) the Income Tax Return, with Audited a limited purpose, i.e., to ensure that the employees
Financial Statements, of Interserve for 2001; and (4) are paid their wages. The employer becomes jointly
the Certificate of Registration of Interserve as an and severally liable with the job contractor only for
independent job contractor, issued by the Department the payment of the employees' wages whenever the
of Labor and Employment (DOLE). contractor fails to pay the same. Other than that, the
employer is not responsible for any claim made by
As a result, petitioner asserted that the contractor's employees.
respondents were employees of Interserve, since it
was the latter which hired them, paid their wages, and On the other hand, labor-only contracting is
supervised their work, as proven by: (1) respondents‘ an arrangement wherein the contractor merely acts as
Personal Data Files in the records of Interserve; (2) an agent in recruiting and supplying the principal
respondents‘ Contract of Temporary Employment employer with workers for the purpose of
with Interserve; and (3) the payroll records of circumventing labor law provisions setting down the
Interserve. rights of employees. It is not condoned by law. A
finding by the appropriate authorities that a

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contractor is a "labor-only" contractor establishes an Code, as amended. It is also apparent that Interserve
employer-employee relationship between the is a labor-only contractor under Section 5(ii) of the
principal employer and the contractor's employees Rules Implementing Articles 106-109 of the Labor
and the former becomes solidarily liable for all the Code, as amended, since it did not exercise the right
rightful claims of the employees. to control the performance of the work of
respondents.
Section 5 of the Rules Implementing
Articles 106-109 of the Labor Code, as amended, The lack of control of Interserve over the
provides the guidelines in determining whether labor- respondents can be gleaned from the Contract of
only contracting exists: Services between Interserve (as the CONTRACTOR)
and petitioner (as the CLIENT). The Contract of
Section 5. Prohibition against labor- Services between Interserve and petitioner did not
only contracting. — Labor-only contracting is hereby identify the work needed to be performed and the
declared prohibited. For this purpose, labor-only final result required to be accomplished. Instead, the
contracting shall refer to an arrangement where the Contract specified the type of workers Interserve
contractor or subcontractor merely recruits, supplies, must provide petitioner (―Route Helpers, Salesmen,
or places workers to perform a job, work or service Drivers, Clericals, Encoders & PD‖) and their
for a principal, and any of the following elements are qualifications (technical/vocational course graduates,
[is] present: physically fit, of good moral character, and have not
i) The contractor or subcontractor does not been convicted of any crime). The Contract also
have substantial capital or investment which relates states that, ―to carry out the undertakings specified in
to the job, work, or service to be performed and the the immediately preceding paragraph, the
employees recruited, supplied or placed by such CONTRACTOR shall employ the necessary
contractor or subcontractor are performing activities personnel,‖ thus, acknowledging that Interserve did
which are directly related to the main business of the not yet have in its employ the personnel needed by
principal; or petitioner and would still pick out such personnel
ii) The contractor does not exercise the right to based on the criteria provided by petitioner. In other
control the performance of the work of the words, Interserve did not obligate itself to perform an
contractual employee. identifiable job, work, or service for petitioner, but
merely bound itself to provide the latter with specific
The foregoing provisions shall be without types of employees. These contractual provisions
prejudice to the application of Article 248(C) of the strongly indicated that Interserve was merely a
Labor Code, as amended. "Substantial capital or recruiting and manpower agency providing petitioner
investment" refers to capital stocks and subscribed with workers performing tasks directly related to the
capitalization in the case of corporations, tools, latter‘s principal business.
equipment, implements, machineries and work
premises, actually and directly used by the contractor The certification issued by the DOLE stating
or subcontractor in the performance or completion of that Interserve is an independent job contractor does
the job, work, or service contracted out. not sway this Court to take it at face value, since the
primary purpose stated in the Articles of
The "right to control" shall refer to the right Incorporation of Interserve is misleading. According
reserved to the person for whom the services of the to its Articles of Incorporation, the principal business
contractual workers are performed, to determine not of Interserve is to provide janitorial and allied
only the end to be achieved, but also the manner and services. The delivery and distribution of Coca-Cola
means to be used in reaching that end. (Emphasis products, the work for which respondents were
supplied.) employed and assigned to petitioner, were in no way
allied to janitorial services. While the DOLE may
In sum, Interserve did not have substantial have found that the capital and/or investments in
capital or investment in the form of tools, equipment, tools and equipment of Interserve were sufficient for
machineries, and work premises; and respondents, an independent contractor for janitorial services, this
it‘s supposed employees, performed work which was does not mean that such capital and/or investments
directly related to the principal business of petitioner. were likewise sufficient to maintain an independent
It is, thus, evident that Interserve falls under the contracting business for the delivery and distribution
definition of a ―labor-only‖ contractor, under Article of Coca-Cola products.
106 of the Labor Code; as well as Section 5(i) of the
Rules Implementing Articles 106-109 of the Labor

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With the finding that Interserve was engaged contractor. Respondents Ernesto Belleza, Carlos
in prohibited labor-only contracting, petitioner shall Rojas, Maximo Malinao were all employees in
be deemed the true employer of respondents. As petitioner's coconut farm, while respondents Felix
regular employees of petitioner, respondents cannot Terona, Virgilio Cosep, Maximo Tolda, and Nelson
be dismissed except for just or authorized causes, Bagaan were assigned to petitioner's mango farm. All
none of which were alleged or proven to exist in this of the abovenamed respondents (copra workers) were
case, the only defense of petitioner against the charge later transferred by petitioner to Gamo as the
of illegal dismissal being that respondents were not latter's copraceros. From 1987 to 1999, Gamo and
its employees. Records also failed to show that petitioner entered into a profit-sharing agreement
petitioner afforded respondents the twin requirements wherein 70% of the net proceeds of the sale of copra
of procedural due process, i.e., notice and hearing, went to petitioner and 30% to Gamo. The copra
prior to their dismissal. Respondents were not served workers were paid by Gamo from his 30% share.
notices informing them of the particular acts for
Petitioner wanted to standardize payments to its
which their dismissal was sought. Nor were they
"contractors" in its coconut farms. On 2 October
required to give their side regarding the charges made
1999, petitioner proposed a new payment scheme to
against them. Certainly, the respondents‘ dismissal
Gamo. The new scheme provided a specific price for
was not carried out in accordance with law and,
each copra making activity. Gamo submitted his
therefore, illegal.
counter proposal. Petitioner did not accept Gamo's
counter proposal since it was higher by at least fifty
percent (50%) from its original offer. Without
agreeing to the new payment scheme, Gamo and his
copra workers started to do harvesting work.
72.[G.R. No. 171814. May 8, 2009.] Petitioner told them to stop. Eventually, petitioner
and Gamo agreed that the latter may continue with
the harvest provided that it would be his last
SOUTH DAVAO "contract" with petitioner. Gamo suggested to
DEVELOPMENT petitioner to look for a new "contractor" since he was
COMPANY, INC. (NOW not amenable to the new payment scheme.
SODACO AGRICULTURAL
Gamo and petitioner failed to agree on a payment
CORPORATION) AND/OR
scheme, thus, petitioner did not renew the "contract"
MALONE PACQUIAO AND
of Gamo. Gamo and the copra workers alleged that
VICTOR A.
they were illegally dismissed.
CONSUNJI, petitioners, vs.
SERGIO L. GAMO, On the other hand, respondent Eleonor Cosep
ERNESTO BELLEZA, FELIX (Eleonor) was employed as a mango classifier in the
TERONA, CARLOS ROJAS, packing house of petitioner's mango farm in San
MAXIMO MALINAO, Isidro, Davao Oriental. Sometime in October 1999,
VIRGILIO COSEP, she did not report for work as she had wanted to raise
ELEONOR COSEP, and sell pigs instead. Petitioner, through Malone
MAXIMO TOLDA, NELSON Pacquiao, tried to convince Eleonor to report for
BAGAAN, and TRADE work but to no avail
UNION OF THE
On 22 March 2000, respondents filed a complaint for
PHILIPPINES and ALLIED
illegal dismissal against petitioner. They alleged that
SERVICES
sometime in December 1999, petitioner verbally
(TUPAS), respondents.
terminated them en masse.
Issues:
Facts:
(1) whether the Court of Appeals failed to take
Petitioner South Davao Development Company judicial notice of the accepted practice of
(petitioner or petitioner corporation) is the operator of independent contractors in the coconut industry; (2)
a coconut and mango farm in San Isidro, Davao whether there is a valid job contracting between
Oriental and Inawayan/Baracatan, Davao del Sur. On petitioner and Gamo; and (3) whether Eleonor had
August 1963 petitioner hired respondent Sergio L. effectively abandoned her work.
Gamo (Gamo) as a foreman. Sometime in 1987,
Held:
petitioner appointed Gamo as a copra maker

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The labor arbiter took judicial notice of the alleged every person. As the common
prevailing business practices in the coconut industry knowledge of man ranges far and
that copra making activities are done quarterly; that wide, a wide variety of particular
the workers can contract with other farms; and that facts have been judicially noticed
the workers are independent from the land owner on as being matters of common
all work aspects. Petitioner wants this Court to take knowledge. But a court cannot
judicial notice of the current business practice in the take judicial notice of any fact
coconut industry which allegedly treats copraceros as which, in part, is dependent on
independent contractors. In Expertravel & Tours, Inc. the existence or non-existence of
v. Court of Appeals, we held, thus: a fact of which the court has no
constructive knowledge.
Generally speaking, matters of
judicial notice have three An invocation that the Court take judicial notice of
material requisites: (1) the matter certain facts should satisfy the requisites set forth by
must be one of common and case law. A mere prayer for its application shall not
general knowledge; (2) it must be suffice. Thus, in this case the Court cannot take
well and authoritatively settled judicial notice of the alleged business practices in the
and not doubtful or uncertain; copra industry since none of the material requisites of
and (3) it must be known to be matters of judicial notice is present in the instant
within the limits of the petition. The record is bereft of any indication that
jurisdiction of the court. The the matter is of common knowledge to the public and
principal guide in determining that it has the characteristic of notoriety, except
what facts may be assumed to be petitioners' self-serving claim. CaASIc
judicially known is that of
A related issue is whether Gamo is an independent
notoriety. Hence, it can be said
contractor. In Escario v. NLRC, we ruled that there is
that judicial notice is limited to
permissible job contracting when a principal agrees
facts evidenced by public records
to put out or farm out with a contractor or a
and facts of general notoriety.
subcontractor the performance or completion of a
Moreover, a judicially noticed
specific job, work or service within a definite or
fact must be one not subject to a
predetermined period, regardless of whether such job
reasonable dispute in that it is
or work service is to be performed within or outside
either: (1) generally known
the premises of the principal. To establish the
within the territorial jurisdiction
existence of an independent contractor, we apply the
of the trial court; or (2) capable
following conditions: first, the contractor carries on
of accurate and ready
an independent business and undertakes the contract
determination by resorting to
work on his own account under his own
sources whose accuracy cannot
responsibility according to his own manner and
reasonably be questionable.
method, free from the control and direction of his
Things of "common knowledge", employer or principal in all matters connected with
of which courts take judicial the performance of the work except to the result
matters coming to the knowledge thereof; and second, the contractor has substantial
of men generally in the course of capital or investments in the form of tools,
the ordinary experiences of life, equipment, machineries, work premises and other
or they may be matters which are materials which are necessary in the conduct of his
generally accepted by mankind business.
as true and are capable of ready
The Implementing Rules and Regulation of the Labor
and unquestioned demonstration.
Code defines investment — as tools, equipment,
Thus, facts which are universally
implements, machineries and work premises, actually
known, and which may be found
and directly used by the contractor or subcontractor
in encyclopedias, dictionaries or
in the performance or completion of the job, work, or
other publications, are judicially
service contracted out. The investment must be
noticed, provided, they are of
sufficient to carry out the job at hand.
such universal notoriety and so
generally understood that they In the case at bar, Gamo and the copra workers did
may be regarded as forming part not exercise independent judgment in the
of the common knowledge of performance of their tasks. The tools used by Gamo

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LABOR STANDARDS LAW

and his copra workers like the karit, bolo, pangbunot, employer-employee relationship. Clearly, the
panglugit and pangtapok are not sufficient to enable operative act is still the employee's ultimate act of
them to complete the job. Reliance on these putting an end to his employment. 29 However, an
primitive tools is not enough. In fact, the employee who takes steps to protest her layoff cannot
accomplishment of their task required more be said to have abandoned her work because a charge
expensive machineries and equipment, like the trucks of abandonment is totally inconsistent with the
to haul the harvests and the drying facility, which immediate filing of a complaint for illegal dismissal,
petitioner corporation owns. more so when it includes a prayer for
reinstatement. 30When Eleonor filed the illegal
In order to determine the existence of an employer-
dismissal complaint, it totally negated petitioner's
employee relationship, the Court has frequently
theory of abandonment.
applied the four-fold test: (1) the selection and
engagement of the employee; (2) the payment of Also, to effectively dismiss an employee for
wages; (3) the power of dismissal; and (4) the power abandonment, the employer must comply with the
to control the employee's conduct, or the so called due process requirement of sending notices to the
"control test", which is considered the most important employee. In Brahm Industries, Inc. v. NLRC, 31 we
element. From the time they were hired by petitioner ruled that this requirement is not a mere formality
corporation up to the time that they were reassigned that may be dispensed with at will. Its disregard is a
to work under Gamo's supervision, their status as matter of serious concern since it constitutes a
petitioner corporation's employees did not cease. safeguard of the highest order in response to man's
Likewise, payment of their wages was merely innate sense of justice. 32 Petitioner was not able to
coursed through Gamo. As to the most determinative send the necessary notice requirement to Eleonor.
test — the power of control, it is sufficient that the Petitioner's belated claim that it was not able to send
power to control the manner of doing the work exists, the notice of infraction prior to the filing of the illegal
it does not require the actual exercise of such dismissal case cannot simply unacceptable. 33 Based
power. In this case, it was in the exercise of its on the foregoing, Eleonor did not abandon her work.
power of control when petitioner corporation
WHEREFORE, the petition is DENIED. The
transferred the copra workers from their previous
Decision of the Court of Appeals is AFFIRMED.
assignments to work as copraceros. It was also in the
exercise of the same power that petitioner corporation 73. G.R. No. 164205 September 3, 2009
put Gamo in charge of the copra workers although
under a different payment scheme. Thus, it is clear Oldarico S. Traveño, Rovel A. Genelsa, Ruel U.
that an employer-employee relationship has existed Villarmente, Alfredo A. Panilagao, Carmen P.
between petitioner corporation and respondents since Danila, Elizabeth B. Macalino, Ramil P. Albito,
the beginning and such relationship did not cease
Reynaldo A. Ladrillo, Lucas G. Tamayo,
despite their reassignments and the change of
payment scheme. Diosdado A. Amorin, Rodino C. Vasquez, Gloria
A. Felicano, Nole E. Fermilan, Joselito B. Rendon,
It is well settled that abandonment as a just and valid
Cristeta D. Caña, Evelyn D. Arcenal and Jeorge
ground for dismissal requires the deliberate and
unjustified refusal of the employee to return for work. M. Nono vs. Bobongon Banana Growers Multi-
Two elements must be present, namely: (1) the Purpose Cooperative, Timog Agricultural
failure to report for work or absence without valid or Corporation, Diamond Farms, Inc., and Dole Asia
justifiable reason, and (2) a clear intention to sever Philippines, Respondents.
the employer-employee relationship. The second
element is more determinative of the intent and must FACTS:
be evinced by overt acts. Mere absence, not being
sufficient, the burden of proof rests upon the a. Origin of Case
employer to show that the employee clearly and
deliberately intended to discontinue her employment  The case originated from three separate
without any intention of returning. 28 In Samarca v. complaints for illegal dismissal filed by
Arc-Men Industries, Inc., we held that abandonment
petitioners, individually and collectively,
is a matter of intention and cannot lightly be
presumed from certain equivocal acts. with the National Labor Relations
Commission against the respondents
To constitute abandonment, there must be clear proof including respondent Dole Asia Philippines
of deliberate and unjustified intent to sever the
as it then supposedly owned Timog

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LABOR STANDARDS LAW

Agricultural Corporation (TACOR), for c. Petitioners’ Argument


unpaid salaries, overtime pay, 13th month
pay, service incentive leave pay, damages,  Petitioners argue that while the Cooperative
and attorney‘s fees. was their employer on paper, the other
respondents exercised control and
 Petitioners Traveno, et. al. were hired by supervision over them and that the
TACOR and Diamond Farms (DFI) to work Cooperative was a labor-only contractor.
at a Banana Plantation in Bobongon, Sto.
Tomas, Davao del Norte, where they helped
to prepare the lands for the planting of ISSUE/S:
banana.
The case is anchored on the issue of whether or not
 While petitioners worked under the direct DFI (with which TACOR had been merged) and
control of supervisors from TACOR and Dole should be held solidarily liable with the
DFI, these companies made it appear that Cooperative for petitioners‘ illegal dismissal and
they were hired through independent money claims.
contractors including individuals,
unregistered associations and cooperatives,
such as the other respondent Bobongon
RULING:
Banana Growers Multi-purpose
Cooperative.  The Cooperative’s co-respondents are not
solidarily liable for the illegal dismissal
 Sometime in 2000, the respondents began and money claims
harassing the respondents in order to ease
them out of their jobs. They unilaterally Job contracting or subcontracting refers to an
changed their compensation package from arrangement whereby a principal agrees to farm out
being based on a daily rate to a pakyawan with a contractor or subcontractor the performance of
rate and then soon after, they stopped paying a specific job, work or service within a definite or
their salaries which prompted the petitioners predetermined period, regardless of whether such job,
to also stop working. work or service is to be performed or completed
within or outside the premises of the principal. The
present case does not involve such an arrangement.
b. Respondents’ Defense
Dole entered into a Banana Production and Purchase
 TACOR and DFI (answering as a merged Agreement (Contract) with the Cooperative. Such
company) claim that they never engaged the contract partakes only the nature of a joint venture
services of the petitioners. They allege that agreement and not a job contracting arrangement.
when TACOR still existed, it had an
arrangement with several land owners in By way of the four-fold test of employer-employee
Sto. Tomas that it would extend technical relationship, it is only the Cooperative and not the
and financial assistance to these landowners other co-respondents who can be considered the
for the development of their lands into a petitioners‘ employer because:
banana plantation on the condition that
TACOR would be the exclusive buyer of the a.) DFI has total lack of knowledge on who actually
bananas produced with such assistance. were engaged by the Cooperative to work in the
TACOR maintains that it is the landowners banana plantation (selection of workers)
who formed the cooperative who hired
laborers for the farms.

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b.) The Cooperative handles the fund in the


PLDT liable for the dismissal. PLDT raised its appeal
operational expenses including the wages of the
workers (payment of wages) first to the NLRC and then consequently to the CA
asking for the nullification of the Resolution issued
c.) The Contract stipulated that the Cooperative was
to be responsible for the proper conduct and general by the NLRC as well as the Labor Arbiter‘s Decision.
welfare of its members and workers in the plantation The CA ruled that SSCP was not a labor-only
(power of dismissal and power of control)
contractor and was an independent contractor having
substantial capital to operate and conduct its own
business. Furthermore, the agreement stipulates
against an employer-employee relationship.

74. Raul G. Locsin & Eddie Tomaquin v. PLDT,

G.R. No. 185251 ISSUE

Whether petitioners became employees of respondent


after the Agreement between SSCP and respondent
Facts
was terminated.

On November 1, 1990, PLDT and the Security


RULING
and Safety Corporation of the Philippines (SSCP)
entered into a Security Services Agreement whereby Yes, petitioners became employees of respondent
SSCP would provide armed security guards to PLDT after the Agreement between SSCP and respondent
to be assigned to its various offices. Petitioners Raul was terminated.
Locsin and Eddie Tomaquin were among those
posted at a PLDT office. However, on August 30,
2001, PLDT terminated the Agreement
Notable, ordinarily, business owners or
effective October 1, 2001.
managers would not allow security guards of an

However, despite the termination of the agency with whom the owners or managers have

Agreement, petitioner continued to secure the severed ties with to continue to stay within the

premises of the office because they were allegedly business‘ premises. Moreover, from the foregoing

told to maintain their posts. Then, on September 30, circumstances, it can be assumed that petitioners

2002, petitioners‘ services were terminated. remained at their post under the instructions of
respondent. We can further conclude that respondent
Petitioners sought recourse to the Labor dictated upon petitioners that the latter perform their
Arbiter for illegal dismissal and recover of money regular duties to secure the premises during operating
claims, such remedy was thereby granted, finding hours. This, to our mind and under the circumstances,

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purpose, labor-only contracting


is sufficient to establish the existence of an employer-
shall refer to an arrangement where
employee relationship. the contractor or subcontractor
merely recruits, supplies or places
While there is no legal relationship with the workers to perform a job, work or
SSCP because of the termination of the Agreement, service for a principal, and any of
the following elements are
petitioners continued to hold post, indicating that the present:xxx
element of control is exercised by the respondent
over petitioners.
(ii) the
Furthermore, Article 106 of the Labor Code contractor does not
contains a provision on contractors, to wit: xxx exercise the right to
control over the
performance of the work
of the contractual
The Secretary of Labor employee.
and Employment may, by
appropriate regulations, restrict There is no question that
or prohibit the contracting-out of respondent having control over the
labor to protect the rights of petitioners must be considered as
workers established under this petitioners‘ employer––from the termination
Code. In so prohibiting or of the Agreement onwards––as this was the
restricting, he may make only time that any evidence of control was
appropriate distinctions between exhibited by respondent over petitioners and
labor-only contracting and job in light of our ruling inAbella. Thus, as aptly
contracting as well as declared by the NLRC, petitioners were
differentiations within these entitled to the rights and benefits of
types of contracting and employees of respondent, including due
determine who among the parties process requirements in the termination of
involved shall be considered the their services.
employer for purposes of this
Code, to prevent any violation or
circumvention of any provision of 75. Aliviado, et. al. vs. Proctor & Gamble Phils.,
this Code. G.R. No. 160506, March 9, 2010
Facts:
Petitioners worked as merchandisers of P&G from
various dates, allegedly starting as early as 1982 or as
Thus, the Secretary of Labor issued late as June 1991, to either May 5, 1992 or March 11,
Department Order No. 18-2002, Series of 2002, 1993. They all individually signed employment
contracts with either Promm-Gem or SAPS for
implementing Art. 106 as follows: periods of more or less five months at a time. 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
Section 5. Prohibition SAPS.
against labor-only contracting.––
SAPS and Promm-Gem imposed disciplinary
Labor-only contracting is hereby
measures on erring merchandisers for reasons such as
declared prohibited. For this

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habitual absenteeism, dishonesty or changing day-off In the event that the contractor or subcontractor fails
without prior notice. to pay the wages of his employees in accordance with
this Code, the employer shall be jointly and severally
P&G is principally engaged in the manufacture and
liable with his contractor or subcontractor to such
production of different consumer and health products,
employees to the extent of the work performed under
which it sells on a wholesale basis to various
the contract, in the same manner and extent that he is
supermarkets and distributors. To enhance consumer
liable to employees directly employed by him.
awareness and acceptance of the products, P&G
entered into contracts with Promm-Gem and SAPS There is "labor-only" contracting where the person
for the promotion and merchandising of its products. supplying workers to an employer does not have
substantial capital or investment in the form of tools,
In December 1991, petitioners filed a complaint
equipment, machineries, work premises, among
against P&G for regularization, service incentive
others, and the workers recruited and placed by such
leave pay and other benefits with damages. The
person are performing activities which are directly
complaint was later amended to include the matter of
related to the principal business of such employer. In
their subsequent dismissal.
such cases, the person or intermediary shall be
On November 29, 1996, the Labor Arbiter dismissed considered merely as an agent of the employer who
the complaint for lack of merit and ruled that there shall be responsible to the workers in the same
was no employer-employee relationship between manner and extent as if the latter were directly
petitioners and P&G. He found that the selection and employed by him.
engagement of the petitioners, the payment of their
Rule VIII-A, Book III of the Omnibus Rules
wages, the power of dismissal and control with
Implementing the Labor Code, as amended by
respect to the means and methods by which their
Department Order No. 18-02, distinguishes between
work was accomplished, were all done and exercised
legitimate and labor-only contracting:
by Promm-Gem/SAPS. He further found that
Promm-Gem and SAPS were legitimate independent Section 3. Trilateral Relationship in Contracting
job contractors. Arrangements. In legitimate contracting, there exists
a trilateral relationship under which there is a
Appealing to the NLRC, petitioners disputed the
contract for a specific job, work or service between
Labor Arbiter‘s findings. On July 27, 1998, the
the principal and the contractor or subcontractor, and
NLRC rendered a Decision dismissing their appeal.
a contract of employment between the contractor or
Petitioners then filed a petition for certiorari with the
subcontractor and its workers. Hence, there are three
CA, alleging grave abuse of discretion amounting to
parties involved in these arrangements, the principal
lack or excess of jurisdiction on the part of the Labor
which decides to farm out a job or service to a
Arbiter and the NLRC. However, said petition was
contractor or subcontractor, the contractor or
also denied by the CA.
subcontractor which has the capacity to
Petitioners filed a motion for reconsideration but the independently undertake the performance of the job,
motion was also denied. Hence, this petition. work or service, and the contractual workers engaged
by the contractor or subcontractor to accomplish the
job, work or service.
Issue: Whether or not Promm-Gem and SAPS are
Section 5. Prohibition against labor-only contracting.
labor-only contractors
Labor-only contracting is hereby declared prohibited.
For this purpose, labor-only contracting shall refer to
an arrangement where the contractor or subcontractor
Ruling:
merely recruits, supplies or places workers to
Promm-Gem is an independent contractor however, perform a job, work or service for a principal, and
SAPS is a labor-only contractor. any of the following elements are present:
The pertinent Labor Code provision on the matter i) The contractor or subcontractor does not have
states: substantial capital or investment which relates to the
job, work or service to be performed and the
ART. 106. Contractor or subcontractor. – Whenever
employees recruited, supplied or placed by such
an employer enters into a contract with another
contractor or subcontractor are performing activities
person for the performance of the former‘s work, the
which are directly related to the main business of the
employees of the contractor and of the latter‘s
principal; or
subcontractor, if any, shall be paid in accordance
with the provisions of this Code.

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ii) [T]he contractor does not exercise the right to contractual employees. This, furthermore, negates –
control over the performance of the work of the on the part of Promm-Gem – bad faith and intent to
contractual employee. circumvent labor laws which factors have often been
tipping points that lead the Court to strike down the
The foregoing provisions shall be without prejudice
employment practice or agreement concerned as
to the application of Article 248 (c) of the Labor
contrary to public policy, morals, good customs or
Code, as amended.
public order.
"Substantial capital or investment" refers to capital
Under the circumstances, Promm-Gem cannot be
stocks and subscribed capitalization in the case of
considered as a labor-only contractor. We find that it
corporations, tools, equipment, implements,
is a legitimate independent contractor.
machineries and work premises, actually and directly
used by the contractor or subcontractor in the On the other hand, the Articles of Incorporation of
performance or completion of the job, work or SAPS shows that it has a paid-in capital of only
service contracted out. P31,250.00. There is no other evidence presented to
show how much its working capital and assets are.
The "right to control" shall refer to the right reserved
Furthermore, there is no showing of substantial
to the person for whom the services of the contractual
investment in tools, equipment or other assets.
workers are performed, to determine not only the end
to be achieved, but also the manner and means to be In Vinoya v. National Labor Relations Commission,
used in reaching that end. the Court held that "[w]ith the current economic
atmosphere in the country, the paid-in capitalization
Clearly, the law and its implementing rules allow
of PMCI amounting to P75,000.00 cannot be
contracting arrangements for the performance of
considered as substantial capital and, as such, PMCI
specific jobs, works or services. Indeed, it is
cannot qualify as an independent
management prerogative to farm out any of its
contractor."Applying the same rationale to the
activities, regardless of whether such activity is
present case, it is clear that SAPS – having a paid-in
peripheral or core in nature. However, in order for
capital of only P31,250 - has no substantial capital.
such outsourcing to be valid, it must be made to an
SAPS‘ lack of substantial capital is underlined by the
independent contractor because the current labor
records which show that its payroll for its
rules expressly prohibit labor-only contracting.
merchandisers alone for one month would already
In the instant case, the financial statements of total P44,561.00. It had 6-month contracts with P&G.
Promm-Gem show that it has authorized capital stock Yet SAPS failed to show that it could complete the 6-
of P1 million and a paid-in capital, or capital month contracts using its own capital and investment.
available for operations, of P500,000.00 as of 1990. Its capital is not even sufficient for one month‘s
It also has long term assets worth P432,895.28 and payroll. SAPS failed to show that its paid-in capital
current assets of P719,042.32. Promm-Gem has also of P31,250.00 is sufficient for the period required for
proven that it maintained its own warehouse and it to generate its needed revenue to sustain its
office space with a floor area of 870 square meters. It operations independently. Substantial capital refers to
also had under its name three registered vehicles capitalization used in the performance or completion
which were used for its promotional / merchandising of the job, work or service contracted out. In the
business. Promm-Gem also has other clients aside present case, SAPS has failed to show substantial
from P&G. Under the circumstances, we find that capital.
Promm-Gem has substantial investment which relates
Furthermore, the petitioners have been charged with
to the work to be performed. These factors negate the
the merchandising and promotion of the products of
existence of the element specified in Section 5(i) of
P&G, an activity that has already been considered by
DOLE Department Order No. 18-02. The records
the Court as doubtlessly directly related to the
also show that Promm-Gem supplied its complainant-
manufacturing business, which is the principal
workers with the relevant materials, such as markers,
business of P&G. Considering that SAPS has no
tapes, liners and cutters, necessary for them to
substantial capital or investment and the workers it
perform their work. Promm-Gem also issued
recruited are performing activities which are directly
uniforms to them. It is also relevant to mention that
related to the principal business of P&G, we find that
Promm-Gem already considered the complainants
the former is engaged in "labor-only contracting".
working under it as its regular, not merely contractual
or project, employees. This circumstance negates the
existence of element (ii) as stated in Section 5 of "Where ‗labor-only‘ contracting exists, the Labor
DOLE Department Order No. 18-02, which speaks of Code itself establishes an employer-employee

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relationship between the employer and the employees Consequently, Vicente et al., as
of the ‗labor-only‘ contractor." The statute establishes complainants, filed a complaint for illegal
this relationship for a comprehensive purpose: to dismissal with the Labor Arbiter against
prevent a circumvention of labor laws. The contractor AMPCO, Merlyn V. Polidario, SMC and
is considered merely an agent of the principal Rufino I. Yatar, SMC Plant Manager, as
employer and the latter is responsible to the respondents. Complainants assert that they
employees of the labor-only contractor as if such are regular employees of SMC. However,
employees had been directly employed by the SMC utilized AMPCO making it appear that
principal employer. the latter was their employer, so that SMC
may evade the responsibility of paying the
Consequently, petitioners recruited and supplied by
benefits due them under the law.
SAPS -- which engaged in labor-only contracting --
are considered as the employees of P&G while those
having worked under, and been dismissed by Promm- The Labor Arbiter rendered judgment
Gem, are considered the employees of Promm-Gem, declaring Vicente, et al. as regular
not of P&G. employees of San Miguel Corporation.
Initially, the NLRC Fourth Division
affirmed with modifications the findings of
76. SAN MIGUEL CORPORATION vs. the LA but in a Resolution, the NLRC
VICENTE B. SEMILLANO reversed its earlier ruling. It absolved
petitioner from liability and instead held
AMPCO, as employer of respondents, as an
FACTS: independent contractor.

AMPCO hired the services of Vicente The Court of Appeals overturned the Commission‘s
Semillano, Nelson Mondejar, Jovito Remada finding that petitioner SMC wielded the power of
and Alex Hawod, herein respondents. All of control over respondent and the power of dismissal
them were assigned to work in SMC's and that AMPCO was a labor-only contractor since
Bottling Plant situated at Brgy. Granada Sta. "a capital of nearly one million pesos" was
Fe, Bacolod City, in order to perform the insufficient for it to qualify as an independent
following tasks: segregating bottles, contractor.
removing dirt therefrom, filing them in
designated places, loading and unloading the SMC filed a motion for reconsideration but was
bottles to and from the delivery trucks, and denied. Hence, this petition for review on certiorari.
performing other tasks as may be ordered by
SMC's officers. They were required to work Petitioner SMC argues that the CA wrongly assumed
inside the premises of SMC using SMC‘s that it exercised power of control over the
equipment. They rendered service with SMC respondents just because they performed their work
for more than 6 months. within SMC's premises. In advocacy of its claim that
AMPCO is an independent contractor, petitioner
Subsequently, SMC entered into a Contract relies on the provisions of the service contract
of Services with AMPCO designating the between petitioner and AMPCO, wherein the latter
latter as the employer of Vicente, et al., As a undertook to provide the materials, tools and
result, Vicente et al., failed to claim the equipment to accomplish the services contracted out
rights and benefits ordinarily accorded a by petitioner. The same contract provides that
regular employee of SMC. In fact, they were AMPCO shall have exclusive discretion in the
not paid their 13th month pay. They were selection, engagement and discharge of its
not allowed to enter the premises of SMC. employees/personnel or otherwise in the direction
The project manager of AMPCO, Merlyn and control thereof. Petitioner also adds that AMPCO
Polidario, told them to wait for further determines the wages of its employees/personnel who
instructions from the SMC's supervisor. shall be within its full control.
Vicente et al., waited for one month,
unfortunately, they never heard a word from In its Comment, respondent AMPCO essentially
SMC. advanced the same arguments in support of its claim
as a legitimate job contractor.

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ISSUE: In the case at bench, petitioner failed to show how


AMPCO took "entire charge, control and supervision
WON AMPCO is a legitimate job contractor of the work and service agreed upon."

RULING: Moreover, the Court was not convinced that AMPCO


wielded "exclusive discretion in the discharge" of
respondents. AMPCO's project manager, even told
NO, AMPCO is a labor-only contractor.
respondents to "wait for further instructions from the
SMC's supervisor" after they were prevented from
The test to determine the existence of independent entering petitioner SMC's premises.
contractorship is whether or not the one claiming to
be an independent contractor has contracted to do the
work according to his own methods and without Despite the fact that the service contracts contain
being subject to the control of the employer, except stipulations which are earmarks of independent
contractorship, they do not make it legally so. The
only as to the results of the work.
language of a contract is neither determinative nor
conclusive of the relationship between the parties.
Although there may be indications of an independent Petitioner SMC and AMPCO cannot dictate, by a
contractor arrangement between petitioner and declaration in a contract, the character of AMPCO's
AMPCO, the most determinant of factors exists business, that is, whether as labor-only contractor, or
which indicate otherwise. job contractor. AMPCO's character should be
measured in terms of, and determined by, the criteria
AMPCO's main business activity is trading, set by statute. At a closer look, AMPCO's actual
maintaining a store catering to members and the status and participation regarding respondents'
public. Its job contracting with SMC is only a minor employment clearly belie the contents of the written
activity or sideline. The component of AMPCO's service contract.
substantial capital are in fact invested and used in the
trading business. Petitioner cannot rely either on AMPCO's Certificate
of Registration as an Independent Contractor issued
AMPCO does not have substantial equipment, tools, by the proper Regional Office of the DOLE to prove
machineries, and supplies actually and directly used its claim. It is not conclusive evidence of such status.
by it in the performance or completion of the The fact of registration simply prevents the legal
segregation and piling job. There is nothing in presumption of being a mere labor-only contractor
AMPCO's list of fixed assets, machineries, tools, and from arising. In distinguishing between permissible
equipment which it could have used, actually and job contracting and prohibited labor-only contracting,
directly, in the performance or completion of its the totality of the facts and the surrounding
contracted job, work or service with petitioner. Thus, circumstances of the case are to be considered.
there can be no other logical conclusion but that the
tools and equipment utilized by respondents are Thus, petitioner SMC, as principal employer, is
owned by petitioner SMC. It is likewise noteworthy solidarily liable with AMPCO, the labor-only
that neither petitioner nor AMPCO has shown that contractor, for all the rightful claims of respondents.
the latter had clients other than petitioner. Therefore, Under this set-up, AMPCO, as the "labor-only"
AMPCO has no independent business. contractor, is deemed an agent of the principal
(SMC). The law makes the principal responsible over
In connection therewith, DOLE Department Order the employees of the "labor-only" contractor as if the
No. 10 also states that an independent contractor principal itself directly hired the employees.
carries on an independent business and undertakes
the contract work on his own account, under his own
responsibility, according to his own manner and
method, and free from the control and direction of his
employer or principal in all matters connected with
the performance of the work except as to the results
thereof. This embodies what has long been 77.Manila Water Company Inc. vs Dalumpines
jurisprudentially recognized as the control test to
determine the existence of employer-employee Facts:
relationship.

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By virtue of Republic Act No. 8041, has a separate and distinct legal personality from
otherwise known as the "National Water Crisis Act of Manila Water, and it was duly registered as an
1995," the Metropolitan Waterworks and Sewerage independent contractor before the DOLE.
System (MWSS) was given the authority to enter into Issues:
concession agreements allowing the private sector in WON FCCSI was a labor-only contractor and that
its operations. Petitioner Manila Water Company, respondent bill collectors are employees of petitioner
Inc. (Manila Water) was one of two private Manila Water
concessionaires contracted by the MWSS to manage Held:
the water distribution system in the east zone of Yes. FCCSI was a labor-only contractor and that
Metro Manila. The east service area included the respondent bill collectors are employees of petitioner
following towns and cities: Mandaluyong, Marikina, Manila Water.
Pasig, Pateros, San Juan, Taguig, Makati, parts of "Contracting" or "subcontracting" refers to
Quezon City and Manila, Angono, Antipolo, Baras, an arrangement whereby a principal agrees to put out
Binangonan, Cainta, Cardona, Jala-Jala, Morong, or farm out with a contractor or subcontractor the
Pililla, Rodriguez, Tanay, Taytay, Teresa, and San performance or completion of a specific job, work, or
Mateo.3 service within a definite or predetermined period,
On November 21, 1997, before the regardless of whether such job, work, or service is to
expiration of the contract of services, the 121 bill be performed or completed within or outside the
collectors formed a corporation duly registered with premises of the principal.
the Securities and Exchange Commission (SEC) as Department Order No. 18-02, Series of
the "Association Collector‘s Group, Inc." (ACGI). 2002, enunciates that labor-only contracting refers to
ACGI was one of the entities engaged by Manila an arrangement where the contractor or subcontractor
Water for its courier service. However, Manila Water merely recruits, supplies, or places workers to
contracted ACGI for collection services only in its perform a job, work, or service for a principal, and
Balara Branch.6 any of the following elements are present: (i) the
In December 1997, Manila Water entered contractor or subcontractor does not have substantial
into a service agreement with respondent First capital or investment which relates to the job, work,
Classic Courier Services, Inc. (FCCSI) also for its or service to be performed and the employees
courier needs. The service agreements between recruited, supplied, or placed by such contractor or
Manila Water and FCCSI covered the periods 1997 subcontractor are performing activities which are
to 1999 and 2000 to 2002.7 Earlier, in a memorandum directly related to the main business of the principal;
dated November 28, 1997, FCCSI gave a deadline for or (ii) the contractor does not exercise the right to
the bill collectors who were members of ACGI to control the performance of the work of the
submit applications and letters of intent to transfer to contractual employee.
FCCSI. The individual respondents in this case were FCCSI has no sufficient investment in the
among the bill collectors who joined FCCSI and were form of tools, equipment and machinery to undertake
hired effective December 1, 1997.8 contract services for Manila Water involving a fleet
On various dates between May and October of around 100 collectors assigned to several branches
2002, individual respondents were terminated from and covering the service area of Manila Water
employment. Manila Water no longer renewed its customers spread out in several cities/towns of the
contract with FCCSI because it decided to implement East Zone. The only rational conclusion is that it is
a "collectorless" scheme whereby Manila Water Manila Water that provides most if not all the
customers would instead remit payments through logistics and equipment including service vehicles in
"Bayad Centers."9 The aggrieved bill collectors the performance of the contracted service,
individually filed complaints for illegal dismissal, notwithstanding that the contract between FCCSI and
unfair labor practice, damages, and attorney‘s fees, Manila Water states that it is the Contractor which
with prayer for reinstatement and backwages against shall furnish at its own expense all materials, tools
petitioner Manila Water and respondent FCCSI. The and equipment needed to perform the tasks of
complaints were consolidated and jointly heard. collectors.
Petitioner Manila Water, for its part, denied
that there was an employer-employee relationship
between its company and respondent bill collectors. 78. Teng vs. Pahagac, G.R. No. 169704,
Based on the agreement between FCCSI and Manila November 17, 2010
Water, respondent bill collectors are the employees
of the former, as it is the former that has the right to
select/hire, discipline, supervise, and control. FCCSI Facts:

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Albert Teng Fish Trading is engaged in deep award final and executory after ten calendar
sea fishing and, for this purpose, owns boats (basnig), days from receipt of the copy of the award
equipment, and other fishing paraphernalia. As owner or decision by the parties. Presumably, the
of the business, Teng claims that he customarily decision may still be reconsidered by the
enters into joint venture agreements with master Voluntary Arbitrator on the basis of a
fishermen (maestros) who are skilled and are experts motion for reconsideration duly filed during
in deep sea fishing; they take charge of the that period.
management of each fishing venture, including the Teng‘s allegation that the VA‘s
hiring of the members of its complement. He avers decision had become final and executory by
that the maestros hired the respondent workers as the time the respondent workers filed an
checkers to determine the volume of the fish caught appeal with the CA thus fails. We
in every fishing voyage. consequently rule that the respondent
On February 20, 2003, the respondent workers seasonably filed a motion for
workers filed a complaint for illegal dismissal against reconsideration of the VA‘s judgment, and
Albert Teng Fish Trading, Teng, and Chua before the the VA erred in denying the motion because
NCMB, Region Branch No. IX, Zamboanga City. no motion for reconsideration is allowed.
2. There exists an employer-employee
Issues: relationship between Teng and the
1. WON the VA‘s decision is not subject to a respondent workers.
motion for reconsideration. While Teng alleged that it was the
2. WON an employer-employee relationship maestros who hired the respondent workers,
existed between Teng and the respondent it was his company that issued to the
workers. respondent workers identification cards
(IDs) bearing their names as employees and
Held: The petition is denied. Teng‘s signature as the employer. Generally,
1. Article 262-A of the Labor Code does not in a business establishment, IDs are issued
prohibit the filing of a motion for to identify the holder as a bona fide
reconsideration. employee of the issuing entity.
On March 21, 1989, Republic Act For the 13 years that the respondent
No. 6715 took effect, amending, among workers worked for Teng, they received
others, Article 263 of the Labor Code which wages on a regular basis, in addition to their
was originally worded as: shares in the fish caught. The worksheet
Art. 263 x x x Voluntary arbitration showed that the respondent workers
awards or decisions shall be final, received uniform amounts within a given
unappealable, and executory. year, which amounts annually increased
As amended, Article 263 is now Article until the termination of their employment in
262-A, which states: 2002. Teng‘s claim that the amounts
Art. 262-A. x x x [T]he award or received by the respondent workers are mere
decision x x x shall contain the facts commissions is incredulous, as it would
and the law on which it is based. It mean that the fish caught throughout the
shall be final and executory after ten year is uniform and increases in number
(10) calendar days from receipt of the each year.
copy of the award or decision by the More importantly, the element of
parties. control – which we have ruled in a number
Notably, Article 262-A deleted the of cases to be a strong indicator of the
word "unappealable" from Article 263. The existence of an employer-employee
deliberate selection of the language in the relationship – is present in this case. Teng
amendatory act differing from that of the not only owned the tools and equipment, he
original act indicates that the legislature directed how the respondent workers were to
intended a change in the law, and the court perform their job as checkers; they, in fact,
should endeavor to give effect to such intent. acted as Teng‘s eyes and ears in every
We recognized the intent of the change of fishing expedition.
phraseology in Imperial Textile Mills, Inc. Teng cannot hide behind his
v. Sampang, where we ruled that: argument that the respondent workers were
It is true that the present rule [Art. hired by the maestros. To consider the
262-A] makes the voluntary arbitration respondent workers as employees of the

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maestros would mean that Teng committed workers was lodged not with the maestros
impermissible labor-only contracting. As a but with Teng. As checkers, the respondent
policy, the Labor Code prohibits labor-only workers‘ main tasks were to count and
contracting: classify the fish caught and report them to
ART. 106. Contractor or Teng. They performed tasks that were
Subcontractor – x x x The Secretary of necessary and desirable in Teng‘s fishing
Labor and Employment may, by appropriate business. Taken together, these incidents
regulations, restrict or prohibit the confirm the existence of a labor-only
contracting-out of labor. contracting which is prohibited in our
xxxx jurisdiction, as it is considered to be the
There is "labor-only" employer‘s attempt to evade obligations
contracting where the person supplying afforded by law to employees.
workers to an employer does not have Accordingly, we hold that
substantial capital or investment in the employer-employee ties exist between Teng
form of tools, equipment, machineries, and the respondent workers. A finding that
work premises, among others, and the the maestros are labor-only contractors is
workers recruited and placed by such equivalent to a finding that an employer-
persons are performing activities which employee relationship exists between Teng
are directly related to the principal and the respondent workers. As regular
business of such employer. In such cases, employees, the respondent workers are
the person or intermediary shall be entitled to all the benefits and rights
considered merely as an agent of the appurtenant to regular employment.
employer who shall be responsible to the
workers in the same manner and extent as if 79. GSIS vs. NLRC, et. al., G.R. No. 180045, Nov.
the latter were directly employed by him. 17, 2010
Section 5 of the DO No. 18-
02, which implements Article 106 of the Facts:
Labor Code, provides:
Section 5. Prohibition against Respondents Dionisio Banlasan, Alfredo T. Tafalla,
labor-only contracting. – Labor-only Telesforo D. Rubia, Rogelio A. Alvarez, Dominador
contracting is hereby declared
A. Escobal, and Rosauro Panis were employed as
prohibited.For this purpose, labor-only
contracting shall refer to an arrangement security guards by DNL Security Agency (DNL
where the contractor or subcontractor Security). By virtue of the service contract entered
merely recruits, supplies or places workers into by DNL Security and petitioner Government
to perform a job, work or service for a Service Insurance System on May 1, 1978,
principal, and any of the following elements respondents were assigned to petitioner‘s Tacloban
are present: City office, each receiving a monthly income
(i) The contractor or subcontractor
ofP1,400.00. Sometime in July 1989, petitioner
does not have substantial capital or
investment which relates to the job, work or voluntarily increased respondents‘ monthly salary to
service to be performed and the employees P3,000.00.3
recruited, supplied or placed by such
contractor or subcontractor are performing In February 1993, DNL Security informed
activities which are directly related to the respondents that its service contract with petitioner
main business of the principal; or was terminated. This notwithstanding, DNL Security
(ii) The contractor does not instructed respondents to continue reporting for work
exercise the right to control over the
to petitioner. Respondents worked as instructed until
performance of the work of the contractual
employee. April 20, 1993, but without receiving their wages;
In the present case, the maestros after which, they were terminated from
did not have any substantial capital or employment.4
investment. Teng admitted that he solely
provided the capital and equipment, while On June 15, 1995, respondents filed with the
the maestros supplied the workers. The National Labor Relations Commission (NLRC),
power of control over the respondent Regional Arbitration Branch No. VIII, Tacloban City,

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a complaint against DNL Security and petitioner for the contract, in the same manner and extent that he is
illegal dismissal, separation pay, salary differential, liable to employees directly employed by him. x x x.
13th month pay, and payment of unpaid salary.
xxxx

ART. 109. Solidary liability. – The provisions of


Issue: WON GSIS is jointly and severally liable with existing laws to the contrary notwithstanding, every
DNL Security Agency for payment of the employer or indirect employer shall be held
unsubstantiated amounts of Salary Differentials and responsible with his contractor or subcontractor for
the 13th Month Pay to the private respondent security any violation of any provision of this Code. For
guards. purposes of determining the extent of their civil
liability under this Chapter, they shall be considered
as direct employers.

Held: This statutory scheme is designed to give the workers


ample protection, consonant with labor and social
The fact that there is no actual and direct employer-
justice provisions of the 1987 Constitution.
employee relationship between petitioner and
respondents does not absolve the former from Petitioner‘s liability covers the payment of
liability for the latter‘s monetary claims. When respondents‘ salary differential and 13th month pay
petitioner contracted DNL Security‘s services, during the time they worked for petitioner. In
petitioner became an indirect employer of addition, petitioner is solidarily liable with DNL
respondents, pursuant to Article 107 of the Labor Security for respondents‘ unpaid wages from
Code, which reads: February 1993 until April 20, 1993. While it is true
that respondents continued working for petitioner
ART. 107. Indirect employer. – The provisions of the
after the expiration of their contract, based on the
immediately preceding Article shall likewise apply to
instruction of DNL Security, petitioner did not object
any person, partnership, association or corporation
to such assignment and allowed respondents to render
which, not being an employer, contracts with an
service. Thus, petitioner impliedly approved the
independent contractor for the performance of any
extension of respondents‘ services. Accordingly,
work, task, job or project.
petitioner is bound by the provisions of the Labor
After DNL Security failed to pay respondents the Code on indirect employment. Petitioner cannot be
correct wages and other monetary benefits, petitioner, allowed to deny its obligation to respondents after it
as principal, became jointly and severally liable, as had benefited from their services. So long as the
provided in Articles 106 and 109 of the Labor Code, work, task, job, or project has been performed for
which state: petitioner‘s benefit or on its behalf, the liability
accrues for such services. The principal is made
ART. 106. Contractor or subcontractor. – Whenever liable to its indirect employees because, after all, it
an employer enters into a contract with another can protect itself from irresponsible contractors by
person for the performance of the former‘s work, the withholding payment of such sums that are due the
employees of the contractor and of the latter‘s employees and by paying the employees directly, or
subcontractor, if any, shall be paid in accordance by requiring a bond from the contractor or
with the provisions of this Code. subcontractor for this purpose.

In the event that the contractor or subcontractor fails Petitioner‘s liability, however, cannot extend to the
to pay the wages of his employees in accordance with payment of separation pay. An order to pay
this Code, the employer shall be jointly and severally separation pay is invested with a punitive character,
liable with his contractor or subcontractor to such such that an indirect employer should not be made
employees to the extent of the work performed under liable without a finding that it had conspired in the
illegal dismissal of the employees.

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Lastly, we do not agree with petitioner that the both Susan/Weesan and Fairland. He submitted 2
enforcement of the decision is impossible because its position papers for the two entities. The workers filed
charter unequivocally exempts it from execution. a Reply, to which Atty. Geronimo also submitted a
Consolidated Reply by Susan/Weesan and Fairland.
To be sure, petitioner‘s charter should not be used to Workers answered back through a Rejoinder.
evade its liabilities to its employees, even to its
indirect employees, as mandated by the Labor Code. The Labor Arbiter dismissed the case for lack of
merit, but ordered the respondent companies to pay
80. Marialy Sy, et al. vs. Fairland Knitcraft Co., each complainant P5,000.00 by way of financial
Inc., assistance.

x--------------------------------------x (consolidated The NLRC granted the worker‘s appeal and set aside
with) the Labor Arbiter‘s decision. The Commission
declared the dismissal of the workers as illegal and
Susan T. De Leon vs. Fairland Knitcraft Co., Inc.,
ordered reinstatement, will full backwages from
et al.
February 5, 2003 and payment all the unpaid benefits
Facts: to be paid solidarily by Susan/Weesan and Fairland.

Fairland is a domestic corporation engaged in Atty. Geronimo filed a Motion for Reconsideration.
garments business, while Susan de Leon (Susan) is However, Fairland filed another Motion for
the owner/proprietress of Weesan Reconsideration through Atty. Melina O. Tecson
Garments (Weesan). (Atty. Tecson) assailing the jurisdiction of the Labor
Arbiter and the NLRC over it, claiming that it was
On the other hand, the complaining workers, Marialy never summoned to appear, attend or participate in all
Sy and 33 others (the workers) are sewers, trimmers, the proceedings conducted therein. It also denied that
helpers, a guard and a secretary who were hired by it engaged the services of Atty. Geronimo. These
Weesan. MRs were denied by the NLRC.

The workers filed separate complaints for Thus, Fairland and Susan/Weesan filed their petitions
underpayment and/or non-payment of wages, for certiorari before the Court of Appeals.
overtime pay, premium pay, 13th month pay and other
monetary benefits against Susan/Weesan. These CA‘s decision on Fairland‘s petition:
complaints were then consolidated by the Arbitration
The CA denied Fairland‘s petition and affirmed the
Branch of the NLRC in January 2003.
NLRC ruling which held Fairland solidarily liable
February 5, 2003, Weesan filed before the with Susan.
Department of Labor and Employment-National
On MR, Fairland moved also for the voluntary
Capital Region (DOLE-NCR) a report on its
inhibition of Justices Leagogo and Maambong. The
temporary closure for a period of not less than six
CA granted the motion for voluntary inhibition and
months. On the same day, the workers were not
transferred the case from the First Division to the
anymore allowed to work. So on February 18, 2003
Ninth Division. The Ninth Division reversed the
they filed an Amended Complaint, and on March 13,
earlier denial of Fairland‘s petition It held that the
2003, another pleading entitled Amended Complaints
labor tribunals did not acquire jurisdiction over the
and Position Paper for Complainants, to include the
person of Fairland, and even assuming they did,
charge of illegal dismissal and impleaded Fairland
Fairland is not liable to the workers since Weesan is
and its manager, Debbie Manduabas (Debbie), as
not a mere labor-only contractor but a bona fide
additional respondents.
independent contractor. The Special Ninth Division
At the Hearings set by the Labor Arbiter Ramon thus annulled and set aside the assailed NLRC
Valentin Reyes, Atty. Antonio Geronimo represented

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Decision and Resolution insofar as Fairland is form of tools, equipment, machineries, work
concerned and excluded the latter therefrom. premises, among others; and

Workers appealed this decision to the Supreme (b) The workers recruited and placed by such person
Court. are performing activities which are directly related to
the principal business of the employer.‖
CA‘s decision on Susan‘s petition:
The workers, majority of whom are sewers, were
Susan‘s petition was denied due course and dismissed recruited by Susan/Weesan and that they performed
for lack of merit. The CA affirmed the NLRC ruling activities which are directly related to Fairland‘s
with respect to Susan. principal business of garments. Did Susan/Weesan
have substantial capital or investment in the form of
Her MR was denied by the CA.
tools, equipment, machineries, work premises, among
Before the Supreme Court: others? The SC said that there was nothing in the
records that would show that Weesan has investment
Susan filed a petition for review on certiorari with the in the form of tools, equipment or machineries. The
SC, which was dismissed by the Supreme Court on records show that Fairland has to furnish Weesan
technicality and for failure to sufficiently show any with sewing machines for it to be able to provide the
reversible error in the assailed judgment. Susan filed sewing needs of the former. Weesan was unable to
an appeal but before it could be resolved, the show that apart from the borrowed sewing machines,
Supreme Court consolidated Susan‘s case with that it owned and possessed any other tools, equipment,
the workers. and machineries necessary to its being a contractor or
sub-contractor for garments. Neither was Weesan
The Supreme Court granted Susan‘s Motion for able to prove that it has substantial capital for its
Reconsideration and reinstated her petition for review business.
on certiorari.
Further, the work premises utilized by Weesan is
Issues: owned by Fairland, which significantly, was not in
the business of renting properties. They also
1. Whether or not Susan/Weesan is a labor-only
advanced that there was no showing that
contracting agent acting as an agent of Fairland?
Susan/Weesan paid any rentals for the use of the
2. Whether or not the individual private respondents premises. Instead of refuting the worker‘s
(Sy, et al.) were illegal dismissed? allegations, Susan instead claimed that Weesan
rented the premises from another entity, De Luxe. To
Ruling: support this, she attached to her petition two
Contracts of Lease purportedly entered into by her
G.R. No. 182915 (Susan de Leon vs. Fairland, and De Luxe for the lease of the premises covering
the periods August 1, 1997 to July 31, 2000 and
Sy et al.) January 1, 2001 to December 31, 2004 as well as
TCTs and Tax declarations in De Luxe‘s name but
1. Susan is a mere labor-only contractor. the SC found it wanting. There were no rental
receipts presented nor did the TCTs indicate with
―There is labor-only contracting when the contractor certainty that the registered property is the same one
or subcontractor merely recruits, supplies or places used for Weesan‘s work premises. Weesan does not
workers to perform a job, work or service for a have its own workplace and is only utilizing the
principal. In labor-only contracting, the following workplace of Fairland to whom it supplied workers
elements are present: for its garment business.

(a) The person supplying workers to an employer Suffice it to say that ―[t]he presumption is that a
does not have substantial capital or investment in the contractor is a labor-only contractor unless such

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contractor overcomes the burden of proving that it to 1997, but in January 31, 2003, Fairland wrote
has substantial capital, investment, tools and the Weesan requesting for the sewing machines back.
like.‖ As Susan/Weesan was not able to adduce
evidence that Weesan had any substantial capital,
G.R. No. 182915 (Sy vs. Fairland)
investment or assets to perform the work contracted
for, the presumption that Weesan is a labor-only ―It is basic that the Labor Arbiter cannot acquire
contractor stands. jurisdiction over the person of the respondent without
the latter being served with summons.‖ However, ―if
2. Yes, the worker‘s were illegally dismissed. there is no valid service of summons, the court can
still acquire jurisdiction over the person of the
Susan relies on Article 283 of the Labor Code which defendant by virtue of the latter‘s voluntary
allows as a mode of termination of employment the closure appearance.‖ Although not served with summons,
or termination of business, which is a management jurisdiction over Fairland and Debbie was acquired
prerogative. The exercise of which requires: a) that the through their voluntary appearance. When the
worker‘s complaint was before the Labor Arbiter, it
closure/cessation of business is bona fide, i.e., its purpose is
is confirmed that Fairland and Debbie were never
to advance the interest of the employer and not to defeat or summoned.
circumvent the rights of employees under the law or a valid
agreement; b) that written notice was served on the The crucial question now is: Did Fairland
employees and the DOLE at least one month before the and Debbie voluntarily appear before the Labor
intended date of closure or cessation of business; and c) in Arbiter as to submit themselves to its jurisdiction?
case of closure/cessation of business not due to financial
Fairland argued before the CA that it did not
losses, that the employees affected have been given engage Atty. Geronimo as its counsel. However, the
separation pay equivalent to ½ month pay for every year of Court held in Santos v. National Labor Relations
service or one month pay, whichever is higher.‖ Commission viz:

The burden of proving that a temporary suspension Moreover, jurisdiction over the
is bona fide falls upon the employer. Clearly here, person of the defendant in civil cases is
Susan/Weesan was not able to discharge this acquired not only by service of summons
burden. The documents Weesan submitted to support but also by voluntary appearance in court
its claim of severe business losses cannot be and submission to its
considered as proof of financial crisis to justify the authority. ‗Appearance‘ by a legal advocate
temporary suspension of its operations since they is such ‗voluntary submission to a court‘s
clearly appear to have not been duly filed with the jurisdiction‘. It may be made not only by
BIR. Weesan failed to satisfactorily explain why the actual physical appearance but likewise by
Income Tax Returns and financial statements it the submission of pleadings in compliance
submitted do not bear the signature of the receiving with the order of the court or tribunal.
officers. Also hard to ignore is the absence of the
mandatory 30-day prior notice to the workers. The fact that Atty. Geronimo entered his
appearance for Fairland and Debbie and that he
Hence, the Court finds that Susan failed to prove that actively defended them before the Labor Arbiter
the suspension of operations of Weesan was bona raised the presumption that he is authorized to appear
fide and that it complied with the mandatory for them. As held in Santos, it is unlikely that Atty.
requirement of notice under the law. Susan likewise Geronimo would have been so irresponsible as to
failed to discharge her burden of proving that the represent Fairland and Debbie if he were not in fact
termination of the workers was for a lawful cause. authorized. As an officer of the Court, Atty.
Therefore, the NLRC and the CA, in CA-G.R. SP Geronimo is presumed to have acted with due
No. 93860, did not err in their findings that the propriety. Moreover, ―[i]t strains credulity that a
workers were illegally dismissed by Susan/Weesan. counsel who has no personal interest in the case
would fight for and defend a case with persistence
The court also ruled that Fairland‘s claim of and vigor if he has not been authorized or employed
prescription does not deserve consideration. Fairland by the party concerned.‖
says that they only engaged Weesan‘s services 1996

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The presumption of authority of counsel to


appear on behalf of a client is found both in the Rules Further proof that Fairland is Weesan‘s principal: (1)
of Court and in the New Rules of Procedure of the aside from sewing machines, Fairland also lent
NLRC. Weesan other equipment such as fire extinguishers,
office tables and chairs, and plastic chairs; (2) no
Sec. 8, Rule III of the New Rules of proof evidencing the contractual arrangement
Procedure of the NLRC, which is the rules between Weesan and Fairland was ever submitted by
prevailing at that time, states in part: Fairland; (3) while both Weesan and Fairland assert
that the former had other clients aside from the latter,
SECTION 8. APPEARANCES. - An no proof of Weesan‘s contractual relationship with its
attorney appearing for a party is presumed to other alleged client is extant on the records; and (4)
be properly authorized for that purpose. there is no showing that any of the workers were
However, he shall be required to indicate in assigned to other clients aside from
his pleadings his PTR and IBP numbers for Fairland. Moreover, the activities, the manner of
the current year. work and the movement of the workers were subject
to Fairland‘s control.
As Atty. Geronimo consistently indicated his PTR
and IBP numbers in the pleadings he filed, there is no Fairland, therefore, as the principal employer, is
reason for the Labor Arbiter not to extend to Atty. solidarily liable with Susan/Weesan, the labor-only
Geronimo the presumption that he is authorized to contractor, for the rightful claims of the employees.
represent Fairland. Under this set-up, Susan/Weesan, as the "labor-only"
contractor, is deemed an agent of the principal,
Moreover, the fact that Debbie signed the verification Fairland, and the law makes the principal responsible
attached to the position paper filed by Atty. to the employees of the "labor-only" contractor as if
Geronimo, without a secretary‘s certificate or board the principal itself directly hired or employed the
resolution attached thereto, is not sufficient reason employees.
for the Labor Arbiter to be on his guard and require
Atty. Geronimo to prove his authority. Debbie, as WHEREFORE, the Court,
General Manager of Fairland is one of the officials of
the company who can sign the verification without 1) in GR No. 189658 denies Susan‘s Petition for
need of a board resolution because as such, she is in a Review on Certiorari. The CA decision declaring her
position to verify the allegations in the petition. a labor-only contractor is affirmed.

Suffice it to say that an attorney‘s presumption of 2) in G.R. No. 182915, grants the worker‘s Petition
authority is a strong one. ―A mere denial by a party for Review on Certiorari. Decision of the CA (ninth
that he authorized an attorney to appear for him, in division) which excluded Fairland from being
the absence of a compelling reason, is insufficient to solidarily liable is reversed and set aside. The
overcome the presumption, especially when the Decision of the CA (first division) which held
denial comes after the rendition of an adverse Fairland as solidarily liable with Susan/Weesan is
judgment,‖ such as in the present case. reinstated and affirmed.

To stress, Article 224 contemplates the furnishing of


copies of final decisions, orders or awards both to the
parties and their counsel in connection with the 81. Polyfoam-RGC International Corp., vs.
execution of such final decisions, orders or Concepcion G.R. No. 172349, June 13, 2012
awards. However, for the purpose of computing the
period for filing an appeal from the NLRC to the CA, Facts:
same shall be counted from receipt of the decision,
order or award by the counsel of record pursuant to Respondent filed a complaint against petitioner
the established rule that notice to counsel is notice to Polyfoam for illegal dismissal alleging that he was an
party. In sum, we hold that the Labor Arbiter
all-around factory worker who served for almost six
had validly acquired jurisdiction over Fairland
and its manager, Debbie, through the appearance years. He was illegally dismissed when he discovered
of Atty. Geronimo as their counsel and likewise, that his time card was not in the rack and that he was
through the latter’s filing of pleadings on their informed by the security guard that he can no longer
behalf. punch his card. Protesting to the supervisor, he found

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out that he was dismissed due to an infraction of a an independent business or undertake the
company rule. A request was sent to Polyfoam‘s performance of its service contract according to its
manager asking for respondent‘s re-admittance but own manner and method, free from the control and
was unheeded. supervision of its principal, Polyfoam. On the first
ground, it was not able to prove ownership over the
Co-petitioner Gramaje filed a Motion for Intervention equipment in Polyfoam‘s premises that is allegedly
claiming to be the real employer of respondent. She owned by Gramaje.
alleges that her business PAGES is a legitimate job
contractor. Polyfoam, then, filed a Motion to Dismiss Respondent was illegally dismissed. Credence was
since there was no employer-employee relationship given to respondent‘s narration of facts. Several
between Polyfoam and respondent. Gramaje assert circumstance also negated the theory of abandonment
that respondent was not illegally dismissed but rather, like: (a) he immediately inquired from his supervisor;
it was respondent that abandoned work. (b) he wrote a letter asking to be re-admitted and (c)
he filed a case for illegal dismissal.
The Motion to Intervene was granted but the Motion
to Dismiss was denied. In denying the motion to .
dismiss, the Labor Arbiter ruled that the non-
existence of the relationship is a matter of defense. In 82. SUPERIOR PACKAGING CORP., VS.
deciding the case, the Labor Arbiter ruled in favor of BALAGSAY ET AL., G.R. NO. 178909,
respondent finding him to be illegally dismissed and OCTOBER 10, 2012
awarded his money claims. It ruled that Polyfoam
Facts:
and Gramaje are solidarily liable to respondent. On
Superior Packaging Corporation (Superior) is
appeal the NLRC, the LA‘s decision was modified by
involved in the manufacture and sale of commercial
exonerating Polyfoam from responsibility and
and industrial corrugated boxes. It engaged the
deleting some of the money awards. It ruled that
services of Lancer Staffing & Services Network, Inc.
Gramaje is an independent contractor and was not
(Lancer) to provide reliever services to its business.
illegally dismissed but abandoned work. On appeal to
The respondents in this case are the workers of
the CA, the NLRC‘s decision was reversed and the
Lancer assigned to Superior for such reliever
LA‘s decision reinstated. Aggrieved, petitioners filed
services.
this petition for review on ceritiorari.
The workers filed a complaint with the DOLE against
Issues:
Superior for underpayment of wages, non- payment
Whether or not Polyfoam is solidarily of premium pay for worked rest, overtime pay and
liable? non-payment of salaries. The DOLE then conducted
Whether or not respondent was illegally an inspection of the Superior‘s premises and made a
dismissed? finding, among others, that Superior is engaged in
labor-only contracting and is consequently an indirect
Ruling: employer of the workers. Having found that Superior
committed the violations alleged by the workers, the
Yes, Polyfoam is solidarily liable. Yes, respondent DOLE issued an Order finding in favor of the
was illegally dismissed. The Court ruled that workers and ordering Superior to pay their claims.
Gramaje was involved in labor-only contracting and
that respondent did not abandon work but was Superior filed a motion for reconsideration on the
illegally dismissed. ground that the workers are not its employees but of
Lancer. It objects to the finding that it is engaged in
In support of its conclusion that Polyfoam is involved labor-only contracting and is consequently an indirect
in labor-only contracting, the following were employer, and alleges that it is beyond the visitorial
considered by the Court: (a) Gramaje has no and enforcement power of the DOLE to make such
substantial capital; and (b) Gramaje did not carry on conclusion. According to Superior, such conclusion

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may be made only upon consideration of evidentiary By virtue of a certification election, Digitel
matters and cannot be determined solely through a Employees Union (Union) became the exclusive
labor inspection. bargaining agent of all rank and file employees of
Digitel in 1994. The Union and Digitel then
Issue: commenced collective bargaining negotiations which
Can the DOLE make a finding as to the existence or resulted in a bargaining deadlock. The Union
non-existence of employer-employee relationship in threatened to go on strike, but then the Labor
the course of an inspection conducted pursuant to its Secretary assumed jurisdiction over the dispute and
visitorial and enforcement power? eventually directed the parties to execute a CBA.
Ruling:
Yes, the DOLE can.
However, no CBA was forged between Digitel and
Under Art. 128(b) of the Labor Code, as amended by the Union. Some Union members abandoned their
RA 7730, the DOLE is fully empowered to make a employment with Digitel. The Union later
determination as to the existence of an employer- became dormant. Ten (10) years thereafter or on 28
employee relationship in the exercise of its visitorial September 2004, Digitel received from Esplana, who
and enforcement power. was President of the Union, a letter containing the list
of officers, CBA proposals and ground rules.
The expanded visitorial and enforcement power of
the DOLE granted by RA 7730 would be rendered
nugatory if the alleged employer could, by the simple
expedient of disputing the employer-employee Digitel was reluctant to negotiate with the Union and
relationship, force the referral of the matter to the demanded that the latter Union show compliance
NLRC. At least a prima facie showing of the absence with the provisions of the Union‘s Constitution and
of an employer-employee relationship be made to By -laws on union membership and election
oust the DOLE of jurisdiction. But it is precisely the of officers. On 4 November 2004, Esplana and his
DOLE that will be faced with that evidence, and it group filed a case for Preventive Mediation before
is the DOLE that will weigh it, to see if the same the National Conciliation and Mediation Board based
does successfully refute the existence of an on Digitel‘s violation of the duty to bargain. On 25
employer- employee relationship. November 2004, Esplana filed a notice of strike. On
10 March 2005, the then Labor Secretary issued an
Here, the DOLE finding Lancer was not an Order.
independent contractor and that Superior and Lancer
were engaged in ―labor-only contracting‖ is a finding
as to the existence of employer-employee
relationship. Hence, Superior was considered an Assuming jurisdiction over the labor dispute. During
indirect employer of the workers and liable to the the pendency of the controversy, Digitel Service, Inc.
latter for their unpaid money claims. (Digiserv), a non-profit enterprise engaged in call
center servicing, filed with the DOLE an
Establishment Termination Report stating that it will
cease its business operation. The closure affected at
83. D I G I T A L least 100 employees, 42 of whom are members of the
TELECOMMUNICATIONS herein respondent Union. Alleging that the affected
PHIL., INC. VS. DIGITEL employees are its members and in reaction to
EMPLOYEES UNION (G.R. Digiserv‘s action, Esplana and his group filed another
NOS. 184903, 10OCT2012) Notice of Strike for union busting, illegal lock-out,
and violation of the assumption order. On 23 May
2005, the Labor Secretary ordered the second notice
FACTS:

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of strike subsumed by the previous Assumption


Order.
RULING:

Meanwhile, on 14 March 2005, Digitel filed


a petition with the Bureau of Labor Relations (BLR) Digiserv is a labor-only contractor.
seeking cancellation of the Union‘s registration. In a
Decision dated 11 May 2005, the Regional Director
of the DOLE dismissed the petition forcancellation of Labor-only contracting is expressly prohibited by our
union registration for lack of merit. The appeal filed labor laws. After an exhaustive review of the records,
by Digitel with the BLR was eventually dismissed for there is no showing that first, Digiserv has substantial
lackof merit in a Resolution dated 9 March 2007. In investment in the form of capital, equipment or tools.
an Order dated 13 July 2005, the Secretary of Labor The NLRC, as echoed by the CA, did not find
directed Digitel to commence the CBA negotiation substantial Digiserv‘s authorized capital stock of P
with theUnion and certified for compulsory 1,000,000.00. It pointed out that only P 250,000.00 of
arbitration before the NLRC the issue of unfair labor the authorized capital stock had been subscribed and
practice.In accordance with the 13 July 2005 Order of only P 62,500.00 had been paid up. There was no
the Secretary of Labor, the unfair labor practice issue increase in capitalization for the last 10 years.
was certified forcompulsory arbitration before the
NLRC. On 31 January 2006, NLRC rendered a
Decision dismissing the unfair labor practicecharge
against Digitel but declaring the dismissal of the 13 Moreover, in the Amended Articles of Incorporation,
employees of Digiserv as illegal and ordering their as well as in the General Information Sheets for the
reinstatement. years 1994, 2001 and 2005, the primary purpose of
Digiserv is to provide manpower services. In PCI
Automation Center, Inc. v. National Labor Relations
Commission the Court made the following
The Union manifested that out of 42 employees, only distinction: "the legitimate job contractor provides
13 remained, as most had already accepted separation services while the labor-only contractor provides
pay.In view of this unfavorable decision, Digitel filed only manpower. The legitimate job contractor
a petition on 9 June 2006 before the Court of undertakes to perform a specific job for the principal
Appeals, challenging theabove NLRC Decision and employer while the labor-only contractor merely
Resolution and arguing mainly that Digiserv provides the personnel to work for the principal
employees are not employees of Digitel.On 18 June employer."The services provided by employees of
2008, CA partially granted the case for ULP, thus Digiserv are directly related to the business of
modifying the assailed NLRC dispositions. The Digitel. It is undisputed that as early as March 1994,
CAlikewise sustained the finding that Digiserv is the affected employees, except for two, were already
engaged in labor-only contracting and that its performing their job as Traffic Operator which was
employees are actually employeesof Digitel.Digitel later renamed as Customer Service Representative
filed a motion for reconsideration but was denied in a (CSR). It is equally undisputed that all throughout
Resolution dated 9 October 2008. Hence, this petition their employment, their function as CSR remains the
forreview on certiorari. same until they were terminated effective May
30, 2005. Their long period of employment as such is
an indication that their job is directly related to
ISSUES: the main business of DIGITEL which is
telecommunications. Furthermore, Digiserv does not
1) Whether Digiserv is a legitimate contractor; and exercise control over the affected employees.
Digiserv shared the same Human Resources,
2) Whether there was a valid dismissal.

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Accounting, Audit and Legal Departments with grounds of closure of Digiserv, a department within
Digitel which manifested that it was Digitel who Digitel. In the recent case of Waterfront Cebu City
exercised control over the performance of Hotel v. Jimenez.
the affected employees. The NLRC also relied on the
letters of commendation, plaques of appreciation and
certification issued by Digitel to the Customer
We reffered to the closure of a department or division of a
Service Representatives as evidence of control.
company as retrenchment. For a valid retrenchment,
Considering that Digiserv has been found to be
the following elements must be present:(1)
engaged in labor-only contracting, the dismissed
That retrenchment is reasonably necessary and likely
employees aredeemed employees of Digitel.
to prevent business losses which, if already incurred,
must be substantial, serious, actual and real, or if only
expected, are reasonably imminent as perceived
The affected employees were illegally dismissed. objectively and in good faith by the employer;(2)
That the employer served written notice both to the
employees and to the Department of Labor and
Employment at least one month prior to the intended
In addition to finding that Digiserv is a labor-only
date of retrenchment;(3) That the employer pays
contractor, records teemwith proof that its dismissed
the retrenched employees separation pay equivalent
employees are in fact employees of Digitel. The
to one (1) month pay or at least ½ month pay for
NLRC enumerated these pieces of evidence, thus:
every year of service, whichever is higher;(4) That
the employer exercises its prerogative to retrench
employees in good faith for the advancement of its
The remaining affected employees, except for two interest and not to defeat or circumvent the
(2), were already hired by DIGITEL even before the employees‘ right to security of tenure; and
existence of DIGISERV. Likewise, the remaining
affected employees continuously held the position of (5) That the employer used fair and reasonable
Customer Service Representative, which was earlier criteria in ascertaining who would be dismissed and
known as Traffic Operator, from the time they were who would be retained among the employees, such
appointed on March 1, 1994until they were as status, efficiency, seniority, physical fitness, age,
terminated on May 30, 2005. and financial hardship for certain workers.

Further, the Certificates issued to Customer Service Only the 3 elements of a valid retrenchment had been
Representative likewise show that they are here satisfied. Indeed, it is management prerogative
employees of DIGITEL, Take for example the to close a department of the company. Digitel‘s
"Service Award" issued to Ma. Loretta C. Esen, one decision to outsource the call center operation of the
of the remaining affected employees. The "Service company is a valid reason to close down the
Award" was signed by the officers of DIGITEL - the operations of a department under which the affected
VP-Customer Services Division, the VP-Human employees were employed. The fifth element
Resources Division and the Group Head-Human regarding the criteria to be observed by Digitel
Resources Division. It cannot be gainsaid that it is clearly does not apply because all employees under
only the employer that issues service award to its Digiserv were dismissed. The instant case is all about
employees. the fourth element, that is, whether or not the affected
employees were dismissed in good faith. We find that
there was no good faith in the retrenchment. Prior to
the cessation of Digiserv‘s operations, the Secretary
As an alternative argument, Digitel maintains that the of Labor had issued the first and second assumption
affected employees were validly dismissed on the order. The effects of the assumption order issued by

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the Secretary of Labor are two-fold. It enjoins an and Belen Rubio, who are also employees of the said
impending strike on the part of the employees and company assigned at the accounting office.
orders the employer to maintain the status quo. There
is no doubt that Digitel defied the assumption order Despite having served respondent Norkis Trading for
by abruptly closing down Digiserv. The closure of a many years and performing the same functions as
regular employees, complainants were not accorded
department is not illegal per se. What makes it
regular status. It was made to appear that
unlawful is when the closure is undertaken in bad complainants are not employees of said company but
faith. In St. John Colleges, Inc.v. St. John Academy that of respondent PASAKA.6
Faculty and Employees Union, bad faith was
evidenced by the timing of and reasons for the Against the foregoing scenario, the respondents,
closure andthe timing of and reasons for the together with several other complainants,7 filed on
subsequent opening. June 9, 1999 with the Department of Labor and
Employment (DOLE) a complaint against Norkis
Trading and PASAKA for labor-only contracting and
84. NORKIS TRADING CORPORATION vs. non-payment of minimum wage and overtime pay.
JOAQUIN BUENA VISTA et al The complaint was docketed as LSED Case No.
G.R. No. 182018 October 10, 2012 RO700-9906-CI-CS-168.

The Facts The filing of the complaint for labor-only contracting


allegedly led to the suspension of the respondents‘
The respondents were hired by Norkis Trading, a membership with PASAKA. On July 22, 1999, they
domestic corporation engaged in the business of were served by PASAKA with memoranda charging
manufacturing and marketing of Yamaha them with a violation of the rule against commission
motorcycles and multi-purpose vehicles, on separate of acts injurious or prejudicial to the interest or
dates and for various positions. welfare of the cooperative. The memoranda cited that
the respondents‘ filing of a case against Norkis
Although they worked for Norkis Trading as skilled Trading had greatly prejudiced the interest and
workers assigned in the operation of industrial and welfare of the cooperative.8 In their answer9 to the
welding machines owned and used by Norkis Trading memoranda, the respondents explained that they
for its business, they were not treated as regular merely wanted to be recognized as regular employees
employees by Norkis Trading. Instead, they were of Norkis Trading. The case records include copies of
regarded by Norkis Trading as members of the memoranda sent to respondents Buenavista,
PASAKA, a cooperative organized under the Fabroa and Dondoyano.10
Cooperative Code of the Philippines, and which was
deemed an independent contractor that merely On August 16, 1999, the respondents received
deployed the respondents to render services for another set of memoranda from PASAKA, now
Norkis Trading.4 The respondents nonetheless charging them with the following violations of the
believed that they were regular employees of Norkis cooperative‘s rules and regulations: (1) serious
Trading, citing in their Position Paper5 the following misconduct or willful disobedience of superior‘s
circumstances that allegedly characterized their instructions or orders; (2) gross and habitual neglect
employment with the company: of duties by abandoning work without permission; (3)
absences without filing leave of absence; and (4)
The work of the operators involves operating wasting time or loitering on company‘s time or
industrial machines, such as, press machine, leaving their post temporarily without permission
hydraulic machine, and spotweld machine. On the during office hours.11 Copies of the
other hand, the welders used the welding machines. memoranda12 sent to Fabroa and Cape form part of
The machines used by complainants herein the records.
respondents in their work are all owned by
respondent Norkis Trading herein petitioner and On August 26, 1999, PASAKA informed the
these are installed and located in the working area of respondents of the cooperative‘s decision to suspend
the complainants inside the company‘s premises. them for fifteen (15) working days, to be effective
from September 1 to 21, 1999, for violation of
The salaries of complainants are paid inside the PASAKA rules.
premises of respondent Norkis Trading by Dalia Rojo

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LABOR STANDARDS LAW

The records include copies of the memoranda13 sent ISSUES:


to Fabroa and Cape. The suspension prompted the
respondents to file with the NLRC the complaint for 1) THE COURT OF APPEALS HAS DEPARTED
illegal suspension against Norkis Trading and FROM THE USUAL COURSE OF JUDICIAL
PASAKA. PROCEEDINGS WHEN IT MADE ITS OWN
FACTUAL FINDINGS AND DISREGARDED THE
The 15-day suspension of the respondents was UNIFORM AND CONSISTENT FACTUAL
extended for another period of 15 days, from FINDINGS OF THE LABOR ARBITER AND THE
September 22, 1999 to October 12, 1999. 14 Copies of NLRC, WHICH MUST BE ACCORDED GREAT
PASAKA‘s separate letters15 to Buenavista, Fabroa, WEIGHT, RESPECT AND EVEN FINALITY. IN
Cape and Dondoyano on the cooperative‘s decision SO DOING, THE COURT OF APPEALS
to extend the suspension form part of the records. EXCEEDED ITS AUTHORITY ON CERTIORARI
UNDER RULE 65 OF THE RULES OF COURT
On October 13, 1999, the respondents were to report BECAUSE SUCH FACTUAL FINDINGS WERE
back to work but during the hearing in their NLRC BASED ON SPECULATIONS AND NOT ON
case, they were informed by PASAKA that they OTHER EVIDENCES [SIC] ON RECORD.
would be transferred to NorkisTradings‘ sister
company, PortaCoeli Industrial Corporation 4) THE COURT OF APPEALS HAS
(PortaCoeli), as washers of Multicab vehicles. DETERMINED A QUESTION OF SUBSTANCE
NOT IN ACCORD WITH LAW AND
The respondents opposed the transfer as it would JURISPRUDENCE IN RULING THAT THE
allegedly result in a change of employers, from RESPONDENTS WERE CONSTRUCTIVELY
Norkis Trading to PortaCoeli. The respondents also DISMISSED CONTRARY TO THE FACTUAL
believed that the transfer would result in a demotion FINDINGS OF THE LABOR ARBITER AND THE
since from being skilled workers in NorkisTrading, NLRC AND WITHOUT SHOWING ANY
they would be reduced to being utility workers.These EVIDENCE TO OVERTURN SUCH FINDING OF
circumstances made the respondents amend their FACT.42
complaint for illegal suspension, to include the
charges of unfair labor practice, illegal dismissal, This Court’s Ruling
damages and attorney‘s fees.
The Court resolves to deny the petition.
For their part, both Norkis Trading and PASAKA
claimed that the respondents were not employees of Factual findings of labor officials
Norkis Trading. They insisted that the respondents may be examined by the courts
were members of PASAKA, which served as an when there is a showing that they
independent contractor that merely supplied services were arrived at arbitrarily or in
to Norkis International Co., Inc. (Norkis disregard of evidence on record.
International) pursuant to a job contract16 which
PASAKA and Norkis International executed on As regards the first ground, the petitioner questions
January 14, 1999 for 121,500 pieces of F/GF-Series the CA‘s reversal of LA Gutierrez‘s and the NLRC‘s
Reinforcement Production. After PASAKA received
rulings, and argues that said rulings should have been
reports from its coordinator at Norkis International of
accorded great weight and finality by the appellate
the respondents‘ low efficiency and violation of the
court as these were allegedly supported by substantial
cooperative‘s rules, and after giving said respondents
evidence.
the chance to present their side, a penalty of
suspension was imposed upon them by the
cooperative. The illegal suspension being complained On this matter, the settled rule is that factual findings
of was then not linked to the respondents‘ of labor officials, who are deemed to have acquired
employment, but to their membership with expertise in matters within their jurisdiction, are
PASAKA. generally accorded not only respect but even finality
by the courts when supported by substantial
evidence, i.e., the amount of relevant evidence which
Norkis Trading stressed that the respondents were
a reasonable mind might accept as adequate to
deployed by PASAKA to Norkis International, a
support a conclusion. We emphasize, nonetheless,
company that is entirely separate and distinct from
that these findings are not infallible. When there is a
Norkis Trading.

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LABOR STANDARDS LAW

showing that they were arrived at arbitrarily or in after they had been afforded due
disregard of the evidence on record, they may be process.66 Termination of employment without just or
examined by the courts. The CA can then grant a authorized cause and without observing procedural
petition for certiorari if it finds that the NLRC, in its due process is illegal.1âwphi1
assailed decision or resolution, has made a factual
finding that is not supported by substantial evidence. In claiming that they were illegally dismissed from
It is within the jurisdiction of the CA, whose their employment, the respondents alleged having
jurisdiction over labor cases has been expanded to been informed by PASAKA that they would be
review the findings of the NLRC.47 transferred, upon the behest of Norkis Trading, as
Multicab washers or utility workers to PortaCoeli, a
We have thus explained in Cocomangas Hotel Beach sister company of Norkis Trading. Norkis Trading
Resort v. Visca48 that the CA can take cognizance of does not dispute that such job transfer was relayed by
a petition for certiorari if it finds that the NLRC PASAKA unto the respondents, although the
committed grave abuse of discretion by capriciously, company contends that the transfer was merely an
whimsically, or arbitrarily disregarding evidence "offer" that did not constitute a dismissal. It bears
which are material to or decisive of the controversy. mentioning, however, that the respondents were not
The CA cannot make this determination without given any other option by PASAKA and Norkis
looking into the evidence presented by the parties. Trading but to accede to said transfer. In fact, there is
The appellate court needs to evaluate the materiality no showing that Norkis Trading would still willingly
or significance of the evidence, which are alleged to accept the respondents to work for the company.
have been capriciously, whimsically, or arbitrarily Worse, it still vehemently denies that the respondents
disregarded by the NLRC, in relation to all other had ever worked for it. Again, all defenses of Norkis
evidence on record. Trading that anchor on the alleged lack of employer-
employee relationship between it and the respondents
This case falls within the exception to the general no longer merit any consideration, given that this
rule that findings of fact of labor officials are to be Court‘s findings in G.R. Nos. 180078-79 have
accorded respect and finality on appeal. As our become conclusive. Thus, the respondents‘ transfer to
discussions in the other grounds that are raised in this PortaCoeli, although relayed to the respondents by
petition will demonstrate, the CA has correctly held PASAKA was effectively an act of Norkis Trading.
that the NLRC has disregarded facts and evidence Where labor-only contracting exists, the Labor Code
that are material to the outcome of the respondents‘ itself establishes an employer-employee relationship
case. No error can be ascribed to the appellate court between the employer and the employees of the
for making its own assessment of the facts that are labor-only contractor. The statute establishes this
significant to the case to determine the presence or relationship for a comprehensive purpose: to prevent
absence of grave abuse of discretion on the part of a circumvention of labor laws. The contractor is
the NLRC, even if the CA‘s findings turn out to be considered merely an agent of the principal employer
different from the factual findings of both the LA and and the latter is responsible to the employees of the
NLRC. labor-only contractor as if such employees had been
directly employed by the principal employer.67
Termination of an employment for
no just or authorized cause No further evidence or document should then be
amounts to an illegal dismissal. required from the respondents to prove such fact of
dismissal, especially since Norkis Trading maintains
that it has no duty to admit and treat said respondents
As to the issue of whether the respondents were
as its employees. Considering that PortaCoeli is an
illegally dismissed by Norkis Trading, we answer in
the affirmative, although not by constructive entity separate and distinct from Norkis Trading, the
dismissal as declared by the CA, but by actual respondents‘ employment with Norkis Trading was
necessarily severed by the change in work
dismissal.
assignment. It then did not even matter whether or
not the transfer involved a demotion in the
Where an entity is declared to be a labor-only respondents‘ rank and work functions; the intention
contractor, the employees supplied by said contractor to dismiss, and the actual dismissal of the
to the principal employer become regular employees respondents were sufficiently established.
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

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LABOR STANDARDS LAW

In the absence of a clear showing that the The Union moreover advanced that
respondents‘ dismissal was for just or authorized sustaining the Company‘s position would easily
causes, the termination of the respondents‘ weaken and ultimately destroy the former with the
employment was illegal. What may be reasonably
latters resort to retrenchment and/or retirement of
deduced from the records was that Norkis Trading
decided on the transfer, after the respondents had employees and not filling up the vacant regular
earlier filed their complaint for labor-only contracting positions through the hiring of contractual workers
against the company. Even Norkis Trading‘s from PESO, and that a possible scenario could also
contention that the transfer may be deemed a valid be created by the Company wherein it could "import"
exercise of management prerogative is misplaced. workers from PESO during an actual strike.
First, the exercise of management prerogative
presupposes that the transfer is only for positions
within the business establishment. Second, the The case was brought before the NCMB
exercise of management prerogative by employers is when the matter remained unsolved for voluntary
not absolute, as it is limited by law and the general arbitration. Voluntary Arbitrator Bienvenido E.
principles of fair play and justice. Laguesma manifested that amicable settlement was
no longer possible; hence, they agreed to submit for
WHEREFORE, premises considered, the petition resolution the solitary issue of "[w]hether or not the
is DENIED. Company is guilty of unfair labor acts in engaging
the services of PESO, a third party service provider,
SO ORDERED. under the existing CBA, laws, and jurisprudence."

ISSUE:

85. GOYA, INC. v. GOYA, INC. EMPLOYEES Whether or not the Company is guilty of
UNION-FFW G.R. No. 170054 : January 21, 2013 unfair labor acts in engaging the services of PESO, a
third party service provider, under the existing CBA,
FACTS: laws, and jurisprudence.

Goya, Inc. (Company) is a domestic


corporation engaged in the manufacture, importation,
RULING:
and wholesale of top quality food products.

The company’s defense is that


Sometime in January 2004, the company
their act of hiring contractual employees is a
hired contractual employees from PESO Resources
management prerogative and is a valid act
Development Corporation (PESO) to perform
thereof.
temporary and occasional services. Respondent
Goya, Inc. Employees UnionFFW (Union) requested
Declaring that a particular act falls within
for a grievance conference on the ground that the
the concept of management prerogative is
contractual workers do not belong to the categories of
significantly different from acknowledging that such
employees stipulated in the existing CBA.
act is a valid exercise thereof. What the VA and the
CA correctly ruled was that the Companys act of
The hiring of contractual employees was in
contracting out/outsourcing is within the purview of
contravention to their CBA agreement which has
management prerogative. Both did not say, however,
been applied since 1970 where there are only 3 kinds
that such act is a valid exercise thereof. Obviously,
of employees: regular employees, probationary
this is due to the recognition that the CBA provisions
employees and casual employees. The Union asserted
agreed upon by the Company and the Union delimit
that the hiring of contractual employees from PESO
the free exercise of management prerogative
is not a management prerogative and in gross
pertaining to the hiring of contractual employees.
violation of the CBA tantamount to unfair labor
Indeed, the VA opined that "the right of the
practice (ULP).

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LABOR STANDARDS LAW

management to outsource parts of its operations is in this instance can reasonably assume that his
not totally eliminated but is merely limited by the powers extended beyond giving a yes-or-no answer
CBA," while the CA held that "this management and included the power to reinstate him with or
prerogative of contracting out services, however, is without back pay.
not without limitation. x x x These categories of
employees particularly with respect to casual 86. Vigilla et al., vs. Phil. College of
employees serve as limitation to the Companys Criminology Inc., G.R. No. 200094, June
prerogative to outsource parts of its operations 10, 2013
especially when hiring contractual employees.‖
Facts:
A collective bargaining agreement is the law
between the parties. PCCr is a non-stock educational institution, while the
petitioners were janitors, janitresses and supervisor in
It is familiar and fundamental doctrine in the Maintenance Department of PCCr under the
supervision and control of Atty. Florante A. Seril
labor law that the CBA is the law between the parties
(Atty. Seril), PCCr‘s Senior Vice President for
and they are obliged to comply with its provisions. Administration. The petitioners, however, were made
to understand, upon application with respondent
A collective bargaining agreement or CBA school, that they were under MBMSI, a corporation
refers to the negotiated contract between a legitimate engaged in providing janitorial services to clients.
labor organization and the employer concerning Atty. Seril is also the President and General Manager
of MBMSI.
wages, hours of work and all other terms and
conditions of employment in a bargaining unit. As in
Sometime in 2008, PCCr discovered that the
all contracts, the parties in a CBA may establish such Certificate of Incorporation of MBMSI had been
stipulations, clauses, terms and conditions as they revoked as of July 2, 2003. On March 16, 2009,
may deem convenient provided these are not contrary PCCr, through its President, respondent Gregory
to law, morals, good customs, public order or public Alan F. Bautista (Bautista), citing the revocation,
policy. Thus, where the CBA is clear and terminated the school‘s relationship with MBMSI,
unambiguous, it becomes the law between the parties resulting in the dismissal of the employees or
maintenance personnel under MBMSI, except
and compliance therewith is mandated by the express
Alfonso Bongot (Bongot) who was retired.
policy of the law.
In September, 2009, the dismissed employees, led by
Moreover, if the terms of a contract, as in a their supervisor, Benigno Vigilla (Vigilla), filed their
CBA, are clear and leave no doubt upon the intention respective complaints for illegal dismissal,
of the contracting parties, the literal meaning of their reinstatement, back wages, separation pay (for
stipulations shall control. Bongot), underpayment of salaries, overtime pay,
holiday pay, service incentive leave, and 13th month
pay against MBMSI, Atty. Seril, PCCr, and Bautista.

In their complaints, they alleged that it was the


On the power of the voluntary arbitrator: school, not MBMSI, which was their real employer
because (a) MBMSI‘s certification had been revoked;
In general, the arbitrator is expected to (b) PCCr had direct control over MBMSI‘s
decide those questions expressly stated and limited in operations; (c) there was no contract between
the submission agreement. However, since arbitration MBMSI and PCCr; and (d) the selection and hiring of
employees were undertaken by PCCr.
is the final resort for the adjudication of disputes, the
arbitrator can assume that he has the power to make a
On the other hand, PCCr and Bautista contended that
final settlement. Thus, assuming that the submission (a) PCCr could not have illegally dismissed the
empowers the arbitrator to decide whether an complainants because it was not their direct
employee was discharged for just cause, the arbitrator employer; (b) MBMSI was the one who had

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LABOR STANDARDS LAW

complete and direct control over the complainants; Ruling of the Court of Appeals
and (c) PCCr had a contractual agreement with
MBMSI, thus, making the latter their direct On September 16, 2011, the CA denied the petition
employer. and affirmed the two Resolutions of the NLRC, dated
February 11, 2011 and April 28, 2011. The CA
On September 11, 2009, PCCr submitted several pointed out that based on the principle of solidary
documents before LA Ronaldo Hernandez, including liability and Article 121711 of the New Civil Code,
releases, waivers and quitclaims in favor of MBMSI petitioners‘ respective releases, waivers and
executed by the complainants to prove that they were quitclaims in favor of MBMSI and Atty. Seril
employees of MBMSI and not PCCr. redounded to the benefit of the respondents. The CA
also upheld the factual findings of the NLRC as to
Ruling of the Labor Arbiter the authenticity and due execution of the individual
releases, waivers and quitclaims because of the
After due proceedings, the LA handed down his failure of petitioners to substantiate their claim of
forgery and to overcome the presumption of
decision, finding that (a) PCCr was the real principal
regularity of a notarized document. Petitioners‘
employer of the complainants ; (b) MBMSI was a
motion for reconsideration was likewise denied by
mere adjunct or alter ego/labor-only contractor; (c)
the CA in its January 4, 2012 Resolution.
the complainants were regular employees of PCCr;
and (d) PCCr/Bautista were in bad faith in dismissing
the complainants. Hence, this petition under Rule 45 challenging the
CA Decision
The LA explained that PCCr was actually the one
which exercised control over the means and methods Issue:
of the work of the petitioners, thru Atty. Seril, who
was acting, throughout the time in his capacity as  Whether or not their claims against the
Senior Vice President for Administration of PCCr, respondents were amicably settled by virtue
not in any way or time as the supposed of the releases, waivers and quitclaims
employer/general manager or president of MBMSI. which they had executed in favor of
MBMSI.
.Ruling of the NLRC o whether or not petitioners executed
the said releases, waivers and
Not satisfied, the respondents filed an appeal before quitclaims
the NLRC. In its Resolution, dated February 11, o whether or not a labor-only
2011, the NLRC affirmed the LA‘s findings. contractor is solidarily liable with
Nevertheless, the respondents were excused from the employer.
their liability by virtue of the releases, waivers and
quitclaims executed by the petitioners.

In their motion for reconsideration, petitioners Ruling:


attached as annexes their affidavits denying that they
had signed the releases, waivers, and quitclaims. The petition fails.
They prayed for the reinstatement in toto of the July
30, 2010 Decision of the LA. 8 MBMSI/Atty. Seril The Releases, Waivers and Quitclaims are Valid
also filed a motion for reconsideration9 questioning
the declaration of the NLRC that he was solidarily We noted that the individual quitclaims,
liable with PCCr. waivers and releases executed by the complainants
showing that they received their separation pay from
On April 28, 2011, NLRC modified its February 11, MBMSI were duly notarized by a Notary Public.
2011 Resolution by affirming the July 30, 2010 Such notarization gives prima facie evidence of their
Decision10 of the LA only in so far as complainants
due execution. Further, said releases, waivers, and
Ernesto B. Ayento and Eduardo B. Salonga were
concerned. As for the other 17 complainants, the quitclaims were not refuted nor disputed by
NLRC ruled that their awards had been superseded complainants herein, thus, we have no recourse but to
by their respective releases, waivers and quitclaims. uphold their due execution

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LABOR STANDARDS LAW

A Labor-only Contractor is Solidarily Liable with of the work performed under the contract" as such
the Employer employer were the employer of the contractor's
employees. The law itself, in other words, establishes
The issue of whether there is solidary an employer-employee relationship between the
liability between the labor-only contractor and the employer and the job contractor's employees for a
employer is crucial in this case. If a labor-only limited purpose, i.e., in order to ensure that the latter
contractor is solidarily liable with the employer, then get paid the wages due to them.
the releases, waivers and quitclaims in favor of
MBMSI will redound to the benefit of PCCr. On the
other hand, if a labor-only contractor is not solidarily
liable with the employer, the latter being directly A similar situation obtains where there is
liable, then the releases, waivers and quitclaims in "labor only" contracting. The "labor-only" contractor-
favor of MBMSI will not extinguish the liability of i.e "the person or intermediary" - is considered
PCCr. "merely as an agent of the employer." The employer
is made by the statute responsible to the employees of
xxx the "labor only" contractor as if such employees had
been directly employed by the employer. Thus, where
The NLRC and the CA correctly ruled that "labor-only" contracting exists in a given case, the
the releases, waivers and quitclaims executed by statute itself implies or establishes an employer-
petitioners in favor of MBMSI redounded to the employee relationship between the employer (the
benefit of PCCr pursuant to Article 1217 of the New owner of the project) and the employees of the "labor
Civil Code. The reason is that MBMSI is solidarily only" contractor, this time for a comprehensive
liable with the respondents for the valid claims of purpose: "employer for purposes of this Code, to
petitioners pursuant to Article 109 of the Labor Code. prevent any violation or circumvention of any
provision of this Code." The law in effect holds both
As correctly pointed out by the respondents,
the employer and the "laboronly" contractor
the basis of the solidary liability of the principal with
responsible to the latter's employees for the more
those engaged in labor-only contracting is the last
effective safeguarding of the employees' rights under
paragraph of Article 106 of the Labor Code, which in
the Labor Code.35
part provides: "In such cases labor-only contracting,
the person or intermediary shall be considered merely
as an agent of the employer who shall be responsible
to the workers in the same manner and extent as if the
latter were directly employed by him."

Xxx

Under the general rule set out in the first and


second paragraphs of Article 106, an employer who 87. BPI Employees Union-Davao city-FUBU vs.
enters into a contract with a contractor for the Bank of the Phil Islands et al., G.R. No.
performance of work for the employer, does not 174912, July 24, 2013
thereby create an employer-employees relationship
Facts:
between himself and the employees of the contractor.
Thus, the employees of the contractor remain the BOMC, which was created pursuant to Central Bank
contractor's employees and his alone. Nonetheless Circular No. 1388, Series of 1993 (CBP Circular No.
when a contractor fails to pay the wages of his 1388, 1993), and primarily engaged in providing
employees in accordance with the Labor Code, the and/or handling support services for banks and other
employer who contracted out the job to the contractor financial institutions, is a subsidiary of the Bank of
becomes jointly and severally liable with his Philippine Islands (BPI) operating and functioning as
contractor to the employees of the latter "to the extent an entirely separate and distinct entity.

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LABOR STANDARDS LAW

bargaining unit represented by the Union pursuant to


its union shop provision in the CBA.7
A service agreement between BPI and BOMC was
initially implemented in BPI‘s Metro Manila The Union then filed a formal protest on June 14,
branches. In this agreement, BOMC undertook to 2000 addressed to BPI Vice Presidents Claro M.
provide services such as check clearing, delivery of Reyes and Cecil Conanan reiterating its objection. It
bank statements, fund transfers, card production, requested the BPI management to submit the BOMC
operations accounting and control, and cash issue to the grievance procedure under the CBA, but
servicing, conformably with BSP Circular No. 1388. BPI did not consider it as "grievable." Instead, BPI
Not a single BPI employee was displaced and those proposed a Labor Management Conference (LMC)
performing the functions, which were transferred to between the parties.
BOMC, were given other assignments.
Thereafter, the Union demanded that the matter be
submitted to the grievance machinery as the resort to
the LMC was unsuccessful. As BPI allegedly ignored
The Manila chapter of BPI Employees Union the demand, the Union filed a notice of strike before
(BPIEU-Metro ManilaFUBU) then filed a complaint the National Conciliation and Mediation Board
for unfair labor practice (ULP). The Labor Arbiter (NCMB) on the following grounds:
(LA) decided the case in favor of the union. The
decision was, however, reversed on appeal by the a) Contracting out services/functions performed by
NLRC. BPIEU-Metro Manila-FUBU filed a petition union members that interfered with, restrained and/or
for certiorari before the CA which denied it, holding coerced the employees in the exercise of their right to
that BPI transferred the employees in the affected self-organization;
departments in the pursuit of its legitimate business.
The employees were neither demoted nor were their b) Violation of duty to bargain; and
salaries, benefits and other privileges diminished.
c) Union busting.

BPI then filed a petition for assumption of


On January 1, 1996, the service agreement was jurisdiction/certification with the Secretary of the
likewise implemented in Davao City. Later, a merger Department of Labor and Employment (DOLE), who
between BPI and Far East Bank and Trust Company subsequently issued an order certifying the labor
(FEBTC) took effect on April 10, 2000 with BPI as dispute to the NLRC for compulsory arbitration. The
the surviving corporation. Thereafter, BPI‘s DOLE Secretary directed the parties to cease and
cashiering function and FEBTC‘s cashiering, desist from committing any act that might exacerbate
distribution and bookkeeping functions were handled the situation.
by BOMC. Consequently, twelve (12) former
On October 27, 2000, a hearing was conducted.
FEBTC employees were transferred to BOMC to
Thereafter, the parties were required to submit their
complete the latter‘s service complement.
respective position papers

On December 21, 2001, the NLRC came out with a


BPI Davao‘s rank and file collective bargaining resolution upholding the validity of the service
agent, BPI Employees Union-Davao City-FUBU agreement between BPI and BOMC and dismissing
(Union), objected to the transfer of the functions and the charge of ULP. It ruled that the engagement by
the twelve (12) personnel to BOMC contending that BPI of BOMC to undertake some of its activities was
the functions rightfully belonged to the BPI clearly a valid exercise of its management
employees and that the Union was deprived of prerogative. It further stated that the spinning off by
membership of former FEBTC personnel who, by BPI to BOMC of certain services and functions did
virtue of the merger, would have formed part of the not interfere with, restrain or coerce employees in the
exercise of their right to self-organization. The Union

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LABOR STANDARDS LAW

did not present even an iota of evidence showing that Ruling:


BPI had terminated employees, who were its
members. In fact, BPI exerted utmost diligence, care ART. 261. Jurisdiction of Voluntary Arbitrators or
and effort to see to it that no union member was panel of Voluntary Arbitrators. – x x x Accordingly,
terminated.13 The NLRC also stressed that violations of a Collective Bargaining Agreement,
Department Order (D.O.) No. 10 series of 1997, except those which are gross in character, shall no
strongly relied upon by the Union, did not apply in longer be treated as unfair labor practice and shall be
this case as BSP Circular No. 1388, series of 1993, resolved as grievances under the Collective
was the applicable rule. Bargaining Agreement. For purposes of this article,
gross violations of Collective Bargaining Agreement
After the denial of its motion for reconsideration, the shall mean flagrant and/or malicious refusal to
Union elevated its grievance to the CA via a petition comply with the economic provisions of such
for certiorari under Rule 65. The CA, however, agreement.
affirmed the NLRC‘s December 21, 2001 Resolution
with modification that the enumeration of functions Clearly, only gross violations of the economic
listed under BSP Circular No. 1388 in the said provisions of the CBA are treated as ULP. Otherwise,
resolution be deleted. The CA noted at the outset that they are mere grievances.
the petition must be dismissed as it merely touched
In the present case, the alleged violation of the union
on factual matters which were beyond the ambit of
shop agreement in the CBA, even assuming it was
the remedy availed of.14 Be that as it may, the CA
malicious and flagrant, is not a violation of an
found that the factual findings of the NLRC were
economic provision in the agreement. The provisions
supported by substantial evidence and, thus, entitled
relied upon by the Union were those articles referring
to great respect and finality. To the CA, the NLRC
to the recognition of the union as the sole and
did not act with grave abuse of discretion as to merit
exclusive bargaining representative of all rank-and-
the reversal of the resolution.
file employees, as well as the articles on union
As to the applicability of D.O. No. 10, the CA agreed security, specifically, the maintenance of membership
with the NLRC that the said order did not apply as in good standing as a condition for continued
BPI, being a commercial bank, its transactions were employment and the union shop clause.26 It failed to
subject to the rules and regulations of the BSP. take into consideration its recognition of the bank‘s
exclusive rights and prerogatives, likewise provided
in the CBA, which included the hiring of employees,
promotion, transfers, and dismissals for just cause
Not satisfied, the Union filed a motion for and the maintenance of order, discipline and
reconsideration which was, however, denied by the efficiency in its operations
CA.
The Union, however, insists that jobs being
outsourced to BOMC were included in the existing
bargaining unit, thus, resulting in a reduction of a
Hence, the present petition
number of positions in such unit. The reduction
Issue: interfered with the employees‘ right to self-
organization because the power of a union primarily
 Whether or not the act of BPI to outsource the depends on its strength in number.28
cashiering, distribution and bookkeeping
functions to BOMC is in conformity with the It is incomprehensible how the "reduction of
law and the existing CBA. Particularly in positions in the collective bargaining unit" interferes
dispute is the validity of the transfer of twelve with the employees‘ right to self-organization
(12) former FEBTC employees to BOMC, because the employees themselves were neither
instead of being absorbed in BPI after the transferred nor dismissed from the service. As the
corporate merger. NLRC clearly stated:

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In the case at hand, the union has not presented even Issue:
an iota of evidence that petitioner bank has started to Whether or not Art. 110 of the Labor Code,
terminate certain employees, members of the union. as amended, which refers to worker preference in
case of bankruptcy or liquidation of an employer's
In fact, what appears is that the Bank has exerted
business, is applicable to the present case
utmost diligence, care and effort to see to it that no notwithstanding the absence of any formal
union member has been terminated. In the process of declaration of bankruptcy or judicial liquidation of
the consolidation or merger of the two banks which TPWII. In other words, is declaration of bankruptcy
resulted in increased diversification of functions, or judicial liquidation required before the worker's
some of these non-banking functions were merely preference may be invoked under Art. 110 of the
transferred to the BOMC without affecting the union Labor Code?
membership
Ruling:
Article 110 is NOT applicable in the absence of any
formal declaration of bankruptcy or judicial
liquidation of TPWII.We hold that public respondent
88. DBP vs. NLRC, 242 SCRA 59 [1995] gravely abused its discretion in affirming the decision
of the Labor Arbiter. Art. 110 should not be treated
Facts: apart from other laws but applied in conjunction with
In September 1983, petitioner Development the pertinent provisions of the Civil Code and the
Bank of the Philippines, as mortgagee of TPWII, Insolvency Law to the extent that piece-meal
foreclosed its plant facilities and equipment. distribution of the assets of the debtor is avoided. Art.
Nevertheless, TPWII continued its business 110, then prevailing, provides:
operations interrupted only by brief shutdowns for ARTICLE 110. Worker
the purpose of servicing its plant facilities and preference in case of bankruptcy.
equipment. In January 1986 petitioner took — In the event of bankruptcy or
possession of the foreclosed properties. From then on liquidation of an employer's
the company ceased its operations. As a consequence business, his workers shall enjoy
private respondent Leonor A. Ang was on 15 April first preference as regards wages
1986 verbally terminated from the service. due them for services rendered
After hearing on a complaint for separation during the period prior to the
pay, 13th month pay, vacation and sick leave pay, bankruptcy or liquidation, any
salaries and allowances against TPWII, its General provision to the contrary
Manager, and petitioner, the Labor Arbiter found notwithstanding. Unpaid wages
TPWII primarily liable to private respondent but only shall be paid in full before other
for her separation pay and vacation and sick leave creditors may establish any claim
pay because her claims for unpaid wages and 13th to a share in the assets of the
month pay were later paid after the complaint was employer.
filed. The General Manager was absolved of any Complementing Art. 110, Sec. 10, Rule
liability. But with respect to petitioner, it was held VIII, Book III, of the Revised Rules and Regulations
subsidiarily liable in the event the company failed to Implementing the Labor Code provides:
satisfy the judgment. The Labor Arbiter rationalized SECTION 10. Payment of
that the right of an employee to be paid benefits due wages in case of bankruptcy. —
him from the properties of his employer is superior to Unpaid wages earned by the
the right of the latter's mortgagee, citing this Court's employees before the declaration of
resolution in PNB v. Delta Motor Workers Union. bankruptcy or judicial liquidation
On 16 November 1992 public respondent of the employer's business shall be
National Labor Relations Commission affirmed the given first preference and shall be
ruling of the Labor Arbiter.Petitioner argues that the paid in full before other creditors
decision of public respondent runs counter to the may establish any claim to a share
consistent rulings of this Court in a long line of cases in the assets of the employer.
emphasizing that the applicant of Art. 110 of the We interpreted this provision in
Labor Code is contingent upon the institution of Development Bank of the Philippines v. Santos to
bankruptcy or judicial liquidation proceedings against mean that —. . . a declaration of bankruptcy or a
the employer. judicial liquidation must be present before the
worker's preference may be enforced. Thus, Article

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110 of the Labor Code and its implementing rule Government and other creditors' may be paid. But,
cannot be invoked by the respondents in this case for an orderly settlement of a debtor's assets, all
absent a formal declaration of bankruptcy or a creditors must be convened, their claims ascertained
liquidation order . . . and inventoried, and thereafter the preferences
The rationale is that to hold Art. 110 to be determined in the course of judicial proceedings
applicable also to extrajudicial proceedings would be which have for their object the subjection of the
putting the worker in a better position than the State property of the debtor to the payment of his debts or
which could only assert its own prior preference in other lawful obligations. Thereby, an orderly
case of a judicial proceeding. Art. 110, which was determination of preference of creditors' claims is
amended by R.A. 6715 effective 21 March 1989, now assured (Philippine Savings Bank vs. Lantin, No. L-
reads: 33929, September 2, 1983, 124 SCRA 476); the
ARTICLE 110. Worker adjudication made will be binding on all parties-in-
preference in case of bankruptcy. interest since those proceedings are proceedings in
— In the event of bankruptcy or rem; and the legal scheme of classification,
liquidation of an employer's concurrence and preference of credits in the Civil
business, his workers shall enjoy Code, the Insolvency Law, and the Labor Code is
first preference as regards their preserved in harmony.
unpaid wages and other monetary In ruling, as we did, in Development Bank
claims, any provision of law to the of the Philippines v. Santos, we took into account the
contrary notwithstanding. Such following pronouncements: In the event of
unpaid wages and monetary claims insolvency, a principal objective should be to effect
shall be paid in full before the an equitable distribution of the insolvent's property
claims of the Government and among his creditors. To accomplish this there must
other creditors may be paid. first be some proceeding where notice to all of the
Obviously, the amendment expanded the insolvent's creditors may be given and where the
concept of "worker preference" to cover not only claims of preferred creditors may be bindingly
unpaid wages but also other monetary claims to adjudicated.
which even claims of the Government must be The rationale therefore has been expressed in the
deemed subordinate. The Rules and Regulations recent case of DBP v. Secretary of Labor (G.R. No.
Implementing R.A. 6715, approved 24 May 1989, 79351, 28 November 1989), which we quote:
also amended the corresponding implementing rule, A preference of credit bestows
and now reads: upon the preferred creditor an advantage of
SECTION 10. Payment of having his credit satisfied first ahead of
wages and other monetary claims other claims which may be established
in case of bankruptcy. — In case against the debtor. Logically, it becomes
of bankruptcy or liquidation of the material only when the properties and assets
employer's business, the unpaid of the debtors are insufficient to pay his
wages and other monetary claims debts in full; for if the debtor is amply able
of the employees shall be given to pay his various creditors in full, how can
first preference and shall be paid in the necessity exist to determine which of his
full before the claims of creditors shall be paid first or whether they
government and other creditors shall be paid out of the proceeds of the sale
may be paid. (of) the debtor's specific property.
Although the terms "declaration" (of Indubitably, the preferential right of credit
bankruptcy) or "judicial" (liquidation) have been attains significance only after the properties
notably eliminated, still in Development Bank of the of the debtor have been inventoried and
Philippines v. NLRC , this Court did not alter its liquidated, and the claims held by his
original position that the right to preference given to various creditors have been established.
workers under Art. 110 cannot exist in any effective In the present case, there is as yet no
way prior to the time of its presentation in declaration of bankruptcy nor judicial liquidation of
distribution proceedings. In effect, we reiterated our TPWII. Hence, it would be premature to enforce the
previous interpretation in Development Bank of the worker's preference. The additional ratiocination of
Philippines v. Santos where we said: public respondent that "under Article 110 of the
It (worker preference) will find application Labor Code complainant enjoys a preference of credit
when, in proceedings such as insolvency, such unpaid over the properties of TPWII being held in
wages shall be paid in full before the 'claims of the

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possession by DBP," is a dismal misconception of the (3) Non-payment of their salaries for the
nature of preference of credit. period March 1986 to the present;
The DBP anchors its claims on a mortgage (4) Non-payment of their 13th month pay
credit. A mortgage directly and immediately subjects
for 1985, 1986 and 1987;
the property upon which it is imposed, whoever the
possessor may be, to the fulfillment of the obligation (5) Non-payment of their vacation and sick
for whose security it was constituted (Article 2176, leave, and the compensatory leaves of mine site
Civil Code). It creates a real right which is employees; and
enforceable against the whole world. It is a lien on an (6) Non-payment of the salaries of
identified immovable property, which a preference is employees who were placed on forced leaves since
not. A recorded mortgage credit is a special preferred November, 1985 to the present, if this is not feasible,
credit under Article 2242 (5) of the Civil Code on
the affected employees be awarded corresponding
classification of credits. The preference given by
Article 110, when not falling within Article 2241 (6) separation pay.
and Article 2242 (3) of the Civil Code and not
attached to any specific property, is an ordinary On February 27, 1987, the complainants
preferred credit although its impact is to move it from filed a Motion for the issuance of an inspection
second priority to first priority in order of preference authority. After said inspection, the Labor Standards
established by Article 2244 of the Civil Code. and Welfare Officers submitted their report with the
The present controversy could have been
recommendations that an Order of Compliance be
easily settled by public respondent had it referred to
ample jurisprudence which already provides the issued directing BatongBuhay Gold Mines Inc. to
solution. Stare decisis et non quietamovere. Once a pay complainants' Elsie Rosalina Ty, et al.
case is decided by this Court as the final arbiter of P4,818,746.40 by way of unpaid salaries of workers
any justiciable controversy one way, then another from March 16, 1987 to present, unpaid and ECOLA
case involving exactly the same point at issue should differentials under Wage Order Nos. 2 and 5 unpaid
be decided in the same manner. Public respondent
13th months pay for 1985 and 1986, and unpaid (sic)
had no choice on the matter. It could not have ruled
any other way. This Court having spoken in a string vacation/sick/compensatory leave benefits.
of cases against public respondent, its duty is simply
to obey judicial precedents. Any further disregard, if RD adopted recommendation of LSWOs.
not defiance, of our rulings will be considered a Complainant filed an ex-parte motion for issuance of
ground to hold public respondent in contempt. a writ of execution and appointment of special
sheriff. The Regional Director issued an Order
directing BBGMI to put up a cash or surety bond
otherwise a writ of execution will be issued.
Respondent, however, failed to do so and RD
appointed a special sheriff thereafter to collect
89. Batongbuhay Gold Mines vs. De la Serna G.R. amount from respondent. The Special Sheriff
No. 86963 August 6, 1999 proceeded to execute the order and seized properties
by respondent and sold them at public auction.
Facts: On December 1987, BBGMI finally posted
On February 5, 1987, respondents Ty, a supersedeas bond which prompted this Office to
Mendelebar, Reyes and 1,247 others filed a issue an Order restraining the complainants and
complaint against BatongBuhay Gold Mines, Inc. for: Sheriff Ramos from enforcing the writ of execution.
Herein petitioner appealed the Order dated July 31,
(1) Non-payment of their basic pay and 1987 of Regional Director Luna C. Piezas to
allowances for the period of July 1983 to July 1984, respondent Undersecretary Dionisio de la Serna,
inclusive, under Wage Order No. 2; contending that the Regional Director had no
(2) Non-payment of their basic pay and jurisdiction over the case. But the respondent upheld
allowances for the period June 1984 to October 1986, the jurisdiction of the Regional Director and annulled
inclusive under Wage Order No. 5; all the auction sales conducted by Special Sheriff
John Ramos.

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compliance with the labor standards provision of this


Code based on the findings of the findings of labor
Issues: regulation officers or industrial safety engineers
made in the course of inspection, and to issue writs of
Whether the Regional Director has jurisdiction over execution to the appropriate authority for the
the complaint filed by the employees of BBGMI enforcement of their order, except in cases where the
employer contests the findings of the labor
SC Ruling: regulations officers and raises issues which cannot
be resolved without considering evidentiary matters
(1) YES. The Regional Director has that are not verifiable in the ordinary course of
jurisdiction over the BBGMI employees who are the inspection.
complainants in Case Number NCR-LSED-CI-2047-
87. The subject labor standards case of the petition The Court would have ruled differently had
arose from the visitorial and enforcement powers by the petitioner shown that subject labor standards case
the Regional Director of Department of Labor and is within the purview of the exception clause in
Employment (DOLE). Labor standards cases are Article 128 (b) of the Labor Code. Said provision
governed by Article 128(b) of the Labor Code. As requires the concurrence of the following elements in
can be gleaned from the records on hand, subject order to divest the Regional Director or his
labor standards case was filed on February 5, 1987 at representatives of jurisdiction, to wit: (a) that the
which time Article 128 (b) read as follows: petitioner (employer) contests the findings of the
Art. 128 (b) Visitorial and enforcement labor regulations officer and raises issues thereon; (b)
powers. that in order to resolve such issues, there is a need to
(b) The Minister of Labor or his duly examine evidentiary matters; and (c) that such
authorized representative shall have the matters are not verifiable in the normal course of
power to order and administer, after due inspection.
notice and hearing, compliance with the
labor standards provisions of this Code Nowhere in the records does it appear that
based on the findings of labor regulation the petitioner alleged any of the aforestated grounds.
officers or industrial safety engineers made The only instance when there was a semblance of
in the course of inspection, and to issue raising the aforestated grounds, was when they filed
writs of execution to the appropriate an Appeal Memorandum wherein petitioner comes
authority for the enforcement of their order, up with the defense that the Regional Director was
except in cases where the employer contests without jurisdiction, as employer-employee
the findings of the labor regulations officers relationship was absent, since petitioner had ceased
and raises issues which cannot be resolved doing business since 1985.
without considering evidentiary matters that
are not verifiable in the ordinary course of Records indicate that the Labor Standards
inspection. and Welfare Officers, pursuant to Complaint
Inspection Authority No. CI-2-047-87, were not
Respondent Undersecretary Dionisio C. allowed to look into records, vouchers and other
DelaSerna, upheld the jurisdiction of Regional related documents. The officers of the petitioner
Director Luna C. Piezas by relying on Sec 2 of E.O. alleged that the company is presently under
111, which states: receivership of the Development Bank of the
The provisions of article 217 of this code to the Philippines. In lieu of this, the Regional Director had
contrary notwithstanding and in cases where the ordered that a summary investigation be conducted.
relationship of employer-employee still exists, the Despite proper notices, the petitioner refused to
Minister of Labor and Employment or his duly appear before the Regional Director. To give it
authorized representative shall have the power to another chance, an order to file its position paper was
order and administer, after due notice and hearing, issued to substantiate its defenses. Notwithstanding

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all these opportunities to be heard, petitioner chose their claim of closure for business, among other
not to avail of such. things, are factual issues which cannot be brought
here for the first time. As petitioner refused to
As held in the case of M. Ramirez Industries participate in the proceedings below where it could
vs. Sec. of Labor and Employment, . . .Under Art. have ventilated the appropriate defenses, to do so in
128(a) of the Labor Code, the Secretary of Labor of this petition is unavailing. The reason for this is that
his duly authorized representatives, such as the factual issues are not proper subjects of a special civil
Regional Directors, has visitorial powers which action for certiorari to the Supreme Court. It is
authorize him to inspect the records and premises of therefore abundantly clear that at the time of the
an employer at any time of the day or night whenever filing of the claims of petitioner's employees, the
work is being undertaken therein, to question any Regional Director was already exercising visitorial
employee and investigate any fact, condition or and enforcement powers.
matter, and to determine violations of labor laws,
wage orders or rules and regulations. If the employer The present law, RA 7730, can be
refuses to attend the inspection or conference or to considered a curative statute to reinforce the
submit any record, such as payrolls and daily time conclusion that the Regional Director has jurisdiction
records, he will be deemed to have waived his right over the present labor standards case. Republic Act
to present evidence. 7730, the law governing the visitorial and
enforcement powers of the Labor Secretary and his
Petitioner's refusal to allow the Labor representatives reads:
Standards and Welfare Officers to conduct inspection Art. 128 (b)Notwithstanding the provisions
in the premises of their head office in Makati and the of Articles 129 and 217 of this Code to the
failure to file their position paper is equivalent to a contrary, and in cases where the
waiver of its right to contest the claims of the relationship of employer-employee still
employees. This Court had occasion to hold there is exists, the Secretary of Labor and
no violation of due process where the Regional Employment or his duly authorized
Director merely required the submission of position representatives shall have the power to issue
papers and resolved the case summarily thereafter. compliance orders to give effect to the labor
Furthermore, the issuance of the compliance order standards provisions of this Code and other
was well within the jurisdiction of the Regional labor legislation based on the findings of
Director, as Section 14 of the Rules on the labor employment and enforcement officers
Disposition of Labor Standards Cases provides: or industrial safety engineers made in the
Sec. 14.Failure to Appear. Where the course of inspection. The Secretary or his
employer or the complainant fails or refuses duly authorized representative shall issue
to appear during the investigation, despite writs of execution to the appropriate
proper notice, for two (2) consecutive authority for the enforcement of their
hearings without justifiable reasons, the orders, except in cases where the employer
hearing officer may recommend to the contests the findings of the labor
Regional Director the issuance of a employment and enforcement officer and
compliance order based on the evidence at raises issues supported by documentary
hand or an order of dismissal of the proofs which were not considered in the
complaint as the case may be. course of inspection.

It bears stressing that this petition involves a


labor standards case and it is in keeping with the law
that "the worker need not litigate to get what legally 90. ABUNDIO BARAYOGA and BISUDECO-
belongs to him, for the whole enforcement machinery PHILSUCORCORFARM WORKERS UNION
of the Department of Labor exists to insure its (PACIWU CHAP-TPC) v. ASSET
expeditious delivery to him free of charge." Thus, PRIVATIZATION

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G.R. No. 160073; October 24, 2005 alleged that when Philsucor initially took over the
operations of the company, it retained BISUDECO‘s
Facts: Bisudeco-Philsucor Corfarm Workers Union existing
is composed of workers of Bicolandia Sugar personnel under the same terms and conditions of em
Development Corporation (BISUDECO), a sugar ployment. Nonetheless, at the start of the season
plantation mill located in Himaao, Pili, Camarines sometime in May1991, Philsucor started recalling
Sur. Asset Privatization Trust (APT), a public trust workers back to work, to the exception of the union
was created under Proclamation No. 50, as amended, members. Management told them thatthey will be re-
mandated to take title to and possession of, conserve, hired only if they resign from the union. Just the
provisionally manage and dispose of non-performing same, thereafter, the company started to employ the
assets of the Philippine government identified for services of outsiders under the pakyaw system.
privatization or disposition. Pursuant to Section 23 of
Proclamation No. 50, former President Corazon Issue: whether APT is liable to pay petitioners‘
Aquino issued Administrative Order No. monetary claims, including back wages from May 1,
14identifying certain assets of government 1991, to October 30, 1992 (the date of the sale of
institutions that were to be transferred to the National BISUDECO assets to BAPCI).
Government. Among the assets transferred was the
financial claim of the Philippine National Bank Held: No. Pursuant to Administrative Order No. 14,
against BISUDECO in the form of a secured loan. Series of 1987, PNB‘s assets, loans and receivables
Consequently, by virtue of a Trust Agreement from its borrowers were transferred to APT as trustee
executed between the National Government and APT of the national government. Among the liabilities
on February 27, 1987, APT was constituted as trustee transferred to APT was PNB‘s financial claim against
over BISUDECO‟s account with the PNB. BISUDECO, not the latter‘s assets and chattel.
BISUDECO remained the owner of the mortgaged
Sometime later, BISUDECO contracted the services properties in August 1988, when the Philippine Sugar
of Philippine Sugar Corporation (Philsucor) to take Corporation (Philsucor) undertook the operation and
over the management of the sugar plantation and management of the sugar plantation until August 31,
milling operations until August 31, 1992.Meanwhile, 1992, under a so-called Contract of Lease between
because of the continued failure of BISUDECO to the two corporations. At the time, APT was merely a
pay its outstanding loan with PNB, its mortgaged secured creditor of BISUDECO.
properties were foreclosed and subsequently sold in a
public auction to APT, as the sole bidder. On April 2,
1991, APT was issued a Sheriff‘s Certificate of Sale.

The union filed a complaint for unfair labor practice,


91.) G.R. 166996 February 6, 2007
illegal dismissal, illegal deduction and underpayment Philippine Airlines vs Zamora
of wages and other labor standard benefits plus
damages. In the meantime, APT‘s Board of Trustees
issued a resolution accepting the offer of Bicol-Agro- FACTS:
Industrial Cooperative (BAPCI) to buy the sugar
plantation and mill. Again, on September 23, 1992, Respondent Zamora had been in the employ of
the board passed another resolution authorizing the petitioner PAL since 9 February 1981 when the
payment of separation benefits to BISUDECO‘s former was hired as a Cargo Representative at
employees in the event of the company‘s petitioner PAL‘s Import Operations Division.
privatization. Respondent Zamora was then dismissed from service
for having been found by petitioner PAL‘s
Then, on October 30, 1992, BAPCI purchased the management to be liable for insubordination, neglect
foreclosed assets of BISUDECO from APT and took of customer, disrespect for authority and absence
over its sugar milling operations under the trade without official leave.
name Peafrancia Sugar Mill (Pensumil). The union

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On 12 March 1996, respondent Zamora filed a RULING:


complaint against petitioners PAL and Francisco X.
Yngente IV before the NLRC for illegal dismissal, No. The relevant law dealing with the suspension of
actions for claims against corporations is Presidential
unfair labor practice, non-payment of wages,
damages and attorney‘s fees Decree No. 902-A, 52 as amended. The term "claim,"
as contemplated in Sec. 6 (c) of Presidential Decree
On 1 February 2005, the Court of Appeals No. 902-A, refers "to debts or demands of
promulgated an Amended Decision modifying its 13 a pecuniary nature. It means 'the assertion of a right
August 2004 Decision but at the same time resolving to have money paid.
petitioner PAL's Motion for Reconsideration in this
wise: WHEREFORE, this Court's August 13, 2004 It is plain from the foregoing provisions of law that
decision is hereby AMENDED, the dispositive "upon the appointment [by the SEC] of a
management committee or a rehabilitation receiver"
portion to read as follows:
all actions for claims against the corporation pending
WHEREFORE, in view of the before any court, tribunal or board shall ipso jure be
foregoing, the petition is GRANTED. suspended.
The NLRC resolution dated April 27,
The law is clear: upon the creation of a management
2001 is MODIFIED. Considering that
petitioner is a detention prisoner committee or the appointment of a rehabilitation
making reinstatement impossible, PAL receiver, all claims for actions "shall be suspended
is hereby ordered to pay petitioner accordingly." No exception in favor of labor claims is
Zamora his separation pay, in lieu of mentioned in the law. Since the law makes
no distinction or exemptions, neither should this
reinstatement, to be computed at one
month salary for every year of service Court.
from February 9, 1981 and back wages
Otherwise stated, no other action may be taken in,
to be computed from December 19,
including the rendition of judgment during the state
1995, both up to October 1, 2000, the
of suspension— what are automatically stayed or
date of his incarceration.
suspended are the proceedings of an action or suit
Considering that PAL is still under receivership, the and not just the payment of claims during the
monetary claims of petitioner Zamora must be execution stage after the case had become final and
executory.
presented to the PAL Rehabilitation Receiver, subject
to the rules on preference of credits. The Court of
The suspension of action for claims against a
Appeals took into account respondent Zamora's